                 Case: 12-11450        Date Filed: 11/29/2012      Page: 1 of 14

                                                                       [DO NOT PUBLISH]

                   IN THE UNITED STATES COURT OF APPEALS

                               FOR THE ELEVENTH CIRCUIT
                                ________________________

                                       No. 12-11450
                                   Non-Argument Calendar
                                 ________________________

                           D.C. Docket No. 1:11-cv-20635-KAM,
                                BKCY No. 07-21016-LMI

In Re: SUNDALE, LTD., f.k.a. Sundale Associates, Ltd.,

lllllllllllllllllllllllllllllllllllllllDebtor.
___________________________________________

SUNDALE, LTD.,
KENDALL HOTEL AND SUITES, LTD.,

llllllllllllllllllllllllllllllllllllllllPlaintiffs - Appellants,

versus

FLORIDA ASSOCIATES CAPITAL ENTERPRISES, LLC,

llllllllllllllllllllllllllllllllllllllllDefendant - Appellee,
                                      ________________________

                        Appeal from the United States District Court
                            for the Southern District of Florida
                              ________________________
                                   (November 29, 2012)

Before MARCUS, FAY and ANDERSON, Circuit Judges.

PER CURIAM:
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      Appellants Sundale, LTD (“Sundale”) and Kendall Hotel and Suites, LLC

(“KHS”) (collectively, “Sundale”) appeal from the district court’s judgment

upholding the bankruptcy court’s finding of fact and conclusions of law in support

of a final judgment in favor of Plaintiff/Counterdefendant Florida Associates

Capital Enterprises, LLC (“FACE”). In Sundale’s bankruptcy proceedings, FACE

sought a declaratory judgment regarding the extent, validity and priority of the

claims it had that stemmed from secured loans it had made to Sundale; in

response, Sundale asserted various affirmative defenses and filed counterclaims

against FACE, including a claim of recoupment of more than three million dollars

in payments Sundale had made to FACE concerning the secured loans. In this

appeal, Sundale argues that: (1) the district court erred in concluding that the

bankruptcy court had jurisdiction over Sundale’s counterclaims; (2) the district

court’s review of the bankruptcy proceedings did not cure the bankruptcy court’s

unconstitutional exercise of jurisdiction; and (3) the bankruptcy court misapplied

Florida law in ruling on the merits. After careful review, we affirm.

      We review subject matter jurisdiction de novo. Adventure Outdoors, Inc. v.

Bloomberg, 552 F.3d 1290, 1294 (11th Cir. 2008). We review “the district court’s

decision to affirm the bankruptcy court de novo, which allows us to assess the

bankruptcy court’s judgment anew, employing the same standard of review the

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district court itself used.” In re Globe Mfg. Corp., 567 F.3d 1291, 1296 (11th Cir.

2009). The bankruptcy court’s factual findings are reviewed for clear error. Id.

Factual findings are clearly erroneous if “the reviewing court on the entire

evidence is left with a definite and firm conviction that a mistake has been

committed.” Jones v. Childers, 18 F.3d 899, 904 (11th Cir. 1994) (quotation

omitted). “Conclusions of law, whether from the bankruptcy court or the district

court, are reviewed de novo.” In re Jennings, 670 F.3d 1329, 1332 (11th Cir.

2012) (quotation omitted). Mixed questions of law and fact are also reviewed de

novo. In re Piper Aircraft Corp., 244 F.3d 1289, 1295 n.2 (11th Cir. 2001).

         The relevant facts are these. Phillip Scutieri, Jr. (“Mr. Scutieri”) is the

principal of both Sundale and KHS. Raymond G. Chambers (“Mr. Chambers”), a

successful businessman involved in leveraged buyouts in the 1980s, had a very

close personal and professional relationship with the Scutieri family for over forty

years.

         On November 20, 1997, Mr. Scutieri’s mother, Delphine Scutieri (“Mrs.

Scutieri”), advised her son that she believed that Mr. Chambers had taken certain

assets from her husband’s estate to begin Chambers’s leveraged buyout business.

After Mrs. Scutieri’s suspicions were relayed to Mr. Chambers, Mr. Chambers sent

a letter to Mrs. Scutieri in which he promised to “share everything” with Mrs.

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Scutieri. Over the next five months, representatives from the two parties

attempted to resolve the dispute between them, and eventually Mr. Scutieri relayed

that the Scutieris would require $420,000,000 to resolve the dispute.

