Filed: Dec. 15, 1998
Latest Update: Feb. 21, 2020
Summary: [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED U.S. COURT OF APPEALS No. 96-4598 ELEVENTH CIRCUIT 12/15/98 THOMAS K. KAHN D. C. Docket No. 89-2510-CIV-LCN CLERK BEL-BEL INTERNATIONAL CORP., Plaintiff -Appellee-Cross-Appellant, versus COMMUNITY BANK OF HOMESTEAD, KENNETH GRAVES, VITO STRANO, GROWERS PACKING COMPANY, JOSEPH TORCISE, and CODELIA TORCISE, Defendants-Appellants-Cross-Appellees. Appeals from the United States District Court for the Southern District of
Summary: [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT FILED U.S. COURT OF APPEALS No. 96-4598 ELEVENTH CIRCUIT 12/15/98 THOMAS K. KAHN D. C. Docket No. 89-2510-CIV-LCN CLERK BEL-BEL INTERNATIONAL CORP., Plaintiff -Appellee-Cross-Appellant, versus COMMUNITY BANK OF HOMESTEAD, KENNETH GRAVES, VITO STRANO, GROWERS PACKING COMPANY, JOSEPH TORCISE, and CODELIA TORCISE, Defendants-Appellants-Cross-Appellees. Appeals from the United States District Court for the Southern District of F..
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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
U.S. COURT OF APPEALS
No. 96-4598 ELEVENTH CIRCUIT
12/15/98
THOMAS K. KAHN
D. C. Docket No. 89-2510-CIV-LCN CLERK
BEL-BEL INTERNATIONAL CORP.,
Plaintiff -Appellee-Cross-Appellant,
versus
COMMUNITY BANK OF HOMESTEAD, KENNETH
GRAVES, VITO STRANO, GROWERS PACKING
COMPANY, JOSEPH TORCISE, and CODELIA TORCISE,
Defendants-Appellants-Cross-Appellees.
Appeals from the United States District Court
for the Southern District of Florida
(December 15, 1998)
Before TJOFLAT and BIRCH, Circuit Judges, and RONEY, Senior Circuit Judge.
TJOFLAT, Circuit Judge:
This case is one of many arising out of the bankruptcy of a Florida tomato farming
operation owned by Joe Torcise.1 The case before us involves one set of creditors converting
1
Other reported cases include Torcise v. Community Bank of Homestead (In re Torcise),
116 F.3d 860 (11th Cir. 1997); Community Bank of Homestead v. Torcise (In re Torcise), 187
property that was pledged as collateral to another creditor. We hold that there is no bar to
requiring the converting creditors to return the property they converted, and therefore affirm the
judgment of the district court.
I.
Joe Torcise owned two tomato farms – one in Homestead, Florida, and the other in
Immokalee, Florida. He also owned Growers Packing Company, which packed his tomatoes and
those of several other farmers.
In the late 1980s, Torcise began facing financial difficulties. In response, he started
“check-kiting” – he wrote checks from one bank account to another, and then wrote checks from
the second account back into the first, thus artificially inflating the balances of both accounts. In
November 1988, one of the banks involved in this process – Community Bank of Homestead –
discovered the check-kiting, but only after honoring $4.3 million of Torcise’s bad checks. In an
attempt to recoup its losses, Community Bank persuaded Torcise to sign a promissory note
(dated November 18, 1988) for the amount of the overdrafts. The collateral for this note was the
accounts receivable (the “receivables”) of the Homestead and Immokalee tomato crops for the
coming winter and spring, respectively.2
B.R. 18 (S.D. Fla. 1995); Torcise v. Community Bank of Homestead, 131 B.R. 503 (S.D. Fla.
1991); Torcise v. Riff (In re Growers Packing Co.),
150 B.R. 82 (Bankr. S.D. Fla. 1993); and
Torcise v. Cunigan (In re Torcise),
146 B.R. 303 (Bankr. S.D. Fla. 1992).
2
The Homestead farm yielded a winter crop; the Immokalee farm yielded both a fall and
a spring crop.
