Aegis Asset Trust v. Dauval

• Court: District Court, M.D. Florida
• Decided: January 3, 2025
• Docket: 8:23-cv-02473
• Status: Unknown

Opinion

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION In re: AEGIS ASSET TRUST MANGEMENT, LLC, Case No. 8:19-bk-8036-CPM Debtor. ___________________________________

AEGIS ASSET TRUST, et al., Appellants,

v. Case No: 8:23-cv-2473-KKM RICHARD M. DAUVAL, et al., Appellees.

___________________________________ ORDER At some point, finality trumps other concerns in a lawsuit. In the bankruptcy case

below, the bankruptcy court approved a stipulation and settlement agreement resolving an adversary proceeding and ordered the sale of sixty-eight properties originally belonging to the appellants. A year and a half later, the appellants filed a flurry of challenges in the main

bankruptcy case and two adversary proceedings claiming that the stipulation and settlement agreement were unauthorized, fraudulent, and void. After three hearings, the bankruptcy court rejected those challenges. Because the bankruptcy court did not err in concluding that the appellants failed to satisfy the conditions for relief under Federal Rule of Civil

Procedure 60, I affirm. I. BACKGROUND A. Sixty-Eight Properties Are Returned to the Aegis Asset Trust Bankruptcy Estate by Stipulation and Sold to the Appellees is consolidated appeal1 arises from the Chapter 7 bankruptcy of Aegis Asset Management, LLC, a real-estate investment firm. (Doc. 12-7) at 1; (Doc. 12-10) ¶ 3.2

e appellants are various entities affiliated with Monier Rahall that obtained real property allegedly transferred from the debtor around the filing of the petition. (Doc. 9-53); (Doc. 9-99) ¶ 1. Appellees are the Chapter 7 trustee and various entities associated with Jamie

Rand that purchased those real properties from the estate after the trustee avoided the transfers. Appellees’ Br. (Doc. 45) at 4–6; (Doc. 12-45) at 2–3. Only a narrow portion of the bankruptcy proceeding related to the avoidance of

those transfers is at issue. After the Aegis bankruptcy was converted from Chapter 11 to Chapter 7 in mid-October 2019, (Doc. 12-9), the Chapter 7 trustee initiated an adversary

1 In addition to this case, this order resolves the appeals in cases 8:23-cv-2515-KKM, 8:23-cv-2516-KKM, 8:24-cv-178-KKM, 8:24-cv-247-KKM, and 8:24-cv-249-KKM.

2 is consolidated appeal has three records, one for each case number in the bankruptcy court below. Citations to (Doc. 12-XX) refer to the record filed in case 8:23-cv-2516-KKM, which is the record from the main bankruptcy case, 8:19-bk-8036-CPM. Citations to (Doc. 9-XX) refer to the record filed in case 8:23-cv-2473-KKM, which is the record from what the parties call the “fraudulent-transfer adversary,” 8:20-ap-73-CPM. Finally, citations to (Doc. 10-XX) refer to the record filed in case 8:23-cv-2515-KKM, which is the record from what the parties call the “independent-action adversary,” 8:22-ap-265-CPM. 2 proceeding seeking to avoid and recover transfers of the debtor’s property under 11 U.S.C.

§§ 548–50. (Doc. 9-9.) e parties call this the “fraudulent-transfer adversary.” , Appellee’s Br. at 8. e trustee ultimately filed a ird Amended Complaint in July 2020 in that proceeding seeking avoidance of transfers to the appellants here. (Doc. 9-53.)

e heart of the parties’ dispute is events resolving that proceeding in February and March 2021. On February 25, 2021, the trustee’s attorney docketed a “Stipulation for Final Judgment Determining Properties as Property of the Bankruptcy Estate” in the fraudulent-

transfer adversary. (Doc. 9-95.) at document stipulated to the entry of final judgment determining that the bankruptcy estate owned the sixty-eight properties claimed by the appellants. . at 1. e trustee’s attorney signed the stipulation on behalf of the trustee and

“attest[ed] that concurrence in the filing of this paper has been obtained.” e electronic signature of an attorney for some of the appellants was also affixed. at 2. e trustee served the stipulation on all the appellants via CM/ECF. ; (Doc. 9-8) at 1–

8. at same day, the trustee moved in the bankruptcy case for an order approving that stipulation and permitting the trustee to sell to Jamie Rand the sixty-eight properties declared part of the bankruptcy estate by the stipulation. (Doc. 12-45) at 1. e trustee

served that motion on the appellants by U.S. mail. at 8, 36–47. Attached to that motion was a settlement agreement between the trustee and appellants providing for the terms of that sale and the entry of the stipulation in the fraudulent-transfer adversary. at 9–14.

