NATIONAL MARITIME SERVICES, INC., Plaintiff-Appellee, v. Glenn F. STRAUB, Burrell Shipping Company, LLC, Defendants-Appellants.
No. 13-15349.
United States Court of Appeals, Eleventh Circuit.
Jan. 13, 2015.
783 F.3d 783
On this factor, we agree with this Court‘s conclusion in Keene and Manders that the financial independence afforded the sheriff‘s office “creates something of a lacuna” because neither the State nor the County will be required to directly pay for any adverse judgment against the Sheriff‘s office. Keene, 477 Fed.Appx. at 579; Manders, 338 F.3d at 1327. Rather, any adverse judgment against Sheriff Prine will be paid out of the budget of the Lowndes County Sheriff‘s Office, which is composed of both County and State funds. Manders, 338 F.3d at 1327. Nevertheless, to the extent that the state treasury will be spared here from paying any adverse judgment, this factor weighs in favor of denying immunity. See Abusaid, 405 F.3d at 1313 (“[T]he fact that a judgment against the Sheriff in this case would not be paid out of the state treasury is, in itself, a clear marker that the Sheriff is not an arm of the state.“).
III. CONCLUSION
As in Manders, the first three factors here weigh in favor of immunity, while the fourth factor weighs against immunity. On balance, we conclude that Sheriff Prine enjoys Eleventh Amendment immunity against Ms. Pellitteri‘s wrongful termination claims brought against him in his official capacity under
REVERSED AND REMANDED.
Eyal Berger, Catherine E. Douglas, Akerman, LLP, Patrick E. Novak, Horr Novak & Skipp, PA, Miami, FL, for Plaintiff-Appellee.
Larry A. Zink, Zink Zink & Zink Co, LPA, Canton, OH, Craig Thomas Gallee, The Galle Law Group, PA, West, Palm Beach, FL, for Defendants-Appellants.
WILLIAM PRYOR, Circuit Judge:
This appeal requires us to decide whether the district court had ancillary jurisdiction over a supplementary proceeding to avoid a fraudulent transfer by a judgment debtor. National Maritime Services, Inc., sued Burrell Shipping Company, LLC, for amounts owed for management and custo
I. BACKGROUND
National Maritime filed a complaint in the district court against Burrell Shipping and Straub for breach of contract and unjust enrichment. The claims arose from management and custodial services that National Maritime had provided for the M/V Island Adventure, a vessel owned by Burrell Shipping. The district court had subject matter jurisdiction based on the maritime nature of the controversy,
Straub is the sole owner of Burrell Shipping and its president, chief operating officer, and managing member. Straub is also the director and president of Burrell Industries, Inc. To facilitate the purchase of the vessel, Straub loaned Burrell Industries $3.2 million in exchange for a promissory note. Burrell Industries in turn loaned Burrell Shipping $3.2 million by a promissory note. Burrell Shipping then granted Burrell Industries a mortgage for the vessel to secure the promissory note and purchased the vessel from the United States Marshals Service.
After a bench trial in June 2011, the district court entered a final judgment in favor of National Maritime and against Burrell Shipping in the amount of $99,660.05, plus interest. But the district court ruled that Straub was not individually liable to National Maritime. National Maritime attempted to execute on its judgment, but was unsuccessful because Burrell Shipping had no assets.
National Maritime then initiated a supplementary proceeding against Straub in “accord[ance] with the procedure of the state where the court is located.”
After our decision in Jackson-Platts v. General Electrical Capital Corporation, 727 F.3d 1127 (11th Cir.2013), the district court raised sua sponte the question whether it had subject-matter jurisdiction to entertain the supplementary proceeding against Straub. After the parties submitted memoranda of law, the district court ruled that it had subject-matter jurisdiction. The district court explained that it had “ancillary jurisdiction [because] ... National Maritime is seeking assets of the Judgment Debtor, Burrell [Shipping], that are found in the hands of a third party, Straub.” Nat‘l Maritime Servs., Inc. v. Straub, 979 F.Supp.2d 1322, 1326 (S.D.Fla. 2013).