2
Torcise also sought to deal with his financial problems through more legitimate means,
namely, by seeking new sources of capital. Torcise received unsecured loans from a number of
sources, including defendants Kenneth Graves and Vito Strano, and Steven and Sam Torcise
(“the Brothers”). Another source of funding was Bel-Bel International Corporation, a small
Panamanian corporation created by a Venezuelan family for the purpose of investing in the
United States. On November 29, 1988, Bel-Bel loaned $2.5 million to Torcise and his wife,
Codelia, secured by a first priority security interest in the Homestead tomato crop for the coming
winter – the same crop that Torcise had pledged as collateral to Community Bank.3 The loan
documents included a representation by Torcise that the collateral was unencumbered, and
provided that Torcise would not further encumber this collateral without Bel-Bel’s consent.
One of the terms of Bel-Bel’s loan was that Torcise was to provide a “good standing
letter” from his other lenders indicating that his loans were not in default. Bel-Bel received such
a letter from Community Bank on December 8, 1988, stating that none of Torcise’s loans were in
default. Conspicuously absent from the letter was any mention of Torcise’s $4.3 million in
overdrafts resulting from his check-kiting activity, or of the loan given to cover those overdrafts.
By the end of 1988, Torcise had fully repaid the $4.3 million note to Community Bank
(thereby extinguishing Community Bank’s claim on the Homestead receivables4), using receipts
from the Immokalee fall crop. This speedy repayment, however, strained Torcise’s cash flow to
3
Bel-Bel actually made two separate loans to Torcise, one for $2 million and one for
$500,000 two months later. Both loans were made on the same terms; they are treated as a
single $2.5 million loan for the purpose of this opinion.
4
The district court held that this claim was never adequately established in the first
instance; the repayment of the note makes the issue moot for the purposes of this appeal.
3
the point that it became difficult for him to meet his current operating expenses. Consequently,
in March 1989, Torcise lacked the resources to harvest the spring crop at his Immokalee farm, or
to keep Growers Packing operating such that any tomatoes picked at Immokalee could be
marketed.
In response to this problem, Community Bank arranged a complex financing scheme with
Torcise and some of his creditors. Community Bank lent a total of $3.55 million to Strano ($1.5
million), Graves ($750,000), and the Brothers ($1.3 million). These individuals then gave the
money to Torcise. Over $3.2 million of this money was immediately returned to Strano, Graves,
and the Brothers as partial repayment for pre-existing debts.5 Community Bank then created a
“lock-box” account into which the receivables for Torcise’s Homestead crop would be
deposited. Sixty percent of this account was to be used to repay the $3.55 million loan from
Community Bank; the remaining forty percent was to be released to Torcise for use in harvesting
the Imokalee crop.6 At the time that this arrangement was made, all of the participants were
aware that the receivables from Torcise’s Homestead crop had been pledged previously to Bel-
Bel.
Between April 6 and May 24, 1989, approximately $5 million in receivables from the
Homestead crop was deposited into the lock-box account. Of this amount, almost $3.6 million
was used to repay the Community Bank loan.
The Bel-Bel note came due on June 1, 1989. Torcise was unable to pay. Consequently,
Bel-Bel agreed to extend Torcise’s repayment schedule through August 18. Torcise was still
5
The $3.55 million loan thus operated in essence as a consolidation loan.
6
This ratio was later changed to 70/30.
