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Veit v. Frater

United States District Court, E.D. Wisconsin

January 13, 2020

JACKSON FAIRBANKS VEIT, Plaintiff,
v.
ANGELA FRATER and NEW COMPANY, Defendants.

          REPORT AND RECOMMENDATION ON PLAINTIFF'S MOTION FOR RELIEF FROM JUDGMENT

          NANCY JOSEPH UNITED STATES MAGISTRATE JUDGE.

         Jackson Fairbanks Veit sued Angela Frater and New Company asserting that they conspired to defraud him of the value of securities that he held in InfoCorp, LLC. Magistrate Judge David Jones dismissed Veit's suit because it was barred by claim preclusion. Veit appealed, and the Seventh Circuit affirmed the judgment except as to the violations of federal securities law alleged in Veit's complaint. On remand, Judge Jones dismissed the action with prejudice on statute of limitations and statute of repose grounds and imposed sanctions upon Veit. Veit appealed the dismissal and the Seventh Circuit affirmed the decision. (Docket # 74.) Veit files a pro se motion for relief from judgment. The case was subsequently reassigned to District Judge Lynn Adelman and Judge Adelman referred Veit's motion to me for a report and recommendation. For the reasons explained below, I recommend that Veit's motion for relief from judgment be denied and that the defendants' motion for sanctions be granted.

         BACKGROUND

         On September 26, 2016, Jackson Fairbanks Veit filed an amended complaint against Angela Frater and New Company, first asserting a civil conspiracy “to defraud Mr. Veit, steal the value of securities held by him and deprive him of any profit defendants gained in the transaction thereof.” (See Am. Compl. ¶ 52, Docket # 14.) Second, Veit asserted that Frater committed violations of “Section 20(a) of the Securities Act, 15 U.S.C. § 77q(a).” (Id. at ¶ 58.) Third, Veit argued that each of the defendants violated Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b). (Id. at ¶ 60.) Finally, Veit alleged a claim of promissory estoppel against Frater. (Id. at ¶¶ 61-64.)

         On January 30, 2017, pursuant to Defendants' Motion to Dismiss, (Docket # 7), Judge Jones dismissed this action with prejudice, finding that Veit had previously brought, and lost, the claims in his amended complaint in state court and that this action was therefore barred by claim preclusion. (See Decision and Order Granting Defendants' Motion to Dismiss 5-14, Docket # 28.) Veit subsequently filed a Notice of Appeal. (Docket # 30.)

         On appeal, the Seventh Circuit reversed this Court's dismissal of Veit's federal securities claims on claim preclusion grounds because claims under the Securities and Exchange Act of 1934 could not have been brought in Veit's earlier state court actions. (See USCA Mandate at 4, Docket # 36.) The Seventh Circuit affirmed the dismissal of Veit's remaining claims. (Id.) In its mandate, the Seventh Circuit directed Judge Jones to consider whether New Company should be dismissed due to Veit's failure to effect service of process or failure to prosecute. (See id. at 5.) The Seventh Circuit also encouraged Judge Jones “to investigate Mr. Veit's conduct” and “impose sanctions, up to and including the dismissal of this suit, ” if the Court determines that Veit has “pursued this suit in an effort to harass the defendants or has willfully misrepresented the facts.” (Id. at 6.)

         After receiving the mandate from the Seventh Circuit, Judge Jones held a telephonic status conference with the parties, during which Judge Jones indicated that the case may be barred by the statute of limitations and/or the statute of repose. (See Minute Sheet, Docket # 48.) In response, Veit filed a letter with the Court arguing that the doctrine of fraudulent concealment tolls the statute of limitations. (See Letter, Docket # 53.) Veit filed two additional letters stating that a case pending in Milwaukee County Circuit Court was related to the proceedings before this Court because the state court judge granted a motion to disqualify the attorneys and the law firm representing some of the defendants and denied a motion for sanctions that Angela Frater filed in that case. (See Docket # 55 and Docket # 56.) Frater replied that Veit's references to the proceedings in Milwaukee County have no bearing on the instant case where Veit's claims were dismissed on claim preclusion and statute of limitations grounds, and that Veit has failed to respond to defendant's motion for sanctions in a timely manner. (See Letter, Docket # 57.)

         On June 29, 2018, Judge Jones dismissed this action with prejudice on statute of limitations and statute of repose grounds and imposed sanctions upon Veit. (See Decision and Order Granting Defendants' Motion to Dismiss Plaintiff's Securities Claims 6-13, Docket # 61.) Veit appealed, and the Seventh Circuit affirmed the dismissal of the action and the award of sanctions. (Docket # 74.) The case was subsequently reassigned to Judge Adelman.

         Veit filed a pro se Motion for Relief from Judgment. (Docket # 67.) The defendants oppose the motion and argue that the motion “is more of the same behavior the Court already deemed appropriate for imposing sanctions.” (Docket # 68 at 10.) As such, the defendants request the Court sanction Veit for filing this motion.

         ANALYSIS

         1. Motion for Relief From Judgment

         At the time Veit brought this motion, this case was pending before the Seventh Circuit Court of Appeals. Thus, Veit brought his motion under Rule 62.1 which allows the district court to issue an indicative ruling while an appeal is pending. As Veit's appeal is now resolved (Docket # 74), his motion is properly considered under Rule 60(b)(2). A party may be entitled to relief from the entry of final judgment if that party presents “newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b).” Fed.R.Civ.P. 60(b)(2). Relief under Rule 60(b)(2) “is an extraordinary remedy that is to be granted only in exceptional circumstances.” Provident Sav. Bank v. Popovich, 71 F.3d 696, 698 (7th Cir. 1995).

         Veit requests relief from the judgment in this case “based on new evidence supporting [his] claims and not previously considered by this Court prior to dismissal.” (Motion for Relief at 1-2.) According to Veit, following the dismissal of his action in June 2018, additional discovery conducted in a related state circuit court matter[1] “yielded new documents supporting [his] allegations of defendants' unlawful transaction of [his] securities, their fraudulent concealment of their plan to do so, and their coverup of the corporate documents to prove [his] claims.” (Id. at 3.)

         The “newly discovered” evidence is two letters that Veit argues evidences that the defendants created an entity they called “New Corporation” as part of their scheme to defraud him. (Id.) The first is a letter addressed from Spring Bank to “InfoCor, LLC (or new corporation to be named), ” outlining the loan that Spring Bank approved for InfoCor, LLC. (Motion for Relief, Docket # 67-1.) That letter asks for “evidence of the change in ownership of the business and the name change.” (Id.) The second letter is from the attorney for Anderson and Frater to counsel for InfoCorp, stating that Anderson and Frater ...


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