Opinion
C/A No. 9:20-cv-1072-RMG-MHC
03-16-2021
Kiril Zahariev, Plaintiff, v. Hartford Life and Accident Insurance Company, Defendant.
REPORT AND RECOMMENDATION
Plaintiff, Kiril Zahariev ("Plaintiff" or "Zahariev"), filed this action on March 16, 2020, pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA"), seeking to recover from Defendant, Hartford Life and Accident Insurance Company ("Defendant" or "Hartford"), unpaid long-term disability ("LTD") benefits pursuant to the terms of a group LTD policy issued and administered by Hartford. ECF No. 1. The parties filed a Stipulation of Dismissal with prejudice on October 28, 2020. ECF No. 88. On February 5, 2021, Zahariev filed a Motion to Reopen the Case ("the Motion"). ECF No. 90. Hartford filed a Response in Opposition, ECF No. 91, and Zahariev filed a Reply, ECF No. 96. The Motion is ripe for review.
This matter was referred to the undersigned pursuant to 28 U.S.C.A. § 636(b)(3), and this Report and Recommendation is entered for review by the District Judge. For the reasons set forth below, the undersigned recommends denying the Motion.
I. BACKGROUND
This case was subject to mandatory mediation, with a deadline of October 9, 2020. ECF No. 15. After a joint request by the parties (ECF No. 46), the mediation deadline was extended to October 12, 2020. ECF No. 51. Subsequently, the parties agreed upon a mediator who was not available until October 16, 2020, and the Court extended the mediation deadline accordingly. ECF No. 57.
On August 31, 2020, Zahariev filed a Motion Requesting Appointment of New Mediator, based in part upon learning that the agreed-upon mediator required a retainer from him. ECF No. 63. Hartford indicated no opposition, ECF No. 64, and the Court appointed a mediator for the parties on September 4, 2020. ECF No. 69.
The Court appointed a mediator from the list of approved mediators for the District of South Carolina. http://www.scd.uscourts.gov/medapps/med152.pdf.
Plaintiff and his wife, who attended the mediation, signed an Agreement to Mediate ("the Agreement") on September 21, 2020. ECF No. 9-1 at 3. The Agreement stated in pertinent part:
1. All statements made during the course of the mediation are privileged, are made without prejudice to any party's legal position, and are non-discoverable and inadmissible for any purpose in any legal proceeding.Id. at 1, 2, ¶¶ 1, 6-7.
. . . . .
6. The parties understand that the mediator does not represent any party, and does not provide legal or financial advice. Parties not represented by counsel are urged to seek legal advice from an attorney and to obtain financial advice as needed from qualified professionals. The parties agree that the mediator shall have no liability for any act or omission in connection with the mediation.
7. The parties agree and acknowledge that they are undertaking this mediation freely and voluntarily without coercion or undue influence, each with the benefit of independent counsel. . . .
The parties mediated the case with the appointed mediator on October 15, 2020, and they reached a settlement. Zahariev executed a confidential release ("Release") on October 15, 2020. On October 16, 2020, the Court was notified that the case had been settled at mediation. ECF No. 83; see also ECF Nos. 87 and 91-2. On October 19, 2020, Zahariev emailed the Court that he was "essentially coerced to accept a settlement amount below [his] bottom line" by the mediator. ECF No. 84
Hartford moved to submit a copy of the Release for in camera review, and Zahariev did not object. ECF Nos. 92, 97. The Court has reviewed the Release and references herein the relevant portions that bear on this matter.
On October 22, 2020, the Court entered a conditional Order of dismissal without prejudice, with leave for either party to petition the Court to reopen the case and restore it to the roster within 60 days, pursuant to Rule 60(b) of the Federal Rules of Civil Procedure. ECF No. 85. On October 28, 2020, a Stipulation of Dismissal with prejudice signed by Zahariev and defense counsel was filed. ECF No. 88.
The Order of Dismissal, ECF No. 85, provided:
The court having been advised by counsel for the parties that the above action has been settled,
IT IS ORDERED this action is hereby dismissed without prejudice. If settlement is not consummated within (60) days, either party may petition the Court to reopen this action and restore it to the calendar. Fed. R. Civ. P. 60(b). In the alternative, to the extent permitted by law, either party may within sixty (60) days petition the Court to enforce settlement, and the Court specifically retains jurisdiction to enforce the settlement. Fairfax Countywide Citizens v. Fairfax County, 571 F.2d 1299 (4th Cir. 1978). The dismissal hereunder shall be with prejudice if no action is taken under either alternative within (60) days from the filing date of this order.
