Estate of Jackson v. General Electric Capital Corp. (In re Fundamental Long Term Care, Inc.)
Estate of Jackson v. General Electric Capital Corp. (In re Fundamental Long Term Care, Inc.)
Opinion of the Court
MEMORANDUM OPINION ON MOTION TO COMPROMISE
“Everything has to come to an end, sometime.”
But there is one catch: the only way the settlement works is if the Court puts an end to all the claims that were or could have been litigated here. The proposed settlement is conditioned on this Court entering an order barring the non-settling Defendants (who either prevailed at the dismissal or summary judgment stage or at trial) from suing the settling Defendants. That would not be fair and equitable to the non-settling Defendants because the Probate Estates intend on pursuing claims against them even though the non-settling Defendants ultimately prevailed in this proceeding, and the proposed bar order would preclude them from pursuing indemnification, contribution, or other claims against the settling Defendants. In the end,' allowing the Probate Estates to relitigate claims arising out of the same nucleus of facts as those in this case would destroy the $20 million compromise, nullify the efforts by this Court and other courts over the last four years, and subject the non-settling Defendants to added cost and expense. Under the Anti-Injunction Act,-
Background
Over ten years ago, the Estate of Juanita Jackson — one of the six Probate Estates — filed the first of six lawsuits against THI and THMI for negligence or wrongful death.
The lawsuits against THI and THMI were initially being defended by lawyers retained by THI under an indemnification agreement or what has been described as a “course of dealing.”
About three months after the lawyers for THI and THMI withdrew, the Estate of Jackson obtained a $110 million empty-chair verdict against THI and THMI and then initiated proceedings supplementary against 16 parties — including the Debtor— to collect on that judgment.
At that point, the Jackson Estate made a strategic decision to force the Debtor into this involuntary chapter 7 bankruptcy ease.
The Jackson Estate likewise opted, again for strategic reasons, not to force THMI — perhaps the more natural target — into bankruptcy. The strategic reason for not forcing THMI into bankruptcy was fairly apparent. Once THMI was put into bankruptcy, the automatic stay would preclude the five other Probate Estates, who were likewise represented by Wilkes & McHugh, from moving forward on their wrongful death claims. In fact, two of the cases filed by the other Probate Estates were set for trial just a couple of months after the Jackson Estate forced the Debtor into bankruptcy.
By this time, the parties to the Jackson proceedings supplementary' — who have at times been referred to as the “targets” by the parties to this case and the Court— could see the writing on the wall: the Probate Estates intended on obtaining large jury verdicts against THI and THMI and attempting to collect them from the targets, many of whom could be consid
Under the January 2012 agreement, FAS — one of the targets — agreed to defend THI, the THI Receiver, and the THI receivership estate from any claims arising out of the negligence or wrongful death cases filed by the Probate Estates.
Newly retained counsel for THMI attempted to appear on the company’s behalf on the morning of trial in the case filed by the Nunziata Estate.
Webb Estate would not let newly retained counsel appear for either THI or THMI. Because the state courts would not let newly retained counsel appear on behalf of THI and THMI, both of those cases proceeded to empty-chair trials, and the juries ultimately returned more than $1 billion in verdicts combined.
Armed with a $100 million claim against the Debtor, and more than a $1 billion in liability against THMI, the Chapter 7 Trustee began investigating and pursuing potential fraudulent transfer, alter ego, and other related claims against the targets arising out of a purported “bust-out” scheme. According to the Trustee, THI Holdings, LLC (THI’s corporate parent) and its primary shareholder, the GTCR Group, conspired to allow THI’s two primary secured lenders — GECC and Ven-tas — to loot THI and THMI to repay $75 million in loans before THMI’s assets were transferred to the “Fundamental Entities” — which included FLTCH, FAS, THI-B, Forman, Grunstein, and Schron — for far less than their fair market value.
