Federal Trade Commission v. Yu Lin

66 F.4th 164

• Court: Court of Appeals for the Fourth Circuit
• Decided: April 18, 2023
• Docket: 22-1738
• Status: Published

Opinion

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PUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 22-1738

FEDERAL TRADE COMMISSION,

Plaintiff – Appellee,

and

MARC-PHILIP FERZAN,

Receiver – Appellee,

v.

YU LIN; QUAN LIN; JAMIE TENG; JULIANA TENGONCIANG; ALFONSO KOLB, JR.; JASMIN TENGONCIANG; ROEL PAHL; CLARISSA TENGONCIANG; ALLAN PRIJOLES; MARY JANE PRIJOLES; DARREN CHRISTIAN; CHAN MARTIN; JULIE SANTOS; DAVID HEIMAN; HEARTLAND PROPERTY GROUP, INC.,

Movants – Appellants.

Appeal from the United States District Court for the District of Maryland, at Baltimore. Peter J. Messitte, Senior District Judge. (1:18-cv-03309-PJM)

Argued: March 8, 2023 Decided: April 18, 2023

Before WILKINSON and THACKER, Circuit Judges, and MOTZ, Senior Circuit Judge.

Affirmed by published opinion. Senior Judge Motz wrote the opinion, in which Judge Wilkinson and Judge Thacker joined. USCA4 Appeal: 22-1738 Doc: 40 Filed: 04/18/2023 Pg: 2 of 9

ARGUED: Kyle Singhal, HOPWOOD & SINGHAL PLLC, Washington, D.C., for Appellants. Imad Dean Abyad, FEDERAL TRADE COMMISSION, Washington, D.C., for Appellees. ON BRIEF: Shon Hopwood, HOPWOOD & SINGHAL PLLC, Washington, D.C., for Appellants. Anisha S. Dasgupta, General Counsel, Joel Marcus, Deputy General Counsel, FEDERAL TRADE COMMISSION, Washington, D.C., for Appellee Federal Trade Commission.

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DIANA GRIBBON MOTZ, Senior Circuit Judge:

This appeal marks another installment in a series of disputes involving an

enforcement action by the Federal Trade Commission (FTC) against a group of

fraudulent real estate developers (the Sanctuary Belize enforcement action). Appellants,

a group of 14 individual investors and a family-owned corporation, moved to intervene in

an action brought by others and sought relief from the district court’s judgment. But

Appellants did not do so until after the district court had entered final judgment and that

judgment had been appealed to this court. See FTC v. Pukke, 53 F.4th 80 (4th Cir. 2022)

(affirming in part In re Sanctuary Belize Litig., 482 F. Supp. 3d 373 (D. Md. 2020)).

Because the Sanctuary Belize enforcement action was already on appeal when Appellants

filed their motions, the district court concluded that it lacked jurisdiction to entertain

those motions. It held alternatively that the motions should be denied as meritless. We

affirm.

I.

The following facts are drawn from the record and unless otherwise noted are

uncontested. In mid-2018, Appellants collectively invested $1.95 million in Newport

Land Group (NLG). Appellants believed that NLG would use that investment to develop

a residential project in Costa Rica. A few months later, the FTC initiated the Sanctuary

Belize enforcement action, alleging that Andris Pukke and others had coordinated “a

large-scale land sales scam in the Central American country of Belize.” Sanctuary

Belize, 482 F. Supp. 3d at 385. The FTC asserted that this project, known as Sanctuary

Belize, was “directed and controlled” by “a web of individuals and corporate entities,”

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and that one such fraudulent entity was NLG. Id. at 386–87. The FTC offered abundant

evidence demonstrating that NLG’s principals had interlocking relationships with

Sanctuary Belize principals, that funds were commingled between NLG and Sanctuary

Belize for no apparent legitimate business purpose, that the entities shared a common

address and corporate headquarters, and that NLG had direct involvement in the

Sanctuary Belize scam.

