Alvarez v. Royal Atlantic Developers, Inc.

• Decision Date: 01 December 2011
• Docket Number: Case No. 07–21333–CIV.
• Citation: 854 F.Supp.2d 1219
• Parties: Roberto ALVAREZ and Omar S. Gonzalez, as co-personal representatives of the Estate of Eliuth Alvarez, Plaintiff, v. ROYAL ATLANTIC DEVELOPERS, INC., Defendant.
• Court: U.S. District Court — Southern District of Florida

854 F.Supp.2d 1219

Roberto ALVAREZ and Omar S. Gonzalez, as co-personal representatives of the Estate of Eliuth Alvarez, Plaintiff,

v.ROYAL ATLANTIC DEVELOPERS, INC., Defendant.

Case No. 07–21333–CIV.

United States District Court,

S.D. Florida.

Dec. 1, 2011.

Martin Eric Leach, Michael Benjamin Feiler, Feiler & Leach, Coral Gables, FL, for Plaintiff.

Kevin Eugene Vance, Epstein Becker & Green, Michael William Casey, III, Richard David Tuschman, Duane Morris, LLP, Miami, FL, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO VACATE JUDGMENT (D.E. 212)

JOAN A. LENARD, District Judge.

THIS CAUSE is before the Court on Defendant Royal Atlantic Developers, Inc.'s Motion to Vacate Judgment and Enter Judgment in Defendant's Favor Based on Newly Discovered Evidence of Plaintiff's Lack of Standing, Perjury and Discovery Violations (“Motion to Vacate,” D.E. 212), filed on July 7, 2011. ¹ On July 25, 2011, Plaintiffs Roberto Alvarez and Omar Gonzalez, as co-Personal Representatives of the Estate of Eliuth M. Alvarez, filed their response in opposition to Defendant's Motion to Vacate (“Response,” D.E. 221), to which Defendant filed its reply (“Reply,” D.E. 231), on August 1, 2011. Having considered the Motion to Vacate, Response, Reply, related pleadings, and the record, the Court finds as follows.

I. Background

On May 23, 2007, Eliuth Alvarez (“Alvarez”) filed this employment discrimination lawsuit. The Complaint alleges Defendant discriminated against her based on her Cuban origin and retaliated against her based on a written complaint, all in violation of Title VII of the Civil Rights Act and the Florida Civil Rights Act. ( See D.E. 1.)

On September 19, 2007, the Court issued its Order Adopting Joint Scheduling Report, Setting Pretrial Conference and Trial, Establishing Pretrial Deadlines, and Establishing Pretrial and Trial Procedures (“Trial Order,” D.E. 19). The Trial Order advised that, “[t]he Parties are under a continuing obligation to supplement discovery responses within ten (10) days of receipt or other notice of new or revised information.” ( Id. at 2.) On October 26, 2007, Defendant served an interrogatory on Alvarez requesting that she “identify each and every civil, criminal or bankruptcy action ... to which you have been a party.” ( See D.E. 212–1 at 20.) On December 17, 2007, Alvarez responded “None.” (D.E. 212–2 at 5.)

On August 21, 2008, 574 F.Supp.2d 1301 (S.D.Fla.2008), the Court granted summaryjudgment in Defendant's favor on all claims. ( See D.E. 81.) On September 17, 2008, Alvarez filed her Notice of Appeal. ( See D.E. 82.)

On December 5, 2008, Alvarez filed her Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Southern District of Florida in Case No. 08–28612–RAM. ( See D.E. 212–3.) As part of her petition, Alvarez was required to disclose, under penalty of perjury, a Statement of Financial Affairs listing “all suits or administrative proceedings to which the debtor is or was a party within one year immediately preceding the filing of this bankruptcy case.” It is undisputed that Alvarez did not disclose this discrimination lawsuit which remained pending before the Eleventh Circuit. On March 18, 2009, the Bankruptcy Court discharged Alvarez's debts under 11 U.S.C. § 727, discharged the bankruptcy trustee Sonya Salkin (the “Trustee”), and closed the case. ( See D.E. 212–4.)

On July 2, 2010, the Eleventh Circuit issued an opinion affirming in part, and reversing and remanding in part, the Court's grant of summary judgment to Defendant. See Alvarez v. Royal Atl. Developers, Inc., 610 F.3d 1253 (11th Cir.2010). In essence, the Eleventh Circuit affirmed the Court's award of summary judgment to Defendant on Alvarez's discrimination claims, but reversed as to her claims of retaliation, finding genuine issues of material fact remained. The Eleventh Circuit's mandate was filed on September 14, 2010. ( See D.E. 97.)

On September 16, 2010, the Court reopened this case and referred it to Magistrate Judge Turnoff for purposes of a settlement conference. ( See D.E. 98, 99.) On September 29, 2010, the Court issued another Order setting trial for May 2011. ( See D.E. 100.)

On October 19, 2010, Alvarez's counsel filed a Suggestion of Death, noting that Alvarez had passed away during the pendency of the appeal. ( See D.E. 101.) Alvarez's counsel also filed a motion to have Plaintiffs Roberto Alvarez and Omar Gonzalez, as co–Personal Representatives of the Estate of Eliuth M. Alvarez, substituted into the case in her place. ( See D.E. 102.) On October 20, 2010, the Court granted Plaintiffs' motion and substituted them into the case as proper parties to the litigation. ( See D.E. 103.)

