Opinion ID: 6349703
Heading Depth: 2
Heading Rank: 2

Heading: The Dispute Between Davis and Samara

Text: In March 2002, Samara (and his company) sued Davis (and his company) in the Northern District of Alabama to recover half of the settlement proceeds Davis had received from Yemen. The case went to a jury trial in April 2004, where the jury returned a verdict against Davis’s company (S & Davis) 2 and in Samara’s favor. The court separately granted Davis’s individual motion for judgment as a matter of law and terminated him from the case. The district court entered an interlocutory judgment of $1,075,851.37, pending its resolution of the interest amount. A flurry of motions followed: Samara sought an accounting of all funds flowing from the settlement, additur, pre-judgment 2 S & Davis is the “doing business as” name for Strickland & Davis International, Inc.—the original party to the joint venture. USCA11 Case: 20-14629 Date Filed: 06/14/2022 Page: 5 of 27 21-10745 Opinion of the Court 5 interest, a constructive trust, and so on. The district court imposed a constructive trust against Davis’s two companies (Strickland & Davis and DISC) pending the magistrate judge’s report and recom- mendation on Samara’s motions. 3 The magistrate judge ultimately recommended that Samara’s motions (for an accounting and for imposition of a constructive trust) be granted, and the court adopted this recommendation over the defendants’ objections. In the R&R, the magistrate judge explained why it felt that Davis (in- dividually) and DISC should be subject to the constructive trust when they hadn’t been found liable at trial: There is no fact dispute necessitating a trial, jury or non-jury, that Davis was the president and sole shareholder in S. & Davis, and that he controlled both S. & Davis and DISC Corporation. There is no dispute that the settlement proceeds were paid to S. & Davis, and there is no apparent dispute that S. & Davis’s net, pretax proceeds were paid over to DISC Corporation. Under the Alabama authority cited above, the voluntary donation of the proceeds to DISC Corporation constituted a fraudulent conveyance as to S. & 3 DISC was not a defendant in the case, but the court noted in its order that “[c]ounsel for Defendant stated at a recent hearing before Judge Putnam that the settlement money was being held by Strickland & Davis International Disc, Inc. Therefore, the Court imposes a constructive trust on said money or assets in the amount of the interlocutory judgment.” Order, Samara Consultant Grp. v. S & Davis Int’l Inc., No. 02-cv-00707 (N.D. Ala. June 22, 2004), ECF No. 174 at 1. USCA11 Case: 20-14629 Date Filed: 06/14/2022 Page: 6 of 27 6 Opinion of the Court 20-14629 Davis’s creditors, including plaintiff, regardless of whether there was any intent to defraud or even whether DISC Corporation was on notice of S. & Da- vis’s debt to plaintiff. And so, Davis was back on the hook for Samara’s share of the settlement proceeds—despite having prevailed at trial. In September 2004, the district court entered final judgment for Samara in the amount of $1,264,125.47, certified the judgment under Rule 54(b), and reserved authority to enter further orders regarding the constructive trusts and other related issues. Soon after, Samara moved for an order enforcing the constructive trust— specifically, for an order requiring Davis and one of his entities to pay the judgment. The district court granted that motion and entered an amended final judgment4 that enforced the constructive trust as to Davis individually and that directed Davis to pay the full amount of the judgment to the clerk of court within seven days. The order also described how the constructive trust would work: Based on the affidavit of Roy Davis and the representations previously made to the Court, the Court hereby enforces the constructive trust. Roy Davis, individually, is ordered to pay the amount of judgment to the Clerk of the Court within seven (7) days. Until 4 In the Amended Judgment, the court also adjusted its calculation of the outstanding prejudgment interest and, as a result, altered the total judgment amount to $1,258,747.57. USCA11 Case: 20-14629 Date Filed: 06/14/2022 Page: 7 of 27 21-10745 Opinion of the Court 7 said money is paid to the Clerk of the Court, Roy Da- vis, Strickland Davis International and Strickland and Davis International DISC Corporation are