Joseph G. Wortley v. James Juranitch, et al.

[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-12021
Non-Argument Calendar
____________________
In re: JOSEPH G. WORTLEY,
Debtor.
___________________________________________
JOSEPH G. WORTLEY,
Plaintiff-Appellant,
versus
JAMES JURANITCH,
RICHARD TARRANT,
CHAD P. PUGATCH,
RICE PUGATCH ROBINSON SCHILLER, PA,
BARRY MUKAMAL,
Trustee, et al.,
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2 Opinion of the Court 22-12021
Defendants-Appellees.
____________________
Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 0:18-cv-61556-DPG
____________________
Before WILSON, J ORDAN, and B RANCH, Circuit Judges.
PER CURIAM:
Joseph G. Wortley appeals the district court’s order affirm-
ing the bankruptcy court’s final order and judgment in favor of De-
fendants-Appellees. Wortley asserts that the district court erred in
affirming the bankruptcy court, which found that Appellees filed
the Chapter 11 bankruptcy petition in good faith. After careful re-
view, we AFFIRM.
I.
Factual Background
The facts of this case are well known to the parties at this
point and are amply recounted in the district court’s order. See In
re Global Energies, LLC, 2022 WL 2276748, *1–3 (S.D. Fla. May 20,
2022). In short, Wortley, James Juranitch, and Richard Tarrant
were business partners in Global Energies, LLC, a privately held
corporation. Wortley invited Chrispus, Tarrant’s corporation, to
invest in Global Energies. Under the terms of the operating
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22-12021 Opinion of the Court 3
agreement, in the event of a deadlock between Wortley and Jura-
nitch, a majority vote was required to remove or elect managers
and to enter a sale, liquidate, dissolve, or wind-up Global Energies.
At some point, Wortley and Juranitch reached an impasse,
which put Global Energies in a deadlock and unable to continue
operations. Tarrant and his financial advisor, Ron Roberts, ex-
tended offers to Wortley to restructure Global Energies and allow
Wortley to keep a significant ownership interest, but he rejected
the offers. Juranitch, Tarrant, and Roberts exchanged emails in
which they developed a strategy to try to salvage Global Energies
(Wortley referred to these emails as the “smoking gun” emails).
Ultimately, they decided that Chrispus would file a Chapter 11 in-
voluntary bankruptcy petition against Global Energies. The peti-
tion was filed on July 1, 2010.
Procedural Background
On October 7, 2010, Wortley moved to dismiss the bank-
ruptcy case for being filed in bad faith, but he later withdrew his
motion to dismiss. On November 30, 2010, the United States Bank-
ruptcy Court for the Southern District of Florida approved the sale
of Global Energies’ assets to Chrispus. Wortley filed a second mo-
tion to dismiss for bad faith based on new evidence, which the
bankruptcy court denied with prejudice after holding an eviden-
tiary hearing.
Months later, during discovery in related state-court litiga-
tion, Wortley discovered the “smoking gun” emails and filed a mo-
tion for rehearing in the bankruptcy court based on newly
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4 Opinion of the Court 22-12021
discovered evidence demonstrating bad faith (the Rule 60(b) mo-
tion).1 The bankruptcy court denied the motion, and Wortley ap-
pealed to the district court. The district court affirmed, and Wort-
ley appealed to this Court.
Finding that the bankruptcy court abused its discretion by
applying the wrong legal standard to the Rule 60(b) motion, we
reversed and remanded the case to the bankruptcy court with in-
structions. See In re Global Energies, LLC, 763 F.3d 1341, 1348 (11th
Cir. 2014) (per curiam). Pursuant to our mandate, the bankruptcy
court vacated its order denying Wortley’s Rule 60(b) motion,
granted the Rule 60(b) motion, vacated its order approving the sale
of Global Energies’ assets, and set Wortley’s second motion to dis-
miss for rehearing.
