Coquina-TD 60(b) Appeal.2015!02!19.Coquina Response to TD Stay Motion (1)

7/21/2019 Coquina-TD 60(b) Appeal.2015!02!19.Coquina Response to TD Stay Motion (1)

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No. 15-10638

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

_____________________________

COQUINA INVESTMENTS,

Plaintiff-Appellee,

v.

TDBANK,N.A.,

Defendant-Appellant.____________________________

On Appeal From The United States District CourtFor The Southern District Of Florida_____________________________

RESPONSE OF PLAINTIFF-APPELLEE COQUINA INVESTMENTSIN OPPOSITION TO TIME-SENSITIVE MOTION OF

DEFENDANT-APPELLANT TD BANK, N.A., FOR STAY

_____________________________

David S. MandelNina Stillman MandelMANDEL &MANDEL LLP169 East Flagler Street, Suite 1200Miami, FL 33131

(305) 374-3771

Miguel A. EstradaCounsel of Record

Jonathan C. BondGIBSON,DUNN &CRUTCHER LLP1050 Connecticut Avenue, N.W.

Washington, D.C. 20036(202) [email protected]

Counsel for Plaintiff-Appellee Coquina Investments

Case: 15-10638 Date Filed: 02/19/2015 Page: 1 of 29


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Coquina Investments v. TD Bank, N.A.

Eleventh Circuit Docket No. 15-10638

C-1

CORPORATE DISCLOSURE STATEMENT AND

CERTIFICATE OF INTERESTED PERSONS

Plaintiff-Appellee Coquina Investments has no parent corporation, subsidiar-

ies, or affiliates whose listing is required by Federal Rule of Appellate Procedure

26.1 or this Courts Rule 26.1-1.

Pursuant to this Courts Rule 26.1-1, Coquina submits that the following en-

tity has an interest in the outcome of this appeal but was omitted from the certifi-

cate of interested persons contained in the Time-Sensitive Motion of Defendant-

Appellant TD Bank, N.A. for Stay:

Travelers Casualty and Surety Company of America, a Connecticut cor-

poration (Surety on TD Banks Supersedeas Bond)

Undersigned counsel certifies that, to the best of counsels knowledge, the

certificate of interested persons contained in the Time-Sensitive Motion of De-

fendant-Appellant TD Bank, N.A. for Stay is otherwise complete.

DATED: February 19, 2015 Respectfully submitted,

/s/ Miguel A. EstradaMiguel A. Estrada

GIBSON,DUNN &CRUTCHER LLP1050 Connecticut Avenue, N.W.Washington, D.C. 20036(202) 955-8500

Counsel for Plaintiff-Appellee

Coquina Investments



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i

TABLE OF CONTENTS

Page

CORPORATE DISCLOSURE STATEMENT AND

CERTIFICATE OF INTERESTED PERSONS .......................................... C-1

TABLE OF CONTENTS ............................................................................................ i

TABLE OF AUTHORITIES ................................................................................... iii

INTRODUCTION ..................................................................................................... 1

COUNTER-STATEMENT OF FACTS .................................................................... 3

ARGUMENT ........................................................................................................... 10

I. TDBANK ISNOT LIKELY TO SUCCEED ON THE MERITS OF ITS APPEAL....... 10

A. The District Court Did Not Abuse Its Discretion In DenyingTDs Request To Reduce The Jurys Compensatory-DamagesAward .................................................................................................. 11

1. This Courts Opinion In TDs Prior Unsuccessful AppealForecloses TDs Claim That The Damages Are

Illusory. .................................................................................. 11

2. TDs Separate Claim That Reducing The Jurys Award IsNecessary To Avoid A Double Recovery Is Meritless ............. 13

a. TD Cannot Seek An Offset For HypotheticalFuture Recoveries That Have Not Yet Occurred ........... 13

b. TD Is Not Entitled To An Offset For The $9Million Payment That The Trustee Has Demanded

Back ................................................................................ 15

B. Any Possible Recovery By Coquina From Third Parties DoesNot Justify Any Reduction In The Jurys Punitive-DamagesAward .................................................................................................. 17



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TABLE OF CONTENTS

(continued)

Page

ii

II. THE EQUITIES DONOT SUPPORT AFURTHER STAY OF EXECUTION.............. 19

A. TD Has Failed To Show Irreparable Harm Absent A Stay ................. 19

B. A Stay Would Substantially Injure Coquina ....................................... 20

C. A Stay Would Not Serve The Public Interest ..................................... 20

CONCLUSION ........................................................................................................ 20

CERTIFICATE OF SERVICE



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iii

TABLE OF AUTHORITIES

Page(s)

Cases

Allsups Convenience Stores, Inc. v. N. River Ins. Co.,976 P.2d 1 (N.M. 1998) ................................................................................... 18

