Burton W. Wiand v. Brian L. Meeker

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-11526
Non-Argument Calendar
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D.C. Docket No. 8:10-cv-00166-EAK-MAP
BURTON W. WIAND,
as Receiver for Valhalla Investment
Partners, L.P.; Viking Fund, LLC; Viking
IRA Fund, LLC; Victory Fund, Ltd.; Victory
IRA Fund, Ltd.; and Scoop Real Estate, L.P.,
Plaintiff-Appellee,
Cross-Appellant,
versus
BRIAN L. MEEKER,
as Trustee for the Brian L. Meeker
Trust dtd 12/06/1991,
Defendant-Appellant,
Cross-Appellee.
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Appeals from the United States District Court
for the Middle District of Florida
________________________
(July 15, 2014)
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Before HULL, MARTIN, and FAY, Circuit Judges.
PER CURIAM:
This appeal arises out of a suit brought by Burton Wiand—the receiver for
various Hedge Funds used in a Ponzi scheme run by Arthur Nadel—under the
Florida Uniform Fraudulent Transfer Act (FUFTA). Wiand seeks to recover false
profits that the Brian L. Meeker Trust gained through its participation in the
scheme, which no one disputes was unknowing. Brian L. Meeker, in his capacity
as trustee for the Meeker Trust, appeals the district court’s grant of summary
judgment in favor of Wiand. Wiand also cross-appeals the district court’s denial of
his request for prejudgment interest. After review, we affirm in part, and reverse
and remand in part.
I.
From 1999 to 2009, Arthur Nadel operated a Ponzi scheme using a number
of Hedge Funds. During the operation of the Ponzi scheme, the Meeker Trust
invested $1,250,000 in one of the Hedge Funds. In addition, from January 2006
through September 2007 the Trust received distributions from Nadel’s scheme
totaling $1,895,641.67. The Trust therefore received a net gain of approximately
$645,642. The Hedge Funds’ bank records indicated that these payments were
made to “Brian L. Meeker, TTEE,” a common shorthand for trustee.
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At summary judgment, the parties litigated whether the Meeker Trust was
entitled to setoff its gains against the losses that Meeker and his wife, Barbara
Meeker, suffered in their personal accounts as a result of Nadel’s Ponzi scheme.
The district court concluded that the Meeker Trust was not entitled to any setoff
and granted Wiand’s motion for summary judgment for an amount of $645,641.67.
The court also denied Meeker’s cross-motion in which he asserted that, due to the
statute of limitations, at least one of the transfers from the Nadel entities to the
Trust should be excluded from the calculation, resulting in a net loss and thus no
liability to Wiand. Lastly, the court declined to grant prejudgment interest to
Wiand.
Meeker, proceeding pro se on appeal, argues that the district court erred in
determining the Trust was liable to Wiand. First, Meeker argues that the losses
suffered by his and his wife’s personal accounts should be considered because he is
the beneficiary of the Trust and she is his wife, and because he personally received
the payments from the Hedge Fund in a non-titled account. Second, Meeker
argues that the first $700,000 payment to the Trust may not be included in Wiand’s
false profit calculation because it falls outside of the FUFTA statute of limitations.
Without this transfer, he argues, the Trust did not realize any profit and there
would be no liability.
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The third issue on appeal is the receiver Wiand’s cross-appeal of the district
court’s denial of his request for prejudgment interest. Wiand argues that
prejudgment interest should be awarded as a matter of law, but that even if the
decision is discretionary, the district court abused its discretion in weighing the
equities here.
II.
We review a district court’s decision to grant summary judgment de novo,
viewing all of the evidence and its reasonable inferences in the light most favorable
to the nonmoving party. Lindley v. FDIC, 733 F.3d 1043, 1050 (11th Cir. 2013).
Federal Rule of Civil Procedure 56(a) states that summary judgment shall be
granted if the pleadings and evidence show that there is “no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.”
A.
Meeker’s first argument is that the district court erred by not setting off the
Meeker Trust’s liability with the losses his and his wife’s personal accounts
suffered from the Nadel Ponzi scheme. 1 Setoff is the right that exists between two
parties to pay off their respective debts by way of mutual deduction. Everglade
Cypress Co. v. Tunnicliffe, 148 So. 192, 193 (Fla. 1933). Setoff is permitted only
where there is mutuality of claims between the parties. Griffin v. Gulf Life Ins.
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Meeker also argues that the Meeker Trust account is empty and closed. But this assertion does
not impact the Trust’s liability to Wiand.
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Co., 146 So. 2d 901, 903 (Fla. 1st DCA 1962). Mutuality of claims requires that
the claims exist between the same parties acting in the same capacities. Everglade
Cypress Co., 148 So. at 193. An individual’s role as trustee is legally
distinguishable from his individual identity. See Harris v. Martin, 606 So. 2d
1212, 1212–13 (Fla. 5th DCA 1992) (declining to uphold the execution of a
deficiency judgment against a party in his individual capacity where the pleadings
and judgment in the trial court identified him in his role as trustee).