ordered to refrain from disposing or transferring any money or assets to other persons or entities other than ordinary expenses without the express permission of this Court. When the full amount of judgment is paid into the Clerk’s Office, the constructive trust will be dissolved pending further orders of this Court. In the event that any Defendant in this case appeals the judgment in this case, or any aspect of the judgment including the constructive trust, Roy Davis shall pay to the Clerk of the Court an additional amount equal to 10% of the judgment as surety for interest occurring during the appeal. The payment of the judgment, plus the 10% of judgment, to the Clerk’s Office will be a sufficient appeal bond to stay recovery of the judgment. (emphasis added). Davis immediately moved to amend the judgment. He claimed that he did “not have liquid assets sufficient to pay the judgment or obtain a supersedeas bond” and asked for permission (and more time) “to pledge, mortgage or liquidate assets for the purpose of securing a supersedeas bond.” Over Samara’s objection, the district court amended the final judgment again—this time, directing Davis to deposit $250,000 with the court within 10 days and USCA11 Case: 20-14629 Date Filed: 06/14/2022 Page: 8 of 27 8 Opinion of the Court 20-14629 the judgment balance within 30 days. Davis complied and made the $250,000 deposit on time. Two weeks later, Davis appealed the final judgment—without posting a surety bond. Instead, he moved for a 45-day extension because he had not yet been able to secure the necessary funds (the full judgment plus 10%) to post the bond. Samara, in turn, filed a motion to hold Davis in contempt for failing to timely pay the judgment balance. A few days later, Davis filed a suggestion of bankruptcy, which derailed the litigation. And so, the parties took a year-long hiatus from their judgment fight to quarrel in bankruptcy court. But, in the first few days of 2006, the bankruptcy court granted Samara’s motion to dismiss Davis’s bankruptcy petition— thus disposing of one obstacle to Samara’s collection efforts. A few weeks later, on February 13, 2006, the parties reached a tentative agreement regarding the outstanding judgment. They “agreed . . . to allow Roy Davis to post a mortgage to the Clerk of the Court in lieu of cash consisting of mortgages on real estate owned by Roy Davis and Voncile Davis” and told the district court that “Roy Davis is in the process of obtaining appraisals and title opinions on said real estate.” Samara and Davis filed a joint motion asking the district court to enter a proposed order—with the mortgage instrument attached. (Spoiler alert: This is the mortgage at issue here). On March 1, 2006, the district court entered the parties’ proposed order and attached the mortgage. The court required the parties to file a joint report within one month, by which time Davis USCA11 Case: 20-14629 Date Filed: 06/14/2022 Page: 9 of 27 21-10745 Opinion of the Court 9 must have either posted the bond or showed cause why the stayed proceedings should not immediately recommence. Here’s (in relevant part) what the order said about the mortgage: Roy Davis and Voncile Davis shall deliver to the Clerk of Court the originally executed mortgage document in the form attached to this Order, which mortgage shall have been filed of record in the Probate Court of Franklin County, Alabama by Roy Da- vis before filing. All proceedings in this matter are hereby STAYED pending resolution of the appeal by the United States Court of Appeals for the Eleventh Circuit. Upon the filing of appraisals satisfactory to the court showing the property to be of a value of at least one million five hundred thousand dollars ($1,500,000.00) and evidence that title is held by Roy Davis and Voncile Davis individually as joint tenants, in fee, and that the property conveyed is not subject to any other encumbrances, the constructive trust imposed by the court shall be dissolved, the Motion to Require Return of Attorney Fees and all motions for contempt filed by plaintiff shall be dismissed as moot… The mortgage is conveyed to the Clerk of the Court in lieu of cash. It is agreed by the parties that by the conveyance of the mortgage as supersedeas, the rights of A.M. Samara regarding the constructive trust shall be the same as if cash had been deposited with the Clerk. USCA11 Case: 20-14629 