Amoco Pipeline Co. v. Montgomery,487 F. Supp. 1268 (D. Okla. 1980) ..................................................................17

Blasland, Bouck & Lee, Inc. v. City of N. Miami,283 F.3d 1286 (11th Cir. 2002) ........................................................................14

BUC Intl Corp. v. Intl Yacht Council Ltd.,517 F.3d 1271 (11th Cir. 2008) ........................................................................14

Burgess v. Porterfield,469 S.E.2d 114 (W. Va. 1996) .........................................................................17

Canady v. Crestar Mortg. Corp.,109 F.3d 969 (4th Cir. 1997) ............................................................................ 14

Coquina Invs. v. TD Bank, N.A.,760 F.3d 1300 (11th Cir. 2014)....................................... 1, 3, 4, 5, 7, 12, 13, 19

EEOC v. Waffle House, Inc.,534 U.S. 279 (2002) ......................................................................................... 17

FDIC v. United Pac. Ins. Co.,152 F.3d 1266 (10th Cir. 1998) ........................................................................14

Hayes Sight & Sound, Inc. v. ONEOK, Inc.,

136 P.3d 428 (Kan. 2006) ................................................................................ 18

Johansen v. Combustion Engg, Inc.,170 F.3d 1320 (11th Cir. 1999) ........................................................................17

Johnson Waste Materials v. Marshall,611 F.2d 593 (5th Cir. 1980) ............................................................................ 14



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(continued)

Page(s)

iv

Kelley v. Michaels,59 F.3d 1050 (10th Cir. 1995) ..........................................................................18

Kleinfeld v. Iacopi (In re Kleinfeld),1994 WL 650057 (9th Cir. Nov. 16, 1994) ......................................................14

Lugo v. Secy, Fla. Dept of Corr.,750 F.3d 1198 (11th Cir. 2014) ........................................................................10

Marshack v. Hudson (In re Advance Mortgagee Servicing Corp.),

1996 WL 267330 (9th Cir. May 20, 1996) ......................................................14

Myers v. Cent. Fla. Invs., Inc.,592 F.3d 1201 (11th Cir. 2010) ................................................................. 17, 18

Nken v. Holder,556 U.S. 418 (2009) .................................................................................. 10, 20

Owens-Corning Fiberglas Corp. v. Ballard,749 So. 2d 483 (Fla. 1999) ...............................................................................17

Raben Builders, Inc. v. First Am. Bank & Trust Co.,561 So. 2d 1229 (Fla. Dist. Ct. App. 1990) .....................................................14

Rood v. Rosen (In re Rood),482 B.R. 132 (D. Md. 2012) ............................................................................ 14

Searcy v. R.J. Reynolds Tobacco Co.,2013 WL 5421957 (M.D. Fla. Sept. 12, 2013) ................................................18

Skandinaviska-Enskilda Banken v. C.L.C. Marine Servs., Ltd.(In re SeaEscape Cruises, Ltd.),172 B.R. 1002 (S.D. Fla. 1994) ....................................................................... 14

Trust for the Certificate Holders of the Merrill Lynch Mortg. Pass-

Through Certificates Series v. Love Funding Corp.,736 F. Supp. 2d 716 (S.D.N.Y. 2010) ..............................................................14



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(continued)

Page(s)

v

TXO Prod. Corp. v. Alliance Res. Corp.,509 U.S. 443 (1993) ......................................................................................... 18

Valle v. Singer,655 F.3d 1223 (11th Cir. 2011) ........................................................................10

Wells v. Tallahassee Meml Regl Med. Ctr., Inc.,659 So. 2d 249 (Fla. 1995) ...............................................................................14

Statutes

11 U.S.C. 547 ...................................................................................................... 3

Rules

Fed. R. Civ. P. 50 ...................................................................................................5

Fed. R. Civ. P. 59 ...................................................................................................5

Fed. R. Civ. P. 60 ...................................................................................................1

Fed. R. Civ. P. 62 ...................................................................................................5

S.D. Fla. L.R. 62.1 .................................................................................................5

Sup. Ct. R. 13.1 ......................................................................................................8

Sup. Ct. R. 13.3 ......................................................................................................8



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INTRODUCTION

Defendant TD Bank, N.A. seeks to stay enforcement of a judgment that was

entered more than three years ago and that this Court has already affirm[ed] in all

respects. Coquina Invs. v. TD Bank, N.A., 760 F.3d 1300 (11th Cir. 2014), rehg

denied, No. 12-11161 (11th Cir. Oct. 1, 2014). The jury returned its verdict for

plaintiff Coquina Investments in January 2012, finding that TD (along with Scott

Rothstein) intentionally defrauded Coquina out of millions of dollars in a massive

Ponzi scheme, and the jury awarded Coquina compensatory and punitive damages.

