The 11th Circuit Court of Appeals recently issued a decision in the case of In re Prudential of Florida Leasing, Inc., ___ F.3d ___, 2007 WL 445368 (11th Cir. (Fla.)) involving the “single satisfaction rule”. In general, the single satisfaction rule prevents one from recovering twice for the same damages. See, e.g. Fla. Stat. Section 46.015 (2).
The 11th Circuit held that federal rule of common law would be used in interpreting the “single satisfaction” rule of avoided transfers. It reversed the decisions of the bankruptcy court and the district court and held that the federal rule of common law, rather than state law, would be used in interpreting 11 USC 550(d) which bars a trustee from taking more than a “single satisfaction” on account of the same avoided transfer.
The Court reasoned that a uniform rule of federal law was preferable because the rule of single satisfaction concerned the judicial process as opposed to a substantive matter and that state law ordinarily does not govern the procedures of federal courts. Furthermore, applying state law -here Florida which erred on the side of preventing a single satisfaction – had the potential to frustrate the purposes of the Bankruptcy Code. The Court also reasoned that applying a uniform rule of federal law would not disturb any pre-existing commercial expectations predicated on state law, and was supported by a textual analysis of the Code
Posted by Jordan Bublick 