Universitas Education v. Avon Capital

• Court: Court of Appeals for the Tenth Circuit
• Decided: December 21, 2022
• Docket: 22-6038
• Status: Unpublished

Opinion

Appellate Case: 22-6038 Document: 010110787390 Date Filed: 12/21/2022 Page: 1 FILED United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit

FOR THE TENTH CIRCUIT December 21, 2022 _________________________________ Christopher M. Wolpert Clerk of Court UNIVERSITAS EDUCATION, LLC,

Petitioner/Judgment Creditor - Appellee,

v. No. 22-6038 (D.C. No. 5:14-FJ-00005-HE) AVON CAPITAL, LLC, (W.D. Okla.)

Respondent/Judgment Debtor,

ASSET SERVICING GROUP, LLC,

Respondent/Garnishee,

and

SDM HOLDINGS, LLC,

Respondent/Garnishee - Appellant.

------------------------------

AVON CAPITAL, LLC, a Wyoming limited liability company,

Intervenor. Appellate Case: 22-6038 Document: 010110787390 Date Filed: 12/21/2022 Page: 2

_________________________________

ORDER AND JUDGMENT* _________________________________

Before BACHARACH, PHILLIPS, and MORITZ, Circuit Judges. _________________________________

Purporting to act on behalf of SDM Holdings, LLC (“SDM”), attorney Jeffrey

Sandberg appeals the district court’s order requiring that he have SDM’s permission

to file motions and make court appearances in support. Attorney Sandberg contends

that he has filed an interlocutory appeal of a district-court order imposing filing

restrictions on SDM. But Attorney Sandberg assumes that he continues to represent

SDM, despite the district court’s having appointed SDM a receiver, which has led to

SDM having a new manager.

Before accepting Attorney Sandberg’s filings on SDM’s behalf, the court

reasonably required him to obtain authorization from the newly constituted SDM to

continue to represent it in court. The district court permitted Attorney Sandberg to

continue representing SDM if he obtained the new manager’s permission. The court

also allowed Attorney Sandberg to represent other interested parties if they appeared

in the case. But Attorney Sandberg did not receive permission to continue his

representation from SDM’s new manager. We reject Attorney Sandberg’s argument

* After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist in the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. 2 Appellate Case: 22-6038 Document: 010110787390 Date Filed: 12/21/2022 Page: 3

that he has presented a proper appeal under 28 U.S.C. § 1292(a). In fact, we lack

appellate jurisdiction under either 28 U.S.C. §§ 1291 or 1292, so we dismiss the

appeal.

BACKGROUND

I. Preceding Legal Battles

This appeal challenges the district court’s order disallowing Attorney

Sandberg from contesting garnishment rulings in the Western District of Oklahoma

until he assured the court that he received his purported client’s permission to

represent it. These garnishment rulings stem from a years-long, multi-jurisdictional

legal battle.1 Though unimportant to this appeal, the litigation history generally

includes federal criminal convictions of Daniel Carpenter, who organized a scheme in

which he defrauded millions of dollars of life-insurance proceeds from the named

beneficiary, Universitas Education, LLC (“Universitas”). Carpenter, 190 F. Supp. 3d

at 293–301. He routed these proceeds through various shell entities for his own

benefit. Id. For a portion of the proceeds, about $6 million, Carpenter routed the

money to one of his shell companies, Avon Capital, LLC (“Avon”). Universitas

Educ., LLC v. Nova Grp., Inc. (“Universitas I”), No. 11CV1590-LTS-HBP, 2014 WL

3883371, at *3 (S.D.N.Y. Aug. 7, 2014).

1 For a complete account of the associated litigation, see United States v. Carpenter, 190 F. Supp. 3d 260 (D. Conn. 2016), and Universitas Education, LLC v. Avon Capital, LLC (“Universitas II”), No. 14-FJ-05-HE, 2020 WL 8768520 (W.D. Okla. Oct. 20, 2020). 3 Appellate Case: 22-6038 Document: 010110787390 Date Filed: 12/21/2022 Page: 4

In 2009, using the misdirected life-insurance proceeds, Avon purchased SDM.

