Jackson-Platts v. Gen. Elec. Capital Corp.

• Decision Date: 22 August 2013
• Docket Number: No. 11–14379.,11–14379.
• Parties: Cathy JACKSON–PLATTS, Personal Representative, of the Estate of Juanita Amelia Jackson, f.k.a. Catherine Whatley, Plaintiff–Appellee, v. GENERAL ELECTRIC CAPITAL CORPORATION, Defendant–Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

727 F.3d 1127

Cathy JACKSON–PLATTS, Personal Representative, of the Estate of Juanita Amelia Jackson, f.k.a. Catherine Whatley, Plaintiff–Appellee,

v.GENERAL ELECTRIC CAPITAL CORPORATION, Defendant–Appellant.

No. 11–14379.

United States Court of Appeals, Eleventh Circuit.

Aug. 22, 2013.

Joanna M. Greber, Isaac R. Ruiz–Carus, James L. Wilkes, II, James R. Freeman, Bennie Lazzara, Jr., Blair Mendes, Wilkes & McHugh, PA, Tampa, FL, for Plaintiff–Appellee.

Christopher Todd Handman, Lisa Bonanno, Ellen S. Kennedy, Hogan Lovells US, LLP, Washington, DC, Carol Ann Licko, Hogan Lovells US, LLP, Miami, FL, for Defendant–Appellant.

Appeal from the United States District Court for the Middle District of Florida. D.C. Docket No. 8:10–cv–02937–VMC–TGW.

Before MARCUS and PRYOR, Circuit Judges, and FRIEDMAN,^* District Judge.

MARCUS, Circuit Judge:

At issue today are two basic questions: whether this cause of action—a supplementary proceeding under Florida Statutes section 56.29(6)—is an independent “civil action” removable to federal district court under 28 U.S.C. § 1441, or whether it is merely an ancillary proceeding; and second, accepting that the cause of action was properly removable, whether the district court abused its discretion by remanding the case to state court under the Colorado River abstention doctrine. The appellee, the Estate of Juanita Amelia Jackson, could not collect on a judgment because assets were allegedly fraudulently transferred to General Electric Capital Corporation (“GE”) and Rubin Schron. It therefore initiated a supplementary proceeding in a Florida state court under Florida Statutes section 56.29(6), which allows a court to void any transfer of personal property that is made by a judgment debtor to “delay, hinder or defraud.” GE timely removed the supplementary proceeding to federal district court, and the appellee moved to remand the proceeding, arguing that it was an ancillary proceeding,not an independent “civil action.” The district court rejected this argument but nonetheless remanded because it concluded the Colorado River abstention doctrine applied. GE appealed.

After thorough review, we reverse and remand for further proceedings. The supplementary proceeding here is an independent civil action because it seeks to impose new liability on new parties founded on wholly new legal theories and based on a completely different factual matrix. As for the Colorado River doctrine, Justice Brennan once said that federal courts have “the virtually unflagging obligation ... to exercise the jurisdiction given them,” Colorado River Water Conservation District v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), and this case presents nothing so extraordinary as to eviscerate that obligation.

I.

The complex factual and procedural history surrounding this case began in 2003, when Juanita Amelia Jackson (“Jackson”) lived at the Auburndale Oaks Healthcare Center, a nursing home in Polk County, Florida, operated by Trans Healthcare, Inc. and Trans Health Management, Inc.¹ Soon after, Jackson was released from the nursing home, and later died on July 6, 2003. About a year later, the Estate of Juanita Amelia Jackson (“Estate”), through Cathy Jackson–Platts, sued thirteen defendants, including Trans Healthcare and Trans Management, alleging that their negligence caused Jackson's death.² The Estate sued in the Tenth Judicial Circuit Court of Florida. During the course of the initial litigation (the “underlying tort action”), the Estate dropped its suit against all but the Trans Health defendants.

While the Florida tort action was proceeding, Trans Healthcare filed in a Maryland circuit court a voluntary petition for the appointment of a receiver to preserve its assets and protect its creditors. The Maryland court agreed, appointed a receiver, and stayed all judicial actions against Trans Healthcare. With the Maryland court's order in hand, the Trans Health defendants moved the Florida circuit court to stay the underlying tort action; the Florida court denied the motion and, because a default judgment was entered against the Trans Health defendants, proceeded to a trial to determine damages. After some three days of trial, the jury returned a verdict for the Estate in the underlying tort action in the amount of $10 million in compensatory damages, and added $100 million in punitive damages. The state circuit court entered final judgment against Trans Healthcare and Trans Management, holding each liable to the Estate in the amount of $55 million. Notably, the Trans Health defendants never appealed from the Florida court's judgment.