3 e Chapter 7 trustee had signed the attached agreement, at 15, but the signatures pages

for all the appellants were blank, at 16–18. On March 5, 2021, the bankruptcy court entered an order approving the stipulation. (Doc. 9-96.) e trustee filed the appellants’ signature pages for the settlement agreement

in a separate document four days later. (Doc. 12-47.) Two weeks after that, on March 24, the bankruptcy court entered a final judgment declaring that the sixty-eight properties at issue in the fraudulent-transfer adversary were the bankruptcy estate’s property and might

be sold by the trustee under 11 U.S.C. § 363. (Doc. 9-97) at 1–2. at judgment was served on all the appellants by U.S. mail. (Doc. 9-98) at 1–5. Five days later, the bankruptcy court entered an order in the bankruptcy case approving the compromise between the trustee and

the appellants and authorizing the sale of the sixty-eight properties to the appellees. (Doc. 12-49) at 1–10. Again, that order was served on all the appellants. (Doc. 12-50) at 1–5. e only objection to the order approving the properties’ sale was by a condominium

association—not any of the appellants. (Doc. 12-49) at 2. None of the appellants filed motions challenging any of these actions under Federal Rule of Civil Procedure 59(e) or 60(b) at the time, and none of the now-appellants appealed. (Doc. 12-6);

(Doc. 9-8).

4 B. e Appellants Challenge the Transfer Over a Year and a Half Later Nineteen months passed. en, on November 9, 2022, Monier Rahall filed motions

seeking to set aside the bankruptcy court’s orders entering judgment in the fraudulent- transfer adversary and approving the sale of the sixty-eight properties. (Doc. 12-91); (Doc. 12-94). Since then, Rahall and the appellants have filed numerous papers in both the

bankruptcy case and the fraudulent-transfer adversary advancing essentially the same theory—that the stipulation, settlement agreement, and signature pages that the Chapter 7 trustee’s attorney filed were fraudulent, that the appellants never agreed to the trustee’s

sale of the properties to Rand, and that the orders approving the stipulation and sale should be set aside under Federal Rule of Civil Procedure 60. , (Doc. 12-133); (Doc. 12- 160); (Doc. 12-191); (Doc. 9-102); (Doc. 9-117); (Doc. 9-140).

e appellants also initiated a new adversary proceeding—what the parties call the “independent-action adversary,” Appellees’ Br. at 18—seeking in part essentially the same relief as they had on motion in the bankruptcy case and the fraudulent-transfer

adversary. (Doc. 10-35.) Namely, Count I of the appellants’ Second Amended Adversary Complaint asked the bankruptcy court to set aside the orders approving the stipulation and sale based on Federal Rule of Civil Procedure 60(b)(4), (b)(6), (d)(1), and

(d)(3). (Doc. 10-35) ¶¶ 164–177. e appellants’ final operative motions in the bankruptcy

5 case and the fraudulent-transfer adversary likewise asked the bankruptcy court to vacate

those orders, for the same reasons. (Docs. 9-140; 12-191). e bankruptcy court declined to do so. After holding three hearings addressing the appellants’ contentions, (Docs. 12-216, 12-268, 12-329), that court concluded that the

appellants had not satisfied the conditions for relief under any provision of Rule 60, (Doc. 12-329) at 8–21. It entered “mirror image” orders styled as judgments on the pleadings disposing of appellants’ claims in the bankruptcy case, the fraudulent-transfer adversary,

and the independent-action adversary. (Docs. 9-3; 10-3; 12-3); (Doc. 12-329) at 22 (“[W]e have mirror-image motions and my ruling is meant to be mirror image as well.”). e appellants challenge all three orders. (Docs. 9-2; 10-2; 12-2). ey also challenge

three orders by the bankruptcy court addressing the content of the record on appeal. , No. 8:24-cv-178-KKM (Doc. 1); , No. 8:24-cv-247-KKM (Doc. 1); , No. 8:24-cv-249-KKM (Doc. 1). ese appeals

are ripe for resolution. II. LEGAL STANDARD A district court serves in an appellate role when reviewing a bankruptcy court’s

decisions. , 216 F.3d 1295, 1296 (11th Cir. 2000). Except for Rule 60(b)(4), a reviewing court ordinarily reviews the disposition of a Rule 60(b) motion for abuse of discretion. , 252 F.3d 1260, 1263 (11th Cir.