It turns out, while this bankruptcy case had been pending, the Probate Estates had been pursuing fraudulent transfer and alter ego claims — claims virtually identical to those being pursued by the Trustee in this case — in state court proceedings supplementary. The Estate of Jackson, of course, had initiated its proceedings supplementary before this case was filed. But it continued to litigate the fraudulent transfer claims against the targets after the order for relief was entered. More than seven months after the order for relief in this case, the Webb and Nunziata Estates movéd to implead Rubin Schron, among others, and actually obtained a default judgment against him in the Nunzia-ta case. All of the proceedings supplementary being pursued by the Probate Estates arose out of the alleged bust-out scheme.
FLTCH and FAS argued persuasively that the actions by the Probate Estates interfered with the Trustee’s administration of the estate as much as their New York declaratory judgment action did. And in fact, the Trustee acknowledged that any recoveries by the Probate Estates on any judgment against THI — including in the proceeding supplementary — should flow through the bankruptcy estate:
What [the Fundamental entities] are really driving at is a substantive determination by this Court that funds , collected by the creditors in their pursuit of claims against THI are property of the estate. It’s a 541 declaratory judgment action.
I don’t conceptually have a problem with that result because I think it’s the best thing for the estate for all the money to flow through to the bankruptcy estate. It’s my belief that that’s what should happen, it’s my belief that’s what will happen, but if this. Court wants absolute certainty with that issue, the way to tee it up properly, without making sort of an off-the-cuff decision, is to require someone to file a dec. action.
If you want me to file it, I’ll file it. If you want the targets to file it, they can file it. But the real question is not whose court should things be litigated in. The real question is whose funds are they? Are they property of the estate or are they non-property of the estate? And that determination requires an adversary proceeding, I believe, and re*506 quires the creditors to be joined to that adversary proceeding.27
The Court agreed that all of those issues needed to be hashed out in one proceeding involving all of the parties. And the Court concluded that proceeding could only take place in this Court, which has jurisdiction over property of the estate wherever located,
To accomplish that goal, the Court enjoined the Probate Estates from pursuing any proceedings supplementary or other collection efforts that implicated property conceivably belonging to the bankruptcy estate.
The main adversary proceeding was initiated when the Probate Estates filed a two-count complaint for declaratory judgment in this proceeding.
The initial joint complaint (really an amended complaint) — which was 228 pages long and contained 1,201 numbered paragraphs — included 22 counts.
The parties ultimately went to trial on claims for substantive consolidation, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, successor liability, fraudulent transfer, and conspiracy to commit fraudulent transfer,
The Court then ordered the Probate Estates, Trustee, FLTCH, FAS, Forman, and Grunstein to mediation. The Court also permitted others to participate in mediation.
On February 23, 2015, the Trustee filed an expedited motion to approve the compromise with the Fundamental Parties.
Under the terms of the bar order, third parties — such as the non-settling Defendants that prevailed in this proceeding— are barred from asserting claims against the Fundamental Parties that arise out of or relate to the claims the Fundamental Parties were released from. In particular, the bar order would bar claims by other Defendants in this adversary proceeding— namely, the GTCR Group, GECC, Ventas, and Rubin Schron — for indemnification and contribution. The parties’ compromise is expressly conditioned on entry of the proposed bar order.
A week later, the Trustee filed a supplemental term sheet setting forth the terms of the compromise with the Quintairos firm.
The GTCR Group, GECC, Ventas, THI Receiver, and Schron have all objected to the proposed compromises.
Conclusions of Law
The Justice Oaks factors are likely met
The Court should only approve a compromise if it is fair and equitable and in the best interests of the estate.
In fact, all of the factors weigh in favor of approving the compromises. The first factor is not particularly relevant as to the compromise with the Fundamental Parties because the Court has already tentatively ruled that at least some of the Fundamental Parties will be liable under a successor liability theory. Of course, there is still an open question of which Fundamental Parties will be liable and for how much. The real issue as to the Fundamental Parties is the extraordinary difficulty of collecting on any final judgment this Court enters and the litigation involved and the expense and delay necessarily attending those collection efforts. The settlement with the Fundamental Parties avoids all of that and brings $18.5 million into the estate — $14.5 million immediately, and the rest within three years. While the Probate Estates and Trustee likely would not face the same collection problems on their claims against the Quin-tairos firm, the claims themselves are much more uncertain.