Hartford issued a settlement check to Zahariev, which was negotiated on October 24, 2020, and has not been returned. ECF No. 91 at 3. Zahariev does not dispute that he received, negotiated and kept the proceeds from the settlement check.
Zahariev filed the Motion to Reopen the Case, pursuant to Rule 60(b) of the Federal Rules of Civil Procedure, on February 5, 2021. ECF No. 90.
II. DISCUSSION
Zahariev seeks to reopen this case under Rules 60(b)(1), 60(b)(3) and 60(b)(6) of the Federal Rules of Civil Procedure. ECF No. 90. Federal Rule of Civil Procedure 60(b) allows the Court to relieve a party from a final judgment, order, or proceeding for the following relevant reasons: "(1) mistake, inadvertence, surprise, or excusable neglect; . . . (3) fraud . . . , misrepresentation, or misconduct by an opposing party; . . . or (6) any other reason that justifies relief." Fed. R. Civ. P. 60(b)(1), (3) and (6).
Hartford notes that there is no "judgment" to set aside in this case under Rule 60(b). ECF No. 91 at 3. However, several courts, including the Supreme Court and the Fourth Circuit, have held or suggested that Rule 60(b) permits relief to vacate a stipulation of dismissal with prejudice under Rule 41(a)(1)(A)(ii). See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 378 (1994) (suggesting that an underlying lawsuit can be reopened pursuant to Rule 60(b) after the parties filed a stipulation of dismissal with prejudice) (citing Keeling v. Sheet Metal Workers Int'l Ass'n, 937 F.2d 408, 410 (9th Cir. 1991); Fairfax Countywide Citizens Ass'n v. Fairfax Cnty., 571 F.2d 1299, 1302-03 (4th Cir. 1978)); see also Federated Towing & Recovery, LLC v. Praetorion Ins. Co., 283 F.R.D. 644, 659 (D.N.M. 2012).
To prevail on a motion seeking relief under 60(b), a movant must first show that he has met four threshold conditions: (1) the motion is timely; (2) he has a meritorious defense to the action; (3) the opposing party would not be unfairly prejudiced by having the judgment set aside; and (4) a showing of exceptional circumstances. Nat'l Credit Union Admin. Bd. v. Gray, 1 F.3d 262, 264 (4th Cir. 1993) (citing Park Corp. v. Lexington Ins. Co., 812 F.2d 894, 896 (4th Cir. 1987); Werner v. Carbo, 731 F.2d 204, 207 (4th Cir. 1984)); Dowell v. State Fire & Cas. Auto. Ins. Co., 993 F.2d 46, 48 (4th Cir. 1993); see Coomer v. Coomer, 217 F.3d 838 (Table), 2000 WL 1005211, at *4 (4th Cir. July 20, 2000).
District courts must rigorously examine these four predicate requirements because Rule 60(b) relief is "extraordinary" and to be used only in "exceptional circumstances." Coomer, 2000 WL 1005211, at *4 (citing Compton v. Alton S.S. Co., 608 F.2d 96, 102 (4th Cir. 1979)). In the unlikely event the moving party can clear this onerous four-part threshold, he must then satisfy one of the six enumerated factors set forth in Rule 60(b). Id. (citing Dowell, 993 F.2d at 48).
A. Threshold Requirements
Zahariev has not met the threshold requirements for relief under Rule 60(b) because he has not shown that his Motion was timely filed or that exceptional circumstances warrant relief. Accordingly, the undersigned recommends that his Motion be denied.
1. Timeliness
"A motion under Rule 60(b) must be made within a reasonable time . . . after the entry of the judgment or order or the date of the proceeding." Fed. R. Civ. P. 60(c). Courts must determine, based on the circumstances of the case, what constitutes a reasonable time and whether a movant has timely filed a Rule 60(b) motion. See Davis v. Lott, C.A. No.: 3:14-cv-04676-JMC, 2019 WL 718600, at *1 (D.S.C. Feb. 20, 2019) (citations omitted); see also Days Inn Worldwide, Inc. v. Patel, 445 F.3d 899, 906 (6th Cir. 2006) ("What constitutes a reasonable time depends on the facts of each case."). Zahariev did not timely move for relief under Rule 60(b).