4
unable to pay. Bel-Bel then filed suit in the Southern District of Florida on November 13, 1989,
against Torcise and his wife, Growers Packing Company, Community Bank, Graves, and
Strano.7 A few weeks later, Torcise, his wife, and Growers Packing Company filed for Chapter
11 bankruptcy.8 The bankruptcy judge granted relief from the automatic stay of litigation
proceedings against the bankrupts, and allowed Bel-Bel’s suit to proceed.9
Following a bench trial, the district court found Torcise and his wife liable to Bel-Bel for
payment of the $2.5 million note. Torcise was also found liable for fraudulent inducement based
on his representation that the Homestead tomato crop was unencumbered, when it had in fact
previously been pledged to Community Bank as collateral for the $4.3 million note to cover
Torcise’s overdrafts. In additon, the court found that Bel-Bel still had a security interest in the
Homestead crop receivables, and therefore that Bel-Bel could demand those receivables from
Community Bank, Graves, and Strano in repayment of Torcise’s debt.10 The district court
additionally found these defendants liable for impairment of collateral, tortious interference with
the contractual relationship between Bel-Bel and Torcise, civil conversion, and conspiracy to
7
Bel-Bel also sued other persons, including the Brothers; these persons have since settled
out of the case.
8
Joe Torcise and Growers Packing filed for bankruptcy on November 30, 1989; Codelia
Torcise filed on December 7, 1989. The bankruptcy proceedings were jointly administered.
9
The commencement of bankruptcy proceedings automatically stays any pending
litigation against the debtors. See 11 U.S.C. § 362 (1994).
10
This holding was based on Florida Statutes chapter 679.306(2), a part of the Uniform
Commercial Code that governs a secured party’s rights upon the disposition of its collateral.
5
commit these torts.11 Finally, Community Bank was held liable for fraudulent nondisclosure,
based on its failure to disclose Torcise’s overdrafts in the “good standing letter.”
The defendants were held jointly and severally liable for compensatory damages,
consisting of principal and accrued interest on the $2.5 million note at the time the lock-box
account was created, and prejudgment interest at the statutory rate from the date of the creation
of the lock-box account to the date on which the district court entered its “findings of fact and
conclusions of law.”12 In addition, punitive damages were assessed against Community Bank
($300,000), Graves ($50,000), and Strano ($50,000).
All defendants appeal, and Bel-Bel cross-appeals. Parts II and III of this opinion dispose
of some preliminary matters raised by the defendants – claims that the district court lacked
subject matter jurisdiction and that the case should have been dismissed for failure to join
necessary parties. Part IV addresses the substantive appeals of Community Bank, Graves, and
Strano, focusing on the district court’s holding that they are liable for conversion. Part V
discusses the issues raised by Torcise on appeal, and part VI discusses Growers Packing’s claim
that the judgment against it is void. Finally, part VII addresses the issues raised by Bel-Bel’s
cross-appeal.
II.
11
Growers Packing Company was also found to be part of this conspiracy.
12
This sum was reduced slightly by settlement recoveries received by Bel-Bel from other
defendants.
6
The defendants’ initial challenge to the district court’s decision is that the parties in this
case are not completely diverse, and thus the district court lacked subject matter jurisdiction over
the case. Federal jurisdiction in this case is premised on diversity of citizenship. See 28 U.S.C.
§ 1332(a) (1994). Diversity jurisdiction requires that the plaintiff be a citizen of a state (or
nation) different from that of any of the defendants. See Strawbridge v. Curtiss, 7 U.S. (3
Cranch) 267, 267, 2 L. Ed. 435 (1806). For purposes of diversity jurisdiction, a corporation is “a
citizen of any State by which it has been incorporated and of the State where it has its principal
place of business.” 28 U.S.C. § 1332(c)(1) (1994). A corporation’s principal place of business
is determined by looking at the “total activities” of the corporation. See Village Fair Shopping
Ctr. Co. v. Sam Broadhead Trust,
588 F.2d 431, 434 (5th Cir. 1979).13
Defendants concede that Bel-Bel is incorporated in Panama (and is therefore a
Panamanian citizen) and that none of the defendants are Panamanian citizens. Defendants argue,
however, that Bel-Bel’s principal place of business is Florida, and therefore Bel-Bel, in addition
to being a Panamanian citizen, is a Florida citizen. The defendants point out that Bel-Bel’s only
investment was in Florida, that Bel-Bel maintained a bank account in Florida, and that Bel-Bel
had an accountant and attorneys in Florida. Many of the defendants in this case are also Florida
citizens; therefore, the defendants argue that complete diversity is lacking and the district court
did not have jurisdiction. In response, Bel-Bel contends that its principle place of business is
Venezuela (not Florida), and therefore complete diversity is present. Bel-Bel points out that all
of its shareholders were Venezuelan citizens, that Bel-Bel was not involved in the day-to-day
13
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), this
court adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to
October 1, 1981.