The bar order is only fair and equitable if the Court grants the permanent injunctive relief
As this Court has explained before in this case, bar orders are permissible under appropriate circumstances. The Eleventh Circuit has expressly held that Bankruptcy Code § 105, which provides that bankruptcy courts may “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions” of the Bankruptcy Code, is ample authority for entry of a bar order.
Standing alone, the proposed bar order in this case is not fair and equitable to the parties being enjoined (principally the objecting parties). The compromise expressly states that the Probate Estates intend to pursue claims against the enjoined parties in the state court actions. Making matters worse, at least from the enjoined parties’ perspective, the proposed compromise expressly contemplates that FAS will withdraw from and refuse to defend the state court actions, as it is required to do under the January 2012 settlement agreement. And now, the enjoined parties will be barred from suing FAS for breaching its obligations under the January 2012 agreement or seeking indemnification or contribution from FAS in the event they are somehow found liable in the state court actions. In fact, the bar order here is virtually identical to one this Court rejected last year in this case.
Last year, the Trustee entered into a proposed compromise with the THI Receiver.
According to FAS, the THI Receiver would have breached his obligations under the January 2012 agreement by withdrawing his defense of THI and THMI in the negligence cases.
This Court ruled that the bar order was not fair and equitable to the enjoined parties because it deprived FAS and the enjoined parties of a right they specifically bargained for — namely, the right to defend THI as an outer “firewall” to protect against their own liability to the Probate Estates.
How is this compromise and bar order any different? At least under the earlier compromise, FAS had the right to argue to the state courts that it had the right to defend those cases under the January 2012 agreement even if the THI Receiver refused to.
To be sure, nothing under the new compromise would prevent the enjoined parties from defending themselves on direct claims against them. For instance, the GTCR Group, GECC, Ventas, and Schron could defend themselves if the Probate Estates sought to add them as the real party in interest in any of the state court cases. The problem, from the enjoined parties’ perspective though, is that they will barred from bringing an' indemnification or contribution claim against FAS, the only party that arguably engaged in wrongful conduct.
If this Court were considering the bar order in isolation, it cannot conceive of any reason to deviate from its prior ruling. And that could potentially doom both compromises because they are contingent on entry of a bar order (although the wording of the compromise allows the Fundamental Parties to waive the bar order requirement on their own behalf). But this Court is not considering the bar order in isolation. As part of their objections, three of the enjoined parties — the GTCR Group, GECC, and Ventas — have argued that their objections to the bar order would be moot if the Court essentially made permanent its temporary injunction.
The reason for that is plain: if the Probate Estates cannot continue pursuing the enjoined parties, then it makes no difference whether the outer firewall remains in place. Likewise, the enjoined parties have no need to assert indemnification or contri-
The Court concludes it has authority to grant permanent injunctive relief
As an initial matter, the Court cannot help but note the seeming irony in the Probate Estates’ argument that this Court lacks jurisdiction to grant permanent in-junctive relief.
As subject-matter jurisdiction can never be conferred by agreement or waived, the [Probate Estates] have concerns that the targets, who since their first appearance have done nothing but delay the progression of this bankruptcy case, will raise a lack of subject-matter jurisdiction after this Court’s resolution of the [Probate Estates’] state and federal actions.74
In many respects, that is precisely what the Probate Estates are doing now. On the one hand, this adversary proceeding has been successful for the Probate Estates. Because of the compromises, $20 million will be coming into the bankruptcy estate. On the other hand, this proceeding at one point involved over 30 counts against 16 different Defendants and ended with a tentative finding in the Probate Estates’ favor on 1 count. Counsel for the Probate Estates opened his closing argument by saying that, to paraphrase, his fear was ending up with a judgment against only FAS — and that is essentially what happened.
It appears that the Probate Estates would now like to disregard all of the unfavorable rulings along the way to that less-than-desirable outcome. They would like to be free to pursue claims this Court has already adjudicated after a two-week trial. They also would like to be free to pursue claims against parties that were disposed of at the pleading or summary judgment stage. But the Probate Estates’ arguments that this Court lacks jurisdiction to prevent them from relitigating those (and other) claims are misplaced.
Instead, this Court has authority to issue injunctive relief under the All Writs Act.