      Thereafter, Mrs. Scutieri apparently asked Mr. Chambers to give $10

million to her son to develop a nine-acre tract of land in Miami, Florida owned by

Sundale (the “Sundale Property”), with the remaining amount due (approximately

$410,000,000) to be worked out. According to Mr. Chambers, he said he would

not loan the $10,000,000, but that he would tell his “financial advisors that they,

(A), help [Mr. Scutieri] get a conventional first mortgage loan on the [Sundale

Property] and, (B), if that loan fell short of the $10,000,000, that [Chambers]

would recommend to them that [Chambers’s] entities provide up to $2 million in a

subordinated second mortgage loan.” A witness to a meeting between the parties

testified otherwise, attesting that Mr. Chambers promised to give $10,000,000 as

an “initial payment of getting the monies back to [Mrs. Scutieri].” Shortly after

this meeting, Mr. Chambers’s representatives created FACE, the sole purpose of

which was to provide funding for Mr. Scutieri’s Sundale project.

      Between July 30, 1999, and March 20, 2000, FACE (and/or its members)

loaned Sundale a total of $7,300,000, through various promissory notes, personal

guarantees, and mortgage and security agreements. On September 7, 2001,

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Sundale closed a $12,000,000 loan with Ocean Bank for the Sundale project (the

“Ocean Bank Loan”). The terms of the agreement provided for FACE’s loans to

be reduced to $3,250,000, and for FACE to subordinate its lien to the lien of

Ocean Bank with respect to the remaining indebtedness. Sundale was obligated to

make quarterly interest payments until November 29, 2002, and then monthly

payments thereafter. Sundale made all interest payments due to FACE through

May 2005.

      On December 11, 2007, both Ocean Bank and FACE sent default notices to

Sundale. The next day, Sundale filed for protection under Chapter 11 of the

United States Bankruptcy Code, and KHS did the same on January 30, 2008. On

May 1, 2008, FACE initiated this adversary proceeding by filing a two-count

complaint seeking a determination of the extent, validity, and priority of its

asserted lien on the Sundale Property. On November 17, 2008, Sundale and KHS

responded by denying FACE’s allegations and asserting a number of affirmative

defenses. On July 30, 2009, Sundale and KHS filed a Second Amended Answer,

for the first time asserting two counterclaims, one seeking a declaration that

FACE’s liens were not valid and enforceable and one for recoupment.

      Both Sundale’s affirmative defenses and counterclaims relied upon the same

factual and legal bases, namely that FACE’s lien was invalid and unenforceable

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because the funds advanced by FACE were intended to be a disguised loan as an

initial payment by Mr. Chambers to the Scutieri family as partial payment of the

monies Mr. Chambers wrongfully diverted from the estate of Mr. Scutieri’s father.

The Bankruptcy Court ultimately ruled in favor of FACE, finding that FACE

“overwhelmingly established a prima facie case that it holds a valid, perfected lien

against the Sundale Property and the Trustee Property. Conversely, the

Defendants failed to meet their burden of proof in every aspect with regard to their

affirmative defenses and their counterclaims.” The district court affirmed the

bankruptcy court’s determination of the extent, validity and priority of FACE’s

claims against Sundale, and it also held -- following the Supreme Court’s recent

decision in Stern v. Marshall, 131 S.Ct. 2594 (2011) -- that the bankruptcy court

had the authority to rule on these claims. The district court noted, in the

alternative, that if the bankruptcy court had exceeded its authority to enter a final

judgment, it was treating the bankruptcy court’s findings of fact and conclusions

of law as a report and recommendation, which the district court adopted and

ratified. This timely appeal follows.

      First, we are unpersuaded by Sundale’s claim that the bankruptcy court

lacked jurisdiction to enter final judgment on its counterclaims. Congress has

divided bankruptcy proceedings into three categories: (1) those that arise under

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title 11; (2) those that arise in a title 11 case; and (3) those that are related to a case

under title 11. Stern, 131 S.Ct. at 2603 (citing 28 U.S.C. § 157(a)). “District

courts may refer any or all such proceedings to the bankruptcy judges of their

district,” and bankruptcy courts may “enter final judgments in ‘all core

proceedings arising under title 11, or arising in a case under title 11.’” Id.

(quoting §§ 157(a), (b)(1)). Congress has chosen 16 specific types of proceedings

that are considered to be “core proceedings” in which bankruptcy courts are

statutorily authorized to render final judgments. See id. (citing §§ 157(b)(1)-(2)).

Section 157(b)(2)(C) defines “counterclaims by the estate against persons filing

claims against the estate” to be one of these “core proceedings.” “Parties may

appeal final judgments of a bankruptcy court in core proceedings to the district

court, which reviews them under traditional appellate standards.” Id. at 2603-04.

