Bavelis v. Doukas (In re Bavelis)

PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW ON REMAINING COUNTS OF SECOND AMENDED COMPLAINT

John E. Hoffman, Jr., United States Bankruptcy Judge

I. Introduction

When debtors commence Chapter 11 bankruptcy cases, they become debtors in possession obligated to perform most of the duties of a trustee, including the duty to object to improper claims filed against the bankruptcy estate in order to increase the recovery realized by their legitimate creditors. George Bavelis, whose confirmed Chapter 11 plan provides for a 100% repayment of his legitimate creditors’ claims, dutifully fulfilled that obligation when he objected to the $14 million secured proof of claim filed by Quick Capital of Long Island Corp. (“Quick Capital”), a company wholly owned by his former “friend,” Ted Doukas. See Bavelis v. Doukas (In re Bavelis), 490 B.R. 258 (Bankr. S.D. Ohio 2013) (“Bavelis 7”), aff'd, No. 13-8015, 2013 WL 6672988 (6th Cir. BAP Dec. 19, 2013), aff'd, 773 F.3d 148 (6th Cir. 2014). In Bavelis I, a copy of which is attached as Appendix A, the Court disallowed Quick Capital’s claim and held that neither Doukas nor any of his other companies had any claim against Bavelis’s bankruptcy estate. If Doukas had been as faithful to Bavelis as Bavelis was to his creditors, Doukas would not have filed the *285 Quick Capital claim in the first place. But as explained in Bavelis I, Doukas repeatedly betrayed the confidence Bavelis placed in him before bankruptcy.

Tales of intrigue and confidence games are generally not the stuff of claim litigation in bankruptcy court. To the contrary, claim disputes usually center on more standard fare: Is the debtor in default of its loan agreement with the claimant?-If so, has the claimant properly calculated its contractual damages? Or has the creditor instead included in its claim sums—late charges, attorney fees, unmatured interest and the like—it is not entitled to recover under the parties’ agreement or applicable law? These 'and similar questions are frequently litigated in bankruptcy. But not so in this case, because Quick Capital lent Bavelis no funds. Instead, Doukas fraudulently induced Bavelis to execute the note on which the Quick Capital claim was based (the “QC Note”) as part of a larger scheme designed to fleece Bavelis out of substantially all of his assets. Doukas did so after gaining Bavelis’s trust at a time when he was emotionally vulnerable and financially in dire straits. And as also explained in Bavelis I, Doukas succeeded not only in fraudulently inducing Bavelis to execute the QC Note, but also in taking from Bavelis his direct and indirect membership interests in limited liability companies he had formed with his business partner, Mahammad Qureshi (the “Bavelis-Qureshi LLCs”). In short, having promised Bavelis that he would negotiate with Qureshi to resolve disputes regarding the management of the Bavelis-Qureshi LLCs, Doukas instead defrauded Bavelis into assigning his interests in the Bavelis-Qure-shi LLCs to three of Doukas’s wholly owned companies—defendants Blair International, Inc. (“Blair”); R.P.M. Recoveries, Inc. (“R.P.M.”); and the aptly named Nemesis of LI Corp. (“Nemesis”). It is the assignments of the membership interests in three of the Bavelis-Qureshi LLCs (the “Assignments”) that Bavelis here seeks to unwind as having been fraudulently induced by Doukas. 1

Given Doukas’s argument that part of the consideration for the QC Note was his promise to resolve the disputes over the Bavelis-Qureshi LLCs in a manner beneficial to Bavelis, the Court was required to make findings in Bavelis I regarding the fraud in which Doukas engaged in connection with the Assignments. Although they are extensive, the Court’s findings distilled down to a central conclusion: Doukas is an unrepentant fraudster who made false promises to Bavelis in an attempt to misappropriate as many of Bavelis’s assets as *286 he could. 2 It is those findings, which have been upheld through two layers of appeal, that form much of the basis for the Court’s proposed findings of fact and conclusions of law here. In short, the Court determines that the Assignments were fraudulently induced and that as a result of his fraudulent conduct Doukas should pay both compensatory damages and substantial punitive damages to Bavelis.

II. Jurisdiction

For the reasons explained below, the Court has jurisdiction to hear these matters under 28 U.S.C. §§ 157 and 1334 and the general order of reference entered by the District Court.

Section 1334(b) of the Judicial Code sets forth three categories of civil proceedings over which the district courts (and the bankruptcy courts by reference) have original, but not exclusive, jurisdiction: (1) those “arising under title 11,” (2) those “arising in” bankruptcy cases and (3) those “related to” such cases. 28 U.S.C. § 1334 (b). See Stern v. Marshall, 564 U.S. 462, 473 , 131 S.Ct. 2594 , 180 L.Ed.2d 475 (2011); Bavelis v. Doukas (In re Bavelis), 453 B.R. 832, 851-52 (Bankr. S.D. Ohio 2011). 3 Although the Doukas Defendants concede that the Court has “arising under” jurisdiction to rule on the avoidance of the transfers of the membership interests in the Bavelis-Qureshi LLCs as fraudulent transfers under §§ 548 and 544(b) of the Bankruptcy Code, 4 the Doukas Defendants argue that the Court lacks jurisdiction to hear the state law claims on which proposed findings of fact and conclusions of law are being submitted (the “State Law Claims”). Adv. Doc. 616 at 13-19; Adv. Doc. 677 at 14-19. 5 Because the State Law Claims neither “aris[e] under title 11” nor “aris[e] in ... a case under title 11,” 28 U.S.C. § 1334 (b), the Court may exercise jurisdiction over them only if they are “related to a case under title 11.” Id.

“The usual articulation of the test for determining whether a civil proceeding is related to bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy.” Mich. Emp’t Sec. Comm’n v. Wolverine Radio Co. (In re Wolverine Radio Co.), 930 F.2d 1132 , 1142 (6th Cir. 1991) (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984)). *287 The Court previously made a determination that it has related-to jurisdiction over the State Law Claims. See Bavelis, 453 B.R. at 851 (“In short, the Court has jurisdiction over the claims for relief set forth in each count of the Complaint because each of these claims either arises under the Bankruptcy Code or is related to [Ba-velis’s] bankruptcy case.”). Indeed, the Court has found that the “outcome of the [State Law Claims] ... conceivably could have an effect on the estate,” because Ba-velis was “acting in his capacity as the debtor in possession, and any recovery obtained by [Bavelis] would be for the benefit of his bankruptcy estate.” Id. at 853 . The manner in which the recovery from this adversary proceeding could conceivably benefit creditors of the bankruptcy estate was made clear in Bavelis’s confirmed Chapter 11 plan, which provides for 100% repayment of creditors’ claims. See Doc. 712 at 9-10 (defining “Retained Actions Net Proceeds” as including “consideration received ... as a result of a settlement ... or from the enforcement of any judgment obtained with respect to any of the Retained Actions”); Id. Ex. 2 (providing that “Retained Actions” includes all claims and causes of action in Adv. Pro. No. 10-2508); Id. at 22 (providing that “[Bavelis] may utilize any portion of Retained Actions Net Proceeds to fund any [of his] obligation[s] under this Plan ... and the repayment of any other obligation for funds borrowed on or after the Effective Date to fund [Bavelis’s] obligations under this Plan”). 6

Doukas, however, maintains that the confirmation of Bavelis’s Chapter 11 plan and the proposed full payment of his creditors has deprived the Court of jurisdiction over the State Law Claims under the close-nexus test for bankruptcy jurisdiction. Adv. Doc. 677 at 15-19. Under the close-nexus test, jurisdiction following confirmation is limited to “[m]atters that affect the interpretation, implementation, consummation, execution, or administration of the confirmed plan.” Binder v. Price Waterhouse & Co. (In re Resorts Int’l, Inc.), 372 F.3d 154, 167 (3d Cir. 2004); In re Thickstun Bros. Equip. Co., 344 B.R. 515, 521 (6th Cir. BAP 2006). But Bavelis commenced this adversary pro ceeding on October 20, 2010, long before his Chapter 11 plan was confirmed on December 12, 2014. And as the circuit court of appeals that developed the close-nexus test (the Third Circuit) itself has clarified, that test applies only to actions filed post-confirmation, while the conceivability standard of Pacor applies to actions filed pre-confirmation. See Geruschat v. Ernst Young LLP (In re Seven Fields Dev. Corp.), 505 F.3d 237, 265 (3d Cir. 2007) (“[W]ith respect to ‘related to’ jurisdiction, the Pacor test applies in all disputes raised pre-confirmation and the ‘close nexus’ test applies in all disputes raised post-confirmation, regardless of when the conduct alleged in the complaint occurred.”); ConocoPhillips Co. v. SemGroup, L.P. (In re SemCrude, L.P.), 428 B.R. 82, 96-98 (Bankr. D. Del. 2010); Liquidating Tr. v. Granite Fin. Sols., Inc. (In re MPC Computs., LLC), 465 B.R. 384, 392 (Bankr, D. Del. 2012). 7

*288 This is because “[i]t has long been the case that the ‘jurisdiction of the court depends upon the state of things at the time of the action brought.’ ” SemCrude, 428 B.R. at 96 (quoting Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 570 , 124 S.Ct. 1920 , 158 L.Ed.2d 866 (2004)); Nuveen Mun. Tr. ex rel. Nuveen High Yield Mun. Bond Fund v. WithumSmith Brown, P.C., 692 F.3d 283, 300 (3d Cir. 2012) (“Supreme Court precedent is clear that the date of filing is the date when subject matter jurisdiction is assessed.”). Thus, if a bankruptcy court was vested with related-to jurisdiction over an adversary proceeding at the time it was filed—as this Court clearly was—subsequent events do not divest the court of that jurisdiction. See, e.g., Nuveen Mun. Tr., 692 F.3d at 294 (“[T]he strength and longevity of [the time of filing] rule has led courts to hold that confirmation of a bankruptcy plan does not divest a district court of related-to jurisdiction over pre-confir-mation claims.”); Owens-Ill., Inc. v. Rapid Am. Corp. (In re Celotex Corp.), 124 F.3d 619, 626 (4th Cir. 1997) (“[I]f a federal court possesses subject matter jurisdiction over an action at the time it is commenced, a subsequent event cannot divest the court of that subject matter jurisdiction.” (citing Freeport-McMoRan, Inc. v. K N Energy, Inc., 498 U.S. 426, 428 , 111 S.Ct. 858 , 112 L.Ed.2d 951 (1991))); Empire State Bldg. Co. v. N.Y. Skyline, Inc. (In re N.Y. Skyline, Inc.), 471 B.R. 69, 79 (Bankr. S.D.N.Y. 2012) (“Neither the confirmation of Skyline’s plan nor anything else that subsequently occurred deprived this Court of its subject matter jurisdiction over those claims and counterclaims.”).

In Nuveen Municipal Trust, the Third Circuit flatly declined to “deviate from the hornbook rule that jurisdiction is assessed at the time of the filing of a complaint and [instead] assess jurisdiction [at the time of its decision] because [of] significant intervening events,” including plan confirmation and near full-administration of the debtor’s bankruptcy estate. Nuveen Mun. Tr., 692 F.3d at 300 . The court noted that a stricter jurisdictional standard applies to actions filed post-confirmation, but held that because the proceeding before it was brought before confirmation, it must determine the action’s conceivable effect as of the date it was brought. Id. at 294-95 . Similarly, the Fifth Circuit has held that related-to jurisdiction continues to exist over state law fraud claims even after confirmation of the debtor’s plan. See Newby v. Enron Corp. (In re Enron Corp. Sec.), 535 F.3d 325, 335-36 (5th Cir. 2008). In Enron, the Fifth Circuit acknowledged a prior ruling in which it had stated that “[a]fter a debtor’s reorganization plan has been confirmed, the debtor’s estate, and thus bankruptcy jurisdiction, ceases to exist, other than for matters pertaining to the implementation or execution of the plan.” Id. at 335 (quoting Bank of La. v. Craig’s Stores of Tex., Inc. (In re Craig’s Stores of Tex., Inc.), 266 F.3d 388, 390 (5th Cir. 2001)). But the appellate court clarified that the Craig’s Stores decision meant that “a bankruptcy court may lack jurisdiction over post-confirmation claims based on post-confirmation activities,” not that “a bankruptcy court may lose jurisdiction over pre-confir-mation claims based on pre-confirmation activities.” Id. at 335.

This adversary proceeding illustrates why the time-of-filing rule makes sense. Here, “the parties and their counsel have spent considerable energy, time, and money litigating the claims in this forum,” and the Court has “made [several] substantive rulings in' the case.” PNC Bank, N.A. v. Rolsafe Int'l LLC (In re Rolsafe Int'l, LLC), 477 B.R. 884, 898 (Bankr. M.D. Fla. 2012). Further, the matters at issue have been fully briefed and tried, and the Court is ready to issue its ruling. If the Court *289 were unable to retain jurisdiction over this case, the parties would be forced to reliti-gate the same claims elsewhere. Id. But the Court is already intimately familiar with this ease’s complex factual background. So “it would be rather inefficient to ask [another] court to familiarize itself [anew] with those facts and the attendant legal issues” when this Court is already prepared to issue proposed findings of fact and conclusions of law to the District Court. Rolsafe, 477 B.R. at 898 . 8 For all the reasons set forth above, the Court has jurisdiction over the State Law Claims.

III. Procedural History

After Bavelis filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on July 20, 2010 (the “Petition Date”), he commenced this adversary proceeding by filing a complaint that was then twice amended. The Court has before it the second amended complaint (the “Complaint”) (Adv. Doc. 490) filed by Bavelis as well as two limited liability companies with which he is affiliated, FLOHIO, LLC (“FLOHIO”) and Bavelis Family, LLC (“Bavelis Family”). Bavelis, FLOHIO and Bavelis Family will be referred to collectively as the “Plaintiffs.” 9

A. Remaining Claims for Relief

As filed, the Complaint contained 17 counts. But six of those counts—Counts Three, Six, Nine, and Fifteen through Seventeen—are no longer pending:

• Count Three, which was bifurcated from the rest of this case, related to Bavelis’s objection to Quick Capital’s claim based on the QC Note. Following a four-day hearing on Bavelis’s objection to the Quick Capital proof of claim and the issue of whether Doukas or any of his entities held a claim against Bavelis (the “Claim Objection Hearing”), the Court issued an opinion and order adjudicating Count Three. Bavelis I, 490 B.R. 258 .

• Bavelis withdrew Counts Six and Nine in his proposed findings of fact and conclusions of law. Adv. Doc. 674 at 6 n.l (“In light of the evidence presented, Mr. Bavelis has elected to withdraw his claim in Count Nine of the [Complaint] for duress and/or violation of Florida’s ‘elder abuse’ provisions found in, inter alia, Fla. Stat. § 415.1111 . The same is true as to the indemnification claim ... in Count Six.”).

• In Count Fifteen, Bavelis sought the disallowance of certain claims under 11 U.S.C. § 502 (d). The claims that Bavelis sought to disallow included the proof of claim filed by Quick Capital, and that claim was disallowed in Bavelis I. Bavelis also *290 sought to disallow any other claims filed by Doukas and his companies, but neither Doukas nor any of his entities other than Quick Capital filed a proof of claim, and the Court in any event held in Bavelis I that Doukas and his companies have no claim. In addition, Bavelis requested in Count Fifteen to disallow any claim filed by Defendant John Stra-vato, but he never filed a proof of claim. 10 For all these reasons, Count Fifteen is moot.

• Bavelis made an oral motion requesting the dismissal of Counts Sixteen and Seventeen without prejudice, a motion the Court granted. Adv. Doc. 592.

Bavelis entered into settlements with all of the defendants named in the Complaint other than Stravato and the Doukas Defendants. In particular, the Court approved settlements between Bavelis and defendant Qureshi (as well as his affiliates Rab Masroor, Financial Lending Services, LLC, BNK Real Estate, LLC and Qureshi Family, LLC) and between Bavelis and defendant Socal Capital, LLC (“Socal”).

In light of all the foregoing, Counts One, Two, Four, Five, Seven, Eight, and Ten through Fourteen—as they relate to the Doukas Defendants and Stra-vato—remain pending. These counts were tried at two different times:

1. In what will be referred to as “Phase I,” a trial was held on Counts One, Two, Four and Ten. By those counts, the Plaintiffs seek to set aside transfers they made to Doukas Defendants Nemesis, R.P.M. and Blair of the membership interests in the Bavelis-Qureshi LLCs, as well as later transfers Doukas caused Nemesis to make to Leftheris. The transcript of Phase I is docketed at Adv. Doc. 621 (“Transcript I”). 11 Bavelis testified during Phase I, Tr. I at 74-99, and his Exhibits 33-37, 40-46, and 51-54 were admitted into evidence without objection, Tr. I at 100-04. The Plaintiffs filed proposed findings of fact and conclusions of law as to Counts One, Two, Four and Ten (Adv. Doc. 609), as did the Doukas Defendants (Adv. Doc. 616).

Doukas, Quick Capital, Nemesis and R.P.M. acknowledged in their proposed findings of fact filed after the Claim Objection Hearing that the Court may use the evidence presented *291 during that hearing to rule on Bavel-is’s request to unwind the very transfers that would become the subject of the Phase I trial. 12 And based on the evidence presented during the Claim Objection Hearing, Doukas, Quick Capital, Nemesis and R.P.M. asked the Court to make findings of fact and issue conclusions of law in their favor with respect to most of the transfers that are the subject of the Complaint. 13

2. In what will be referred to as “Phase II,” a trial was held on: (a) Counts Five, Seven, Eleven, Twelve, Thirteen and Fourteen, by which Bavelis seeks damages from the Doukas Defendants under various legal theories; and (b). Count Eight, under which Bavelis seeks damages for an alleged breach of fiduciary duty by Stravato, who Bavelis also contends engaged in conspiracy as part of Count Fourteen.