The Court was notified on October 16, 2020, that this case had been settled at mediation. ECF No. 83; see also ECF Nos. 87 and 91-2. On October 22, 2020, the Court entered a conditional Order of Dismissal without prejudice, with leave for either party to petition the Court to reopen the case and restore it to the roster within 60 days, pursuant to Rule 60(b) of the Federal Rules of Civil Procedure. ECF No. 85. The sixty-day time frame ran on December 21, 2020, without any motion from Zahariev.
Zahariev emphasizes that, on October 19, 2020, he emailed the Court indicating his displeasure with the settlement, as he was "essentially coerced to accept a settlement amount below [his] bottom line" by the mediator. ECF No. 84. Notwithstanding his email, however, Zahariev proceeded to negotiate the settlement check from Hartford five days later on October 24, 2020. See footnote 4, supra. Moreover, on October 28, 2020, a Stipulation of Dismissal with prejudice signed by Zahariev and defense counsel was filed. ECF No. 88. Zahariev then waited over three months to file his Motion on February 5, 2021.
Zahariev has not provided any explanation for his delay in filing the Motion. The movant bears the burden to show timeliness and must offer a "satisfactory explanation" for any delay. Central Operating Co. v. Util. Workers of Am., 491 F.2d 245, 253 (4th Cir. 1974); Davis, 2019 WL 718600, at *1 (citing Moses v. Joyner, 815 F.3d 163, 166 (4th Cir. 2016)). The Fourth Circuit has upheld denials of 60(b) motions that were filed as little as two and one-half months after entry of the judgment or order from which relief was sought. Consol. Masonry & Fireproofing, Inc. v. Wagman Constr. Corp., 383 F.2d 249, 251 (4th Cir. 1967); see also McLawhorn v. John W. Daniel & Co., 924 F.2d 535, 538 (4th Cir. 1991) (three and one-half months); Central Operating Co., 491 F.2d at 253 ("almost four months"); Jones v. Richmond, 106 F.R.D. 485, 488-90 (E.D. Va. 1985) (discussing Central Operating and Consolidated Masonry and denying as untimely 60(b) motion filed "over three months" after movant received notice of grounds for the motion).
In this case, Zahariev's complaints about the mediation and settlement existed before the Court entered its Conditional Order of Dismissal. However, he waited over three and a half months after the Court's Conditional Order of Dismissal was entered, over a month and a half after the deadline set forth in the Conditional Order had passed, and over three months after the Stipulation of Dismissal with prejudice was filed before filing his Rule 60(b) Motion. Without a satisfactory explanation from Zahariev for this delay in moving to reopen the case, the undersigned recommends denying the Motion as untimely.
2. Exceptional Circumstances
Moreover, Zahariev has not shown exceptional circumstances warranting relief under Rule 60(b). The gravamen of his Motion is that he was coerced by the mediator to accept a settlement amount that was less than the value of his case and below his bottom line. See ECF Nos. 84, 90. However, "a settlement agreement enjoys great favor with the courts[;] consequently, it is only in the most extraordinary circumstances that such a pact will be vacated." Claiborne v. City of Greenville, S.C., No. CV 6:16-2910-TMC-KFM, 2018 WL 11275376, at *3 (D.S.C. Mar. 2, 2018), aff'd sub nom. Claiborne v. Greenville S.C., 746 F. App'x 213 (4th Cir. 2018) (quoting Mungin v. Calmar Steamship Corp., 342 F. Supp. 484, 485 (D. Md. 1972)).