7
operation of the Florida tomato farm, and that Bel-Bel’s corporate decisionmaking took place in
Venezuela. The district court, after holding an evidentiary hearing on the matter, found that Bel-
Bel’s principle place of business was Venezuela. We review this finding for clear error. See
Vareka Invs., N.V. v. American Inv. Properties, Inc., 724 F.2d 907, 910 (11th Cir. 1984).
The evidence suggests that Bel-Bel is, in essence, a small corporation designed as a
vehicle through which a handful of Venezuelan investors could make loans to the Torcises’
Homestead, Florida, tomato farm. Thus, the money and the management were based in
Venezuela. Bel-Bel’s operations in Florida, meanwhile, consisted of only those things necessary
to monitor its investment. In such a situation, the evidence was sufficient to support the district
court’s finding that Bel-Bel’s “principal place of business” was Venezuela. See id. (affirming
the district court’s finding of diversity on similar facts).
Furthermore, this is not the type of situation that section 1332(c)(1)’s “principal place of
business” doctrine was intended to address. That requirement was intended to prevent local
businesses from avoiding local trials simply because they were incorporated in Delaware (or
another foreign jurisdiction), and to reserve diversity jurisdiction for parties that are sufficiently
foreign to have a legitimate fear of local prejudice. See S. Rep. No. 1830 (1958), reprinted in
1958 U.S.C.C.A.N. 3099, 3102. In the case at hand, Bel-Bel has substantial indicia of being a
foreign corporation, and is thus not the type of organization that Congress, in enacting section
1332(c)(1), intended to keep out of federal court.
Thus, in light of the policy behind 28 U.S.C. § 1332(c)(1) and Bel-Bel’s substantial
Venezuelan connections, we hold that the district court did not commit clear error in finding that
Bel-Bel’s principle place of business was in Venezuela. The parties were therefore completely
8
diverse, and the district court properly exercised subject matter jurisdiction pursuant to 28 U.S.C.
§ 1332(a)(2).
III.
The defendants also allege that the district court erred in denying Community Bank’s
motion under Rule 19 of the Federal Rules of Civil Procedure to require joinder of certain
necessary parties. Specifically, the defendants claim that the bankruptcy estates of the Torcises
and Growers Packing were necessary parties to this action under Rule 19(a)(2)(ii), which
requires that parties be joined in an action if disposition of the action in that party’s absence may
“leave any of the persons already parties subject to a substantial risk of incurring double,
multiple, or otherwise inconsistent obligations.”14 Fed. R. Civ. P. 19(a)(2)(ii). The defendants
argue that the receivables sought by Bel-Bel are the same as those sought by the bankruptcy
estates (on a fraudulent conveyance or preference theory) in certain adversarial litigation in the
bankruptcy court; not joining the estates in Bel-Bel’s suit thus created a substantial risk of
double liability.