The transcript of Phase II is docketed at Adv. Doc. 666 (“Transcript II”). 14 During Phase II, Bavelis testified, Tr. II at 98-153, as did two of his attorneys—Richard Stovall (“Stovall”), Tr. II at 70-98, and Chris Hogan, id. at 158-72—and an expert witness, Larry McClatchey, regarding attorneys’ fees incurred by Bavelis, id. at 172-80. In addition, Bavelis’s Exhibits 1-211 (except those marked as “Reserved” on Adv. Doc. 645), 221, 246 and 284 were admitted into evidence without objection. Tr. II at 153-58, 181. Doukas testified on behalf of himself and the Doukas Defendants, id. at 182-85, and his Exhibits V, AE and AF were admitted into evidence without objection. Id. at 186-87.

Bavelis and the Doukas Defendants also “stipulate[d] to the admissibility of (a) all testimony offered as part of the [hearing on the claim objection adjudicated in Bavelis I ] that was not excluded or stricken based on a sustained objection, and (b) the exhibits previously admitted into evidence by this Court in conjunction with [Bavelis /].” Adv. Doc. 654. The parties also agreed that evidence offered during the show cause hearing was admissible for purposes of the trial on Counts Five, Seven, Eleven, Twelve, Thirteen, and Fourteen. Tr. II at 70.

In accordance with an order that was amended multiple times at the request of the parties, Bavelis filed proposed findings of fact and conclusions of law *292 (Adv. Doc. 674) as to his Phase II claims for relief, as did the Doukas Defendants (Adv. Doc. 677). 15

Bavelis also filed a supplemental brief (Adv. Doc. 682) regarding the Doukas Defendants! asserted right to a jury trial. 16

B. Entries of Default

In support of certain of their claims for relief, the Plaintiffs rely on entries of default that the Clerk of Courts (the “Clerk”) entered against the corporate Doukas Defendants and Stravato.

1. The Corporate Doukas Defendants

The Clerk entered a default (Adv. Doc. 91) against Blair based on its failure to answer Bavelis’s original complaint. Afterward, Blair filed an answer to the Complaint, as did Quick Capital, Nemesis, R.P.M. and Leftheris. Adv. Doc. 494. The attorney who filed the answer then withdrew from the representation of the Dou-kas Defendants, 17 and the Court set dead *293 lines for Quick Capital, Nemesis, R.P.M. and Leftheris to retain counsel or be deemed in default, because “[t]he law is well-settled that a corporation may appear in federal courts only through licensed counsel and not through the pro se representation of an officer, agent, or shareholder.” N. L.R.B. v. Consol. Food Servs., Inc., 81 Fed.Appx. 13 , 14 n.1 (6th Cir. 2003). The Court, however, did not establish the consequences of any default; instead, the orders establishing the deadlines to- retain counsel stated that those consequences would be the subject of further orders. Adv. Doc. 454 at 3; Adv. Doc. 563.

Quick Capital, Nemesis, R.P.M. and Leftheris failed to timely retain counsel, leading the Clerk to issue an entry of default as to them. Adv. Doc. 579. The corporate Doukas Defendants, however, eventually retained counsel who represented them (as well as Doukas) during both Phase I and Phase II. Bavelis nonetheless contends that the consequence of their default should be that they have admitted the allegations of the Complaint. As explained in the proposed conclusions of law, it is unclear whether the corporate Doukas Defendants should be deemed to have admitted the allegations of the Complaint under the circumstances present here. Furthermore, because as a matter of law Bavelis is not entitled to a judgment on the only count of the Complaint to which the deemed admissions are relevant—Count Fourteen (conspiracy against the corporate Doukas Defendants)—the Court need not decide whether their defaults have resulted in deemed admissions.

2. Stravato

Stravato filed an answer to Bavelis’s original complaint, Adv. Doc. 84, and neither the first amended complaint (Adv. Doc. 359) nor the Complaint itself included any allegations as to Stravato that were not already set forth in the original complaint that Stravato answered. Despite this, Bavelis sought entry of a default against Stravato based on his failure to answer the first amended complaint and the Complaint, Adv. Doc. 520, and the Clerk entered a default against him. Adv. Doc. 573. As with the corporate Doukas Defendants, Bavelis contends that the consequence of Stravato’s default should be that he has admitted the allegations of the Complaint. As explained below, however, Stravato’s answer to the original complaint *294 makes Bavelis’s contention untenable under controlling circuit law.

IV. Findings of Fact

To summarize: The remaining counts of the Complaint are Counts One, Two, Four, Five, Seven, Eight, and Ten through Fourteen as they relate to Stravato and the Doukas Defendants. As discussed in its proposed conclusions of law, the Court proposes that the District Court dismiss Counts Five, Seven, Eight, Ten, and Twelve through Fourteen—Counts Five, Eight and Fourteen as a matter of law, and Counts Seven, Ten, Twelve and Thirteen as moot. Thus, based on the evidence presented, and having considered the demeanor and credibility of the witnesses, the Court proposes that the District Court make the findings of fact set forth below with respect to the following counts of the Complaint: 18

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A. Background Findings

The findings of fact and conclusions of law set forth in Bavelis I are adopted and incorporated by reference into this opinion in their 'entirety. In Bavelis I, the Court explained how it came to be that Bavelis trusted Doukas enough to execute the QC Note and the Assignments. One factor was Bavelis’s emotional state when he first met Doukas. In December 2008, Bavelis, who was then in his mid-70s, lost his brother to a terminal illness. Having met Bavelis for the first time a month later, Doukas soon was referring to Bavelis as his “brother,” a term that was incredibly meaningful to Bavelis given that his brother had just passed away. Bavelis I, 490 B.R. at 270 . Doukas, who was about 20 years younger than Bavelis, also took advantage of their shared Greek heritage, using it to develop Bavelis’s trust in him, as well as the confidence of Bavelis’s wife, Georgia Gia Bavel-is, Id. at 271-72 . And Doukas likewise led both of the Bavelises “to believe that he shared [their] religious beliefs,” including by presenting them “with a religious icon that he said was from Greece” and that he described as being something that would protect their home. Id. at 271 , 19 All of this, *295 plus Doukas’s willingness to share details about his divorce and other aspects of his personal life, led Bavelis to believe that he and Doukas were not only brothers, but also, as Doukas put it, “friends for life.” Id. Having gained Bavelis’s trust, Doukas began taking steps to systematically misappropriate Bavelis’s assets.

Doukas’s first step was to gain an interest in one of the Bavelis-Qureshi LLCs, GMAQ. Bavelis had shared with Doukas his concerns about Qureshi and the disputes they were having regarding the management of the Bavelis-Qureshi LLCs. Doukas persuaded Bavelis that he had the experience and expertise that was needed to negotiate a consensual resolution with Qureshi. In March 2009, Doukas told Ba-velis that he would need a 10% stake in GMAQ in order to be in a position to negotiate with Qureshi, and Bavelis readily agreed. Bavelis transferred his 10% interest in GMAQ to Blair 20 based on Doukas’s promise that the interest would be returned to him as soon as a resolution with Qureshi was reached. See id. at 272-73 . Then, in June 2009, Doukas convinced Ba-velis that, although he had been negotiating with Qureshi to resolve the disputes over the Bavelis-Qureshi LLCs in a manner favorable to Bavelis, the negotiations had reached an impasse and that Doukas needed a greater stake in GMAQ in order to negotiate effectively with Qureshi. Dou-kas asked that Bavelis transfer his entire interest in GMAQ to R.P.M., and Bavelis did so, again based on Doukas’s representation that the interest would be recon-veyed to Bavelis once Doukas had successfully negotiated on his behalf with Qureshi. See id. at 276-76 .

In June 2009, Doukas also offered to help.Bavelis with his estate planning. See id. at 276 . Given his age and the fact that his brother had just passed away, it was natural for Bavelis to be thinking about estate planning, and Doukas represented to Bavelis that he had the expertise to help him fund an estate planning trust that Bavelis had previously established but not adequately funded. See id. at 277 . Based on Doukas’s representations, Bavelis believed that he was issuing the QC Note as part of Doukas’s estate planning efforts. Doukas advised Bavelis that no payments would be due under the QC Note and that the note, as well as an agreement granting Quick Capital a security interest in certain bank shares and securities, would be-returned to him once the estate planning efforts were completed. See id. at 278-79 . 21

Doukas contended that the consideration for the QC Note included “buy[ing] out ... Qureshi and indemnify[ing] ... Bavelis” for the more than $20 million of debt of two of the Bavelis-Qureshi LLCs—FLO-VEST, LLC and BMAQ, LLC—that Ba-velis had personally guaranteed. Id. at 284 . Doukas, however, never negotiated with Qureshi on behalf of Bavelis and never provided Bavelis any indemnification. Id. at 300 . Instead, by telling Bavelis that he needed a greater stake in the companies in order to finalize the deal he was reaching *296 with Qureshi, in December 2009 Doukas duped Bavelis into assigning to Nemesis FLOHIO’s 50% interest in FLOVEST and Bavelis Family’s 50% interest in BMAQ. 22 He also induced Bavelis to assign once again—this time to Nemesis—his 50% interest in the very valuable GMAQ, a company that owned several million dollars in assets with no offsetting bank debt. See Bavelis I, 490 B.R. at 267 . Again, Doukas promised Bavelis that he would return the Assignments to Bavelis once the deal with Qureshi was finalized. See id. at 273, 298-300 . But just as he refused to return the QC Note, Doukas refused to return the Assignments despite Bavelis’s repeated requests that he do so. See id. at 303-06 . The reason, of course, was simple: “Doukas never intended to ... keep any of the promises he made to Mr. Bavelis, but instead intended to take advantage of Mr. Bavelis and deprive him of his assets.” Bavelis 1, 490 B.R. at 318 .

B. Findings Relevant to the Request in Count One for a Declaratory Judgment that Doukas Fraudulently Induced the Transfers to Blair and R.P.M.

Count One relates to (1) the transfer Bavelis made to Blair of a portion of Ba-velis’s membership interest in GMAQ in March 2009 23 and (2) the transfer Bavelis made to R.P.M. of his entire membership interest in GMAQ in June 2009.

1. The March 2009 Transfer to Blair

In Count One, Bavelis seeks a declaratory judgment that the March 2009 transfer to Blair—defined below as the “March Agreement”—was fraudulently induced. After spending years contending that he never defrauded Bavelis, in his own proposed findings of fact and conclusions of law, Doukas now concedes that “[i]n reference. [to] the Assignments, Mr. Doukas made statements that were not true about transfers from Mr. Bavelis to [the] Doukas entities.” Adv. Doc. 677 at 28. 24 In addition, as the Court found in Bavelis I:

[By March 2009], the friendship between Mr. Bavelis and Mr. Doukas was based on several factors, including their common Greek heritage; their mutual entrustment of details about their personal lives and businesses; values they ostensibly held in common; and Mr. Ba-velis’s belief that Mr. Doukas had only his best interests at heart. In March 2009, Mr. Doukas informed Mr. Bavelis that, in order to advance those interests, he would need a 10% stake in GMAQ so as to be in a better position to negotiate with Mr. Qureshi. Tr. at 487. Mr. Bavel-is, who by then had introduced Mr. Dou-kas to Mr. Qureshi, Debtor’s Ex. 173 at *297 5:23, agreed.[ 25 ] On March 27, 2009, Mr. Bavelis (as a member of GMAQ), Mr. Doukas (on behalf of Blair) and Mr. Qureshi (as a member of GMAQ) signed an agreement entitled “GMAQ,. LLC, Members, Transferor’s and Transferee’s Consent and Approval of Transfer of Ownership” (“March Agreement”). Debtor’s Ex. 130. By that agreement, Mr. Bavelis transferred to Blair 10% of his membership interest in GMAQ, with Mr. Qureshi consenting to the transfer. Mr. Doukas promised Mr. Bavelis that, as soon as a resolution was reached with Mr. Qureshi, he would return the March Agreement and reconvey the 10% interest back to Mr. Bavelis. Tr. at 490. Mrs. Bavelis confirmed that Mr. Doukas so advised her husband. Tr. at 430:11-27 (“We didn’t question Ted, we trusted Ted Doukas. He told us, he told George he was going to bring the 10% back .... It was given to him so he can negotiate with Qureshi and as soon as he did that he would give this 10% back. I didn’t think anything of it.”).

Bavelis I, 490 B.R. at 272-73 .

Again, Doukas did not intend to keep any of the promises he made to Bavelis. See id. at 318 . Based on all these findings, the Court further finds that: (i) Doukas made false statements concerning material facts (i.e., his intent to negotiate with Qur-eshi on Bavelis’s behalf and his intent to return the March Agreement); (ii) Doukas knew his statement was false, because he did not intend to negotiate with Qureshi on behalf of Bavelis and did not intend to ever return the March Agreement; (iii) Doukas intended his misrepresentations to induce Bavelis to execute the March Agreement; (iv) in light of Doukas’s efforts to cultivate the appearance of a relationship of trust and friendship with Bavelis, Bavelis justifiably relied on Doukas’s representation; and (v) Bavelis was injured as a result of losing a portion of his interest in GMAQ. Doukas therefore fraudulently induced Ba-velis to execute the March Agreement.

2. The June 2009 Transfer to R.P.M.

In Count One, Bavelis also seeks a declaratory judgment that the June 2009 transfer to R.P.M.—defined in Bavelis I as the “R.P.M. Agreement,” because Bavelis signed other agreements in June 2009— was fraudulently induced. Again, Doukas admits that “[i]n reference [to] the Assignments, Mr. Doukas made statements that were not true about transfers from Mr. Bavelis to [the] Doukas entities.” Adv. Doc. 677 at 28. And as the Court previously found:

Mr. Doukas had led Mr. Bavelis to believe that he was negotiating with Mr. Qureshi to resolve the disputes over the Bavelis-Qureshi LLCs in a manner favorable to Mr. Bavelis, but that his negotiations had failed to reach such a resolution because Mr. Qureshi “was not taking [Mr, Doukas] seriously,” Tr. at 707:6-7, and that he therefore needed more authority to negotiate with Mr. Qureshi. Tr. at 568; 706-07. On or about June 21, 2009, Mr. Doukas presented Mr. Bavelis with an agreement (“R.P.M. Agreement”) by which Mr. Bavelis would, in return for $50,000, transfer his “50% interest in GMAQ” to ... R.P.M., a New York corporation of which Mr. Doukas was president[ 26 ] Debtor’s Ex. *298 131. When he signed the R.P.M. Agreement, Mr. Bavelis believed that he was giving “him a larger percentage so that [Mr. Doukas] can be able to be more effective.” Tr. at 707:7-9. Mr. Bavelis’s understanding when he signed the R.P.M, Agreement was that the agreement was temporary and would be “coming right back to me.... ” Tr. at 717:13. By signing such an agreement with the understanding that it would be returned to him, Mr. Bavelis demonstrated a high level of confidence in Mr. Doukas. According to Mr. Bavelis, at that time “I had already established a trust in Ted Doukas that we became very good friends and I would listen to him because he offered so many things that he was going to do for me.” Tr. at 667:4-8. “He’s going to help me in many respects. And I had no doubts about it at that time.” Tr. at 667:8-9. “[H]e was my brother at the time. We had such a close relationship that I trusted Ted for anything he told me.” Tr. at 685:23-686:1. As Mrs. Bavelis put it, “George and I had come to a point where anything he said we trusted him.” Tr. at 391:20-21.

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In June 2009, Mr. Bavelis firmly believed that Mr. Doukas was on his side and considered him a friend and brother in whom he could place the utmost confidence and trust.

Bavelis I, 490 B.R. at 275-76 (footnote omitted).

Based on all these findings and the prior finding that Doukas never intended to keep any of the promises he made to Ba-velis, see id. at 318 , the Court further finds that: (i) Doukas made false statements concerning material facts (i.e., his intent to negotiate with Qureshi on Bavelis’s behalf and his intent to return the R.P.M. Agreement); (ii) Doukas knew his statements were false, because he did not intend to negotiate with Qureshi on behalf of Bavelis and did not intend to ever return the R.P.M. Agreement; (iii) Doukas intended his representations to induce Bavelis to execute the R.P.M. Agreement; (iv) in light of Doukas’s efforts that led Bavelis to consider him a friend and brother in whom he could place the utmost confidence and trust, Bavelis justifiably relied on the representation; and (v) Bavelis was injured as a result of losing his 50% interest in GMAQ, a company that owned millions of dollars of assets. Thus, Doukas fraudulently induced Bavelis to execute the R.P.M. Agreement.

C. Findings Relevant to the Request in Count Two for a Declaratory Judgment that Doukas Fraudulently Induced the Transfers to Nemesis

Count Two relates to the December Agreements by which Bavelis assigned membership interests in GMAQ, BMAQ and- FLOVEST to Nemesis. 27 Bavelis entered into the December Agreements on behalf of himself with respect to the transfer of the membership interest in GMAQ and as the manager of Bavelis Family-and FLOHIO with respect to the transfers of the membership interests in BMAQ and FLOVEST, respectively.

