*1 alleged following § 2680. Ash Monica Castro 28 U.S.C. exceptions negli- torts the United States: F.3d at 504. Pertinent ford, 511 gence, intentional infliction of emotional discretionary function and are the appeal distress, imprisonment, false pro- abuse of exceptions. tort intentional cess, and assault. The district cor- sovereign immunity § is not Under rectly pro- found the law enforcement upon the when the claim is “based waived applies viso to Castro’s claims for false performance or or the failure exercise imprisonment, process, abuse of and as- discretionary func- perform exercise or finding. sault. Neither contests (the discretionary function duty” or tion proviso ap- Because the law enforcement “out of or when the claim arises exception) plies, sovereign immunity is waived. The assault, battery, imprisonment, false false subject jurisdiction court has matter over arrest, prosecution, abuse of malicious these claims and the district court’s hold- libel, slander, misrepresentation, process, contrary ing to the error. deceit, interference with contract or For these reasons and for the reasons (the exception). intentional tort
rights” Stewart, by Judge I stated dissent. 2680(a) (h). § The law enforce- & U.S.C. however, 2680(h), § pro- proviso ment exception exceptions. to these
vides States, v. 556 F.3d Nguyen
See United (11th Cir.2009); Sutton v. 1255-56 States, 1289, 1297 819 F.2d
United 2680(h).
Cir.1987); § provi- see also immunity “with re- sovereign so waives Kelly CRAWFORD, Appellee, M. investigative acts or omissions of gard to “any enforcement officers” for or law assault, battery, arising ... out of claim Wendy SILETTE, Defendant-Appellant. arrest, abuse of imprisonment,
false false No. 09-40641. prosecution.” malicious process, 2680(h). proviso § If the law enforcement Appeals, States United Court sovereign immunity is waived and applies, Fifth Circuit. discretionary function and intentional June exceptions plaintiffs tort will not bar a at Nguyen, claims for relief. 556 F.3d meaning (effecting plain “the statutory language by purpose
clear immunity
concluding sovereign does provi- a claim that falls within the
not bar subsection(h), regardless of whether
so to it a discre- giving
the acts rise to involve Sutton, function”); at
tionary see (concluding discretionary that “the exception cannot be an absolute
function proceed un-
bar which one must clear to 2680(h)” pro- § law enforcement [the]
der
viso). *2 (argued),
Charlene Cantrell Koonce Stone, L.L.P., Dallas, TX, Scheef & for Crawford.
Leif (argued), Alexander Olson Welsh & L.L.P., Chapoton, Houston, TX, for Silette. JONES, Judge, Before Chief ELROD, SMITH and Judges. Circuit fused, JONES, responding money that she used the Judge: EDITH H. Chief mortgage. parties nego- to retire her con- retired her Florida Wendy Silette unsuccessfully for several months to tiated $328,000 given with dominium’s an accommodation. In December reach *3 Hudgins. Unbeknownst by George 2008, petitioned receiver Silette, money Hudgins obtained to turn over the require court to Silette through a Ponzi defrauding investors purchased because it condominium was receiver court-appointed A scheme. money. with obtained Silette the court to take Hudgins’s petitioned ease contended that the condominium was her in order condominium control Silette’s protected by homestead and the Florida funds to it and redistribute the to sell exemption. liberal homestead constitution’s court Hudgins’s victims. The district petition, imposed granted 3, 2009, the district court re- On June lien, to transfer and ordered Silette jected argument, holding ap- to the receiver. Silette condominium while Florida’s homestead did peals, arguing that Constitu- apply, state law nonetheless allowed the prevented the tion’s homestead lien because the imposing court from purchased homestead was with fraudulent- improper. order was We that the transfer ly money. Accordingly, the re- affirm. ceiver owned an lien on the con- immediately
dominium and could foreclose. I. BACKGROUND 4, 2009, the On June district court ordered quitclaim to execute a deed and to Silette 2008, January In Silette received 3, 2009, by July vacate condominium $368,500 Hudgins, from the true villain did. The pos- which she receiver assumed time, Hudgins At that was de- this case. session of the condominium. On Novem- frauding through investors a Ponzi 2, 2009, approved ber the court the condo- scheme, gifts proceeds. of which the were stayed minium’s sale. This court the sale was unaware of the fraud. She Silette pending appeal. money off the part used condo, her homestead mortgage on the