Community Bank made essentially the same argument in the bankruptcy court, there
arguing that Bel-Bel was a necessary party to the adversarial bankruptcy litigation, because a
judgment for both the estates and Bel-Bel would lead to double liability. The bankruptcy court
14
Rule 19 actually contemplates a two-part inquiry. First, the court is to use the criteria
in Rule 19(a) to determine whether a party ought to be joined. See Fed. R. Civ. P. 19. If so, and
if joinder of that party is impossible, the court is to use the criteria in Rule 19(b) to determine
whether the court should nevertheless proceed in that party’s absence. See id. Because the
district court did not find that the bankruptcy estates met the criteria of Rule 19(a), it did not
reach the Rule 19(b) question.
9
rejected the argument, and the district court affirmed the bankruptcy court on an interlocutory
appeal. Community Bank appealed that decision to the Eleventh Circuit, which also concluded
that Rule 19 did not require the joinder of Bel-Bel in the adversarial bankruptcy litigation.15 See
Torcise v. Community Bank of Homestead (In re Torcise), 116 F.3d 860, 865-67 (11th Cir.
1997). This decision is squarely “on point” with the issue raised in this appeal; we are therefore
bound by it and thus reject defendants’ appeal of the district court’s denial of Community Bank’s
Rule 19 motion.16 See Cargill v. Turpin,
120 F.3d 1366, 1386 (11th Cir. 1997) (holding that a
prior panel decision is binding on subsequent panels).
15
The panel reasoned that Bel-Bel was not a necessary party in the bankruptcy litigation
because (1) the suits alleged different causes of action – the bankruptcy litigation involved
fraudulent conveyance and preference claims, while this action involves tort claims; (2) the
responsible parties were different in each case – Strano and Graves were not in the bankruptcy
litigation; and (3) Community Bank had improperly acquired control over a sufficient amount of
receivables to be able to pay Bel-Bel $2.5 million and pay the estates $3.55 million without
incurring double liability. See Torcise v. Community Bank of Homestead (In re Torcise), 116
F.3d 860, 866 (11th Cir. 1997).
16
This decision also controls our resolution of defendants’ related claim that the
judgment rendered in the adversarial bankruptcy proceeding (based on the fraudulent
conveyance and preference allegations) is res judicata as to Bel-Bel’s claims in this suit.
According to the defendants, Bel-Bel’s claims in this suit are identical to those at issue in the
adversarial bankruptcy litigation. Thus, Bel-Bel should have raised those claims in the
adversarial bankruptcy litigation (even though it was a not party). Because Bel-Bel did not, and
because the adversarial bankruptcy proceeding resulted in a final decision on the merits, res
judicata bars the raising of the claims in this action.
This claim is essentially a restatement of the argument that Bel-Bel was a necessary party
in the bankruptcy litigation. Almost by definition, a party whose claim would be extinguished
by a decision in an action (under res judicata) is a necessary party to that action under Rule 19.
The prior panel decision in In re Torcise thus dictates that we reject the res judicata claim. Cf.
Bel-Bel Int’l Corp. v. Barnett Bank of S. Fla., N.A., 158 B.R. 252, 257-58 (S.D. Fla. 1993)
(rejecting defendants’ res judicata claim in this case using reasoning similar to that by which In
re Torcise rejected defendants’ Rule 19 argument).
10
We also note that the risk of double liability in this case is largely illusory. If Bel-Bel
obtains relief as a creditor in the bankruptcy proceedings before the defendants have satisfied
Bel-Bel’s judgment in this case, the defendants can challenge Bel-Bel’s attempt to obtain
satisfaction of the judgment on that ground and presumably reduce their payments by whatever
amount Bel-Bel obtains in bankruptcy. See Hurley v. Gaertner (In re Hurley), 158 B.R. 115, 122
(N.D. Ill. 1993) (noting that “courts possess the power ‘in all cases to compel credits on
judgments or executions, where it would be illegal or inequitable to proceed to collect the
amount claimed’”) (quoting Sandburg v. Papineau,
81 Ill. 446 (1876)). If Bel-Bel has not
obtained relief as a creditor in the bankruptcy proceedings when the defendants satisfy the
judgment, then the defendants can claim an equitable lien or constructive trust on whatever
amount from the estates is allocated to Bel-Bel. Cf. United States v. Cannistraro,
694 F. Supp.
62, 72 n.11 (D.N.J. 1988), vacated in part,
871 F.2d 1210 (3d Cir. 1989) (noting that constructive
trusts are applied in numerous contexts to prevent unjust enrichment). In either case, the
defendants would not be subject to double liability.
