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U.S. Commodity Futures Trading Commission v. Kratville

United States District Court, D. Nebraska

April 16, 2014

U.S. COMMODITY FUTURES TRADING COMMISSION, Plaintiff,
v.
MICHAEL B. KRATVILLE, ELITE MANAGEMENT HOLDINGS CORP., MJM ENTERPRISES LLC, JONATHAN W. ARRINGTON, and MICHAEL J. WELKE, Defendants.

MEMORANDUM AND ORDER

LAURIE SMITH CAMP, Chief District Judge.

This matter is before the Court on the Motion to Alter or Amend and for Relief from a Final Judgment (Filing No. 171) filed by Defendant Michael B. Kratville. For the reasons discussed below, the Motion will be denied.

BACKGROUND

The Court incorporates the Background section from its prior Memorandum and Order dated January 28, 2014 (Filing No. 168 at 1-16), and will not recite the facts again here. The Court concluded in the Memorandum and Order that the undisputed evidence in the record demonstrated that Kratville committed fraud under the Commodity Exchange Act (the "CEA" or the "Act"), 7 U.S.C. §§ 1 et seq., and its implementing regulations, 17 C.F.R. §§ 1.1 et seq., and the Court granted the Motion for Summary Judgment (Filing No. 97) submitted by Plaintiff United States Commodity Futures Trading Commission ("CFTC").

Kratville now argues that the Court's reasoning in its Memorandum and Order was flawed. Specifically, he argues that the Court erred in (1) not concluding that issues of fact and/or ultimate inferences precluded summary judgment, and (2) failing to exclude certain evidence. Kratville also argues that his former attorney's "excusable neglect" warrants the Court's consideration of additional evidence. Finally, Kratville contends that his prior attorney's advice, directing Kratville to invoke the protection of the Fifth Amendment, was also "excusable neglect" warranting the re-opening of the case.

STANDARD OF REVIEW

"Rule 59(e) motions serve the limited function of correcting manifest errors of law or fact or to present newly discovered evidence.'" United States v. Metro. St. Louis Sewer Dist., 440 F.3d 930, 933 (8th Cir. 2006) (quoting Innovative Home Health Care, Inc. v. P.T.-O.T. Assoc. of the Black Hills, 141 F.3d 1284, 1286 (8th Cir. 1998)). "Such motions cannot be used to introduce new evidence, tender new legal theories, or raise arguments which could have been offered or raised prior to entry of judgment." Id. (quoting Innovative Home Health Care, 141 F.3d at 1286) (internal marks omitted). The "district court has broad discretion in determining whether to grant or deny a motion to alter or amend judgment pursuant to Rule 59(e)...." Id.

Federal Rule of Civil Procedure 60(b) motions serve to relieve parties from final judgments, orders, or proceedings on several enumerated grounds, including "mistake, inadvertence, surprise, or excusable neglect."[1] Post-judgment motions for leave to amend may be granted if timely made. U.S. ex rel. Roop v. Hypoguard USA, Inc., 559 F.3d 818, 823 (8th Cir. 2009). "Rule 60(b) is not a vehicle for simple reargument on the merits.'" Arnold v. Wood, 238 F.3d 992, 998 (8th Cir. 2001) (quoting Broadway v. Norris, 193 F.3d 987, 990 (8th Cir. 1999)).

DISCUSSION

I. Manifest Error

Kratville has not identified manifest errors of law or fact that require the Court to alter or amend its Memorandum and Order or the accompanying Judgment.

a. Error of Law

Kratville has identified only one alleged error of law, arguing that this Court mistakenly applied a passive standard with respect to causation of fraud. Kratville points to the Court's citation-in a footnote-to a case from the Eastern District of Michigan, SEC v. Conaway, 698 F.Supp.2d 771, 865-66 (E.D. Mich. 2010). Kratville suggests that this Court mistakenly relied on that case for the principle that, in some circumstances, an individual may contribute to fraud by acquiescing to fraudulent behavior. He notes that Conaway ultimately applied an active standard, i.e., the defendant in Conaway actively caused a material fact to be omitted.

The court in Conaway specifically noted that its analysis did not "exhaust the universe of factual patterns in which one can be found liable for causing another to make or omit making certain statements." 698 F.Supp.2d at 869. Under the facts of that case, the director of a corporation did not himself draft, edit, or review allegedly fraudulent statements, yet was found to have caused fraud. Id. at 865. In that regard, the factual circumstances in Conaway were similar to those presented by Kratville, who argued that he did not draft or approve fraudulent documents, although the evidence established that he affirmatively directed investors and potential investors to such misleading information. ( See, e.g., Memorandum and Order, ...


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