SE PROPERTY HOLDINGS, LLC, As successor by merger with Vision Bank, Plaintiff-Appellant, versus RUSTON C. WELCH, et al., Defendants, NEVERVE LLC, Defendant-Appellee.
No. 21-11736
United States Court of Appeals For the Eleventh Circuit
April 11, 2023
[PUBLISH]
Opinion of the Court
Appeal from the United States District Court for the Northern District of Florida
D.C. Docket No. 5:18-cv-00252-TKW-MJF
Before LAGOA and BRASHER, Circuit Judges, and BOULEE,1 District Judge.
This case presents issues of first impression to this Court regarding the application of the Florida Uniform Fraudulent Transfer Act (FUFTA),
Neither Florida state courts nor this Court have squarely addressed the FUFTA issues presented by this appeal. Based on the narrow interpretation of FUFTA in Freeman v. First Union National Bank, 865 So. 2d 1272 (Fla. 2004), however, we believe the Florida Supreme Court would determine that FUFTA’s catch-all provision does not allow for an award of money damages against the transferor, an award of punitive damages, or an award of attorney’s fees. Thus, the district court was correct in granting summary judgment in favor of Neverve on SEPH’s FUFTA claims. And we conclude that the district court did not err in granting summary judgment in favor of Neverve on SEPH’s equitable lien claim. Accordingly, for the reasons discussed below, and with the benefit of oral argument, we affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
This case began with the failure of a real estate development in Bay County, Florida. Neverve defaulted on loans secured by a mortgage on the Bay County property originally given to SEPH’s predecessor in interest. SEPH foreclosed on Neverve’s property, and the United States District Court for the Northern District of Florida issued a deficiency judgment in favor of SEPH against Neverve (who was then insolvent) for a total sum of over $19.6 million. See SE Prop. Holdings, LLC v. Neverve, No. 12-cv-292 (N.D. Fla. June 18, 2015).
In 2016, after the judgment was entered, Neverve settled a claim against BP related to the Deepwater Horizon oil spill (the BP proceeds). Neverve, however, did not turn over the BP proceeds to SEPH towards satisfaction of SEPH’s judgment. Instead, at the direction of Neverve’s principal, David Stewart, approximately $350,000 of those proceeds were wired to Ruston C. Welch and Welch Law Firm,
SEPH sued Neverve, Welch, and WLF in the Northern District of Florida. In its amended complaint, SEPH asserted, among other claims, three FUFTA claims (one for actual fraud and two for constructive fraud) and an equitable lien claim against the defendants, based on the transfer of the BP proceeds from WLF’s trust account to Welch and WLF. In its FUFTA claims, SEPH sought (1) compensatory and punitive damages, (2) attorney’s fees and costs, (3) to set aside each fraudulent transfer and for the court to declare them null and void, and (4) any additional relief the court deemed proper.
Welch and WLF moved to dismiss the amended complaint for lack of personal jurisdiction, and Neverve sought dismissal on the ground that Welch and WLF were indispensable parties. After jurisdictional discovery and briefing, the district court dismissed the claims against Welch and WLF for lack of personal jurisdiction.2 Regarding Neverve’s motion, the district court found that Welch and WLF were indispensable parties for certain relief sought by SEPH—avoidance of the transfers and imposition of an equitable lien—and granted that part of Neverve’s motion. The district court, however, denied the motion as to SEPH’s claims for money damages against Neverve. Neverve answered and later moved for summary judgment on SEPH’s remaining claims.
In its order granting Neverve’s motion for summary judgment, the district court explained that FUFTA’s primary remedy—avoidance of a transfer or a money judgment against a transferee—was unavailable to SEPH because the court lacked personal jurisdiction over indispensable parties for that remedy, Welch and WLF. As to the other remedy sought by SEPH—an award of money damages against the transferor, Neverve—the court found it was unavailable under FUFTA’s catch-all provision in
As to SEPH’s request for punitive damages and attorney’s fees under FUFTA, the district court noted that there was no Florida case law addressing whether the catch-all provision authorized an award of those types of damages and that other federal district courts to consider the issue found that the catch-all provision did not authorize an award of attorney’s fees. And the district court found it unlikely that the Florida Supreme Court would construe the catch all provision in FUFTA to authorize an award of punitive damages or attorney’s fees against the transferor in light of its statements in Freeman.
SEPH timely appealed.3 While SEPH filed an initial brief in this case, Neverve did not file a brief in response.4 We then appointed pro bono counsel as amicus curiae to defend the district court’s judgment.5
II. STANDARD OF REVIEW
We review de novo the district court’s grant of a motion for summary judgment, considering all of the evidence and the inferences it may yield in the light most favorable to the nonmoving party. Ellis v. England, 432 F.3d 1321, 1325 (11th Cir. 2005). Summary judgment is appropriate where the evidence shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Id. (quoting Comer v. City of Palm Bay, 265 F.3d 1186, 1192 (11th Cir. 2001)).
