United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT, UNITED STATES DISTRICT JUDGE.
before the Court is Defendant's Motion for
Reconsideration (Dkt. #149). After reviewing the relevant
pleadings, the Court finds that the motion should be denied.
issue before the Court concerns the Court's decision not
to dismiss the Securities and Exchange Commission's
(“SEC”) scheme liability claims in full against
Defendant William E. Mapp, III (“Mapp”) for
alleged violations of Sections 17(a)(1), (3) of the
Securities Act and Rule 10b-5(a), (c) of the Exchange Act. On
September 29, 2017, Mapp filed a Motion for Judgment on the
Pleadings (Dkt. #112). On November 9, 2017, the Court entered
a Memorandum Opinion and Order (the “Opinion”),
in which it granted in part and denied in part Mapp's
motion (Dkt. #142).
November 16, 2017, Mapp filed his Motion for Reconsideration
(Dkt. #149). On November 30, 2017, the SEC filed its response
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)).
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 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)).
Mapp filed his motion for reconsideration within 28 days of
the order that denied in part Mapp's Motion for Judgment
on the Pleadings; therefore, the motion will be considered a
Rule 59(e) motion.
59(e) motion is “not the proper vehicle for rehashing
evidence, legal theories, or arguments that could have been
offered or raised before the entry of judgment.”
Templet, 367 F.3d at 479 (citing Simon v. United
States, 891 F.2d 1154, 1159 (5th Cir. 1990)).
“Rule 59(e) ‘serve[s] the narrow purpose of
allowing a party to correct manifest errors of law or fact or
to present newly discovered evidence.'”
Id. (quoting Waltman v. Int'l Paper
Co., 875 F.2d 468, 473 (5th Cir. 1989)). “Relief
under Rule 59(e) is also appropriate when there has been an
intervening change in the controlling law.”
Milazzo, 2012 WL 1867099, at *1 (citing Schiller
v. Physicians Res. Grp., 342 F.3d 563, 567 (5th Cir.
2003)). “Altering, amending, or reconsidering a
judgment is an extraordinary remedy that courts should use
sparingly.” Id. (citing Templet, 367
F.3d at 479). “The alternative, Federal Rule of Civil
Procedure 60(b)(6) states, “On motion and just terms,
the court may relieve a party or its legal representative
from a final judgment, order, or proceeding for the following
reasons: . . . (6) any other reason that justifies
November 9, 2017, the Court issued its Opinion declining to
dismiss the SEC's scheme liability claims in full (Dkt.
#142). The Court concluded that “[c]onducting a lab
test in isolation to achieve an intended result may
constitute a deceptive act in itself that had ‘the
principal purpose and effect of creating a false appearance
of fact' about Servergy and the CTS-1000.” (Dkt.
#142 at p. 12-13). The Court found scheme liability was
adequately alleged in the Amended Complaint based on
“Mapp's actions in hiring lab technicians to test
CTS-1000's utility and potentially directing them to
manipulate the testing to achieve an intended result.”
(Dkt. #142 at p. 12-13).
argues that such a theory is not alleged in the Amended
Complaint because the SEC has never contended that the
October 2010 lab test was manipulated or was independently
fraudulent. According to Mapp, the Amended Complaint only
alleges that Mapp and Servergy made misrepresentations
regarding the results of the lab test. Mapp argues that
because this theory was not raised by the Commission in its
Response, he did not have an opportunity to address it prior
to issuance of the Opinion.
Amended Complaint, the SEC alleged that:
Not only were Mapp's and Servergy's power and thermal
output claims baseless and false, but they also falsely
represented to investors that an independent lab confirmed
the claims. In reality, the lab they touted did not conduct
comparable testing pitting the CTS-1000 against other
servers. Instead, in October 2010, the lab merely tested the
power consumption and thermal output of ...