NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 12-2864
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In re: JEFFREY J. PROSSER,
Debtor
JAMES P. CARROLL, Chapter 7 Trustee of
the Bankruptcy Estate of Jeffrey J. Prosser
v.
DAWN PROSSER,
Appellant
_____________
On Appeal from the District Court
of the Virgin Islands
(D.C. Civil No. 3-08-cv-00147)
District Judge: Honorable Juan R. Sanchez
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Submitted Under Third Circuit L.A.R. 34.1(a)
April 24, 2013
Before: McKEE, Chief Judge, SCIRICA and VANASKIE, Circuit Judges.
(Filed: August 1, 2013)
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OPINION
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VANASKIE, Circuit Judge.
Appellant Dawn Prosser appeals from a judgment of the District Court entered
upon a jury verdict against her and in favor of James Carroll, the Chapter 7 Trustee of the
bankruptcy estate of Jeffrey J. Prosser. Appellant challenges the District Court’s denial
of her motions to dismiss and for judgment as a matter of law, argues the District Court
erroneously allowed recovery for transfers of property made more than two years before
the bankruptcy petition was filed, and that Trustee Carroll failed to prove the post-
petition transfers were out of the ordinary course of business. Finding no error, we will
affirm.
I.
Because we write primarily for the parties, who are familiar with the background
of this case, we set forth only those facts necessary to our analysis. In January 2006, the
Delaware Chancery Court found Jeffrey Prosser, Appellant’s husband, jointly and
severally liable for $56,341,843 (“the Greenlight judgment”) for his fraudulent
acquisition of the outstanding public stock of the predecessor corporation to Innovative
Communication Corporation (“New ICC”). Mr. Prosser subsequently filed a Chapter 11
bankruptcy petition. The Bankruptcy Court later converted the case from Chapter 11 to
Chapter 7 and appointed James Carroll as the Chapter 7 Trustee for Prosser’s estate.
From the time the lawsuits that culminated in the Greenlight judgment were
pending until after he filed his bankruptcy petition, Mr. Prosser acquired and transferred
millions of dollars of real and personal property to Appellant, including collections of
artwork, expensive cigars, fine wine, and valuable jewelry. During this period, Mr.
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Prosser also made millions of dollars of improvements to the couple’s main residence, the
Estate Shoys. The couple maintained that Jeffrey Prosser gifted the property to
Appellant.
Seeking to recover the money they were awarded, the Greenlight judgment
creditors filed an involuntary Chapter 11 bankruptcy petition against New ICC. The
Chapter 11 trustee, later joined by Trustee Carroll, commenced proceedings against
members of the Prosser family in the Bankruptcy Court, seeking turnover of the property
Jeffrey Prosser had gifted to Appellant on the theory that there had been no legal transfer
of ownership (the “Turnover Action”). The trustees argued that, because Jeffrey Prosser
retained ownership, the property belonged to his bankruptcy estate.
After the Turnover Action was filed but before it was tried, Trustee Carroll filed a
complaint against Appellant in Bankruptcy Court, asserting that, to the extent that she
owned the gifted property, she acquired ownership through fraudulent transfers from her
husband which, the Trustee alleged, were designed to shield the substantial income the
husband was taking from New ICC (the “Fraudulent Transfer Action”). On December 5,
2008, Appellant successfully obtained a withdrawal of the reference to the Bankruptcy
Court, and the matter proceeded in the District Court.
On February 9, 2011, the Bankruptcy Court issued an order in the Turnover
Action, resolving Jeffrey Prosser’s and Appellant’s respective ownership of the contested
property. See In re Prosser, Nos. 06-30009, 07-30012, 2011 WL 576068 (Bankr. D. V.I.,
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Feb. 9, 2011). Based on its findings, the Bankruptcy Court ordered that all of Jeffrey
Prosser’s interest in the property be turned over to the estate. Id. at *53.
Subsequently, on May 23, 2011, Appellant filed a motion to dismiss the
Fraudulent Transfer Action, claiming that Carroll had already tried the fraudulent transfer
issues in the Turnover Action and was thus precluded from re-litigating them. The
District Court denied the motion.
