ALLIANT TAX CREDIT 31, INC, a Florida corporation, ALLIANT TAX CREDIT FUND XXVII, LTD., a Florida limited partnership, ALLIANT TAX CREDIT TAX CREDIT XXVII, INC, a Florida corporation, ALLIANT TAX CREDIT XI, INC., a Florida corporation, ALLIANT TAX CREDIT XI, LTD., a Florida limited partnership, Plaintiffs - Counter Defendants - Appellees -Cross Appellants,
M. VINCENT MURPHY, III, MULTIFAMILY HOUSING DEVELOPERS, L.L.C., a Georgia limited liability company, COMMUNITY MANAGEMENT SERVICES, INC., a Georgia corporation, GAZEBO PARK APARTMENTS OF ACWORTH, LLC, a Georgia limited liability company, Defendants - Appellants - Cross Appellees, MARILYN MURPHY, Defendant - Counter Claimant - Appellant -Cross Appellee.
Appeals from the United States District Court for the
Northern District of Georgia D.C. Docket No.
TJOFLAT and WILLIAM PRYOR, Circuit Judges, and MURPHY,
TJOFLAT, Circuit Judge.
fraudulent-transfer case, like many such cases, is a suit
about a suit. In the first suit, Plaintiffs obtained a
judgment in federal district court in Kentucky for breach of
a partnership contract. But when Plaintiffs tried to collect,
they discovered that the once-wealthy Defendant was
figuratively penniless. The surprised Plaintiffs surmised
that Defendant had colluded with his former wife to
fraudulently transfer his assets to her (or to entities under
her control) as part of their divorce settlement. So
Plaintiffs sued-again-this time in federal district court in
Georgia-to recover their judgment under Georgia's
fraudulent-transfer statute. Agreeing with Plaintiffs that
fraudulent transfers had occurred, a jury returned a verdict
in their favor. The District Court entered judgment
accordingly, and this appeal and cross-appeal followed.
run-up to this suit began when Plaintiffs, five entities that
we collectively refer to as "Alliant,
" lent Defendant M. Vincent Murphy, III
investment capital to build low-income housing units that
were never completed. So Alliant sued him and other
guarantors of the debt in federal court in the Eastern
District of Kentucky for breach of their partnership
contract. Alliant was joined in that suit by Alliant Tax
Credit Fund 31-A, Ltd. ("Alliant 31-A"), which also
lent investment capital to Vincent. Alliant and Alliant 31-A
prevailed, and the District Court for the Eastern District of
Kentucky entered a judgment (the "Kentucky
judgment") in their favor for $8, 946, 643. Vincent
appealed, and the Court of Appeals for the Sixth Circuit
affirmed. Alliant Tax Credit Fund 31-A, Ltd. v.
Murphy, 494 Fed.Appx. 561, 563 (6th Cir. 2012).
fraudulent activity that gave rise to this suit began before
the Kentucky judgment was entered.
and his wife, Marilyn Murphy, had earlier divorced in the
Superior Court of Fulton County, Georgia. The divorce decree
incorporated a settlement agreement between them. As part of
the agreement, Marilyn received from Vincent several millions
of dollars in cash and commercial paper, stock shares, a
mountain cabin, household furnishings, and an apartment
complex. These assets are the basis for the
fraudulent-transfer action here. When Alliant sought to
collect on the Kentucky judgment, it found that Vincent was
judgment proof. So it sued Vincent for a second time.
(but not Alliant 31-A) brought this action against Vincent,
Marilyn, Multifamily Housing Developers, L.L.C.
("Multifamily Housing"), and Community Management
Services, Inc. ("CMS"),  in the District Court for
the Northern District of Georgia under the Uniform Fraudulent
Transfers Act (the "UFTA"), O.C.G.A. §§
18-2-70 to 80 (2010), amended by the Uniform
Voidable Transactions Act (the "UVTA"), O.C.G.A.
§§ 18-2-70 to 85 (2015). The UFTA, a quintessential
fraudulent-transfer statute, allows creditors to void certain
asset transfers made by a debtor with the purpose of
immunizing itself from collection. See O.C.G.A.
§ 18-2-77 (2010). Alliant claimed that the Murphys'
divorce settlement and Vincent's asset transfers to
Defendants were ruses to evade Vincent's creditors and
thus sought to void those transfers. The case proceeded to
trial, and a jury returned an itemized verdict for Alliant
after having found that twenty-three transfers from Vincent
to Defendants were fraudulent. The jury also found that the
Murphys were subject to punitive damages but that only
Vincent had acted with the "specific intent to cause
harm." It awarded $1, 000, 000 in punitive damages
against him and $100, 000 in punitive damages against
the jury returned its verdict, the District Court for the
Northern District of Georgia entered a final judgment (the
"Georgia judgment") for Alliant. Before describing
what the judgment provided, we pause momentarily to note the
remedies available under the UFTA.