The Plaintiffs seek a declaratory judgment that the December Agreements were fraudulently induced. Again, it bears noting here that in his own proposed findings of fact and conclusions of law, Doukas concedes that “[i]n reference [to] the Assignments, Mr. Doukas made statements that were not true about transfers from Mr. Bavelis to [the] Doukas entities.” Adv. *299 Doc. 677 at 28. In addition, as the Court found in Bavelis I:

Th[e] relationship of trust and confidence [that Bavelis placed in Doukas] did not merely exist in Mr. Bavelis’s mind. Mr. Doukas. himself testified that Mr. Bavelis was entitled to trust him from March through December 2009.

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[In October 2009] Mr. Bavelis was ... dissatisfied with Mr. Doukas’s lack of success in reaching a deal with Mr. Qur-eshi ....

[[Image here]]

The confidence Mr. Bavelis previously had in Mr. Doukas apparently was momentarily restored when, in December 2009, Mr. Doukas advised Mr. Bavelis that a deal had been struck with Mr. Qureshi. Mr. Doukas told Mr. Bavelis that, in order to finalize the deal, Mr. Doukas would need an assignment to be made to Nemesis of the 50% interests that Mr. Bavelis, Bavelis Family and FLOHIO owned,in the Bavelis-Qureshi LLCs, but that the assignments would be returned after Mr. Doukas had acquired the 50% interest held by Mr. Qureshi.... Mr. Doukas told Mr. Bavel-is that he would return the assignments [the December Agreements] after the deal with Mr. Qureshi was finalized. Mrs. Bavelis confirmed that Mr. Doukas made such a representation to her husband[.]

[[Image here]]

Unbeknownst to Mr. Bavelis, however, in December 2009 Mr. Doukas was attempting to purchase on his own behalf the 50% interest in the Bavelis-Qureshi LLCs owned by Mr, Qureshi or his affiliated entities. Debtor’s Ex. 173 at 18:21; 19:16.1.

[[Image here]]

In late January 2010 .., Mr. Bavelis made desperate—and ultimately futile— attempts to convince Mr. Doukas to return the December Agreements....

Bavelis I, 490 B.R. at 297-300, 304, 318, 325 (footnote omitted).

During his Phase II testimony, Bavelis explained why he continued to trust Dou-kas as late as December 2009:

So I really had a lot of trust in him, a lot of trust in him, because he was convincing me, even though at some point I had some second thoughts. But after I had the second thoughts, he would come back to my house, we would have dinner, and he would talk to make you always justify. And then I would say: “Well, why am I worried about this guy? He is—he’s still a genuine guy. He will help. He will do everything I need to get me out of Qureshi and help me with [Sterling Bank].”

Tr. II at 130; see also id. at 145 (Bavelis testifying that he believed Doukas’s representations that he had reached a deal with Qureshi and that the December Agreements would be returned to him; “It was a done deal, finished. There was nothing to worry about anymore. He was going straight to Mr. Qureshi to get the signature and we were done.”).

Based on the findings from Bavelis I and Bavelis’s testimony during Phase II, the Court finds that: (i) Doukas made false statements concerning material facts (i.e., his intent to negotiate with Qureshi on Bavelis’s behalf and his intent to return the December Agreements once the negotiations were successful); (ii) Doukas knew his statements were false, because he did not intend to negotiate with Qureshi on behalf of Bavelis and did not intend to ever return the December Agreements; (iii) Doukas intended his misrepresentations to induce Bavelis to execute the December Agreements; (iv) Bavelis justifiably relied on the representations; and (v) Bavelis was injured as a result, including by losing *300 his indirect interests in BMAQ and FLO-VEST and his personal 50% interest in GMAQ, a company that owned millions of dollars of assets at the time.

D. Findings Relevant to the Request for Rescission in Counts One and Two

In Counts One and Two, Bavelis also asks the Court to rescind the Assignments as a result of Doukas’s fraudulent inducement. In order to prevail on a claim for rescission, Bavelis must show not only that the Assignments were fraudulently induced, but also that he did not retain any benefits under the Assignments. Bavelis in fact did not retain any such benefits. As the Court previously found, “Bavelis received no cash or any other remuneration in exchange for the December Agreements. ... Mr. Bavelis never received indemnification or anything else in exchange for the transfer of interests in the Bavelis-Qureshi LLCs (other than the $50,000 under the R.P.M. Agreement, which Mr. Ba-velis repaid [within a month after receiving it]).” Bavelis I, 490 B.R. at 296, 300 . In fact, the Doukas Defendants have admitted that no consideration was provided to any person or entity—which would include FLOHIO and Bavelis Family—for the December Agreements. See Adv. Doc. 616 ¶ 31 (Doukas Defendants’ proposed finding that “[i]n their response to Mr. Bavelis’ requests for admission, Defendants Dou-kas, Quick Capital, Nemesis, R.P.M.... and Leftheris admitted that no consideration was provided to any person or entity pursuant to the December 2009 assignments); see also Phase I Ex. 37 at 5-7 (responses to requests for admission and interrogatories).

E. Findings Relevant to Count Four

Count Four relates to subsequent transfers that Nemesis made based on the fraudulently induced December Agreements. As the Court found above, Doukas used Nemesis to obtain the Plaintiffs’ membership interests in the Bavelis-Qure-shi LLCs—including their interests in GMAQ and FLOVEST—by means of the December Agreements. After doing so, Doukas then caused Nemesis, in its capacity as the purported managing member of GMAQ and FLOVEST, to make transfers of property owned by them to Leftheris, his solely owned company. 28 In particular, in June 2010, Doukas, acting in his capacity as the president of Nemesis, executed two quit claim deeds identifying FLO-VEST as the grantor of parcels of real property in Orange County, Florida and Leftheris as the grantee. The quit claim deeds were recorded in Orange County in September 2010. Phase I Ex. 51. The next month, Doukas—again in his capacity as the president of Nemesis—executed an Assignment of Mortgage identifying GMAQ as the assignor and Leftheris as the as-signee of a mortgage “by Noel Stephen O’Brien ... in favor of GMAQ, LLC on lands in the County of Palm Beach, State of Florida.” Phase I Ex. 52. The Assignment of Mortgage was recorded in Palm Beach County on July 9, 2010. Id. The Court will refer to these transfers and any others that Nemesis and Leftheris made of assets owned by GMAQ, BMAQ and FLO-VEST collectively as the “Subsequent Transfers.” 29

As discussed above, the transfers of the membership interests in GMAQ and FLO- *301 VEST to Nemesis were fraudulently induced. Furthermore, the Subsequent Transfers were founded on the fraudulently induced December Agreements with Nemesis. Moreover, rescinding the Subsequent Transfers is necessary in order to restore the status quo of the parties before the transfers took place.

F. Findings Relevant to Count Eleven

In Count Eleven, the Plaintiffs seek a judgment for damages they incurred as a result of the fraudulent inducement of the QC Note and the Assignments. The findings the Court made above as to the fraudulent inducement of the Assignments support an award of damages incurred as a result of Doukas’s fraudulent inducement of those agreements. With respect to the fraudulent inducement of the QC Note, the Court previously found that:

[i]n the summer of 2009, Mr. Bavelis believed that he did not have the ability to service any more debt. Tr. at 602. Consistent with that belief, before he signed the QC Loan Documents, Mr. Bavelis obtained a promise from Mr. Doukas that he would not be required to make payments on the QC Note. As Mr. Bavelis testified: “[W]hen I gave him this note for $14,000,0001 said, 'Ted, you don’t expect me to make payments for this thing?’ He said, ‘No, no, no, you don’t need to make payments.’ ” Tr. at 598:22-25.

Bavelis I, 490 B.R. at 278 . 30

In Bavelis /, the Court made additional extensive findings that led it to conclude that “Doukas made several representations that fraudulently induced Mr. Bavelis to sign the QC Loan Documents [including the QC Note],” Bavelis I, 490 B.R. at 284 , and to ultimately conclude that Bavelis “established each of the elements of fraudulent inducement with respect to the [QC Note],” id. at 327 . Thus, Bavelis also is entitled to damages incurred as a result of Doukas’s fraudulent inducement of the QC Note.

G. Findings Relevant to Bavelis’s Contention that Doukas Is Liable for Nearly All of the Costs Incurred During the Bankruptcy Case

According to Bavelis, Doukas should pay him:

• the amount that Doukas received from Socal when he caused Quick Capital to assign the QC Note and related loan documents to Socal, Adv. Doc. 674 at 17; 31

• $1,801,273 of interest that Bavelis says he was “forced to pay on certain pre-bankruptcy loans, due to his bankruptcy filing, that he could have otherwise avoided,” Adv. Doc. 674 at 18;

• with only limited exceptions, all of the fees and expenses that his attorneys incurred in connection with the bankruptcy case, id. at 18-19;

• U.S. Trustee fees in the amount of approximately $121,000, id. at 19; and

*302 • the $35,400 in fees incurred by Ba-velis’s financial advisor in connection with the preparation of his monthly operating reports, id. at 20,

The Court finds that the evidence and the law do not support an award of these amounts. As explained in the proposed conclusions of law, the legal doctrine on which Bavelis relies in support of his contention that Doukas should pay him the amount that he received from Socal—dis-gorgement—does not support Bavelis’s position. Moreover, the argument on which Bavelis grounds his purported entitlement to the other amounts he seeks—that he would have resolved his financial distress outside of bankruptcy if Doukas had not fraudulently induced him to execute the Assignments—is too speculative to support an award of damages.

There are several reasons why a finding that Bavelis could have avoided bankruptcy were it not for Doukas’s prepetition fraudulent conduct would be speculative. First, at the time he filed his bankruptcy case, Bavelis had recently lost his substantial investment in Sterling BancGroup Inc. (“Sterling Holding”). As the Court found in Bavelis I:

Mr. Bavelis was a director of [Sterling Bank of Palm Beach County, Florida (“Sterling Bank”) ] and also was the chairman of the board, chief executive officer and president of its parent, Sterling Holding. At one point, Mr. Bavelis and members of the Bavelis family, directly and through trusts, owned somewhere between 52-55% of Sterling Holding.

[In the second quarter of 2009] Sterling Bank and Sterling Holding, like Mr. Bavelis, were having financial difficulty. At least part of Sterling Bank’s problems stemmed from nonperforming loans resulting from the distressed economy and depressed real estate values in Florida.

On June 10, 2010, the Board of Governors of the Federal Reserve System ... determined that, as of April 30, 2010, Sterling Bank was “significantly under-capitalized” and issued a prompt corrective action directive providing the bank 30 days from date of directive to become adequately capitalized. Sterling Bank could not do so, and, in July 2010, Sterling Bank was taken over by the FDIC.... On July 20, 2010, Mr. Bavelis filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code.

Bavelis I, 490 B.R. at 266, 274, 307 (citations and footnote omitted).

Given the 30-day corrective action issued by the Board of Governors on June 10, 2010, Bavelis would have known on the Petition Date that Sterling Bank was going to be taken over by the FDIC. 32 And Bavelis would have realized on the Petition Date that he was about to lose “$18-$20 million” as a result of the failure of Sterling Bank. Phase II Tr. at 132. Further, Bavelis concedes that Doukas did not cause the problems at Sterling Bank. Phase II Tr. at 131-32. Rather, according to Bavelis, Sterling Bank failed “because of the situation in Florida.” Bavelis testified that “it was a catastrophe at the time, my bank went under along with 88 other banks in the year 2010.” Phase II Tr, at 101; id. at 134 (“What happened with Sterling Bank is the real estate market collapsed. The real estate, commercial properties went down 57 percent”).

The imminent loss of his investment in Sterling Bank was only one of Bavelis’s *303 many financial problems existing on the Petition Date that Doukas had no hand in creating. During the Claim Objection Hearing, Bavelis testified that by the time he signed the QC Note “there was no way [he] ... personally ... would ... be able to borrow any more money.” Bavelis I, 490 B.R. at 301 . In fact, Bavelis already owed a significant amount of debt to institutional lenders by the time Doukas entered the picture. As the Court previously found:

In order to finance ... projects, Mr. Bavelis and Mr. Qureshi caused FLO-VEST and BMAQ to obtain loans from various lenders, including Fifth Third Bank, First Southern Bank, Colonial Bank, N.A. and Heartland Bank ... The aggregate principal amount of the debt owed by FLOVEST and BMAQ to ... [these] banks was approximately $21 million. Of this amount, the vast majority (more than $18 million) was the debt of FLOVEST. Mr. Bavelis personally guaranteed (or otherwise had personal liability on) all of this debt.

Bavelis I, 490 B.R. at 267-268 (citations omitted). Bavelis’s exposure on the loan to FLOVEST for which Colonial Bank was the principal obligor was approximately $13 million, and his liability on the guarantee of debt to First Southern Bank was around $6.4 million. Phase II Tr. at 77. That is, Bavelis had at least $20 million of liability on his personal guarantees of the debt of FLOVEST and BMAQ in favor of Colonial Bank and First Southern Bank. And Bavelis executed those guarantees, as well as other guarantees to Fifth Third Bank from March 2006 to February 2007, Claim Objection Hr’g Exs. 19-25, long before he was first introduced to Doukas in December 2008, Bavelis I, 490 B.R. at 270 .

One of Bavelis’s most pressing problems on the Petition Date arose from his obligations to Fifth Third. Bavelis “had two direct obligations to Fifth Third Bank” that “totaled approximately $9 or $9.5 million.” Phase II Tr. at 79. Although Bavelis was current on the debt -to Fifth Third on which he was primarily liable, he also had guarantor liability on loans that Fifth Third made to BMAQ and FLOVEST, and those loans were in default. Phase II Tr. at 79-80. Bavelis’s liability to Fifth Third on the guarantees was approximately $3.6 million. Doc. 40 (Schedule F) at 19.

According to Stovall, Bavelis’s bankruptcy counsel, Bavelis’s concern about actions that Fifth Third might take was a primary factor bearing on his decision to file a Chapter 11 case:

They subsequently went into default, being both the—I’ll call it the Fifth Third-Flovest obligation and the Fifth Third-BMAQ obligation, for clarity. And as a result of Mr. Bavelis’s other direct obligations, which were secured by a securities account held at Fifth Third Securities, Fifth Third threatened, if you will— and we engaged in negotiations with Fifth Third to try and resolve this—but threatened to call into default the other obligations of Mr. Bavelis, the direct obligations by virtue of cross-default provisions, and satisfy the entirety of the BMAQ and [FLOVEST] Fifth Third obligations, as well as the direct obligations out of the securities account.

Phase II Tr. at 80. Stovall also testified that Bavelis “needed at that point the jurisdiction of a bankruptcy court—this bankruptcy court—because of the [automatic] stay that we needed with regard to the threats of Fifth Third, which were looming very rapidly and very large.” Phase II Tr. at 83.

Stovall’s testimony was consistent with Bavelis’s representations in his disclosure statement for his Chapter 11 plan regarding the reason he decided to file his bankruptcy case:

*304 [Bavelis had granted] a security interest in those stocks and securities maintained in a [securities] account ... with Fifth Third Securities .... Fifth Third Bank threatened to exercise its alleged remedies against [Bavelis’s] [securities [a]c-count to satisfy the BMAQ and [FLO-VEST] obligations, all of which were personally guaranteed by [Bavelis]. [Ba-velis] was unable to resolve matters with Fifth Third Bank, Qureshi and Doukas. Thus, in order to protect his personal assets and attempt to restructure payments to lenders, he filed this chapter 11 bankruptcy proceeding on July 20, 2010.

Doc. 748 at 23-24. Bavelis valued the stocks and securities in the securities account at around $12 million as of the Petition Date and nearly $21 million by the ■time the disclosure statement was filed. See Doc. 748 at 42. In short, Bavelis commenced his bankruptcy case in order to prevent Fifth Third from seizing the valuable securities account maintained at the bank.

Bavelis contends that, were it not for Doukas’s fraudulent inducement of the Assignments, he could have addressed his multi-million dollar obligations to Fifth Third and the other banks without filing a bankruptcy case. See Phase II Tr. at 132 (“I could have worked out with the banks whatever I owed them. I was financially to the point that the banks trusted me because they extended—I could work out with the banks. Even Fifth Third, there was no problem.”). But after examining how Bavelis and his counsel suggest he would have done this, it becomes clear that their assumption that bankruptcy was avoidable were it not for the fraudulently inducement Assignments is entirely too speculative.

Bavelis’s proposed approach focused on first working out a deal with Qureshi. During the Phase II trial, Bavelis testified that by early 2009 he realized that he and Qureshi had fundamentally different business philosophies. See Phase II Tr. at 127 (“I didn’t want to be with him anymore, because we had difficulties in understanding each other in the business world.”); id. at 142 (“[A]t the beginning of [2009] I had some disagreements [with Qureshi], but then the disagreements progressed. And it was coming to the point that I just didn’t want to be a partner with him, because our philosophies of doing business were starting to be different.”). Given the differences between Bavelis and Qureshi—differences that pre-dated Doukas’s relationship with Bavelis—there is no reason to believe that Bavelis and Qureshi and their respective affiliates would have negotiated a consensual deal that would have addressed FLO-VEST’s and BMAQ’s debt and Bavelis’s guaranty obligations with respect to that debt. Bavelis nonetheless testified that he could have worked something out with Qureshi were it not for the Assignments. Phase II Tr. at 136 (“I would have been able to work something out with Qureshi, even if I offered him some money to get out.”). But Bavelis had attempted to work out a deal with Qureshi in the summer and fall of 2009 on his own without the involvement of Doukas, and the attempts had failed. Bavelis I, 490 B.R. at 296-97 ; see also Phase II Tr. at 142-43 (describing the failed negotiations). 33

In support of their argument that bankruptcy was avoidable if it were not for *305 Doukas and the. Assignments, Bavelis and his counsel also pointed to Bavelis’s efforts to dissolve FLOVEST and/or seek the appointment of a receiver who could sell FLOVEST’s assets in order to pay its debts. Phase II Tr. at 82-83. But there are several reasons why the Court cannot rely on those efforts to credit Bavelis’s argument that he could have avoided bankruptcy were it not for Doukas. For one, back in 2009, another individual with an interest in FLOHIO (the 50% owner of FLOVEST) 34 expressed the view that Qureshi might well stand in the way of any attempt to use a state court proceeding to resolve their differences with him:

In November 2009, Mr. Bavelis’s attorney, Mr. Schaeffer, sent a letter to Mr. Bavelis and certain principals of the other members of FLOHIO (i.e., Yessios Limited Partnership and Vakaleris Family Limited Partnership). Debtor’s Ex. 127. In response to the letter from Mr. Schaeffer, one of those principals stated in an email: “I vote to proceed with the ... dissolution [of FLOVEST], even though I have a strong suspicion that [Mr. Qureshi] will find a way to maneuver around this as well. I see this as a last resort and if it does not work the consequences should be obvious.” Debt- or’s Ex. 127 at TD 000119. In response, Mr. Bavelis stated that he “would prefer to see what the possibility is of working [this] out with the plaintiffs lawyer and possibly the judge before we jump into dissolution.”