On June 6, 2011, the parties tried the Fraudulent Transfer Action before a jury.
On June 8, 2011, Appellant moved to dismiss the action, arguing that the trustees did not
adduce proof of actual intent by Mr. Prosser to hinder, delay, or defraud creditors through
the transfer of assets. The District Court denied the motion, and the jury returned a
verdict finding that the transfers were fraudulent.
Appellant filed a post-verdict Rule 50(b) motion for judgment as a matter of law,
arguing Trustee Carroll failed to prove that the transfers were fraudulent because he did
not present sufficient evidence that Mr. Prosser owned the transferred assets, or that Mr.
Prosser was insolvent at the time of transfers. On June 6, 2012, the District Court denied
Appellant’s Rule 50(b) motion, holding that Appellant had waived the issues, and that,
even if she had preserved them, they nevertheless failed on the merits.
II.
The District Court had jurisdiction pursuant to 48 U.S.C. § 1612(a) and 28 U.S.C.
§ 1334, and we have appellate jurisdiction pursuant to 28 U.S.C. § 1291. Our review is
mixed: we review a district court’s legal conclusions de novo, and review a district
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court’s factual findings for clear error. United States v. Reynolds, 710 F.3d 498, 506 (3d
Cir. 2013).
A. The Motion to Dismiss
Appellant advances four theories in support of her argument that the District Court
erred in denying her pretrial motion to dismiss. Specifically, she asserts that this case is
barred by the doctrines of collateral estoppel, judicial estoppel, and election of remedies,
and that, by allowing Trustee Carroll to pursue relief under multiple statutes for the same
set of facts, the District Court rendered the statutes “redundant and superfluous.”
(Appellant’s Br. 58.) Her arguments under each theory lack merit.
First, as to her collateral estoppel theory, the District Court determined that the
Bankruptcy Court’s ruling in the Turnover Action had no preclusive effect on this case
because the elements of collateral estoppel were not met. Collateral estoppel bars re-
litigation of an issue where: “(1) the issue sought to be precluded [is] the same as that
involved in a prior action; (2) that issue [was] actually litigated; (3) it [was] determined to
be a final and valid judgment; and (4) the determination [was] essential to the prior
judgment.” Peloro v. United States, 488 F.3d 163, 174-75 (3d Cir. 2007) (internal
quotation omitted).
Appellant argues that the Turnover Action barred the Fraudulent Transfer Action
because both actions arose out of the same “nucleus of facts.” (Appellant’s Br. 22, 33.)
That assertion, however, is not germane to collateral estoppel analysis, which focuses not
on whether the facts underlying the cases are the same, but instead on whether the same
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issue has been conclusively determined in a prior decision. Here, the issues decided in
each case were different. Specifically, the issue decided by the Bankruptcy Court in the
Turnover Action was whether Jeffrey Prosser retained ownership of the property he
attempted to transfer to Appellant. To the extent it determined that Jeffrey Prosser
retained ownership interests in the property, the Bankruptcy Court required his interest to
be turned over to the bankruptcy estate. In contrast, the issue in this case was whether
Appellant’s ownership interests resulted from a fraudulent conveyance from Jeffrey
Prosser. Thus, although the same factual scenario gave rise to the two actions, the issues
decided in each were entirely distinct. Indeed, as the District Court observed in its denial
of Appellant’s motion to dismiss, the Turnover Opinion is replete with the Bankruptcy
Court’s explicit avoidance of any issue related to the alleged fraudulent nature of Jeffrey
Prosser’s transfers.1 We therefore reject Appellant’s argument that the Bankruptcy Court
analyzed the fraudulent nature of the transfers to her, and conclude that the District Court
correctly held that collateral estoppel did not preclude the Fraudulent Transfer Action.