In July 2015, Wortley filed an adversary bankruptcy proceed-
ing against Tarrant, Jaranitch, Chrispus, Chad Pugatch, the Law
Firm, and Plasma Power LLC. In July 2017, the bankruptcy court
held an 11-day trial which addressed both the second motion to
dismiss and claims from the adversary proceeding. On June 25,
2018, the bankruptcy court issued a 70-page final order, which de-
nied the second motion to dismiss with prejudice. Final judgment
was entered in favor of Appellees the same day.
Wortley appealed to the district court. In March 2019, the
district court reversed and remanded after finding that the
1 This motion sought relief under Federal Rule of Civil Procedure 60(b)(2) and
(3) from the bankruptcy court’s denial of the second motion to dismiss.
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22-12021 Opinion of the Court 5
bankruptcy court failed to follow our mandate in In re Global Ener-
gies. In May 2019, Appellees appealed and petitioned this Court for
a writ of mandamus. On December 16, 2019, we issued a Manda-
mus Order directing the district court to vacate its order remanding
to the bankruptcy court, finding that the bankruptcy court did not
deviate from our mandate during its proceeding on remand. See In
re Chrispus Venture Capital, LLC, 2019 WL 13192053, *1 (11th Cir.
Dec. 16, 2019). On May 20, 2022, the district court affirmed the
bankruptcy court's final order and judgment. Wortley timely ap-
pealed.
II.
In bankruptcy cases, we act as a “‘second court of review’
and thus ‘examines independently the factual and legal determina-
tions of the bankruptcy court and employs the same standards of
review as the district court.’” In re Optical Technologies, Inc., 425
F.3d 1294, 1299–1300 (11th Cir. 2005) (quoting In re Issac Leaseco,
Inc., 389 F.3d 1205, 1209 (11th Cir. 2004)). We review the bank-
ruptcy court’s and district court’s legal conclusions de novo, and
we review the bankruptcy court’s factual findings for clear error.
Id. at 1300.
III.
On appeal, Wortley argues that the district court erred in
affirming the bankruptcy court’s final order. Specifically, Wortley
challenges the bankruptcy court’s finding that the Chapter 11 peti-
tion was filed in good faith. Wortley also argues that, pursuant to
our mandate in In re Global Energies, the bankruptcy court should
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6 Opinion of the Court 22-12021
have reimbursed his attorneys’ fees and costs; dismissed the bank-
ruptcy; awarded damages; required accounting and disgorgement;
and ensured Appellees “do not profit from their misconduct.”
The Appellees argue that the district court properly affirmed
the bankruptcy court’s final order and judgment because the bank-
ruptcy court followed our mandate by holding an evidentiary hear-
ing and—based on the law and evidence—correctly denied Wort-
ley’s claims of bad faith. We agree with the Appellees.
The Mandate
Before addressing the merits of Wortley’s appeal, we turn
first to our mandate in In re Global Energies. It is helpful to briefly
summarize the law underlying appellate mandates:
The [law of the case] doctrine is based on the premise
that an appellate decision is binding in all subsequent
proceedings in the same case unless the presentation
of new evidence or an intervening change in the con-
trolling law dictates a different result, or the appellate
decision is clearly erroneous and, if implemented,
would work a manifest injustice. A district court
when acting under an appellate court’s mandate,
“cannot vary it, or examine it for any other purpose
than execution; or give any other or further relief; or
review it, even for apparent error, upon a matter de-
cided on appeal; or intermeddle with it, further than
to settle so much as has been remanded.”
. . .
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22-12021 Opinion of the Court 7
The mandate rule is simply an application of the law
of the case doctrine to a specific set of facts.
Litman v. Massachusetts Mut. Life Ins. Co., 825 F.2d 1506, 1510–11
(11th Cir. 1987) (footnotes and citations omitted).
Here, the bankruptcy court conducted an 11-day trial, dur-
ing which it considered Wortley’s claims of bad faith based on the
newly discovered evidence.2 Over the course of the trial, the bank-
ruptcy court “admitted over 200 exhibits into evidence, heard ar-
gument from the parties, and heard testimony from” 14 witnesses.