6 2001). Orders denying relief under Rule 60(d)(3) are likewise reviewed for abuse of

discretion , No. 21-14120, 2022 WL 4282253, at *2 (11th Cir. Sept. 16, 2022) (per curiam); , 478 F.3d 1303, 1314 (11th Cir. 2007) (motions under Rule 60(b)(3) reviewed for abuse of

discretion). Because Rule 60(b)(4)’s availability turns on whether the underlying judgment is void—a legal question—orders under that rule are reviewed de novo. , 216 F.3d at 1263.

But because the bankruptcy court described its ruling as a judgment on the pleadings, my review is de novo here. That review is appropriate when no material facts are in dispute and the moving party is entitled to judgment as a matter of law, drawing all

inferences “in the light most favorable to the nonmoving party.” , 250 F.3d 1299, 1301 (11th Cir. 2001). III. ANALYSIS

e appellants challenge the bankruptcy court’s orders under Federal Rules of Civil Procedure 60(b)(4), 60(b)(6), 60(d)(1), and 60(d)(3). None of their arguments that the bankruptcy court erred are persuasive. I thus affirm the bankruptcy court’s orders.

7 A. e Appellants Do Not Show that the Bankruptcy Court’s Orders Were Void, So Relief is Not Available Under Rule 60(b)(4) Civil Rule 60(b)(4)3 provides that a “court may relieve a party” from an order at any time if “the judgment is void.” “A void judgment is a legal nullity.”

, 559 U.S. 260, 270 (2010). A judgment is not void simply because it is wrong. Rather, a judgment is void only if it “is premised either on a certain type of jurisdictional error or on a violation of due process that deprives a party of notice or the

opportunity to be heard.” at 271; , 75 F.4th 1326, 1335 (11th Cir. 2023) (“A judgment is ‘void’ under Rule 60(b)(4) if it was rendered without jurisdiction of the subject matter or the parties or in a manner inconsistent with due process

of law.” (quoting , 259 F.3d 1315, 1319 (11th Cir. 2001) (per curiam))). Neither the bankruptcy court’s order approving the parties’ stipulation nor its order

approving the sixty-eight properties’ sale is void. e essence of the appellants’ argument is that, because the stipulation resolving the fraudulent-transfer adversary was allegedly fraudulent, all actions that the bankruptcy court took premised on that document—

including approving the stipulation and the motion to sell the sixty-eight properties—are

3 e Federal Rules of Bankruptcy Procedure incorporate Federal Rule of Civil Procedure 60 for bankruptcy cases, subject to exceptions inapplicable here. FED. R. BANKR. P. 9024(a). 8 void.4 , Appellants’ Br. (Doc. 42) at 60 (“A void stipulation and approving of void

stipulation cannot be the basis for a final judgment based on the void stipulation and void approval.”). Yet the appellants do not explain why any infirmity in the stipulation renders the judgment void. A judgment erroneously enforcing a void agreement (or purported

agreement) is not itself void unless there was some defect in the court’s jurisdiction or a violation of due process. , 111 F.4th 1043, 1054 (10th Cir. 2024) (holding that a judgment upon a contract was not void for purposes of Rule 60(b)(4) even

though the underlying contract was illegal); , 338 F. Supp. 3d 326, 333 (S.D.N.Y. 2018) (same), , 802 F. App’x 28 (2d Cir. 2020). Any possible problem with the stipulation or settlement agreement goes to whether the

bankruptcy court’s orders were , not whether it had the authority to enter them.

, 559 U.S. at 270 (“ ‘A judgment is not void,’ for example, ‘simply because it is or

may have been erroneous.’ ” (quoting , 57 F.3d 1, 6 (1st Cir. 1995))). And nothing suggests that any of the bankruptcy court’s acts were without authority or violated due process. e appellants baldly assert that the bankruptcy court’s order approving the parties’ stipulation, (Doc. 9-96), was void because “[t]here was no due process or hearing and no legitimate [s]tipulation to approve.” Appellants’ Br. at 59 (emphasis