The Anti-Injunction Act prohibits a federal court from enjoining state court proceedings except in three specific instances:
A court of the United States may not grant an injunction to stay proceedings in a State court except as authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.84
If an injunction falls within one the three exceptions set forth in the Anti-Injunction Act, then it is authorized under the All Writs Acts.
The Probate Estates argue, with some persuasiveness, that the injunction proposed here has not. been expressly authorized by Congress. While the Probate Estates rightfully concede that § 105 is express authorization by Congress for this Court to enjoin a state court proceeding under the right circumstances, they argue that the authority under § 105 has never been extended to bar a claim that did not have a direct and immediate connection to property of the estate or the
The proposed injunction is necessary to aid this Court’s jurisdiction
Over 20 years ago, the Eleventh Circuit explained that an injunction is necessary to aid a federal court’s jurisdiction when a state court’s exercise of jurisdiction over a case would “seriously impair the federal court’s flexibility and authority to decide that case.”
The Eleventh Circuit first recognized this “complex litigation” scenario in Battle v. Liberty National Life Insurance.
On appeal, the Eleventh Circuit upheld the district court injunction under the “in aid of jurisdiction” exception to the Anti-Injunction Act. In doing so, the Battle court rejected the notion that the “in aid of jurisdiction” exception applies only to in rem cases.
In particular, the Battle court noted that the district court judgment resolved seven years of litigation over complicated antitrust issues.
Any state court judgment would destroy the settlement worked out over seven years, nullify this court’s work in refining its Final Judgment over the last ten years, add substantial confusion in the minds of a large segment of the state’s population, and subject the parties to added expense and conflicting orders. This lengthy, complicated litigation is the “virtual equivalent of a res.”100
Four years later, the Eleventh Circuit reached a similar conclusion in Wesch v. Folsom.
Although it does not involve a class action lawsuit, the facts of this case are highly analogous to those in Battle. Here, what started off as 6 negligence or wrongful death lawsuits has morphed into 25 lawsuits (including adversary proceedings) and 15 appeals before 11 different courts and 17 judges in 5 states over a total of 11 years. In this Court, alone, there have been at least 78 days of hearings resulting in at least 18 reported decisions. The main adversary complaint filed by the Trustee and Probate Estates, which was nearly 300 pages and more than 1,200 numbered paragraphs, alleged more than 30 claims for relief against 16 parties,
All of that led to basically a $20 million settlement that hinges on one thing: finality. The Court cannot approve the compromise if the Probate Estates are allowed to continue pursuing claims — many of which have already or could have been litigated here — against GTCR, GECC, Ventas, Schron, and the other objecting parties because the objecting parties will be barred from seeking indemnification or contribution from FAS and the other Fundamental Parties under the compromise. But FAS and the other Fundamental Parties understandably will not agree to the compromise if they do not get a bar order. The only way the settlement works is if
For all of those reasons, this case falls squarely within the Eleventh Circuit’s decision in Battle. This Court and others have devoted years of time and effort to exceedingly complex litigation that has resulted in a $20 million settlement. Allowing the Probate Estates to go back to state court or elsewhere to litigate claims arising out of the same nucleus of acts threatens to destroy the $20 million compromise (there will be none without the injunction), nullify the efforts by this Court and other courts over the last four years, and subject parties who have prevailed in this proceeding to added cost and expense. Accordingly, this Court has the authority to enter an injunction to aid its own jurisdiction.
The proposed injunction also is necessary to protect this Court’s prior judgments
An injunction is appropriate under the “relitigation exception” to the Anti-Injunction Act — i.e., to protect this Court’s prior judgments — where state law claims would be precluded by the doctrine of res judicata:
In a sense, the relitigation exception empowers a federal court to be the final arbiter of the res judicata effects of its own judgments because it allows a litigant to seek an injunction from the federal court rather than arguing the res judicata defense in state court.105
But for the “relitigation exception” to apply, the objecting parties must make a strong and unequivocal showing that the Probate Estates are seeking to relitigate claims that would be barred by the doctrine of res judicata.
To determine whether res ju-dicata bars the claims the Probate Estates seek to relitigate, the Court must look to Florida law.