Date Filed: 06/14/2022 Page: 10 of 27 10 Opinion of the Court 20-14629 (emphasis added). We pause our narrative here to note the parties’ agreement that the mortgage they attached to the proposed order did not contain Parcel A. See Appellant’s Br. at 10 (“When the mortgage was prepared by [a law firm] for Davis, the following property (107 acres) was omitted from the mortgage[.]”); Appellee’s Br. at 9 (“Attached to that Joint Motion was a proposed Order referencing property held by Roy Davis and Voncile Davis individually as joint tenants as well as a mortgage executed by Roy Davis and Voncile Davis that . . . included all property held by Roy Davis and Voncile Davis individually as joint tenants.”). Crucially, Samara knew that Parcel A was not “held by Roy Davis and Voncile Davis individually as joint tenants.” He, in fact, described that parcel in filings before the district court as “a large piece of property, owned by Voncile Davis.” Back to our overall story. In March 2006, a lawyer filed an “opinion of title to the lands described in the mortgage from Roy Davis and wife Voncile Davis.” 5 A few days later, Davis submitted a status report, asserting that “[t]he original mortgage [and title opinion] required to be filed with the clerk of court ha[ve] been delivered to and accepted by the clerk.” On April 6, 2006, Davis filed an appraisal valuing the land at $1,690,000. In describing the 5 For reasons unknown to us, the lawyer filed this opinion in Samara’s related action against a different Davis-affiliated entity, rather than in the case involving Davis individually. USCA11 Case: 20-14629 Date Filed: 06/14/2022 Page: 11 of 27 21-10745 Opinion of the Court 11 “[s]cope of the [a]ppraisal,” the appraiser noted that Parcel One had “an office and warehouse” and that Parcel Two was “a 232.03 acre farm.” It appears, in other words, that the appraisal included the disputed Parcel A, even though (as we’ve said) that parcel was excluded from the mortgage. Four days after Davis filed the appraisal, the district court sua sponte dissolved the constructive trust and denied all pending motions as moot. In its order, the court first repeated the requirements it had outlined for the dissolution of the constructive trust, as set out in the parties’ proposed order: (1) the filing of the mortgage, (2) the filing of the title opinion, and (3) the filing of the appraisal. The court then found that Davis had, in fact, satisfied each of those requirements, including “on April 6, 2006, counsel filed notice of an appraisal conducted by David S. McFall, which listed the value of the property described in the mortgage as one million six hundred ninety thousand dollars ($1,690,000.00).” But our story doesn’t end there. Six months after the district court dissolved the constructive trust, we handed down our decision regarding the propriety of that (now-dissolved) trust. In that opinion, we expressed concern about “whether appellants [Davis and DISC Corporation] were afforded a fair opportunity to defend against the imposition of a constructive trust as the recipient of a fraudulent or otherwise wrongful transfer.” We were similarly “concerned that the district court never explained its rationale for setting aside the previous judgments against appellants.” On those grounds, we vacated and remanded the district court’s order USCA11 Case: 20-14629 Date Filed: 06/14/2022 Page: 12 of 27 12 Opinion of the Court 20-14629 imposing the constructive trust. We did so without addressing the fact that the trust had already been dissolved. Since the now-vacated order was the only mechanism by which Samara could enforce the constructive trust against Davis individually, Samara was right back where he started: with no enforceable judgment in hand. Over the next year, the motions practice continued—with little resolution. In January 2008, Davis filed a suggestion of bankruptcy for his company, S & Davis. Samara, in turn, moved to sever the claims against S & Davis so that his case against Davis (individually) and DISC could proceed. After a few months of this, the district court entered an order (1) staying the case “pending the resolution of the bankruptcy proceedings and any fraudulent transfer litigation arising out of those proceedings” and (2) asking the parties to “submit briefs . . . addressing whether the mortgage currently held in the court should be returned.” In