Bimal Banik v. Angel Tamez ( 2020 )

Case: 19-40437 Document: 00515310092 Page: 1 Date Filed: 02/13/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 19-40437 February 13, 2020
Lyle W. Cayce
BIMAL K. BANIK, Clerk
Plaintiff - Appellant
KATIE PEARSON KLEIN; WILLIAM D. MOUNT; ELIZABETH F. TURCO;
DALE & KLEIN, L.L.P.,
Appellants
v.
AMANDA YBARRA,
Defendant - Appellee
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 7:16-CV-462
Before KING, COSTA, and HO, Circuit Judges.
GREGG COSTA, Circuit Judge: *
Federal Rule of Civil Procedure 60(b)(5) allows a party to seek vacatur of
a judgment that “has been satisfied, released, or discharged.” We decide
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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whether that rule requires a district court to vacate a judgment imposing
sanctions when the parties reach a postjudgment settlement.
I.
The sanctions were imposed in a lawsuit brought by Bimal Banik, a
former chemistry professor at the University of Texas-Pan American. After he
was fired, Banik sued individuals he blamed for his termination. One of the
defendants was his former student Amanda Ybarra.
After years of contentious litigation, the district court granted Ybarra’s
motion to dismiss under the Texas Citizens Participation Act. 1 TEX. CIV. PRAC.
& REM. CODE §§ 27.001−27.011. The court awarded Ybarra about $117,000 in
attorneys’ fees and costs. It also imposed $15,000 in sanctions against Banik
under the Texas Citizens Participation Act, id., and roughly $20,000 in
sanctions against Banik’s attorneys under 28 U.S.C. § 1927.
While an appeal of those rulings was pending, the parties settled. The
parties then filed a “Joint Motion for Relief from Judgment” under Federal
Rule of Civil Procedure 60(b)(5). The district court treated the motion as timely
but denied relief. The district court reasoned that although parties may settle
claims, they may not agree to erase a sanction that is part of the judgment.
II.
Rule 60(b)(5) permits a party to seek relief from a judgment that “has
been satisfied, released, or discharged.” We review a district court’s denial of
a Rule 60(b)(5) motion for abuse of discretion but review its underlying legal
conclusions de novo. Frew v. Janek, 780 F.3d 320, 326 (5th Cir. 2015).
1 We recently held that the Texas Citizens Participation Act does not apply in federal
court. Klocke v. Watson, 936 F.3d 240, 242 (5th Cir. 2019). But the district court entered
judgment against Banik before we decided Klocke. Banik does not seek to vacate under
Klocke, which makes sense as postjudgment changes in the law are usually not a basis for
disturbing a final judgment. See Priester v. JP Morgan Chase Bank, N.A., 927 F.3d 912, 913
(5th Cir. 2019).
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Parties rarely invoke the “satisfied, released, or discharged” clause of
Rule 60(b)(5). 11 Charles Alan Wright & Arthur R. Miller, FEDERAL PRACTICE
AND PROCEDURE § 2863 (3d ed. 2019). Courts have applied the Rule when
parties cannot agree on filing a satisfaction of judgment “due to an ongoing
dispute over the judgment amount.” 21A FEDERAL PROCEDURE, LAWYER’S
EDITION § 51:154 (citing Zamani v. Carnes, 491 F.3d 990 (9th Cir. 2007)); see
also Zelaya/Capital Int’l Judgment LLC v. Zelaya, 769 F.3d 1296, 1304 (11th
Cir. 2014). Other uses of the Rule include applying various credits against a
judgment, BUC Int’l Corp. v. Int’l Yacht Council Ltd., 517 F.3d 1271, 1276−78
(11th Cir. 2008); Sunderland v. City of Philadelphia, 575 F.2d 1089, 1090−91
(3d Cir. 1978), or reducing judgments based on amounts paid prejudgment but
not discovered until after the judgment issued, see Johnson Waste Materials v.
