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Absolute Activist Value Master Fund Ltd v. Devine

United States District Court, M.D. Florida, Fort Myers Division

November 17, 2017

ABSOLUTE ACTIVIST VALUE MASTER FUND LIMITED, ABSOLUTE EAST WEST FUND LIMITED, ABSOLUTE EAST WEST MASTER FUND LIMITED, ABSOLUTE EUROPEAN CATALYST FUND LIMITED, ABSOLUTE GERMANY FUND LIMITED, ABSOLUTE INDIA FUND LIMITED, ABSOLUTE OCTANE FUND LIMITED, ABSOLUTE OCTANE MASTER FUND LIMITED, and ABSOLUTE RETURN EUROPE FUND LIMITED, Plaintiffs,
v.
SUSAN ELAINE DEVINE, Defendant.

          OPINION AND ORDER

          JOHN E. STEELE UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on plaintiffs' Emergency Motion for a Stay of the Court's July 25, 2017 Order (Doc. #577) filed on July 26, 2017. Defendant filed a Response (Doc. #596) on August 9, 2017.

         On July 25, 2017, the Court entered an Order dissolving a Temporary Restraining Order entered on July 1, 2015 that restrained virtually all of the assets held by, or under the control of, defendant Susan Devine. (Doc. #575.) On July 26, 2017, plaintiffs filed a Notice of Interlocutory Appeal (Doc. #577) and an Emergency Motion to Stay the Court's July 25, 2017 Order (Doc. #578). In their Motion to Stay, plaintiffs request two things: (1) a stay of the Court's July 25, 2017 Order until defendant has a chance to respond to their Motion to Stay and the Court rules thereon; and (2) a stay of the Court's July 25, 2017 Order pending their appeal of the Court's July 25, 2017 Order. (Id.)

         On July 26, 2017, this Court entered an Order denying a stay pending this Court's decision on Motion to Stay, but taking under advisement the remainder of the motion. (Doc. #582.) On July 28, 2017, the Eleventh Circuit entered an Order temporarily staying this Court's July 25, 2017 Order dissolving the TRO pending their (the Eleventh Circuit's) resolution of Appellants' Emergency Motion to Stay District Court Order Pending Appeal. (Doc. #590.) Then, on October 3, 2017, the Eleventh Circuit entered an Order clarifying that the dissolution of the TRO will be stayed pending the District Court's Order on the Motion to Stay and their (the Eleventh Circuit's) Order following issuance of the District Court's Order. (Absolute Activist Value Master v. Devine, No. #17-13364 (11th Cir. Oct. 3, 2017)).

         I.

         A stay pending appeal under Federal Rule of Civil Procedure 62 is considered extraordinary relief for which the moving party bears a heavy burden. Garcia-Mir v. Meese, 781 F.2d 1450, 1453 (11th Cir. 1986). In determining whether the issuance of a stay is warranted, courts consider (1) whether the stay applicant has made a strong showing that it is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies. Hilton v. Braunskill, 481 U.S. 770, 776 (1987).

         A. Likelihood of Success on Appeal

         The plaintiffs assert various arguments as to why they are likely to succeed on the appeal of the Order dissolving the TRO, including: (1) the Court previously stated that the unjust enrichment claim supported the TRO; (2) the Court erred in finding the funds had been commingled, and if they had been commingled, it was with bad funds; (3) plaintiffs were precluded from having a hearing on the preliminary injunction due to Devine's stipulation to extend the TRO; (4) the discovery received from third-party financial institutions establishes sufficient tracing to support a constructive trust; (5) plaintiffs could have made a showing that they are likely to succeed on their request for a constructive trust had the Court indicated its prior analysis would change; and (6) equitable and preliminary injunctive relief are available for plaintiffs' unjust enrichment claim. (Doc. #577, pp. 3-9.) Devine disagrees with each argument presented. (Doc. #596, pp. 4-16.)

         1. Change in Circumstances

         Plaintiffs first briefly assert that there was no change in circumstances to justify the dissolution because this Court previously held that the unjust enrichment claim also supported the TRO. (Doc. #577, pp. 3-4.)

         The Court finds there was a sufficient change in circumstances due to the dismissal of all of the claims arising under federal law, resulting the case proceeding based off of diversity jurisdiction with one Florida state law claim. Further, in the Order dissolving the TRO, it was explicitly acknowledged that the Court had previously described a Florida claim for unjust enrichment as equitable, although upon a closer analysis of the case law on point, it is deemed an action at law under Florida law. (Doc. #575, p. 14 n.8.) Therefore, the Court does not find that plaintiffs have established a likelihood of success on appeal on this basis.

         2. Commingled Funds

         Plaintiffs next assert that the Court incorrectly found that the funds were commingled, thereby precluding the imposition of a constructive trust. (Doc. #577, pp. 4-5.) Plaintiffs assert that the cases relied upon by the Court involved mixing good funds with bad funds, whereas here bad funds were mixed with bad funds. (Id.)

         Plaintiffs fail to cite any case law on point to support this assertion. The Court finds that even if the funds were mixed with bad funds, they were still commingled resulting in the inability to determine which funds actually came from the alleged illegal activity and were derived from the plaintiffs. Therefore, the Court ...


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