FI L ED U.S. COURT OF APPEAL S EL EVENTH CI RCUI T OCTOB ER 14, 2011 J OHN L EY CL ERK [DO N OT PUBLISH]

IN THE UN ITED STATES COURT OF APPEALS

FOR THE ELE VENTH CIRCUIT

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No. 1 1- 12 32 7 Non -Arg um en t Ca le nd ar

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D.C. Dock et No. 8 :1 0- cv -0 03 94 -J SM- EAJ

C&M INVESTMENT GROUP, LT D., KARLIN HOLDINGS LIMITED PARTNERSHIP,

ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll Pl ai nt iff s - Ap pe ll ees ,

vers us

NEIL DAVID CAMPBELL, JULIE CAM PBELL,

ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll Defen da nt s - Ap pe ll an ts

.

__ __ __ __ __ __ __ __ __ __ __ __ App eal fro m

th e Uni te d S ta te s Di st ric t Co ur t for th e Mi dd le Dis tri ct of F lo rid a

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__ __ __ __ __ __ __ __ __ __ __ (Oct ob er 1 4, 2 01 1)

Befo re MAR CUS, WILSON an d B LACK, Circ ui t J ud ge s.

PER CURI AM:Defen da nt s- App el la nt s Neil Dav id Cam pb el l an d Ju li e Cam

pb el l (co ll ect iv el y

th e “ Cam pb el ls ”) ap pe al th e d i s t r ic t co ur t’s en try of de fau lt jud gm en t in fav or of

Pl ai nt iff s- App el le es Co st a Ri can li m it ed li ab il it y co m pa ny C&M In ve st m en t Gro up

Ltd

. an d it s so le sh areh ol de r Ka r l i n H o l di ng s (co ll ect iv el y “ C&M ”) on C&M ’s

frau du le nt tra ns fer cl ai m

. On ap pe al
, th e Cam pb el ls arg ue th at th e di st ric t co ur t erre d

in im po si ng an d co ll ap si ng a co ns tru ct iv e t r us t pu rs ua nt to th e de fau lt jud gm en t

be cau se he di d no t co nc ed e t o th e da m ag es so ug ht
, an d C&M ’s co m pl ai nt di d no t

r e q ue st a m on ey jud gm en t or to co ll ap se a tru st bu t was in act ua li ty a cl a i m f o r a n

eq ui ta bl e li en on pr op ert y un ti l da m ag es are es ta bl is he d ( i n r e l at ed li ti ga ti on in

Cal ifo rn ia co ur t, he rei na fte r th e “ Cal ifo rn ia Acti o n ” )

. Afte r care fu l rev ie w, we

affi rm

.

W e rev ie w th e d is tri ct co ur t’s de ci si on to en te r a de fau lt jud gm en t fo r ab us e

of di sc r e t i o n , bu t rev ie w de no vo cl ai m s of le ga l erro r, as well as ch al le ng es to th e

su ffi ci en cy of th e co m

pl ai nt

. See San de rfo rd v. Pru de nt ia l In s. Co

. of Am eri ca, 90 2

F.2 d 8 97 , 89 8 (1 1t h C ir.1 99 0) ; Fi rs t Vag ab on ds Ch ur ch of Go d v . Cit y of Orl an do
,

63 8 F.3 d 75 6, 76 0 (1 1t h Ci r. 20 11 ); Eag le Hos p. Ph y si ci an s, LLC v. SRG Co ns ul ti ng ,

In c., 56 1 F .3d 12 98 , 13 03 (11 th Cir . 20 09 ).

The rel ev an t pr oc ed ur al hi st or y is th is

. C&M ’s co m pl ai nt al le ge d a vi ol at io n

of Fl or id a’s Uni fo rm Frau du le nt Tran sf er Act, on th e gr ou nd th at Neil Cam pb el l ha d

2pu rch as ed real pr op ert y (th e “ Sara so ta Pro pe rty”) us in g C&M ’s m on ie s, whi ch were

ob ta in ed th ro ug h frau d. The co m pl ai nt so ug ht to vo id a m on ey tra ns fer be twee n th e