We review a district court’s legal conclusions de novo. Id. at 1323; accord United States v. Daniels, 685 F.3d 1237, 1244 (11th Cir. 2012). And we review the denial of equitable relief for an abuse of discretion. See Dresdner Bank AG v. M/V OLYMPIA VOYAGER, 465 F.3d 1267, 1273 (11th Cir. 2006); CNA Fin. Corp. v. Brown, 162 F.3d 1334, 1337 (11th Cir. 1998).
III. ANALYSIS
On appeal, SEPH contends that the district court erred in holding that FUFTA’s catch-all provision does not permit: (1) an award of money damages against a transferor; (2) an award of punitive damages; and (3) an award of attorney’s fees. SEPH further contends that the district court erred in granting summary judgment in favor of Neverve on its equitable lien claim. We address these issues in turn.
A. SEPH’s Claims Under FUFTA
Because SEPH’s claims arise under Florida law, we apply Florida’s substantive law. Molinos Valle Del Cibao, C. por A. v. Lama, 633 F.3d 1330, 1348 (11th Cir. 2011) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). FUFTA
Among such relevant data in a statutory interpretation case, of course, includes the text of the statute itself. Under Florida law, a court must give effect to the legislative intent of the statute. Robbins v. Garrison Prop. & Cas. Ins. Co., 809 F.3d 583, 586 (11th Cir. 2015) (quoting Belanger v. Salvation Army, 556 F.3d 1153, 1155 (11th Cir. 2009)). But, as emphasized by the Florida Supreme Court, to discern such legislative intent, a court looks to the actual language used in the statute. Freeman, 865 So. 2d at 1276 (quoting BellSouth Telecomms., Inc. v. Meeks, 863 So. 2d 287, 289 (Fla. 2003)). Thus, [w]hen the statute is clear and unambiguous, [Florida] courts will not look behind [its] plain language for legislative intent. Robbins, 809 F.3d at 586 (some alterations in original) (quoting Daniels v. Fla. Dep’t of Health, 898 So. 2d 61, 64 (Fla. 2005)).
To that end, the Florida Supreme Court has articulated Florida law regarding statutory interpretation as follows:
In interpreting statutory language, we of course begin with the language of the statute. As we recently explained, we adhere to the supremacy-of-text principle: The words of a governing text are of paramount concern, and what they convey, in their context, is what the text means. We thus strive to determine the text’s objective meaning through the application of the text to given facts on the basis of how a reasonable reader, fully competent in the language, would have understood the text at the time it was issued.
Page v. Deutsche Bank Tr. Co. Ams., 308 So. 3d 953, 958 (Fla. 2020) (alterations adopted) (citations omitted) (first quoting Lieupo v. Simon’s Trucking, Inc., 286 So. 3d 143, 145 (Fla. 2019); then quoting Advisory Op. to Governor re Implementation of Amend. 4, the Voting Restoration Amend., 288 So. 3d 1070, 1078 (Fla. 2020); and then quoting Antonin Scalia & Bryan A. Gardner, Reading Law: The Interpretation of Legal Texts 33 (2012)). And the Florida Supreme Court has recently held that, because [t]he plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which the language is used, and the broader context of the statute as a whole, a court is to use the traditional canons of statutory interpretation to aid the interpretive process from beginning to
We turn to the relevant statutory provisions of FUFTA, which are modeled after the Uniform Fraudulent Transfer Act (UFTA). See Amjad Munim, M.D., P.A. v. Azar, 648 So. 2d 145, 152 (Fla. Dist. Ct. App. 1994).
A transfer made . . . by a debtor is fraudulent as to a creditor[] . . . if the debtor made the transfer . . . :
(a) With actual intent to hinder, delay, or defraud any creditor of the debtor; or
(b) Without receiving a reasonably equivalent value in exchange for the transfer . . . , and the debtor:
- Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
- Intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due.
(1) In an action for relief against a transfer or obligation under [§§] 726.101-726.112, a creditor, subject to the limitations in [§] 726.109 may obtain:
(a) Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor’s claim;
(b) An attachment or other provisional remedy against the asset transferred or other property of the transferee in accordance with applicable law;
(c) Subject to applicable principles of equity and in accordance with applicable rules of civil procedure:
- An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property;
- Appointment of a receiver to take charge of the asset transferred or of other property of the transferee; or
- Any other relief the circumstances may require.
(2) If a creditor has obtained a judgment on a claim against the debtor, the creditor, if the court so orders, may levy execution on the asset transferred or its proceeds.