But this Court’s authority to issue an injunction under the “relitigation exception” is slightly narrower that traditional notions of res judicata. In SFM Holdings, Ltd. v. Banc of America Securities, the Eleventh Circuit held that the broad view of res judicata — i.e., res judicata bars claims that were actually litigated or could have been — is not consistent with the Anti-Injunction Act.
Conclusion
Under the Eleventh Circuit’s
Early on in this proceeding, this Court observed that the facts alleged in the Probate Estates’ adversary complaint had all the making of a “legal thriller” and that it was ultimately up to this Court to determine whether the allegations were mostly the work of fact or fiction.
. Doc. Nos. 1591, 1595 & 1596.
. Adv. Doc. Nos. 1052, 1055 & 1058.
. L. Frank Baum, The Marvelous Land of Oz (1904).
. The six probate estates are the Estate of Juanita Jackson, the Estate of Elvira Nunzia-ta, the Estate of Joseph Webb, the Estate of James Jones, the Estate of Opal Sasser, and the Estate of Arlene Townsend (the "Probate Estates”).
. This bankruptcy case and the main adversary proceeding were exceedingly complex. The Court had nearly 80 days of hearings in this case. The issues raised in those hearings resulted in 18 reported decisions: In re Fundamental Long Term Care, Inc., 2012 WL 4815321 (Bankr.M.D.Fla. Oct. 9, 2012); In re Fundamental Long Term Care, Inc., 489 B.R. 451 (Bankr.M.D.Fla. 2013); In re Fundamental Long Term Care, Inc., 492 B.R. 571 (Bankr.M.D.Fla. 2013); In re Fundamental Long Term Care, Inc., 493 B.R. 613 (Bankr.M.D.Fla. 2013); In re Fundamental Long Term Care, Inc., 493 B.R. 620 (Bankr.M.D.Fla. 2013); In re Fundamental Long Term Care, Inc., 494 B.R. 548 (Bankr.M.D.Fla. 2013); In re Fundamental Long Term Care, Inc., 500 B.R. 140 (Bankr.M.D.Fla. 2013); In re Fundamental Long Term Care, Inc., 500 B.R. 147 (Bankr.M.D.Fla. 2013); In re Fundamental Long Term Care, Inc., 501 B.R. 770 (Bankr.M.D.Fla. 2013); In re Fundamental Long Term Care, Inc., 501 B.R. 784 (Bankr.M.D.Fla. 2013); In re Fundamental Long Term Care, Inc., 507 B.R. 359 (Bankr.M.D.Fla. 2014); In re Fundamental Long Term Care, Inc., 508 B.R. 224 (Bankr.M.D.Fla. 2014); In re Fundamental Long Term Care, Inc., 509 B.R. 387 (Bankr.M.D.Fla. 2014); In re Fundamental Long Term Care, Inc., 509 B.R. 956 (Bankr.M.D.Fla. 2014); In re Fundamental Long Term Care, Inc., 512 B.R. 690 (Bankr.M.D.Fla. 2014); In re Fundamental Long Term Care, Inc., 515 B.R. 352 (Bankr.M.D.Fla. 2014); In re Fundamental Long Term Care, Inc., 515 B.R. 857 (Bankr.M.D.Fla. 2014); In re Fundamental Long Term Care, Inc., 515 B.R. 874 (Bankr.M.D.Fla. 2014).
.The Probate Estates and Trustee named 16 defendants. One defendant — Rubin Schron— prevailed at the dismissal stage. Three more defendants — General Electric Capital Corporation (“GECC”), Ventas Realty Limited Partnership, and Ventas, Inc. (collectively, “Ven-tas”) — prevailed on summary judgment. The Court tentatively ruled in favor of seven more defendants — Edgar Jannotta; GTCR Golder Rauner, LLC; GTCR VI Executive Fund, LP; GTCR Fund VI, LP; GTCR Partners, VI, LP; GTCR Associates VI, LP (collectively, the "GTCR Group”); and THI Holdings, LLC ("THI Holdings”) — at trial. The Court will be entering a final judgment in favor of those seven defendants. The Court tentatively ruled that the remaining five defendants — Leonard Grunstein; Murray Forman; Fundamental
. 28 U.S.C. § 2283.