On November 9, 2010, the Parties attended settlement conference with Magistrate Judge Turnoff which was unsuccessful. ( See D.E. 104.)

In January 2011, Plaintiffs' counsel became aware that Alvarez had previously filed for bankruptcy.²

On February 4, 2011, the Trustee filed an Ex Parte Motion to Reopen Case to Administer an Undisclosed Asset in the bankruptcy case, the undisclosed asset consisting of Alvarez's discrimination lawsuit. ( See D.E. 212–6.) The Bankruptcy Court reopened the case the next day. ( See D.E. 25 in Case No. 08–28612–RAM.)

On March 1, 2011, the Trustee filed an Application for Employment of Special Counsel. ( See D.E. 212–7.) Therein, the Trustee sought authorization from the Bankruptcy Court to employ Plaintiffs' counsel, Martin Leach, as special counsel to the Trustee in the prosecution of this discrimination lawsuit. The Trustee represented that Plaintiffs' counsel “does not hold or represent any interest adverse to the estate, and the Trustee believes that the employment of this attorney as a special counsel would be in the best interest of the estate.” ( Id. at 1.) As part of the motion, the Trustee attached the contingency fee arrangement entered into between Alvarez and Plaintiffs' counsel which requires Plaintiffs' counsel's express consent to settle any claims. ( See D.E. 212–7 at 4 (“I hereby agree not to compromise or accept any type of payment for my claim without the consent of FEILER & LEACH, P.L.”).) The Bankruptcy Court granted the motion and authorized the appointment of Plaintiffs' counsel as special counsel to the Trustee on March 4, 2011. ( See D.E. 212–8.) As part of its Order Approving Employment of Special Counsel, the Bankruptcy Court explicitly ordered that “no settlement may be reached nor monies disbursed, without prior approval of the Bankruptcy Court.” ( Id. at 2.)

On April 25, 2011, the Court referred the case to settlement conference once again. ( See D.E. 132.) On April 26, 2011, Magistrate Judge O'Sullivan issued an Order scheduling the settlement conference and advised that “[e]ach side shall have a party representative(s) present with full authority to negotiate and finalize any settlement reached ... Failure of a party representative with full and final authority to make and accept offers of settlement to attend this conference may result in the undersigned's sua sponte recommendation to the District Judge that sanctions be entered against the offending party.” ( See D.E. 134.) On May 9, 2011, Plaintiffs and the Defendant attended settlement conference before Magistrate Judge O'Sullivan but that conference was also unsuccessful. ( See D.E. 138.)

On May 31, 2011, trial commenced. ( See D.E. 168.) At trial, Plaintiffs introduced Alvarez's deposition testimony. On June 8, 2011, the jury returned a verdict in favor of the Plaintiffs and awarded $5,480.76 in compensatory damages and $19,519.23 in punitive damages.³ ( See D.E. 185.) On June 9, 2011, the Court issued a final judgment in favor of Plaintiffs in the amount of $24,999.99. ( See D.E. 196.) On July 7, 2011, Defendant filed its Motion to Vacate.

II. Motion to Vacate

Defendant moves to vacate the entry of judgment pursuant to Rules 59(e) and 60(b)(2) of the Federal Rules of Civil Procedure based upon the non-disclosure of Alvarez's bankruptcy. Specifically, Defendant argues that once Alvarez filed her Chapter 7 bankruptcy petition, the Trustee became the real party in interest in the lawsuit and the only entity with standing to pursue the cause of action. Because Plaintiffs lacked standing to continue to prosecute the case, Defendant believes the judgment is void. Additionally, Defendant argues the judgment should be vacated because Alvarez was judicially estopped from pursuing this case based upon her perjury in the bankruptcy proceeding. Defendant also argues that Plaintiffs violated their discovery obligations by never disclosing Alvarez's bankruptcy (despite being required to do so by this Court's Orders and the Federal Rules of Civil Procedure). Thus, Defendant believes that the judgment is void and should be vacated, Plaintiffs' claims should be dismissed, and judgment should be entered in its favor.

In response, Plaintiffs argue they possessed standing to prosecute the discrimination lawsuit, any perjury was insufficient to warrant punishing Plaintiffs, the Trustee, or Alvarez's creditors, and no discovery violations occurred. Plaintiffs contend that counsel only learned of Alvarez's bankruptcy following her death and the issuance of the Eleventh Circuit's opinion. According to Plaintiffs, counsel took immediate steps to reopen the bankruptcy proceedings and have counsel appointed as special counsel to the Trustee. As such, “[a]fter discussion with the trustee, the strategic decision was made to proceed without moving for substitution.” (Response at 2.) Nevertheless, Plaintiffs contend that the “Trustee was directing counsel undersigned from that point forward, including through at least one settlement conference and trial.” ( Id.) Plaintiffs do not dispute that Alvarez, under oath, failed to disclose the discrimination lawsuit. ( Id. at 4.) Rather, they believe that judicial estoppel is inappropriate where the evidence does not suggest her non-disclosure was calculated to...