Cam pb el ls an d to im

po se an eq ui ta bl e li en an d/ or a co ns tru ct iv e tru st fo r C&M ’s

be ne fit on th e Sara so ta Pro pe rty, an d so ug ht an in jun ct io n pr oh ib it in g th e Cam pb el ls

fro m tra ns ferr in g or en cu m be rin g th e Sara so ta Pro pe rty. The Cam pb el ls or ig in al ly

an swe red th e co m

pl ai nt , bu t th en fil ed a m ot io n to wit hd raw th e an swe r. The di st ric t

co ur t t he n d ire ct ed th e Cam pb el ls to no ti fy

th e co ur t as to whet he r th ey in te nd ed to

wit hd raw th ei r m ot io n to wit hd raw th e an swe r or in th e al te rn at iv e, if th ey m ov ed to

wit hd raw th e m ot io n, th ey were to pr ov id e di sc ov ery o w e d t o C & M. The co ur t

or de red th at if t h e Cam

pb el ls fai le d to ei th er wit hd raw th e m ot io n or to pr ov id e

di sc ov ery, a de fau lt jud gm en t wou ld be en te red in fav or of C&M
, “ whi ch in cl ud es

th e rem ed y of a co ns tru ct iv e tr u s t

. ” B e c au se th e Cam pb el ls fai le d to ta ke ei th er

act io n wit hi n th e al lo tt ed ti m e pe rio d, th e di st ric t co ur t gr a n t e d t h e Cam pb el ls ’

m ot io n t o wi th dr aw th ei r an swe r an d e nt ered a de fau lt ag ai ns t t he Cam pb el ls

.

In th e de fau lt jud gm en t, th e di st ric t co ur t gr an te d to C&M a co ns tru ct iv e tru st

ov er th e Sara so ta Pro pe rty, by whi ch ti tl e of th e pr op ert y wou ld be tra ns ferr ed fro m

t he Cam pb el ls to C&M wit hi n te n da y s of th e da te of jud gm en t, an d or de red t h e

Cam pb el ls to co nv ey th e pr op ert y , an d to ex ecu te al l do cu m en ts an d to pa y al l ta xe s

an d co st s req ui red to effe ct ua te th e tra ns fer. The jud gm en t st ip ul at ed th at sh ou ld th e

3Cam

pb el ls fai l to co m

pl y wit h th e or de r, C&M w o u l d b e au th or iz ed to pe rfo rm al l

act s ne c e s s a ry to effe ct ua te th e tra ns fer of ti tl e, or in th e al te rn at iv e, at C&M ’s

el ect io n, th e jud gm en t wou ld op erat e to di ve st th e Cam pb el ls of ti tl e to th e pr op ert y

an d th e pr op ert y wou ld be ve st ed in C&M or it s de si gn ee. The di st ric t co ur t de ni ed

in rel ev an t pa rt th e Cam

pb el ls ’ su bs e q u en t m ot io n to st ay , an d on May 31
, 20 11
,

C&M de si gn at ed Fl owe r Sara so ta , LLC to ta ke ti tl e to th e Sara so ta Pro pe rty, an d th e

warra nt y de ed was re co rd ed on Ju ne 1, 2 01 1. Th is ti m el y ap pe al fol lo ws.

W e are un pe rs ua de d by t he Cam pb el ls ’ cl ai m s th at C&M was no t e n t i t l ed to

en try of jud gm en t un ti l th ey pr ov ed up th ei r “ da m ag es ” in th e se pa rat e Cal ifo rn ia

Acti on

. As an in it ia l m at te r, th e Cam pb e l l s ’ r e l i an ce on th e Cal ifo rn ia Acti on is 1

m is pl aced as th os e pr oc eed in gs in vo lv e cau se s of act io ns se pa rat e fro m th e

un de rlyin g pr oc eed in gs

. As th e di st ric t co ur t reco gn iz ed whe n th e C a mp be ll s

un su cces sf

ul ly m ov ed to st ay th is p r oc eed in g in fav or of th e Cal ifo rn ia Acti on , t he

We are also unpersua ded, howe ver, by C&M’s a rg ument that the appe al is moot. W hile 1 it is t rue tha t the previous tra nsfer of prope rty

to a third party

pursuant to a district cour t order that is not stay ed pending appea l could make a

n appea l moot, see Am. Gra in Ass’n v. L ee- Vac
, L td., 630 F.2d 245, 247-48 ( 5th Cir. 1980), it is di fficult to say that Flowe r Sara sota, L L C, the

rec ipient of the Sara sota Property , is a true third pa rty in this case. As the r ecor d shows, Flowe r Sarasota, L L C is a Florida c orpora tion, formed just day s befor e it rec eived the Sar asota Proper ty , and has a s its reg istered mana g er K arlin Asset Mana g ement, I nc., which sha res the sa me addr ess and re g istered a g ent as the pla intiffs. There fore , we r ejec t C&M’s cla im of mootness, and addre ss the Campbells’ arg ument on the merits.

