Stanford v. Godbey

ROBERT ALLEN STANFORD, Plaintiff, v. DAVID C. GODBEY, et al., Defendants.

Case No. 3:20-cv-00115-E-BT

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

December 10, 2020

FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

Before the Court are separate motions to dismiss pro se Plaintiff Robert Stanford's Consolidated Complaint filed by each of the Defendants in this case: (1) Defendant Ralph Janvey's "Motion to Dismiss Complaint Pursuant to Federal Rules of Civil Procedure 12(b)(6), 41(b), and the Court's Inherent Powers" (ECF No. 27); (2) Defendant Judge David C. Godbey's Rule 12(b)(5) and 12(b)(6) Motion to Dismiss (ECF No. 35); and (3) Defendant David Reece's Rule 12(b)(5) and 12(b)(6) Motion to Dismiss (ECF No. 43). For the following reasons, the District Court should GRANT Defendants' motions and DISMISS Plaintiff's claims against them with prejudice.

Background

The genesis of this lawsuit is a February 2009 SEC enforcement action filed in this district against Plaintiff Robert Stanford. Consolidated Compl. 4 (ECF No. 17); Reece Mot. 6; see SEC v. Stanford Int'l Bank, Ltd., et al., No. 3:09-cv-00298-N (N.D. Tex.) (the "SEC Action"). In that case, the SEC alleged Stanford, together with other defendants, "misappropriated billions of dollars in investor funds through a massive fraud scheme and falsified financial statements in an effort to conceal his fraudulent conduct." Reece Mot. 6. Defendant Judge Godbey presided over the SEC Action.

Stanford executed his scheme by misrepresenting to investors that Stanford International Bank, Ltd.'s ("SIBL") certificates of deposit were conservatively invested and offered higher returns than banks in the United States. See United States v. Stanford, 805 F.3d 557, 563-64 (5th Cir. 2015). Instead, Stanford diverted a substantial portion of the investors' funds "to finance his personal business ventures and opulent lifestyle." Id. at 564. In June 2009, Stanford was indicted in the Southern District of Texas on criminal charges arising out of the same conduct, and in 2012, he was "tried and convicted by a jury on numerous counts of wire and mail fraud, money laundering, conspiracy to obstruct an SEC investigation, and obstruction of an SEC investigation," for which he was sentenced to 110 years in prison. Reece Mot. 6; see also Stanford, 805 F.3d at 563-65.

Following Stanford's 2009 indictment, the court appointed Ralph S. Janvey as receiver of Stanford's estate. Janvey Mot. 6; see also SEC Action, Receivership Order (ECF No. 10). In the Receivership Order, the court enjoined Stanford from "filing or prosecuting any actions or proceedings which involve the Receiver . . . except with the permission of this Court." SEC Action, Receivership Order 8 (ECF No. 10). On January 23, 2018, Stanford filed suit against Janvey and his agents without obtaining leave of court, alleging that Janvey had "wrongfully obtained,manipulated, and shared [SIBL] data, ultimately leading to Stanford's wrongful conviction." Stanford v. Janvey, et al., No. 3:18-cv-00165-N-BQ, Order 5 (ECF No. 17) (the "2018 Case"). Judge Godbey also presided over the 2018 Case, and he dismissed Stanford's claims with prejudice because his suit violated the Receivership Order and was barred by judicial immunity. Id. 6-7. After noting that Stanford had filed over two dozen frivolous and duplicative motions in the SEC Action, Judge Godbey further granted Janvey's motion to declare Stanford a vexatious litigant and enjoined him from "filing any new lawsuit against the Parties or Receivership Professionals[, meaning any professional firm or individual retained to provide services to the Parties,] without first seeking and obtaining leave of Court." Id. 2, 4-5. Stanford appealed that order, and the Fifth Circuit dismissed his appeal for lack of prosecution because Stanford failed to timely pay the docketing fee. 2018 Case, Notice of Appeal (ECF No. 19); 2018 Case, Judgment (ECF No. 26).

On January 16, 2020, Stanford filed his original Complaint in this case against Judge Godbey seeking damages for an alleged civil-rights violation under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971). Original Compl. (ECF No. 3). Stanford then moved to add Defendant David B. Reece, the lead SEC counsel in the SEC Action, in his individual capacity. Mot. to Add Reece (ECF No. 4); Mot. to Convert Reece's Status from Official Capacity to Individual Capacity (ECF No. 8). Next, Stanford moved to add Janvey, the receiver of the Stanford estate, as a defendant. Mot. to Add Janvey (ECF No.10). This Court granted Stanford's motions and ordered Plaintiff to file a consolidated Complaint. Order (ECF Nos. 9 & 16).

