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Securities & Exchange Commission v. Sethi Petroleum, LLC

United States District Court, E.D. Texas, Sherman Division

January 10, 2017

SECURITIES AND EXCHANGE COMMISSION
v.
SETHI PETROLEUM, LLC, and SAMEER P. SETHI

          MEMORANDUM OPINION AND ORDER

          AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE

         Pending before the Court is Non-Party John R. Weber's Motion for Relief (Dkt. #201). After reviewing the relevant pleadings and motion, the Court finds the motion should be denied.

         BACKGROUND

         On May 14, 2015, the Court granted the Securities and Exchange Commission's (“SEC”) emergency ex parte request and issued a temporary restraining order, asset freeze, and other injunctive relief against Sethi Petroleum, LLC (“Sethi Petroleum”) and Sameer Sethi (Dkt. #11). The Court also appointed a receiver over Sethi Petroleum (Dkt. #12). On May 26, 2015, the Court issued an Agreed Order Granting Preliminary Injunction, Asset Freeze, and Other Relief (Dkt. #23).

         On June 22, 2016, the SEC filed its Emergency Motion for Show Cause Hearing to Hold Defendant and Others in Contempt (Dkt. #138). On June 29, 2016, John Weber (“Weber”) filed a response to the motion for show cause hearing (Dkt. #147). On July 1, 2016, the SEC filed a reply to Weber's response (Dkt. #149). The Court granted the SEC's motion and set a show cause hearing for August 1, 2016 (Dkt. #153). On August 1, 2016, the Court held a hearing and ordered the parties to provide further briefing on the issue of whether the interests that Cambrian Resources LLC (“Cambrian”) sold were, in fact, securities. On August 2, 2016, all parties filed briefs on the issue (Dkt. #161; Dkt. #163; Dkt. #164; Dkt. #165).

         On August 9, 2016, the Court issued a Memorandum Opinion and Order (the “Order”) and found that “the SEC established by clear and convincing evidence that Sameer Sethi, Praveen Sethi, and John Weber each were aware of the Preliminary Injunction and nevertheless violated the terms of the Preliminary Injunction by directly or indirectly engaging in the offer, issuance, or sale of securities through Cambrian Resources LLC” (Dkt. #169 at pp. 29-30).

         Prior to the show cause hearing, Weber interviewed former Cambrian employee Ontario Rowe (“Rowe”) about his communications with Cambrian investors. Weber specifically asked Rowe about all of his conversations with Beverlyn Jorman (“Jorman”). Rowe told Weber about several telephone conversations, but did not mention any email communications. Based on Rowe's statements, Weber believed that the telephone conversations were the full extent of Rowe's communications with Jorman.

         Immediately after the show cause hearing, Rowe informed Sameer Sethi that Jorman emailed Rowe several times. Sameer later informed Weber of the emails and Weber immediately began trying to gain access to them. Julissa Martinez accessed Rowe's email account on August 29, 2016, and found the emails between Rowe and Jorman.

         On October 10, 2016, Weber filed a Motion for Relief asking the Court to reconsider the Order under Federal Rule of Civil Procedure 60(b)(2) (Dkt. #201). On October 7, 2016, the SEC filed its response (Dkt. #210). On October 12, 2016, Weber filed a reply (Dkt. #212).

         LEGAL STANDARD

         A motion seeking “reconsideration” may be construed under either Federal Rule of Civil Procedure 59(e) or 60(b). Shepherd v. Int'l Paper Co., 372 F.3d 326, 328 n.1 (5th Cir. 2004); see also Milazzo v. Young, No. 6:11-cv-350-JKG, 2012 WL 1867099, at *1 (E.D. Tex. May 21, 2012). Such a motion “‘calls into question the correctness of a judgment.'” Templet v. HydroChem Inc., 367 F.3d 473, 478 (5th Cir. 2004) (quoting In re Transtexas Gas Corp., 303 F.3d 571, 581 (5th Cir. 2002)).

         “If a motion for reconsideration is filed within 28 days of the judgment or order of which the party complains, it is considered to be a Rule 59(e) motion; otherwise, it is treated as a Rule 60(b) motion.” Milazzo, 2012 WL 1867099, at *1; see also Shepherd, 372 F.3d at 328 n.1; Berge Helene Ltd. v. GE Oil & Gas, Inc., No. H-08-2931, 2011 WL 798204, at *2 (S.D. Tex. Mar. 1, 2011)). Weber filed his motion almost two months after the Court's Order. Therefore it will be treated as a Rule 60(b) motion.

         Rule 60(b)(2) provides that a court may relieve a party from final judgment based on “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). To succeed on a motion for relief from judgment based on newly discovered evidence, the Fifth Circuit requires a movant to demonstrate: (1) that the movant exercised diligence in obtaining the information; and (2) the evidence is material and controlling and clearly would have produced a different result if present before the original judgment. Hesling v. CSX Transp., Inc., 396 F.3d 632, 639 (5th Cir. 2005) (quoting Goldstein v. MCI WorldCom, 340 F.3d 238, 257 (5th Cir. 2003)). The newly discovered evidence must be in existence at the time of trial and not be discovered until after trial. Longden v. Sunderman, 979 F.2d 1095, 1102 (5th Cir. ...


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