This Court upheld the verdict, rejecting TDs claim that some of Coquinas dam-

ages were speculative and illusory because (TD said) Coquina would recover part

of its losses from the bankruptcy estate of Rothsteins law firm. Id. at 1318.

Instead of obeying that final judgment, TD seeks to forestall enforcement

further while it pursues another fruitless appeal, in which it challenges the district

courts denial of TDs Federal Rule 60(b) motion to reduce the damages. That re-

quest is literally baseless in that TD submitted zero evidence to back up the bald

assertions and self-serving predictions on which its motion and its representations

to this Court rest. TD cannot show any likelihood of success on the merits, be-

cause the bulk of the arguments it now presses merely recast the arguments that

this Court expressly rejected in the direct appeal. Indeed, TD rehashes not only its

shopworn claims that Coquinas damages are illusory but also the claim that Co-



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quina is not a true partnership but merely some sort of conduit for investments

by random individuals, which was earlier presented to this Court in the guise of an

Article III problem and was also decisively rejected in the original appeal.

As to the onlyissue this Court left openTDs claim that an offset is needed

to avoid a double recoveryTD has not shown that the district court abused its

discretion. Indeed, while TD emphasizes that Coquina has already received an in-

terim payment from the Rothstein bankruptcy Trustee, it never acknowledges,

much less refutes, the Trustees view that Coquina is requiredto return that pay-

ment to the estate if it recovers anything from TD. The district courtpresented

with evidenceby Coquina, but only bare assertionsby TDfound that enforcing

the judgment in full will not result in a double recovery, and that reducing the

judgment could perversely prevent Coquina from recovering its full damages even

once. The court, moreover, ensured that no double recovery will occur, by order-

ing Coquina, once paid in full by TD, to comply with the Trustees demand and re-

turn the interim payment to the Trustee. TDs claim that thepunitiveaward should

be reduced because Coquina supposedly recovered part of its compensatory dam-

ages is contrary to settled law and common sense, and has no basis in the record.

TDs claim of irreparable injury absent a stay suffers the same total lack of

evidentiary support. It cites no record evidence corroborating its conjecture that, if

TD is finally forced to pay the judgment, and in the unlikely event it prevails on



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appeal, it will be unable to recover any overpayment. What the record doesshow

is that Coquina has been waiting three years since the verdictand more than five

since being defrauded by TDto be made whole. Basic principles of fairness and

the public interest in prompt enforcement of final judgments counsel strongly

against further delay. TD has not carried its burden. Its motion should be denied.

COUNTER-STATEMENT OF FACTS

Coquina Investments, a Texas investment partnership, is one of the victims

of a massive, billion-dollar Ponzi scheme orchestrated by TD and Rothstein.

760 F.3d at 1304-05. The TD-Rothstein scheme entailed selling fictitious struc-

tured settlements to investors, including Coquina, offering attractive future returns

in exchange for short-term investments. Id.at 1305. TDs status as a trusted bank

was vital to the scheme, as were its personnel: Its regional vice presidentwho

has been indicted since this Court affirmed the jurys verdictdeceived Coquina

by signing lock letters falsely confirming that Coquinas funds were safe. Id.

All told, Coquina invested $37.7 million in the TD-Rothstein scheme. Co-

quina temporarily recouped part of that sum (approximately $31 million); it never

saw the rest. D.E.943:7.1 In May 2010, however, the bankruptcy Trustee of Roth-

steins former law firm demanded even those recouped sums backincluding

$28.1 million that the Trustee was entitled to claw back automatically under

11 U.S.C. 547 as preferential transfers. 760 F.3d at 1305, 1316-17.1 Citations in the form D.E.X:Y refer to district court docket entry #X, page Y.



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After receiving the Trustees demand, Coquina filed this suit in May 2010

against TD and Rothstein seeking to recover for its losses, claiming (as relevant)

that TD defrauded Coquina and aided and abetted Rothsteins fraud. 760 F.3d at

1306; D.E.1:21-23. Coquina noted in its initial filings that the bankruptcy Trustee

ha[d] made a demand upon Coquina for in excess of $30 million. D.E.16:5.

Shortly before trial, Coquina and the Trustee reached a settlement to avoid

costly litigation. Trial Ex. P-896. The settlement had two parts: First, Coquina

agreed to pay $12.5 million up front, regardless of its recovery in this case; second,

Coquina agreed to pay the Trustee a percentage of any recovery Coquina obtains

from TD, until the Trustees total share (including the $12.5 million) reached the

full sum that Coquina received from Rothstein (roughly $31 million). See id. at 1-

3. In exchange, the Trustee granted Coquina a garden-variety release of any claims

the Trustee might have, plus an allowed general unsecured claim for sums Coquina

paid to the bankruptcy estate. Seeid. Coquina amended its damages calculation in

this case accordingly to include its settlement damages. See D.E.570.