4Cam

pb el ls fai l to ap pr eci at e th at th is la wsu it is in de pe nd en t of th e Cal ifo rn ia Acti on ,

an d i s n ot a m ere “ co ll ect io n a ct io n” :

Thi s act io n de al s wit h whe th er Mr. Cam pb el l frau du le nt ly tra ns ferr ed

as se ts to Defen da nt Ju li e Cam pb el l, who is no t a pa rty in th e Cal ifo rn ia
act io n. Not ab ly, th e Fl or id a pr op ert y at is su e in th is cas e is no t at is su e in th e Cal ifo rn ia act io n. And as Pl ai nt iff s po in t ou t, co nt ra r y to Defen da nt s’ arg u men t th at th is act io n is jus t a co ll ect io n act io n, an act io n fo r frau du le nt tra ns fer un de r Fl or id a la w is no t a n a ct io n to

co ll ect , b ut rat he r a cl ai m th at req ui res an in de pe nd en t ad jud ic at io n of li ab il it y ba se d o n s ta tu to ril y -d efi ne d e le m en ts

. (Do c. 41 at 5)

. In de ed
, th e Cam pb el ls do no t ev en a r g u e t ha t th e Cal ifo rn ia an d

Fl or id a act io ns in vo lv e th e sa m e cau se s of act io n or th e sa m e pa rti es ; th ey m erel y sa y

th at th e cas es in vo lv e th e sa m e fac ts

.

Mo reo ve r, C&M di d no t ne ed to pr ov e da m ag es he re be cau se th ey di d no t se ek

da m ag es in th ei r co m

pl ai nt , bu t rat he r, so ug ht a co ns tru ct iv e tru st an d t i t l e to th e

Sara so ta Pro pe r t y. Th e Cam pb el ls ’ arg um en t th at C&M on ly so ug ht “ pr ov is io na l 2

rel ie f” an d th at th e di st ric t co ur t, by im po si ng a co ns tru ct iv e tru st , gr an te d Pl ai nt iff s

rel ie f gr eat er th an wha t th ey req ue st ed is be li ed by C&M ’s co m pl ai nt , whi ch req ue st s

th at th e di st ric t co ur t “ di rect [] th at th e Sara so ta Pro pe rty be he ld in co n s t r u c ti ve

tru st .” The Cam

pb el ls ev en a c k no wled ge th at C&M so ug ht a co ns tru ct iv e tru st in

I n addition, the Campbells’ asser tion that Florida state la

w re quires plaintiffs to make a 2 showing separ ate f

rom the alleg ations in the complaint to obtain a defa ult judgment for

damag es is irreleva nt here , since fe dera l, not Florida, proc edura l law g overns the de fault-judg ment analy sis in thi s case . See Ga sperini v. Center f or Humanities, I nc., 518 U.S. 415, 427 (1996) (“f eder al cour

ts sitt ing in diver sity

apply state substantive law a

nd fede ral proc edura l law”)

.

5th ei r co m

pl ai nt , bu t in si st th at C&M ’s ex pr es s req ue st fo r a co ns t r u c ti ve tru st was

so m eh ow in su ffi ci en t: “ Des pi te us e of th e te rm ‘Con st ru ct iv e Tru s t ’, Pl ai nt iff s’

pl ead in g is act ua ll y a cl ai m fo r a n e q u it ab le li en un ti l da m ag es are es ta bl is he d.”

( B lu e Br. at 9)

. Not wit hs ta nd in g th e Cam pb el ls ’ effo rt to rewri te th e co m pl ai nt to

th ei r li ki ng , C&M ’s pr ay er fo r a “ co ns tru ct iv e tru st ” was si m pl y th at -- a cl ai m fo r a

co ns tru ct iv e tru st

. And
, co nt rary to th e Cam pb el ls ’ un su pp or te d as se rti on , C&M di d

no t al so ha ve to pl ead th at th ey wan te d th e co ns tru ct iv e tru st “ co ll ap se d” in or de r to

be en ti tl ed to tra ns fer of ti tl e. The la w is cl ear th at “ [w]hen a co ns tru ct iv e tru st is

crea te d, th e be ne fic ia ry

. . . ‘is en ti tl ed to ha ve hi s or ig in al in te res t res to red
, an d to be

rees ta bl is he d in hi s ti tl e.’” Am

. Nat’l Ban k of Ja ck so nv il le v. FDIC, 71 0 F.2 d 15 28
,

15 41 (11 th Cir . 19 83 ) (q uo ti ng Jo hn so n v. Jo hn so n, 34 9 So. 2d 69 8, 69 9 (Fla . Dis t.

