Phillips v. Epic Aviation, LLC (234 F. Supp. 3d 1174, 2017)

OPINION AND ORDER

JOHN E. STEELE, SENIOR UNITED STATES DISTRICT JUDGE

This matter came before the Court on December 15 through 18, 2015, for a bench trial of plaintiffs’ Third Amended Complaint (Doc. # 58). The Court heard testimony from plaintiffs Bonita B. Phillips and Jeffrey S. Phillips; James E. Green, Jr., the Chief Financial Officer (CFO) and Senior Vice President of defendant Epic Aviation, LLC; Marsha Griffin Rydberg and David Boyette, two expert witnesses; real estate attorneys Douglas A. Wood .and Gary K. Wilson; real estate agents Karen Van Arsdale and Susan M. Weidlich; real estate appraiser Hallas Neal Scott; and United States Trustee Diane Jensen (Trustee or the Trustee). (Docs. ## 141— 144.) Various exhibits were admitted as evidence, and the Court took judicial notice of certain bankruptcy and district court cases. (Does. ,## 103, 109.) Both sides filed trial briefs (Docs. ## 139, 140), and defendant filed a Post-trial Memorandum (Doc. # 154). The Court heard closing arguments from counsel on January 15, 2016. (Doc. # 155.)

Pursuant to the Revised. Joint Pre-Trial Statement (Doc. # 138, ¶ 2), plaintiffs have withdrawn the quiet title claim in Count II because the real property at issue was sold on November 2, 2015. Plaintiffs confirmed at the beginning of the-bench trial that this count was to be dismissed with prejudice, and defendant concurred. Accordingly, Count II is dismissed with prejudice.

The remaining claim, Count I of the Third Amended Complaint (Doc. # 58), is an action for slander of title based upon the wrongful filing of a lis pendens and two notices of appeal in the Official Records of Collier County, Florida. (Doc. # 58, ¶¶ 51, 55.) Plaintiffs assert that the Official Records filings were intentional and wrongful; that these documents published and communicated to third parties false assertions that Epic Aviation had some, interest or rights in plaintiffs’ primary residence (the Property) when it never had any such interest or right (id. at ¶ 54); that the filed documents impaired the ven-dibility of the Property, and the false statements contained in the lis pendens played a material and substantial part in inducing others not to deal with plaintiffs (id. at ¶ 56); that the filed documents thwarted plaintiffs’ ability to close the sale of the Property under written contracts, and have further thwarted their diligent attempts to re-contract the Property since January, 2013 (id. at ¶ 57); that Epic Aviation had actual knowledge of the wrongfulness of its conduct and the high probability that injury or damage to plaintiffs would result, but intentionally pursued its course of conduct, resulting in injury or damage (id. at ¶ 58); that Epic Aviation knew or should have known that the publication of the falsehoods would likely result in inducing others not to deal with plaintiffs (id.); that plaintiffs have been damaged by defendant’s conduct and are entitled to compensatory damages, consequential damages, punitive damages, and attorney fees (id at ¶ 59); and that these damages were proximately caused as a result of the published falsehoods (id.).

Along with key factual denials, Epic Aviation raised four affirmative defenses: (1) the slander of title claim is barred by the Florida litigation privilege; (2) plaintiffs have waived the slander of title claim; (3) plaintiffs had elected a different remedy; and (4) the slander of title claim is barred by the Florida appellate litigation privilege. (Doc. # 68, pp. 8-9.)

The Court makes the findings of fact and conclusions of law set forth below.

I. Findings of Fact

A, State of Oregon Judgment Against Jeffrey Scott Phillips

In 2004, Epic Aviation, LLC (Epic Aviation) sued Jeffrey Scott Phillips (Scott Phillips or Mr. Phillips) individually in Oregon state court based upon a guarantee he had signed relating to the purchase of aviation fuel. The Oregon state court granted Epic Aviation’s Motion for Summary Judgment on June 24, 2004, and a General Judgment and Money Award were filed on July 26, 2004, awarding Epic Aviation the principal amount of $322,603.30, plus late charges until fully paid. Plaintiffs’ Exhibit 1. On September 24, 2004, Epic Aviation domesticated the Oregon state judgment in Florida by filing a copy of the judgment in the Official Records of Collier County, Florida, along with a certification and an affidavit. Id See Florida Enforcement of Foreign Judgments Act, Fla. Stat. §§ 55.501-55.509. Bonita B. Phillips (Bonnie Phillips or Mrs. Phillips), Scott Phillips’ wife, was not a party to the Oregon lawsuit or the resulting Judgment. Epic Aviation’s CFO testified at trial that Mr. Phillips has never paid anything on this judgment, and that Epic Aviation has expended well in excess of $100,000 in attorney fees on Mr. Phillips’ litigation file.

There is no assertion by plaintiffs that the recording of this money judgment as part of the enforcement process was wrongful or constituted a slander of title to any of their property. The recording of the money judgment in this context was clearly privileged, and indeed required by statute.

B. Purchase of Green Dolphin Lane Property

On February 28, 2005, Mr. and Mrs. Phillips (collectively plaintiffs or Debtors) purchased a primary residence on .68 acres of land located at 3060 Green Dolphin Lane, Naples Florida (the Property) for approximately $6 million. Plaintiffs’ Exhibit 28, Exh. A; Defendant’s Exhibit 91, p. 9. Plaintiffs’ financing included a first mortgage of $1,175 million and a second mortgage of $500,000 on the Property. Defendant’s Exhibit 91, pp. 10-11. Debtors proceeded to spend a little over $1 million on renovations to the Property. Id. at p. 9. Plaintiffs owned the Property as tenants by the entireties from its purchase until it was sold on November 2, 2015. (Doc. # 138, ¶ 9(1).) Because of its ownership by the entireties, Epic Aviation’s domesticated Oregon money judgment against Mr. Phillips never attached to the Property.

C. Chapter 7 Bankruptcy Proceedings, 2007 to Early 2012

On October 18, 2006, Bonnie Phillips filed a Voluntary Petition under Chapter 7 of the Bankruptcy Code in the Fort Myers Division of the Middle District of Florida. Court’s Exhibit A; Case No. 9:06-bk-05685-FMD. Epic Aviation was not a creditor of Mrs. Phillips, and did not file a Proof of Claim in her bankruptcy case.

On December 29, 2006, Scott Phillips filed his own Chapter 7 Voluntary Petition in the Fort Myers Division of the Middle District of Florida. Court’s Exhibit B; Case No. 9:06-bk-07489-FMD; Defendant’s Exhibit 127, p. 2. Epic Aviation filed a Proof of Claim based upon the domesticated Oregon money judgment, Defendant’s Exhibit 127, p. 3, which constituted about 7% of the claims against Mr. Phillips. Plaintiffs’ Exhibit 39, p. 4. According to Epic Aviation’s CFO’s trial testimony, Epic Aviation is a company with approximately 95 employees and sales of over $500 million in the previous year.