       Stern involved a tortious interference counterclaim, arising under state

common law, which the bankruptcy court had determined to be a “core

proceeding” as defined by § 157(b)(2)(C). See id. at 2601-02. After determining

it had jurisdiction over the matter, the bankruptcy court rendered a final judgment

on the state law counterclaim. See id. at 2601. The Supreme Court determined

that the bankruptcy court had the statutory authority under 28 U.S.C. § 157(b) to

issue a final judgment on the state law counterclaim, but that it was a violation of

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Article III of the United States Constitution for Congress to confer that authority

upon the bankruptcy court. See id. The Supreme Court ultimately held that “[t]he

Bankruptcy Court below lacked the constitutional authority to enter a final

judgment on a state law counterclaim that is not resolved in the process of ruling

on a creditor’s proof of claim.” Id. at 2620. The Supreme Court also made clear

that it did not intend its decision in Stern to have broad implications: “We do not

think the removal of counterclaims such as [the debtor’s] from core bankruptcy

jurisdiction meaningfully changes the division of labor in the current statute; we

agree with the United States that the question presented here is a ‘narrow’ one.”

Id.

      As the district court explained, Stern is inapplicable here. That case

involved a tortious interference counterclaim that was a “state law action

independent of the federal bankruptcy law and not necessarily resolvable by a

ruling on the creditor’s proof of claim in bankruptcy.” Id. at 2611. The complaint

in Stern was filed by a creditor seeking a declaration that his defamation claim was

not dischargeable in the bankruptcy proceedings. Id. at 2601. The “proof of

claim” at issue was “for the defamation action, meaning that [the creditor] sought

to recover damages for [the claim] from [the] bankruptcy estate.” Id. The debtor

“responded to [the creditor]’s initial complaint by asserting truth as a defense to

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the alleged defamation and by filing a counterclaim for tortious interference.” Id.

That counterclaim alleged that the creditor “had wrongfully prevented [the

debtor’s husband] from taking the legal steps necessary to provide [the debtor]

with half his property.” Id. The counterclaim for tortious interference was the

claim deemed by the Supreme Court to be a “state law action independent of the

federal bankruptcy law and not necessarily resolvable by a ruling on the creditor’s

proof of claim in bankruptcy.” Id. at 2611.

      Here, the state law counterclaim Sundale travels on in its brief is

recoupment -- and as the Florida state courts have explained, recoupment is “a

purely defensive matter springing from the same transaction as the plaintiffs’

cause of action, which is available only to reduce or satisfy a plaintiffs’ claim . . . .

A recoupment defense is analogous to a compulsory counterclaim, in that both

‘spring’ from the same transaction as the plaintiff’s cause of action.” Kellogg v.

Fowler, White, Burnett, Hurley, Banick & Strickroot, P.A., 807 So. 2d 669, 670

n.2 (Fla. 4th Dist. Ct. App. 2001) (citing Metropolitan Cas. Ins. Co. of N.Y. v.

Walker, 9 So.2d 361, 362 (Fla. 1942)). Sundale argues to us that FACE’s proof of

claim hinged on the money that Sundale had not paid FACE, whereas its

recoupment counterclaim hinged on the money that Sundale had paid to FACE.

Sundale thus argues that resolving the proof of claim would not resolve its

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counterclaim. This distinction is without merit. Indeed, the crux of Sundale’s

case theory is that none of the money FACE transferred to Sundale was ever

intended to be a loan, but rather the first of many payments Mr. Chambers was to

make to the Scutieri family to satisfy a $420,000,000 debt. Sundale relied on this

theory to advance numerous affirmative defenses against FACE’s proof of claim

and as the premise for its recoupment (and declaratory judgment) counterclaims.

All of the affirmative defenses and the counterclaims thus have one common

thread -- whether both the money FACE transferred to Sundale and the money that

Sundale later transferred back to FACE was premised on a loan by FACE

(FACE’s version) or a repayment by FACE (Sundale’s version). As a result, a

rejection of Sundale’s version of the events as defenses to FACE’s claims also

undermines Sundale’s counterclaims. Similarly, a finding in favor of Sundale on

its defenses to FACE’s claims would necessarily result in a favorable ruling for

Sundale on its counterclaims. Either way, a resolution of the proof of claim

necessarily resolves the recoupment and declaratory judgment counterclaims.

