Birri v. United States Small Bus. Admin.

1

ASTOR BIRRI, Plaintiff, v. UNITED STATES SMALL BUSINESS ADMINISTRATION, Defendant.

No. 22-cv-03311-VKD

United States District Court, N.D. California, San Jose Division

November 2, 2023

ORDER DENYING PLAINTIFF'S MOTION FOR RELIEF FROM ORDER OF DISMISSAL AND SETTLEMENT AGREEMENT

RE: DKT. NO. 25

VIRGINIA K. DEMARCHI UNITED STATES MAGISTRATE JUDGE

Plaintiff Astor Birri, who is representing himself, filed a “motion to set aside settlement agreement.” Dkt No. 25. He seeks relief from an order of dismissal entered pursuant to an agreement he reached with defendant U.S. Small Business Administration (“SBA”) to resolve this civil rights lawsuit. Id. Mr. Birri claims that the Assistant U.S. Attorney (“AUSA”) who negotiated the agreement with him “wrongfully and intentionally gave [him] false information” about the status of a related Federal Tort Claims Act (“FTCA”) claim against the SBA and that he signed the settlement agreement under duress. Id. at 1-2. Mr. Birri also claims that he has obtained “new evidence” regarding the underlying claim. Id. at 7.

The Court construes Mr. Birri's motion as a motion for relief from an order of dismissal with prejudice under Rule 60(b) of the Federal Rules of Civil Procedure. See id. at 9 (citing Rule 60). The SBA opposes Mr. Birri's motion. Dkt. No. 26. This motion is suitable for decision without oral argument. See Civil L.R. 7-1(b). Upon consideration of the moving and responding papers, the Court denies Mr. Birri's motion for relief from the order of dismissal or the settlement agreement resolving the litigation.^[1]

I. BACKGROUND

Mr. Birri filed this lawsuit on June 7, 2022. Dkt. No. 1. In his complaint, he alleged that the SBA discriminated against him on the basis of race and age by refusing to distribute $38,800 in approved COVID-19 Economic Injury Disaster Loans (“EIDLs”) to him and his businesses based on an assessment that he was “overfunded for a black person.” Id. ¶¶ 6-26. He claimed the SBA's actions violated Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq., 42 U.S.C. § 1981, and the Age Discrimination in Employment Act, 29 U.S.C. § 621, et seq. Id. ¶¶ 12-26. According to the complaint, the SBA's failure to distribute the EIDLs caused Mr. Birri's businesses to incur significant losses and led him contemplate suicide. Id. ¶ 27. The complaint demanded distribution of the previously approved loan funds and $13,780,000 in damages for harm to his businesses and for his own “pain and suffering.” Id.

On June 10, 2022, Mr. Birri filed a separate administrative tort claim under the FTCA against the SBA. See Dkt. No. 26-2. As in the complaint in this lawsuit, Mr. Birri alleged that the SBA failed to distribute EIDLs to his businesses because he was “over-funded (for a Black Person).” Id. The FTCA claim also alleged that the SBA's conduct caused Mr. Birri to become suicidal. Id. The FTCA claim included a request for $13,780,000 in damages. Id.

The SBA moved to dismiss Mr. Birri's lawsuit on October 21, 2022. Dkt. No. 13. Mr. Birri opposed the motion. Dkt. No. 15. The Court took the matter under submission without oral argument on November 29, 2022. Dkt. No. 19.

On February 1, 2023, while the motion was pending, Mr. Birri sent an email to the AUSA representing the SBA stating “[a]s to the litigation, I would very much like nothing more than to have this matter settled-with the [] redistribution of the $38,800 in to my business bank account.” Dkt. No. 26-17.^[2] The AUSA responded by email on February 10, 2023, attaching a draft agreement for a proposed resolution of the SBA's dispute with Mr. Birri. See Dkt. No. 26-24. The draft agreement provided that Mr. Birri would release the SBA “from any and all obligations, damages, liabilities, actions, causes of action, claims and demands of any kind and nature whatsoever . . . on account of the same subject matter that gave rise to the above captioned action and including the subject matter of the Claim for Damage, Injury or Death, submitted to the United States Small Business Administration on Standard Form 95, signed by Astor Birri on June 10, 2022.” Dkt. No. 26-25 ¶ 4. In return for dismissing this action with prejudice and releasing the SBA from liability, Mr. Birri would receive a payment of $38,800. Id. ¶¶ 3-5. The AUSA invited Mr. Birri to call if he wanted to discuss the proposed agreement. Dkt. No. 26-24.

After receiving the proposed settlement agreement, Mr. Birri spoke with the AUSA by telephone on February 10, 2023. Dkt. No. 25 at 2; Dkt. No. 26-3 ¶ 14. The parties describe this conversation differently, but both appear to agree that the AUSA told Mr. Birri that the Court's anticipated decision on the SBA's then-pending motion to dismiss could affect the SBA's willingness to settle the matter on the proposed terms. See Dkt. No. 25 at 2; Dkt. No. 26-3 ¶ 14.