The bankruptcy cases were jointly administered, but not consolidated, in Bankruptcy Court (Doc. # 138, ¶ 9(3)), and the same Trustee, Diane Jensen, was appointed in both cases. According to the Trustee, Debtors claimed about $1 million owed to joint creditors, and each claimed a homestead exemption for the Property and exemption for property owned by the entire-ties. Court’s Exhibits A, B.

(1) Trustee’s Objections to Exemptions

On March 7, 2007, the Trustee filed Objections to Exemptions as to Mrs. Phillips. Plaintiffs’ Exhibit 28, Exh. A. As to the claimed homestead exemption, the Trustee objected that the acreage exceeded the Florida constitutional limit of .5 acres; that the exemption amount must be reduced by those improvements made within ten years and with intent to hinder, delay or defraud creditors; that the exemption was limited to $125,000 because the Property was purchased within 1,215 days of the filing of the bankruptcy petition; and that Debtor could not claim the benefits of 11 U.S.C. § 522(p)(2)(B) for various reasons relating to the sources of the funds used to purchase the Property. Id. The Trustee also objected to any property claimed to be exempt as property owned by the entireties, including the primary residence, but this objection only related to joint debts. Id The Trustee testified at trial that a trustee may only reach a tenancy by entireties property to the extent the Debtors’ obligations are owed to joint creditors.

On April 16, 2007, the Trustee filed similar objections to the claimed exemptions of Mr. Phillips. Defendant’s Exhibit 186, ¶ 6; Court’s Exhibit C.

(2) 2007 Mediated Settlement Agreement

In May 2007, the Trustee sought and was granted permission from the Bankruptcy Court to mediate her objections with the Debtors. Court’s Exhibit D, A two-page Mediated Settlement Agreement between the. Trustee ancj Debtors dated May 14, 200.7 (the Settlement Agreement), Defendant’s Exhibit 69, resolved “all matters and disputes between” the Trustee and the Debtors, including the Trustee’s prior objections to Debtors’ claimed exemptions. The relevant terms and conditions were: (1) the Trustee would be paid $825,000 from the sale of Debtors’ home at 3060 Green Dolphin Lane, Naples, Florida; (2) upon payment, the Trustee and the Debtors' would exchange mutual general releases; :(3) the Property would “be put on the market promptly and the Debtors will keep the Trustee advised of the status of the sale and of any offers received;” (4) the Trustee would be given a lien on the Property, subordinate to two mortgages and real estate taxes, and was given permission to file the Bankruptcy Court’s approval order in the public records; (5) the intentional failure of Debtors to pay the Trustee the , $825,000 would constitute a breach of the Settlement Agreement, which “shall be grounds for revocation of the Debtors’ discharge;” and (6) the Trustee’s lien on the Property was the property of the estate and protected by the automatic stay until paid in full. Id.

.The Settlement Agreement did not provide any deadlines for the sale of the Property or,the payment of the money to the Trustee, and did not set a price at which the Property would be offered for sale. Epic Aviation was not a party to the Settlement Agreement and did not participate in its negotiation, although it was consulted by the Trustee as to one alternative provision of the Settlement Agreement.

The Trustee testified at trial that if Debtors breached the Settlement Agreement, the Trustee’s best case recovery would be to seek the $825,000 and to seek denial of the bankruptcy discharge of Debtors, or perhaps to seek enforcement of the Trustee’s objections to the claimed exemptions. In either event, there was no way the Trustee or any other creditor could reach tenancy by entireties property to satisfy the Epic Aviation domesticated money judgment. Even if the Property was not exempt under the bankruptcy provisions, and Debtors were denied a bankruptcy discharge, the, Property was still tenancy by entireties property which could not be reached by a creditor of only one of its two owners.

On May 24, 2007, the Debtors and the Trustee filed a Joint Motion for Authority to Compromise Controversies Between Diane Jensen, The Chapter 7 Trustee, and Bonita and Jeffrey Phillips. Defendant’s Exhibit 91, pp. 11-12; Defendant’s Exhibit 178; Defendant’s Exhibit 186, ¶ 10. This joint motion summarized the -terms of the Settlement Agreement and explained why the compromise settlement was in the best interests of the parties.

On June 18, 2007, Epic Aviation filed an Objection to the Joint Motion for Authority to Compromise Controversies. .Court’s Exhibit E. Epic Aviation asserted that the value of the Property may have been understated in the Joint Motion. Id.

At a September 5, 2007 hearing, the Trustee and Debtors’ bankruptcy counsel told the Bankruptcy Court that there was no time limit on the sale of the home because the real estate market was bad. Court’s Exhibit F, p. 5. The parties also told the Bankruptcy Court that the asking price would be $6 million, although they did not anticipate' actually getting that much. Id., pp. 5-6. Epic Aviation withdrew its Objection to the joint motion to compromise at the hearing. Plaintiffs’ Exhibit 2, p. 1.

On October 9, 2007, the Bankruptcy Court issued an Order Approving Joint Motion for Authority to Compromise Controversies Between Diane Jensen, The Chapter 7 Trustee and Bonita and Jeffrey Phillips. Plaintiffs’ Exhibit 2; Defendant’s Exhibit 178 (the Settlement Agreement Approval Order). In relevant part, the Settlement Agreement Approval Order granted the joint motion, approved the compromise Settlement Agreement, directed payment of $82S,000 to the Trustee from the sale of the Property, and granted the Trustee a lien against the Property to secure Debtors’ obligations under the Settlement Agreement, subordinate to two specified mortgages and any real estate taxes. Id. at ¶¶ 1-4. The Settlement Agreement Approval Order also authorized and directed the parties to take all steps necessary to effectuate and consummate the settlement, including that the Debtors “shall” place the home on the market for sale and continue to make the mortgage payments on the Property. Id. at ¶ 5. The Settlement Agreement Approval Order further provided that the intentional failure of Debtors to pay the Trustee the $825,000 “shall constitute a breach of the compromise and shall be grounds for the revocation of the Debtors’ discharge.” Id. at ¶ 7. Like the Settlement Agreement, the Settlement Agreement Approval Order did not set forth any restriction on the timing or price for the sale of the home. The validity of the Settlement Agreement and the Settlement Agreement Approval Order has never been challenged. As discussed below, however, on October 12, 2012, approximately five years later, Epic Aviation would attempt to resurrect the Trustee’s objections and assert them as its own. Plaintiffs’ Exhibit 28.

On October 25,2007, the Trustee recorded a copy of the Settlement Agreement Approval Order in the Official Records of Collier County, Florida. Plaintiffs’ Exhibit 2. This constituted public notice of the Trustee’s lien on the Property and of the bankruptcy cases. Regions Bank v. Deluca, 97 So.3d 879, 885 (Fla. 2d DCA 2012) (recording in Official Records constitutes notice of both the existence of the instrument recorded and its contents).

Mrs. Phillips obtained a discharge in her Chapter 7 bankruptcy case on November 7, 2007. Court’s Exhibit G; Defendant’s Exhibit' 127, p. 2.