IV.
Bel-Bel’s primary claim against defendants Community Bank, Graves, and Strano was
conversion. Conversion is “the exercise of wrongful dominion or control over property to the
detriment of the rights of the actual owner.” Seymour v. Adams, 638 So. 2d 1044, 1046-47 (Fla.
5th DCA 1994). A lienholder is considered to be an “owner” for the purposes of conversion if he
has a present right of possession. See Farmer’s Home Admin. v. Dino (In re Dino),
17 B.R. 316,
318 (Bankr. M.D. Fla. 1982); Dekle v. Calhoun,
53 So. 14, 15 (Fla. 1910). Bel-Bel had a present
11
right of possession to the receivables from the Homestead tomato crop by virtue of Torcise’s
defaults.17 Community Bank, Graves, and Strano exercised control over these receivables. The
exercise of control was wrongful because the receivables had been previously pledged to Bel-Bel
as security, and (under the security agreement) the defendants did not have the right unilaterally
to take control of those receivables. The exercise of control was also to the detriment of Bel-Bel,
which lost the money that otherwise would have provided repayment for the loan. Thus, Bel-Bel
had a strong claim for conversion.
The defendants, however, argue that Bel-Bel’s conversion claim was barred by the
“specific fund” requirement: “To state a claim for the conversion of money, there must exist a
specific fund capable of separate identification.” Bankest Imports, Inc. v. ISCA Corp., 717
F. Supp. 1537, 1542 (S.D. Fla. 1989). According to the defendants, the money received by
Torcise for the Homestead tomato crop was dispersed among several parties, and as a result there
is no specific fund that Bel-Bel can claim was converted. The cases upon which the defendants
rely, however, all involve contractual rights to payments for which no particular source was
specified – i.e., the payment money could come from anywhere. See Advanced Surgical Techs.,
Inc. v. Automated Instruments, Inc.,
777 F.2d 1504, 1505 (11th Cir. 1985); Gambolati v.
Sarkisian,
622 So. 2d 47, 50 (Fla. 4th DCA 1993); Belford Trucking Co. v. Zagar,
243 So. 2d 646,
648-49 (Fla. 4th DCA 1970). In the case before us, there was a specific, identifiable fund – the
receivables from the Homestead crop – in which Bel-Bel had a property right and from which
17
The security agreement between Bel-Bel and Torcise gave Bel-Bel the right to take
control of the receivables in the event of default. The district court found that, at the time the
“lock-box” arrangement was instituted, Torcise had “numerous prior defaults.” This finding is
not challenged.
12
Bel-Bel was entitled to be repaid when Torcise defaulted. The specific fund requirement thus
placed no bar on Bel-Bel’s claims. Cf. Allen v. Gordon, 429 So. 2d 369, 371 (Fla. 1st DCA 1983)
(allowing a conversion action for a specific sum of money improperly transferred from one bank
account to another).
Furthermore, the policy underlying the specific fund requirement makes it inapplicable to
Bel-Bel’s claim. The specific fund requirement is an exception to the general rule that an
obligation to pay money cannot be enforced through an action for conversion. See Capital Bank
v. G & J Invs. Corp., 468 So. 2d 534, 535 (Fla. 3d DCA 1985). This general rule is an expression
of the principle that “an action in tort is inappropriate where the claim is based on a breach of
contract.” Douglas v. Braman Porsche Audi, Inc.,
451 So. 2d 1038, 1039 (Fla. 3d DCA 1984).
There was no contractual relationship between Bel-Bel and the persons who converted the
receivables from the Homestead tomato crop; therefore, Bel-Bel’s claim could not be
characterized as an attempt to transform a breach of contract action into a tort action. Bel-Bel’s
claim was thus not the type of claim to which the specific fund requirement was intended to
apply.