Marshall, 611 F.2d 593, 594−95 (5th Cir. 1980); Ferrell v. Trailmobile, Inc.,
223 F.2d 697, 698−99 (5th Cir. 1955).
The parties’ joint motion to vacate fits into another category: requests to
vacate a judgment based on settlements that occur while a judgment is being
appealed. The Supreme Court has recognized that a court has discretion to
vacate its rulings based on postjudgment settlements. See U.S. Bancorp
Mortg. Co. v. Bonner Mapp P’ship, 513 U.S. 18, 28−29 (1994) (addressing an
appellate court’s authority to vacate its prior judgment but noting similar relief
is available in the district court via Rule 60); Wright & Miller, supra, § 2863
(“[I]t now appears that Rule 60(b) may be utilized to seek the vacation of a
judgment on the ground that the case has been settled so that it would not be
equitable to have it remain in effect.”). In recognizing that equitable authority,
however, the Supreme Court stressed that it should be used in “exceptional
circumstances.” U.S. Bancorp, 513 U.S. at 29.
Of course, parties do not usually need court approval to settle while a
case is on appeal. The winning party can eliminate the risk of appeal by
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agreeing to accept a reduced award from the losing party. That includes the
ability to settle the monetary portion of sanctions that a district court requires
one party to pay another (as opposed to sanctions owed to a court, which cannot
be settled). See Fleming & Assocs. v. Newby & Tittle, 529 F.3d 631, 639−40
(5th Cir. 2008). When parties agree to settle the monetary aspects of a
judgment, they need not seek to vacate under Rule 60(b)(5) because the release
prevents any future attempts to enforce the judgment. That is likely why such
requests are hard to find in the case reporters.
The parties here nonetheless sought to eliminate the monetary aspects
of the judgment based on their agreement. The “release” language in Rule
60(b)(5) seems to support such requests. And as we have discussed, U.S.
Bancorp recognizes that district courts have authority to grant such relief
based on postjudgment settlements. Because the district court did not
recognize that Rule 60(b)(5) gives it that authority, we will remand for it to
consider vacating the monetary portions of the judgment.
But Banik and his attorneys seek more than just erasing the monetary
aspects of the judgment. While the postjudgment settlement already takes
them off the hook for the financial obligations, it does not eliminate the court
record of sanctions. So they also seek to erase any mention of sanctions in the
final judgment.
On this issue, we affirm the district court. It acted within its discretion
in refusing to wipe away the sanctions ruling. 21A FEDERAL PROCEDURE,
LAWYER’S EDITION, supra, § 51:154 (“[R]elief has been denied where the
disputed prejudgment payments did not constitute a satisfaction of the claim
but rather a court-imposed sanction.” (citing Gibbs v. Maxwell House, 738 F.2d
1153 (11th Cir. 1984)). Sanctions, even compensatory ones awarded to the
opposing party rather than punitive ones payable to the court, serve a greater
purpose than transferring money. They deter litigants and their attorneys
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from engaging in wrongful conduct, and the record of those sanctions may be
useful to later courts considering sanctions against the same actors or to bar
disciplinary committees looking at the history of a lawyer’s conduct. Because
sanctions “play an important role in discouraging bad behavior by litigators . .
. , we should not allow a subsequent settlement to erase that language.”
Fleming, 529 F.3d at 641 (holding that district court did not have to vacate the
sanctions ruling itself even though it should have vacated the monetary portion
of the sanctions award based on a prejudgment settlement); see also Keller v.
Mobil Corp., 55 F.3d 94, 99 (2d Cir. 1995) (noting that a district court can
preserve already-imposed 28 U.S.C. § 1927 sanctions payable to another party
after a settlement).
The order denying Rule 60(b)(5) relief is AFFIRMED in part and
VACATED and REMANDED in part. The sanctions order in Paragraphs 4
and 5 of the judgment will remain. On remand, the district court will consider
whether to vacate Paragraphs 2 and 3 of the judgment, which awarded fees,
costs, and expenses that were resolved by settlement during the appeal.
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