(3) Property Fails to Sell, 2007-2010; Epic Aviation Writes Off Judgment

As required by the Settlement Agreement, Debtors placed the Property on the market for sale, and kept it on the market during this relevant time period. Defendant’s Exhibit 69. Debtors’ initial listed asking price was $6,295 million. Defendant’s Exhibit 186, ¶ 11. From 2007 to 2015, the Property was most often listed for sale with Karen Van Arsdale (Ms. Van Arsdale), a real estate broker with Premier Southby’s in Naples, Florida. For the three years after the Settlement Agreement, the Property did not sell.

In August 2009, Epic Aviation wrote off the balance of the amount due from Jeffrey Phillips on its domesticated Oregon money judgment. Plaintiffs Exhibit 43A, p. 954.

On March 25, 2010, Debtors’ bankruptcy counsel inquired of the Trustee whether, in light of the downturn in the real estate market and Debtors inability to sell the house, there was a discounted cash number which would settle the matter. Defendant’s Exhibit 121. The Trustee responded she was not inclined to take a discount, and suggested the Debtors lower the asking price, then at $4.5 million, to $3 million. Id. The Trustee arrived at this proposed price based upon informal information provided by Scott Henderson, a Naples, Florida real estate agent she had used in the past. Defendant’s Exhibit 117. Debtors declined to reduce the price, and the Property remained on the market without being sold. Ms. Van Arsdale testified that the various asking prices were set at market price and were fair prices, and that she did everything in her power to close contracts she obtained for Debtors.

On September 29, 2010, a frustrated Trustee filed the Chapter 7 Trustee’s Motion to Compel Compliance with Settlement, Defendant’s Exhibit 186, seeking to compel Debtors to reduce the asking price of the Property. The Trustee argued that the Settlement Agreement’s requirement to place the Property on the market implicitly included the obligation of a realistic asking price. The Trustee conceded that the house had been on the market continuously, and that the original asking price of $6,295 million had been reduced to the current $4.5 million asking price. Defendant’s Exhibit 186, ¶ 11. Despite these reductions, the Trustee asserted that Debtors “appear to be acting in bad faith in their attempts to market and sell the Home” because the asking price was significantly inflated. Id. at ¶ 16.

Later, on September 29, 2010, Debtors’ ■bankruptcy counsel sent an email to the Trustee’s counsel noting the recent filing of the motion to enforce. Defendant’s Exhibit 122. After some brief observations about the merits, Debtors’ bankruptcy counsel offered $150,000 to settle the case. Id.

In an October 29, 2010, hearing before the bankruptcy judge, the Trustee admitted that she did not have sufficient information to determine if the asking price was inflated or achievable, Court’s Exhibit H, p. 4, but requested an evidentiary hearing to determine whether Debtors were marketing the Property in good faith, id., p. 6. On November 14, 2010, the Bankruptcy Court denied the motion without prejudice to the initiation by the Trustee of an adversary proceeding. Defendant’s Exhibit 187. The Trustee did not file such an adversary proceeding because she questioned whether she could be successful. The Property continued to be on the market at the $4.5 million asking price.

(4) Mr. Phillips Denied Bankruptcy Discharge

In 2007, Epic Aviation filed a multi-count Complaint in an adversary proceeding objecting to Mr. Phillips’ discharge. See 9:07-ap-00181-ALP, On August 10, 2009, after an evidentiary hearing, the Bankruptcy Court published a decision denying Mr. Phillips a Chapter 7 discharge under 11 U.S.C. § 727(a)(4)(A) for making false oaths in connection with the official schedules' and statement of financial affairs in his bankruptcy case. In re Phillips, 418 B.R. 445 (Bankr. M.D. Fla. 2009). Final Judgment was entered the same day. Defendant’s Exhibit 126.

Mr. Phillips filed an appeal to the District Court. The Bankruptcy Court’s decision was affirmed by the undersigned in a March 29, 2011 Opinion and Order as to three of the five false oaths found by the Bankruptcy Court. Defendant’s Exhibit 127; In re Phillips, NO. 2:10-cv-212-FTM-29, 2011 WL 1196427 (M.D. Fla. Mar. 29, 2011).

While Mr. Phillips’ appeal to the Eleventh Circuit Court of Appeals was pending, an exchange of emails occurred between September 16 and 19, 2011, discussing compromise of the Settlement Agreement. Defendant’s Exhibit 70. The Trustee offered to compromise the Settlement Agreement for $650,000, the Debtors countered at $400,000, and the Trustee stood firm at $650,000. Id.

The decision of the Bankruptcy Court was affirmed by the Eleventh Circuit Court of Appeals on April 2, 2012, as to the three false statements upheld by the District Court. Defendant’s Exhibit 128; In re Phillips, 476 Fed.Appx. 813 (11th Cir. 2012).

D. 2012 Efforts to Sell Property, Compromise Settlement Agreement, and Reach Entireties Property

By the Spring of 2012, the Property had been on the market for almost five years without selling, the Trustee suspected Debtors were not really trying to sell the Property, and Mr. Phillips’ denial of a discharge in bankruptcy had been affirmed by the Eleventh Circuit Court of Appeals. The parties then started to get more serious about resolving the matter, although with conflicting agendas. Most of the discussions did not occur between the bankruptcy principals themselves (the Trustee and the Debtors), but between and among multiple attorneys and their assistants, several real estate agents, and a title company and its employees and attorneys. Three chronologically overlapping themes emerge from the evidence: Debtors’ efforts to sell the Property; Debtors and the Trustee’s efforts to compromise the Settlement Agreement payoff amount; and Epic Aviation’s efforts to collect its domesticated Oregon money judgment by reaching the Property despite its tenancy by entire-ties ownership.

(1) Epic Aviation Aims For Entire-ties Property

From July 19, 2012, through October 31, 2014, Epic Aviation’s Collection Manager Greg J. Gettig (Mr. Gettig) contemporaneously prepared a series of Priority Credit Review Action List documents, Plaintiffs’ Exhibits 43A-X, which essentially constitute a running summary of events in connection with the Phillips “litigation account” for Epic Aviation management. Mr. Gettig was a credit manager for Epic Aviation for about 15 years before his recent retirement, and was responsible fpr the Phillips account file. Mr. Gettig reported to Mr. Green and others in Epic Aviation management on a regular basis. The thrust of these documents show that Epic Aviation, buoyed by its success in thwarting Mr. Phillips’ discharge in bankruptcy, was intent on reaching the entireties Property to satisfy its domesticated Oregon money judgment despite clear law and facts precluding it from doing so as either a judgment creditor or a bankruptcy creditor. ,

In the first Priority Credit Review Action List of record, on July 19, 2012, Mr. Gettig wrote that although the balances due to Epic Aviation were written off in 2009, Epic Aviation was “poised .. .to initiate steps to force sale of home which is in joint tenancy (with wife who is not part of our transaction) or direct settlement with Phillips to avoid sale.” Plaintiffs’ Exhibit 43A at p. 954. Mr. Gettig also wrote that “Epic will need to determine if Motion to Levy on Real Property, which Epic has Judgment lien on, and initiate foreclosure is the most cost effective method to protect its interest depending on the results of debtor exam findings.” Id.