At trial, in addition to extensive evidence of TDs fraud, Coquina presented

evidence of its damages, including those based on the bankruptcy settlement. Co-

quinas expert explained how the settlement worked and how any award here

would affect what Coquina owed the Trustee. D.E.811:150-54. Wire-transfer rec-

ords also were presented showing the amounts the bankruptcy estate could reclaim



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as preferential transfers. Trial Ex. P-529; 760 F.3d at 1317. The jury also learned

that Coquina might receive future distributions from the estate. D.E.812:35-39.

The jury found TD liable and awarded Coquina $32 million in compensatory

damagesroughly $7 million representing what Coquina invested but never re-

covered, and $25 million for what Coquina paid or owed the Trustee under the set-

tlement (the $12.5 million Coquina paid up front, plus $12.5 million under the set-

tlement formula). 760 F.3d at 1306-07 & n.4; D.E.748:3-5. Finding that TD acted

intentionally, the jury also awarded $35 million in punitive damages. D.E.748:3,

5. The district court accordingly entered judgment for $67 million. D.E.754.

TD appealed, challenging among many other things the jurys award of

damages. D.E.767. TD also filed post-judgment motions attacking the verdict and

damages under Federal Rules of Civil Procedure 50 and 59. D.E.759, 760. The

Bank obtained a stay pending appeal by posting a supersedeas bond under Federal

Rule of Civil Procedure 62(d),see D.E.764, 769, 910;see also S.D. Fla. L.R. 62.1,

and the appeal was held in abeyance while the district court considered TDs Rule

50 and 59 motions. While those motions were pending, extensive litigation mis-

conduct by TD and its outside counsel came to light, prompting the district court to

sanction both. D.E.911. The district court then denied all of TDs challenges to

the verdict and damages, D.E.943, and TD also appealed that ruling and the sanc-

tions to this Court. The briefing was completed in August 2013. Also in August



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cured. After the deadline for seeking certiorari passed on December 30, 2014,

Sup. Ct. R. 13.1, 13.3, Coquinas counsel contacted counsel for TD on January 13,

2015, to arrange for payment of the final, operative judgment. See D.E.971, Ex. A.

TD refused to discuss payment, and instead sought an additional stay. D.E.969.

Coquina then moved to enforce TDs bond to satisfy the judgment. D.E.972.

The parties motions were fully briefed, and the court held a hearing on Feb-

ruary 11, 2015, to address those motions and TDs Rule 60(b) motion. D.E.983.

Coquina explained that the Trustees demand letteralready in the record

(D.E.967, Ex. 1)showed that, consistent with the terms of the bankruptcy plan,

the $9,062,500 that Coquina had received was not given to it free and clear, but it

had strings attached. D.E.984:32. TD conceded that any future recoveries that

Coquina might receive were prospective, and it could not even say when they

might occur. Id.at 14-15, 24. And when asked whether Coquina, if paid in full by

TD, would still have a claim in the bankruptcy, TDs counsel c[ould]nt answer

that question, explaining that it depended on the bankruptcy plan, and that one

would have to ask the bankruptcy trustee. Id. at 15. TD introduced no evi-

denceit neither called the Trustee nor presented a letter or affidavit from him

to back up its assertions about what it says might happen in the bankruptcy.

After hearing argument from both sides, the court denied TDs motion and

granted Coquinas motion to enforce. D.E.991. Enforcing the judgment in full,



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the court explained, was most consistent with the jurys verdict, this Courts ruling,

and the state of the proceedings in the bankruptcy case. D.E.984:41. The possibil-

ity of hypothetical future distributions to Coquina did not merit an offset because

such distributions were still prospective, id.at 14, and could be adequately ad-

dressed in the bankruptcy case, id.at 42, 44. The court found that there were ad-

equate provisions in place to prevent a double recovery by Coquina, and that

TDs speculation that Coquina, if it recovered in full from TD, would still receive

additional sums from the bankruptcy estate was implausible. Seeid.at 42, 47.

The court also found that an offset was not warranted as to the $9,062,500

that Coquina had received, finding that the Trustees demand letter, already in evi-

dence, showed that there was an actual demand from the trustee that [Coquina]

return that money. D.E.984:42. And, as the district court recognized, if it didoff-

set Coquinas recovery by the $9,062,500, there was a serious risk that the Trustee

would attempt to claw back that sum anyway from other portions of Coquinas

damages. Id.at 42-43. To ensure that the $9,062,500 did not result in a double re-

covery, the Court ordered Coquina, within three days after receiving payment of

the judgment in full from TD, to pay the $9,062,500 to the Trustee. Id.; D.E.991:2.