      Sundale also seems to suggest that under Stern, a bankruptcy court only has

jurisdiction to enter final judgment on federal bankruptcy law claims -- and no

state law claims. However, the Supreme Court made no such distinction. Under

the clear language of the decision, the Supreme Court held that bankruptcy courts

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lack “the constitutional authority to enter a final judgment on a state law

counterclaim that is not resolved in the process of ruling on a creditor’s proof of

claim.” 131 S.Ct. at 2620 (emphasis added). Because the underlined phrase is

included, it must follow that a bankruptcy court would have jurisdiction to enter

final judgment on state law counterclaims that are necessarily resolved in the

process of ruling on a creditor’s proof of claim. See also id. at 2618 (bankruptcy

court jurisdiction to enter final judgment exists if “the action at issue stems from

the bankruptcy itself or would necessarily be resolved in the claims allowance

process”).

        In short, because Sundale’s counterclaims are necessarily resolved by

resolution of FACE’s proof of claim, the self-declared narrow holding in Stern is

distinguishable from the facts before us. Therefore, we agree with the district

court that the bankruptcy court had jurisdiction to enter a final judgment in this

case.

        We also find no merit to Sundale’s argument that the bankruptcy court erred

in applying Florida law. As for Sundale’s claim that the bankruptcy court

misinterpreted Florida law by holding that Sundale could not have reasonably

relied on FACE’s misrepresentations because they were made in an adversarial

context, the lower court relied on binding Eleventh Circuit case law, in the Florida

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law context, which concluded that “plaintiffs were unjustified in relying on

representations made by the defendants” since, among other things, “the parties

had been in an adversarial relationship since well before the execution of the

Agreement.” Mergens v. Dreyfoos, 166 F.3d 1114, 1118 (11th Cir. 1999).

Moreover, all of the Florida state cases Sundale cites seem to rest on the principle

that one party had no notice that the other party could not be believed. See, e.g.,

Greene v. Kolpac Builders, Inc., 549 So. 2d 1150, 1152 (Fla. 3d App. Dist. 1989)

(allowing a misrepresentation claim “[a]bsent circumstances which would have

put Greene on notice that Kolpak’s word could not be believed”); Schlapper v.

Maurer, 687 So. 2d 982, 984 (Fla. 5th App. Dist. 1997) (a lawyer’s “professional

responsibility owed to the court and the opposing parties imposed on him an

obligation not to lie about or misrepresent facts critical to the case” (emphasis

removed)). Given the history of the parties in this case, it cannot be said that

Sundale had no notice of Mr. Chambers’s dealings with them. Thus, the lower

court did not misapply the Florida law of misrepresentation.

      As for Sundale’s claim that the bankruptcy court’s analysis of duress

improperly relied on its speculative finding that Sundale could have obtained

funds by mortgaging the undeveloped adjacent property, the bankruptcy court

relied on various other factors in reaching the conclusion that Sundale was not

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under financial duress. Moreover, the bankruptcy court relied on record evidence

to find that the undeveloped adjacent property was unencumbered, and Sundale

fails to offer anything more than speculation to suggest that it could not have

obtained a mortgage on that property at the time of the alleged duress as it did a

year later.

       As for Sundale’s claim that the bankruptcy court erred in finding that the

debtors could not prove misrepresentations relating to the 1999 transactions based

on the execution of the 2001 documents, as well as its claim that the bankruptcy

court’s conclusion that FACE was entitled to seek subordination was circular,

Sundale cites no case law or legal argument for these issues in his brief and

therefore has waived them. See Fed. R.App. P. 28(a)(9)(A) (providing that an

appellant’s brief must set forth his “contentions and the reasons for them, with

citations to the authorities and parts of the record on which the appellant relies”);

Continental Tech. Servs., Inc., v. Rockwell Int’l Corp., 927 F.2d 1198, 1199 (11th

Cir. 1991). Further, because there was no error in the rulings on duress and

misrepresentation, these arguments fail.

       Finally, Sundale claims that the bankruptcy court erred in concluding that

the notes payable to FACE and mortgages in FACE’s favor were enforceable,

because, it says, Sundale received no consideration from FACE. As an initial

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matter, Sundale does not dispute that FACE’s subordination in 2001 of its security

interest in the Sundale property to Ocean Bank’s security interest constituted

consideration. Sundale argues, nonetheless, that FACE’s earlier “loans” to

Sundale did not constitute consideration because the money came from Mr.

Chambers’s trusts or other sources, rather than from FACE itself. However,

Sundale admits that some of these earlier transfers were in fact made in FACE’s

name, see Blue Br. at 5, and cites nothing for the proposition that these transfers

could not be considered valid consideration from FACE.

      AFFIRMED.




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