(2) Debtors’ Undisclosed Sales Contract; Settlement Agreement Compromise Efforts; Title Issues

In July 2012, Debtors’ efforts to sell the Property, as required by the Settlement Agreement, finally bore fruit. On July 23, 2012, James Patrick Morrissy (Mr. Morris-sy) signed a Sales Contract and Addendum, Defendant’s Exhibit 24, to purchase the Property from Debtors for $4,325 million cash, with a deposit of $500,000, and a scheduled closing date of August 30, 2012. The Sales Contract required Debtors to provide “good and marketable” title, and was contingent upon an adequate appraisal and an engineer’s determination that the house would support a tile roof that Mr. Morrissy wanted to install. Id. Mr. Morris-sy was represented by real estate attorney Gary K. Wilson and his staff (generally referred to as Mr. Morrissy’s attorney or a similar phrase). Mr. Morrissy’s real estate agents were Susan Weidlich (Ms. Weidlich) and Chris Ryker (Ms. Ryker) (generally referred to as Mr. Morrissy’s real estate agents or other similar phrase).

The sales price which Mr. Morrissy agreed to pay was a reasonable one, and was greater than a retrospective appraisal of the Property performed by Epic Aviation’s appraiser. On June 1, 2015, appraiser Halas Neal Scott prepared an Appraisal of Real Property, Defendant’s Exhibit 64, which determined, based on the sales comparison approach, that the Property was valued at $4.25 million as of October 12, 2012.

Not coincidentally, late in the afternoon of July 23, 2012, Debtors’ bankruptcy counsel renewed his September 2011 offer to the Trustee’s counsel to compromise the Settlement Agreement for $400,000. Defendant’s Exhibit 70. Debtors’ bankruptcy counsel failed to disclose the existence of the Morrissy Sales Contract to the Trustee or her counsel. Debtors signed this Sales Contract on July 24, 2012. Defendant’s Exhibit 24. On July 25, 2012, Debtors raised their settlement offer to the Trustee to $500,000, Defendant’s Exhibit 70, which the Trustee accepted. The Morrissy Sales Contract was still not disclosed to the Trustee or her attorney, and the Trustee testified at trial that she would not have accepted this compromise if she had known about the Morrissy Sales Contract.

Effective July 26, 2012, Old Republic National Title Insurance Company (Old Republic, the Fund, or the Title Company) issued a title Commitment, Defendant’s Exhibit 1, for the Property and Mr. Mor-rissy. The Commitment contained a list of twenty requirements to be accomplished before a title insurance policy would issue, most of which were routine and easily accomplished. Id. Schedule B-l. Five of the requirements related to the pending bankruptcy cases (requirements 2, 9, 10, 11, 12). Id. Additionally, the requirements included obtaining a release of Epic Aviation’s domesticated 2004 Oregon judgment against Mr. Phillips (requirement 13). Id. As will be seen by correspondence, this last requirement was based upon the Title Company’s persistent but mistaken belief that Epic Aviation’s domesticated money judgment attached to the Property.

For the next several months, Debtors and Mr. Morrissy’s representatives worked on addressing title issues and closing the Sales Contract. Simultaneously, Debtors’ counsel and the Trustee’s counsel worked on a compromise of the amount required by the Settlement Agreement.

Having accepted Debtors’ $500,000 compromise offer, on July 31, 2012, the Trustee filed a Motion to Approve Compromise of Controversy Between Trustee and Jeffrey S, Phillips. Defendant’s Exhibit 71. The proposed compromise was the Debtors’ payment of $500,000 to the Trustee, with $262,500 (52.5%) being allocated to Mr. Phillips’ bankruptcy estate and $237,500 (47.5%) being allocated to Mrs. Phillips’ bankruptcy estate, and the Trustee’s release of all Debtors’ obligations under the Settlement Agreement. Id. at ¶ 15. The Trustee stated that this was in the best interest of the bankruptcy estate because the Property had remained unsold for so long and Mr. Phillips’ discharge in bankruptcy had been denied. Id. at ¶ 16. The Trustee also stated that the compromise would benefit the estate by eliminating the continued time for the sale and the risk that the Property would not be sold for an additional period of time. Id. at ¶ 17. Debtors had still not informed the Trustee of the signed Morrissy Sales Contract, and the Trustee remained unaware of the Mor-rissy Sales Contract. Additionally, there is no evidence that Epic Aviation knew of the existence of this Sales Contract.

While Bankruptcy Court approval of the proposed compromise of the Settlement Agreement was pending, the Debtors and Mr. Morrissy worked towards closing their Sales Contract. On August 8, 2012, counsel for Mr. Morrissy caused the title Commitment to be forwarded to Debtors’ real estate counsel so he could work on the various B-l requirements. Defendant’s Exhibit 132. On August 10, 2012, Mr. Mor-rissy’s counsel requested a summary and timetable of the steps Debtors’ counsel would be taking with regard to the Commitment requirements. Defendant’s Exhibit 134. Debtors’ bankruptcy counsel promptly responded that the Property was both TBE (tenancies by entireties) and. homesteaded, and was not part of the bankruptcy cases, except' that the Trustee had been granted a lien which would be released pursuant to a compromise. Id. Debtors’ bankruptcy counsel further stated that “[t]he Epic judgment does not attach to the property as it is both TBE and homestead.” Id. Debtors’ real estate attorney worked on getting the payoff amounts for the first and second mortgages. Defendant’s Exhibit 3.

Also on August 10, 2012, Epic Aviation’s Priority Credit Review Action List, Plaintiffs’ Exhibit 43B, repeated that Epic Aviation was “poised ... to initiate steps to force sale of home which is in joint tenancy (with wife who is not part of our transaction) or direct settlement with Phillips to avoid sale.” Id., p. 982. Mr. Gettig also repeated that “Epic will need to determine if Motion to Levy on Real Property, which Epic has Judgment lien on, and initiate foreclosure is the most cost effective method to protect its interest depending on the results of debtor exam findings.” Id. There was no indication that Epic Aviation knew of the pending Morrissy Sales Contract at the time.

Despite the clearly correct proposition that Epic Aviation’s domesticated money judgment did not attach to the Property, the Title Company had its own ideas of what it wanted in order to issue a title insurance policy. On August 14, 2012,. Mr. Morrissy’s counsel responded to Debtors’ bankruptcy counsel that the Title Company’s attorney wanted, among other things, an order from the bankruptcy court confirming that the Epic Aviation money judgment does not attach to the Property. Defendant’s Exhibits 134, 136. On August 16, 2012, work continued on the title requirements, with Debtors’ bankruptcy counsel handling some of the items. Defendant’s Exhibit 138. There was an. emphasis on the bankruptcy matters and the Epic Aviation judgment, which were viewed by Mr. Morrissy’s. attorney as title defects. Defendant’s Exhibit 139.