Bavelis I, 490 B.R. at 297 .

In addition, Stovall testified about the difficulty Bavelis would have in obtaining the appointment of a receiver in the Florida courts. And when he was asked about that testimony, Bavelis did not attempt to argue that the state court proceeding would have resulted in a resolution of the FLOVEST problems. To the contrary, he confirmed Stovall’s testimony about the problems they saw with the state-court approach, stating that “the [state court] judge said that he had about ... 50,000 cases to resolve and to go and to file a case in Florida would have taken several years before anything was [resolved].” Phase II Tr. at 148. Bavelis was then asked: “[i]f that were the case ... even if you had not made the assignments of the interest, would you have been able to address your problems with Mr. Qureshi through the Florida court system and avoid bankruptcy?” In response, Bavelis did not provide testimony in support of his argument that the dissolution/receivership proceeding would have been successful. Instead, he repeated only that he “would have been able to work something out with Qureshi, even if [he] offered him some money to get out.” Id. Again, however, Bavelis had tried on his own to reach a consensual resolution with Qureshi without Doukas’s involvement and had been unsuccessful. Moreover, Qureshi and his companies opposed the dissolution and appointment of a receiver, and there is no reason to believe that he would have opposed them any less if the Assignments had not been made. Nor is it evident that a receiver for FLO-VEST would have been appointed over Qureshi’s objections even if Bavelis had not caused FLOHIO to assign its interest in FLOVEST to Nemesis.

*306 Bavelis appears to assume that he could have avoided bankruptcy if a receiver were appointed and the assets of FLOVEST were made available to pay its bank debt. But there is insufficient evidence to support that assumption, for he did not provide any testimony about the value of assets owned by FLOVEST. Id. at 105-06. And as the Court found in Bavelis I:

[W]ith respect to the Bavelis-Qureshi LLCs, FLOVEST was the most pressing problem. Among the properties it owned, only two of them—the office building and the gas station—were producing income, meaning that it was becoming increasingly difficult for FLO-VEST to make its mortgage payments. With an outstanding balance in excess of $10 million, the loan for the Lake Mary Project matured, and in May 2009 Colonial Bank notified FLOVEST that it would not renew the loan. Colonial Bank eventually initiated foreclosure proceedings and sought the appointment of a receiver for FLOVEST.

Bavelis I, 490 B.R. at 273 (citations omitted).

As already discussed, Bavelis had more than $18 million of exposure on his guarantees of the debt of FLOVEST alone. The evidence does not support a finding that the assets that might have been available if a receiver were appointed for FLOVEST would have been sufficient to satisfy that debt and thereby relieve Bavelis of his guarantee obligations. 35 In sum, there is no evidence that the assets of FLOVEST would have been sufficient to satisfy all of the bank debt and therefore prevent what Bavelis says led him to file his bankruptcy case in the first place—the fear that Fifth Third Bank would make good on its threat to seize his multi-million dollar securities account maintained at the bank after declaring a default on his debt.

To summarize: As of the Petition Date, Bavelis was about to lose an $18-$20 million investment in Sterling Bank while at the same time owing approximately that same amount to several other banks, including one [Fifth Third] that was threatening to seize valuable assets held by Ba-velis in order to pay the debt owed it. Furthermore, there is no reason to believe that the solutions posited by Bavelis—a workout with Qureshi and/or a receivership proceeding in Florida—would have resolved his financial difficulties outside of bankruptcy had Doukas not fraudulently induced the Assignments. For all the reasons set forth above, Bavelis’s contention that he would have stayed out of bankruptcy were it not for Doukas’s fraudulent inducement is too speculative to form a basis for awarding him the interest payments he was required to make after the Petition Date and all of his U.S. Trustee and professional fees he paid during the bankruptcy case.

V. Conclusions of Law

A. Applicability of Bavelis I’s Findings

Because the Court is basing these proposed findings of fact and conclusions of law in large part on the findings of fact set forth in Bavelis I, an explanation of why it is doing so is appropriate. Bavelis I’s findings were grounded on the evidence presented during the Claim Objec *307 tion Hearing. And before the Phase II trial commenced, Bavelis and each of the Doukas Defendants “stipulate[d] to the admissibility of (a) all testimony offered as part of the [Claim Objection Hearing] that was not excluded or stricken' based on a sustained objection, and (b) the exhibits previously admitted into evidence by this Court in conjunction with [the Claim Objection Hearing].” Adv. Doc. 654. Count Eleven, on which the Court is recommending that the District Court enter judgment in the amount of the damages incurred as a result of the fraudulent inducement of the QC Note and the Assignments, was tried at Phase II. It therefore is appropriate to incorporate Bavelis 7’s findings into these proposed findings of fact and conclusions of law as to Count Eleven. See, e.g., Levin v. S.C. Dep’t of Health & Human Servs., No. 3:12-cv-0007-JFA, 2015 WL 4545931 , at *1 n.3 (D.S.C. July 28, 2015) (holding that, because the parties “agreed that relevant testimony provided at the first bench trial would be considered in ruling on the merits of Plaintiffs’ claim for the second bench trial ... the findings of fact and conclusions of law rendered in the Court’s prior order ... are deemed incorporated herein”).

The parties’ stipulation also applies to the claims for relief that were tried at Phase I on which the Court is recommending the District Court enter final judgment (Counts One, Two and Four). In Counts One and Two, the Plaintiffs seek to unwind the Assignments based on Doukas’s fraudulent inducement. It would be disingenuous for the Doukas Defendants to consent to the Court’s using the findings from the Claim Objection Hearing in connection with the request in Count Eleven for damages based on fraudulent inducement, but then decline to agree to the application of those findings in connection with the adjudication of the requests in Counts One and Two for a judgment that the Assignments were fraudulently induced. Furthermore, as explained in the procedural history, the Doukas Defendants themselves previously asked the Court to use the evidence presented during the Claim Objection Hearing to rule on Bavelis’s request to unwind the Assignments. For these reasons, it is appropriate to incorporate the findings of fact from Bavelis I for the purpose of ruling on the Counts of the Complaint (Counts One and Two) that seek to unwind the Assignments.

The same also is true of Count Four. In that count, the Plaintiffs seek to unwind the transfers that Doukas caused Nemesis to make to Leftheris. Evidence presented during the Phase I trial established that Nemesis’s purported authority to make the transfers to Leftheris was based on the fraudulently induced December Agreements. Again, it would be disingenuous for the Doukas Defendants to agree that evidence from the Claim Objection Hearing could be used for purposes of concluding that the December Agreements had been fraudulently induced, but then argue that those findings could not be used to invalidate the transfers that Nemesis made to Leftheris based on the fraudulently induced December Agreements. It therefore is appropriate to apply the Doukas Defendants’ stipulation to Count Four as well. In short, despite the timing of the stipulation, the Court concludes that it applies to all the counts of the Complaint on which judgment should be entered against the Dou-kas Defendants. 36

*308 B. Law Governing the Plaintiffs’ Tort Claims

“Where the [Bankruptcy] Code [or other federal.law] does not specifically address an issue ... bankruptcy court[s] look[] to state law, to the extent that it does not conflict with the [B]ankruptcy [C]ode[.]” Reinhardt v. Vanderbilt Mortg. & Fin., Inc. (In re Reinhardt), 563 F.3d 558, 563 (6th Cir. 2009) (internal quotation marks omitted)). The question, then, is which state’s law applies here.

The Sixth Circuit has not resolved the issue of whether federal common law or the law of the forum state (Ohio) provides the applicable choice-of-law principles in a bankruptcy case. See State Bank of Florence v. Miller (In re Miller), 513 Fed. Appx. 566, 572 (6th Cir. 2013) (“[T]he federal circuits are split on whether state or federal law supplies the choice-of-law rules in bankruptcy cases.”). But just as in Miller, the Court “need not resolve that issue here,” because both the Ohio Supreme Court and the Sixth Circuit follow the approach of the Restatement (Second) of Conflict of Laws. See Morgan v. Biro Mfg. Co., 15 Ohio St.3d 339 , 474 N.E.2d 286, 288-89 (1984) (applying the Restatement approach, stating that “[w]e hereby adopt the theory stated in the Restatement of the Law of Conflicts, as it is more reflective of our past decisions and also provides sufficient guidelines for future litigation.”); Hauf v. Life Extension Found., 454 Fed. Appx. 425 , 430 n.2 (6th Cir. 2011) (“[Federal common law ... follow[s] the Restatement (Second) of Conflict of Laws.” (citing Med. Mut. of Ohio v. deSoto, 245 F.3d 561, 570 (6th Cir. 2001))).

Section 145 of the Restatement governs the law that applies to a tort action such as a claim of fraudulent inducement. Section 145 states: “The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.” Restatement § 145(1). *309 In determining which state has the most significant relationship under the principles stated in Restatement § 6, 37 a court should consider “(a) the place where the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the domicil, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered.” Id, § 145(2). “These contacts are to be evaluated according to their relative importance with respect to the particular issue.” Id.

Applying these factors here, it is clear that the state with the most significant relationship to the Plaintiffs’ tort claims against Doukas is Florida. Bavelis and Doukas both maintained residences in Florida, their relationship began and developed there, and Doukas engaged in his fraudulent conduct while he and Bavelis were in Florida. See Bavelis I, 490 B.R. at 271 . Furthermore, the Assignments transferred interests in Florida limited liability companies whose principal place of business was Florida, See Claim Objection Hr’g Exs. 14-16 (operating agreements for FLOVEST, BMAQ and GMAQ). Accordingly, Florida law governs the Plaintiffs’ tort claims.

C. Fraudulent Inducement

1. The Elements of a Fraudulent Inducement Claim Under Florida Law

In order to succeed on a fraudulent inducement claim under Florida law, a plaintiff must- prove: “(1) a false statement concerning a material fact; (2) the representor’s knowledge that the representation is false; (3) an intention that the representation induce another to act bn it; and (4) consequent injury by the party acting in reliance on the representation.” Butler v. Yusem, 44 So.3d 102, 105 (Fla. 2010) (quoting Johnson v. Davis, 480 So.2d 625, 627 (Fla, 1985)). Promises of future performance such as Doukas’s promises to negotiate with Qureshi on Bavelis’s behalf and to return the Assignments once the negotiations were completed constitute fraudulent misrepresentations if they are “made with no intention of performing or with a positive intention not to perform.” Thor Bear, Inc. v. Crocker Mizner Park, Inc., 648 So,2d 168, 172 (Fla. Dist. Ct. App. 1994); Houri v. Boaziz, 196 So.3d 383, 392-93 (Fla. Dist. Ct. App. 2016), pet. denied, 2016 WL 6902819 (Nov. 22, 2016). 38

2. Doukas Fraudulently Induced Ba-velis to Execute the Assignments.

Based on the findings of fact proposed in Sections IVA., IV.B and IV.C, the *310 Plaintiffs have established the required elements of their fraudulent inducement claims under Butler . Again, “Doukas ... perpetrated a scheme designed to deprive ... Bavelis of substantially all of his assets.” Bavelis I, 490 B.R. at 265 . Acting in accordance with this scheme, Doukas did everything that needed to be done to give rise to a fraudulent inducement claim under Florida law. He made false statements concerning material facts, including that he would negotiate with Qureshi on Bavel-is’s behalf and that he would return the Assignments once a resolution with Qure-shi was reached. Further, Doukas knew his representations to Bavelis were false, because he of course was aware of his intent not to negotiate with Qureshi on Bavelis’s behalf, but to instead keep the Assignments for himself. In fact, “Doukas never intended to fulfill his promise” to Bavelis of “working to resolve matters with .Qureshi in a manner favorable to ... Bavelis, nor for that matter, did he intend to keep any of the promises,” he made to him, but instead “intended to take advantage of ... Bavelis and deprive him of his assets.” Id. at 318 . Doukas clearly intended his misrepresentations to induce Bavelis to execute the Assignments. Finally, the Plaintiffs were injured as a result of their reliance on Doukas’s false representations. FLOHIO lost its 50% interest in FLOVEST, and Bavelis Family lost its 50% interest in BMAQ. For his part, Ba-velis lost his indirect ownership of BMAQ and FLOVEST, and he also lost his personal 50% membership interest in GMAQ—a company with no bank debt that instead owned millions of dollars of assets. And as a result of Doukas’s refusal to return the Assignments, Bavelis was forced to incur substantial attorneys’ fees litigating with Doukas—attorneys’ fees that, for the reasons explained below, Ba-velis cannot recover as damages under Florida law. The Plaintiffs therefore clearly were injured as a- result of the reliance on Doukas’s false promises.

3. The Reliance Requirement

Conceding that he “made statements that were not true about transfers from Mr. Bavelis to [the] Doukas entities,” Adv. Doc. 677 at 33, Doukas asserts only one defense to the Plaintiffs’ fraudulent inducement claims—that Bavelis “was not justified in relying on Mr. Doukas’ representations.” Id. at 35. For the reasons explained below, this defense must fail.

In Butler , the Florida Supreme Court stated that “ [j Justifiable reliance is not a necessary element of fraudulent misrepresentation.” Butler, 44 So.3d at 105 . Relying on this statement, Bavelis contends that Florida law does not require a party’s reliance to be justifiable. But despite the seemingly clear pronouncement in Butler , Florida law in fact is ambiguous on this point. In the context of misrepresentations of existing facts, the Florida Supreme Court—including the Butler court—has repeatedly reaffirmed that “a recipient may rely on the truth of a representation, even though its falsity could have been ascertained had he made an investigation, unless he knows the representation to be false or its falsity is obvious to him.” Id. (quoting Besett v. Basnett, 389 So.2d 995, 998 (Fla. 1980)); see also, e.g., M/I Schottenstein Homes v. Azam, 813 So.2d 91, 94-95 (Fla. 2002) (“[I]f the recipient ‘knows that [the statement] is false or its falsity is obvious to him,’ his reliance is improper, and there can be no cause of action for fraudulent misrepresentation.”) (quoting Besett, 389 So.2d at 997 ). Importantly, this is precisely the standard for justifiable reliance: “The recipient of a fraudulent misrepresentation is not justified in relying upon its truth if he knows that it is false or its falsity is obvious to him.” Restatement (Second) of Torts § 541 (1977); see also *311 Restatement (Second) of Torts § 540 (“The recipient of a fraudulent misrepresentation of fact is justified in relying upon its truth, although he might have ascertained the falsity of the representation had he made an investigation.”). Moreover, pri- or Florida Supreme Court cases expressly adopted the Restatement’s justifiable reliance provisions. See Besett, 389 So.2d at 997 (“The principle of law which we adopt is expressed in Sections 540 and 541 of Restatement!)]”); Gilchrist Timber Co. v. ITT Rayonier, Inc., 696 So.2d 334, 336 (Fla. 1997) (“[In Besett,} we specifically adopted the Restatement of Torts’ position contained in sections 540 and 541 [.] ”).

Given all this, a lower Florida appellate court has noted the uncertainty raised by the Butler decision. Construing Butler in the context of the prior Florida Supreme Court decisions, the court questioned whether Butler truly eliminated justifiable reliance as a requirement, because “[Florida’s] high court does not overrule itself sub silentio.” Billington v. Ginn-La Pine Island, Ltd., 192 So.3d 77 , 81-82 n.4 (Fla. Dist. Ct. App. 2016).

4. Bavelis’s Reliance was Justifiable.

That said, it is unnecessary to determine whether Florida law requires justifiable reliance rather than mere reliance, because Bavelis in fact was justified in relying on Doukas’s misrepresentations. While Bavelis would not have been justified in relying upon Doukas’s representations regarding his intent if Bavelis had known the representations were false or their falsity had been obvious to him, Bavelis clearly did not know that Doukas’s promises in December 2009 were false, nor was it obvious to Bavelis that Doukas was lying to him. Furthermore, “[t]he recipient of a fraudulent misrepresentation of intention is justified in relying upon it if the existence of the intention is material and the recipient has reason to believe that it will be carried out.” Restatement § 544. And “[w]hether the recipient has reason for this belief depends upon the circumstances under which the statement was made, including the fact that it was made for the purpose of inducing the recipient to act in reliance upon it and the form and manner in which it was expressed.” Id. cmt. a. Under the circumstances, Bavelis was justified in relying upon Doukas’s false representation of his intention. The existence of Doukas’s intention to carry out his promises—including the promise to negotiate a resolution with Qureshi and then return the Assignments—was material to Bavel-is’s decision to execute the Assignments, and Bavelis had reason to believe that Doukas would return the Assignments and fulfill his other promises, The Court reaches this conclusion after considering the circumstances under which Doukas’s statements were made—including the fact that they were made for the purpose of inducing Bavelis to act in reliance upon them— and after considering the form and manner in which Doukas expressed his intention. In particular, as explained in the Court’s proposed findings of fact, Doukas made his promises after engaging in sustained efforts to cultivate the appearance of a relationship of trust and friendship with Bavel-is.