In re Global Energies, LLC, No. 10-28935-RBR, 2018 WL 3121792, *1
(Bankr. S.D. Fla. June 25, 2018), aff’d, No. 10-BK-28935-SMG, 2022
WL 2276748 (S.D. Fla. May 20, 2022). The bankruptcy court con-
cluded after the trial that this was a rare case in which deviation
from a mandate was justified because the court was presented with
new and substantially different evidence on remand. Id. at *33–35.
At the original evidentiary hearing on Wortley’s second motion to
dismiss—which lasted one day—the bankruptcy court heard testi-
mony from only two witnesses. Chrispus never presented any ev-
idence or witnesses. At the trial, the bankruptcy court heard from
14 witnesses, considered significantly more evidence, and made
more detailed factual findings. Thus, the bankruptcy court’s find-
ing of no bad faith after rehearing was appropriate in light of the
2 The bankruptcy court held the trial and evidentiary hearing together and
entered a duplicate opinion in the main bankruptcy case and adversary pro-
ceeding because the legal issues and factual findings were “intertwined in a
manner that made any attempt at separation futile.”
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8 Opinion of the Court 22-12021
new evidence and witness testimony it was presented with. See
Litman, 825 F.2d at 1512 (“[T]here are cases wherein a seemingly
specific mandate such as an order for a new [hearing] may wind up
with a different result on remand.”); Friedman v. Market St. Mortg.
Corp., 520 F.3d 1289, 1294–95 (11th Cir. 2008) (recognizing an ex-
ception to the law of the case doctrine where “the evidence on a
subsequent trial was substantially different”).
Contrary to Wortley’s assertions, our mandate did not es-
tablish factual findings in the underlying bankruptcy case. As we
have stated numerous times, a court of appeals cannot find facts.
See, e.g., United States v. Banks, 347 F.3d 1266, 1271 (11th Cir. 2003)
(“A court of appeals is not a fact finding body.”); United States v.
Barnette, 10 F.3d 1553, 1558 (11th Cir. 1994) (“It is not an appellate
court’s role to find facts.”). Our mandate directed the bankruptcy
court on remand to “conduct any hearings necessary in the exercise
of all its powers at law or in equity and issue appropriate orders or
writs.” In re Global Energies, 763 F.3d at 1350. Importantly, we did
not impose any remedies because we recognized “that Chrispus,
Juranitch, Tarrant, and Pugatch have not had an appropriate hear-
ing, which will be conducted before the bankruptcy court.” Id.
In sum, the bankruptcy court complied with our mandate
by holding an appropriate hearing, and its deviation in other re-
spects was justified due to the presentation of new evidence.
The Bankruptcy Court’s Findings
We now turn to the bankruptcy court’s factual findings and
legal conclusions over the course of the trial. On appeal, Wortley
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22-12021 Opinion of the Court 9
asserts that “there was no conceivable basis in this record to find a
‘good faith’ petition” and that “the district court erred in adopting
the [bankruptcy court’s] reasoning that the petition was filed in
good faith.” Appellees argue that the bankruptcy court, after con-
sidering all the evidence, found that the petition was not filed in
bad faith—rather, it was filed to break the deadlock and reorganize
Global Energies.
A review of the bankruptcy court’s final order shows there
was ample evidence to support its finding that the petition was filed
in good faith. The bankruptcy court heard testimony from Wort-
ley, Tarrant, and Juranitch, “which resulted in three facially plausi-
ble versions of the same story regarding the breakup of Global En-
ergies.” In re Global Energies, 2018 WL 3121792, *31. Thus, the
bankruptcy court made credibility determinations as to the wit-
nesses and found that Tarrant and Juranitch were credible, but that
“Wortley’s testimony lacked any and all credibility.” Id. The bank-
ruptcy court thoroughly explained its credibility determinations for
Wortley, Tarrant, and Jurantich. Id. at *32–33. As to Worley, the
court found him “not a credible witness because his testimony was
inconsistent, non-responsive, self-serving, confusing, and argu-
mentative.” Id. at *32. The court found the other witnesses credi-
ble because they were forthright when answering questions, thus
the court gave substantial weight to their testimony. Id. at *33.