. Before March 2006, THI owned a number of subsidiaries that operated nursing homes throughout the United States. THMI, which was a THI subsidiary at the time, provided administrative support for the nursing homes operated by the other THI subsidiaries.
. Technically, THI was not named as a defendant in the Nunziata case.
. Doc. No. 105 at 5; Doc. No. 109 at 17; Doc. No. 204 at 9-10; Doc. No. 318 at 27-29; Doc. No. 373 at 59; Doc. No. 402 at 127-29; Doc. No. 599 at 124.
. The facts surrounding the withdrawal of counsel for THI and THMI is set forth in more detail in this Court’s memorandum opinion overruling the Debtor's objection to the Estate of Jackson’s proof of claim. In re Fundamental Long Term Care, Inc., 500 B.R. 140, 142-45 (Bankr.M.D.Fla. 2013).
. Initially, the Estate of Jackson moved to implead GECC and Schron. Later, the Jackson Estate moved to implead Ventas, Grun-stein, Forman, FAS, FLTCH, THI-B, the GTCR Group, Jannotta, Troutman Sanders, LLP, and Concepcion, Sexton & Martinez.
. Copies of the motions to implead the 16 parties were filed with the district court when a number of those parties attempted to remove the proceedings supplementary to district court. Dist. Ct. Case No. 8:10-cv-2937-VMC, Doc. No. 1 — i; Dist. Ct. Case No. 8:11— cv-1314-SDM, Doc. No. 6-1.
. Doc. No. 1; Claim No. 2-1.
. Doc. No. 1.
. Doc. No. 6.
. The Nunziata case was set for trial January 9, 2012. The Webb case was set for trial February 10, 2012.
. The "targets” are all the Defendants in this proceeding.
. Doc. No. 1598-1.
. Id. at ¶ 9.1.
. Id.
. Again, THI was not a defendant in Nunzia-ta.
. The verdict in Nunziata was $200 million; the Webb verdict was $900 million.
. The purported "bust-out” scheme is set forth in In re Fundamental Long Term Care, Inc., 507 B.R. 359, 367-71 (Bankr.M.D.Fla. 2014).
. Technically, the claims the Trustee was pursuing belonged to THMI, which was not in bankruptcy. But the Court had ruled that the Trustee, as the representative of THMI’s sole shareholder (the Debtor), had the right to control THMI. In re Fundamental Long Term Care, Inc., 2012 WL 4815321, at *8 (Bankr.M.D.Fla. Oct. 9, 2012). District Judge James S. Moody, Jr., who presided over one of the appeals in the main bankruptcy case, ordered
. Adv. No. ll-ap-01198, Adv. Doc. No. 1, Ex. 1.
. Adv. No. ll-ap-01198, Adv. Doc. No. 62 at 42-43.
. 28 U.S.C. § 1334(e).
. In re Fundamental Long Term Care, Inc., 500 B.R. 147, 160 (Bankr.M.D.Fla. 2013); In re Fundamental Long Term Care, Inc., 501 B.R. 770, 784 (Bankr.M.D.Fla. 2013).
. Adv. Doc. No. 1.
. Adv. Doc. Nos. 12, 16 & 36.
. Adv. Doc. No. 109.
. For example, the amended complaint included claims by the Probate Estates for breach of fiduciary duty (Count III), aiding and abetting breach of fiduciary duty (Counts V & VII), and fraudulent transfer (Count XIV & XV). Adv. Doc. No. 109.
. Id. For example, the Probate Estates and Trustee jointly asserted claims for successor liability (Count VIII), piercing the corporate veil (Counts IX-XIII), and fraudulent transfer (Counts XVI-XXII)
. Adv. Doc. 289.
. After the Court dismissed the claims set forth in the second amended complaint filed by the Probate Estate and the Trustee, the parties filed a restated second amended complaint that included only the counts that remained pending after the Court’s rulings on the various motions to dismiss. Adv. Doc. No. 620.
. Adv. Doc. No. 1019.
. Id.
. Id.
