Court Opinion

ID: 9388197
Source: CourtListenerOpinion
Date Created: 2023-04-19 21:01:22.246089+00
Date Added: 2024-06-11T17:18:18.749333
License: Public Domain

USCA4 Appeal: 22-1738     Doc: 40           Filed: 04/18/2023   Pg: 1 of 9

                                              PUBLISHED

                              UNITED STATES COURT OF APPEALS
                                  FOR THE FOURTH CIRCUIT

                                               No. 22-1738

        FEDERAL TRADE COMMISSION,

                    Plaintiff – Appellee,

              and

        MARC-PHILIP FERZAN,

                    Receiver – Appellee,

              v.

        YU LIN; QUAN LIN; JAMIE TENG; JULIANA TENGONCIANG; ALFONSO KOLB,
        JR.; JASMIN TENGONCIANG; ROEL PAHL; CLARISSA TENGONCIANG; ALLAN
        PRIJOLES; MARY JANE PRIJOLES; DARREN CHRISTIAN; CHAN MARTIN;
        JULIE SANTOS; DAVID HEIMAN; HEARTLAND PROPERTY GROUP, INC.,

                    Movants – Appellants.

        Appeal from the United States District Court for the District of Maryland, at Baltimore.
        Peter J. Messitte, Senior District Judge. (1:18-cv-03309-PJM)

        Argued: March 8, 2023                                           Decided: April 18, 2023

        Before WILKINSON and THACKER, Circuit Judges, and MOTZ, Senior Circuit Judge.

        Affirmed by published opinion. Senior Judge Motz wrote the opinion, in which Judge
        Wilkinson and Judge Thacker joined.
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        ARGUED: Kyle Singhal, HOPWOOD & SINGHAL PLLC, Washington, D.C., for
        Appellants. Imad Dean Abyad, FEDERAL TRADE COMMISSION, Washington, D.C.,
        for Appellees. ON BRIEF: Shon Hopwood, HOPWOOD & SINGHAL PLLC,
        Washington, D.C., for Appellants. Anisha S. Dasgupta, General Counsel, Joel Marcus,
        Deputy General Counsel, FEDERAL TRADE COMMISSION, Washington, D.C., for
        Appellee Federal Trade Commission.

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        DIANA GRIBBON MOTZ, Senior Circuit Judge:

                  This appeal marks another installment in a series of disputes involving an

        enforcement action by the Federal Trade Commission (FTC) against a group of

        fraudulent real estate developers (the Sanctuary Belize enforcement action). Appellants,

        a group of 14 individual investors and a family-owned corporation, moved to intervene in

        an action brought by others and sought relief from the district court’s judgment. But

        Appellants did not do so until after the district court had entered final judgment and that

        judgment had been appealed to this court. See FTC v. Pukke, 53 F.4th 80 (4th Cir. 2022)

        (affirming in part In re Sanctuary Belize Litig., 482 F. Supp. 3d 373 (D. Md. 2020)).

        Because the Sanctuary Belize enforcement action was already on appeal when Appellants

        filed their motions, the district court concluded that it lacked jurisdiction to entertain

        those motions. It held alternatively that the motions should be denied as meritless. We

        affirm.

                                                    I.

                  The following facts are drawn from the record and unless otherwise noted are

        uncontested. In mid-2018, Appellants collectively invested $1.95 million in Newport

        Land Group (NLG). Appellants believed that NLG would use that investment to develop

        a residential project in Costa Rica. A few months later, the FTC initiated the Sanctuary

        Belize enforcement action, alleging that Andris Pukke and others had coordinated “a

        large-scale land sales scam in the Central American country of Belize.” Sanctuary

        Belize, 482 F. Supp. 3d at 385. The FTC asserted that this project, known as Sanctuary

        Belize, was “directed and controlled” by “a web of individuals and corporate entities,”

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        and that one such fraudulent entity was NLG. Id. at 386–87. The FTC offered abundant

        evidence demonstrating that NLG’s principals had interlocking relationships with

        Sanctuary Belize principals, that funds were commingled between NLG and Sanctuary

        Belize for no apparent legitimate business purpose, that the entities shared a common

        address and corporate headquarters, and that NLG had direct involvement in the

        Sanctuary Belize scam.