We also reject Appellant’s second theory that Trustee Carroll is judicially
estopped from pursuing the Fraudulent Transfer Action. Judicial estoppel is an equitable
doctrine, which courts may apply at their discretion “to prevent a litigant from asserting a
1
See, e.g., In re Prosser, 2011 WL 576068, at *6 n.41 (“[T]his adversary
proceeding is not to determine whether property was fraudulently conveyed . . .”); id. at
*13 n.56 (“offer[ing] no opinion” on whether transfers to Dawn Prosser were fraudulent);
id. at *36 n.129 (“[This] turnover action is not appropriate for resolving . . . allegations
[of fraud]. The Chapter 11 Trustee has the opportunity to prove the propriety and alleged
fraudulent nature of the transfers in the fraudulent conveyance actions . . .”); id. at *52
(“This Opinion preserves and reserves all rulings regarding fraudulent conveyances.”).
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position inconsistent with one that she has previously asserted in the same or in a
previous proceeding.” Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d
355, 359 (3d Cir. 1996). However, judicial estoppel is “not intended to eliminate all
inconsistencies no matter how slight or inadvertent.” In re Kane, 628 F.3d 631, 638 (3d
Cir. 2010). Thus, we have held that a party’s purportedly inconsistent litigation positions
should be judicially estopped only if they meet the following criteria:
First, the party to be estopped must have taken two positions
that are irreconcilably inconsistent. Second, judicial estoppel
is unwarranted unless the party changed his or her position in
bad faith—i.e., with the intent to play fast and loose with the
court. Finally, a district court may not employ judicial
estoppel unless it is tailored to address the harm identified
and no lesser sanction would adequately remedy the damage
done by the litigant’s misconduct.
Id. (quoting Montrose Med. Grp. Participating Sav. Plan v. Bulger, 243 F.3d 773, 779
(3d Cir. 2001)).
Here, Trustee Carroll merely plead alternative theories in the Turnover and
Fraudulent Transfer Actions. Such alternative pleading, which is explicitly permitted by
Federal Rule of Civil Procedure 8(d), is not barred by judicial estoppel. See Chaveriat v.
Williams Pipe Line Co., 11 F.3d 1420, 1428 (7th Cir. 1993). Furthermore, the alternative
theories were not “irreconcilably inconsistent.” Kane, 628 F.3d at 638. Instead, they
allowed the estate to recover under one theory the property that belonged to Jeffrey
Prosser, and to recover under another theory the property that was in Appellant’s
possession by way of Jeffrey Prosser’s fraudulent transfers. Additionally, although
Trustee Carroll argued in the Turnover Action that Appellant did not own the transferred
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property, but later acknowledged her ownership in the Fraudulent Transfer Action, this
change in position was not made in bad faith. Instead, Trustee Carroll simply conceded
the Bankruptcy Court’s conclusions as to ownership, thereby ensuring that there was no
double recovery by the estate.2 Thus, neither of the first two elements of judicial estoppel
is met in this case. Accordingly, we find no error in the District Court’s denial of
Appellant’s motion to dismiss on the ground of judicial estoppel.
We likewise reject Appellant’s third theory premised upon the election of
remedies doctrine, which seeks to prevent a party from “occupy[ing] inconsistent
positions in relation to the facts which form the basis of his respective remedies.”
Abdallah v. Abdallah, 359 F.2d 170, 174 (3d Cir. 1966). As with judicial estoppel, the
election of remedies doctrine does not prevent a party from pleading in the alternative.
Furthermore, Trustee Carroll, along with the Bankruptcy and District Courts, took pains
to ensure that the theories advanced in each action did not result in a double recovery.
We therefore agree with the District Court that the election of remedies doctrine does not
bar the Fraudulent Conveyance Action.
2
Contrary to Appellant’s repeated suggestions, the bankruptcy estate was not
awarded a double recovery of the couple’s respective interests in the Estate Shoys. In the
Turnover Action, evidence that Jeffrey Prosser resided at the Estate Shoys and paid for
extensive improvements to the property was used to determine that he retained an
ownership interest in the property notwithstanding his representations that it was owned
solely by Appellant. As a result, the bankruptcy estate was awarded Jeffrey Prosser’s
50% interest in the Estate Shoys, which included his 50% interest in the improvements
made to the property. In the Fraudulent Transfer Action, Trustee Carroll sought and
recovered only Appellant’s 50% interest in the value of the improvements to the Estate
Shoys. Therefore, there was no double recovery.