The district court also denied TDs request to reduce the punitive-damages

award. D.E.984:42. The court found there was ample evidence in this record for

the judgment on the punitives to stand, which goes to the banks misconduct, the



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disparity between the actual and potential harm suffered by Coquina, and compa-

rable cases like this that have talked about these sort of damages. Id. The district

court, finally, rejected TDs request for an additional stay. Id.at 47-48.

ARGUMENT

As the Supreme Court has made clear, [a] stay is an intrusion into the or-

dinary processes of administration and judicial review, and accordingly is not a

matter of right. Nken v. Holder, 556 U.S. 418, 427 (2009) (citation omitted).

This Court will not grant that extraordinary remedy unless the movant shows

that: (1) he has a substantial likelihood of success on the merits; (2) he will suffer

irreparable injury unless the injunction issues; (3) the stay would not substantially

harm the other litigant; and (4) if issued, the injunction would not be adverse to the

public interest. Valle v. Singer, 655 F.3d 1223, 1225 (11th Cir. 2011) (per curi-

am) (citation omitted). TD fails to satisfy any, let alone all, of those elements.

I. TDBANK IS NOT LIKELY TO SUCCEED ON THE MERITS OF ITS APPEAL.

TD has not established any substantial likelihood (Valle, 655 F.3d at

1225 (citation omitted))that it will prevail in its appeal of the denial of TDs Rule

60(b) motion. This Court review[s] the denial of a Rule 60(b) motion only for an

abuse of discretion, and thus will affirm unless [it] determine[s] that the district

court applied an incorrect legal standard, failed to follow proper procedures , or

made findings of fact that are clearly erroneous. Lugo v. Secy, Fla. Dept of



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Corr., 750 F.3d 1198, 1207 (11th Cir. 2014). TD has not shown any abuse of dis-

cretion here. Indeed, this Courts opinion in TDs prior appeal forecloses a central

plank of TDs Rule 60(b) motion, and TD does not come close to showing that the

district courts other findings were clearly erroneous.

A. The District Court Did Not Abuse Its Discretion In Denying TDs

Request To Reduce The Jurys Compensatory-Damages Award.

The crux of TDs attack on the judgment is its claim that the compensatory

damages should be reduced in light of hypothetical and actual distributions to Co-

quina from the bankruptcy estate. TD Stay Mot. 11-12; D.E.959:9-13. A key ar-

gument in TDs Rule 60(b) motion was eviscerated by this Courts prior ruling,

and its remaining double recovery contentions are factually and legally meritless.

1. This Courts Opinion In TDs Prior Unsuccessful Appeal

Forecloses TDs Claim That The Damages Are Illusory.

TDs central argument in its Rule 60(b) motion was that Coquinas compen-

satory damages based on the bankruptcy settlement were speculative, illusory,

and nonexistent from the outset because Coquina might receive some or all of its

payments to the bankruptcy estate back, as distributions on its allowed unsecured

claim. D.E.959:1-2, 8; see id. at 12-13. On appeal, TD again argues that those

damages were illusory and for this reason were never correct to begin with.

Indeed, TD now says that it warned this Court about these things in the prior ap-

peal. TD Stay Mot. 1-2, 13. This Court heard and rejected that very argument.



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TD argued in the prior appeal that Coquinas settlement damages were

speculative because Coquina, by dint of its unsecured claim in the bankruptcy

proceeding, might receive future distributions. TD Am. Opening Br. 42-43, No.

12-11161 (11th Cir. Nov. 26, 2012). TD itself equated that argument with the ar-

gument in its Rule 60(b) motion that the settlement damages are illusory: Immedi-

ately after filing its Rule 60(b) motion in the district court, TD tendered that mo-

tion to this Court, arguing that the points in that motion are related to TDs argu-

ments on appeal that the damages related to Coquinas bankruptcy settlement were

speculative and that the settlement was unreasonable. TD 28(j) Ltr. 1.

This Court squarely rejected TDs claim: [N]o court has held that an

amount of loss is speculative just because the loss resulted from the surrender of a

preference and the injured party has an unsecured claim in the bankruptcy case for

the property surrendered. 760 F.3d at 1318. The Court thus c[ould ]not con-

clude that Coquinas settlement damages awarded by the jury were speculative.

Id. TDs claim in its Rule 60(b) motion that the settlement damages were never

properly part of its damages is an attack on this Courts ruling and on the verdict.

Seeking to circumvent this Courts ruling, TD argued below that this Courts

ruling d[id] not affect the relief TD Bank seeks in its Rule 60(b) motion,

D.E.977:2, and in this Court, TD misleadingly claims that the district court diso-

beyed this Courts direction by denying TDs Rule 60(b) motion, TD Stay Mot.



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3, 10. TD grossly distorts this Courts decision. This Court did not hold that TDs

Rule 60(b) motion has merit; it flatly rejectedTDs claim, which that motion re-

peated, that Coquinas settlement damages were speculative. 760 F.3d at 1318.