(Emphasis added).
And
(2) Except as otherwise provided in this section, to the extent a transfer is voidable in an action by a creditor under [§] 726.108(1)(a), the creditor may recover judgment for the value of the asset transferred, as adjusted under subsection (3), or the amount necessary to satisfy the creditor’s claim, whichever is less. The judgment may be entered against:
(a) The first transferee of the asset or the person for whose benefit the transfer was made; or
(b) Any subsequent transferee other than a good faith transferee who took for value or from any subsequent transferee.
1. Money Judgment Against a Transferor
SEPH contends that FUFTA permits a creditor to recover a monetary judgment against a transferor through the statute’s catch-all provision in
Beginning with
The only part of FUFTA that expressly addresses monetary judgments and that is relevant here is
Under the principle of statutory construction, expressio unius est exclusio alterius, the mention of one thing implies the exclusion of another. Young v. Progressive Se. Ins. Co., 753 So. 2d 80, 85 (Fla. 2000) (quoting Moonlit Water Apartments Inc. v. Cauley, 666 So. 2d 898, 900 (Fla. 1996)); accord United States v. Castro, 837 F.2d 441, 442 (11th Cir. 1988). Thus, the Florida legislature’s express inclusion of several specific remedies in [a] statute represents an implicit exclusion of remedies not listed. See Bishop v. Osborn Transp., Inc., 838 F.2d 1173, 1174 (11th Cir. 1998) (declining to find that punitive damages were available under the Employment Retiring Income Security Act). Critically here,
By contrast, the only remedies against a transferor or debtor expressly authorized by
[the statute] not to permit self-insured motorist policy exclusions.).
We also conclude that the catch-all provision in
Second, our analysis of the statute’s plain text finds support in Florida case law. Although FUFTA allows for certain limited remedies against transferors and third-party beneficiaries of fraudulent transfers,
Moreover, in Freeman v. First Union National Bank, 865 So. 2d 1272 (Fla. 2004), the Florida Supreme Court addressed the narrow focus of
Interpreting this case law with the plain language of the statute, we do not believe the Florida Supreme Court would find that
On the other hand, SEPH argues that we are bound to follow two Florida district court of appeal decisions—Hansard and McCalla—that held FUFTA’s catch-all provision permits claims for money damages against the transferor of a fraudulent transfer. We disagree. In Hansard, the Florida Fourth District Court of Appeal stated that a plaintiff may recover money damages against the transferor under the so-called catchall provision. 783 So. 2d at 309 (emphasis in original). Hansard, however, was decided before the Florida Supreme Court’s decision in Freeman and did not engage fully with FUFTA’s statutory text, contrary to how the Florida Supreme Court construes statutory language. See Robbins, 809 F.3d at 586. Then, in McCalla, the Florida First District Court of Appeal, relying solely on the pre-Freeman decision of Hansard, reached the same conclusion, stating that FUFTA authorizes awards of money damages against both fraudulent transferor and transferee, jointly and severally. 183 So. 3d at 1194. But, similar to Hansard, the court in McCalla did not conduct an in-depth statutory analysis as to
For the reasons we have explained, the text of FUFTA, coupled with the reasoning in Friedman and Freeman, constitutes a persuasive indication that the Florida Supreme Court would decide the question of whether monetary damages are available against transferors under FUFTA’s catch-all provision contrary to the Hansard and McCalla decisions. Winn-Dixie, 746 F.3d at 1021. Accordingly, we conclude that the district court did not err in granting summary judgment on this claim.
2. Punitive Damages
We next address whether FUFTA authorizes the separate recovery of punitive damages against a transferor under the statute’s catch-all provision. The district court concluded that FUFTA did not allow for recovery of punitive damages based on the Florida Supreme Court’s decision in Freeman. SEPH contends that this was error and that punitive damages are available under FUFTA’s catch-all provision. The Florida Supreme Court has not addressed this issue, nor has any Florida intermediate appellate court. Therefore, we must decide the issue the way the Florida Supreme Court would. Ernie Haire, 260 F.3d at 1290.
The Florida Supreme Court has stated that a plaintiff’s right to a claim for punitive damages is subject to the plenary authority of the legislature. Alamo Rent-A-Car, Inc. v. Mancusi, 632 So. 2d 1352, 1358 (Fla. 1994). And turning to the plain
As we have discussed above,
We also note that it appears that punitive damages are unavailable to creditors with regards to those money judgments that FUFTA expressly authorizes.