In addition to being held liable for conversion, Community Bank, Graves, and Strano
were held liable for tortious interference and impairment of collateral, and Community Bank was
held liable for fraudulent nondisclosure.18 The remedy granted for each of these torts, however,
was identical to the remedy granted for conversion – joint and several liability for the $2.5
18
Each of these defendants was also held liable for punitive damages, see supra part I;
those holdings are not challenged.
13
million for which Bel-Bel was secured, plus interest.19 In essence, Bel-Bel sought the same
relief on a variety of legal theories. Therefore, in light of our affirmance of the district court’s
holding regarding conversion, we do not need to reach the defendants’ appeals regarding Bel-
Bel’s other claims.
V.
Defendants Joseph and Codelia Torcise were held liable for payment of the $2.5 million
note plus interest. The Torcises challenge this holding on two grounds. First, they claim that the
bankruptcy court’s relief from the automatic stay did not give Bel-Bel leave to pursue its claim
on the note; rather, the relief from stay permitted Bel-Bel to pursue only its fraud claim. Second,
the Torcises argue that Bel-Bel was not entitled to any interest on this claim that accrued after
they filed for bankruptcy.
The bankruptcy court’s order granting relief from stay concluded, without exception, that
Bel-Bel’s suit in district court should proceed. This suit included Bel-Bel’s contractual claim
against the Torcises for repayment of the note. We therefore hold that the district court did not
err in entertaining this claim. In addition, Bel-Bel, as a secured creditor, was entitled to post-
petition interest on its claim. See 11 U.S.C. § 506(b); Orix Credit Alliance, Inc. v. Delta
Resources, Inc. (In re Delta Resources, Inc.), 54 F.3d 722, 727 (11th Cir. 1995). The district
court therefore properly held the Torcises liable for interest that accrued on their debt after they
filed their bankruptcy petition.
19
The joint and several liability results from the district court’s holding that the
defendants were liable for conspiracy to commit the alleged torts. This holding is not
challenged.
14
Joe Torcise also challenges the district court’s holding that he is liable for fraudulent
inducement.20 The relief granted on this claim, however, was the same as that for the contractual
claim – $2.5 million plus interest. Fraudulent inducement thus operated as an alternative
holding; having affirmed on the primary holding (the contractual claim), we do not need to
address the alternative legal theory on which the district court granted relief.
VI.
Growers Packing Company was held to be part of the conspiracy to convert funds
belonging to Bel-Bel, see supra note 11, and was therefore held jointly and severally liable for
the $2.5 million note, plus interest. In response, Growers Packing argues that Bel-Bel was not
granted relief from the automatic stay against litigation as to Growers Packing, and thus any
judgment against it is void.
Growers Packing raised this issue for the first time after the district court issued its
“findings of fact and conclusions of law,” but before the district court issued a final judgment.
The final judgment was issued without reference to Growers Packing, but the district court
withheld jurisdiction to determine whether Growers Packing should be added to the judgment.
20
The district court found that Torcise had misled Bel-Bel as to the status of its collateral
(the Homestead tomato crop) by claiming in the loan documents that the collateral was
unencumbered, when it had in fact been pledged to Community Bank as security for the $4.3
million note to cover Torcise’s overdrafts. The district court also found that this
misrepresentation had induced Bel-Bel to make the loan.
15
Bel-Bel then filed a motion to amend the judgment to include Growers Packing; the motion was
granted.21
We review the grant of a motion to amend a final judgment for an abuse of discretion.