. It appears that Christine Zack, the law firm of Quintairos, Prieto, Wood & Boyer, and Kristi Anderson all participated in the mediation in some respect.
. The "Fundamental Parties” refers to FLTCH, THI-B, FAS, Forman, Grunstein, Zack, and Fundamental Clinical Consulting.
. The Trustee had sued the Quintairos firm for malpractice and breach of fiduciary duty in state court. That action was removed to federal court. The Trustee later filed an adversary complaint against the Quintairos firm in this Court.
.Doc. No. 1591, Ex. 1.
. I'd. at 111.
. Id.
. Id.
. Id. at ¶¶ 3 & 5-8.
. Id. at ¶ 13.
. Doc. No. 1596, Ex. 1.
. Id. atHl.
. Id. atfflI2&3.
. Id. at 5.
. Doc. Nos. 1598, 1600, 1601, 1602 & 1606.
. The objections are principally directed at the compromise with the Fundamental Parties.’ But the arguments raised by those objections seem to apply to the compromise with the Quintairos firm. And at a March 4, 2015 hearing on the proposed compromises, the GTCR Group alluded to the fact that it objects to the Quintairos compromise for the same reasons it objects to the settlement with the Fundamental Parties.
. Adv. Doc. Nos. 1052, 1055 & 1058.
. Rivercity v. Herpel (In re Jackson Brewing Co.), 624 F.2d 599, 602 (5th Cir. 1980).
. Wallis v. Justice Oaks II, Ltd. (In re Justice Oaks II, Ltd.), 898 F.2d 1544, 1549 (11th Cir. 1990).
. Id.
. This Court recently dismissed negligence (legal malpractice) and breach of fiduciary duty claims against the Quintairos firm. Adv. No. 8:13-ap-01176, Adv. Doc. No. 90 at 106-08. That ruling is subject to a pending motion for reconsideration. Adv. No. 8:13-ap-01176, Adv. Doc. No. 89. The Court is aware that District Judge Mary S. Scriven denied the Quintairos firm’s motion to dismiss legal malpractice and breach of fiduciary duty claims by THMI in a removed state court case. Dist. Ct. Case No. 8:12-cv-1854-MSS, Doc. No. 82 at 8-11.
. Munford v. Munford, Inc. (In re Munford), 97 F.3d 449, 454-55 (11th Cir. 1996).
. See, e.g., In re GunnAllen Fin., Inc., 443 B.R. 908, 915 (Bankr.M.D.Fla. 2011) (discussing factors to be considered in entering bar orders).
. In re Fundamental Long Term Care, Inc., 515 B.R. 352, 359 (Bankr.M.D.Fla. 2014).
. Id.
. Doc. Nos. 1490, 1506, 1509, 1511, 1512 & 1513. FAS characterized that settlement as
merely a continuation of the [Probate Estates’] strategy to obtain massive judgments against undefended entities, with the object of collecting these judgments from innocent third parties that lack an initial voice in the contest on the merits. In this instance, the Trustee is willingly along for the ride, despite a clear conflict in purportedly “representing” THMI’s interests, not because the Trustee has any facts or information that THMI or THI should actually be saddled with massive judgments for underlying tort claims (when all objective evidence is to the contrary), but instead merely to enhance potential litigation damages for those very same creditors.
Doc. No. 1512 at 1-2.
.To his credit, counsel for FAS, in arguing for the bar order here, acknowledged arguing against the previous bar order in favor of the THI receiver. (“In fact, I think I may have spoken eloquently on that issue myself in opposition to that compromise. The irony is not lost on me, Your Honor.”)
. In re Fundamental Long Term Care, Inc., 515 B.R. at 360-61.
. Id.
. Doc. No. 1598-1 at ¶ 9.1.
. Id.
. Adv. Doc. Nos. 1052, 1055 & 1058.
.The Trustee has also forcefully argued in opposition to the injunction. Adv. Doc. No. 1059. The Trustee’s objection, however, is somewhat curious. It is unclear why the Trustee objects to the proposed injunctive relief. It would seem the Trustee has no interest in whether the Probate Estates are permitted to pursue claims in state court. If anything, the Trustee presumably should support the request for injunctive relief if it would resolve the only objections to the nearly $20 million in settlements. In any event, the Court will focus on the Probate Estates’ objection since they are the parties who will potentially be enjoined.