Allthat this Court left open was TDs distinct argumentthat a reduction of

the damages was warranted to avoid a double recoverywhich TD claimedwould

occur because Coquina received $9,062,500 already and might receive more in the

future. 760 F.3d at 1318-19. As Coquina explained, that distinct double recov-

ery argument was meritless, but in any case should not be resolved for the first

time on appeal, on the basis of TDs self-serving but unsubstantiated factual asser-

tions. D.E.967, Ex. 2:35-39. That distinct argumentand only that argument (and

TDs related attack on the punitive damages)was open to the district court to

consider. This Court said nothing about the merit vel nonof that argumentand

the district court, after careful consideration of the evidence, found that it has none.

2. TDs Separate Claim That Reducing The Jurys Award Is

Necessary To Avoid A Double Recovery Is Meritless.

The only compensatory-damages issue left open by this Courts prior ruling

is whether TD is entitled to a setoff to avoid a double recovery. It is not.

a.

TD Cannot Seek An Offset For Hypothetical FutureRecoveries That Have Not Yet Occurred.

TD primarily seeks a reduction in Coquinas compensatory damages based

on the prospect that Coquina mightreceive certain sums from the bankruptcy estate



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in the future. TD Stay Mot. 2, 12. But it offers no authority for the proposition

that a defendant may obtain a setoff based on hypothetical recoveries that have not

yet happened. TDs stay motion cites no case law on this issue, and its Rule 60(b)

motion cited no case that granted a setoff solely because the defendant anticipated

that the plaintiff would recover from a third party in the future. Indeed, in all but

three of the cases TD cited, the plaintiffs had alreadyrecovered part or all of their

damages from another source (or their damages had been awarded by a court).2

And in the remaining three cases, the courts made clear that the defendants would

be entitled to relief only if the plaintiffs recovered elsewhere.3

The district court therefore properly rejected TDs bid in its Rule 60(b) mo-

tion for a setoff based on hypothetical recoveries by Coquina from the estate that

have not occurred. Aside from the $9,062,500 Coquina receivedwhich the Trus-

2 See BUC Intl Corp. v. Intl Yacht Council Ltd., 517 F.3d 1271, 1276 (11th Cir.

2008);Blasland, Bouck & Lee, Inc. v. City of N. Miami, 283 F.3d 1286, 1293(11thCir. 2002); Canady v. Crestar Mortg. Corp., 109 F.3d 969, 972 (4th Cir. 1997);

Marshack v. Hudson (In re Advance Mortgagee Servicing Corp.), 1996 WL267330, at *1 (9th Cir. May 20, 1996); Kleinfeld v. Iacopi (In re Kleinfeld),1994 WL 650057, at *3 (9th Cir. Nov. 16, 1994); Johnson Waste Materials v.

Marshall, 611 F.2d 593, 599-600 (5th Cir. 1980); Skandinaviska-Enskilda Bankenv. C.L.C. Marine Servs., Ltd. (In re SeaEscape Cruises, Ltd.), 172 B.R. 1002, 1007

(S.D. Fla. 1994); Raben Builders, Inc. v. First Am. Bank & Trust Co., 561 So. 2d1229, 1230 (Fla. Dist. Ct. App. 1990) (per curiam), abrogated on other grounds byWells v. Tallahassee Meml Regl Med. Ctr., Inc., 659 So. 2d 249 (Fla. 1995).

3 See FDIC v. United Pac. Ins. Co., 152 F.3d 1266, 1275 (10th Cir. 1998); Rood

v. Rosen (In re Rood), 482 B.R. 132, 154 (D. Md. 2012); Trust for the CertificateHolders of the Merrill Lynch Mortg. Pass-Through Certificates Series v. Love

Funding Corp., 736 F. Supp. 2d 716, 728 (S.D.N.Y. 2010).



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tee has demanded be returned if Coquina recovers anything from TD, D.E.967, Ex.

1TD does not and cannot claim that Coquina has alreadyrecovered from the es-

tate. TD conceded below, and the district court agreed, that such distributions are

purely prospective. D.E.984:14-15. And neither below nor in this Court has TD

offered any actual evidencemerely its own self-serving surmisethat such dis-

tributions will in fact occur. E.g., TD Stay Mot. 12. A defendants bare specula-

tion that a plaintiff mightrecover elsewhere is no basis to upend a verdict.4

Moreover, as the district court found, adequate provisions are in place to

prevent the prospect of duplicative recovery: The Trustee is watching very care-

fully whats going out of the door, and it is difficult to believe that the Trustee

would pay Coquina any further funds if it recovers fully here. D.E.984:42, 47. In

all events, the propriety of any further distributions is to be decided by the bank-

ruptcy court, id. at 43where TD, which admittedly is a participant in the bank-

ruptcy proceedings, id.at 12, can object to distributions it believes improper.

b. TD Is Not Entitled To An Offset For The $9 Million

Payment That The Trustee Has Demanded Back.