(3) Epic Aviation Objects To Proposed Settlement Agreement Compromise, Makes a CounterOffer, and Re-Records Its Money Judgment

Back in the Bankruptcy Court, on August 21, 2012, Epic Aviation became the only creditor to file an Objection To Motion to Approve Compromise of Controversy Between Trustee and Jeffrey S. Phillips. Court’s Exhibit I. Epic Aviation asserted that Debtors had failed to sell the Property for five years and had consistently priced it above fair market value in order to thwart their obligations under the Settlement Agreement. Based upon past misconduct by Mr. Phillips, which led to the denial of his bankruptcy discharge, Epic Aviation asserted that the Trustee should not discount the Settlement Agreement amount but should file an adversary complaint to revoke the discharge of Mrs. Phillips, and raise other challenges to Debtors’ claimed exemptions. Id. at ¶ 10.

On August 23, 2012, at 10:24 a.m., Epic Aviation re-recorded the General Judgment and Money Award in the Public Records of Collier County, Florida. Plaintiffs’ Exhibit 3. While the reason for the rerecording is not in the trial record, bankruptcy counsel for Epic Aviation informed the Court during closing arguments, in response to a question from the Court, that he had caused the re-recording because he had concerns over the legal sufficiency of the original recorded judgment.

In an August 23, 2012, 5:05 p.m. email, Mr. Morrissy’s attorney emailed Mr. Mor-rissy’s realtor summarizing his discussions that morning with Debtors’ bankruptcy counsel. Defendant’s Exhibit 161. The email provided that Debtors’ bankruptcy counsel had stated that Epic Aviation filed a motion at the last minute opposing the compromise settlement worked out with the Trustee; that Epic Aviation held a large judgment against Mr. Phillips; and that unless [Mr.] Phillips could work out a deal with Epic Aviation, there was a bankruptcy hearing scheduled for September 11, 2012. Id. Mr. Morrissy’s attorney stated that the appeal period for any resulting order was 14 days, and the earliest the closing could occur would be the end of September. Id Mr. Morrissy’s counsel further stated that he had told Debtors’ bankruptcy counsel that Mr. Morrissy was unlikely to grant an extension of the closing date, so it would be in the Debtors’ best interest to resolve the matter with Epic Aviation at the earliest possible date. Id. Mr. Morrissy’s counsel stated “[a]s an aside, we now believe the judgment does not attach to the property, since it is only against Scott Phillips and the property is owned by Scott and his wife as an estate by the entirety.” Id

(4) Debtors Vacate Property; Mor-rissy Sales Contract Terminated

Effective August 25, 2012, plaintiffs signed a two year lease to move into a residence on Silverleaf Lane, Naples, Florida. Defendant’s Exhibit 89. Plaintiffs moved out of the Property and into the new residence shortly thereafter. Mr. Phillips testified at trial that he and his wife were going to move out of the Property whether it sold to Mr. Morrissy or not.

On August 29 and 30, 2012, Mr. Phillips, Mrs. Phillips, and Mr. Morrissy signed a Termination of Sales Contract and Deposit Release and Directive. Defendant’s Exhibits 5, 142. The Sales Contract for the purchase of the Property was terminated and the deposit was directed to be returned. Defendant’s Exhibit 5. The signed Termination was emailed to Debtors’ real estate agent on August 30, 2012. Defendant’s Exhibit 4. Mr. Morrissy terminated the Sales Contract because he was not willing to wait for the bankruptcy case(s) to conclude, and felt he could not otherwise obtain marketable title and title insurance.

(5) Epic Aviation’s Continued Opposition to Compromise of Settlement Agreement and Continued Sights On Entireties Property

Although the Morrissy Sales Contract had now been terminated, there was still the matter of the Trustee’s proposed compromise of the Settlement Agreement pending in the Bankruptcy Court. On September 13, 2012, Epic Aviation’s bankruptcy counsel took Mr. Phillips’ deposition in connection with the Trustee’s Motion to Approve Compromise of Controversy Between Trustee and Jeffrey S. Phillips. Defendant’s Exhibit 91. When asked if he had “received any offers on the property?” Mr. Phillips replied “None. No. Nothing” except for “goofy”, “would-you-takes” offers. Defendant’s Exhibit 91, 18:12-19. In light of the formerly executed Morrissy Sales Contract, this was clearly a false representation intended, in the Court’s view, to further Debtors’ effort to compromise the $825,000 Settlement Agreement for $500,000 without full disclosure to the Trustee.

On September 14, 2012, Mr. Gettig wrote in his Priority Credit Review Action List that Mr. Phillips had testified at the deposition to the effect that “all assets owned are either in -wife Bonnie name (not Epic customer) or by Tenants in the Entirety.” Plaintiffs’ Exhibit 43C, p. 1071. Epic Aviation’s counsel was directed to initiate garnishment on accounts belonging to Scott Phillips. Id. Mr. Gettig also wrote that Epic Aviation, counsel for Mr. Phillips, the Trustee, and the Trustee’s counsel were having discussions “to consider Epic purchasing Trustee’s rights in the bankruptcy estate for an amount not determined as of this publication. The basis for Epic proceeding forward on purchasing Trustee’s interest in [sic] based on Epic’s success in blocking Scott Phillips’ discharge as well as based on the estimated equity in real property of $2MM in Naples, Florida.” Id.

(6) Proposed Compromise Morphs Into Auction

On September 18, 2012, the Bankruptcy Court held a hearing on the Trustee’s motion to approve the proposed compromise of the Settlement Agreement. Court’s Exhibit J. Epic Aviation offered to pay the Trustee $525,000 for the Trustee’s rights under the Settlement Agreement, and the Trustee orally requested a continuance of the hearing in order to allow the parties to reach a compromise agreement or have a public auction of the Trustee’s rights under the Settlement Agreement. Epic Aviation and Debtors agreed to the request.

Later that day, with the consent of the Debtors, the Trustee filed a Report and Notice of Intention to Sell Property of the Estate at Public Sale, Court’s Exhibit K, stating an intent to hold a public sale of all the Trustee’s rights and interests in and to the Settlement Agreement. This Notice stated that the “Price” was “Highest Bid” and the sale would be to the “Highest Bidder.” The “Terms” of the auction were: (1) The minimum bid would be $525,000.00, with 10% down and the balance to be paid within 48 hours of the conclusion of the telephonic auction; (2) all qualifying bids were to be received by the Trustee by 5 p.m. on September 27, 2012; (3) the telephonic auction would be conducted on September 28, 2012 at 2 p.m., if at least two qualifying written bids and deposits were received; (4) the balance of the high bid was due within 48 hours of the conclusion of the auction; (5) if the highest bidder failed to fulfill the auction terms, the Trustee “will sell the rights to the next highest bidder at the last bid price;” and (6) auction bids were to be in $25,000 increments, subject to the increments being lowered by the Trustee during the auction. Id.