Thus, reviewing the relevant FUFTA provisions alone, it appears that a creditor cannot obtain punitive damages against a transferor in pursuing a claim under FUFTA. As explained before, applying the ejusdem generis principle of statutory construction, the general words of the catch-all provision in
For example, SEPH points to
SEPH also points to our decision in Alliant Tax Credit 31, Inc v. Murphy, 924 F.3d 1134 (11th Cir. 2019), in which this Court held that punitive damages are authorized under Georgia’s UFTA. Id. at 1149. In Alliant, we recognized that, under a separate Georgia statute, [a] court may award punitive damages ‘only in such tort actions in which it is proven by clear and convincing evidence that the defendant’s actions showed . . . fraud.’ Id. (quoting
Although not cited by SEPH, in Ault v. Lohr, 538 So. 2d 454 (Fla. 1989), the Florida Supreme Court held that an express finding of a breach of duty should be the critical factor in an award of punitive damages and that, as such, a finding of liability alone will support an award of punitive damages ‘even in the absence of financial loss for which compensatory damages would be appropriate.’ Id. at 456 (quoting Lassiter v. Int’l Union of Operating Eng’rs, 349 So. 2d 622, 626 (Fla. 1976)). Subsequently, in Engle v. Liggett Group, Inc., 945 So. 2d 1246 (Fla. 2006), the court clarified that the required finding of liability is more than a breach of duty, e.g., causation and reliance. Id. at 1262–63. But see Morgan Stanley & Co. v. Coleman (Parent) Holdings Inc., 955 So. 2d 1124, 1132 (Fla. Dist. Ct. App. 2007) (holding, post-Engle, that [a]ctual damages and the measure thereof are essential as a matter of law in establishing a claim of fraud (alteration in original) (quoting Nat’l Equip. Rental, Ltd. v. Little It. Rest. & Delicatessen, Inc., 362 So. 2d 338, 339 (Fla. Dist. Ct. App. 1978))). Furthermore,
Here, SEPH raised one actual fraud and two constructive fraud claims under FUFTA against Neverve. To prevail on a fraudulent transfer claim under FUFTA, a creditor must demonstrate (1) there was a creditor to be defrauded, (2) a debtor intending fraud, and (3) a conveyance—i.e., a ‘transfer’—of property which could have been applicable to the payment of the debt due. Isaiah, 960 F.3d at 1302; accord
Without FUFTA’s specific remedy provision in
Therefore, because the Florida Supreme Court has declined to expand FUFTA beyond its purpose and plain language, and has instead urged a narrow focus when interpreting FUFTA, see Freeman, 865 So. 2d at 1277, we conclude that the Florida Supreme Court would not find that FUFTA allows a creditor to obtain the remedy of punitive damages against a transferor under FUFTA’s catch-all provision.7 Accordingly, we affirm the district court’s grant of summary judgment as to this claim.
3. Attorney’s Fees
We next address whether a creditor, such as SEPH, may recover attorney’s fees under FUFTA—another issue of first impression for this Court. The district court concluded that FUFTA did not permit recovery of attorney’s fees, noting that another federal district court in Florida had reached a similar conclusion. SEPH contends that this was error, asserting
The Florida Supreme Court has stated that attorney’s fees incurred in defending or prosecuting a claim are not recoverable in the absence of a statute or contractual agreement authorizing their recovery. Price v. Tyler, 890 So. 2d 246, 250 (Fla. 2004) (quoting Bidon v. Dep’t of Pro. Regul., 596 So. 2d 450, 452 (Fla. 1992)). In other words, the general rule under Florida law is that each party bears its own attorneys’ fees unless a contract or statute provides otherwise. Id. (quoting Pepper’s Steel & Alloys, Inc. v. United States, 850 So. 2d 462, 465 (Fla. 2003)). And statutory authorization for attorney fees is to be strictly construed. Sarkis v. Allstate Ins. Co., 863 So. 2d 210, 223 (Fla. 2003).
Turning to FUFTA,
Accordingly, the district court did not err in granting summary judgment as to this claim.
B. SEPH’s Equitable Lien Claim
Finally, we turn to SEPH’s equitable lien claim. The district court granted summary judgment in favor of Neverve on this claim. Noting that it was undisputed Neverve was not in current possession of the BP proceeds, the district court determined that Neverve lacked the authority to impose an equitable lien on those proceeds, even if Neverve had established the elements necessary to obtain such a lien.
SEPH argues that the district court erred because FUFTA allows for an injunction against a debtor that prevents the debtor from further disposing of an asset—here, the BP proceeds. See
IV. CONCLUSION
While we do not condone the alleged conduct by Neverve, Welch, and WLF in this case, the relief SEPH seeks against Neverve is not permitted under FUFTA. Nor does Neverve currently possess the assets on which SEPH seeks an equitable lien. Thus, we affirm the district court’s order granting summary judgment in favor of Neverve on SEPH’s claims.
AFFIRMED.