Universitas II, 2020 WL 8768520, at *9. In a 2014 suit brought in the United States

District Court for the Southern District of New York, the court ruled that Avon had

received some of the life-insurance proceeds owed to Universitas through fraudulent

conveyance. Universitas I, 2014 WL 3883371, at *11, *13. The court entered a

nearly $6 million judgment for Universitas against Avon. Id. Through discovery in

that case, Universitas learned that Avon owned SDM. Because SDM was organized

and registered in Oklahoma, Universitas registered its judgment in the Western

District of Oklahoma. Universitas II, 2020 WL 8768520, at *1. The present appeal

challenges the district court’s order disallowing Attorney Sandberg from contesting

garnishment rulings against SDM without obtaining SDM’s permission to represent it

in court.

II. Garnishment Proceedings

Universitas sought to collect on the judgment against both Avon and SDM.

Universitas II, 2020 WL 8768520, at *1–2. In response, Avon argued that it was not

the judgment debtor identified in the Southern District of New York case. Avon

sought a permanent injunction prohibiting Universitas from executing the judgment

against Avon or SDM. Universitas II, 2020 WL 8768520, at *1. The Oklahoma

federal district court denied this motion and entered an order piercing Avon’s

corporate veil. The court then enjoined Avon from transferring, concealing, or

encumbering its interest in SDM.

4 Appellate Case: 22-6038 Document: 010110787390 Date Filed: 12/21/2022 Page: 5

The district court also appointed a receiver for Avon to prevent it from

disposing of any other assets. Under his court-appointed authority, the receiver

replaced the manager of SDM, which marked a split between the old SDM

management (as we call it, “pre-receivership SDM”), represented by Attorney

Sandberg, and the new SDM management (“post-receivership SDM”).2 Pre-

receivership SDM (through Attorney Sandberg) and Avon (represented by different

counsel) both appealed the district court’s order piercing Avon’s corporate veil and

its order appointing a receiver. Those appeals were recently argued in this court and

are currently pending. Universitas Educ., LLC v. Avon Cap., LLC, No. 21-6044 (10th

Cir. argued Sept. 27, 2022); Universitas Educ., LLC, v. Avon Cap., LLC, No. 21-6049

(10th Cir. argued Sept. 27, 2022); Universitas Educ. v. Avon Cap., LLC, No. 21-6133

(10th Cir. argued Sept. 27, 2022); Universitas Educ., LLC v. SDM Holdings, LLC,

No. 21-6134 (10th Cir. argued Sept. 27, 2022).

III. Attorney Sandberg’s Involvement

Early in the garnishment proceedings, before the receivership, Attorney

Sandberg filed several motions on SDM’s behalf. But even after the district court

appointed a receiver and post-receivership SDM changed management, Attorney

Sandberg continued to file objections on behalf of pre-receivership SDM, ignoring

that it had a new manager. For instance, Attorney Sandberg objected to Universitas’s

2 We use the terms “pre-receivership SDM” and “post-receivership SDM” only to avoid reader confusion, but these terms do not represent any official SDM designations used by the parties or the district court.

5 Appellate Case: 22-6038 Document: 010110787390 Date Filed: 12/21/2022 Page: 6

notice that it was refiling its monetary judgment.3 At a December 2021 hearing over

several matters, including this objection, the district court asked Attorney Sandberg

about his authority from SDM’s new manager to represent post-receivership SDM.

That inquiry is at the heart of this appeal. Attorney Sandberg equivocated, stating that

the post-receivership SDM’s manager hadn’t opposed his appearance but hadn’t

authorized him to represent the post-receivership SDM. Attorney Sandberg agreed

with the court and stated that “going forward, then, [he would] confer with the

receiver and/or the manager and make sure that [he was] authorized to continue to

appear on behalf of SDM.” R. vol. II, at 468. The district court struck Attorney

Sandberg’s objection and concluded the hearing.

That day, the district court entered an order “not[ing] that the receiver has

replaced the manager of SDM” with a new manager. Id. at 383. The order also stated

that SDM’s objection to Universitas’s filing was stricken because “[t]he objection

was filed without authority from the manager of [post-receivership] SDM and hence

may not properly be viewed as the position of SDM.” Id. at 385.