Bavelis’s reliance was justifiable not only when he signed the March Agreement and the R.P.M. Agreement, but also when he signed the December Agreements. As discussed in Section IV.C above, Bavelis adequately explained why he continued to trust Doukas in December 2009:

So I really had a lot of trust in him, a lot of trust in him, because he was convincing me, even though at some point I had some second thoughts. But after I had the second thoughts, he would come back to my house, we would have dinner, and he would talk to make you always *312 justify. And then I would say: “Well, why am I worried about this guy? He is—he’s still a genuine guy. He will help. He will do everything I need to get me out of Qureshi and help me with the bank.” And I was going overboard not to upset him in any way.

Phase II Tr. at 130-31. Given Doukas’s reassurances, Bavelis believed Doukas’s representations that he had reached a deal with Qureshi and that the December Agreements would be returned to him. See id. at 145 (“It was a done deal, finished. There was nothing to worry about anymore. He was going straight to Mr. Qure-shi to get the signature and we were done.”).

Should Bavelis have been more careful? Certainly. As pointed out in Bavelis I: “In hindsight, Mr. Bavelis no doubt would agree that he should have done things differently. A businessman of his experience and stature clearly should not have turned to Mr. Doukas—or relied on his machinations—to resolve his financial difficulties, including his disputes with Mr. Qureshi.” Bavelis I, 490 B.R. at 304 . But as the Supreme Court of Florida has held:

A person guilty of fraud should not be permitted to use the law as his shield. Nor should the law encourage negligence. However, when the choice is between the two—fraud and negligence-negligence is less objectionable than fraud. Though one should not be inattentive to one’s business affairs, the law should not permit an inattentive person to suffer loss at the hands of a misrepre-senter.

Besett, 389 So.2d at 998 .

For all the reasons explained above, the Court concludes that, under Florida law, Bavelis’s reliance on Doukas’s promises throughout 2009 was justifiable and that Doukas fraudulently induced Bavelis to execute the Assignments.

D. Rescission

“Assignments are contracts.” Slorp v. Lerner, Sampson & Rothfuss, 587 Fed.Appx. 249, 254 (6th Cir. 2014). As with other contracts, rescission of an assignment is appropriate when “at the time of the execution ... the party promising to perform an act in the future has a secret undisclosed intent not to carry it out but fraudulently represents that he will perform as an inducement to the other party to enter into the contract .... ” Steak House, Inc. v. Barnett, 65 So.2d 736, 738 (Fla. 1953); Royal v. Parado, 462 So.2d 849, 855 (Fla. Dist. Ct. App. 1985). Because Doukas induced Bavelis to execute the Assignments by promising to perform acts that Doukas had no intention of performing, the Assignments should be rescinded.

In order to succeed on a claim for rescission under Florida law, a plaintiff must demonstrate:

(1) The character or relationship of the parties;

(2) The making of the contract;

(3) The existence of fraud, mutual mistake, false representations, impossibility of performance, or other ground for rescission or cancellation;

(4) That the party seeking rescission has rescinded the contract and notified the other party to the contract of such rescission;

(5) If the moving party has received benefits from the contract, he should further allege an offer to restore these benefits to the party furnishing them, if restoration is possible;

(6) Lastly, that the moving party has no adequate remedy at law.

Crown Ice Mach. Leasing Co. v. Sam Senter Farms, Inc., 174 So.2d 614, 617 (Fla. Dist. Ct. App. 1965); see also Lawyers *313 Title & Escrow, Inc. v. S. States Inv. Corp., No. 98-5472, 1999 WL 993932 , at *3 (6th Cir. Oct. 20, 1999) (quoting Crown Ice, 174 So.2d at 617 ). 39

The Plaintiffs have established all of these elements with respect to the Assignments. As explained above in Sections IV.A, IV.B and IV.C, the evidence demonstrates the relationship that existed between Doukas and Bavelis and how Doukas used that relationship to defraud Bavelis into executing the Assignments. Bavelis made repeated requests that Doukas return the Assignments, which effectively was a demand and notice of rescission of the Assignments. Further, Bavelis has not retained any benefits under the Assignments. And as stated above in Section IV.D, Bavelis received no benefits from the March Agreement or the December Agreements, and he quickly (within a month) repaid the $50,000 that he received under the R.P.M. Agreement. Finally, failure to rescind the fraudulently induced Assignments would leave the Doukas Defendants in a position to further harm Bavelis by using assets of GMAQ, BMAQ and FLOVEST that they have no right to use. Thus, anything short of rescission would be an inadequate remedy. For all these reasons, the Assignments must be rescinded. 40

That leaves the Subsequent Transfers. Under Florida law, “[t]he prime object of rescission is ‘to undo the original transaction and restore the former status’ of the parties.” Billian v. Mobil Corp., 710 So.2d 984, 990 (Fla. Dist. Ct. App. 1998) (quoting Willis v. Fowler, 102 Fla. 35 , 136 So. 358, 369 (1931)). If rescission of a transfer is warranted as a result of fraud, a court:

may set aside all transactions founded on [the transfer], however they may have been effected, and notwithstanding any contrivance by which it may have been attempted to protect them, and may also treat acts as having been done which ought to have been done, and convert the party who has committed a fraud and profited by it into a trustee for the injured party.

Id. (quoting Willis, 136 So. at 368 ).

The Subsequent Transfers were founded on the fraudulently induced December Agreements, and they must be rescinded in order to restore the parties to the status quo existing before the December Agreements were executed. The judgment in favor of the Plaintiffs therefore should provide for rescission of the Subsequent Transfers.

E. Tortious Interference

In Count Five, Bavelis. asserts a tortious interference claim against Doukas with respect to certain guarantees Bavelis executed before the Petition Date (the “Guarantees”) “as an inducement for the extension of credit” to the Bavelis-Qureshi LLCs. Adv. Doc. 490 ¶ 41. In particular, Bavelis *314 executed a Guaranty in favor of Colonial Bank, an Absolute Unconditional and Continuing Guaranty in favor of First Southern Bank, and- six guarantees—a Continuing Guaranty Agreement, an Unconditional Guaranty of Payment and Performance, a Cognovit Guaranty, and three documents entitled Unconditional and Continuing Guaranty—in favor of Fifth Third Bank. Id, ¶¶ 43-50. Bavelis also includes among the Guarantees a promissory note he issued “to enable FLOVEST to secure financing from Heartland Bank.” Id. ¶ 42. 41

Bavelis contends that Doukas “interfered with the Guarantees by ... engaging in acts which caused the [Bavelis-Qureshi LLCs] to default on the[ ] loans” they received from Colonial Bank, First Southern and Fifth Third. Adv. Doc. 490 ¶ 161. In his proposed findings of fact and conclusions of law, Bavelis argues in more detail that:

Doukas, either individually or through his assignee entities, is directly liable for tortiously interfering with Mr. Ba-velis’ personal guarantees of the [Ba-velis-Qureshi LLC’s] debt.... [I]n fraudulently inducing the [Assignments] but refusing—based upon such assignments—to participate/aid in the marshalling and preservation of assets for the [Bavelis-Qureshi LLCs’] creditors, Doukas intentionally and directly interfered with Mr. Bavelis’ personal guarantees.

Adv. Doc. 674 at 33.

In support of his tortious interference claim, Bavelis relies, on Restatement (Second) of Torts § 766. See Adv. Doc. 674 at 34. Florida law recognizes the cause of action for tortious interference with contractual relations under that section of the Restatement. See Gossard v. Adia Servs., Inc., 723 So.2d 182, 184 (Fla. 1998). The section provides:

One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract.

Restatement (Second) of Torts § 766.

This section applies if the defendant caused a third party to breach its contract with the plaintiff. See Gemini Physical Therapy & Rehab., Inc. v. State Farm Mut. Auto. Ins. Co., 40 F.3d 63, 66 (3d Cir.1994) (holding that Section 766 applies where “the defendant causes the promisor to breach its contract with the plaintiff’). In the context of the Guarantees, Section 766 might have applied if Doukas had caused the banks to breach promises they made to Bavelis (e.g., their promise to loan money) in connection with Bavelis’s execution of the Guarantees. Bavelis, however, does not allege that Doukas caused the banks or any other third party to breach any contract with Bavelis. Section 766 therefore does not apply. Put differently, Bavelis contends that Doukas should be liable for tortious interference with the Guarantees because Doukas caused the parties who were primarily liable on the obligations guaranteed by Bavelis (i.e., the Bavelis-Qureshi LLCs) to default, but the default on which Bavelis relies is a default by the Bavelis-Qureshi LLCs’ on their obligations to the banks, not on any obligation the Bavelis-Qureshi LLCs had to Bavelis. Again, Section 766 does not apply *315 here, because that section “addresses disruptions caused by an act directed not at the plaintiff, but at a third person: the defendant causes the promisor to breach its contract with the plaintiff.” Gemini Physical Therapy, 40 F.3d at 66 (3d Cir. 1994) (quoting Windsor Sec., Inc. v. Hartford Life Ins. Co., 986 F.2d 655, 660 (3d Cir.1993)). Section 766 is inapplicable given that Bavelis does not allege that Doukas caused a third party to breach its contract with Bavelis.

Bavelis appears to be suggesting that Doukas caused his performance under the Guarantees to be more burdensome—for example, by causing the Bavelis-Qureshi LLCs to default on their primary obligations to the banks and thus forcing him to tap his own resources to satisfy his obligations under the Guarantees.. There is a section of the Restatement that addresses situations where “the defendant prevents or impedes the plaintiffs own performance.” Gemini, 40 F.3d at 66 (quoting Windsor Sec., 986 F.2d at 660 ). This section of the Restatement, Section 766A, provides:

One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person, by preventing the other from performing the contract or causing his performance to be more expensive or burdensome, is subject to liability to the other for the pecuniary loss resulting to him.

Restatement (Second) of Torts § 766A (emphasis added).

Florida, however, does not recognize a cause of action for tortious interference with contractual relations under Section 766A. See KMS Rest. Corp. v. Wendy’s Int’l, Inc., 361 F.3d 1321, 1323 (11th Cir. 2004) (holding that, because the plaintiffs “were seeking relief under § 776A of the Restatement (Second) of Torts and ... because the Florida courts have not adopted § 766A, their claim failed”). 42 In short, the facts alleged by the Plaintiffs do not state a tortious interference claim under Florida law. Bavelis’s tortious interference claim therefore should be dismissed.

F. Breach of Fiduciary Duty

1. Doukas

In Count Seven, Bavelis contends that Doukas breached fiduciary duties he owed Bavelis. Adv. Doc. 490 ¶¶ 170-71. Adjudicating this claim is unnecessary because the only remedy that Bavelis seeks based on the alleged breach of fiduciary duty that he is not already receiving based on fraudulent inducement is the equitable remedy of disgorgement and, as explained in Section V.I.3 below, it would not be equitable to order disgorgement under the circumstances of this case. For this reason, Count Seven against Doukas should be dismissed as moot.

2. Stravato

In Count Eight, Bavelis seeks to hold Stravato culpable for breach of fiduciary duty based on the following state *316 ments in the Complaint, which Bavelis contends Stravato has admitted:

1. “At all times herein, Defendant Stravato was a co-conspirator, aider and abettor and/or agent for Defendants Doukas, Nemesis, and Quick Capital.” Adv. Doc. 490 ¶ 11.

2. “Defendant Stravato prepared the [QC] Note, and in doing so served in a dual agency capacity by representing Defendants Quick Capital and Doukas and George Bavelis. George Bavelis paid Defendant Stravato for the legal services rendered.” Id. ¶ 78.

3. “Defendant Stravato served as legal counsel for George Bavelis, and as such owed him a duty of good faith and to act without conflict.” Id. ¶ 174.

4. Defendant Stravato violated the duty of care owed as an attorney, and violated his fiduciary duty, by, among other items, (a) acting as a dual agent; (b) his preparation of the [QC] Note; and (c) failure to adequately advise his client and otherwise disclose information material to his client. Id. ¶ 175.

Bavelis did not introduce evidence in support of these allegations, but instead relies entirely on Stravato’s purported admissions. Stravato, however, filed an answer to the original complaint, which contained the same allegations regarding him as those set forth above. Adv. Doc. 1 ¶¶ 9, 71, 160-61. In his answer, Stravato stated:

I have never met the plaintiff George Bavelis and the only services I have performed for him were indirectly, related to a project involving medical technology and early detection of breast cancer. Mr, Bavelis and Mr. Doukas were to invest jointly and for that reason I received $2,500 from Mr. Bavelis and $2,500 from Mr. Doukas to review material related to this project. All of my contact was with Mr. Doukas with the exception of a single email where I was providing contact information so that I could receive 50% of the Retainer Mr. Bavelis was to contribute. I had no conversations or discussions with Mr. Ba-velis. I would not recognize him if I saw him... At Mr. Bavelis’ direction and because of my prior relationship with Mr. Doukas, I chose to communicate solely to Mr. Doukas.

Nearly a year later I was retained by Quick Capital of Long Island Corp. to collect on a Promissory Note executed by Mr. Bavelis.

Adv. Doc. 84 ¶¶ 12-13.

Thus, Stravato has not admitted that he represented Bavelis in connection with the QC Note or that he had a fiduciary duty to him. Despite Stravato’s filing of an answer to the original complaint, Bavelis argues that the entry of default against Stravato means that he is deemed to have admitted the allegations of the Complaint. This argument, however, is contrary to controlling Sixth Circuit law. Because Stravato filed an answer to Bavelis’s original complaint, and because neither the first amended complaint nor the Complaint itself included any allegations as to Stravato that were not already set forth in the original complaint, Stravato has not admitted the allegations concerning his purported breach of fiduciary duty. See Nouri v. Cnty. of Oakland, 615 Fed.Appx. 291, 297 (6th Cir. 2015) (holding that the allegations of the amended complaint were denied because the defendant denied substantially the same allegations in its answer to an earlier complaint) (citing LaGorga v. Kroger Co., 407 F.2d 671, 673 (3d Cir. 1969)). Thus, Count Eight must be dismissed.

G. Conspiracy

In Count Fourteen of the Complaint, the Plaintiffs allege:

*317 With the exception of the [Bavelis-Qure-shi LLCs], Defendants, through their conduct described [in the Complaint], intentionally and maliciously conspired with each other, aided and abetted each other, and/or acted as principals/agents of each other, in an effort to intentionally and willfully breach fiduciary duties owed to George Bavelis, commit fraud, and/or commit fraudulent conveyances in the manner set forth [earlier in the Complaint].

Adv. Doc. 490 ¶ 206.

“Conspiracy is not a separate or independent tort but is a vehicle for imputing the tortious acts of ’one coconspirator to another to establish joint and several liability.” Ford v. Rowland, 562 So.2d 731 , 735 n.2 (Fla. Dist. Ct. App. 1990). Once again, Bavelis relies solely on the purported, admissions of Stravato and the corporate Doukas Defendants in order to make them culpable for the acts of Doukas. See Adv. Doc. 674 at 36 (arguing that “[t]he result [of the defaults of Stravato and the corporate Doukas Defendants] is that [they] are deemed to be conspirators with Doukas, and are jointly and severally liable for the damages awarded to Mr. Bavelis based on fraud”).

1. Stravato

Again, however, Stravato filed an answer to the original complaint, and that complaint contained the same allegations regarding conspiracy as the Complaint does. See Adv. Doc. 1 ¶¶ 9, 21, 192 & Adv. Doc. 490 ¶¶ 11, 24, 206. Thus, under Sixth Circuit law, Stravato cannot be deemed to have admitted the conspiracy-related allegations of the Complaint. In addition, there is no evidence in the record that Stravato conspired with Doukas. Indeed, Bavelis concedes that liability for conspiracy requires knowledge of the conspiracy. Adv. Doc. 674 at 37. Yet there is absolutely no evidence that Stravato had knowledge of the conspiracy in which Bavelis contends the Doukas Defendants engaged. For these reasons, dismissal of Count Fourteen as to Stravato is appropriate.

2. The Corporate Doukas Defendants

That leaves Doukas’s solely owned companies. As discussed in the procedural history, Quick Capital, Nemesis, R.P.M. and Leftheris filed an answer but, after the attorney who filed it on their behalf withdrew from the representation, they were deemed to be in default based on their failure to retain new counsel by the deadline set by the Court. The Plaintiffs contend that the consequence of the deemed default by these corporate Doukas Defendants should be an admission that they conspired with Doukas. But those corporate Doukas Defendants (as well as Blair, which also joined in the answer to the Complaint) eventually retained counsel who prosecuted this matter on their behalf, including by participating at trial and filing proposed findings of fact and conclusions of law. Bavelis cites no case law—and the Court is unaware of any—where a defendant was deemed to have admitted the allegations of a complaint after filing an answer and retaining counsel (albeit in an untimely fashion) to litigate the issues, and it thus is far from clear that the corporate Doukas Defendants should be deemed to have admitted the allegations of the Complaint.