The district court correctly determined that the Meeker Trust was not
entitled to setoff its gains with the Meekers’ personal losses. The required
mutuality does not exist here where Meeker incurred losses in his individual
capacity in his personal account but was acting in his capacity as a trustee for the
Meeker Trust account. 2 See Everglade Cypress Co., 148 So. at 193; Harris, 606
So. 2d at 1212–13; see also In re Drexel Burnham Lambert Group, Inc., 113 B.R.
830, 847 (Bankr. S.D.N.Y. 1990) (“If a creditor’s debt to his debtor arises from a
fiduciary duty or in the nature of a trust, the creditor may not set off his claim
against the debtor against his own liability because the parties are acting in
different capacities and the debts of each side are not mutual.”). We therefore
affirm the district court’s denial of a setoff.
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Wiand also points out, and Meeker admits, that he and his wife did not file timely proof of
claim forms for their individual accounts or the Meeker Trust account.
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B.
Meeker’s second argument is that the first $700,000 payment from the Nadel
Hedge Funds to the Meeker Trust should not be included in calculating whether the
Trust received any false profits because that payment falls outside of the four-year
FUFTA statute of limitations. Without this $700,000 transfer, the Trust did not
have a net gain and therefore would not be required to return any false profits to
Wiand.
FUFTA provides for “a cause of action for damages in favor of a creditor
against an aider or abettor to a fraudulent transaction.” Freeman v. First Union
Nat’l Bank, 865 So. 2d 1272, 1273 (Fla. 2004) (per curiam). In this case, Wiand
was required to bring his FUFTA claim within four years after the transfer to the
Trust, or, if later, within one year after he could have reasonably discovered the
transfer. Fla. Stat. § 726.110(1). The latter one-year limitations period is referred
to as the “savings clause.” See, e.g., Desak v. Vanlandingham, 98 So. 3d 710, 713
(Fla. 1st DCA 2012). In Desak, a case involving a fraudulent transfer of an estate,
a Florida Court of Appeal applied § 726.110(1)’s savings clause and held that the
recording of a deed without more did not trigger the one-year limitations period.
98 So. 3d at 712–14. Although the recording of a deed constitutes constructive
notice, the court reasoned that the plaintiff in that case could not reasonably have
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been alerted to a possible fraudulent transfer by the mere act of recording. Id.
at 713–14.
Here Meeker argues that the four-year statute of limitations began to run
when the transfer from the Nadel Hedge Funds to the Meeker Trust was made.
This argument fails because, like in Desak, the savings clause applies. Based on
the record here, we conclude that Wiand could not have reasonably been alerted to
a possible fraudulent transfer by the mere act of the transfer from the Hedge Funds
to the Meeker Trust. Rather, the one-year limitations period began to run when
Wiand was appointed receiver. Wiand v. Cloud, 919 F. Supp. 2d 1319, 1339
(M.D. Fla. 2012) (finding FUFTA claim brought within one year of receiver’s
appointment to be timely); see also Hunt v. Am. Bank & Trust Co., 783 F.2d 1011,
1013–14 (11th Cir. 1986) (concluding for statute of limitations purposes that
receiver should at least have been able to discover potential claims from his own
department’s files within a few months of his appointment); In re Blackburn, 209
B.R. 4, 13 (Bankr. M.D. Fla. 1997) (applying Florida’s discovery rule and finding
statute of limitations for breach of fiduciary duty and usurpation of corporate
opportunity claims did not begin to run until receiver’s appointment).
Wiand was appointed as receiver on, at the earliest, January 21, 2009. He
then filed the original complaint on January 19, 2010, within one year of his
appointment as receiver. Because Wiand timely filed his claims within the one-
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year savings clause period, we find no legal error in including the first $700,000
payment to the Meeker Trust in the calculation of false profits.
III.
Lastly, Wiand cross-appeals the district court’s decision to deny
prejudgment interest. The decision to refuse or reduce prejudgment interest is
within the trial court’s sound discretion, and we review that decision for an abuse
of discretion. Blasland, Bouck & Lee v. City of N. Miami, 283 F.3d 1286, 1298
(11th Cir. 2002).
This Court recently addressed this same issue in Wiand v. Lee, No. 13-
10448, __ F.3d __, 2014 U.S. App. LEXIS 10154 (11th Cir. June 2, 2014), which
involved significantly similar legal and factual findings also arising from the
Nadler Ponzi scheme. The district court in Lee denied Wiand’s request for
prejudgment interest for the same reasons it denied Wiand’s request in the instant
case. For the reasons set forth in Section II.B. of this Court’s Lee opinion, we find
that the district court abused its discretion in denying Wiand’s request for
prejudgment interest in the instant case and, therefore, reverse and remand for the
lower court to apply the factors in Blasland to determine whether equitable
considerations justify denying or reducing a prejudgment interest award in this
case. See id., 2014 U.S. App. LEXIS 10154, at *21–27.
AFFIRMED in part, REVERSED and REMANDED in part.
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