The district court found that before the sale of the vessel Burrell Shipping had never generated its own revenues and had operated on loans or funds provided by Burrell Industries. When Burrell Shipping sold the vessel, its liabilities “exceeded its assets by at least $4 million.” Id. To
The district court found that Straub is an insider of Burrell Shipping and of Burrell Industries. The district court also found that Straub “controlled and received the transfer” and failed to provide consideration for the transfer. Id. The district court determined that, “[a]t the time of the transfer, Straub was aware or should have been aware that Burrell[ Shipping]‘s liabilities exceeded its assets, he was aware or should have been aware of the pending lawsuit against Burrell [Shipping] and himself, and he was aware or should have been aware that Burrell [Shipping] owed National Maritime in excess of $90,000.00.” Id.
The district court ruled that the transfer of proceeds was fraudulent on two grounds. First, the district court found that the transfer was made with “actual intent to hinder, delay, or defraud,”
II. STANDARDS OF REVIEW
Two standards of review govern this appeal. First, we review de novo issues of subject-matter jurisdiction. Jackson-Platts, 727 F.3d at 1133. Second, “[a]fter a bench trial, we review the district court‘s conclusions of law de novo and the district court‘s factual findings for clear error.” Crystal Entm‘t & Filmworks, Inc. v. Jurado, 643 F.3d 1313, 1319 (11th Cir.2011) (internal quotation marks and citation omitted).
III. DISCUSSION
This appeal presents two issues. First, we must decide whether the ancillary jurisdiction of the district court extended to the supplementary proceeding initiated by National Maritime. Second, we must decide whether the district court erred when it determined that Burrell Shipping fraudulently transferred the proceeds to Straub. We address each issue in turn.
A. The District Court Had Subject-Matter Jurisdiction to Hear the Supplementary Proceeding Initiated by National Maritime.
The parties agree that ancillary jurisdiction is the only possible basis for subject-matter jurisdiction over the supplementary proceeding. This Court has not addressed when a supplementary proceeding falls within the ancillary jurisdiction of a district court. We conclude that the district court had ancillary jurisdiction over this supplementary proceeding.
Ancillary jurisdiction exists in two circumstances: “(1) to permit disposition by a single court of claims that are, in varying respects and degrees, factually interdependent; and (2) to enable a court to function successfully, that is, to manage its proceedings, vindicate its authority, and effectuate its decrees.” Peacock v. Thomas, 516 U.S. 349, 354, 116 S.Ct. 862, 867, 133 L.Ed.2d 817 (1996) (quoting Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 379-80, 114 S.Ct. 1673, 1676, 128 L.Ed.2d 391 (1994)). The latter category encom
The decision of the Supreme Court in Peacock is instructive. After the plaintiff in Peacock won a judgment against his employer, the plaintiff initiated a supplementary proceeding to pierce the corporate veil of his employer to reach assets of a third party. Id. at 351-52, 116 S.Ct. at 865-66. The Supreme Court held that ancillary jurisdiction did not extend to the supplementary proceeding because the effect of the plaintiff‘s claim would be “to impose liability for a money judgment on a person not otherwise liable for the judgment.” Id. at 351, 116 S.Ct. at 865. As the Court explained, the claim was more than an attempt “to force payment ... or to void postjudgment transfers.” Id. at 357 n. 6, 116 S.Ct. at 868 n. 6.
In contrast with Peacock, the district court had ancillary jurisdiction over this supplementary proceeding because National Maritime sought to disgorge Straub of a fraudulently transferred asset, not to impose liability for a judgment on a third party. Unlike the defendant in Peacock, Straub is not personally liable for the judgment against Burrell Shipping. Id. at 351, 116 S.Ct. at 865. Straub‘s liability is limited instead to the proceeds that Burrell Shipping fraudulently transferred to him. If the value of the transferred proceeds was less than the value of the judgment against Burrell Shipping, National Maritime would have no recourse against Straub for the excess amount. The claim asserted by National Maritime is not “a new lawsuit [that] impose[s] liability for a judgment on a third party.” Id. at 359, 116 S.Ct. at 869.