UFTA provides creditors with both equitable and legal
remedies. The creditor may obtain, as an equitable remedy,
"[a]voidance of the transfer . . . to the extent
necessary to satisfy the creditor's claim." See
id. § 18-2-77(a)(1). Or it may obtain, as a legal
remedy, "judgment [against the transferee] for the value
of the asset transferred . . . or the amount necessary to
satisfy the creditor's claim, whichever is less."
See id. § 18-2-78(b).
did not seek avoidance of any of the transfers made. Nor
realistically could it: Most of Vincent's transfers were
in the form of cash that has since been turned into proceeds
that are likely untraceable. Rather, it sought a money
judgment for the value of the assets transferred.
Said differently, it sought the legal remedy available under
Georgia judgment, which purported to implement the jury's
verdict, provided that Alliant would receive the sum of $10,
137, 285.84, which consisted of the amount of the Kentucky
judgment ($8, 946, 643), interest on that judgment ($90,
642.84), and the punitive-damages awards against Vincent and
Marilyn ($1, 000, 000 and $100, 000, respectively). The
District Court for the Northern District of Georgia also
issued a writ of execution that directed the U.S. Marshal to
seize Defendants' assets to satisfy the
the entry of the Georgia judgment, Marilyn satisfied the
judgment in full, and Alliant moved to alter or amend the
judgment, see Fed. R. Civ. P. 60, to allow
prejudgment interest under Georgia law. The District Court
for the Northern District of Georgia denied this motion,
reasoning that (1) Alliant's UFTA claim was
unliquidated-that is, not reduced to a fixed sum-until the
Georgia judgment was entered and (2) under Georgia law,
entitlement to prejudgment interest for unliquidated claims
requires compliance with the Unliquidated Damages Interest
Act, O.C.G.A. § 51-12-14 (2018), whose procedures
Alliant had not followed. Defendants appealed the judgment
entered pursuant to the verdict, and Alliant cross-appealed
the order denying prejudgment interest.
appeal and cross-appeal require us to decide numerous
discrete issues. We first take up justiciability problems in
Part II. We then turn to the merits, addressing
Defendants' arguments on appeal in Parts III through V
and Alliant's arguments on cross-appeal in Part VI. We
conclude in Part VII.
begin by addressing two jurisdictional bars to the District
Court's power to entertain this suit: mootness and
subject-matter jurisdiction. We then address
non-jurisdictional bars. Defendants challenge the Court's
decision not to abstain from exercising its jurisdiction on
three prudential grounds. First, that even if the parties are
diverse of citizenship, this case falls within the
domestic-relations exception to diversity jurisdiction.
Second, that by entertaining this suit, the Court violated
the Rooker-Feldman doctrine. And third, that
Alliant is collaterally estopped from attacking the transfers
first question, given Marilyn's full satisfaction of the
Georgia judgment: Are this appeal and cross-appeal moot?
After oral argument, we asked the parties to brief this
question and having reviewed their responses, we are
satisfied that the case remains a case or controversy within
the meaning of Article III. See U.S. Const. art.
III, § 2, cl. 1.
matters [for mootness] is whether the parties' actions
objectively manifest an intent to abandon the issues on
appeal." RES-GA Cobblestone, LLC v. Blake Constr.
& Dev., LLC, 718 F.3d 1308, 1315 (11th Cir. 2013).
So payment moots an appeal "only if the parties mutually
intended a final settlement of all the claims in dispute and
a termination of the litigation." McGowan v. King,
Inc., 616 F.2d 745, 747 (5th Cir. 1980) (per
case continues to breathe life. In Alvarez Perez v.
Sanford-Orlando Kennel Club, Inc., 518 F.3d 1302 (11th
Cir. 2008), we applied the Supreme Court's decision in
United States v. Hougham, 364 U.S. 310, 81 S.Ct. 13
(1960), and held that an appeal and cross-appeal situated
much like the ones before us today were not moot. There, the
plaintiff's counsel signed satisfaction-of-judgment
documents that were subsequently filed in the district court,
but the plaintiff did not expressly reserve his right to
appeal. 518 F.3d at 1305. But there, as here, the parties
"continued to pursue their appeals." Id.
at 1307. There, as here, the parties "filed supplemental
letter briefs addressing the merits." Id. And
there, as here, a party "inform[ed] us of a change in
status involving one of the defendants." Id. In
other words, "[i]nstead of filing a motion to dismiss
the appeal as soon as a satisfaction was filed in the
district court, both parties continued to litigate the case
in this Court as though nothing had changed."