As to the filing of the Chapter 11 petition, the bankruptcy
code does not define “bad faith.” Thus, “courts have used different
approaches to determine whether a petition was filed in bad faith.”
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10 Opinion of the Court 22-12021
Gen. Trading Inc. v. Yale Materials Handling Corp., 119 F.3d 1485, 1501
(11th Cir. 1997). Our circuit recognizes three tests: the improper
purpose test, the improper use test, and the test modeled on Rule
9011 of the Federal Rules of Bankruptcy Procedure.
Under the improper purpose test, “bad faith exists
where the filing of the petition was motivated by ill
will, malice or the purpose of embarrassing or har-
assing the debtor.” . . .
Under the improper use test, bad faith exists when a
creditor uses a bankruptcy proceeding to accomplish
objectives not intended by the Bankruptcy Code,
such as taking over a debtor corporation and its as-
sets. . . .
Finally, under the test modeled on Rule 9011 of the
Federal Rules of Bankruptcy Procedure, bad faith ex-
ists, where a filing party (1) fails to make a reasonable
inquiry into the facts and the law before filing and (2)
files the petition for an improper purpose. The first
prong, reasonable inquiry, is an objective one.
In re Global Energies, 763 F.3d at 1349 n.5 (citations omitted).
In its final order, the bankruptcy court stated that it “failed
to find any evidence that Chrispus filed the involuntary Chapter 11
bankruptcy petition in bad faither under the Eleventh Circuit’s
tests.” In re Global Energies, 2018 WL 3121792, *37. The bankruptcy
court found that the “primary purpose in filing the involuntary pe-
tition was to reorganize Global Energies and resolve the deadlock
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22-12021 Opinion of the Court 11
between the primary members.” Id. This finding was supported
by witness testimony: “Tarrant testified that he wanted to reorgan-
ize Global Energies, keep Mr. Wortley involved, and make Mr.
Wortley whole.” Id. Tarrant further testified that he and Roberts
“attempted to resolve the deadlock between the parties before and
after the bankruptcy filing; the ‘smoking gun’ emails revealed an
intent to reorganize; and the Trustee testified there was ‘potential’
to reorganize but a sale of the assets was the best outcome.” Id.
Under the clearly erroneous standard—which is “highly def-
erential”—we must uphold “factual determinations so long as they
are plausible in light of the record viewed in its entirety.” Under-
writers at Lloyd’s, London v. Osting-Schwinn, 613 F.3d 1079, 1085
(11th Cir. 2010) (quotations and citation omitted). After reviewing
the record and the bankruptcy court’s thorough 70-page order, we
are convinced that its factual findings were plausible. The bank-
ruptcy court considered all the evidence that was presented during
the trial, made plausible factual determinations, and applied the
correct law to the bad faith claims.
Wortley appears to fundamentally misunderstand the func-
tion of our mandate in In re Global Energies. He repeatedly asserts
that our mandate established that, based on the facts, the petition
was filed in bad faith and that the bankruptcy court disregarded our
mandate by not imposing sanctions on Appellees or awarding
Wortley fees and costs. However, as explained above, our man-
date instructed the bankruptcy court to hold a hearing and explic-
itly refrained from imposing remedies because Appellees had not
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12 Opinion of the Court 22-12021
had an appropriate hearing. In re Global Energies, 763 F.3d at 1350.
Based on the new evidence presented at trial, the bankruptcy court
contextualized the “smoking gun” emails and ultimately deter-
mined that Chrispus did not file the Chapter 11 petition in bad faith.
We see no reason to disturb the bankruptcy court's thorough and
well-reasoned order.
We find no error in the bankruptcy court’s factual findings
or its legal conclusion that the Chapter 11 petition was filed in good
faith. The district court properly affirmed the bankruptcy court’s
final order and judgment. Accordingly, we affirm.
AFFIRMED.
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