NLG, LLC v. Horizon Hospitality Group, LLC

10 F.4th 1244
Court of Appeals for the Eleventh Circuit·Decided September 1, 2021·No. 19-14049·Published·Cited by 18 cases

Opinion

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 19-14049

D.C. Docket No. 1:18-cv-24272-RS, Bkcy No. 16-bkc-1-389-AJC

In re: LIZA HAZAN,

Debtor.

NLG, LLC, Plaintiff - Appellant,

versus

HORIZON HOSPITALITY GROUP, LLC, SELECTIVE ADVISORS GROUP, LLC, LIZA HAZAN,

Defendants - Appellees.

Appeal from the United States District Court for the Southern District of Florida

(September 1, 2021)

Before WILLIAM PRYOR, Chief Judge, JORDAN and MARCUS, Circuit Judges. MARCUS, Circuit Judge:

This bankruptcy case began in 2007, when NLG, LLC (“NLG”) sold a home on Fisher Island (the “Property”) to Liza Hazan (“Hazan”) for $5,100,000, receiving a purchase money note (the “Note”) and mortgage (the “Mortgage”) on the residence from Hazan. The Property would turn out to be the subject of years of protracted litigation before at least six judges and in two states. The upshot of this was a series of orders addressing the rights of NLG, Hazan, and Selective Advisors Group, LLC (“Selective”), a company owned and controlled by Hazan’s husband, concerning the Property, the Note, and the Mortgage. On January 11, 2016, one day before the property was to be sold, Hazan filed for relief under Chapter 11 of the Bankruptcy Code in the Southern District of Florida. Not surprisingly, NLG filed a proof of claim against the Property. In response, Hazan and Selective began adversary proceedings asserting that NLG no longer retained any rights or claims to the Property, and the bankruptcy court agreed.

NLG appealed the bankruptcy court’s decision to the district court, claiming that the Rooker-Feldman doctrine prevented the bankruptcy court from considering any of the issues raised during the adversary proceedings. The district court concluded, however, that the Rooker-Feldman doctrine was inapplicable. It then

dismissed NLG’s claims on the ground of equitable mootness. NLG now appeals the district court’s order. We affirm the judgment of the district court.

I.

These are the essential facts necessary to understanding the instant appeal:

A. Litigation in the Florida courts.

Litigation began in 2007 shortly after Hazan purchased the Property when NLG sued Hazan for breach of the purchase money promissory note. In April 2008, Judge Robert N. Scola of Florida’s Eleventh Judicial Circuit in Miami-Dade County entered a default final judgment (the “Scola Judgment”) against Hazan and in favor of NLG in the amount of $1,618,071.29 with 11% interest per annum.

NLG sued Hazan again in 2011, in the same state court, this time seeking to foreclose on the Mortgage. In February 2014, Circuit Judge Spencer Eig issued an order finding, however, that NLG could not foreclose on the Property. Rather, it could only recover the monetary Scola Judgment since it had elected a monetary remedy instead of foreclosure in its previous action (the “Eig Order”). NLG appealed this decision to Florida’s Third District Court of Appeal.

While all of this was happening, back in 2012, a foreign corporation called 9197-5904 Quebec, Inc. obtained a $5 million judgment against NLG in a wholly unrelated litigation in New York Supreme Court (the “Quebec Judgment”). Selective acquired the Quebec Judgment against NLG from 9197-5904 Quebec

and recorded the judgment in the Circuit Court in Miami-Dade County. This case was assigned to Judge Peter Lopez. Judge Lopez assigned NLG’s interest in the Scola Judgment -- and all of its rights and claims against Hazan -- to Selective for the purpose of partially satisfying the Quebec Judgment, which NLG now owed to Selective (the “Lopez Assignment Order”).1 In August 2014, Selective filed a satisfaction of the Scola Judgment and the Mortgage in the Circuit Court, giving credit to NLG towards satisfying the Quebec Judgment.