September 2008, Samara’s lawyer filed a response “request[ing] the Court to maintain the mortgage interest on real estate with the Clerk of the Court.” Samara explained that, in the bankruptcy case, the plan was for “the Trustee [to] join in the pleadings of this Court” and to “take possession of [the mortgage] for the benefit of the creditors.” He added that “[a] release of the mortgage at this time would interfere with the Trustee’s right to claim the mortgage as an asset of the debtor’s estate.” A short while later, Samara filed a sixth amended complaint, adding new parties and new claims—back to square one. Among the defendants Samara listed in this latest complaint were Davis, S USCA11 Case: 20-14629 Date Filed: 06/14/2022 Page: 13 of 27 21-10745 Opinion of the Court 13 & Davis, DISC, Native American Development LLC (an entity that, according to Samara, Davis used to fraudulently transfer settlement proceeds), four Davis family members (also accused of fraudulent transfers), and Christian & Small LLC (Davis’s former counsel). Eventually, on November 17, 2010, the district court considered cross-motions for summary judgment between Davis (on the one hand) and the Trustee and Samara (on the other). In a long order, the court found (in relevant part) that Davis had fraudulently conveyed funds from S & Davis to DISC and then from DISC to others and granted partial summary judgment for Samara and the Trustee. After another tortured year of litigation, on November 2, 2011, the district court ordered that the mortgage be assigned to the Trustee for Samara’s benefit (he was the only creditor). In that order, the district court explained what had happened with the mortgage: On January 22, 2009, in response to a motion by the Trustee, the U.S. Bankruptcy Court entered an order freezing the . . . real estate mortgage that Davis and his wife, Voncile Davis, executed in the amount of $1,134,622.33 in favor of the U.S. District Court. . . . On June 28, 2011, Trustee filed a motion in the U.S. Bankruptcy Court to compel turnover of the . . . real USCA11 Case: 20-14629 Date Filed: 06/14/2022 Page: 14 of 27 14 Opinion of the Court 20-14629 estate mortgage held by the U.S. District Court as property of the Bankruptcy Estate. The court concluded: The Clerk is hereby AUTHORIZED and DIRECTED to immediately assign and transfer to the Trustee the real estate mortgage that Roy Davis and Voncile Davis gave in the amount of $1,134,622.33 in favor of the U.S. District Court, to be held by the Trustee pending further Order of the Bankruptcy Court. The trustee duly complied and assigned the mortgage to Samara. On December 4, 2012, Samara foreclosed and bought the property (from himself) for $765,915. Then, on January 10, 2014, Samara filed a motion to reform the mortgage. Samara explained: Plaintiff A. M. Samara moves that the Court reform the mortgage, given by Roy Davis and wife Voncile Davis (Ex. A), so as to include the following property which is owned by Voncile Davis and which was ex- cluded from the mortgage which Roy and Voncile Davis gave A. M. Samara to stay judgment and to avoid contempt proceedings. A. M. Samara has foreclosed on the property included in the mortgage. Roy Davis and Voncile Davis still occupy the property. However, a large piece of property, owned by Von- cile Davis, included in the Davis’s farm was not USCA11 Case: 20-14629 Date Filed: 06/14/2022 Page: 15 of 27 21-10745 Opinion of the Court 15 included in the mortgage. . . . The property owned by Voncile Davis was listed on the appraisal. The property owned by Voncile Davis was omitted from the mortgage which was prepared by Counsel for Davis. The farm listed on the appraisal consists of 232.3 acres. The property listed on the mortgage is 110 acres. The property belonging to Voncile Davis was omitted from the mortgage. (emphasis added). Two weeks later, the district court terminated the motion to reform in a one-page order. “The problem for A.M. Samara,” the court explained, “is that the case before this court has been closed since November of 2010.” The court added: “The Motion (Doc. #555) does not provide the court with sufficient cause to reopen this case, especially in light of the fact that all of the motions that were filed in this case in 2013 were administratively terminated in favor of alternate avenues for relief.” And that was the end of our story—for a little while.