McCaffrey v. Gatekeeper USA, Inc

Background

McCaffrey sued Gatekeeper USA, Inc., Asgard International, Inc., Ares Ventures Inc., A. John Leontakianakos, and John Seetoo, alleging securities fraud and negligent misrepresentation. In March 2022, the court granted summary judgment against all defendants on the negligent-misrepresentation claim, finding them jointly and severally liable for $50,000 in compensatory damages plus prejudgment interest at an annual rate of 9 percent. The case was expected to continue on the issue of punitive damages.

The parties later reached a settlement during a conference before Magistrate Judge Robert W. Lehrburger. The agreement required an initial payment of $50,000 within 45 days, but the defendants did not make that payment. McCaffrey chose to enforce the settlement rather than proceed to trial on punitive damages.

James Wishart, identified in the opinion as a retired Gatekeeper officer and as Gatekeeper’s president when he became aware of the case, filed two motions seeking to intervene as an interested party and dismiss the case. McCaffrey filed a motion under Rule 59(e), which allows a court to alter or amend a judgment, asking the court to add approximately $7,000 in interest and approximately $500,000 in settlement funds to the existing judgment, for a requested total of $601,329.54. He also asked the court to enter judgment against Wishart.

Intervention motions

The court denied Wishart’s motions to intervene as untimely. Intervention requires a timely application, whether the person seeks intervention as a matter of right or asks for permission to intervene. Wishart waited eight years after the complaint was filed to seek intervention, and the court noted that he had been actively involved in the litigation on Gatekeeper’s behalf. The court concluded that this delay was clearly untimely.

Motion to alter the judgment

The court denied McCaffrey’s motion to alter the judgment. It held that McCaffrey was not entitled to recover both the settlement amount and the compensatory damages awarded in the earlier summary-judgment order. Under the settlement agreement, the parties exchanged mutual releases covering claims known or unknown through the date of the agreement, except for claims involving breach of the settlement agreement.

The court stated that the settlement entitled McCaffrey to $400,000. If the defendants failed to make the required payments, the agreement entitled McCaffrey to a judgment for the unpaid portion of the settlement value, plus 25 percent of that unpaid amount and reasonable costs and fees of enforcement. The denial of the motion to alter the judgment was without prejudice to McCaffrey filing a motion seeking entry of judgment under those settlement terms.

The court also declined to enter judgment against Wishart. It found that the rules and statute cited by McCaffrey did not provide a legal basis for doing so. Wishart did not attend the settlement conference, was not a defendant in the case, and was not bound by the settlement agreement or by any judgment entered under it.

Disposition

The court denied Wishart’s motion to intervene as untimely and denied McCaffrey’s motion to amend the judgment, without prejudice to a future motion for entry of judgment based on the settlement agreement. The Clerk was directed to terminate the motions at Docs. 339, 370, and 373.