In any event, under Florida law, the corporate Doukas Defendants are legally incapable of conspiring with their sole owner, Doukas, and also are incapable of conspiring with one another. A civil conspiracy exists where there is: “(1) an agreement between two or more parties; (2) to do an unlawful act or to do a lawful act by unlawful means; (3) the doing of some overt act in pursuance of the conspir *318 acy; and (4) damage to plaintiff as a result of the acts done under the conspiracy,” Philip Morris USA, Inc. v. Russo, 175 So.3d 681 , 686 n.9 (Fla. 2015). Under the intracorporate conspiracy doctrine, a company and its sole owner are not considered separate parties for purposes of conspiracy, and federal district courts applying this doctrine in cases governed by Florida law therefore have held that an individual defendant cannot, as a matter of law, conspire with a company that he wholly owns. See Vivid Entm’t, LLC v. J & B PB, LLC, No. 2:13-cv-524, 2015 WL 144352 , at *4 (M.D. Fla. Jan. 12, 2015) (“Pursuant to the intracorporate conspiracy doctrine, McCarty cannot conspire with Vivid as McCarty is the sole owner of [Vivid].”); Bryant Heating & Air Conditioning Corp. v. Carrier Corp., 597 F.Supp. 1045, 1054 (S.D. Fla. 1984) (“Florida case law holds that members of a single economic unit, such as [a corporation and] its wholly owned subsidiary ... cannot constitute the requisite combination of ‘separate economic groups or forces’ necessary to establish the Florida tort of conspiracy.” (citing Buckner v. Lower Fla. Keys Hosp. Dist., 403 So.2d 1025, 1029 (Fla. Dist. Ct. App. 1981))); see also Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752, 771 , 104 S.Ct. 2731 , 81 L.Ed.2d 628 (1984) (holding that parent corporation and its wholly owned subsidiary are not legally capable of conspiring with each other under § 1 of the Sherman Act because “a parent and subsidiary have not ... two separate corporate consciousnesses, but one”).

The intracorporate conspiracy doctrine also has been extended to companies with common ownership. See Directory Sales Mgmt. Corp. v. Ohio Bell Tel. Co., 833 F.2d 606, 611 (6th Cir. 1987) (“Here we have two subsidiaries which are wholly-owned by the same parent and are likewise not separate enterprises. We agree ... that Copperweld precludes a finding that two wholly-owned sibling corporations can combine for the purposes of section 1 [of the Sherman Act].”); Perry v. Patriot Mfg, Inc., No. 1:05CV153LMB, 2006 WL 2707361 , at *3 (E.D. Mo. Sept. 19, 2006) (“Two subsidiaries of the same parent corporation cannot conspire.” (citations omitted)), In light of all the foregoing, the Court cannot conclude that the corporate Doukas Defendants conspired with Doukas or with one another. And because conspiracy is the sole legal theory on which Bavel-is seeks a monetary award against the corporate Doukas Defendants in this adversary proceeding, a money judgment should be entered against Doukas only.

H. Moot Claims

In light of the Court’s determination that the Assignments were fraudulently induced and should be rescinded and that judgment should be entered in favor of the Plaintiffs on Counts One and Two on the basis of fraudulent inducement, certain other counts and portions of counts of the Complaint are no longer of practical significance and therefore are moot. See Finstad v. Florida, Dep’t of Bus. & Prof'l Regulation, 295 Fed.Appx. 352, 353 (11th Cir. 2008) (“A complaint becomes moot when it no longer presents a ‘live’ controversy or a ruling on the issues would have no practical significance.”), cert. denied, 558 U.S. 824 , 130 S.Ct. 145 , 175 L.Ed.2d 36 (2009). In particular, the following claims for relief are moot as a result of the proposed rulings on Counts One and Two: Count One subparts (b)-(g) (additional grounds for unwinding the March Agreement and the R.P.M. Agreement, including failure of consideration); Count Two sub-parts (b)-(g) (additional grounds for unwinding the December Agreements, including failure of consideration); Count Ten (request to avoid the Assignments as fraudulent transfers); Count Twelve (neg *319 ligent misrepresentation claim against Doukas with respect to the Assignments); and Count Thirteen (promissory estoppel against Doukas with respect to the Assignments). In addition, as already discussed, adjudicating Count Seven (the breach of fiduciary duty claim against Doukas) is unnecessary given that the only remedy that Bavelis seeks based on the alleged breach of fiduciary duty that he is not already receiving based on fraudulent inducement is disgorgement, a remedy to which he is not entitled. Because these proposed findings of fact and conclusions of law are intended to adjudicate all of the remaining claims in this adversary proceeding, the claims discussed above (the “Moot Claims”) should be dismissed as moot.

I. Amount of the Judgment

1. Unreturned Checks

Based on the equitable doctrine of unjust enrichment, Bavelis seeks “to recover $116,600, which is the amount of [two] checks written to Quick Capital that Doukas promised to return to ... Bavelis, but did not.” Adv. Doc. 674 at 43. Under the Restatement (Second) of Conflict of Laws § 221, recovery based on a claim of unjust enrichment is governed by “the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties,” and the determination of the relevant. state law is determined after taking into consideration the following factors:

(a) the place where a relationship between the parties was centered, provided that the receipt of enrichment was substantially related to the relationship,

(b) the place where the benefit or enrichment was received,

(c) the place where the act conferring the benefit or enrichment was done,

(d) the domicil, residence, nationality, place of incorporation and place of business of the parties; and

(e) the place where a physical thing, such as land or a chattel, which was substantially related to the enrichment, was situated at the time of the enrichment.

Restatement (Second) of Conflict of Laws § 221 (1971).

Application of these factors here makes it clear that the state with the most significant relationship to Bavelis’s unjust enrichment claim is Florida. Again, the relationship between Bavelis and Doukas was centered in Florida. Furthermore, the receipt of the $116,600 was substantially related to their relationship, and the cheeks were issued by Bavelis and received by Doukas while the two men were at Bavelis’s Florida home. See Bavelis I, 490 B.R. at 287 . Florida law therefore applies to Bavelis’s unjust enrichment claim.

“The elements of an unjust enrichment claim are ‘a benefit conferred upon a defendant by the plaintiff, the defendant’s appreciation of the benefit, and the defendant’s acceptance and retention of the benefit under circumstances that make it inequitable for him to retain it without paying the value thereof.’” Fla. Power Corp. v. City of Winter Park, 887 So.2d 1237 , 1241 n.4 (Fla. 2004) (quoting Ruck Bros. Brick, Inc. v. Kellogg & Kimsey, Inc., 668 So.2d 206, 207 (Fla. Dist. Ct. App. 1995)). Those elements are satisfied here. At Doukas’s request, in the summer of 2009 Bavelis issued Quick Capital two checks, each in the amount of $58,300. Bavelis believed that the checks related to his estate planning, 43 and Doukas advised *320 him that he would return the checks. Dou-kas, however, never returned the checks. Bavelis I, 490 B.R. at 327 . When Bavelis gave Doukas the checks and Doukas failed to keep his promise to return them, Dou-kas was enriched at Bavelis’s expense, and it would be inequitable to permit Doukas and Quick Capital to retain the funds. The judgment entered in favor of Bavelis accordingly should include the $116,600 aggregate amount of the checks.

2. Fees and Expenses Incurred in Litigating With Doukas

[32,33] Bavelis contends that applicable state law entitles him to a judgment for the attorneys’ fees he incurred in litigating with the Doukas Defendants. As discussed above, Florida law applies here. Acknowledging Florida’s adoption of the “American Rule,” 44 under which “attorney fees may be awarded by a court only when authorized by statute or by agreement of the parties,” Fla. Patient’s Comp. Fund v. Rowe, 472 So.2d 1145, 1148 (Fla. 1985), 45 Bavelis primarily relies on Florida’s bad-faith exception to the American Rule. Adv. Doc. 674 at 49. 46 The Supreme Court of Florida indeed has recognized an exception' to the American Rule—which it calls the “inequitable conduct doctrine”—in cases in which a party “acted in bad faith” in connection with litigation. Bitterman v. Bitterman, 714 So.2d 356, 365 (Fla. 1998).

In Bitterman , the Supreme Court of Florida stated that the bad-faith exception “is rarely applicable,” Id. Attempting to persuade the Court that this is the rare case in which the exception applies, Bavel-is first points to Doukas’s fraudulent conduct on which the Complaint is based. Adv. Doc. 674 at 49. But equating the underlying fraudulent conduct with bad faith effectively would render fraud an exception to the American Rule. Florida, however, does not recognize an exception to the American Rule for fraud claims. See Martin v. Paskow, 339 So.2d 266, 268 (Fla. Dist. Ct. App. 1976); Weisenberg v. Carlton, 233 So.2d 659, 661 (Fla. Dist. Ct. App. 1970); Butler v. Wright, No. 8:06-CV-165-T-17TBM, 2010 WL 599387 , at *4 (M.D. Fla. Feb. 16, 2010) (“Upon careful consideration of the parties’ arguments and applicable state case law, I am unable to find that an award of attorney fees on grounds of inequitable conduct and/or bad faith is warranted. The jury’s findings with respect to fraud, breach of fiduciary duty, *321 and punitive damages, while troubling, do not alone allow for such an award under Florida law.”); A Bus. Equip. Sols., Inc. v. Quality Data Sys., Inc., No. 08-60769-CIV, 2008 WL 4763710 , at *6 (S.D. Fla. Oct. 27, 2008). 47

Furthermore, if the fraud that gave rise to the plaintiffs claim constituted bad faith, then the exception that the Bitter-man court described as “rarely applicable” would not be so rare—it instead would apply in every case in which a defendant is held liable for fraud. Cf. Ass’n of Flight Attendants, AFL-CIO v. Horizon Air Indus., Inc., 976 F.2d 641, 650 (9th Cir. 1992) (holding that “expanding the,[bad faith] exception to encompass cases in which the only bad faith alleged is an element of the cause of action” would improperly “justify an award of fees in every fraud case”). Thus, no Florida court has relied on the fraud that gave rise to the underlying claim as a basis for finding bad faith and awarding attorneys’ fees. Indeed, doing so would effectively nullify Florida’s adoption of the American Rule. Cf. Shimman v. Int’l Union of Operating Eng’rs, Local 18, 744 F.2d 1226 , 1232 n.9 (6th Cir. 1984) (en banc) (holding that “[t]he effect of a fee award based on bad faith in the initial wrongdoing would be to punish that conduct,” which would not be permissible under the American Rule).

In support of his argument that Dou-kas’s underlying fraud supports an award of attorneys’ fees, Bavelis relies on the Bitterman court’s statement that “[b]ad faith may be found not only in the actions that led to the lawsuit, but also in the conduct of the litigation.” Adv. Doc. 674 at 49 (quoting Bitterman, 714 So.2d at 365 ). But given that Florida does not recognize fi-aud as an exception to the American Rule, it is clear that the phrase “actions that led to the lawsuit” refers to something other than the conduct that gave rise to the plaintiffs claims for relief. Cf. Horizon Air, 976 F.2d at 550 (holding that the bad-faith exception for “actions that led to the lawsuit” does not permit “shifting attorney’s fees based solely upon a finding of *322 bad faith as an element of the cause of action presented in the underlying suit”); Shimman, 744 F.2d at 1233 (holding that the bad-faith exception for “actions that led to the lawsuit” does not “allow an award of attorney fees based only on bad faith in the conduct giving rise to the underlying claim”).

The phrase “actions that led to the lawsuit” instead encompasses conduct such as “bad faith conduct in filing a frivolous or vexatious lawsuit,” Horizon Air, 976 F.2d at 550 , as well as other “bad faith [that occurs] after the original claim arises” but before the lawsuit is filed, Shimman, 744 F.2d at 1232 . Bavelis does not specify any such conduct. Instead, the only conduct in which Doukas engaged (after committing his underlying fraud) that Bavelis specifies and attempts to tie to his attorneys’ fees is the sanctionable conduct addressed in the Sanctions Opinion. See Adv. Doc. 674 at 49 (stating that Doukas’s “post-litigation bad faith consisted of, among other things,” the conduct that is the subject of the Sanctions Opinion). Other than those misdeeds, Bavelis vaguely mentions only that Dou-kas engaged in “other” misconduct. But Florida law requires a court to make “an express finding of bad faith conduct ... supported by detailed factual findings describing the specific acts of bad faith conduct that resulted in the unnecessary in-currence of attorneys’ fees.” Moakley v. Smallwood, 826 So.2d 221, 227 (Fla. 2002). Thus, by merely alluding to unspecified conduct with the use of the phrase “among other things,” Bavelis has not .provided the Court with the evidence it would need in order to propose factual findings supporting an award of attorneys’ fees for bad faith with the “high degree of specificity” required by Florida law. Id. at 227 . 48

Following a hearing, Doukas, Quick Capital and Goldstein will be ordered to pay the attorneys’ fees that Ba-velis incurred as a result of the specific misconduct addressed in the Sanctions Opinion. There is no reason to do so separately here, and the only other conduct on which Bavelis relies for an award of attorneys’ fees is the fraud that led to his underlying claims for relief. Thus, including attorneys’ fees in a judgment in this adversary proceeding effectively would be awarding attorneys’ fees based on the fraudulent conduct itself, in contravention of the Florida decisional authority adopting the American Rule.

3. Additional Amounts Sought by Bavelis

In seeking compensation for certain interest payments he made after the Petition Date as well as his U.S. Trustee fees and almost all of the professional fees he incurred in connection with his bankruptcy case, Bavelis argues that he would not have needed to file a bankruptcy case were it not for Doukas. But as previously discussed, this argument is too speculative to support an award of damages. See Grantham & Mann, Inc. v. Am. Safety Prods., Inc., 831 F.2d 596, 601-02 (6th Cir. 1987) (holding that the rule against awarding speculative damages “precluded] recovery ... where the damage claimed is not the certain result of the wrong”). Ba-velis therefore is not entitled to an award for the additional amounts he seeks.

*323 Bavelis also argues that, as a result of Doukas’s fraud and breach of fiduciary duty, he is entitled to recover the amount that Doukas or Quick Capital received from Socal for the assignment of the Quick Capital claim. 49 In so arguing, Bavelis relies on the “doctrine of disgorgement.” Adv. Doc. 674 at 38. As Bavelis acknowledges, disgorgement is an equitable remedy. Id. (citing S.E.C. v. Monterosso, 756 F.3d 1326, 1337 (11th Cir. 2014), for the proposition that “[d]isgorgement is an equitable remedy intended to prevent unjust enrichment”). “It is a cardinal principle that the granting of an equitable remedy is ordinarily a matter of discretion, not an arbitrary, capricious discretion, but a sound judicial discretion, controlled by established principles of equity, and exercised upon a consideration of all of the circumstances of each particular case.” Valentine Gardens Co-op., Inc. v. Ober-man, 237 N.Y.S.2d 535 , 537 (N.Y. Sup. Ct. 1963). Thus, courts have “broad discretion not only in determining whether or not to order disgorgement but also in calculating the amount to be disgorged.” S.E.C. v. First Jersey Sec., Inc., 101 F.3d 1450, 1474-75 (2d Cir. 1996).

Here, it would not be equitable to order disgorgement. In each of the cases cited by Bavelis in which the court actually decided whether disgorgement was appropriate, the defendant’s fraud or breach of fiduciary duty deprived the plaintiff of an asset, business opportunity or benefit that should have resulted in a profit for the plaintiff rather than the defendant. 50 That is, the defendant’s fraudulent conduct or breach of fiduciary duty deprived the plaintiff of something that, but for the misconduct, might have redounded to the *324 benefit of the plaintiff. See, e.g., Nelson, 576 F.2d at 1340 (“[I]t is appropriate to require the fraudulent buyer to account for his ‘ill-gotten profits’ derived from an increase in the value of the stock following his acquisition of the stock.... Only in this manner can the seller be put in the position he occupied before the contract was made.” (quoting Green v. Occidental Petroleum Corp., 541 F,2d 1335, 1342 (9th Cir. 1976))). The courts applied the disgorgement doctrine in these cases because it both “provides full compensation for injury caused by fraudulent conduct” and “removes all incentive to engage in such conduct.” Id. at 1338. By contrast, when Doukas fraudulently induced Bavelis to execute the QC Note, he did not deprive Bavelis of an asset; he instead fraudulently caused Bavelis to incur an obligation. Bavelis cites no case authority for the proposition that the remedy of disgorgement should be ordered by a court in this context—that is, when the plaintiff incurred an obligation rather than lost an asset or other benefit.

The QC Note is not an asset that Bavelis could have sold to Socal or any other third party, and thus he did not lose out on the possibility of making a profit from its sale. For this reason, it would not be equitable to order disgorgement under the circumstances of this case.

4. Punitive Damages

Punitive damages, however, are appropriate here. Bavelis seeks an award of punitive damages based on Doukas’s fraudulent conduct. Adv. Doc. 674 at 46-48. The issue of whether punitive damages should be imposed is determined by the law of the state whose substantive law applies to the plaintiffs underlying claim for relief. See Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 278 , 109 S.Ct. 2909 , 106 L.Ed.2d 219 (1989) (holding that in any “lawsuit where state law provides the basis of decision, the propriety of an award of punitive damages for the conduct in question ... are questions of state law”). Here, the applicable state law is the law of Florida.

As the victim of Doukas’s fraud, Bavelis is entitled to punitive damages under Florida law, which provides:

A defendant may be held liable for punitive damages only if the trier of fact, based on clear and convincing evidence, finds that the defendant was personally guilty of intentional misconduct or gross negligence. As used in this section, the term:

(a) "Intentional misconduct” means that the defendant had actual knowledge of the wrongfulness of the conduct and the high probability that injury or damage to the claimant would result and, despite that knowledge, intentionally pursued that course of conduct, resulting in injury or damage.

