Justia U.S. 11th Circuit Court of Appeals Opinion Summaries

SE Property Holdings, LLC, and affiliated entity Vision-Park Properties, LLC, (collectively “Vision”) appealed a district court’s order upholding decisions in the bankruptcy restructuring proceedings of Seaside Engineering and Surveying, LLC. Seaside was a civil engineering and surveying firm whose principal shareholders prior to all bankruptcy litigation were John Gustin, James Mainor, Ross Binkley, James Barton, and Timothy Spears. The principals branched out from their work as engineers and entered the real estate development business, forming Inlet Heights, LLC, and Costa Carina, LLC. These wholly separate entities borrowed money from Vision with personal guaranties from the principals. Inlet Heights and Costa Carina defaulted on the loans, and Vision filed suit to recover amounts under the guaranties. Gustin filed for Chapter 7 bankruptcy protection for himself. Mainor and Binkley followed suit. All were appointed Chapter 7 trustees. Gustin, Mainor, and Binkley listed their Seaside stock as non-exempt personal property in their required filings. The Chapter 7 trustee in the Gustin case conducted an action to sell Gustin’s shares of Seaside stock. Gustin bid $95,500.00, and Vision defeated the bid with a purchase price of $100,000.00. Seaside attempted to block sale of Gustin’s stock to Vision, but the bankruptcy court confirmed the sale. Following the sale of Gustin’s stock, Seaside filed for Chapter 11 bankruptcy protection. Seaside proposed to reorganize and continue operations as the entity Gulf Atlantic, LLC (“Gulf”), an entity managed by Gustin, Mainor, Binkley, and Bowden, and owned by four members, the respective irrevocable family trust of each manager. The outside equity holders would receive promissory notes with interest accruing at a rate of 4.25% in exchange for their interest in Seaside and thus be excluded from ownership in Gulf. The bankruptcy court approved the Second Amended Plan of Reorganization over Vision's objection. The district court affirmed the bankruptcy court. After careful review of the record, the Eleventh Circuit affirmed. View "SE Property Holdings, LLC v. Seaside Engineering & Surveying, Inc." on Justia Law

DVI Receivables XIV, LLC; DVI Receivables XVI, LLC; DVI Receivables XVII, LLC; DVI Receivables XVIII, LLC; DVI Receivables XIX, LLC; DVI Funding, LLC (collectively, the "DVI Entities"); Lyon Financial Services, Inc. d/b/a U.S. Bank Portfolio Services ("Lyon"); and U.S. Bank, N.A. ("USB") (collectively, "Appellants") appealed a district court decision to affirm a bankruptcy court's final order awarding appellee Maury Rosenberg attorney's fees and costs. The DVI Entities filed an involuntary bankruptcy petition against appellee Rosenberg. After the bankruptcy court dismissed the petition, the court awarded attorney's fees and costs to appellee Rosenberg. The bankruptcy court granted Rosenberg's motion and dismissed the involuntary petition with prejudice. The bankruptcy court found, inter alia, that the DVI Entities were not eligible creditors of Rosenberg because his 2005 guaranty did not run to the DVI Entities. The DVI Entities therefore lacked standing as a matter of law to file an involuntary petition against Rosenberg. In his adversary complaint, Rosenberg asserted federal claims to recover attorney's fees, costs, and damages he incurred because of the filing of the involuntary petition, which the bankruptcy court had dismissed. After careful review of the record and the parties' briefs, and following oral argument, the Eleventh Circuit affirmed in part, vacated in part, and remanded for further proceedings. The Court affirmed the district court's affirmance of the bankruptcy court's award of the following three categories of attorney's fees and costs: (1) fees to obtain the dismissal, (2) appellate fees, and (3) fees on fees. The Eleventh Circuit vacated the district court's affirmance of the bankruptcy court's award of the fourth category of fees and costs, those incurred to prosecute Rosenberg's bad-faith claims for damages, as prematurely entered. The case was remanded back to the district court: (1) to deduct from the total award the limited amount of fees and costs that were incurred solely for the legal work done to prosecute Rosenberg's bad-faith claims for damages; and (2) to reconsider that deducted fee and cost amount along with the motion to supplement. View "DVI Receivables XIV, LLC, et al. v. Rosenberg" on Justia Law

This dispute arose from violations issued by the Department of Labor's Mine Safety and Health Administration. At issue was whether the word "corporation" includes limited liability companies (LLCs) for purposes of the Federal Mine Safety and Health Act of 1977 (the Mine Act), 30 U.S.C. 801 et seq. The court concluded that the terms "corporation" and "corporate operator" in the Mine Act are ambiguous. Applying Chevron deference, the court concluded that the Secretary's interpretation is reasonable where, most importantly, construing section 110(c) to include agents of LLCs is consistent with the legislative history. Therefore, the court held that an LLC is a corporation for purposes of the Mine Act and that section 110(c) can be used to assess civil penalties against agents of an LLC. Because substantial evidence supported the ALJ's decision to hold petitioners personally liable for the order at issue, the court affirmed on this issue. Finally, the order underlying their civil penalties was not duplicative. Accordingly, the court affirmed the ALJ's decision.View "Sumpter, et al. v. Secretary of Labor, et al." on Justia Law