Although not specifically stated, it appears Zahariev is attempting to void the Release he signed in settlement of the case, which gave rise to the Stipulation of Dismissal with prejudice. Upon repudiation of a settlement agreement terminating litigation pending before it, a district court "has the authority under Rule 60(b)(6) to vacate its prior dismissal order and restore the case to its docket." Gant v. City of N. Charleston, No. CV 2:08-3257-CWH, 2010 WL 11651901, at *2 (D.S.C. July 13, 2010) (citing Fairfax Countywide Citizens Ass'n v. Fairfax Cnty., 571 F.2d 1229, 1303 (4th Cir. 1978). "Importantly, though, the cases allowing for dismissal tend to involve a court's dismissal order in situations where one party refuses to comply with a settlement agreement and the other party seeks to reopen proceedings in the case." Id. (emphasis in original). Under such circumstances, it can fairly be said that "exceptional circumstances"—the other party's unexpected repudiation of the settlement agreement that was behind the dismissal of the case—exist. Id.
Here, however, Zahariev is not seeking to vacate the Court's Conditional Order of Dismissal without prejudice but rather the Stipulation of Dismissal with prejudice subsequently filed by the parties. Moreover, the party seeking to reopen the case—Zahariev—is the same party that is now attempting to repudiate the settlement agreement that served as the basis for that Stipulation of Dismissal with prejudice. Under these circumstances, Zahariev's purported repudiation of the Release he signed does not constitute an exceptional circumstance warranting the reopening of the case. The broad power granted by Rule 60(b) is "not for the purpose of relieving a party from free, calculated and deliberate choices he has made." Id. (citation omitted). Having second thoughts about the results of a settlement agreement does not justify setting aside an otherwise valid agreement. Young v. FDIC, 103 F.3d 1180, 1195 (4th Cir. 1997) (citing Petty v. Timken Corp., 849 F.2d 130, 133 (4th Cir. 1988)).
Zahariev contends that he did not make a free, deliberate choice to enter into the Release but, instead, was under duress by the mediator. "Under South Carolina law, duress has been defined as coercion that puts a person in such fear that he is 'bereft' of the quality of mind essential to the making of a contract and the contract was thereby obtained as a result of this state of mind." Claiborne, 2018 WL 11275376, at * 3 (citing Hyman v. Ford Motor Co., 142 F. Supp. 2d 735, 744 (D.S.C. 2001); Cherry v. Shelby Mut. Plate Glass & Cas. Co., 4 S.E.2d 123 (S.C. 1939) (duress is defined as "a condition of the mind produced by improper external pressure of influence that practically destroys the free agency of a party and causes him to do an act or form a contract not of his own volition")).
"Generally, only improper influence from one of the contracting parties to a settlement will be sufficient to set aside a settlement agreement on the basis of fraud, duress or coercion." Claiborne, 2018 WL 11275376, at * 3 (citing Clark v. Sch. Bd. of Bradford Cty., Fla., No. 3:09-CV-901-J-34TEM, 2010 WL 4696063, at *4 (M.D. Fla. Oct. 13, 2010), report and recommendation adopted, No. 3:09-CV-901-J-34TEM, 2010 WL 4694840 (M.D. Fla. Nov. 12, 2010)). Zahariev has not made any allegation of duress pertaining to Hartford.
The undersigned is aware of one case in this District where a court has considered whether a settlement agreement should be set aside based upon alleged misconduct by a mediator improperly influencing and coercing a party to the agreement. See id. Like the Claiborne case, however, the behavior of the mediator as alleged by Zahariev fails to rise to the level necessary to warrant the extraordinary remedy of setting aside an executed Settlement Agreement.
In general, Zahariev contends that during mediation the mediator: (a) failed to fully define and describe the mediation process and his role; (b) was advocating on Hartford's behalf; (c) improperly coerced Zahariev to accept Hartford's discount rate instead of using as a starting point the Moody's Seasoned Corporate Bond Yield supplied by Zahariev which, in effect, drastically reduced the present value of future benefits and consequent settlement offer; (d) did not require Hartford to compromise in a reciprocal manner; (e) was incorrect that "he believed ERISA settlement moneys [sic] is not taxable"; (f) did not allow Zahariev to leave the mediation; (g) barraged Zahariev with offenses; and (h) "took a discriminatory approach against [Zahariev] about whose medical history he knows absolutely nothing." ECF No. 90 at 2-5.