Fla. Stat. § 768.72 (2).

The statutory requisites for the imposition of punitive damages have been met here, as Bavelis has shown by clear and convincing evidence that Doukas was personally guilty of intentional misconduct. Doukas’s misconduct included the fraudulent representation that he would return the two checks in the aggregate amount of $116,600 and the fraudulent representations that he would return the Assignments once a deal with Qureshi was finalized. Furthermore, Doukas engaged in this misconduct intentionally within the meaning of Florida law. That is, he possessed actual knowledge of the wrongfulness of his conduct, and he was aware of the high probability that injury or damage to Bavel-is would result—in fact, Doukas intended the injury. See Bavelis I, 490 B.R. at 318 . Despite his knowledge of the wrongfulness of his actions and the harm to Bavelis that *325 was certain to result from it, Doukas intentionally pursued a scheme to take Bavelis’s assets. This misconduct caused Bavelis injury, including the loss of $116,600 and the even greater loss of his indirect membership interests in BMAQ and FLOVEST and his personal 50% membership interest in GMAQ, a limited liability company that owned several million dollars in assets. See Bavelis I, 490 B.R. at 267 . Given all this, Doukas’s fraudulent scheme clearly is sufficient to support an award of punitive damages under Florida law. See W.R. Grace & Co. v. Waters, 638 So.2d 502, 503 (Fla. 1994) (“Punitive damages are appropriate when a defendant engages in conduct which is fraudulentt.]”).

Doukas’s only argument against the imposition of punitive damages is this: “To the extent that Plaintiff argues that Mr. Doukas attempted to defraud Mr. Bavelis, there is nothing in evidence to suggest that such fraud would have been anything other than a self-interested business strategy.” Adv. Doc. 677 at 46. Of course, fraud is not a business strategy. And the fact that a defendant’s fraudulent conduct is based on self-interest—-which is almost always the case—is not a defense to an award of punitive damages.

The next question is the amount of punitive damages that should be imposed. In determining the appropriate amount of punitive damages, the Court recognizes that “the purpose of punitive damages is not to further compensate the plaintiff, but to punish the defendant for its wrongful conduct and to deter similar misconduct by it and other actors in the future.” Owens-Corning Fiberglas Corp. v. Ballard, 749 So.2d 483, 486 (Fla.1999). Doukas has said that his business is “creating] a leverage that you can negotiate so it will make money” and that he “take[s] [his] chances and always win[s].” Bavelis I, 490 B.R. at 268, 274 . In order to be sufficiently deterred, Doukas must be made to understand that fraud and confidence games—including those based on ethnic and purported religious affinity-are not winning strategies. 51 Nothing less than a substantial punitive damages award will achieve that goal. Thus, the Court concludes that a punitive damages award of at least $1 million is appropriate and will serve the requisite deterrent purpose. In addition, for the reasons explained below, an award of $1 million in punitive damages is proper under Florida law.

Although Florida law imposes caps on punitive damages under certain circumstances, Fla. Stat. § 768.73 (1)(a)-(b), it imposes no cap “[w]here the fact finder determines that at the time of injury the defendant had a specific intent to harm the claimant and determines that the defendant’s conduct did in fact harm the claimant.” Fla. Stat. § 768.73 (1)(c). Doukas no doubt intended to harm Bavelis, for, as the Court found in Bavelis I, he “intended to take advantage of Mr. Bavelis and deprive him of his assets.” Bavelis I, 490 B.R. at 318 . In addition, Doukas’s conduct did in fact harm Bavelis by depriving him of $116,600, as well as his indirect interests in BMAQ and FLOVEST and his *326 direct interest in GMAQ. On top of those significant economic injuries, the trust and confidence Bavelis placed in Doukas was betrayed. See id. at 305 ,

Under these circumstances, the punitive damages available under Florida law are uncapped, and a punitive damages award of $1 million is appropriate. 52 See Flying Fish Bikes, Inc. v. Giant Bicycle, Inc., 181 F.Supp.3d 957 (M.D. Fla. 2016). In Flying Fish Bikes, the district court held that Florida law imposed no cap on punitive damages and that an award of $3 million in punitive damages was appropriate in a case where the defendant “tactically and deceptively” induced the plaintiff to purchase goods from the defendant by “pledging continued loyalty” to the plaintiff while “simultaneously scheming” to take actions that would undermine the plaintiffs business. Id. at 961, 974 . Dou-kas’s fraudulent scheme was no less egregious.

Finally, the Court must assess whether a' $1 million punitive damages award would be considered excessive from a federal constitutional standpoint, that is whether it is “so ‘grossly excessive’ as to violate the Due Process Clause of the Fourteenth Amendment.” TXO Prod. Corp. v. All. Res. Corp., 509 U.S. 443, 458 , 113 S.Ct. 2711 , 125 L.Ed.2d 366 (1993); see also Myers v. Cent. Fla. Invs., Inc., 592 F.3d 1201, 1218-23 (11th Cir. 2010) (applying the Supreme Court’s approach to evaluating excessiveness); Engle, 945 So.2d at 1263-64 (adopting the federal approach for the purpose of evaluating the excessiveness of punitive damages in Florida). The Supreme Court has adopted three guideposts for evaluating whether an award is grossly excessive: “the degree of reprehensibility of the [defendant’s actions]; the disparity between the harm or potential harm suffered by [the plaintiff] and his punitive damages award; and the difference between this remedy and the civil penalties authorized or imposed in comparable cases.” B.M.W. of N. Am., Inc. v. Gore, 517 U.S. 559, 574-75 , 116 S.Ct. 1589 , 134 L.Ed.2d 809 (1996).

The guidepost of reprehensibility is “[pjerhaps the most important in-dicium of the reasonableness of a punitive damages award[.]” Id. at 575 , 116 S.Ct. 1589 . The factors that are relevant to that guidepost are whether:

the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had finan *327 cial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident.

State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419 , 123 S.Ct. 1513 , 155 L.Ed.2d 585 (2003).

Applying these factors, there can be no doubt that Doukas’s conduct was sufficiently reprehensible to support the conclusion that a punitive damages award of $1 million is not excessive. While the harm Bavelis experienced was primarily economic in nature, Doukas did exhibit indifference towards Bavelis’s health. After all, Doukas continued on his fraudulent course even after acknowledging that the stress Bavelis was under was going to make Ba-velis “sick.” Bavelis I, 490 B.R. at 272 . Moreover, the harm Doukas inflicted on Bavelis was the result of intentional malice and fraud. The Supreme Court has upheld large punitive damages awards in such cases. See TXO, 509 U.S. at 462 , 113 S.Ct. 2711 (upholding $10 million punitive damages award in case involving a “pattern of fraud, trickery and deceit”).

The second guidepost—the disparity between the harm or potential harm suffered by [the plaintiff] and his punitive damages award—also supports a substantial award of punitive damages. Doukas misappropriated Bavelis’s indirect interests in three of the Bavelis-Qureshi LLCs and his personal 50% stake in a company—GMAQ—that was the owner of millions of dollars of assets at the time Doukas fraudulently induced Bavelis to assign his interest in GMAQ to R.P.M. and Nemesis. Moreover, “punitive damages awards can match the scale of the attempted swindle,” Willow Inn, Inc. v. Public Serv. Mut. Ins. Co., 399 F.3d 224, 234 (3d Cir. 2005), and the harm to Bavelis could have been even greater, for Doukas attempted (albeit unsuccessfully) to induce Bavelis to execute an agreement transferring his interest in more than 20 partnerships of which Bavelis was a partner to a Nevada corporation that Doukas was proposing to form with directors that Bavelis did not know. Bavelis I, 490 B.R. at 278, 288 . And although Ba-velis is not able to recover his attorneys’ fees under Florida law for the reasons stated above, the actual harm to Bavelis in fact also includes the substantial fees that Bavelis has paid his attorneys litigating with Doukas in the bankruptcy case and the adversary proceeding. Thus, the punitive damages award does not exceed the harm suffered by Bavelis and the potential harm that Doukas attempted to inflict on him—it is, in fact, much less. Finally, because it does not appear that civil penalties are imposed in fraud cases such as this under Florida law, the third Supreme Court guidepost is inapplicable. Cf. Adidas Am., Inc. v. Payless Shoesource, Inc., No. CV 01-1655-KI, 2008 WL 4279812 , at * 16 (D. Ore. Sept. 12, 2008) (“The parties both agree that the ... guidepost [of] civil penalties in comparable cases, does not apply because there are no statutory penalties for trademark infringement.”). In short, ordering Doukas to pay $1 million dollars in punitive damages serves the deterrent purpose of such damages and is consistent with the Federal Constitution and Florida law. Accordingly, a judgment requiring Doukas to pay Bavelis $1 million in punitive damages should be entered.

VI. Conclusion and Notice

Based on the foregoing, the Court recommends that the District Court enter a Anal judgment in favor of the Plaintiffs: (a) declaring that the Assignments were fraudulently induced by Doukas, (b) rescinding the Assignments and the Subsequent Transfers; (c) awarding Bavelis compensatory damages in the amount of $116,600 and punitive damages in the *328 amount of $1 million; and (d) dismissing Count Five, Count Eight, Count Fourteen and the Moot Claims.

In accordance with Bankruptcy Rule 9033(a), the Clerk shall cause copies of these proposed findings of fact and conclusions of law to be served on all parties to the adversary proceeding by mail and shall note the date of mailing on the docket. Under Bankruptcy Rule 9033(b), “a party may serve and file with the [Cjlerk written objections which identify the specific proposed findings or conclusions objected to and state the grounds for such objection,” and must, unless a request for an extension is timely made and granted under Bankruptcy Rule 9033(c), do so “[wjithin 14 days after being served with a copy of the proposed findings of fact and conclusions of law.” Fed. R. Bankr. P. 9033(b). Failure to file objections within the specified 14-day time period may constitute a waiver of the right to appeal an order of the District Court regarding this Court’s proposed findings of fact and conclusions of law. See Monge v. Rojas (In re Monge), 826 F.3d 250, 255 (5th Cir. 2016); Nantahala Vill., Inc. v. NCNB Nat’l Bank of Fla. (In re Nantahala Vill., Inc.), 976 F.2d 876 , 880 (4th Cir.1992). If any objections are filed, “[a] party may respond to another party’s objections within 14 days after being served with a copy thereof.” Fed. R. Bankr. P. 9033(b).

The Clerk is hereby directed to transmit these proposed findings of fact and conclusions of law to the Clerk of the District Court for the Southern District of Ohio, Eastern Division, for assignment to a District Judge. The Clerk shall defer transmittal of the proposed findings of fact and conclusions of law to the District Court until such time as they have been served upon all parties and the objection and response periods prescribed by Bankruptcy Rule 9033 have expired. ■

IT IS SO ORDERED.

APPENDIX A

Bavelis v. Doukas (In re Bavelis), 490 B.R. 258 (Bankr. S.D. Ohio 2013)

will be made in the context of an adversary proceeding.

SO ORDERED.

In re George A. BAVELIS, Debtor. George A. Bavelis, Plaintiff, v. Ted Doukas, et al., Defendants.

Bankruptcy No. 10-58583.

Adversary No. 10-2508.

United States Bankruptcy Court, S.D. Ohio, Eastern Division.

March 28, 2013.

Background: Individual Chapter 11 debtor objected to proofs of claim filed by former friend, and sought to have claims disallowed on lack of consideration, payment, failure of consideration, and fraudulent inducement theories. ■

Holdings: The Bankruptcy Court, John E. Hoffman Jr., J., held that:

(1) evidence that individual Chapter 11 debtor had repaid the entire amount loaned prepetition by creditor filing proof of claim based on their prepetition loan agreement, albeit by payment coming from company account rather than from debtor personally, was sufficient to establish affirmative defense of payment;

(2) evidence also supported failure of consideration defense;

*329 (3) evidence supported inference that creditor never intended to perform as promised and, to extent that debtor justifiably relied thereon to _ his detriment, would support disal-lowance of creditor’s claim on fraud in the inducement theory; and

(4) creditor stood in “fiduciary” relationship with debtor, such that debtor had no obligation to conduct any investigation in order to justifiably rely on creditor’s promises.

Claims disallowed.

1. Bankruptcy ©=>2926, 2928

Proof of claim executed and filed in accordance with Bankruptcy Rules is prima facie evidence of validity and amount of claim, and initial burden of making a color-able challenge to properly filed proof of claim is on objecting party. Ped.Rules Bankr.Proc.Rule 3001(f), 11 U.S.C.A.

2. Bankruptcy ©=>2926

Generally, once objecting party has overcome prima facie effect of properly filed proof of claim, burden of going forward shifts to creditor, and creditor also bears ultimate burden of persuasion. Fed. Rules Bankr.Proc.Rule 3001(f), 11 U.S.C.A.

3. Bankruptcy ©=>2926

If debtor’s objection to proof of claim is based on affirmative defense for which debtor would have burden of proof outside bankruptcy, debtor must carry that same burden of proof in prosecuting claim objection.

4. Bankruptcy ©=>2002

When the Bankruptcy Code does not specifically address issue that arises in bankruptcy, bankruptcy court looks to state law, to extent that it does not conflict with the Code.

5. Contracts ©=>15, 47

Under both New York and Ohio law, formation of contract requires a manifestation of mutual assent and consideration.

6. Contracts ®=>15

Under Ohio law, “manifestation of mutual assent,” of kind required for formation of contract, means that each party either must make a promise, or begin or render a performance.

See publication Words and Phrases for other judicial constructions and definitions.

7. Contracts ©=>15

Under both New York and Ohio law, “manifestation of mutual assent,” of kind required for formation of contract, may be made wholly or partly by written or spoken words, or by other acts, or by failure to act.

8. Secured Transactions ©=>50

Parties’ execution of loan documents, pursuant to which one party agreed to lend $200,000 to the other, and their execution of security agreement to secure other party’s implicit promise to repay sums lent, together with their subsequent performance in advancing and repaying funds, was sufficient manifestation of their mutual assent to enter into loan transaction, as required under both New York and Ohio law to give rise to binding contract between them.

9. Bills and Notes ©=>92(10)

Under both New York and Ohio law, one party’s promise to advance at least $200,000 to the other, and other party’s implied promise to repay any amounts ac *330 tually advanced, as well to enter into security agreement, were mutual promises constituting “consideration,” of kind required to support promissory note and loan agreement.

10. Contracts <3=47

Under both New York and Ohio law, gratuitous promises are not enforceable as contracts, because there is no consideration.

11. Contracts <3=50

Under both New York and Ohio law, desire to help cannot be “consideration” for contract; rather, it is merely a motive.

See publication Words and Phrases for other judicial constructions and definitions.

12. Bankruptcy ©=’2926, 2927

Individual Chapter 11 debtor, as party objecting to contract-based claim by asserting affirmative defense of payment, bore burden of proof thereon, and had to carry that burden by preponderance of evidence.

13. Bankruptcy <3=2825, 2927

Evidence that individual Chapter 11 debtor had repaid the entire amount loaned prepetition by creditor filing proof of claim based on their prepetition loan agreement, albeit by payment coming from company account rather than from debtor personally, was sufficient to establish affir-. mative defense of payment and to thus require disallowance of creditor’s proof of claim as unenforceable under applicable nonbankruptcy law. 11 U.S.C.A. § 502 (b)(1).

14. Bankruptcy <3=2926, 2927

Individual Chapter 11 debtor, as party objecting to contract-based claim by asserting affirmative defense of failure of consideration, bore burden of proof thereon, and had to satisfy that burden by preponderance of evidence.

15. Contracts <3=88

Under both New York and Ohio law, “failure of consideration” exists when promise has been made to support contract, but that promise has not been performed.

See publication Words and Phrases for other judicial constructions and definitions.

16. Contracts <3=86

Under both New York and Ohio law, when there is failure of consideration, other party to contract is excused from further performance.

17. Bankruptcy <3=2825, 2927

Evidence that, while promising to make his assets available to acquire nonperforming loans of individual Chapter 11 debtor’s closely owned bank and to assist debtor in restructuring his affairs, and while also promising to assist debtor with estate planning and in negotiating dispute with debtor’s business partner on terms favorable to debtor, individual had never acquired these nonperforming loans or provided assistance with any such restructuring and that assets which he proposed to make available for these purposes were inadequate in any event, that individual was not qualified to provide estate planning services and did not in fact do so, and that he used promises of assistance in negotiating with business partner to convince debtor to grant him interests in the businesses, ostensibly so that business partner would take him seriously during *331 negotiations, supported failure of consideration defense, and required disallowance of proof of claim based upon $14 million note that debtor had executed in exchange for these unperformed promises of assistance, as unenforceable under applicable nonbankruptcy law. 11 U.S.C.A. § 502 (b)(1).

18. Fraud @=>3

Under New York law, elements of fraudulent inducement claim are a representation of material fact, falsity of that representation, knowledge by party who made representation' that it was false when made, justifiable reliance by plaintiff, and resulting injury.

19. Contracts @=>328(1)

Under Ohio law, elements of defense of fraudulent inducement to contract-based claim are: (1) actual or implied false representation concerning a fact or, when there- is duty to disclose, concealment of fact, (2) which is material to • transaction; (3) knowledge of falsity of that representation or such recklessness or utter disregard for its truthfulness that knowledge may be inferred; (4) intent to induce reliance on representation; (5) justifiable reliance; and (6) injury proximately caused by that reliance.

