ATLANTA -- The U.S. 11th Circuit Court of Appeals has upheld a lower court ruling dismissing Rubin Schron from the wrongful death lawsuit filed by the estates of six deceased nursing home patients.

The case was heard by Circuit Judges Julie E. Carnes and Aldaberto Jordan and C. Roger Vinson, senior U. S. District Judge for the Northern District of Florida, sitting by designation.

U.S. 11th Circuit Court of Appeals
U.S. 11th Circuit Court of Appeals

Carnes wrote the court’s decision, in which the court determined there was no legal reason to give the states a third attempt in court against Schron, noting they had simply reiterated previous claims against the defendant rather than raising new issues to highlight his role in an alleged “bust-out” scheme.

The estates had filed of wrongful death lawsuits against a network of nursing homes and won a total of $1 billion in empty chair judgments against the network.

The protected assets prevented the court from enforcing the judgment, and the defendants transferred all of the useful assets of the network into a new operating enterprise, leaving behind a worthless shell that was judgment-proof.

In an effort to block what they deemed as the fraudulent transfer of the debtors’ assets, the estates filed an involuntary Chapter 7 bankruptcy petition with the U.S. District Court for the Middle District of Florida.

Schron, a real estate investor, was among the defendants and he was ultimately dismissed from the case by the bankruptcy court. Ultimately, the estates settled with the remaining defendants for $24 million.

The estates then appealed the dismissal of claims against Schron and a ruling by the bankruptcy court which issued a permanent injunction in the case concerning the investor.

The estates, on appeal, alleged that Schron also was part of the scheme under an alias and he benefited from the transfers of assets.

In affirming the lower court’s ruling, the appeals court also rejected second amended claims raised the estates.  

“The second amended complaint not only failed to remedy the inadequacies the bankruptcy court had identified, but it also repeated, by incorporation, numerous paragraphs contained in the first amended complaint and added another 60 pages of allegations, including four entirely new claims against several of the defendants,” Carnes wrote in the decision.  

The court also noted that if the estates could have provided additional information that would enhance their chances for success on appeal, they likely would already have done so.

“We find no abuse of discretion in the court’s decision not to grant the estates a third bite at the apple and affirm accordingly,” Carnes wrote.

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