Id. at 1308.
fact, Marilyn merely did the effective equivalent of posting
a supersedeas bond-an act that by itself does not moot a
case. See Fed. R. Civ. P. 62(b).
judgment is appealed, both the winning and losing parties
face risk in the period between the time judgment is entered
and the time it is affirmed or reversed. The winning party
seeks immediate satisfaction of the judgment because assets
available at the time judgment is entered might disappear by
the time it is affirmed. And the losing party seeks delayed
satisfaction of judgment for a parallel reason: Assets
available at the time judgment is entered might disappear by
the time it is reversed. A supersedeas bond insures both
parties against these respective risks. It permits a judgment
debtor to "avoid the risk of satisfying the judgment
only to find that restitution is impossible after reversal on
appeal" and "secures the prevailing party against
any loss sustained as a result of being forced to forgo
execution on a judgment during the course of an ineffectual
appeal." Poplar Grove Planting & Ref. Co. v.
Bache Halsey Stuart, Inc., 600 F.2d 1189, 1191 (5th Cir.
posting a supersedeas bond does not moot an appeal. See
Dale M. ex rel. Alice M. v. Bd. of Educ. of
Bradley-Bourbonnais High Sch. Dist. No. 307, 237 F.3d
813, 815 (7th Cir. 2001) (Posner, J.) ("A judgment
creditor who pays the judgment pending appeal instead of
posting a supersedeas bond (which would automatically stay
collection) is entitled to the return of its money if the
decision is reversed, and so the payment does not moot the
appeal unless the appellant has relinquished his right to
seek repayment if he wins." (citation omitted)).
choice to pay the judgment does not render this case moot any
more than would her decision to post a supersedeas bond; she
simply waived the protection a bond would provide.
Cf. 11 Charles Alan Wright et al., Federal
Practice and Procedure § 2905, at 724-25 (3d ed.
2012) ("[A] person who cannot furnish a supersedeas bond
does not lose the right to appeal, although he does assume
the risk of getting his money back again if the judgment is
short, the "objective manifestations of both parties
clearly indicate that they intended to pursue their positions
in the appeal and cross-appeal." Alvarez Perez,
518 F.3d at 1308. We turn now to subject-matter jurisdiction.
maintain that the District Court lacked jurisdiction to
entertain the dispute because the parties were not diverse of
District Court's subject-matter jurisdiction has
continued to present difficulties in this case. Defendants
appealed the Georgia judgment, and two months later, this
Court sua sponte asked the parties to address
subject-matter jurisdiction because diversity jurisdiction
was not evident from the pleadings. In response, Alliant
moved to amend its complaint to simply allege the
citizenships of all relevant entities. Defendants, in turn,
moved to remand the case to the District Court for a factual
determination of subject-matter jurisdiction in the first
instance. After reviewing the parties' responses and
motions, we remanded the case to the District Court so that
it might "fully resolve the question of the court's
subject-matter jurisdiction over this action."
Alliant Tax Credit Fund 31-A, Ltd. v. Murphy, No.
15-14634-GG, slip op. at 1 (11th Cir. Apr. 10, 2017) (per
remand, Alliant filed a memorandum on Plaintiffs'
citizenships. Plaintiffs are a mixture of limited-liability
companies and limited partnerships.Some of Plaintiffs'
members and partners are natural persons, but some are other
limited-liability companies, other partnerships,
corporations, banks, and trusts. Alliant traced these
entities' citizenships, too. It included with its
memorandum to the District Court affidavits, declarations,
and authenticated documents. Defendants responded that
Alliant's submissions were insufficient to confirm that
all relevant entities were accounted for, as well as to
confirm those entities' citizenships. The Court observed
that though Alliant had initially claimed that the sole
citizenship of all five Plaintiffs was Florida, Alliant
conceded in its memorandum that Plaintiffs were also citizens
of California, Delaware, the District of Columbia, Illinois,
Nebraska, New York, Ohio, and Texas. So the Court required
further documentary evidence of citizenship. For natural
persons, it asked for drivers licenses; for corporations, it
asked for annual reports and articles of incorporation or
governance documents; for limited partnerships and limited-
liability companies, it asked for agreements; for banks, it
asked for articles of association; and for trusts, it asked
for organizational documents.
this jurisdictional discovery was complete, the District
Court set out its findings as to the parties'
• Alliant 31 was a citizen of Florida, California, and
• Alliant XXVII, Ltd. was a citizen of Florida,
California, Illinois, and the District of Columbia.
• Alliant XXVII, L.L.C. was a citizen of Florida,
California, and Illinois.
• Alliant XI, L.L.C. was a citizen of Florida,
California, and Illinois.
• Alliant XI, Ltd. was a citizen of Florida, California,
Illinois, Delaware, New York, ...