. Adv. No. 8:13-ap-00929, Doc. No. 7 at V 2.
. Adv. Doc. No. 1011 at 9-10 ("... in spite of the fear I have that we’re going to get a judgment against FAS and not anyone else.... ”). '
. Adv. Doc. No. 1060.
. Id. at 1-2.
. Id.
. Id. at 5-9.
. 28 U.S.C. § 1651(a).
. Id.
. Burr & Forman v. Blair, 470 F.3d 1019, 1026 (11th Cir. 2006); see also Wesch v. Folsom, 6 F.3d 1465, 1470 (11th Cir. 1993) (explaining that the All Writs Act “also empowers federal courts to issue injunctions to protect or effectuate their judgments”).
. 28 U.S.C. § 2283.
. Id.
. Upper Chattahoochee Riverkeeper Fund, Inc. v. City of Atlanta, 701 F.3d 669, 675 (11th Cir. 2012); Burr & Forman, 470 F.3d at 1027-28.
. Adv. Doc. No. 1060 at 10 (citing In re Richard Potasky Jeweler, Inc., 222 B.R. 816, 827-28 (S.D.Ohio 1998); In re Cont’l Airlines, 203 F.3d 203, 217 (3d Cir. 2000)).
. Id. (arguing that "[n]one of the exceptions to the Anti-Injunction Act apply here”).
. Wesch, 6 F.3d at 1470.
. In re Bayshore Ford Truck Sales, Inc., 471 F.3d 1233 (11th Cir. 2006).
. 877 F.2d 877 (11th Cir. 1989).
. Id. at 880.
. Id.
. Id.
. Id. (discussing First Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 97 S.Ct. 2881, 53 L.Ed.2d 1009 (1977)).
. Id.
. Id. at 880-81.
. Id.
. Id.
. Id. at 882 (quoting Battle v. Liberty Nat'l Life Ins. Co., 660 F.Supp. 1449, 1457 (N.D.Ala. 1987)).
. 6 F.3d 1465, 1470-72 (11th Cir. 1993).
. Id. at 1471.
. Adv. Doc. Nos. 1, 289 & 620.
. Burr & Forman v. Blair, 470 F.3d 1019, 1030 (11th Cir. 2006); Wesch, 6 F.3d at 1470.
. Burr & Forman, 470 F.3d at 1030 & n. 30.
. Id. (explaining that "[wjhen determining whether claim preclusion is appropriate, federal courts employ the law of the state in which they sit”).
. Heney v. Windsor Corp., 777 F.Supp. 1575, 1576-77 (M.D.Fla. 1991).
. 764 F.3d 1327, 1336 (11th Cir. 2014).
. The Eleventh Circuit’s decision in Juris v. Inamed Corp., 685 F.3d 1294 (11th Cir. 2012) likewise supports the Court’s decision here.
. In re Fundamental Long Term Care, Inc., 507 B.R. 359, 365 (Bankr.M.D.Fla. 2014).
. The scope of that injunction will not preclude the Probate Estates (or any other party) from prosecuting an appeal of any order entered by this Court.
. In Townsend, the Townsend Estate obtained a $1.1 billion verdict against THI. After the trial, the Townsend Estate attempted to add the non-settling Defendants to the judgment as the ’’real parties in interest.”
The Sasser and Jones Estates similarly attempted to add the non-settling Defendants as defendants in those state court actions — albeit before judgment — based on the same “real party in interest” theory. All three of those cases have been removed to this Court. In the Court's view, the "real party in interest” theory, which is based on the January 5 settlement agreement, is completely without merit. In any case, it is essentially the same as several of the claims asserted here just recast under a different name, and even if it is somehow distinct, that claim could have been litigated here.
Reference
- Full Case Name
- IN RE: FUNDAMENTAL LONG TERM CARE, INC., Debtor. Estate of Juanita Jackson v. General Electric Capital Corporation
- Cited By
- 6 cases
- Status
- Published