since 2000. II. JURISDICTION 2008, Commodity Futures May merits, addressing Before we brought an action Trading Commission must first determine whether the district enjoin Hudgins to his scheme and jurisdiction dispute. court had over the and other penalties seek civil subject review determinations of mat We appointed a re- relief. The district jurisdiction ter de novo. McAllister Crawford, ceiver, Kelly to reclaim Hud- Deposit Corp., Federal Ins. 87 F.3d the benefit of the de- gins’s assets for (5th Cir.1996). Silette asserts that the the CFTC and frauded investors. While subject juris court lacked matter district case,1 their re- Hudgins have settled diction because of the local action doctrine. yet complete. ceivership’s efforts are The local action doctrine holds “feder jurisdiction al and state courts lack over In June the receiver demanded gifts. subject re- matter of claims to land located that Silette return the Silette charges Hudgins pled guilty the criminal tivities. stemming from his fraudulent investment ac- outside the state which the court sits.” barred the court from imposing district Corp., 821 F.2d Hayes v. Oil 287 equitable lien on the condominium and Gulf Cir.1987). “prevents It courts unfa forcing its sale. fashioning equita- When property rights miliar with local and laws relief, ble a court acts with broad discre- interfering from with title to real tion, which we review for abuse of discre- unitary must which be recorded under LLC, tion. SEC v. Mgmt., Forex Asset keep conflicting set of rules to it free of (5th Cir.2001). Section encumbrances.” Id. at 290. states: fails; argument This federal law exempt [A shall be homestead] subject jurisdiction creates matter for fed *4 court, forced sale process any under of (“A § eral receivers. 28 U.S.C. 754 receiv judgment, and no or decree execution in appointed any proceed er civil action or thereon, shall be a lien except for the real, ing involving property, personal or payment of taxes and assessments mixed, situated in different districts shall thereon, obligations contracted for the ... be complete jurisdiction vested with purchase, improvement repair or there- and control of all such property with the of, obligations house, or contracted for thereof.”).
right possession to take As the field or other performed labor on the explained: Sixth Circuit realty ... undisputed proposition [It an] that the X, § Fla. Const. art. 4a. Courts construe initial suit which in appoint- results the the exemption liberally homestead in favor ment of the receiver primary is the ac- Am., of homeowners. Havoco Ltd. v. of any tion and that suit which the receiver Hill, (Fla.2001). brings appointment thereafter in the Nonetheless, despite strong presump court in order to execute his duties is in tion favor of protections, ancillary such, to the main suit. As it, equity “where demands [the Florida ancillary subject district court has mat- courts permit equi have] hesitated to jurisdiction ter every such suit irre- imposed table liens to be on homesteads spective diversity, amount contro- beyond X, the literal language of article versy any other factor which would section 4.” Specifically, Id. at 1024. normally jurisdiction. determine Florida Supreme explained Court Bank, Haile v. Henderson Nat. courts invoke “equitable principles Cir.1981). prop- The CFTC beyond reach the literal language of the erly brought suit Hudgins exceptions only where funds obtained Texas, Eastern District of through fraud or egregious conduct were appointed receiver, and the re- in, used to invest purchase, or improve the brought ceiver suit against Silette to re- homestead.” Id. at 1028. cover the condominium. case, In this Silette retired the con
III. DISCUSSION mortgage using dominium’s fraudulently A. money, yet nothing she knew Silette asserts that Article the scheme. Sadly, both parties are inno Section 4 of the Florida Constitution cent and one must lose.2 Silette Ideally, parties might have placing mortgage settled: Si- paying Hudgins' and off lette would refinance her condominium Unfortunately, investors. the current finan- $328,000, pay essentially Crawford the re- impossible. cial climate made only Not cannot there was no fraud involved either La that the court contends cases, her homestead lien on because Mar or In those Sonneman. in the fraud. We complicit was not she imposed liens were Florida, In lien can disagree. unjust enrichment. an inno- imposed on a homestead where be Id. at 270. While Mrs. Fishbein commit- fraudulently obtained party used cent wrongdoing, ted no she was not entitled to funds to invest in the homestead. a windfall: Savings In Beach & Loan Ass’n v. Palm competent There is and substantial evi-
Fishbein,
Court held
support
finding
dence to
that Mrs.
