Universitas Education, LLC v. Nova Group, Inc.

Background

The case involved Universitas’s efforts to collect an arbitration award and a later judgment against Nova Group, Inc. The arbitration award arose from a dispute over approximately $30 million in life-insurance proceeds. After Nova failed to pay, the court entered a June 7, 2012 judgment for Universitas in the amount of $30,181,880.30, including prejudgment interest.

During post-judgment collection proceedings, the court entered a 2014 judgment against Daniel E. Carpenter and several entities he controlled, including Avon Capital, LLC. The court found that funds had been fraudulently transferred to those entities, at Carpenter’s direction, in a scheme intended to make the arbitration award and judgment against Nova unrecoverable. Avon was made jointly and severally liable for $6,710,065.92. The opinion states that Avon had not made any effort to satisfy that judgment and that the total judgment of more than $30 million remained unpaid.

Universitas had settled its claims against the Grist Mill Trust for $4,487,007.81 and filed a satisfaction for that amount. Avon also pointed to Universitas’s February 2018 arbitration settlement with Wilmington Savings Funds Society, a successor to Christiana Bank, for $12 million. Avon contended that this settlement should count as a partial satisfaction of the judgment against Nova and could reduce or eliminate Avon’s liability.

Avon’s Motion

Avon moved under Federal Rule of Civil Procedure 60(b)(5), which allows a party to seek relief from a final judgment when the judgment has been satisfied, released, or discharged. Avon asked the court to order Universitas to file an appropriate satisfaction or partial satisfaction and provide enough information for Avon to calculate what it still owed, if anything. Universitas opposed the motion.

Court’s Analysis

The court held that the motion failed because it was not filed within the reasonable time required by Rule 60(c)(1). The court explained that reasonableness depends on the circumstances, including the length of the delay, notice of the circumstances supporting the motion, and possible prejudice. Rule 60 motions generally require highly convincing evidence and good cause for failing to act sooner.

Avon waited nearly six years after learning about the $12 million settlement before filing the motion. The court identified several events that gave Avon an opportunity to seek relief earlier, including a February 2018 press release announcing the settlement, Universitas’s June 2018 filing of a satisfaction concerning the Grist Mill Trust, and a March 2020 filing describing some of Universitas’s collections. Avon attributed the delay to the lack of involvement by its former counsel after September 2014, but the court found that explanation insufficient. The court stated that sophisticated litigants are expected to maintain contact with counsel, retain new counsel when necessary, and stay informed about their cases.

The court also concluded that ordering an accounting would be inequitable. Avon had not attempted to satisfy its own judgment for nearly six years, while Universitas continued trying to collect. The court described Avon’s request as both late under Rule 60 and substantively premature because Avon and nearly all the other turnover respondents had not attempted to pay the judgment. The court did not decide whether the $12 million settlement reduced Avon’s liability.

Disposition

The court denied Avon’s motion in its entirety. The conclusion states that the motion was denied, and the order resolves docket entry number 744 in case number 11-CV-1590.