4 e appellees exhaustively address why the bankruptcy court’s judgment was not void, explaining why it had subject-matter jurisdiction and personal jurisdiction and why its orders did not violate due process. Appellees’ Br. at 49–63. Yet for brevity’s sake, I address only the form of the voidness argument that the appellants’ opening brief preserved. 9 omitted). Yet the appellants received notice of every relevant act by the bankruptcy court

and could have challenged them at the time. (Doc 9-95) at 2 (notice of filing of stipulation); (Doc. 12-45) at 8, 36–47 (notice of motion for order approving stipulation); (Doc. 9-98) at 1–5 (notice of judgment declaring that the sixty-eight properties were the

property of the bankruptcy estate); (Doc. 12-50) at 1–5 (notice of order approving sale).5 And the appellants do not plead otherwise in their complaint in the independent-action adversary. (Doc. 10-35). Nothing suggests that there was a “due process

[violation] that deprive[d] [the appellants] of notice or the opportunity to be heard” such that the judgments are void. , 559 U.S. at 271. Finally, the appellants repeatedly suggest that the bankruptcy court needed to hold

an evidentiary hearing to determine whether their attorneys ever consented to the stipulation’s filing, among other issues about how the stipulation and settlement agreement were enforced. , Appellants’ Br. at 7, 13–14, 25, 35, 44. An evidentiary hearing was

not necessary. As explained above, the judgment is not void even if the trustee’s attorney lacked authority to enter the stipulation or file the settlement agreement, so an evidentiary

5 e appellants make what facially appears to be a notice argument with respect to the hearing on approval of the settlement agreement on March 22, 2021. Appellants’ Br. at 64–69 (citing FED. R. BANKR. P. 2002(a)(3), 9019(b)). Yet on closer examination, this is another form of the appellants’ voidness argument. at 66 (“e 02/25/21 , Ex.A, was not executed, so there is literally nothing that could take place on 03/22/21 at 1:30 p.m. to approve an unexecuted Settlement Agreement, Ex. A, because there was no Settlement Agreement, Ex. A, entered into or executed and they (the 21 Defendants in ) had executed no in .” (emphasis original) (citation omitted)). It does not show that the appellants were denied notice. 10 hearing inquiring into the extent of his authority or related matters would have been

superfluous. e bankruptcy court did not err in denying relief under Rule 60(b)(4). B. e Appellants’ Rule 60(b)(6) Claims Are Barred Because ey Overlap with Relief Available Under Other Sections of Rule 60(b) Civil Rule 60(b)(6) allows a court to set aside a judgment at any time for “any other reason that justifies relief.” “Rule 60(b)(6) is an extraordinary remedy, but it is within the

district court’s discretion to grant it in order to do justice.” , 811 F.2d 1398, 1400 (11th Cir. 1987). Relief under Rule 60(b)(6) is exclusive of relief available under the rest of Rule 60(b)—a party may not seek relief under it if it could have sought relief under

one of the other rules. 596 U.S. 528, 533 (2022); , 507 U.S. 380, 393 (1993). e appellants fail to make out any arguments not cognizable under the rest of Rule

60(b). Broadly, they say that the bankruptcy court’s orders are wrong, void, and premised on fraud. , Appellants’ Br. at 50–51. Yet a court’s errors are properly challenged under Rule 60(b)(1). , 596 U.S. at 534 (“e ordinary meaning of the term

‘mistake’ in Rule 60(b)(1) includes a judge’s legal errors.”). Fraud may be remedied under Rule 60(b)(3).6 , 478 F.3d at 1314. And—as already discussed—

6 Both Rule 60(b)(1) and (b)(3) are unavailable to the appellants because Rule 60’s time limit bars their claims under those sections. FED. R. CIV. P. 60(c)(1) (“A motion under Rule 60(b) must be made within 11 a judgment may be set aside as void under Rule 60(b)(4). More, appellants fail to cite to

Rule 60(b)(6) at all in their briefing and do not explain why extraordinary relief is justified. e bankruptcy court thus did not err in denying relief under Rule 60(b)(6). C. Because the Appellants Slept on eir Rights, Relief is Not Available Under Rule 60(d)(1) Civil Rule 60(d)(1) “preserves a court’s historical equity power to ‘entertain an

independent action to relieve a party from a judgment, order, or proceeding.’” , 741 F.3d 1349, 1359 (11th Cir. 2014) (quoting FED. R. CIV. P. 60(d)(1)). A party seeking the relief preserved by this provision must satisfy five elements: (1) a judgment which ought not, in equity and good conscience, to be enforced; (2) a good defense to the alleged cause of action on which the judgment is founded; (3) fraud, accident, or mistake which prevented the defendant in the judgment from obtaining the benefit of his defense; (4) the absence of fault or negligence on the part of defendant; and (5) the absence of any remedy at law. (quoting 761 F.2d 1549, 1551 (11th Cir. 1985) (per curiam)). As already discussed, the appellants had notice of the bankruptcy court’s purportedly erroneous acts and failed to challenge them. ey thus cannot satisfy the fourth element—absence of fault or negligence—and may not avail themselves of relief under Rule 60(d)(1). , 825 F.2d 281, 284–85 (11th Cir. 1987) (“Where