A week after the hearing and order, Attorney Sandberg filed a motion for

reconsideration, purportedly on SDM’s behalf. In this motion, he contested the

district court’s requirement that he have the post-receivership-SDM management’s

permission before continuing to represent post-receivership SDM, stating as follows:

[SDM] files this Motion for Reconsideration of the Court’s sua sponte requirement that counsel obtain the authorization of the receiver for

3 Attorney Sandberg originally characterized this objection as a response motion, but the court labeled it an objection, so we match the court’s language. 6 Appellate Case: 22-6038 Document: 010110787390 Date Filed: 12/21/2022 Page: 7

Avon-WY [“Avon”] or manager of SDM-OK [“SDM”] appointed by the receiver before continuing to represent SDM-OK. The receiver and manager refused counsel’s request, depriving SDM-OK of counsel. Notably, SDM-OK is not in the receivership.

Id. at 386–87. 4 Attorney Sandberg argued that the district court had deprived SDM of

counsel, which violated the LLC’s due-process and equal-protection guarantees.

Attorney Sandberg requested permission to continue to file documents on behalf of

post-receivership SDM, despite having earlier admitted that he had not obtained

permission from the post-receivership SDM’s manager to continue his representation.

The district court denied reconsideration, reasoning that the recently appointed

manager of post-receivership SDM should control its litigation strategy and court

filings. But the district court clarified that Attorney Sandberg was free to represent

any interest-holders with their permission.

Next, Attorney Sandberg—purporting to act on SDM’s behalf—appealed the

district court’s order. He claimed that the district court’s order enjoined SDM’s

ability to represent itself and control its property and assets. But he has provided no

basis for his assertion of appellate jurisdiction under 28 U.S.C. § 1292(a)(1). He has

failed to show that he represents a party to the appeal. Thus, we lack jurisdiction.

4 The district court referred to Avon as “Avon-WY” and SDM as “SDM-OK.” R. vol. II, at 386–87. In its order, the district court used “SDM-OK” as shorthand for SDM Holdings, LLC. Id. The district court referred to Avon as “Avon-WY” to distinguish between the three Avon entities involved in the Western District of Oklahoma veil-piercing analysis: Avon-WY, Avon-NV, and Avon-CT. Universitas II, 2020 WL 8768520, at *5–6. For this order, we are concerned only with Avon-WY. 7 Appellate Case: 22-6038 Document: 010110787390 Date Filed: 12/21/2022 Page: 8

DISCUSSION

We generally have jurisdiction over final judgments from a district court.

28 U.S.C. § 1291. But we also have jurisdiction to review certain interlocutory

orders, including orders granting a permanent injunction. 28 U.S.C. § 1292(a)(1).

That section “was intended to carve out only a limited exception to the final-

judgment rule,” and we construe the exception narrowly. Carson v. Am. Brands, Inc.,

450 U.S. 79, 84 (1981). Attorney Sandberg argues that we have jurisdiction over this

appeal as an interlocutory order imposing filing restrictions on post-receivership

SDM.

But Attorney Sandberg has a fundamental problem apart from the reach of our

§ 1292(a)(1) appellate jurisdiction. The district court struck SDM’s objections

because Attorney Sandberg filed them without permission from the post-

receivership-SDM manager. Even on appeal, he provides no assurance that he

represents the client on whose behalf he has filed the appeal. He cannot appoint

himself as a party’s counsel.5 The district court’s order requiring Attorney Sandberg

to represent a party to the case before filing in the court does not effectively enjoin

SDM from future filings. The district court did not impose filing restrictions on post-

receivership SDM. Rather, post-receivership SDM did not authorize Attorney

Sandberg to act as its lawyer.

5 Attorney Sandberg may represent the pre-receivership SDM management when challenging the receivership. He has done so in the pending appeal on that issue. Universitas Educ., LLC v. SDM Holdings, LLC, No. 21-6134 (10th Cir. argued Sept. 27, 2022). 8 Appellate Case: 22-6038 Document: 010110787390 Date Filed: 12/21/2022 Page: 9

CONCLUSION

Attorney Sandberg does not represent any of the parties to this appeal, and his

filings do not reflect post-receivership SDM’s litigation position. To the extent

Attorney Sandberg contests the receivership and SDM’s new manager (appointed by

the receiver), that appeal is not before us, and we will not comment on its merits.

This appeal is dismissed. The pending motion for leave to file a reply brief is denied.

Entered for the Court

Gregory A. Phillips Circuit Judge