Acheron Capital, Ltd. v. Mukamal

• Decision Date: 06 January 2022
• Docket Number: No. 21-13052,21-13052
• Parties: ACHERON CAPITAL, LTD., in its capacity as investment manager, Plaintiff-Appellant, Securities and Exchange Commission, et al., Plaintiffs, v. Barry MUKAMAL, AS TRUSTEE OF the MUTUAL BENEFITS KEEP POLICY TRUST, Interested Party-Appellee, Mutual Benefits Corp., et al., Defendants.
• Court: U.S. Court of Appeals — Eleventh Circuit

22 F.4th 979

ACHERON CAPITAL, LTD., in its capacity as investment manager, Plaintiff-Appellant,

Securities and Exchange Commission, et al., Plaintiffs,

v.Barry MUKAMAL, AS TRUSTEE OF the MUTUAL BENEFITS KEEP POLICY TRUST, Interested Party-Appellee,Mutual Benefits Corp., et al., Defendants.

No. 21-13052

United States Court of Appeals, Eleventh Circuit.

Filed: January 6, 2022

Julissa Rodriguez, Larry I. Glick, Shutts & Bowen, LLP, Miami, FL, Daniel R. Lazaro, Miranda Lundeen Soto, Buchanan Ingersoll & Rooney, PC, Miami, FL, Steven L. Schreckinger, Anderson & Kreiger LLP, Boston, MA, for Plaintiff-Appellant.

John Arrastia, Jr., Angelo Michael Castaldi, Attorney, Genovese Joblove & Battista, PA, Miami, FL, David L. Rosendorf, Kozyak Tropin & Throckmorton, LLP, Coral Gables, FL, for Interested Party-Appellee.

Before William Pryor, Chief Judge, Grant, and Anderson, Circuit Judges.

William Pryor, Chief Judge:

This appeal is the latest in a years-long postjudgment dispute about the disposition of fraudulently sold investments. The question presented is whether some combination of court orders and agreements permits the court-appointed trustee to sell the interests of Acheron Capital, Ltd., and its portfolio companies in those investments. Because the order that Acheron appeals is not a "final decision[ ]," 28 U.S.C. § 1291, and did not involve the refusal "to wind up [a] receivership[ ]," id. § 1292(a)(2), this Court lacks jurisdiction. So, we dismiss the appeal.

I. BACKGROUND

Mutual Benefits Corporation sold fractional investment interests in viatical settlements. Sec. & Exch. Comm'n v. Mut. Benefits Corp. (Mutual Benefits I ), 408 F.3d 737, 738 (11th Cir. 2005). "A viatical settlement is a transaction in which a terminally ill insured sells the benefits of his life insurance policy to a third party in return for a lump-sum cash payment equal to a percentage of the policy's face value." Id. "The purchaser of the viatical settlement realizes a profit if, when the insured dies, the policy benefits paid are greater than the purchase price, adjusted for time value." Id.

In 2004, the Securities and Exchange Commission sued Mutual Benefits for "falsely represent[ing] to investors that its life expectancy figures"—"of paramount importance" for valuing the settlements—"had been produced by independent physicians." Id. at 738, 740. "The administration and management of these Mutual Benefits policies were put into receivership by the district court," and investors were given "the option of retaining their investments or directing the court-appointed receiver to sell their interests." Sec. & Exch. Comm'n v. Mut. Benefits Corp. (Mutual Benefits II ), 810 F. App'x 770, 772 (11th Cir. 2020). The parties refer to the policies retained by investors as "Keep Policies."

Some investors in the Keep Policies did not pay their share of the premiums associated with their interests, leaving the policies at risk of lapse and the non-defaulting investors at risk of losing their investments. To prevent the lapse of the policies, Acheron Capital, Ltd., through its portfolio companies, began to purchase the fractional interests of defaulting investors from the receiver. Id. at 772.

In 2009, the district court approved the transfer and management of the Keep Policies—including some policies in which Acheron held fractional interests—from the receiver to a trustee, Barry Mukamal. The trust agreement permitted the Trustee "to authorize and direct the sale ... of the Keep Policies" "[i]n the event that ... continued servicing of the Keep Policies becomes unfeasible," "and to distribute the proceeds ... in such manner as the Trustee determines to be appropriate."

Acheron continued to purchase the fractional interests of defaulting investors, this time from the Trustee, id. , but it raised concerns about the Trustee's management of the trust. The parties entered into an agreement in 2015 to resolve those concerns. The 2015 Agreement provided that, in the event that the Trustee sells "the entire portfolio of policies owned by the Trust," "Acheron will have the right to bid upon any sale of a policy in which it has an interest and the right to top any bid submitted by another party."

A few years later, Acheron and the Trustee filed competing motions to wind down the trust and distribute its assets. Acheron proposed a transfer of the Keep Policies "to Acheron in exchange for Acheron agreeing to pay future [s]ervicing [f]ees for the [p]olicies." (Emphasis omitted.) And it promised not to "sell any [p]olicy in which a [n]on-Acheron [i]nvestor [held] an interest ... without that investor's written consent." The Trustee proposed "the sale of ... entire polic[ies]" because "[t]he Trustee owns and holds title to the policies and the [p]olicy [i]nvestors own beneficial ownership in the fractional interests of the policy." The district court granted the Trustee's motion and denied Acheron's motion.