               Also in 2018, the FTC successfully obtained a temporary restraining order and, at

        the district court’s direction, the Sanctuary Belize entities (including NLG) turned over

        their assets to a court-appointed Receiver. See id. at 385, 388. Because NLG was jointly

        and severally liable for the scheme, the Receiver sought and received approval from the

        district court to begin using NLG’s assets, including Appellants’ investment funds, for

        general receivership purposes.     Although Appellants received timely notice of the

        Receiver’s takeover of the NLG assets, they did not attempt to intervene in the case at

        that time.

               In early 2020, the district court conducted a nearly three-week bench trial. David

        Heiman, one of the Appellants now seeking intervention, testified at that trial but neither

        he nor the other Appellants sought to intervene. NLG, for its part, never appeared in the

        proceedings. The district court later imposed final judgment on all defendants in two

        thorough opinions, one issued on August 28, 2020, and the other on January 13, 2021.

               In its August 2020 opinion, the court acknowledged that Heiman “challenged the

        Receiver’s seizure of NLG’s assets as being assets of the Receivership.” Though noting

        Heiman “face[d] a steep uphill battle” to have his investment returned, the district court

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        explained that it was “willing at least to give him his day in court” and accordingly

        granted Heiman leave to file a motion requesting the return of his investment. The

        district court also deferred imposing default judgment against NLG until Heiman had an

        opportunity to present his argument. The following month, Heiman and other NLG

        investors sent nearly identical pro se letters to the district court in which they requested

        that their investments be returned.     But neither Heiman nor any of the other NLG

        investors moved to intervene in the action. On November 9, 2020, Pukke noted an appeal

        of the district court’s judgment to this court. In its January 2021 opinion, the district

        court rejected the NLG investors’ written requests and extended its judgment to NLG.

               On November 12, 2021, while Pukke’s appeal was pending before us, Appellants

        finally moved in the district court to intervene in the Sanctuary Belize enforcement action

        and for relief from judgment. The district court denied Appellants’ intervention motion,

        reasoning that it lacked jurisdiction, that Appellants’ motion was untimely, and that they

        lacked sufficient interest in the litigation to intervene as a matter of right. The court also

        determined that its denial of the motion to intervene disposed of Appellants’ motion for

        relief from judgment, and so denied the latter motion as a matter of course. Appellants

        then noted this appeal.

                                                     II.

               This case does not present a difficult legal issue. Forty years ago, in Griggs v.

        Provident Consumer Disc. Co., 459 U.S. 56, 58 (1982), the Supreme Court held that

        “[t]he filing of a notice of appeal is an event of jurisdictional significance—it confers

        jurisdiction on the court of appeals and divests the district court of its control over those

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        aspects of the case involved in the appeal.” We followed suit in Doe v. Public Citizen,

        749 F.3d 246, 258 (4th Cir. 2014), observing that “[g]enerally, a timely filed notice of

        appeal transfers jurisdiction of a case to the court of appeals and strips a district court of

        jurisdiction to rule on any matters involved in the appeal.” We explained that “[t]his rule

        fosters judicial economy and guards against the confusion and inefficiency that would

        result if two courts simultaneously were considering the same issues.” Id.

               Moreover, in Public Citizen we specifically addressed the relationship between a

        notice of appeal and a motion to intervene. We concluded that there was “no reason why

        an intervention motion should be excepted from the general rule depriving the district

        court of authority to rule on matters once the case is before the court of appeals.” Id.

        Thus, we held “that an effective notice of appeal divests a district court of jurisdiction to

        entertain an intervention motion.” Id.

               Appellants offer two arguments in an effort to resist the explicit holdings of

        Griggs and Public Citizen. First, they maintain, assertedly relying on Public Citizen, that

        “one party’s notice of appeal [does not] divest the district court of jurisdiction to

        adjudicate claims made by other parties.” Appellants’ Opening Br. at 21. Second, they

        argue that “one party’s appeal of only some issues in a given controversy does not divest

        the district court of jurisdiction over other issues.” Id. Both arguments fail.

               As to the first, Appellants misread Public Citizen. In their view, Public Citizen

        held that “when a putative intervenor file[s] a notice of appeal, the district court then

        lack[s] jurisdiction to entertain an intervention motion by that same party.” Id. Those

        were the facts of Public Citizen (i.e., Public Citizen, along with other consumer groups,

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        noted an appeal after filing a motion to intervene), but Appellants mistake those facts for

        the holding of the case.