liens,
that,
imposing equitable
when
courts
stands in no
position
Fishbein
worse
party claiming
should focus on whether the
than she stood before the execution of
unjust
would be
mortgage.
the bank
When
made its
(Fla.1993).
ly
enriched.
loan, one of the prior mortgages was
Mr. Fishbein
ob
already overdue. Mr. Fishbein testified
tained a fourth
on their home
that time he had no other assets
signa
by forging
his innocent wife’s
which could be used to
off the
Savings
Beach
ture. Fishbein
Palm
&
*5
liens,
preexisting
and Mrs. Fishbein tes-
(Fla.
Ass’n,
Loan
1053-54
tified that she had no funds with which
proceeds,
the
Mr.
Dist.Ct.App.1991). With
pay
....
them
Mrs. Fishbein is not
second,
first,
paid off the home’s
Fishbein
$930,000
entitled to a
windfall. The
mortgages.
and third
Id. When the Fish
exemption
is intended to be a
divorced,
subsequently
Fish
beins
Mrs.
shield, not a sword.
possession of the house. Id.
bein obtained
Fishbein now claimed the
Because Mrs.
added).
(emphasis
Id. at 270-71
See also
had not
house as her homestead and
(Fishbein
Havoco,
Silette and the dissent Fish only may impose basis on which a court case, inapplicable, because in that bein lien is where there is fraud money Mr. Fishbein invested the into the egregious conduct claim- homestead and then transferred the home ing exemption. the homestead There- wife, creating stead to his direct links be fore, we hold that the trial court erred tween the fraud and the home and the imposed when it an equitable lien present fraudfeasor and his home. In the because case, Hudgins spend money did not on the Bank to establish home, gave but it to Silette. Without failed fraudulent part. conduct on Mrs. Fishbein’s direct links between the fraud and the homestead, according to Silette and the Ass’n, Fishbein v. Palm Beach S&L dissent, equita the court cannot (Fla. 1991) So.2d 4th DCA *6 lien. equitable ble Silette notes no added). (emphasis This is essentially the in imposed lien has ever been such a cir position, Supreme dissent’s but the Florida phrase cumstance and some courts rejected Court addressed and this reason require culpability rule to in the fraud. ing. enrichment, unjust The focus is on (Bankr. Johnson, In re 336 B.R. not fraud: S.D.Fla.2006) Havoco, (citing 790 So.2d at Thus, it apparent equity is that where 1028). Further, the dissent would not “ex demands it this Court has not hesitated pand” to the homestead ex to permit equitable imposed liens to be ception to include circumstances where the beyond on homesteads the literal lan- directly fraudfeasor is not connected to the However, guage of article section 4. homestead. appellate [Florida was not so court] concerned with the constitutional lan-
Although perhaps equitably compelling, it guage as was with its belief that an reasoning rejected by this line of has been equitable imposed lien could not be be- Supreme Court. The Florida cause Mrs. Fishbein was not a party to appellate very court made a argu- similar Yet, the fraud. there was no fraud in- ment in the Fishbein case: volved in either La Mar or Sonneman. may impose equitable [CJourts liens cases, equitable those liens were against only homestead real property unjust imposed to enrichment. plaintiff where the can establish some egregious or otherwise con- at 270 (emphasis So.2d add- fraudulent ed). part duct on the beneficiary The Florida Court could of of protection. party’s Isaacson not be clearer: a innocence in the Isaacson, is not to relevant whether the court (Fla. 1987). 1st im- Limiting impose equitable DCA can an only lien. The application, expansion, whether not an of factor is Havoco’s relevant principles. by fraudulently obtained unjustly enriched Circuit reached the The Eleventh
funds.
B.
In re Financial Feder-
same conclusion.
challenges
Silette also
the district
ated,
(“Unjust
at 890
enrichment
requiring
court’s order
her to transfer title
the basis for the assertion of an
can be
condominium,
to the
solely on the basis
lien.”).