Also in 2018, the FTC successfully obtained a temporary restraining order and, at

the district court’s direction, the Sanctuary Belize entities (including NLG) turned over

their assets to a court-appointed Receiver. See id. at 385, 388. Because NLG was jointly

and severally liable for the scheme, the Receiver sought and received approval from the

district court to begin using NLG’s assets, including Appellants’ investment funds, for

general receivership purposes. Although Appellants received timely notice of the

Receiver’s takeover of the NLG assets, they did not attempt to intervene in the case at

that time.

In early 2020, the district court conducted a nearly three-week bench trial. David

Heiman, one of the Appellants now seeking intervention, testified at that trial but neither

he nor the other Appellants sought to intervene. NLG, for its part, never appeared in the

proceedings. The district court later imposed final judgment on all defendants in two

thorough opinions, one issued on August 28, 2020, and the other on January 13, 2021.

In its August 2020 opinion, the court acknowledged that Heiman “challenged the

Receiver’s seizure of NLG’s assets as being assets of the Receivership.” Though noting

Heiman “face[d] a steep uphill battle” to have his investment returned, the district court

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explained that it was “willing at least to give him his day in court” and accordingly

granted Heiman leave to file a motion requesting the return of his investment. The

district court also deferred imposing default judgment against NLG until Heiman had an

opportunity to present his argument. The following month, Heiman and other NLG

investors sent nearly identical pro se letters to the district court in which they requested

that their investments be returned. But neither Heiman nor any of the other NLG

investors moved to intervene in the action. On November 9, 2020, Pukke noted an appeal

of the district court’s judgment to this court. In its January 2021 opinion, the district

court rejected the NLG investors’ written requests and extended its judgment to NLG.

On November 12, 2021, while Pukke’s appeal was pending before us, Appellants

finally moved in the district court to intervene in the Sanctuary Belize enforcement action

and for relief from judgment. The district court denied Appellants’ intervention motion,

reasoning that it lacked jurisdiction, that Appellants’ motion was untimely, and that they

lacked sufficient interest in the litigation to intervene as a matter of right. The court also

determined that its denial of the motion to intervene disposed of Appellants’ motion for

relief from judgment, and so denied the latter motion as a matter of course. Appellants

then noted this appeal.

II.

This case does not present a difficult legal issue. Forty years ago, in Griggs v.

Provident Consumer Disc. Co., 459 U.S. 56, 58 (1982), the Supreme Court held that

“[t]he filing of a notice of appeal is an event of jurisdictional significance—it confers

jurisdiction on the court of appeals and divests the district court of its control over those

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aspects of the case involved in the appeal.” We followed suit in Doe v. Public Citizen,

749 F.3d 246, 258 (4th Cir. 2014), observing that “[g]enerally, a timely filed notice of

appeal transfers jurisdiction of a case to the court of appeals and strips a district court of

jurisdiction to rule on any matters involved in the appeal.” We explained that “[t]his rule

fosters judicial economy and guards against the confusion and inefficiency that would

result if two courts simultaneously were considering the same issues.” Id.

Moreover, in Public Citizen we specifically addressed the relationship between a

notice of appeal and a motion to intervene. We concluded that there was “no reason why

an intervention motion should be excepted from the general rule depriving the district

court of authority to rule on matters once the case is before the court of appeals.” Id.

Thus, we held “that an effective notice of appeal divests a district court of jurisdiction to

entertain an intervention motion.” Id.

Appellants offer two arguments in an effort to resist the explicit holdings of

Griggs and Public Citizen. First, they maintain, assertedly relying on Public Citizen, that

“one party’s notice of appeal [does not] divest the district court of jurisdiction to

adjudicate claims made by other parties.” Appellants’ Opening Br. at 21. Second, they

argue that “one party’s appeal of only some issues in a given controversy does not divest

the district court of jurisdiction over other issues.” Id. Both arguments fail.

As to the first, Appellants misread Public Citizen. In their view, Public Citizen

held that “when a putative intervenor file[s] a notice of appeal, the district court then

lack[s] jurisdiction to entertain an intervention motion by that same party.” Id. Those

were the facts of Public Citizen (i.e., Public Citizen, along with other consumer groups,

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noted an appeal after filing a motion to intervene), but Appellants mistake those facts for

the holding of the case.