Zahariev first argues that the mediator did not address all of the requirements under the local rules for mediation and did not adhere to the standards of conduct for mediators. It is undisputed, however, that Zahariev received a copy of the Scheduling Order in this case in writing, outlining the mediation requirements. ECF No. 15 at 2, ¶ 7. The Scheduling Order specifically referenced the applicable Local Civil Rules 16.04 - 16.12, which explain in detail that mediation is an "informal process in which a third-party mediator facilitates settlement discussions between the parties. Any settlement is voluntary. In the absence of settlement, the parties lose none of their rights to trial by judge or jury." Local Civil Rule 16.04 (DSC). The Local Civil Rules outline the mediation process, as well as the duties of the parties, representatives, attorneys and mediator at mediation. See Local Civil Rules 16.04-16.12 (DSC). Indeed, Zahariev was aware of and familiar with the Local Civil Rules regarding mediation, having filed a Motion Requesting Appointment of New Mediator in advance of mediation, pursuant to and "[i]n accordance with Local Rule 16.06 (D), D.S.C." ECF No. 63.
Moreover, in advance of mediation, Zahariev was informed in writing of the role of the mediator and his option to seek independent legal and financial counsel. ECF No. 91-1 at 6-7. He had several weeks after signing the Agreement to Mediate in which to consult legal counsel regarding the substantive issues or a financial professional regarding the appropriate present value discount rate and taxability of any settlement payment. In addition, Zahariev had more than five months between the date of the Court's order setting the mediation deadline and the date the mediation occurred to seek legal or financial advice in preparation for the mediation. He chose not to do so.
Notably, Zahariev included a declaration from his wife, who attended the mediation with him in the capacity as a witness, indicating she has a "Master's Degree in Corporate Finance" and is "currently employed in the banking sector." ECF No. 90-1 at 1, ¶ 1. She also attested that Zahariev produced a detailed analysis in support of his calculation of a discount rate for future benefits. Id. at ¶ 2.
Zahariev counters that the terms of the Agreement to Mediate are premised on an impartial mediator, arguing that the mediator was biased and advocated on Hartford's behalf, coercing him to using a lower discount rate without requiring reciprocal compromises by Hartford. ECF No. 96 at 3. As Zahariev was not present in the room with Hartford and the mediator, he is speculating about the mediator's interactions with Hartford. Moreover, as to being incorrect about the taxability of the settlement, even Zahariev concedes the mediator only "believed" the settlement proceeds were not taxable and has shown that he could have found that information out. ECF No. 90 at 3. Moreover, the Mediation Agreement signed by Zahariev expressly provides that the mediator "does not provide legal or financial advice." ECF No. 9-1 at 2, ¶ 6.
With regard to Zahariev's other general allegations about the mediator, it appears many of them pertain to comments or actions by the mediator discussing the weaknesses of Zahariev's underlying ERISA case, and "it is generally accepted that it is the job of the mediator to assess the strengths and weaknesses of each party's case." Claiborne, 2018 WL 11275376, at *4 (citing Patnaude v. Sears Pest Control, Inc., No. 08-61980-CIV, 2009 WL 10667066, at *7 (S.D. Fla. June 1, 2009) ("[T]he Court notes that it is a mediator's function to apprise each party of the strengths and weaknesses of its claims and defenses, as well as the potential liability that a party exposes himself to if he chooses to continue to litigate.")). Moreover, while Zahariev may have been offended or angered by some of the mediator's alleged comments, he has failed to demonstrate that the mediator coerced him through these statements or improperly influenced Zahariev into signing the Release through any means.
Zahariev contends that prior to mediation, he "had Hartford pinned against the wall with very limited maneuverability," and he highlights "his demonstrated ability to navigate the murky waters of ERISA and make provocative motions, including his Motion to Conduct Discovery, Motion to Compel Production (ECF 71), and Motion to Lift Protective Order (ECF 77)." ECF 90 at 4-5. Under the circumstances, it is difficult to imagine the mediator coerced him into settling his case. Zahariev argues, however, that his acumen in this case is evidenced in writing, not while under the stress of an in-person mediation with a mediator speaking to him in an offensive manner while advocating on behalf of the other party. He emphasizes that he represented himself, without the benefit of counsel; that he has not completed formal education in the United States; that he cannot express himself very well in spoken English; and that his writing skills are superior to his speaking skills, at least when he is not under duress. Id. at 4. However, Zahariev undertook to represent himself in this matter and was advised in the Agreement to seek legal advice from an attorney. ECF No. 9-1 at 2, ¶ 7. Taking all of Zahariev's allegations as true, they do not warrant voiding the Release and reopening this case.