In December 2010, the Estate commenced, again in Florida's Tenth Judicial Circuit Court, the action now pending on appeal, which we'll call the “first supplementary proceeding.” The Estate brought this supplementary proceeding under Florida Statutes section 56.29, which allows a plaintiff with an unsatisfied judgment to open “proceedings supplementary to execution.” Fla. Stat. § 56.29(1). In this proceeding, the Estate moved the court to add General Electric Capital Corporation (“GE”) and Rubin Schron (“Schron”) as new defendants to the underlying tort action and to enter final judgment against them for $110 million. The state court added GE and Schron as defendants and directed them to show cause why the assets allegedly transferred to them by the Trans Health defendants should not be declared fraudulently acquired and levied upon to satisfy the Trans Health defendants' $110 million final judgment.

The liability of GE and Schron supposedly arose out of a conspiracy between GE and Schron that was designed to strip the Trans Health defendants of all of their assets. According to the Estate, GE gained control over the Trans Health defendants. With Schron's aid, GE abused this control and syphoned off the Trans Health defendants' assets. Allegedly to cover their tracks, GE and Schron had Trans Healthcare file the receivership petition in Maryland state court and then used the receivership order in a fraudulent, albeit failed attempt to stay the underlying tort action. GE and Schron purportedly undertook these actions to delay, hinder, and defraud creditors, including the Estate.

On December 30, 2010, GE timely removed the first supplementary proceeding to the United States District Court for the Middle District of Florida. In its notice of removal, GE claimed that Jackson was a citizen of Florida, thereby making the Estate a citizen of Florida under 28 U.S.C. § 1332(c)(2) (providing that “the legal representative of the estate of a decedent shall be deemed to be a citizen only of the same State as the decedent”). Neither GE nor Schron was a citizen of Florida,³ and since the Estate demanded that the new defendants pay $110 million, the first supplementary proceeding met the requirements of complete diversity of citizenship and an amount in controversy over the $75,000 threshold. The Estate nevertheless moved to remand the case to state circuit court because, it claimed, a supplementary proceeding under Florida law did not constitute a “civil action” and thus was not removable under 28 U.S.C. § 1441. See28 U.S.C. § 1441(a) (providing for removal of “any civil action” over which “the district courts of the United States have original jurisdiction”). According to the Estate, the first supplementary proceeding was merely ancillary to the underlying tort action. A magistrate judge recommended that the district court deny the motion to remand, because the Estate's “claim for fraudulent transfer of funds against the impled defendants is removable.” In particular, the magistrate judge observed that this case was analogous to a garnishment proceeding, and that this Court's precedents hold that garnishment actions are removable civil actions under 28 U.S.C. § 1441. The Estate filed its objections to the magistrate judge's Report and Recommendation, and thereafter the district court adopted the Report and Recommendation and denied the motion to remand.

Soon after it had objected to the magistrate judge's recommendation in the first supplementary proceeding, the Estate initiated a second supplementary proceeding in Florida's Tenth Judicial Circuit Court (the “second supplementary proceeding”). Again the Estate alleged a conspiracy to strip the Trans Health defendants of their assets. And again the Estate asked the state circuit court to add fourteen new defendants, who it claimed were conspirators, to the underlying tort action.⁴ None of the fourteen new defendants were parties in either the underlying tort action or the first supplementary proceeding.

The second supplementary proceeding followed the same track as the first one. It was removed by eleven of the defendants from the Florida circuit court to the United States District Court for the Middle District of Florida. Thereafter the Estate moved to remand the second supplementary proceeding to state court, again arguing that the supplementary proceedings were merely ancillary proceedings to the underlying tort action and therefore were not removable to federal district court. Unlike in the first supplementary proceeding, the motion to remand was granted in the second one by a different federal judge. See Estate of Jackson v. Ventas Realty, Ltd. P'ship, 812 F.Supp.2d 1306 (M.D.Fla.2011).

Not surprisingly, after the second supplementary proceeding was remanded, the Estate moved the district court in the first supplementary proceeding for reconsideration. Relying on the order remanding the second supplementary proceeding, the Estate argued that the district court should remand the first supplementary proceeding too. This time, the district court granted the Estate's motion for reconsideration, and remanded the first supplementary proceeding to the state circuit court, but not for any of the reasons offered by the Estate. Rather, the district court sua sponte decided to abstain under the Colorado River...