(7) Debtors’ Continued Efforts to Sell Property to Morrissy and Continued Title Company Issues

With an auction of the Trustee’s rights under the Settlement Agreement on the near horizon, the Debtors continued their efforts to sell the Property. While the Morrissy Sales Contract had been terminated, there were still efforts to obtain a new contract and consummate a sale to Mr.. Morrissy. A series of pi-e-auction emails in mid-September 2012, show continued interest in selling the Property to Mr. Morrissy and continued Title Company issues based on the bankruptcy cases and the Epic Aviation money judgment.

In a September 18, 2012 email, Defendant’s Exhibit 144, the Morrissy’s real estate agent 'reported that a hearing had taken place and all except one item had been settled, which would be resolved by September 28, 2012. It was also indicated that the Debtors may re-enter into a purchase contract effective September 29, 2012, with a closing date of October 15, 2012. Mr. Morrissy wanted some concession for the delays and additional legal fees, and for Debtors to “make [him] an offer”, but the Debtors were “adamant” that they-would not entertain any contract except on the previously agreed terms.

In a September 25, -2012, 12:40 p.m. email, the Title Company’s underwriting counsel (Sun Mi Shin) advised Mr. Morris-sy’s attorney that she had reviewed the Bankruptcy Court pleadings and docket, and the Title Company could not make any requirements or decisions until after the anticipated September 28 auction of the Trustee’s rights and interest under the Settlement Agreement. Defendant’s Exhibit 147, p. 4. Underwriting counsel also noted that there was a hearing set for October 28 that could impact the Title Company’s ability to make any requirements on the commitment. Id. Underwriting counsel further stated that it was unclear why the seller believed other matters could be resolved by October 15, unless based on information not available through the Bankruptcy Court’s docket. Underwriting counsel requested any available additional information, noting “[a]s an aside, this is a complex, contentious and unusual BR case so we need to be cautious.” Id.

In a September 25, 2012, 2:48 p.m. email, Mr. Morrissy’s attorney responded to the Title Company’s underwriting counsel with questions about the purpose of the October 28 hearing, whether the Epic Aviation judgment had been dealt with, and whether the Title Company would accept an affidavit of continuous marriage. Id., p. 3.

In a September 25, 2012, 2:55 p.m. email, Mr. Morrissy’s attorney emailed the Debtors’ real estate attorney and their bankruptcy attorney, Defendant’s Exhibit 6, stating that the Title Company had the following concerns about the title and the bankruptcy cases: The Title Company would not make any decisions until after September 28, the date set for the auction of the Trustee’s rights and interest under the 2007 Settlement Agreement; there was a bankruptcy hearing set for October 28 for which the Title Company may have to wait; and October 15 had been mentioned as a proposed closing date, but the Title Company was unclear why this was possible given the Bankruptcy Court’s calendar. Id. Mr. Morrissy’s attorney requested additional information, and the status of the Epic Aviation judgment. Id.

Underwriting counsel responded in a September 25, 2012, 3:09 p.m. email to Mr. Morrissy’s attorney that the October 28 hearing was on Epic Aviation’s objection to the .Trustee’s motion to compromise the Settlement Agreement; that this may become moot depending, on the September 28 auction bid; and that the Epic Aviation judgment had not been dealt with, but “[i]t is still a requirement and we won’t rely upon a continuous marriage affidavit for that as we do not believe that it protection [sic] under the Federal BR rules.” Defendant’s Exhibit 147, p. 3.

On September 27, 2012, at 2:04 p.m., Mr. Morrissy’s counsel emailed both Debtors’ bankruptcy counsel and their real estate counsel, stating that the Epic Aviation judgment was still an issue according to the Title Company’s underwriting counsel, who had stated: “We believe that the BR court does not recognize T/E for purposes of avoiding judgments and therefore will not rely upon it for the Epic judgment. However, if the BR attorney can provide us with the legal basis to do so, we will review.” Defendant’s Exhibits 6, p. 1; 73, p. 4. Debtors’ real estate attorney responded the same day, expressing confusion: “I am confused, even if the bankruptcy court does not recognize T/E for purposes of avoiding judgment, that would only mean that the judgment is not discharged through bankruptcy. Even if that is the case, the judgment would still not attach to T/E property pursuant to Florida law. Am I missing something? May I speak with your underwriting counsel?” Defendant’s Exhibit 6, p. 1.

Various emails indicate that the various real estate professionals were confused about whether, and when, a sale would occur. Defendant’s Exhibits 6, 147, 148, 149.

(8) The September 28, 2012 Auction

The telephonic auction was conducted on September 28, 2012. Court’s Exhibit L. The bidding commenced at $525,000, and eventually Debtors bid $750,000. Id., pp. 3-4, 6. Epic Aviation then bid $825,000. Id., p. 7. Rather than exceed this bid, Debtors said they would stop bidding and just pay off the full original Settlement Agreement amount of $825,000. Id., p. 8. After some discussion off the record, the Trustee stated that if Mr. Phillips was willing to pay the $825,000 (less his previous deposit) within 48 hours, the Trustee would not sell her rights under the Settlement Agreement, but would accept Debtors’ full payoff of the Settlement Agreement. Epic Aviation objected, stating that Debtors no longer had a right to pay the Settlement Agreement amount after participating in the auction, and that Debtors did not win the auction because they were not the highest bidder. The Trustee gave Mr. Phillips until October 2,2012, to put the money into the Trustee’s trust account, where it would remain pending a hearing in the Bankruptcy Court to address Epic Aviation’s objection. Id., p. 14.

Mr, Green testified he believed that, at the time of the auction, Epic Aviation knew Debtors had an interested purchaser , and knew Debtors’ equity in the Property was in excess of $1 million. Mr. Green testified that Epic Aviation would not have tried to purchase the Trustee’s rights without that equity in the Property, but also stated that Epic Aviation believed there was other potential value in the Trustee’s Settlement Agreement rights. Mr. Green testified that Epic Aviation’s interest in trying to acquire the Trustee’s rights and responsibilities under the Settlement Agreement was twofold: (1) To investigate further challenges that the Trustee had outlined for her objection to the homestead exemption; and (2) to continue to seek opportunities for payments of amounts owed under the domesticated Oregon money judgment. Mr. Green testified that Epic Aviation believed there may have been an intentional failure to pay under the Settlement Agreement, which may have constituted a breach, and could result in a revocation of Mrs. Phillips'* discharge, affording Epic Aviation an opportunity to re-examine the homestead exemptions which were the foundation of the Settlement Agreement. Mr. Green testified that while the $825,000 lien on the Property was worth $825,000, the issue of the homestead exemptions were, in Epic Aviation’s view, potentially more valuable. The Trustee testified at trial that it was her understanding that Epic Aviation wanted to step into the Trustee’s shoes and assume her fiduciary duties to the other bankruptcy creditors.

Mr. Green also testified that during the auction process Epic Aviation engaged in settlement discussions with Debtors. He testified that at one point there was an offer by the Debtors to pay Epic Aviation $825,000 and to pay the Trustee $500,000, but the Trustee would not agree. Discussions went back and forth without success. The Court notes that the types of settlement discussions referred to by Mr. Green were not for the benefit of all creditors (despite Epic Aviation’s argument to the contrary), but were aimed at substantial recovery for Epic Aviation at the ultimate expense of the other creditors.