Plaintiffs, seafarers employed with Cunard Line cruise ships, filed a class action complaint against Carnival Corp. and Carnival PLC, a dual-listed company, alleging failure to provide maintenance and cure in accordance with general United States maritime law and the Jones Act, 46 U.S.C. 50101. The court held that Carnival Corp. & PLC was not properly suable in this action. Plaintiffs could have brought an action against Carnival PLC (the Cunard Line's parent company), but chose not to, instead making a tactical decision to pursue potentially broader claims against Carnival Corp. & PLC. Accordingly, the court affirmed the district court's dismissal of the complaint.View "Sabo, et al. v. Carnival Corp., et al." on Justia Law

This case is one of many "clawback" actions initiated by the Receiver to recover profits from investors in a Ponzi scheme run by Arthur Nadel. The Lee Defendants appealed the district court's grant of summary judgment in favor of the Receiver on the Receiver's complaint under Florida Uniform Fraudulent Transfer Act (FUFTA), Fla. Stat. 726.101 et seq. The receiver appealed the denial of prejudgment interest on the profits Lee was ordered to return to the receivership entities. Since the undisputed facts show that Nadel's transfers to the Lee Defendants satisfy all the elements of FUFTA, the district court's grant of summary judgment in favor of the Receiver is due to be affirmed as is the judgment for the Receiver and against the Lee Defendants in the amount of $935,631.51. The court reversed and remanded with instructions for the district court to apply the factors in Blasland, Bouck & Lee, Inc. v. City of N. Miami, to determine whether equitable considerations justify denying or reducing a prejudgment interest award in light of Florida's general rule that prejudgment interest is an element of pecuniary damages. View "Wiand v. Lee, et al." on Justia Law

The FTC filed suit against defendants, alleging that they violated the Federal Trade Commission Act (FTC Act), 15 U.S.C. 45(a), and the Telemarketing and Consumer Fraud and Abuse Prevention Act (the Telemarketing Act), 15 U.S.C. 6102, by deceiving consumers in the sale of trade-association memberships. According to the FTC, consumers were led to believe that they were purchasing major medical insurance, but what they actually received were memberships in a trade association that offered only limited discounts for certain medical care. The district court entered a preliminary injunction against IAB, the individual Wood defendants, and IAB-affiliated entities. The court affirmed, concluding that the FTC met its burden of proof for injunctive relief by demonstrating that it was likely to succeed on the merits and that an injunction would serve the public interest; the district court did not abuse its discretion in freezing defendants' assets; and the McCarran-Ferguson Act, 15 U.S.C. 1012, does not preempt the FTC's claims. View "Federal Trade Commission v. IAB Marketing Assoc., LP, et al." on Justia Law

Plaintiff filed suit against MAM, a Delaware corporation. Plaintiff was a MAM secured creditor and he held two Convertible Promissory Notes. Plaintiff's complaint alleged claims related to the Security Agreement that each note was secured by. MAM failed to respond to plaintiff's complaint and two weeks after plaintiff moved for entry of default judgment, Michael Gleicher moved to intervene in the case. Gleicher sought leave to intervene in two capacities: (1) as a MAM general creditor holding two Convertible Promissory Notes; and (2) as a MAM shareholder. The court concluded that Gleicher cited no source giving a general creditor a right to defend his debtor from another general creditor for the sole purpose of defeating the latter's claim. Further, Gleicher cited no source giving a corporation's shareholder the right to intervene in a suit brought against the corporation by one of its creditors for the sole purpose of defeating the creditor's claim. Gleicher has not established, nor could he, that he suffered an injury-in-fact as a result of plaintiff's filing of this lawsuit. Therefore, Gleicher lacked standing to intervene and he lacked standing to appeal the district court's final judgment. Accordingly, the court dismissed the appeal. View "Hawes v. Gleicher" on Justia Law

This interlocutory appeal arose from an action filed by the FDIC, as receiver for Integrity Bank, against former Bank directors and corporate officers (defendants). The FDIC sought to recover losses that the Bank suffered as a result of defendants' alleged negligent conduct. The court certified questions of state law regarding the standard of care established in O.C.G.A. 7-1-490 and Georgia's business judgment rule to the Supreme Court of Georgia. Because the FDIC has failed to demonstrate the existence of an established and long-standing common law rule barring defendants' affirmative defenses, and because the court must decline to create a barring rule, the FDIC was unentitled to partial summary judgment. Accordingly, the court affirmed in part and certified questions in part. View "FDIC v. Skow, et al." on Justia Law

The FTC sued Randall Leshin and his co-appellants based on deceptive marketing practices and other violations of the Federal Trade Commission Act, 15 U.S.C. 41 et seq., committed by Leshin's debt-consolidation business. At issue on appeal was whether a district court could convert the unpaid remainder of an equitable disgorgement remedy, stemming from a compensatory civil contempt sanction, into the legal remedy of a money judgment after the contemnor has disgorged as much money as he currently has the ability to pay. The court concluded that the district court acted within the bounds of its broad discretion in this case and affirmed the judgment. View "Federal Trade Commission v. Leshin, et al." on Justia Law

The bankruptcy trustee of Northlake, a Georgia corporation, filed suit against defendant, a shareholder of Northlake, alleging that a 2006 Transfer was fraudulent. The facts raised in the complaint and its exhibits, taken as true, were sufficient to conclude that Northlake's benefits under the Shareholders Agreement were reasonably equivalent exchange for the 2006 Transfer. Because the complaint contained no allegations indicating why these benefits did not constitute a reasonably equivalent exchange for the 2006 Transfer, the court had no ground to conclude that they did not. Accordingly, the court affirmed the judgment of the district court. View "Crumpton v. Stephen" on Justia Law