Ultimately, all of Zahariev's arguments ignore that he had an alternative to executing the Release: not to settle the case and to go to trial. Absent an allegation that a party has no other alternative than to enter into an agreement, there is no claim for duress. See id. (citing Bekhor v. Josephthal Group, Inc., No. 96 Civ 4156(LMM), 2000 WL 1521198 at *3-*4 (S.D.N.Y. Oct. 13, 2000) (finding that despite a "very hostile atmosphere during the negotiations," there was no duress where plaintiff "always had the alternative of refusing to settle . . . and pursuing his legal claims"); Batac Dev. Corp. v. B & R Consultants, Inc., 98 Civ. 721(CSH), 1999 WL 76873, at *4-*5 (S.D.N.Y. Feb. 16, 1999) (no claim for duress where although plaintiff "felt intimidated and 'ganged up' on he admittedly could have left the office. [Plaintiff] could have simply walked out of the meeting . . . the fact remains that an obvious alternative to waiving his right to payment was available to him"); Reid v. IBM Corp., 95 Civ. 1755(MBM), 1997 WL 357969 at *7 (S.D.N.Y. June 26, 1997) (no duress where "[p]laintiff could have rejected the Release and pursued his legal remedies")). The alleged behavior in this case fails to rise to the level necessary to overwhelm and destroy Zahariev's free will to the point that his signing of the Release lacked his volition.
While Zahariev alleges that he attempted on three occasions to leave mediation but could not, the allegations fall short of evidencing that he had no alternative to refusing to settle. Indeed, he signed the Release, which specifically states that: "[H]e has carefully read this Release and fully understands and knows the terms thereof, and signs the same voluntarily as his own free act, and that he had an opportunity to consult with legal counsel of his choice regarding the release." More importantly, however, he ignores the precise steps he took after the mediation, outside the presence of the mediator, during which he had ample time to reflect.
Despite sending an email to the Court on October 19, 2020, that he was "essentially coerced to accept a settlement amount below [his] bottom line" by the mediator, ECF No. 84, Zahariev accepted the settlement proceeds from Hartford and negotiated the settlement check. To date, he has not returned the settlement proceeds to Hartford. "The general rule in South Carolina is that when a party seeks to set aside a release, he must first return any consideration received by him for the release." Hyman, 142 F. Supp. 2d at 747-48 (citing Gray v. Petoseed Co., 1997 WL 716454, 129 F.3d 1259 (4th Cir. 1997) (table) (affirming dismissal of fraud because under South Carolina law, when a party to a compromise settlement wishes to avoid a valid release and be restored to his original rights, he must restore the other party to his original position by returning or offering to return the consideration received under the compromise); McCarty v. Kendall Co., 242 F. Supp. 495 (W.D.S.C. 1965) (action to avoid a release allegedly induced by fraud dismissed because of plaintiff's failure to return or tender consideration given for settlement); Dunaway v. United Ins. Co. of Am., 123 S.E.2d 353, 354 (S.C. 1962) (failure to tender or return consideration given for settlement precluded recovery in action for fraudulent inducement of settlement); State Farm Mut. Auto. Ins. Co. v. Turner, 399 S.E.2d 22, 23 (S.C. 1990) ("it is well settled that one who seeks to avoid the effects of a release must first return or tender consideration paid thereof")).
When the Court entered its Conditional Order of Dismissal on October 22, 2020, specifically informing the parties that either one could move to restore the case to the roster within 60 days, Zahariev did not do so. Instead, he negotiated the settlement check on October 24, 2020, and on October 28, 2020, a Stipulation of Dismissal with prejudice signed by Zahariev and defense counsel was filed. ECF No. 88. All of his actions after the mediation—accepting the settlement money and filing the stipulation of dismissal with prejudice, after being informed by the Court of the ability to file a Rule 60(b) motion—are wholly inconsistent with someone acting under duress.
