MAURY ROSENBERG v. DVI RECEIVABLES XIV, LLC, DVI RECEIVABLES XVI, LLC, DVI RECEIVABLES XVII, LLC, DVI RECEIVABLES XVIII, LLC, DVI RECEIVABLES XIX, LLC, DVI FUNDING, LLC, U.S. BANK, N.A. et al.
No. 14-14620
United States Court of Appeals, Eleventh Circuit
April 8, 2016
D.C. Docket No. 1:12-cv-22275-PAS
IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
MAURY ROSENBERG, Plaintiff - Appellant Cross Appellee, versus DVI RECEIVABLES XIV, LLC, DVI RECEIVABLES XVI, LLC, DVI RECEIVABLES XVII, LLC, DVI RECEIVABLES XVIII, LLC, DVI RECEIVABLES XIX, LLC, DVI FUNDING, LLC, U.S. BANK, N.A. et al.,
Appeals from the United States District Court for the Southern District of Florida
(April 8, 2016)
Before MARCUS, JILL PRYOR and FAY, Circuit Judges.
MARCUS, Circuit Judge:
At issue today is whether a federal district court is obliged to follow the Federal Rules of Civil Procedure or the Federal Rules of Bankruptcy Procedure when trying a bankruptcy case arising under title 11 of the United States Code. In entertaining the defendants’
I.
This case comes before us with a complex factual and procedural history.1 The essential facts are these. In November 2008, Jane Fox -- on behalf of several companies (“the DVI Entities“) that had entered into equipment leases with Maury Rosenberg in connection with his chain of medical imaging centers -- filed an involuntary Chapter 7 bankruptcy petition against Rosenberg, asserting a claim based on an individual limited guaranty Rosenberg had made in connection with the leases. The petition was originally filed in the United States Bankruptcy Court for the Eastern District of Pennsylvania, but was later transferred to the Bankruptcy Court for the Southern District of Florida. In August 2009, the bankruptcy court granted Rosenberg‘s motion to dismiss the petition because the DVI Entities were not eligible creditors and, alternatively, because they were judicially estopped from prosecuting the case. Although it dismissed the petition with prejudice, the bankruptcy court retained jurisdiction to award Rosenberg his costs, reasonable attorney‘s fees, and damages (if appropriate) under
In December 2010, Rosenberg filed an adversary complaint against the defendants under
If the court dismisses a petition under this section other than on consent of all petitioners and the debtor, and if the debtor does not waive the right to judgment under this subsection, the court may grant judgment—
(1) against the petitioners and in favor of the debtor for—
(A) costs; or
(B) a reasonable attorney‘s fee; or
(2) against any petitioner that filed the petition in bad faith, for— (A) any damages proximately caused by such filing; or
(B) punitive damages.
In March 2012, Rosenberg demanded a jury trial on all triable issues in his adversary proceeding. The defendants did not consent to a jury trial in the bankruptcy court, but, instead, moved the district court to withdraw the reference of the adversary proceeding so that the matter could be tried in district court. The district court granted the motion, withdrew the reference of the claims for damages under
The defendants then moved for judgment as a matter of law under
Turning to the merits, the district court granted the Rule 50(b) motion, concluding that while the evidence supported a finding of bad faith and emotional damages, it did not sustain the verdict for punitive damages or compensatory damages for loss of reputation and loss of wages. Accordingly, the district judge entered an amended final judgment holding the defendants liable only for $360,000 in compensatory damages for emotional distress.
Rosenberg appealed, arguing that the defendants’ Rule 50(b) motion was filed untimely and, therefore, the merits of the claim should not have been considered at all. Moreover, Rosenberg claims that even if the motion had been properly considered, the district court erred in its application of Rule 50(b). The defendants, in turn, cross-appealed, claiming that the district court also should have overturned the jury‘s finding of liability for bad faith, and a damages award for emotional distress was improper because of our ruling in Lodge v. Kondaur Capital Corp., 750 F.3d 1263 (11th Cir. 2014).
II.
The central issue in this case is whether the defendants timely filed a Rule 50(b) motion for judgment as a matter of law. This requires us to decide whether the Federal Rules of Civil Procedure or the Federal Rules of Bankruptcy Procedure apply to the timeliness of perfecting a Rule 50(b) motion filed in a district court trying a bankruptcy case arising under title 11. We review de novo the district court‘s conclusion that the deadline in the
Under the Federal Civil Rules, a party must file its post-trial motion “[n]o later than 28 days after the entry of judgment.”