(9) Debtors’ Post-Auction Efforts to Sell Property

After the auction, Debtors’ representatives worked towards putting a deal together with Mr. Morrissy. In a September 28, 2012, 2:23 p.m. email, Debtors’ bankruptcy counsel advised Debtors’ real estate counsel and Mr. Morrissy’s counsel that the “auction” had just concluded, and Debtors had agreed to satisfy the $825,000 settlement amount to the Trustee, which would be accepted by the Trustee. Defendant’s Exhibit 73, p. 3. Debtors’ bankruptcy counsel requested that an immediate closing be scheduled and a form of release be provided for the Trustee. Id.

In an email later that day, Mr. Morris-sy’s attorney told Mr. Morrissy’s realtor that he would discuss the auction and the Epic Aviation judgment with the Title Company’s underwriting attorney the following Monday and hoped for something more definitive. Id., pp. 1-2. The Title Company was informed that the auction was completed, and later on September 28, 2012, requested more detailed information from Debtors’ attorneys. Defendant’s Exhibits 7, p. 2; 75, p. 1.

On the morning of October 2, 2012, Mr. Morrissy’s attorney sent an email to Mr. Morrissy’s real estate agent summarizing what had transpired at the auction and noting an upcoming bankruptcy court hearing on October 28. Defendant’s Exhibit 148. Mr. Morrissy’s Counsel concluded: “Given the contentious bankruptcy matter, the aggressive way Epic is pursuing Phillips, and the possibility Phillips may be unable to comply with the terms of the auction, there are many unanswered questions at this time. I cannot recommend that Mr. Morrissy enter into a contract until we get more definitive answers.” Id., p. 2.

(10) Debtors’ Request for Extension of Trustee’s Deadline; Debtors’ Disclosure of Interested Purchaser

Debtors did not provide the Trustee with the funds on the October 2, 2012, the deadline established by the Trustee. Instead, the Debtors filed an Emergency Motion for Enlargement of Time to Make Settlement Payment to the Trustee and for Order Authorizing the Sale of the Debtors’ Homestead Property. Plaintiffs’ Exhibit 25. In the Emergency Motion, the Debtors argued that the 48 hour payment deadline should not apply because they were fulfilling the Settlement Agreement, not complying with the auction terms. The Debtors stated that they had received a verbal offer to purchase the Property for $4.175 million, which was sufficient to pay all mortgages and the $825,000.00 to the Trustee, however “issues have arisen relating to Epic’s conduct during the auction and Epic’s judgment against Debtor, Jeffrey S. Phillips only.” Id., ¶6. Debtors stated that a 10% deposit had been wired and that they were prepared to immediately wire an additional $500,000 pending the closing of the sale, but that they did not believe that they should have to pay the full $825,000 “due to the unknown agenda of Epic.” Id., ¶ 8. Debtors indicated that the Trustee’s prior motion to compromise “has essentially [been] withdrawn” by the Trustee, Debtors were prepared to pay the full payoff amount in the original Settlement Agreement, and the reasons for an auction were no longer present. Id., ¶ 9. Debtors requested an unspecified amount of additional time to make full payment and for an order authorizing sale of the Property free and clear of any lien of Epic Aviation.

This October 2, 2012, motion by Debtors is the first disclosure to Epic Aviation, the Trustee, and the Bankruptcy Court of any current offer to purchase the Property. Despite the non-disclosure, by this time the Trustee was to get all she would ever be entitled to receive under the Settlement Agreement—the $825,000. The pending sale of the Property was consistent with the terms of the Settlement Agreement, although for significantly more than the $3 million the Trustee had recommended in late 2010.

Epic Aviation filed a written Response, Court’s Exhibit M, making a “limited objection” to the enlargement of time to make the settlement payment. Epic Aviation asserted that the Debtors were essentially conceding that their bid above $500,000 at the auction had been with money they simply did not have. Epic Aviation further argued that Debtors had not shown grounds for the Bankruptcy Court to award additional time to comply with their auction obligations. Id., ¶¶ 16-17.

(11) Debtors’ Continued Discussions Regarding Sale to Mr. Morrissy; Epic Aviation Requested to State Position on Whether Its Money Judgment Attached to the Property

While the motion for an extension was pending, Debtors continued their efforts to clear up title issues and sell the Property to Mr. Morrissy, despite his attorney’s stated reluctance.

In an October 3, 2012 9:55 a.m. email, Debtors’ bankruptcy counsel told Epic Aviation’s bankruptcy counsel that he needed to know if Epic Aviation was claiming any hen or interest in the jointly owned homestead property. Plaintiff’s Exhibit 49, p. 2. If not, counsel requested confirmation that Epic Aviation would provide a partial release of its judgment lien relating to the jointly owned homestead property so that a prompt closing could occur and Debtors could fully fund the settlement. Id.

Epic Aviation’s bankruptcy counsel responded later that morning as follows:

Releasing a lien implies that a lien has attached. Recording a judgment lien attaches only to interests for which the law provides a lien. If the title company believes the judgment lien attaches to the property at issue, please let us know.

As I mentioned last night, this is really a title company issue as they drive what is, or is not, “clear” title as it would be relevant to any proposed sale. They should be able to tell you that by now if you ordered a commitment; it’s a quick process.

Id., pp. 1-2. To this lawyerly but non-responsive answer, Debtors’ bankruptcy counsel promptly replied that they both knew it was not quite that simple, concluding that his question was “will Epic provide a partial release? Simple question.” Id., p. 1. Epic Aviation provided no response to this simple question, and the record does not reflect that Epic Aviation ever agreed to, or executed, any release.

In an October 3, 2013 1:15 p.m. email, Mr. Morrissy’s real estate agent advised the Debtors’ real estate agents that Mr. Morrissy was “unwilling to get tangled into a financial mess that appears to have more questions than answers.” Defendant’s Exhibit 149, p, 2. An October 5, 2012 10:28 a.m. email among the real estate professionals, however, stated that Mr. Morrissy was still interested in the Property “but will not move forward with it until the seller gets his issues cleared up.” Defendant’s Exhibit 149, p. 1. Reference was made to the October 28 Bankruptcy Court hearing, and a wait-and-see attitude was expressed. Id.

In an October 5, 2012 11:04 a.m. email, Debtor’s bankruptcy counsel asked Mr. Morrissy’s counsel if Mr. Morrissy would provide a written contract with an express contingency of court approval and a hard deadline to close with no deposit. Defendant’s Exhibits 7, p. 2; 75, p. 1. Debtors’ bankruptcy counsel said he would like to have the information for an upcoming bankruptcy court hearing. Id.