The only genuine issue TDs Rule 60(b) motion raised regarding purported

double recovery is whether TD should receive a setoff for the $9,062,500 distribu-

tion. But TDs stay motion utterly fails to show that the district court abused its

4 TD could not even say whether Coquina, if paid in full by TD, would still have

a claim in the bankruptcy case. D.E.984:15. Moreover, as Coquina explained, inDecember 2014 the Trustee sought and received court approval for a list of finaldistributions for class 3 creditors, which included none for Coquina. D.E.971:7.



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discretion in resolving that highly factbound question. Coquina demonstrated that

it did not receive that payment free and clear. Under the bankruptcy plan, once TD

(or its surety) pays the judgment in full, Coquina cannot keepthe $9,062,500 pay-

ment, but must return it to the bankruptcy estate.5 And, as the district court found,

the Trustee has alreadyformally demanded the return of that sum if Coquina re-

covers from TD. D.E.984:42 (citing D.E.967, Ex. 1). TD offered no evidenceto

refute these facts. And there is no question that Coquina will in fact repay that sum

once TD pays what it owes: The court ordered Coquina to do so within three days

of being paid by TD and to present proof to the Court, id. at 43; see also

D.E.991:2, eliminating any possibility of double recovery.

Moreover, as the district court noted, D.E.984:42-43, grantingTD a credit

for the $9,062,500 could perversely deprive Coquina of even one full recovery.

The Trustee expressly demanded that Coquina repay the $9 million from whatever

sum Coquina receives here, even if reduced as TD proposes.6 Indeed, because TD,

as a residual creditor in the bankruptcy, stands to benefit from such recoveries by

the estate, much or all of the offset it seeks here would likely go to its own pocket.

5 D.E.960, Ex. A:41 (Any holder of a Class 3 Claim that receives Distributions

in excess of the amount such holder of a Class 3 Claim was entitled to receive inDistributions shall repay such amount that it received that was in excess of the Dis-tributions such holder was entitled to receive.); id.at 73-74 (holder of an unse-cured claim who receives collateral source recovery must repay to the estate a sumequal to that recovery, up to the amount of prior distributions to claim holder).

6 D.E.967, Ex. 1:1 (demanding recovery if TD satisfies [the] judgment in whole

or in part (emphasis added)).



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B. Any Possible Recovery By Coquina From Third Parties Does Not

Justify Any Reduction In The Jurys Punitive-Damages Award.

TDs real motivation for manufacturing an illusion of double recovery and

seeking a setoff of the compensatory damages is no mystery: It hopes by doing so

to escape paying thepunitivedamages the jury awarded. TD Stay Mot. 10, 12-14.

But even if an offset were needed to avoid double recovery (and it is not), TDs

claim that the punitive award should be reduced is legally and factually baseless.

Punitive damages by definition are not intended to compensate the injured

party, but instead to punish the tortfeasor, and to deter him and others from

similar extreme misconduct.7 Courts thus routinely refuse to set off punitive-

damages awards in light of a plaintiffs recovery of compensatorydamages from

an alternative source.8 TD tries to end-run these principles by claiming that, ifthe

compensatory award is reduced, the punitive award will then be disproportion-

ate. TD Stay Mot. 13. But courts have correctly rejected this gambit as well.

Unless the compensatory damages were incorrect ab initio, courts have held, the

proper benchmark for assessing punitive damages is still the originalcompensato-

ry award, notthe portion of that award that is still unpaid on some random future

7EEOC v. Waffle House, Inc., 534 U.S. 279, 295 (2002) (citation omitted); see

also Myers v. Cent. Fla. Invs., Inc., 592 F.3d 1201, 1216 (11th Cir. 2010); Owens-Corning Fiberglas Corp. v. Ballard, 749 So. 2d 483, 486 (Fla. 1999).

8 See, e.g.,Johansen v. Combustion Engg, Inc., 170 F.3d 1320, 1340 (11th Cir.

1999);Burgess v. Porterfield, 469 S.E.2d 114, 118-21 (W. Va. 1996);Amoco Pipe-line Co. v. Montgomery, 487 F. Supp. 1268, 1273 (D. Okla. 1980).



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date.9 Onlyif the compensatory award was wrong when renderedas was true in

TDs only case on this pointis there any basis to alter the punitive award.10

TDs contrary rule makes no sense. That a plaintiff has recovered for some

of its harm from a third party does not diminish the reprehensibility of the defend-

ants conduct or the extent of the injury that the defendants conduct caused, much

less the magnitude of thepotential harm that the defendants conduct could have

inflicted.11

TDs rule also would perversely enable a defendant to buy its way out

of a punitive-damages awardwriting a check for the compensatory damages and

then contending that the punitive damages, measured against the remaining com-

pensatory damages, are out of whack. That is not the law.