It is, by now, axiomatic that in interpreting the federal rules, we look first to their plain language. See In re Yates Dev., Inc., 256 F.3d 1285, 1288 (11th Cir. 2001) (citing Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 739 (1989)). The plain language of the federal rules -- of bankruptcy and civil procedure -- requires application of the Federal Bankruptcy Rules in this case.
the specific purpose of expanding the reach of the rules beyond the bankruptcy courts to all courts hearing bankruptcy matters. Thus, the advisory committee notes to the rule read, “This amended Bankruptcy Rule 1001 makes the Bankruptcy Rules applicable to cases and proceedings under title 11, whether before the district judges or the bankruptcy judges of the district.”
There is no dispute that this case arises under title 11. Rosenberg asserted claims under
Moreover, the Federal Rules of Civil Procedure provide for the primacy of the Federal Bankruptcy Rules in bankruptcy proceedings adjudicated in district court.
Because the Federal Civil Rules only apply to bankruptcy proceedings to the extent provided by the Federal Bankruptcy Rules, we are required to read Federal Civil Rule 50 through the lens of the Federal Bankruptcy Rules.
This reading of the Bankruptcy and Civil Rules yields a result consonant with how many federal courts have addressed which set of rules to apply in similar circumstances. Thus, for example, in cases arising under title 11 but tried in district court, two of our sister circuits have applied the Federal Bankruptcy Rules to determine whether service of process was sufficient. In re Celotex Corp., 124 F.3d 619, 630 (4th Cir. 1997); Diamond Mortg. Corp. v. Sugar, 913 F.2d 1233, 1243-44 (7th Cir. 1990). In both cases, the courts determined that parties serving process in cases arising under title 11, but tried in district court, were permitted to use the nationwide service of process provided by
Also illuminating, we think, is the Third Circuit‘s ruling in Phar-Mor, Inc. v. Coopers & Lybrand, 22 F.3d 1228, 1238 (3d Cir. 1994), “that the Bankruptcy Rules govern non-core, ‘related to’ proceedings before a district court.” Non-core proceedings offer, perhaps, the most likely circumstance for applying the Federal Civil Rules (and not the Federal Bankruptcy Rules) because these proceedings do not arise directly under the substantive rules of title 11, and, therefore, may lie outside the language of
Finally, we take note of a district court opinion in VFB LLC v. Campbell Soup Co., 336 B.R. 81 (D. Del. 2005), where the court was faced with a motion to alter and amend its findings and judgment in a case arising under title 11 after ruling against the plaintiffs who had alleged fraudulent transfer and breach of fiduciary duty claims. The opinion hinged on how to count the days to determine the timeliness of filing a motion for a new trial -- the Federal Civil Rules do not count weekends or holidays in the 10-day deadline, while the Federal Bankruptcy Rules do count those days. The court concluded that
The defendants, however, cite to Stephenson v. Malloy, 700 F.3d 265, 270 n.5 (6th Cir. 2012), where the Sixth Circuit applied a 28-day filing deadline found in the Federal Civil Rules and not the 14-day deadline found in the Federal Bankruptcy Rules to a motion to alter or amend a judgment under Rule 59. There is, however, no analysis of the issue offered in the court‘s opinion. Indeed, there is no indication that the parties urged or that the court even considered applying the deadline found in the Federal Bankruptcy Rules instead of the timeline found in the Federal Civil Rules, nor is there a holding on the matter. Rather, in Stephenson, the court focused on the question of judicial estoppel. The case does not counsel in favor of applying the Civil Rules to cases arising under title 11. See United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 38 (1952) (“The effect of the omission was not there raised in briefs or argument nor discussed in the opinion of the Court. Therefore, the case is not a binding precedent on this point.“); Webster v. Fall, 266 U.S. 507, 511 (1925) (“Questions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents.“).