As stated above, relief from a settlement agreement and relief from an order of the court are extreme remedies to be granted by the court only upon a showing of exceptional circumstances. Claiborne, 2018 WL 11275376, at *5. Zahariev has failed to make such showings, and his claim of coercion, bias, and duress is not substantiated by the record. Accordingly, the undersigned recommends denying the Motion.
B. Remaining Conditions
Additionally, Zahariev cannot satisfy any of the specific requirements of Rule 60(b).
1. Rule 60(b)(1) Relief is Not Appropriate.
Rule 60(b)(1) provides for relief from a judgment based on mistake, surprise, inadvertence, or excusable neglect. Zahariev does not explicitly identify a specific mistake, surprise, inadvertence or excusable neglect supporting his request for relief under Rule 60(b)(1), although he appears to suggest surprise with the alleged behavior of the mediator at mediation that resulted in Zahariev settling his case for less than he intended. See ECF Nos. 84, 96 at 3-4. Alternatively, he may be arguing that it was a mistake for him to enter into the Release. However, neither reason supports relief under Rule 60(b)(1). See In re Caldwell/VSR, Inc., 353 B.R. 130, 136 (Bankr. E.D. Va. 2005) ("[O]ne party's mistake as to the facts of a settlement agreement does not justify relief from the settlement agreement.") (quoting In re Harbor Fin. Group, Inc., 303 B.R. 124, 133-134 (Bankr. N.D. Tex. 2003)); see also Cashner v. Freedom Stores, Inc., 98 F.3d 572, 577 (10th Cir. 1996) ("Generally speaking, a party who takes deliberate action with negative consequences . . . will not be relieved of the consequences [by Rule 60(b)(1)] when it subsequently develops that the choice was unfortunate.") (quoting 7 Moore, Federal Practice ¶ 60-22 [2], p. 60-182)); Brown v. United States, No. 2:09-CR-00295-DCN-3, 2014 WL 2871398, at *3 (D.S.C. June 24, 2014) ("The purpose of Rule 60(b) is to correct mistakes made in the issuance of a final judgment or order[.]").
Zahariev argues that he "approached the mediation process" in good faith, ECF No. 90 at 2; however, he also states that "[c]oming to the mediation [he] had no intent and desire to settle the case." Id. at 5. To the extent Zahariev's statement may be interpreted to suggest he did not want to participate in mediation, Local Civil Rule 16.05 provides that "[p]arties may request relief from any mediation requirement by motion, and relief shall be freely given for good cause shown." Zahariev did not file a motion to be relieved from the mediation requirement.
For the same reasons set forth in detail above, see Section II.A.2, supra, Zahariev has failed to establish any mistake, surprise, inadvertence or excusable neglect in the issuance of a final judgment or order supporting relief under Rule 60(b)(1). For the additional reason that Zahariev cannot meet the individual requirements of Rule 60(b)(1) to re-open this case, the undersigned recommends denying the Motion.
2. Rule 60(b)(3) Relief is Not Appropriate.
Plaintiff also argues that the Court should vacate the judgment under Rule 60(b)(3) based on Hartford's "false responses to Plaintiff's Request for Production and Answers to Interrogatories . . . in addition to the mediators [sic] misconduct." ECF No. 96 at 2.
A court may grant relief from final judgment under Rule 60(b)(3) in case of "fraud[,] . . . misrepresentation, or other misconduct of an adverse party." Fed. R. Civ. P. 60(b)(3). A moving party must establish three factors in order to state a successful Rule 60(b)(3) motion: "(1) the moving party must have a meritorious defense; (2) the moving party must prove misconduct by clear and convincing evidence; and (3) the misconduct prevented the moving party from fully presenting its case." Samuel v. Dickey, No. 4:12-CV-2277-TLW-TER, 2016 WL 11410293, at *6 (D.S.C. Feb. 17, 2016), report and recommendation adopted, No. 4:12-CV-2277-TLW, 2016 WL 1253181 (D.S.C. Mar. 31, 2016) (quoting Schultz v. Butcher, 24 F.3d 626, 630 (4th Cir. 1994)).