In his Consolidated Complaint, Stanford claims Judge Godbey, Janvey, and Reece "joined hands in a blatant act of tyranny" to violate his Fourth and Fifth Amendment rights, for which he seeks $18.5 billion in damages. Resp. Janvey 2 (ECF No. 29); Resp. Reece 5 (ECF No. 44); Consolidated Compl. 2-3. Specifically, Stanford claims (1) Janvey, as receiver, exceeded the scope of his authority in obtaining SIBL documents; (2) Reece, while acting as an agent of the SEC, lacked jurisdiction to pursue the SEC Action because the certificates of deposit sold by SIBL were not "securities" under the Securities Exchange Act of 1934; and (3) Judge Godbey "engaged in a non-judicial act" by impermissibly interpreting the certificates of deposit at issue as "securities" under the statute. Consolidated Compl. 4-7¹.

In response to Stanford's Consolidated Complaint, Defendants filed separate motions to dismiss, asserting numerous bases for dismissal, including various immunities, failure to state a claim, res judicata, and insufficient service of process. Janvey Mot.; Godbey Mot.; Reece Mot. The motions are fully briefed and ripe for determination.

Legal Standard and Analysis

The Court first addresses Defendant Janvey and Reece's argument under Rule 41(b)² before addressing Defendants' Rule 12(b)(6) arguments.

41(b)

Defendants Janvey and Reece argue that Plaintiff's Consolidated Complaint should be dismissed because Plaintiff violated the Receivership Order and the 2018 Case's injunction by filing this action against them without court approval. Janvey Mot. 11-13; Reece Mot. 12. However, Plaintiff does not address this argument in his responses. See Resp. Janvey (ECF No. 29); Resp. Reece (ECF No. 44). The Court finds Plaintiff's claims against Defendants Janvey and Reece should be dismissed with prejudice under Rule 41(b).

Federal Rule of Civil Procedure 41(b) provides that "[i]f the plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may move to dismiss the action or any claim against it." Fed. R. Civ. P. 41(b). Additionally, a trialcourt has discretionary authority to dismiss an action sua sponte for a plaintiff's failure to prosecute or comply with any order of the court. Link v. Wabash R.R. Co., 370 U.S. 626, 629-30 (1962); Gates v. Strain, 885 F.3d 874, 883 (5th Cir. 2018) (citations omitted). "This authority [under Rule 41(b)] flows from the court's inherent power to control its docket and prevent undue delays in the disposition of pending cases." Boudwin v. Graystone Ins. Co., Ltd., 756 F.2d 399, 401 (5th Cir. 1985) (citing Link, 370 U.S. at 630-31); see also Beard v. Experian Info. Sols. Inc., 214 F. App'x 459, 462 (5th Cir. 2007) (per curiam) (citing Fed. R. Civ. P. 41(b); Lopez v. Aransas Cnty. Indep. Sch. Dist., 570 F.2d 541, 544 (5th Cir. 1978) (noting that "[a]lthough the rule is phrased in terms of dismissal on the motion of the defendant, it is clear that the power is inherent in the court and may be exercised sua sponte")). While "[l]esser sanctions such as fines or dismissal without prejudice are usually appropriate before dismissing with prejudice," dismissal with prejudice is appropriate where "there is a 'clear record of delay or contumacious conduct by the plaintiff, . . . and when lesser sanctions would not serve the best interests of justice.'" Bryson v. United States, 553 F.3d 402, 403 (5th Cir. 2008) (per curiam) (first citing Long v. Simmons, 77 F.3d 878, 880 (5th Cir. 1996), then quoting Callip v. Harris Cnty. Child Welfare Dep't, 757 F.2d 1513, 1521 (5th Cir. 1985) (per curiam)).

As stated, the Receivership Order prohibited Stanford from "filing or prosecuting any actions or proceedings which involve the Receiver [Janvey] . . . except with the permission of this Court." SEC Action, Receivership Order 7-8(ECF No. 10). And Judge Godbey dismissed with prejudice the 2018 Case that Plaintiff filed against Janvey and his agents without leave of court because the suit violated the Receivership Order and was barred by judicial immunity. 2018 Case, Order 5-7 (ECF No. 17). The court's order in the 2018 Case prohibits Plaintiff from "filing any new lawsuit against the Parties [Janvey, Little, the SEC, and the Official Stanford Investors Committee] or Receivership Professionals[, defined as any professional firm or individual retained to provide services to the Parties,] without first seeking and obtaining leave of Court." Id. 1-2, 4-5. That order also "directs the Clerk of the Court not to accept for filing any such new complaint that Stanford files unless Stanford has obtained leave of Court for such filing." Id. 5. Here, Plaintiff did not seek permission from the Court to file a new lawsuit against Janvey, a former party, or Reece, counsel to a former party. Instead, he filed suit against Judge Godbey, the presiding judge in the SEC Action and the 2018 Case, and later moved to add Defendants Janvey and Reece in a deceitful attempt to circumvent the court's order prohibiting him from filing suit against the SEC Action parties or professionals providing services to those parties without leave of court. Mot. to Add Reece; Mot. to Add Janvey. In Plaintiff's motions for leave to join Janvey and Reece, he did not...