               In Public Citizen, we addressed the question of “[w]hether a district court retains

        jurisdiction to rule on a motion to intervene following a notice of appeal,” recognizing

        that it was “a matter of first impression in this Circuit.” 749 F.3d at 258. We held that in

        such scenarios, a district court lacks jurisdiction. Id. We placed no emphasis on the fact

        that Public Citizen itself had filed the notice of appeal. Rather, we focused on the fact

        that any effective notice of appeal transfers jurisdiction from the district court to the court

        of appeals. See id. Regardless of whether the moving and appealing parties are the same,

        simultaneous jurisdiction between the two courts would surely result in the “confusion

        and inefficiency” that the Public Citizen holding was designed to prevent. Id.

               Appellants’ argument to the contrary is further undermined by the holdings of

        courts that have considered cases where the moving and appealing parties differ. See,

        e.g., Taylor v. KeyCorp, 680 F.3d 609, 616 (6th Cir. 2012); Nicol v. Gulf Fleet Supply

        Vessels, Inc., 743 F.2d 298, 299 (5th Cir. 1984). Those courts have concluded, as we

        hold here, that a district court lacks jurisdiction over a motion to intervene while an

        appeal is pending, regardless of who noted the appeal. Thus, it matters not that Pukke,

        rather than Heiman and his co-investors, noted the appeal.

               Appellants next argue that the district court retained jurisdiction because Pukke’s

        initial appeal divested the district court of control only over “those aspects of the case

        involved in the appeal.” Appellants’ Opening Br. at 21 (quoting Griggs, 459 U.S. at 58)

        (emphasis omitted). Appellants are doubly wrong.

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               First, Appellants suggest that they sought intervention merely to challenge rulings

        that had not been appealed. See id. at 21–22. But Appellants’ motion to intervene

        expressly stated that they wished to intervene to set aside portions of the district court’s

        final judgment. That final judgment, unquestionably, was before us by virtue of Pukke’s

        appeal. Thus, Appellants did indeed seek to challenge an aspect of the case that was then

        on appeal. Second, even if Appellants had sought to intervene to challenge different

        issues, “an effective notice of appeal divests a district court of jurisdiction to entertain an

        intervention motion.” Public Citizen, 749 F.3d at 258. Because a notice of appeal had

        already been filed by the time Appellants moved to intervene, the district court lacked

        jurisdiction to entertain Appellants’ motion.

               As a final matter, we note that this appeal is somewhat unusual in the sense that

        the FTC, which argues that the district court lacked jurisdiction, joins Appellants in

        asking us to address the merits of the underlying motions. See Oral Arg. at 26:16–26:39

        (FTC’s counsel arguing that if this court fails to address the merits, it will be “leaving

        everybody . . . open to another motion to intervene . . . only to go back up [on appeal]

        with exactly the same arguments”); Appellants’ Reply Br. at 2 (arguing that “any

        jurisdictional obstacle is now removed because this Court has decided the Pukke

        appeals”). *

               *
                At oral argument, the FTC suggested that Lytle v. Griffith, 240 F.3d 404 (4th Cir.
        2001) and Fobian v. Storage Tech. Corp., 164 F.3d 887 (4th Cir. 1999), allow this court
        to reach the merits even if the district court was without jurisdiction. The relevant
        portions of Lytle and Fobian, however, only concern a district court’s ability to “take
        (Continued)
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               While we are sympathetic to this suggestion, we cannot rule on the merits.

        Because the district court correctly determined it lacked jurisdiction on a matter that had

        been appealed to our court, we only have jurisdiction to review that decision, not to

        entertain the underlying merits. See Bender v. Williamsport Area Sch. Dist., 475 U.S.

        534, 541 (1986); Public Citizen, 749 F.3d at 259.

                                                   III.

               For the foregoing reasons, the district court correctly held it lacked jurisdiction

        over Appellants’ motions, and accordingly its judgment is

                                                                                     AFFIRMED.

        subsequent action on matters that are collateral to,” or in aid of, the appeal. See Public
        Citizen, 749 F.3d at 258.

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