a reasonable time--and for reasons (1), (2), and (3) no more than a year after the entry of the judgment or order or the date of the proceeding.”). 12 complainant’s own negligence or oversight, however innocent, contributed to the original

judgment, an independent action for relief is not proper unless the evidence which would establish injustice is ‘practically conclusive.’ ” (quoting , 611 F.2d 593, 595 (5th Cir. 1980))); , 215 B.R. 245, 250

(Bankr. M.D. Fla. 1997) (concluding that an independent action to set aside a judgment was unavailable because the movant “had ample opportunity to challenge” an order premised on a fraudulent settlement agreement yet failed to do so). D. e Appellants Have Not Shown Fraud on the Court, So Relief Under Rule 60(d)(3) is Unavailable Civil Rule 60(d)(3) provides that a court retains its inherent power to “set aside a

judgment for fraud on the court.” A movant seeking relief under Rule 60(d)(3) must establish fraud by clear and convincing evidence. , 102 F.4th 1235, 1240 (11th Cir.) (“e movant must establish that the alleged fraud is ‘highly

probable.’ ” (quoting , 726 F.3d 1243, 1258 (11th Cir. 2013))), , 144 S. Ct. 2600 (2024). And fraud on the court encompasses only the most egregious conduct. It “involves a ‘direct assault on the integrity

of the judicial process’ ” and “ ‘embrace[s] only that species of fraud’ that officers of the

court ‘perpetrate[] ’ against ‘the judicial machinery’ and that ‘defile[s] the court itself.’ ” (first quoting 11 CHARLES ALAN WRIGHT, ARTHUR R. MILLER, & MARY KAY KANE,

13 FEDERAL PRACTICE & PROCEDURE § 2870 (3d ed. Apr. 2023 update); then quoting

, 761 F.2d at 1551). e appellants have not plausibly alleged a fraud upon the court. is case is similar to , in which the Eleventh Circuit held that no reasonable jurist could conclude that

a district court had abused its discretion by denying relief under Rule 60(d)(3) when the movant alleged that an attorney knowingly witnessed another attorney and a witness repeatedly perjuring themselves “yet said nothing.” 102 F.4th at 1240. So too here, the

appellants allege that the Chapter 7 trustee’s attorney filed multiple fraudulent documents, yet they themselves had notice of these documents—which allegedly deprived them of $17 million in real estate, Appellants’ Br. at 55—and said nothing. is is not the “clear and

convincing evidence” required to show fraud on the court. , 825 F.2d at 283. e appellants are not entitled to relief under Rule 60(d)(3). E. e Appellants Do Not Support eir Appeals of the Bankruptcy Court’s Orders Defining the Record, So ose Challenges Fail e appellants also docketed notices of appeal challenging the bankruptcy court’s Order Denying Reconsideration of Order Striking in Part Appellants’ Amended

Designation of Record on Appeal in each underlying matter. , No. 8:24- cv-178-KKM (Doc. 1); , No. 8:24-cv-247-KKM (Doc. 1); , No. 8:24-cv-249-KKM (Doc. 1). Yet the appellants present no arguments

in their briefing directed to these orders. Appellants’ Br.; Reply Br. (Doc. 50). 14 “Typically, issues not raised in the initial brief on appeal are deemed abandoned.” United States v. Campbell, 26 F.4th 860, 871 (11th Cir.) (en banc), cert. denied, 143 S. Ct. 95 (2022). In the absence of any argument as to why these orders were in error, I affirm them. IV. CONCLUSION Accordingly, the bankruptcy court’s order in each of these consolidated appeals is AFFIRMED. The clerk is directed to ENTER JUDGMENT in each consolidated case, which shall read: “The order of the bankruptcy court is affirmed,” TERMINATE any pending deadlines, and CLOSE each case. Additionally, it is ORDERED that the appellants’ Request for Oral Argument (Doc. 51) is DENIED AS MOOT. ORDERED in Tampa, Florida, on January 3, 2025.

Anal ,

United States District Judge