Ct

. App

. 19 77 )); se e al so Ben de r v. Cen Trus t Mo rtg

. Co rp ., 51 F.3 d 10 27
, 10 29 (1 1t h

Ci r. 19 95 ) (“ The be ne fic ia ry of th e co ns tru ct iv e tr us t i s ent it le d to ha ve hi s ori gi na l

in te res t res to red in hi s pr op ert y whi ch was wro ng fu ll y ta ke n. ”) ; Barf ie ld v. Brad sh aw,

44 2 So . 2 d 10 02 , 1 00 4 (Fl a. Dis t. Ct . Ap p. 1 98 3) (ho ld in g t ha t l owe r co ur t er red in

ap po in ti ng a tru st ee to h o l d a n d manag e fu nd s su bjec t to co ns tru ct iv e tru st , rat he r

th an tra ns ferr in g th em to rig ht fu l own er, be cau se “ [n ]o pa rty so ug ht ap po in tm en t of

a tru st ee, an d th e ru le is th at a be ne fic ia ry un de r a co ns tru ct iv e tru st is en ti tl ed to ha ve

6hi s or ig in al ti tl e res to red ”). Th us , C&M ’s en ti tl em en t to th at eq ui ta bl e rel ie f was 3

de m on st rat ed whe n th e Cam pb el ls co nc ed ed th e tru th of th e well -p le ad ed al le ga ti on s

th at th e Cam

pb el ls fu nd ed th e pu rch as e of th e Sara so ta Pro pe rty en ti rel y wit h m on ey

st ol en fro m

C&M

.

Fi na ll y , th e Cam

pb el ls ’ cl ai m , un de r fed eral pr oc ed ur al ru le s, th at th e di st ric t

co ur t erre d by en te rin g de fau lt jud gm en t be cau se C&M ’s c la im was no t fo r a “ su m

cert ai n” is ba se d up on a m is read in g of Fed eral Ru le of Ci vi l Pro ced ur e 55

. Ru le

55 (b )(1 ) req ui res a “ su m cert ai n” on ly be fo re th e cl erk can en te r de fau lt ju d g ment

.

Ru le 55 (b )(2 ), b y co nt ras t, whi ch ad dr es se s en try o f de fau lt jud gm en t by t he co ur t,

co nt ai ns no su ch r e q ui rem en t an d gi ve s co ur ts br oa d di sc ret io n to de te rm in e wha t

ad di ti on al ev id en ce, if an y , is req ui red to en te r de fau lt jud gm en t. See Fed

. R. Ci v. P.

55 (b )(2 ) (p ro vi di ng th at co ur ts “ m ay co nd uc t he ari ng s or m ak e refe rral s” ne ces sa ry

to effe ct ua te de fau lt jud gm en t); se e al so SEC v. Sm y th
, 42 0 F.3 d 12 25
, 12 32 n.1 3

(1 1t h Ci r. 20 05 ) (n ot in g th at an “ ev id en ti ary he ari ng is no t a pe r se req ui rem en t” fo r

a de fau lt ju d g men t an d is no t ne ed ed whe n “ al l es se nt ia l ev id en ce is al read y of

The Campbells also say

that “a c onstructive trust is a re medy , not a ca use of a ction and 3 must be imposed on an established c ause of action.” ( Blue Br . at 6-7). T hey provide no support for this asser

tion, and its basis is unclear. B ut in any event, the r ecor d is clear that the district court imposed a c onstructive trust as a reme dy for the Ca mpbells’ violation of Florida f raudule nt transfe r laws. ( Doc. 106 a t 2-3). Also, it was cle ar f rom the district court’ s order that the Campbells’ failure to withdraw the motion to withdraw would r esult in the transfe r of the Sarasota Prope rty ’s title.

7reco rd ”); Ham m v. DeKal b Cn ty., 77 4 F.2 d 15 67
, 15 76 (1 1t h Ci r. 19 85 ) (“ The en try

of a de fau lt jud gm en t i s co m m it te d t o t he di sc ret io n o f th e d is tri ct co ur t.”)

.

Acco rd in gl y , we affi rm

.

AFFIRMED.

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