If the court does not
equitable
equities
that the court failed to balance the
lien,
Silette will re-
“dispossessed”
before it
her of her home.3
$328,000
a
windfall. As Florida has
ceive
She cites no Florida case in which the
protect
the innocent benefi-
not chosen
lien on the
ciary
fraudulently
proceeds,
obtained
homestead,
having
once
been found per
may
the federal court
not do so.
missible,
upon
balancing
was denied
a
Although not raised
Silette or the
equities.
balancing,
Such further
in
dissent,
way
analyze
another
this some-
fact,
probably
would
be inconsistent with
what novel case is
consider whether
cases,
Fishbein and its related
which au
Hudgins’s Ponzi scheme victims are more
thorize
in
intervention
favor of
in
mortgage
like the defrauded
lender
creditors where
(who thought
getting
it was
Fishbein
in,
funds were used to purchase, invest
homestead)
judg-
Havoco,
or the
improve
on
a homestead. See
(whose
cases).
So.2d at 1024-27
hope
(discussing
ment creditor
Havoco
The
remedy
lien,
these cases
is the
judgment
vanished when the
payment
question
not the
“equi
whether further
protect
elected to
his assets
debtor
support
ties”
lien.
homestead).
purchasing
exempt
factors,
believe,
key
we
are that the
Assuming arguendo that
per-
fraud-
can
ulently obtained funds
be traced di-
sonal situation was
to be balanced
rectly into the homestead. Havoco care-
victims,
Hudgins’s
the harm to
fully identified this situation —the Fishbein
function,
adequately performed
paradigmatic
excep-
case—as the
narrow
light
briefing
him,
before
on two
*7
generous
tion to Florida’s otherwise
home-
2009,
occasions.
In June
grant-
his order
Havoco, 790
stead laws. See
So.2d at
ing
the receiver’s motion to
an
cases).
(discussing
equitable
thoroughly analyzed
This case is an
lien
relevant
here,
lien).
Contrary
equitable
to what occurred
where the
A creditor who obtains an
simply
court
Silette to execute a
ordered
compli-
lien must undertake a foreclosure in
deed,
complied,
and she
foreclosure does not
appli-
ance with the terms of the contract and
automatically
imposition
eq-
follow
Woods,
22,
Kubany
cable law.
v.
lien,
requires
pro-
uitable
but instead
its own
(Fla.Dist.Ct.App.1993).
may
24
Foreclosure
Financial,
ceeding. See In re
was no worse off from the is, The record establishes that Silette than she was as a mort always been, and has the sole owner of the reasons, gagor. For these at home issue. At the time Silette met in impos did abuse its discretion Hudgins, purchased she had the home lien. SEC v. Forex Asset ing name, her own and she had established EEC, Mgmt., F.3d Cir. equity in the It equally unit. clear that 2001). fraudfeasor, Hudgins, the absolutely has no connection to the home. He never lived IV. CONCLUSION home, in the and he has never transferred Because Silette used ob- money into the home or established an tained funds to retire the condominium’s ownership However, interest in the home. mortgage, the district court’s of because accepted gift Silette a cash proper was under Florida Hudgins which she then used to down judgment law. The is AFFIRMED and mortgage, she stands lose her home stay of sale is VACATED. equity and all which she had accrued. protections This result runs afoul of the ELROD, JENNIFER WALKER provided to Silette’s home Judge, Circuit dissenting: Constitution. *8 question before us is whether Flori- Article Section 4 of the Florida con- da’s broad constitutional homestead ex- provides stitution that the homestead emption protects Wendy Silette’s home being subject from the of an equitable exempt lien shall be from forced sale under court, and foreclosure sale to benefit per- process any other of and judgment, no by party. sons who were defrauded a third decree or execution shall be a lien there who, on, Silette is innocent third except payment for the of taxes and after a receiving gift George thereon, of cash from obligations assessments con Hudgins, pay used that cash to off a purchase, mort- tracted for the improvement gage thereof, on her parties repair homestead. Both con- or or obligations con house, that cede there is no evidence in the rec- tracted for field or other labor 71 (Fla.l993); performed realty, following on the the In see also re Fin. Fed. Ti Trust, Inc., 880, tle & by person. owned a natural 890-91 (11th Cir.2003). In