In an October 5, 2012 3:38 p.m. email response, Mr. Morrissy’s counsel advised Debtors’ counsel that Mr. Morrissy would not enter into a contract at the time. Defendant’s Exhibit 7, p. 1. He further stated that “[o]nce you resolve the BR and Epic related issues, please let me know and I will contact the Buyer to determine [if] he has any interest in the property at that time.” Id. Debtors’ bankruptcy counsel responded on October 8, 2012, that while he understood the response, he had made a representation to the Court that the client made a verbal offer to purchase the property, and if that was not the case he had to advise the court. Id.

(12) Bankruptcy Court Hearing; Order on Deadline Extension Request; Debtors’ Payment; Trustee’s Release

On October 9, 2012, the Bankruptcy Court conducted a hearing on Debtors’ motion requesting an extension of time to deposit their funds. Plaintiffs’ Exhibit 28, Exh. B. Debtors’ bankruptcy counsel summarized the events at the auction, and stated that because of Epic Aviation’s objection to the way the auction was concluded, the Trustee was not in a position to sign a release in exchange for the $325,000 remaining payoff amount. |d, pp. 4-11. Debtors’ bankruptcy counsel stated that he had the balance of the funds in his trust account ready to be paid to the Trustee, pending resolution of the Epic Aviation objection. Id, pp. 12-13,14.

Epic Aviation’s bankruptcy counsel argued that the terms of sale at the auction did not allow payment conditioned upon the sale of other property, and the Notice clearly required all monies to be paid within 48 hours. Id., pp. 19-20. Epic Aviation stated that it sent $825,000 to the Trustee, and it was willing and able to close as the highest bidder at the auction. Id, p. 20. Epic Aviation further argued that the auction was noticed as going to the highest bidder, and that the terms and conditions of the auction were violated when the auction was terminated by the Trustee’s decision to allow Debtors to pay their original obligation under the Settlement Agreement. Id., p. 21.

The Trustee’s position was that if the Debtors could fund the $825,000 within 48 hours of a Bankruptcy Court ruling, she would accept that as the highest and best offer at the auction. If the Debtors are unable to fund the $825,000, the Trustee would sell her rights to Epic Aviation as the second highest and best bid. The Trustee’s position was that she had the business judgment and discretion to decide the auction winner. Id., pp. 23-24.

Later on October 9, 2012, the Bankruptcy Court filed an Order on Debtors’ Emergency Motion for Enlargement of Time to Make Settlement Payment to the Trustee and For Order Authorizing Sale of the Debtors’ Homestead Property. Plaintiffs’ Exhibit 26; Defendant’s Exhibit 60. This Order adopted the oral findings and determinations made at the hearing, id., p. 2, in which the Bankruptcy Court found: Debtors’ motion was timely filed; the Trustee was in the best position to determine the highest and best bid at the auction; and if Epic Aviation was determined to be the winning bid, and the $825,000 was tendered by the Debtors, Epic Aviation would be obligated to accept the payment. Plaintiffs’ Exhibit 28, Exh. B, pp. 29-30. The Bankruptcy Court noted that the Settlement Agreement did not have a deadline for payment, did not provide for interest, and did not provide for anything other than that the Debtors would list the Property for sale. Id., pp. 33-34.

The Bankruptcy Court’s Order granted the emergency motion for enlargement of time “only to the extent that the Debtors seek additional time to fund the purchase price at the auction sale by- paying $825,000 in full satisfaction of the Settlement.” .Plaintiffs’ Exhibit 26, p. 2. The Debtors were directed to wire transfer the difference between the $825,000 bid and the previous deposit to the Trustee on or before 5:00 P.M., October 11, 2012. If the Debtors timely made this payment, (i) the Debtors would be deemed to be the successful bidder at the auction sale; (ii) the Settlement would be deemed paid in full, (iii) the Trustee would provide the Debtors a release and satisfaction of the lien created by recordation of the Settlement Order, and (iv) the Trustee would return all monies paid by Epic Aviation, LLC, in connection with the auction.' If the Debtors failed to pay the remaining funds'as provided, then (i) Epic Aviation, LLC, would be deemed the successful bidder at the auction/sale; (ii) the Trustee would assign all of her rights- under the Settlement to Epic Aviation, LLC, and (iii) the Trustee would return the deposit paid by the Debtors in connection with in the auction. Id. at pp. 2-3.

Debtors timely paid the remaining balance of the $825,000. On October 9, 2012, the Trustee executed a Satisfaction and Release of Lien and Interest (Satisfaction and Release) satisfying and releasing Debtors of any and all right, claim or interest held by the Trustee in connection with her Objection to Exemptions^ and the Order Approving Joint Motion for Authority to Compromise Controversies. Plaintiffs’ Exhibit 4. On October 10, 2012, at 10:16 a.m. Debtors recorded the Satisfaction and Release of Lien and Interest in the Collier County, Florida Official Records. Id.

On October 10, 2012 at 10:56 a.m., Debtors’ real estate counsel emailed Mr, Morrissy’s realtor a copy of the Trustee’s recorded Satisfaction and Release of Lien and Interest, and inquired- if Mr. Morris-sy was ready to go back into contract-and whether there were any other outstanding issues. Defendant’s Exhibits 9; 157, p. 3. Mr. Morrissy’s counsel forwarded .the Release to the Title Company’s underwriting counsel, noting that Debtors’ real estate attorney was still taking the position that Epic Aviation’s domesticated money judgment was not a lien on .the Property. Defendant’s Exhibit 157, pp. 2-3. Underwriting counsel responded that the Title Company still had an issue with the Epic Aviation judgment, and that its last communications related to a partial release to be signed by Epic Aviation and a request for some federal bankruptcy law from Debtors’ bankruptcy counsel. Id., p. 2.

(13) Epic Aviation Files Notice of Appeal; Post-Order Motion to Stay and Motion to Remove Judgment Lien

On October 10, 2012, Epic Aviation filed a Notice of Appeal of the Order on Debtors’ Emergency Motion for Enlargement of Time to Make Settlement Payment to the Trustee and For Order Authorizing Sale of the Debtors’ Homestead Property (the Auction Order Appeal). Plaintiffs’ Exhibit 5. This was an appeal to the District Court, sitting in an appellate capacity. Plaintiffs do not assert that the filing of this Notice of Appeal with the Bankruptcy Court constituted a slander of their title (only that the subsequent recording of the Notice of Appeal in the Official Records did so).

With the Bankruptcy Court having upheld the Trustee’s agreement to accept Debtors’ $825,000 as completion of their obligations under the Settlement Agreement, and an appeal of that order having been filed, the parties addressed two matters in post-order motions. Epic Aviation wanted to stay the sale of the Property while it pursued its appeal, and Debtors wanted to resolve any argument that Epic Aviation’s domesticated money was a lien which attached to the Property.

On October 10, 2012, Epic Aviation filed an Emergency Motion for Stay Pending Appeal, Court’s Exhibit N, with the Bankruptcy Court in order to prevent the sale of the Property. Epic Aviation asserted that if Debtors moved forward with their proposed sale of the Property it would be deprived of the rights it purchased from the Trustee, including its lien on Debtors’ property under the Settlement Agreement, and its right to relief on appeal. Id. Epic Aviation requested a