Here, this Courts decision in the prior appeal forecloses any argument that

the original $32 million compensatory-damages award was incorrect. That original

award is therefore the proper benchmark for assessing the punitive award. It is not

Coquina that seeks to pump up the punitive damages, TD Stay Mot. 12, but ra-

ther TD that seeks to deflate them by a misleading comparison to the amount of

compensatory damages TD claims is not yet paid. Moreover, as the district court

9 See, e.g.,Kelley v. Michaels, 59 F.3d 1050, 1055 (10th Cir. 1995);Hayes Sight

& Sound, Inc. v. ONEOK, Inc., 136 P.3d 428, 447-48 (Kan. 2006); Allsups Con-venience Stores, Inc. v. N. River Ins. Co., 976 P.2d 1, 18-19 (N.M. 1998).10

See TD Stay Mot. 13-14 (citing Searcy v. R.J. Reynolds Tobacco Co., 2013 WL5421957, at *6-7 (M.D. Fla. Sept. 12, 2013) (concluding compensatory damageswere excessive when rendered and thenreducing punitive damages accordingly)).11

TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443, 460 (1993) (pluralityopinion) (emphasis added);see also Myers, 592 F.3d at 1221.



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found, there is ample evidence in this record for the judgment on the punitives to

stand, which goes to the banks misconduct, the disparity between the actual and

potential harm suffered by Coquina, and comparable cases like this that have

talked about these sort of damages. D.E.984:42. TD identifies no clear error in

that finding. And its bald assertion that reducing the punitive award honors the

wishes of the jury (TD Stay Mot. 13) is not only baseless, but galling; it is utterly

implausible that the jury, if aware of all the additional evidence of TDs miscon-

duct revealed only after trial, cf. D.E.911:6-28, would award less punitive damages

today merely because (TD says) Coquina partially recovered from another source.

II. THE EQUITIES DO NOT SUPPORT AFURTHER STAY OF EXECUTION.

TD also fails to demonstrate any of the remaining prerequisites for a stay.

A. TD Has Failed To Show Irreparable Harm Absent A Stay.

The only irreparable harm TD alleges is that, if it is required to pay the

judgment but prevails on appeal, it will be unable to recoup any overpayment. TD

Stay Mot. 15-17. But all it offers for that assertion is its own self-serving specula-

tion, not evidence, that the proceeds will be dissipated and beyond the courts

reach. This Court has rejected TDs efforts to overturn the judgment by portraying

Coquina as a fictional conduit entity. 760 F.3d at 1309. It should not counte-

nance TDs efforts to evadepayingthe judgment on the same basis.



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B. A Stay Would Substantially Injure Coquina.

TD is also incorrect that its supersedeas bond eliminates any injury to Co-

quina from a stay. Coquina has already been forced to wait more thanfive years

since it was defrauded, and three since the verdict, to be made whole. TDs first

failed appeal lasted more than two and a half years, from February 2012 to October

2014; a second appeal might take just as long. The paltry federal postjudgment in-

terest rate hardly compensates Coquina for the loss of its money in the interim.

C.

A Stay Would Not Serve The Public Interest.

Allowing TD to evade paying what a federal jury determined (and this Court

confirmed) TD owes while it exhausts a secondfruitless appeal hardly serves the

public interest. While [t]he parties and the public are entitled to both careful

review and a meaningful decision, they are also generally entitled to the prompt

execution of orders that the legislature has made final. Nken, 556 U.S. at 427.

TDs claims that a stay would enable the Court to ensure the judgments accura-

cy and prevent what the bank deems illegitimate recoveries are merely its mer-

its and irreparable-harm arguments repackaged. TD Stay Mot. 18. Nor has TD

shown how a stay could possibly conserve judicial resources, id.; with or without

a stay, this Courts task of deciding TDs baseless appeal will be the same.

CONCLUSION

TDs motion for a stay should be denied.



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DATED: February 19, 2015 Respectfully submitted,

David S. MandelNina Stillman MandelMANDEL &MANDEL LLP169 East Flagler Street, Suite 1200Miami, FL 33131(305) 374-3771

/s/ Miguel A. EstradaMiguel A. Estrada

Counsel of RecordJonathan C. BondGIBSON,DUNN &CRUTCHER LLP1050 Connecticut Avenue, N.W.Washington, D.C. 20036(202) [email protected]

Counsel for Plaintiff-Appellee Coquina Investments



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Coquina-TD 60(b) Appeal.2015!02!19.Coquina Response to TD Stay Motion (1)

Documents

Transcript of Coquina-TD 60(b) Appeal.2015!02!19.Coquina Response to TD Stay Motion (1)