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Word v. U.S. Commodity Futures Trading Commission

United States Court of Appeals, Eleventh Circuit

May 23, 2019

CALVIN LEE WORD, Petitioner,

          Petition for Review from the United States Commodity Futures Trading Commission No.: 89-R300

          Before WILSON, JILL PRYOR and TALLMAN, [*] Circuit Judges.


         Petitioner Calvin Word seeks review of a 2016 order (the "2016 Order") entered by the United States Commodity Futures Trading Commission (the "CFTC" or the "Commission") denying his motion to set aside a 1992 default judgment order (the "1992 Order") requiring him to pay $17, 511.91 in reparations plus interest to June and Louie Stidham (the "Stidhams") for violations of the Commodity Exchange Act, 7 U.S.C. §§ 1, et seq. (the "Act"). On October 11, 2016, after Word sought review of the 2016 Order, both Respondents filed a motion to dismiss the petition for lack of jurisdiction [Dkt. No. 14] (the "Motion") because Word failed to post the required appeal bond under 7 U.S.C. § 18(e). We grant their Motion and dismiss Word's petition for want of jurisdiction.


         This case has a long history. The Stidhams were customers of a failed commodity futures trading merchant. In 1989, the Stidhams filed a reparation complaint with the CFTC against traders Word, Madlyn L. Ferro, Andrew C. Anderson, and their employer, First Commodity Corporation of Boston ("FCCB"). The Stidhams alleged that Word and the other respondents had intentionally and fraudulently misrepresented material facts in soliciting and maintaining an account to trade commodity futures contracts. Ferro answered the reparation complaint and moved to dismiss the Stidhams' claims against her, asserting that their claims were barred by the two-year statute of limitations set forth in 7 U.S.C. § 18(a) (1988). After being served with legal process under the Commission's regulations, [1] Word, Anderson, and FCCB did not respond to the Stidhams' complaint or otherwise participate in the proceedings. The Stidhams moved for default against those who did not appear, including Word.

         A CFTC administrative law judge (an "ALJ") then issued the 1992 Order denying the motion for default against Ferro and granting Ferro's motion to dismiss because the statute of limitations had run. But the 1992 Order entered default against Word and the others, stating that they also might have been able to assert a successful statute-of-limitations defense, but concluding that they had waived the defense by not raising it in any answer. The 1992 Order required Word, FCCB, and Anderson to pay the Stidhams reparation in the amount of $17, 511.91, plus 4.58 percent interest compounded annually from April 7, 1986, [2]until the date of payment. Significantly, Word-unaware that the default had been entered against him-did not appeal the default order to the Commission.

         The Stidhams then filed a complaint in the United States District Court for the Northern District of Georgia to enforce the reparations award against Word under 7 U.S.C. § 18(d) (1988). After significant delay caused by Word's recalcitrance, including avoiding service, filing a bankruptcy petition, and refusing to participate in discovery, the district court struck Word's answer in the litigation and entered default judgment (the "1996 Order") against him as a sanction. The 1996 Order required Word to pay the Stidhams $37, 402.35, which included the original reparation award, and accumulated interest plus costs and attorneys' fees.

         In 2011, Word filed a motion to set aside the 1992 Order on grounds of excusable neglect. An ALJ denied that motion under 17 C.F.R. § 12.23(b), which requires motions to set aside default orders in CFTC reparation cases for excusable neglect to be filed within one year of the issuance of the order. On appeal, the Commission affirmed the ALJ's decision (the "2012 Order"), declining to waive the one-year filing deadline because doing so would prejudice the Stidhams, who had already spent 23 years trying to collect the money they lost. See 17 C.F.R. § 12.4(b). Word did not seek judicial review of that 2012 Order.

          In 2015, Word filed a second motion to set aside the 1992 Order and dismiss the Stidhams' reparation complaint. In his latest motion, Word contended that the Stidhams' failure to file their reparation complaint within the two-year statutory time limit set forth in 7 U.S.C. § 18(a) deprived the CFTC of jurisdiction to consider the complaint and rendered the reparation award against him void. In response to Word's motion, the Stidhams challenged Word's assertion that the two-year statute of limitations was jurisdictional.

         On July 29, 2016, the Commission issued the 2016 Order denying Word's second motion to set aside the 1992 Order, holding that the two-year statute of limitations in § 18(a)(1) was not jurisdictional, and, thus, the Commission had the power to enter the 1992 Order against Word. The Commission held that because Word had no jurisdictional challenge to the default order, he was once again barred from moving to vacate the order by the one-year time limit in 17 C.F.R. § 12.23(b). The Commission further held that, even if Word's motion to vacate was properly before the Commission, it would have denied the motion because he had waived the statute of limitations defense by failing to raise it in any answer to the Stidhams' original complaint. The Commission noted that Word could petition for review of its reparation order to a United States Court of Appeals, and that, under 7 U.S.C. § 18(e), such a petition would not be effective unless, in conformance with the statute, within 30 days of the date of the order he filed with the court "a bond equal to double the amount of any reparation award."

         On August 4, 2016, Word filed here a petition for review of the 2016 Order. He also filed a motion for leave to appeal in forma pauperis (IFP). However, he failed to file an appeal bond with the Clerk of Court or elsewhere.

         On September 1, 2016, according to the Stidhams, Word owed them a total of approximately $128, 900, including still accumulating interest, costs, and attorneys' fees. The Stidhams collected a partial payment of $75, 211.75 from a 2016 disbursement of funds by the receiver of a limited liability company partly owned by Word, in accordance with a court order obtained in a state court proceeding initiated by the Stidhams. But even after the disbursement, the Stidhams contend that Word still owed them over $50, 000 on account of the ever-increasing costs, fees, and interest arising from the 1992 Order.[3]

         On October 11, 2016, both Respondents filed a motion to dismiss Word's current petition for review for lack of jurisdiction because Word has never posted any bond as required by 7 U.S.C. § 18(e), the congressional directive governing judicial review of CFTC reparation orders. Word responded to the motion pro ...

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