United States District Court, E.D. New York
MEMORANDUM & ORDER
KIYO A. MATSUMOTO, District Judge.
Pending before the court is plaintiff and counterclaim defendant Abraham Leser's motion to dismiss this action with prejudice pursuant to Federal Rule of Civil Procedure 41(a)(2) and to vacate the Judgment pursuant to Federal Rules of Civil Procedure 60(b)(5) and 60(b)(6). For the reasons set forth below, the court denies the motion to dismiss this action with prejudice pursuant to Federal Rule of Civil Procedure 41(a)(2) and denies the motion to vacate the Judgment pursuant to Federal Rules of Civil Procedure 60(b)(5) and 60(b)(6).
The parties are familiar with the tortuous background of this case. On June 4, 2009, Leser commenced this action against U.S. Bank National Association ("USB"), seeking a declaratory judgment that he did not sign personal guaranties in connection with loans extended by USB for the purchase and development of properties in Philadelphia, Pennsylvania, and Seattle, Washington. (ECF No. 1, Complaint, 6/4/09.) USB subsequently counterclaimed on the guaranties against Leser. (ECF No. 10.) After motion practice and a jury trial, the jury returned a verdict in favor of USB, finding that Leser did in fact sign the personal guaranties. (ECF No. 189, Jury Verdict, 1/14/13.) After significant post-trial motion practice, the court entered Judgment in favor of USB and against Leser in the amount of $52, 946, 419.15 on May 10, 2013. (ECF No. 231, Judgment, 5/10/13.) The Judgment provided that interest would accrue at the federal post-judgment statutory rate provided by 28 U.S.C. § 1961(a) to the date the Judgment was satisfied. (Judgment at 2.)
After the entry of the Judgment, USB filed a turnover petition in this action because, in addition to failing to pay the Judgment, Leser took steps that USB argued were fraudulent transfers to conceal his assets, including allegedly transferring his shares in The Leser Group - purportedly valued at $160 million - to his wife and filing a $35 million confession of judgment in favor of certain purported creditors. (ECF No. 241, Turnover Petition, 6/19/13.) The court granted USB's motion for a temporary restraining order against Leser's wife, Edith Leser, and Aron Mandel as nominee for certain purported creditors of Leser (the "Mandel Group"), after finding that USB would likely succeed on the merits of its fraudulent conveyance claims against Leser, Mandel, and Edith Leser. (ECF No. 251, Temporary Restraining Order, 6/20/13.) On July 1, 2013, based on the consent of Edith Leser, the court granted a preliminary injunction against Edith Leser until the resolution of USB's petition for a turnover order. (Order dated 7/1/13.)
After additional discovery and motion practice, the court granted USB's motion for a preliminary injunction against the Mandel Group. (ECF No. 288, Order Granting Preliminary Injunction ("PI Order"), 7/18/13.) The court found, inter alia, that USB had shown a likelihood of success on its claim that Leser had obtained the confession of judgment through actual fraud, that USB had shown a likelihood of success on its claims of constructive fraud, and that USB had shown it would suffer irreparable harm in the absence of an injunction against the Mandel Group. ( Id. at 35.) The court also found that, in the alternative, USB had shown there were sufficiently serious questions going to the merits of its claims and that the balance of hardships tipped decisively in favor of granting a preliminary injunction to USB. ( Id. ) Accordingly, the court issued a preliminary injunction against the Mandel Group. ( Id. )
On September 11, 2013, USB moved for an order (i) appointing a receiver over Leser's assets and property, (ii) directing Leser to turn over title to his various assets, and (iii) charging Leser's economic interests in all partnerships and limited-liability companies in which he had an interest with the obligation to make payments toward the unsatisfied Judgment. (ECF No. 306, Motion to Appoint Receiver, for a Turnover Order, and for a Charging Order, 9/11/13.) After considering the parties' submissions, the court granted USB's motion on October 4, 2013. (ECF No. 326, Order Granting U.S. Bank National Association's Motion for the Appointment of a Receiver, Turnover of Assets, and Charging of Assets ("Receivership Order"), 10/4/13.)
After USB alleged that Leser had failed to comply with his legal obligations under the Receivership Order, (ECF No. 341, 11/8/13), the court held a conference in which it reminded Leser of his obligations under the Receivership Order, ordered the various entities subject to the Receivership Order to produce relevant documents, and ordered the parties to meet and confer concerning briefing schedules for other anticipated motions. (Minute Entry dated 11/19/13.)
The parties subsequently reached a comprehensive and confidential settlement agreement that included, inter alia, the withdrawals of appeals and the resolution of all pending claims between the parties. The court approved the settlement agreement on December 31, 2013. (Order dated 12/31/13.)
Leser filed the instant motion on May 7, 2014. (ECF No. 374, Motion to Vacate Judgment, 5/7/14.) USB confirmed in a subsequent letter that it consented to the relief sought by Leser - vacating the Judgment and dismissing the action with prejudice - but took no position on the arguments made by Leser and did not endorse any other aspect of Leser's motion. (ECF No. 381, Letter from Matthew D. Parrott, 5/14/14.)
A. Legal Standard
Under Federal Rule of Civil Procedure 60(b)(5), a court may relieve a party from a final judgment "[o]n motion and just terms" if "the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable." Fed.R.Civ.P. 60(b)(5). In addition, a court may vacate a final judgment under Federal Rule of Civil Procedure 60(b)(6) for "any other reason that justifies relief." Fed.R.Civ.P. 60(b)(6).
The Supreme Court has held that "mootness by reason of settlement does not justify vacatur of a judgment under review" unless there are "exceptional circumstances" present to justify doing so. U.S. Bancorp Mortg. Co. v. Bonner Mall P'ship, 513 U.S. 18, 29 (1994). "[T]he determination is an equitable one, and exceptional circumstances may conceivably counsel in favor of such a course." Id. Consequently, the Second Circuit has required that "the movant must demonstrate equitable entitlement to the extraordinary remedy of vacatur'" and noted that a court should only "vacate a judgment or order mooted by settlement where the relief is ...