The defendants also cite three other cases in support of the view that a district court trying a bankruptcy case arising under title 11 ought to apply Rule 50(b) to a motion for judgment notwithstanding the verdict. See In re Lemington Home for the Aged, 777 F.3d 620 (3d Cir. 2015); In re Palermo, 549 F. App‘x 38 (2d Cir. 2014); In re Prosser, 534 F. App‘x 126 (3d Cir. 2013). These cases are inapposite. Rosenberg is not arguing that
Notwithstanding the unambiguous language found in the rules, the district court determined that the 28-day timeline found in
The defendants also suggest that
An appeal to a court of appeals from a final judgment, order, or decree of a district court exercising jurisdiction under
28 U.S.C. § 1334 [granting district courts jurisdiction over bankruptcy cases] is taken as any other civil appeal under these rules.
Nor do we see any force in the argument that application of
The defendants also argue, in the alternative, that even under the shortened
When the district court withdrew its reference to the
Nor does the suggestion that the ruling has never become final withstand analysis. The defendants claim that, even if we are to assume that the Federal Bankruptcy Rules apply,
Again, we are unpersuaded. The defendants’ reasoning leads to an absurd result, which we decline to endorse. See In re Lehman, 205 F.3d 1255, 1255–56 (11th Cir. 2000). It would require district courts exercising their unquestioned jurisdiction to hear bankruptcy cases under
In short, both the plain language of the rules and the weight of authority counsel for the application of the Bankruptcy Rules to bankruptcy proceedings tried in district court. Because the defendants’ motion for judgment notwithstanding the verdict was filed after the expiration of the deadline for filing such motions provided by the Bankruptcy Rules, the defendants’ motion was untimely and should have been denied.
Because we conclude that the defendants’ Rule 50(b) motion was not timely filed, we need not (and, indeed, cannot) address whether the motion was correctly decided by the district court on the merits. Similarly, we cannot consider the defendants’ argument on cross-appeal that the damages award for emotional distress runs afoul of our ruling in Lodge v. Kondaur Capital Corp., 750 F.3d 1263, 1271 (11th Cir. 2014). Regardless of how the defendants attempt to characterize their claim, we think it is clear that they seek to challenge the sufficiency of the evidence presented at trial. The defendants argued in their pre-verdict Rule 50(a) motion that the emotional distress claim rested on insufficient evidence because Rosenberg had not shown that the defendants’ conduct was the proximate cause of that distress, had failed to present any medical or psychological expert testimony, and had presented only self-serving and unsubstantiated evidence about his emotional distress. But, notably, when the defendants filed their post-verdict Rule 50(b) motion for judgment as a matter of law, they made no mention of the emotional distress claim. They did not argue that the evidence supporting emotional distress was insufficient either because plaintiff had failed to establish proximate cause, or because he failed to introduce any medical or expert testimony, or because the evidence presented was insufficient to establish emotional distress. Rather, the defendants only argued in their Rule 50(b) motion that the jury lacked a legally sufficient evidentiary basis to find bad faith and award punitive damages as well as damages for loss of wages and loss of reputation.
The failure to renew the insufficiency claim as to emotional distress in a post-verdict Rule 50(b) motion, despite every opportunity to do so, is fatal to the defendants’ argument on appeal. Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S. 394, 405 (2006) (holding that a circuit court is “powerless” to set aside a jury verdict based on insufficiency of the evidence where a party fails to raise the claim in a post-verdict Rule 50(b) motion, even where the party raised the issue in a pre-verdict Rule 50(a) motion); Hi Ltd. P‘ship v. Winghouse of Fla., Inc., 451 F.3d 1300, 1302 (11th Cir. 2006) (“Filing a pre-verdict, Rule 50(a) motion for judgment as a matter of law cannot excuse a party‘s post-verdict failure to move for either a JNOV or a new trial pursuant to
We also reject the defendants’ claim that the district court committed error by allowing testimony that allegedly ran counter to the court‘s in limine orders. We review a district court‘s rulings on the admissibility of evidence only for abuse of discretion. Goldsmith v. Bagby Elevator Co., 513 F.3d 1261, 1276 (11th Cir. 2008). This is a particularly deferential standard requiring that we affirm a district court‘s ruling unless it was manifestly erroneous or constituted a clear error of judgment. United States v. Frazier, 387 F.3d 1244, 1258–59 (11th Cir. 2004). We can discern no abuse of discretion in the district court‘s rulings.
III.
The Federal Rules of Bankruptcy Procedure govern cases arising under title 11, including those tried in district court, and
AFFIRMED in part, REVERSED in part, VACATED in part, and REMANDED.