To the extent Zahariev premises the Motion on alleged fraud or other misconduct by the mediator, Rule 60(b)(3) is specifically limited to conduct by an "adverse party." Fed. R. Civ. P. 60(b)(3); Mitchell v. Rivera, C/A No. 4:13-1949-TMC, 2015 WL 12867811, at *1 (D.S.C. Oct. 13, 2015), aff'd, 653 F. App'x 784 (4th Cir. 2016); see also Sherman v. Verizon Va., Inc., 220 F.R.D. 260, 262-63 (E.D. Va. 2002), aff'd in part, dismissed in part, 55 F. App'x 136 (4th Cir. 2003) (holding that relief under Rule 60(b)(3) was unavailable to plaintiff claiming fraud or misconduct by her former attorney who was not an adverse party, and that the adverse party (i.e., opposing party in the litigation) "must be the author of any fraud, misrepresentation, or misconduct" relied on for Rule 60(b)(3) relief). Thus, Zahariev's allegations regarding the mediator do not support his claim for relief under Rule 60(b)(3).
As to the discovery responses by Hartford, Zahariev takes issue with "Hartford's supplemental responses to interrogatories and RFP's [that] were submitted to Plaintiff on October 14, 2020 at around 6:30pm, the night before mandatory mediation on October 15, 2020." ECF No. 96 at 2. According to Zahariev, Hartford's original responses were false and it was "impossible for [him] to properly assess the newly discovered evidence in a timely manner, considering the issues involving the mediation process already expressed in Plaintiff's Motion to Reopen Case." Id. However, Zahariev ignores that a party has an ongoing duty to supplement or correct its disclosure or discovery response "in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing." Precision Fabrics Grp., Inc. v. Tietex Int'l, Ltd., 297 F. Supp. 3d 547 (D.S.C. 2018) (quoting Fed. R. Civ. P. 26(e)(1)(A)).
Zahariev raises the argument of purported fraud by Hartford, as opposed to the mediator, for the first time in his Reply brief. It is improper to raise a new argument in a reply brief. See, e.g., EEOC v. Freeman, 961 F. Supp. 2d 783, 801 (D. Md. 2013); Tyndall v. Maynor, 288 F.R.D. 103, 108 (M.D.N.C. 2013). The Court's consideration of this new argument, however, does not prejudice Hartford, because the Court rejects the new argument.
Zahariev contends that receiving the supplemental responses the night before mediation made it impossible to properly assess the "newly discovered information." ECF No. 96 at 2. However, he had the information prior to mediation and has not shown how Hartford prevented him from presenting his case or otherwise representing himself at mediation. See Square Const. Co. v. Washington Metro. Area Transit Auth., 657 F.2d 68, 71 (4th Cir. 1981) ("A party seeking relief under subsection (3) of the rule must also prove the misconduct complained of by clear and convincing evidence and demonstrate that such misconduct prevented him from fully and fairly presenting his claim or defense."); see also In re Shen, 501 B.R. 216, 223 (Bankr. S.D.N.Y. 2013) (finding that movant bank failed to meet its burden under Rule 60(b)(3) where bank failed to show how any alleged fraud prevented it from fully and fairly presenting its case).
Thus, Zahariev has failed to meet his burden to show that the conduct complained of prevented him from fully and fairly presenting or mediating his case. For the reasons set forth herein, the undersigned recommends denying the Motion under Rule 60(b)(3).
3. Rule 60(b)(6) Relief is Not Appropriate.
Federal Rule of Civil Procedure 60(b) authorizes a district court to grant relief from a final judgment for five enumerated reasons or for "any other reason that justifies relief." Fed. R. Civ. P. 60(b)(6). This sixth criterion is a catch-all provision giving the court broad equitable power to grant relief from judgments "for any other reason." This clause, however, is generally invoked only in "extraordinary circumstances." Compton, 608 F.2d at 102. As set forth in detail above, the instant case does not present the requisite "extraordinary circumstances" justifying relief under Rule 60(b)(6).
IV. RECOMMENDATION
For the reasons set forth above, the undersigned RECOMMENDS Zahariev's Motion to Reopen (ECF No. 90) be DENIED.
The parties are referred to the Notice Page attached hereto.
/s/_________
Molly H. Cherry
United States Magistrate Judge March 16, 2021
Charleston, South Carolina
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. "[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must 'only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'" Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed. R. Civ. P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); see Fed. R. Civ. P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
Post Office Box 835
Charleston, South Carolina 29402
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).