In early 2021, the Trustee filed a status report about the wind-down. The report "anticipate[d] that the Trustee's sale of the Keep Policies in connection with the Trust wind-down [would] occur by the fourth quarter of 2021." (Emphasis omitted.) It stated that "the liquidation of the Trust portfolio [was] expected to involve the sale of the whole Keep Policies owned by the Trust, ... with the proceeds of such sale to be distributed in a fair and equitable manner to all holders of fractional interests in those policies." And it stated that "[t]he Trustee ... intend[ed] to seek Court approval of the following steps in [the wind-down] process: ... [1] approval of any ‘stalking horse’ purchase offer and bidding/ sale procedures; [2] approval of the sale after auction; and [3] approval of the proposed means of distributing the net sale proceedings."

After Acheron objected to this plan, the district court granted an oral motion by the Trustee "to treat the ... [s]tatus [r]eport as a request for instructions" about whether "the Trustee [could] engage in a process to auction whole policies implicating Acheron's asserted rights." And it ordered briefing on that issue. Acheron argued that the agreements governing its purchase of the fractional interests from the receiver and Trustee prohibited the Trustee from selling those interests. And it argued that the 2015 Agreement "require[d] either: (i) a policy by policy sale; or (ii) if a portfolio sale, a ... per policy price has to be determined by the buyer or the auctioning party .... Acheron can then have a last look on a policy [by] policy (not portfolio) basis."

The magistrate judge, in a report and recommendation adopted by the district court, disagreed. It reasoned that the purchase agreements expressly provided that they were subject to an earlier court order empowering the district court to approve a future sale of the fractional interests. And it determined "that the 2015 Agreement d[id] not require the Trustee to sell or value the policies on a policy by policy basis when liquidating the Trust[;] nor is the Trustee required to provide Acheron with a right to a ‘last look.’ " The district court added that "Acheron retain[ed] rights to object to other aspects of the liquidation of the Trust as the Trustee makes those determinations and moves the Court for approval of those additional steps in the wind down process." Acheron timely appealed the Instructions Order.

We expedited the appeal and directed the parties to file supplemental briefs about our jurisdiction. We asked whether the Instructions Order was "immediately appealable under 28 U.S.C. § 1292(a)(2), under the collateral order doctrine or the doctrine of practical finality, or as a final order disposing of a discrete postjudgment proceeding." Acheron argued that "it d[id] not appear that section 1292(a)(2) would provide for interlocutory review," but that the order could be appealed under the other theories we mentioned and "under the marginal finality doctrine." The Trustee argued that we lack jurisdiction.

II. STANDARD OF REVIEW

"We review de novo questions of our jurisdiction." United States v. Amodeo , 916 F.3d 967, 970 (11th Cir. 2019).

III. DISCUSSION

"We have a threshold obligation to ensure that we have jurisdiction to hear an appeal, for ‘without jurisdiction we cannot proceed at all in any cause.’ " Corley v. Long-Lewis, Inc. , 965 F.3d 1222, 1227 (11th Cir. 2020) (alterations adopted) (quoting Ex parte McCardle , 74 U.S. (7 Wall.) 506, 514, 19 L.Ed. 264 (1869) ). "The potential bases for our jurisdiction are few and well defined." Thomas v. Blue Cross & Blue Shield Ass'n , 594 F.3d 823, 828 (11th Cir. 2010). "Our jurisdiction is ordinarily limited to appeals from final decisions of the district courts." Id. ; see 28 U.S.C. § 1291. "Additionally, we have jurisdiction to review certain interlocutory orders of the district courts," Thomas , 594 F.3d at 828, including "[i]nterlocutory orders appointing receivers, or refusing orders to wind up receiverships or to take steps to accomplish the purposes thereof, such as directing sales or other disposals of property," 28 U.S.C. § 1292(a)(2).

We divide our discussion in two parts. We first explain why the Instructions Order is not a "final decision[ ]." Id. § 1291. Second, we explain that the Instructions Order is not an appealable interlocutory order either. See id. § 1292(a)(2).

A. The Instructions Order Is Not a "Final Decision."

Section 1291 grants us jurisdiction over "appeals from all final decisions of the district courts ...." Id. § 1291. "A final decision is typically one that ends the litigation on the merits and leaves nothing for the court to do but execute its judgment." Mayer v. Wall St. Equity Grp., Inc. , 672 F.3d 1222, 1224 (11th Cir. 2012) (internal quotation marks omitted). "[T]he statute's core"— and most obvious—"application is to rulings that terminate an action," such as final judgments, see Gelboim v. Bank of Am. Corp. , 574 U.S. 405, 409, 135 S.Ct. 897, 190 L.Ed.2d 789 (2015), but the statute also applies...