In Public Citizen, we addressed the question of “[w]hether a district court retains

jurisdiction to rule on a motion to intervene following a notice of appeal,” recognizing

that it was “a matter of first impression in this Circuit.” 749 F.3d at 258. We held that in

such scenarios, a district court lacks jurisdiction. Id. We placed no emphasis on the fact

that Public Citizen itself had filed the notice of appeal. Rather, we focused on the fact

that any effective notice of appeal transfers jurisdiction from the district court to the court

of appeals. See id. Regardless of whether the moving and appealing parties are the same,

simultaneous jurisdiction between the two courts would surely result in the “confusion

and inefficiency” that the Public Citizen holding was designed to prevent. Id.

Appellants’ argument to the contrary is further undermined by the holdings of

courts that have considered cases where the moving and appealing parties differ. See,

e.g., Taylor v. KeyCorp, 680 F.3d 609, 616 (6th Cir. 2012); Nicol v. Gulf Fleet Supply

Vessels, Inc., 743 F.2d 298, 299 (5th Cir. 1984). Those courts have concluded, as we

hold here, that a district court lacks jurisdiction over a motion to intervene while an

appeal is pending, regardless of who noted the appeal. Thus, it matters not that Pukke,

rather than Heiman and his co-investors, noted the appeal.

Appellants next argue that the district court retained jurisdiction because Pukke’s

initial appeal divested the district court of control only over “those aspects of the case

involved in the appeal.” Appellants’ Opening Br. at 21 (quoting Griggs, 459 U.S. at 58)

(emphasis omitted). Appellants are doubly wrong.

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First, Appellants suggest that they sought intervention merely to challenge rulings

that had not been appealed. See id. at 21–22. But Appellants’ motion to intervene

expressly stated that they wished to intervene to set aside portions of the district court’s

final judgment. That final judgment, unquestionably, was before us by virtue of Pukke’s

appeal. Thus, Appellants did indeed seek to challenge an aspect of the case that was then

on appeal. Second, even if Appellants had sought to intervene to challenge different

issues, “an effective notice of appeal divests a district court of jurisdiction to entertain an

intervention motion.” Public Citizen, 749 F.3d at 258. Because a notice of appeal had

already been filed by the time Appellants moved to intervene, the district court lacked

jurisdiction to entertain Appellants’ motion.

As a final matter, we note that this appeal is somewhat unusual in the sense that

the FTC, which argues that the district court lacked jurisdiction, joins Appellants in

asking us to address the merits of the underlying motions. See Oral Arg. at 26:16–26:39

(FTC’s counsel arguing that if this court fails to address the merits, it will be “leaving

everybody . . . open to another motion to intervene . . . only to go back up [on appeal]

with exactly the same arguments”); Appellants’ Reply Br. at 2 (arguing that “any

jurisdictional obstacle is now removed because this Court has decided the Pukke

appeals”). *

* At oral argument, the FTC suggested that Lytle v. Griffith, 240 F.3d 404 (4th Cir. 2001) and Fobian v. Storage Tech. Corp., 164 F.3d 887 (4th Cir. 1999), allow this court to reach the merits even if the district court was without jurisdiction. The relevant portions of Lytle and Fobian, however, only concern a district court’s ability to “take (Continued) 8 USCA4 Appeal: 22-1738 Doc: 40 Filed: 04/18/2023 Pg: 9 of 9

While we are sympathetic to this suggestion, we cannot rule on the merits.

Because the district court correctly determined it lacked jurisdiction on a matter that had

been appealed to our court, we only have jurisdiction to review that decision, not to

entertain the underlying merits. See Bender v. Williamsport Area Sch. Dist., 475 U.S.

534, 541 (1986); Public Citizen, 749 F.3d at 259.

III.

For the foregoing reasons, the district court correctly held it lacked jurisdiction

over Appellants’ motions, and accordingly its judgment is

AFFIRMED.

subsequent action on matters that are collateral to,” or in aid of, the appeal. See Public Citizen, 749 F.3d at 258.