the Florida repeatedly Florida courts have held that Supreme permitted Court a bank to im exemption the homestead is “to be liberal- pose equitable lien on a solely home ly protecting construed in the interest of owned Ms. Fishbein'—-an innocent par Am., family home.” v. the Havoco Ltd. However, ty. the house had been in the (Fla.2001). Hill, 790 So.2d common ownership of both Mr. and Ms. explicit Article X contains no exception Fishbein at the time that Mr. Fishbein against liens Florida permitting home fraudulently obtained a mortgage on that However, the steads on basis of fraud. homestead forging signature. Supreme has a Court created Even though Ms. Fishbein was innocent exception provi narrow to the homestead possession and obtained sole of the house sion the Florida Constitution order to divorce, following the the Supreme Florida unjust guard enrichment and has upheld Court the lien to prevent unjust ed against upon further encroachments the enrichment resulting from Mr. Fishbein’s exemption by constitutional homestead di illegal obtainment of the mortgage. Fish bein, liberal, recting apply Likewise, courts should “a So.2d at. at 269-70. in In Trust, re Financial Federated Title interpretation nontechnical of the home and Inc., the Eleventh Circuit a affirmed bank and strict construction of ruptcy imposing court’s order an equitable exceptions exemption.” to that Butter against a case in which (Fla. Caggiano, worth v. perpetrator’s wife was unaware that 1992); Quigley Kennedy see & Ely also purchase the funds used to the home had Ins., Inc., (Fla.1968) fraudulently acquired been in her hus (declining exception find an to Florida’s band’s Ponzi scheme. See id. 890-91. constitutional homestead on the there, But both the husband and wife used debt-circumvention, preventing basis of fraudulently pur funds to holding that a parcel adjacent and of land home, purchase chase the enabled property, to the homestead pur which was the fraudfeasor to become an owner of the entry chased after the of judgment against home. See id. at 884. owner, exempt was nevertheless question There is no that the conditions levy being part and execution as in Fishbein and In re Financial Federated homestead); Lazin, In re 221 B.R. Title present & Trust are not here. (Bankr.M.D.Fla.1998). instance, it was Silette - not the fraud Indeed, in each case where the Florida pay feasor - who used the funds to off the upheld Court has such, on her homestead. As an equitable an innocent there is no danger the homestead homestead, existed, owner’s two conditions exemption might “applied be as to make it (1) present neither of which are here: or imposition upon instrument fraud personally fraudfeasor used creditors,” very concern motivated acquired improve funds engraft the court to exception homestead, down the debt on the *9 X, onto Article 4. Section Id. at 1020 (2) possessed the fraudfeasor an own- Milton, (quoting Milton v. 63 Fla. at ership interest the time (1912)). So. 718 And unlike in the cases mortgage acquisition. of the transfer or majority upon, relies in which the Ass’n, Savings Beach See Palm & Loan fraudfeasor owned the homestead at the F.S.A. v. 268- time of the fraudulent transfer or as a transfer, Hudgins never had result of ownership interest in Silette’s condo-
any Supreme
minium. The Florida Court has equi- of an
never authorized on the upon a homestead based
table person of a who nev-
fraudulent endeavors actually the homestead.
er owned Supreme Court’s light of juris “equitable
admonition that its broadly” not be read too
prudence should Havoco, exception, enlarge at be reluctant we should limited, strictly ex expand
ception to the Florida Constitution’s home guidance without clear
from the Florida Court. I would 4 of
hold that Article Section the Flori permit impo
da Constitution does not lien on
sition Accordingly, respectfully
homestead. I
dissent. COMPANY;
LYONDELL CHEMICAL al., Plaintiffs,
et
Epec Polymers, Inc.; Epec Corporation; Pipeline Company,
El Paso Tennessee Party Plaintiffs-Appellees-
Third Appellants,
Cross Pipeline Company,
Tennessee Gas for
merly Inc., Tenneco, known as Defen
dants-Appellees-Cross Appellants, CORPORATION,
OCCIDENTAL CHEMICAL nt-Appella
Defenda
nt-Cross-Appellee.
No. 08-40060. Appeals,
United States Court of
Fifth Circuit.
June