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We also reject Appellant’s argument that, by permitting the trustees to pursue
relief against Jeffrey Prosser and Appellant under numerous statutes, the District Court
rendered the statutes “redundant and superfluous.” (Appellant’s Br. 58.) Congress chose
to authorize various types of relief for trustees seeking to recover assets for distribution to
creditors under the Bankruptcy Code. See, e.g., 11 U.S.C. §§ 542, 547, 548, 549, and
550. The fact that Jeffrey Prosser’s actions violated several provisions of the Bankruptcy
Code does not render those provisions superfluous.
C. The Motion for Judgment as a Matter of Law
In her motion pursuant to Federal Rule of Civil Procedure 50(b), Appellant argued
that Trustee Carroll failed to prove that Jeffrey Prosser owned the property he transferred
and that Jeffrey Prosser was insolvent. The District Court held that Appellant waived
these arguments. We agree.
A party may move for judgment as a matter of law “at any time before the case is
submitted to the jury.” Fed. R. Civ. P. 50(a)(2) (emphasis added). If the court denies the
pre-verdict motion, the movant may renew her motion within twenty-eight days after the
entry of judgment. Fed. R. Civ. P. 50(b). “Since the post-submission motion is nothing
more than a renewal of the earlier motion,” however, the party may not raise any new
issue that she did not raise in her pre-verdict motion. 9B Charles Wright & Arthur
Miller, Federal Practice & Procedure § 2537 (3d ed. 2013); see also Chemical Leaman
Tank Lines, Inc. v. Aetna Cas. & Sur. Co., 89 F.3d 976, 993 (3d Cir. 1996).
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Appellant’s pre-verdict motion failed to assert either of the grounds raised in her
renewed motion. Specifically, the pre-verdict Rule 50 motion did not argue that Trustee
Carroll failed to prove that Jeffrey Prosser owned the property he transferred to her.
Instead, Appellant argued only that Jeffrey Prosser did not have the requisite intent to
hinder, delay, or defraud his creditors. Thus, the District Court did not err in finding she
waived the ownership argument.
Appellant’s argument that Trustee Carroll failed to prove her husband was
insolvent is similarly waived, because her pre-verdict motion raised only New ICC’s
solvency. Appellant argues her husband’s solvency was dependent on the solvency of
New ICC, but Rule 50(a) requires a motion to “specify the judgment sought and the law
and facts that entitle the movant to judgment.” Fed. R. Civ. P. 50(a)(2). Thus, even if
New ICC’s solvency was relevant to Jeffrey Prosser’s personal solvency, or vice versa,
we read Rule 50 as requiring a higher degree of specificity. Cf. In re Ins. Brokerage
Antitrust Litig., 579 F.3d 241, 262 (3d Cir. 2009) (observing, in waiver context, that a
“fleeting reference or vague allusion to an issue” is insufficient to preserve it for appeal).
Furthermore, as the District Court extensively discussed in its Memorandum denying
Appellant’s post-submission motion to dismiss, insolvency is not a necessary element of
the fraudulent transfer claims. Carroll v. Prosser, Civil Action No. 08-147, 2012 WL
2053868, at *3 (D.V.I. June 6, 2012). Thus, even if Appellant had not waived her
argument that Trustee Carroll failed to prove her husband’s insolvency, it would
nevertheless fail as a matter of law.
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D. Issues Raised for the First Time on Appeal
Finally, Appellant argues that the District Court erred as a matter of law by
awarding recovery for transfers made by Jeffrey Prosser more than two years before he
filed the voluntary Chapter 11 petition, and that Trustee Carroll failed to prove that
Jeffrey Prosser’s post-petition transfers were not made “in the ordinary course” of
business. She failed, however, to raise either issue before the District Court. We need
not consider issues that are raised for the first time on appeal absent “exceptional
circumstances.” In re Ins. Brokerage Antitrust Litig., 579 F.3d at 261. Appellant cannot
identify a single instance in the record where she preserved either issue for appellate
review. Thus, they are waived.
III.
For the foregoing reasons, we will affirm the judgment of the District Court.
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