United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S
MOTION TO DISMISS AND SUA SPONTE DISMISSING PLAINTIFFS'
MATTER comes before the Court upon Defendant's Motion to
Dismiss, filed September 28, 2017 (Doc. 11),
and Plaintiffs' Motion for Leave to File Sur-reply
(Doc. 20), filed November 8, 2017. Having
reviewed the parties' pleadings and the applicable law,
the Court finds that Defendant's motion is well-taken
and, therefore, is granted. Furthermore, the Court sua
sponte dismisses Plaintiffs' remaining claims.
are suing the Department of Justice for compensatory and
punitive damages, alleging that the DOJ denied them their due
process rights by allowing corruption or bias in the courts.
Plaintiffs also appear to ask this court to review or
overturn a summary judgment issued by the bankruptcy court,
on the basis of fraud on the court.
Vaughan Company, Realtors (“Vaughan Company”)
filed a chapter 11 bankruptcy petition on February 22, 2010.
On the basis that Vaughan Company was operating a Ponzi
scheme, the bankruptcy court entered an order approving the
appointment of Judith Wagner as the chapter 11 trustee for
the debtor's bankruptcy estate (the
Plaintiffs invested in the Vaughan Company Ponzi scheme, and
were “net winners”, meaning they received more
money from the scheme than they put in. On February 21, 2012,
the Trustee filed an adversary proceeding, seeking the
turnover of these net winnings under 11 U.S.C. § 548 and
New Mexico state law.
27, 2014, U.S. Bankruptcy Judge Robert Jacobvitz entered
summary judgment against the Plaintiffs and determined that
the Trustee was entitled to turnover of a total of $67,
404.39 under 11 U.S.C. § 548(a)(1)(B) and NMSA §
56-10-18(A)(2). This amount was their “net
winnings.” Plaintiffs did not appeal.
seven months later Plaintiffs filed a motion to vacate the
summary judgment under Fed.R.Civ.P. 60(b)(3) and 60(d)(3),
arguing that the Trustee committed fraud and fraud on the
court by intentionally submitting a
“miscalculation” in the complaint of how much
they owed. The bankruptcy court denied the motion, pointing
out that it did not rely on the miscalculation in the
complaint, and that the Trustee had corrected the amount
prior to the court ruling on summary judgment. Moreover, the
bankruptcy court declined to consider a new argument that the
amount subject to turnover should be offset by net losses in
her IRA investment account of $4, 127.75.
appealed the denial of the motion to vacate to this Court. In
both the motion to vacate and the appeal thereto, which was
referred to U.S. Magistrate Judge Carmen Garza, Judge Garza
addressed Plaintiffs' fraud on the court claims and
denied them. On August 25, 2015, Judge Brack issued an order
adopting Judge Carmen Garza's recommendation to affirm
the bankruptcy court. Plaintiffs did not appeal that decision
to the U.S. Court of Appeals for the Tenth Circuit.
November 6, 2015, the Plaintiffs filed a complaint in this
Court against the Trustee and her attorneys, alleging fraud
and attempting to assert criminal charges against the trustee
and judicial officers. They also sought to set aside the
summary judgment under Fed.R.Civ.P. 60(d)(3) for fraud on the
court. The Court dismissed the case under the Barton
doctrine and under the doctrine of judicial immunity. This
decision was appealed to the Tenth Circuit and the decision
Plaintiffs twice moved for permission to sue the Trustee
based on alleged misconduct or fraud in the adversary
proceeding. The bankruptcy court considered and denied
Plaintiffs request as frivolous or futile.
April 2, 2017, the Plaintiffs moved to reopen the adversary
proceeding and vacate the summary judgments. The bankruptcy
court denied the motion to reopen, and further addressed and
denied Plaintiffs' claim for fraud on the court. The
bankruptcy court considered and denied the theory that the
summary judgment should be modified to take into account Ms.
Lankford's IRA losses.
their complaint, Plaintiffs seek compensatory and punitive
damages from the United States Department of Justice for
failure to promote justice or protect the Plaintiffs from
“cronyism, obstruction of justice, collusion, bias, and
corruption” in the courts. Plaintiffs seek damages from
the United States for allegedly being denied due process in
argue that the bankruptcy court's summary judgment should
be overturned for fraud on the court because (1) the Trustee
intentionally miscalculated the net winnings in connection
with the summary judgment, (2) the bankruptcy court did not
consider Ms. Lankford's IRA losses in calculating the net
winnings, (3) the Trustee withheld or fabricated evidence,
(4) the Court fabricated documents, and (5) general bias or
corruption in not ruling in their favor.
filed a motion to dismiss under Fed.R.Civ.P. 12(b)(1),
asserting sovereign immunity. In a response, Plaintiffs
alleged that sovereign immunity is waived under the Federal
Tort Claims Act. Plaintiffs also filed a motion for
permission to file a sur-reply, along with the sur-reply. In
the sur-reply, Plaintiffs allege that sovereign immunity is
waived as to due process violations, but do not point to any
explicit statutory waiver of immunity.
The United States is Immune to Plaintiffs' Claim for
argues that claims for compensatory and punitive damages
against United States for due process violations should be
dismissed, as the United States has not waived immunity.
Standard for dismissal for ...