See Barnes v. Southwest Forest Indus., Inc., 814 F.2d 607, 611 (11th Cir. 1987). We find no such
abuse here. Growers Packing was a party to this action when the motion for relief from stay was
before the bankruptcy court. Growers Packing was also a party to the jointly-administered
bankruptcy actions. The stay order did not omit Growers Packing when declaring that Bel-Bel’s
district court litigation would be permitted to proceed. It was therefore reasonable for the district
court to conclude that Growers Packing was included in the relief from stay order, and that
judgment against Growers Packing was therefore appropriate.
VII.
Bel-Bel cross-appeals the denial of a motion to amend its complaint to add an allegation
of civil theft. The amendment of pleadings is left to the discretion of the trial court. See
21
The issue of whether Growers Packing was included in the relief from the automatic
stay should have been raised in a motion to amend Growers Packing’s answer, not in a motion to
amend the judgment. If Bel-Bel was not in fact granted relief from the automatic stay as to
Growers Packing, then Bel-Bel violated the stay by filing a lawsuit against Growers Packing.
Such a violation would be an affirmative defense for Growers Packing. See, e.g., Barr v.
Overmyer (In re Overmyer), 121 B.R. 272, 275-76 (Bankr. S.D.N.Y. 1990); Redmond v.
Redmond,
718 A.2d 668, 676 (Md. Ct. Spec. App. 1998). Growers Packing did not, however,
assert this affirmative defense in its answer. Thus, the proper course for the district court to have
taken would have been to recognize Growers Packing’s argument as an attempt to amend its
answer. Such an attempt might have been denied as untimely. If the motion had been granted,
but followed by a rejection of the argument on the merits, we would be presented with a question
of law (the interpretation of the bankruptcy court’s relief from stay order) that we would review
de novo. Our conclusion would nevertheless be the same – that Growers Packing was included
in the relief from stay, and therefore the district court was correct in permitting Bel-Bel’s claims
against Growers Packing to proceed. Thus, the district court’s procedural error was harmless.
16
Technical Resource Servs., Inc. v. Dornier Med. Sys., Inc., 134 F.3d 1458, 1463-64 (11th Cir.
1998). In this case, the district court found that the proposed amendment was untimely and
redundant. In light of the numerous counts alleged in the complaint and the fact that the motion
to amend came several years after the initial complaint was filed, the district court’s finding did
not constitute an abuse of discretion.
Bel-Bel also appeals the calculation of interest on the amended final judgment.22 The
amended final judgment stated that prejudgment interest would run through August 30, 1995 (the
date on which the district court issued its “findings of fact and conclusions of law”), and that
postjudgment interest would begin accruing as of the date of the amended final judgment (April
16, 1996). This resulted in a gap of nearly eight months for which Bel-Bel was awarded neither
prejudgment nor postjudgment interest.
A prevailing party is entitled, under Florida law, to prejudgment interest. See Argonaut
Ins. Co. v. May Plumbing Co., 474 So. 2d 212, 214-15 (Fla. 1985). Prejudgment interest is, by
definition, interest that accrues until judgment is rendered. Because final judgment was not
rendered in this case until April 16, 1996, Bel-Bel was entitled to prejudgment interest at the
statutory rate that had accrued until that date.
The defendants argue that Bel-Bel waived this objection to the amended final judgment
by not raising it in the district court. We disagree. Bel-Bel properly raised the issue of interest
22
There were two “final” judgments in this case – the “final judgment” and the “amended
final judgment.” The amended final judgment disposed of certain motions that were made after
the final judgment was entered.
17
simply by requesting it;23 Bel-Bel is now entitled to raise on appeal any errors concerning the
district court’s resolution of its request.
VIII.
We remand this case to the district court with instructions to provide for prejudgment
interest accruing until the date of the amended final judgment. In all other respects, the
judgment of the district court is AFFIRMED.
SO ORDERED.
23
Furthermore, Bel-Bel explicitly raised the issue of the appropriate dates for
prejudgment interest in its reply to the defendants’ post-trial motions.
18