Our decision follows the approaches of other authorities. Both the Second and Ninth Circuits have upheld the exercise of ancillary jurisdiction in this circumstance, Epperson v. Entm‘t Express, Inc., 242 F.3d 100, 103-07 (2d Cir.2001); Thomas, Head & Greisen Emps. Trust v. Buster, 95 F.3d 1449, 1453-55 (9th Cir.1996), and the First and Tenth Circuits have suggested in dicta that they would reach the same conclusion, Ellis v. All Steel Const., Inc., 389 F.3d 1031, 1034 (10th Cir.2004); U.S.I. Props. Corp. v. M.D. Const. Co., 230 F.3d 489, 498 (1st Cir.2000). Our decision also comports with the ruling in Dewey v. West Fairmont Gas Coal Company, where the Supreme Court approved of the exercise of ancillary jurisdiction over a claim to avoid a fraudulent transfer of assets to a third party. 123 U.S. 329, 332-33, 8 S.Ct. 148, 150, 31 L.Ed. 179 (1887). Although the claim to avoid the fraudulent transfer in Dewey was asserted before the entry of a judgment against the transferor, id. at 332, 8 S.Ct. at 149-50, we see no reason why the result should be different when the claim is asserted after the entry of a judgment. See Buster, 95 F.3d at 1455. “[T]he fact that the joinder .... took place after judgment is not dispositive of whether the court has jurisdiction to effectuate its judgment by recapturing the judgment debtor‘s fraudulent conveyances.” Id.; see also Swift & Co. Packers v. Compania Colombiana Del Caribe, S.A., 339 U.S. 684, 694-95, 70 S.Ct. 861, 867-68, 94 L.Ed. 1206 (1950) (“The basis of admiralty‘s power is to protect its jurisdiction from being thwarted by a fraudulent transfer, and that applies equally whether it is concerned with executing its judgment or authorizing an attachment to secure an independent maritime claim.“).
B. The District Court Did Not Err When It Concluded that Burrell Shipping Fraudulently Transferred the Proceeds of the Sale to Straub.
Straub argues that the district court erred when it ruled that the transfer of the proceeds was fraudulent. To determine whether a transfer is fraudulent within the meaning of
Straub argues that National Maritime failed to establish that the transfer was made “without receiving reasonably equivalent value,” but this argument misses the boat. Reasonably equivalent value is not an element of proof under
Straub also argues that the transfer is not voidable because he gave “new value” for the transfer,
The district court did not err. The record supports its decision that the transfer to Straub was a fraudulent transfer to an insider,
We AFFIRM the judgment in favor of National Maritime and against Straub.
JORDAN, Circuit Judge.
I join the Court‘s opinion in full. Although there is language in Jackson-Platts v. General Electric Capital Corp., 727 F.3d 1127, 1134–39 (11th Cir.2013), which can be read as cutting against a finding of ancillary jurisdiction here, the case is distinguishable because the plaintiff there, though seeking to void a fraudulent transfer, wanted to hold the new parties liable for the entire underlying judgment. Here, as the Court points out, National Maritime‘s claim against Mr. Straub in the supplementary proceeding was limited to the value of the fraudulently transferred assets. We should not read Jackson-Platts more broadly given that the Supreme Court has twice held that district courts have jurisdiction to entertain ancillary proceedings challenging fraudulent transfers by defendants. See Swift & Co. Packers v. Compania Colombiana Del Caribe, S.A., 339 U.S. 684, 690-95, 70 S.Ct. 861, 94 L.Ed. 1206 (1950) (fraudulent transfer of vessel which had been attached pre-judgment in initial admiralty action); Dewey v. West Fairmont Gas Coal Co., 123 U.S. 329, 332-33, 8 S.Ct. 148, 31 L.Ed. 179 (1887) (pre-judgment fraudulent transfer of assets to non-diverse defendant).
WILLIAM PRYOR
UNITED STATES CIRCUIT JUDGE