After the Lopez Assignment Order, the Eig Order was reversed on appeal by Florida’s Third District Court of Appeal. NLG, LLC v. Hazan, 151 So. 3d 455, 456–57 (Fla. Dist. Ct. App. 2014). On remand, and despite the fact that the Lopez Assignment Order assigned all of NLG’s rights and claims against Hazan to Selective, Judge Monica Gordo (who had taken over the case from Judge Eig), entered a foreclosure judgment in favor of NLG in December 2014 (the “Gordo Foreclosure Judgment”). Selective unsuccessfully moved to intervene in this proceeding. The Gordo Foreclosure Judgment determined that NLG was entitled to more than $4.8 million, and set the Property for sale on January 12, 2016. The

1 Following entry of the order, NLG moved the court to reconsider the Order of Assignment, asserting that because the Scola Judgment was the subject of an ongoing appeal, it could not be judicially assigned. Judge Lopez denied NLG’s motion, ruling that the assignment of the interest to Selective did not “affect the validity of what’s up on appeal.” He clarified that, “win or lose [the appeal], whatever happens, now [Selective] own[s] it instead of [NLG].”

court also ruled that Hazan was entitled to a right of redemption pursuant to Fla. Stat. § 45.0315 -- that is, she could avert the sale before it took place by paying the $4.8 million judgment amount to NLG.

In sum, the Scola Judgment awarded NLG approximately $1.6 million for breach of the Note. The Eig Order concluded that NLG could not foreclose on the Property because it had made an election of remedies in the previous action before Judge Scola. The Lopez Assignment Order then assigned NLG’s interest in the Scola Judgment and all of its rights and claims against Hazan to Selective. Lastly, the Gordo Foreclosure Judgment reversed the Eig Order, entered a foreclosure judgment in favor of NLG, set a date for the sale of the Property, and found that NLG was entitled to a foreclosure judgment in the amount of $4.8 million. B. Hazan’s Bankruptcy.

On January 11, 2016, one day before the scheduled foreclosure of her home, Hazan filed for relief under Chapter 11 of the Bankruptcy Code, staying the sale. As part of the bankruptcy proceedings, NLG filed a proof of claim against the Property in the amount of the Gordo Foreclosure Judgment. In response, Selective initiated an adversary proceeding against NLG seeking a determination of the nature and extent of the proof of claim, which Hazan joined. Selective and Hazan argued that NLG had no remaining claim against either Hazan or the Property based on the state court orders and judgments -- in particular, the Lopez

Assignment Order which had assigned all of NLG’s rights and claims against Hazan to Selective.

On October 31, 2017, the bankruptcy court entered Final Judgment on Counts I, II, and III of Plaintiffs’ Third Amended Complaint Determining Validity, Priority and Extent of Liens and Setting Trial on Counts IV Through IX (the “Bankruptcy Judgment”). 2 Noting the apparent conflict between the Lopez Assignment Order and the Gordo Foreclosure Judgment, the court set about to determine the rights of the parties. It then reconciled the state court judgments. The bankruptcy court concluded that Hazan had effectively exercised her right to redeem the Property, because her debt to NLG had been paid: Selective had applied the Note (in the form of the Scola Judgment) and the Mortgage in partial satisfaction of the Quebec Judgment NLG owed, leaving NLG with no further rights or claims to the Property. But in order to give full faith and credit to the Gordo Foreclosure Judgment, the bankruptcy court determined that NLG should be credited $4.8 million (the amount of the Gordo Foreclosure Judgment), rather than the $1.6 million awarded in the Scola Judgment, towards its satisfaction of the $5 million Quebec Judgment owed to Selective. NLG appealed the judgment of the bankruptcy court to the district court.

2 Hazan subsequently moved to withdraw Counts IV through IX, which the bankruptcy court granted.

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NLG, LLC v. Horizon Hospitality Group, LLC, 10 F.4th 1244 (11th Cir. 2021).

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