After speaking with the AUSA, Mr. Birri signed the settlement agreement on February 10, 2023, and the government filed a “stipulation and agreement of compromise and settlement” with a proposed order for dismissal with prejudice that same day. See Dkt. No. 23. On February 13, the Court dismissed the action with prejudice pursuant to the parties' stipulation. Dkt. No. 24. Mr. Birri received $38,800 on February 28, 2023. Dkt. No. 26-39.

On July 31, 2023, Mr. Birri filed a “motion to set aside settlement agreement.” Dkt. No. 25. He claims that the AUSA who negotiated the agreement “[led him] to be believe that the [FTCA] case had been rejected, or not even considered by the SBA” and that he “had only the case he and I [were] litigating,” even though the AUSA “KNEW that the SBA was still working on the [FTCA case].” Id. at 2-3. Mr. Birri says that the AUSA was “aware that [he] had every intention[] of proceeding with the [FTCA] case along side of [this] case” and that he “would have done so if [the AUSA] had not [led him] to believe that the [FTCA] case was not being worked on by the SBA.” Id. at 4. According to Mr. Birri, the AUSA “took advantage of [him]” by “getting [him] to-quickly-sign the settlement agreement-as [the AUSA] put it, ‘before the Judge rules on the motion to dismiss.'” Id. at 2. Mr. Birri says he discovered that the AUSA had misled him about the status of his FTCA claim when he received a letter from the SBA on May 3, 2023, stating that the FTCA claim had been dismissed pursuant to the settlement agreement in this case. Id. at 2, 8. The letter suggested, (in Mr. Birri's view) that the SBA was actively considering his claim and would have continued to do so, but for the settlement agreement. Id. at 2. Mr. Birri asks the Court to “reopen[]” this case and “cancel[] the settlement agreement.” Id. at 9. Mr. Birri has not returned the $38,800 he received from the SBA pursuant to the settlement agreement, or offered to return this amount.

II. LEGAL STANDARD

Rule 60(b) provides that a court “may relieve a party . . . from a final judgment, order, or proceeding” for several enumerated reasons, including: fraud, misrepresentation, or misconduct by an opposing party; newly discovered evidence; and “any other reason that justifies relief.” Fed.R.Civ.P. 60(b); see also Gonzalez v. Crosby, 545 U.S. 524, 528 (2005). Rule 60(b) is not limited to requests for relief from a judgment, but may be used to seek relief from an order of dismissal entered pursuant to a stipulation. Cooper v. Newsom, 13 F.4th 857, 864 (9th Cir. 2021). “A motion under Rule 60(b) must be made within a reasonable time” and, for motions alleging newly discovered evidence or fraud, within a year of the order or judgment in question. Fed.R.Civ.P. 60(c)(1).

Relief under Rule 60(b) is available only in extraordinary circumstances. See Stevens v. ITT Sys., Inc., 868 F.2d 1040, 1041 n.1 (9th Cir. 1989). “Rule 60(b) is not intended to remedy the effects of a deliberate and independent litigation decision that a party later comes to regret through second thoughts or subsequently-gained knowledge.” Latshaw v. Trainer Wortham & Co., 452 F.3d 1097, 1099 (9th Cir. 2006). Determination of a Rule 60(b) motion is “committed to the sound discretion of the trial judge.” Blair v. Shanahan, 38 F.3d 1514, 1518 (9th Cir. 1994).

III. DISCUSSION

Mr. Birri argues that he should be relieved from the terms of the settlement agreement and from the order dismissing his claims on grounds of fraud, duress, and newly discovered evidence. Dkt. No. 25 at 2-7. He claims that the AUSA defrauded him by misleading him about the status of his FTCA claim, inducing him to release it as part of a settlement of this action. Id. at 1-4. Mr. Birri also contends that he signed the settlement agreement under conditions of duress because he was forced to make his decision “quickly . . . before the Judge rule[d] on the motion to dismiss” and did not have the opportunity to carefully review the agreement or discuss it with an attorney from the Federal Pro Se Program. Id. at 2. Finally, Mr. Birri claims that he has obtained new evidence relating to his underlying discrimination claim. Id. at 7.

The Court considers each of Mr. Birri's stated grounds for relief under Rule 60(b).^[3]

A. Fraud, Misrepresentation, or Misconduct

To be relieved of an order under Rule 60(b)(3), the moving party must prove by clear and convincing evidence that the order was obtained through fraud, misrepresentation, or other misconduct and that the conduct complained of prevented the party from fully and fairly presenting their case or defense. Fed.R.Civ.P. 60(b)(3); Casey v. Albertson's Inc 362 F.3d 1254, 1260 (9th Cir. 2004). Generally, fraud requires: “(1) a misrepresentation (false representation, concealment, or non-disclosure); (2) knowledge of falsity (or scienter); (3) intent to defraud (i.e., to induce reliance); (4)...