20. Fraud @=>50, 58(1)

Under both New York and Ohio law, burden of proof, by clear and convincing evidence, rests with party asserting fraudulent inducement.

21. Fraud @=>30, 32

Under New York law, false representation, of kind required to support fraudulent inducement claim, can be made by party to contract or by person acting on behalf of party.

22. Contracts @=>94(1)

Under Ohio law, promise made with present intention not to perform is misrepresentation of existing fact, and if such a false representation induces other party to enter into contract, then contract may be voided.

23. Bills and Notes @=>103(1)

Under both New York and Ohio law, fraudulent inducement is valid defense to action by holder of negotiable instrument to enforce the instrument.

24. Fraud @=>12

. Under New York law, statement of present intention is deemed a statement of material existing fact, sufficient to support fraud action.

25. Fraud @=>32

Under New York law, false promise can support fraud claim only if promise was collateral or extraneous to terms of parties’ agreement, that is, if promise involves duty separate from, or in addition to, that imposed by contract.

26. Bankruptcy @=>2825, 2926

Evidence presented in contested matter arising out of individual Chapter 11 debt- or’s objection to creditor’s proof of claim, that assets which creditor promised to make available to assist debtor in restructuring his debts were wholly inadequate for that purpose and would not have been accepted as such by any reasonable lender, that creditor was also unqualified to provide estate planning services that he promised and had never provided such services in past, and that creditor, far from representing debtor in negotiations with business partner in manner resulting in favorable resolution for debtor, had used these promises of assistance to induce debtor to *332 grant him interests in debtor’s businesses, ostensibly so that business partner would take him seriously during negotiations, supported inference that creditor never intended to perform as promised and, to extent that creditor’s promises were material and debtor justifiably relied thereon to his detriment, would support fraud in the inducement defense to proof of claim based on $14 million promissory note that debtor executed in exchange for these unperformed promises. 11 U.S.C.A. § 502 (b)(1).

27. Fraud @=*12

Inference that promisor never intended to fulfill his promise, such as will support promissory fraud claim under New York law, should not be based solely on assertion that the promise was not, in fact, fulfilled, but nonfulfillment of promise is factor to be considered.

28. Fraud @=*12

Under both New York and Ohio law, present intention not to fulfill promise, of kind required to support promissory fraud claim, is generally inferred from surrounding circumstances, since people do not ordinarily acknowledge that they are lying.

29. Fraud @=>18

Under New York law, there is both an objective and subjective component of analysis into whether false representation was material, as required to support fraudulent inducement claim.

30. Fraud @=>18

Under Ohio law of fraud in the inducement, fact is “material” if it is likely, under the circumstances, to affect conduct of reasonable person with reference to transaction, unless the individual responsible for misrepresentation is aware that the recipient is peculiarly disposed to attach importance to a particular subject, in which case misrepresentation should be deemed “material,” regardless of its significance to a reasonable person under similar circumstances.

See publication Words and Phrases for other judicial constructions and definitions.

31. Fraud @=*18

Regardless of whether putative friend’s false promises of assistance in making his assets available to acquire nonperforming loans of closely held bank, and to assist bank’s owner in restructuring his affairs, in estate planning, and in negotiating with his partner in other businesses, would have affected conduct of reasonable individual, by inducing him to grant this putative friend an interest in his businesses and to execute promissory note in friend’s favor, false promises had to be deemed “material,” as required under New York and Ohio law to support fraudulent inducement claim, given putative friend’s awareness of precarious financial condition of bank and of importance to bank owner of preserving bank.

32. Fraud @=*20

Under both New York and Ohio law, determining whether a party’s reliance on alleged fraudulent misrepresentation was justifiable requires review of all the facts and circumstances.

33. Fraud @=*23

Factors considered by New York courts when conducting justifiable-reliance analysis in fraud action include level of sophistication of parties, relationship between them, and information available at time of the operative decision.

*333 34. Fraud <3=»20, 23

In conducting justifiable-reliance analysis in fraud case, Ohio courts consider the various circumstances involved, such as nature of transaction, form and materiality of representation, relationship of parties, their respective intelligence, experience, age, and mental and physical condition, and their respective knowledge and means of knowledge.

35. Fraud l®=s>23

Financially troubled individual who was faced with loss of bank that he owned as result of several nonperforming loans “justifiably relied” on promises by putative friend and business advisor to provide assistance by making his assets available to acquire these nonperforming loans and to assist with restructuring of debts and negotiations with business partner, when he agreed to execute promissory note in favor of friend and to gratuitously grant friend a part interest in his businesses, which friend had requested so that business partner would take friend seriously during negotiations; while this reliance may not have been justifiable, as required to support fraudulent inducement claim, if parties were dealing at arm’s' length, putative friend had cultivated a close personal relationship based on parties’ common Greek heritage and persuaded individual to rely on his purported experience and expertise in restructuring debts, as corroborated by his apparent wealth.

See publication Words and Phrases for other judicial constructions and definitions.

36. Fraud @^22(1)

Under New York law, in order for a party’s reliance on alleged fraudulent misrepresentation to be considered “justifiable,” there is generally duty to review documents or other information to which party has access.

See publication Words and Phrases for other judicial constructions and definitions.

37. Fraud <⅜*22(1)

Under New York, there is no duty to investigate as prerequisite to establishing the justifiable reliance that is required for fraud claim if there is fiduciary relationship between parties.

38. Fraud <⅜=7

Under New York law, “fiduciary” relationship is one founded upon trust or confidence reposed by one person in integrity and fidelity of another.

See publication Words and Phrases for other judicial constructions and definitions.

39. Fraud <a=>7

Under New York law, “fiduciary” relationship exists in all cases in which influence has been acquired and abused, in which confidence has been reposed and betrayed.

40. Fraud <⅜=7

Under New York law, “fiduciary” relationships include both technical fiduciary relations and those informal relations which exist whenever one man trusts in, and relies upon, another.

41. Fraud <S=>7

Under Ohio law, “fiduciary” relationship is one in which special confidence and trust is reposed in integrity and fidelity of another, and there is a resulting position of superiority or influence, acquired by virtue of this special trust.

*334 42. Fraud <3=7

Under Ohio law, “fiduciary” relationship need not be created by contract, but may arise out of informal relationship in which both parties understand that special trust or confidence has been reposed.

43. Fraud <3=7

Under both New York and Ohio law, defining qualities of “fiduciary” relationship are the trust and confidence that one party places in another and resulting influence exercised by person in whom the trust and confidence is placed. '

44. Fraud <⅜»64(1)

Question of whether fiduciary relationship exists between two parties is issue of fact under both New York and Ohio law.

45. Fraud <3=22(1)

Promisor, having cultivated close personal relationship with promisee based upon their common Greek heritage and purportedly similar religious beliefs, such that parties regularly held themselves out as “brothers,” and having persuaded prom-isee to rely on his purported expertise and extensive experience in restructuring debts, as corroborated by his ability to deposit large sums of money in promisee's bank, had to be regarded as standing in “fiduciary” relationship to promisee, so that promisee had no obligation under either New York or Ohio law to conduct any investigation prior to agreeing, in exchange for promisor’s putative assistance in restructuring his financial affairs and in negotiating dispute with business partner, to execute $14 million promissory note in promisor’s favor and to grant him interest in promisee’s businesses, ostensibly to assist during negotiations with business partner.

46. Fraud <3=7

While close friendship or personal connections between parties are themselves insufficient to create “fiduciary” relationship under New York law, such a close connection is a factor to be considered in determining whether fiduciary relationship exists.

47. Fraud <3=22(1)

Even assuming that parties’ close personal relationship and first party’s reliance on second party’s purported experience and financial expertise was insufficient to place them in “fiduciary” relationship, nature of second party’s allegedly fraudulent misrepresentations, • in promising to provide future assistance to first party with restructuring his debts and in negotiating favorable resolution of dispute with business partner, were such that first party had no obligation to investigate as prerequisite to justifiably relying thereon; no documents or other information available to first party would have revealed that second party did not intend to keep these promises.

48. Fraud <3=22(1)

Under New York fraud law, plaintiffs failure to investigate will not preclude finding of “reasonable reliance” where the facts allegedly misrepresented are peculiarly within defendant’s knowledge, and plaintiff has no independent means of ascertaining the truth; in such circumstances, reasonable reliance may be found even where the truth theoretically might have been discovered, though only with extraordinary effort or great difficulty.

See publication Words and Phrases for other judicial constructions and definitions.

*335 49. Bankruptcy @=*2825, 2927

Evidence presented in contested matter arising out of individual Chapter 11 debt- or’s objection to creditor’s proof of claim, that debtor executed $14 million promissory note in justifiable reliance on promises made by putative friend and business ad-visor who had assiduously cultivated close relationship with debtor and his wife, sufficiently established resulting injury, and supported disallowance of proof of claim that was based on this note, as unenforceable under nonbankruptcy law on fraudulent inducement theory. 11 U.S.C.A. § 502 (b)(1).

50. Securities Regulation <s»299

Three-day right of rescission available under Florida law to purchasers of securities exempt from registration began to run on purchaser’s receipt of letter notifying him of his right to rescind after he had tendered funds to acquire stock in closely owned bank holding company, and not from date that he later received stock certificate. West’s F.S.A. § 517.061(ll)(a)(5).

Marion H. Little, Jr., Zeiger, Tigges & Little LLP, Columbus, OH, for Plaintiff.

Gary A. Goldstein, Baltimore, MD, Steven Newburgh, Steven S. Newburgh, P.A., West Palm Beach, FL, for Defendant.

John M. Stravato, Melville, NY, pro se.

MEMORANDUM OPINION ON DEBTOR’S OBJECTION TO PROOFS OF CLAIM OF QUICK CAPITAL OF L.I. CORP.

JOHN E. HOFFMAN JR., Bankruptcy Judge.

I. Introduction

The issue before the Court is whether Quick Capital of L.I. Corp. (“Quick Capital”) or any entity affiliated with it holds a claim against the Chapter 11 bankruptcy estate of George A. Bavelis (“Mr. Bavelis” or “Debtor”). Ted Doukas, a/k/a Leftheris Doukas (“Mr. Doukas”), the president and sole shareholder of Quick Capital, asserts that Quick Capital has a secured claim against Mr. Bavelis based on a promissory note (“QC Note”), a loan agreement (“QC Loan Agreement”) and a security agreement (“QC Security Agreement” and, together with the QC Note and the QC Loan Agreement, “QC Loan Documents”) that Mr. Bavelis signed in June 2009. Quick Capital filed an original proof of claim for a lesser amount (“Original Proof of Claim”), but then filed an amended proof of claim, Claim No. 49-2 (“Amended Proof of Claim” and, together with the Original Proof of Claim, “Proofs of Claim”), in the amount of $14 million plus interest.

Although claims based on promissory notes and loan agreements are relatively commonplace in bankruptcy, there is nothing ordinary about the facts that gave rise to Quick Capital’s purported claim. Mr. Doukas himself concedes that Quick Capital lent Mr. Bavelis no funds. Rather, he contends that the consideration provided for the QC Loan Documents, was fourfold: (1) a $200,000 loan provided by means of a check that one of Mr. Doukas’s other companies, Nemesis of L.I. Corp. (“Nemesis”), issued to Mr. Bavelis; (2) approximately $1.4 million of funds that Mr. Doukas transferred from certain bank accounts to purchase stock in Sterling BancGroup Inc. (“Sterling Holding”), allegedly on behalf of Mr. Bavelis; (3) Mr. Doukas’s promise to pledge his assets to help resolve Mr. Ba-velis’s financial problems and to purchase nonperforming loans of Sterling Holding’s banking subsidiary, Sterling Bank of Palm Beach County, Florida (“Sterling Bank”); and (4) Mr. Doukas’s promise to provide consulting and management services to *336 Mr. Bavelis, including attempting to resolve disputes with one of Mr. Bavelis’s business partners, Mahammad A. Qureshi (“Mr. Qureshi”), in a manner that would be in the best interests of Mr. Bavelis. In the alternative, Quick Capital argues that, if Mr. Doukas in fact purchased'the shares of stock in Sterling Holding on his own behalf and not on behalf of Mr. Bavelis, then Mr. Doukas personally has a claim against Mr. Bavelis under Florida state law regulating the sale of securities.

Mr. Bavelis takes the position that he owes nothing to Mr. Doukas or his companies. According to Mr. Bavelis, Mr. Doukas took advantage of, among other things, their shared Greek heritage; the close friendship that quickly developed between Mr. Doukas and Mr. Bavelis and his wife, Georgia Gia Bavelis (“Mrs. Bavelis”), after they first met Mr. Doukas in early 2009; Mr. Bavelis’s need to complete his estate planning; and the desire on Mr. Bavelis’s part to save the failing Sterling Bank and to extricate himself from the strained business relationship with Mr. Qureshi.

Based on the documentary evidence and the testimony of multiple witnesses, the Court concludes that the Proofs of Claim must be disallowed and that neither Mr. Doukas nor any of his companies has a claim against Mr. Bavelis or his bankruptcy estate. First, Mr, Bavelis repaid the funds that Nemesis advanced to him. Second, neither Mr. Doukas nor any of his companies provided the other consideration allegedly supporting the QC Loan Documents. In this regard, the Court finds that Mr. Doukas purchased shares in Sterling Holding on his own behalf, not on behalf of Mr. Bavelis; that the assets that Mr. Doukas purportedly made available to restructure Mr. Bavelis’s financial situation and/or to purchase nonperforraing loans of Sterling Bank were never effectively used for that purpose; and that neither Mr. Doukas nor his companies ever provided consulting, management or estate planning services of any value, but instead perpetrated a scheme designed to deprive Mr. Bavelis of substantially all of his assets. In fact, Mr. Doukas made several representations that fraudulently induced Mr. Bavelis to sign the QC Loan Documents. Finally, the argument that Mr. Doukas personally has a claim against Mr. Bavelis based on Mr. Doukas’s purchase of stock in Sterling Holding is without merit.

This opinion constitutes the Court’s findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052. To the extent any of the Court’s findings of fact are determined to be conclusions of law, they are adopted as such; likewise, to the extent any of the Court’s conclusions of law are determined to be findings of fact, they are adopted as such.

II. Jurisdiction

The Court has jurisdiction to hear and determine this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the general order of reference entered in this district. This is a core proceeding. See 28 U.S.C. § 157 (b)(2)(B).

III. Findings of Fact

Based on the evidence adduced at trial, 1 including the documentary evidence and the testimony presented, and having considered the demeanor and credibility of the witnesses, the Court makes the findings of fact set forth below.

*337 A. Events Occurring Before the Execution of the QC Loan Documents

1. Mr. Bavelis’s Real Estate and Banking Businesses

This is the story of how Mr. Bavelis came to trust Mr. Doukas enough to issue one of his companies a multimillion dollar promissory note and how Mr. Doukas later took advantage of that trust. It is difficult to understand why Mr. Bavelis allowed himself to become so closely involved with Mr. Doukas without knowing something of Mr. Bavelis’s background before the two men met. Mr. Bavelis was born in Greece in 1937 and emigrated to the United States in 1958. Tr. at 451-52. After obtaining a-scholarship and earning a degree from the University of Arkansas in mechanical engineering, he began working as an engineer in Arkansas. Tr. at 452-53. He and Mrs. Bavelis (who also was born in Greece) married in 1964 and moved in 1969 to Columbus, Ohio, where Mr. Bavelis continued his work as an engineer. Tr. at 380; 453. In 1971, he began subleasing rental properties and thereafter purchased apartment buildings to lease. Tr. at 453-54; 493. In 1973, he became a real estate broker. Tr. at 454.

By sometime in 1975, Mr. Bavelis no longer worked as an engineer, but instead was engaged full time in the real estate business. Tr. at 454. He organized Pella Company, a Columbus real estate investment and management company, Debtor’s Ex. 118 at 6, and over the years formed more than 30 real estate investment partnerships operating in Columbus (“Ohio Partnerships”). Tr. at 454-55. Mr. Bavelis personally guaranteed the mortgage debt incurred by the Ohio Partnerships. Tr. at 465-66.

In 1996, Mr. Bavelis and other investors acquired Sterling Bank. Tr. at 226-27; 456; Debtor’s Ex. 118, Confidential Memorandum Summary at 1. A federally-chartered savings bank, Sterling Bank converted into a commercial bank chartered by the State of Florida in 2004. Debtor’s Ex. 118 at 1. Mr. Bavelis was a director of Sterling Bank and also was the chairman of the board, chief executive officer and president of its parent, Sterling Holding. Debtor’s Ex. 118 at 6. At one point, Mr. Bavelis and members of the Bavelis family, directly and through trusts, owned somewhere between 52-55% of Sterling Holding. Tr. at 177; 458.

2, The Debtor’s Relationship with Mr, Qureshi

In the early 2000s, a Sterling Bank lending officer suggested that Mr. Bavelis meet Mr. Qureshi, a customer of Sterling Bank, because Mr. Bavelis owned interests in six or seven gas stations, and Mr. Qure-shi held interests in over 100 gas stations. Tr. at 458-59. The meeting went well, and the two men decided to go into business together. Tr. at 459. As Mr. Bavelis put it, “[Mr. Qureshi] came to my office and we met and we talked about what he was doing and what I was doing in the gas stations.” Tr. at 459:11-13. “And we hit it [off] pretty well there, I thought he was a very nice guy and we kept talking and at some point we said, ‘Why don’t we just buy some gas stations together, invest some money together.’ And we decided to get into the partnerships.” Tr. at 459:13-18. From 2004 to 2007, Mr. Bavelis and Mr. Qureshi worked together to form limited liability companies for the purpose of investing in not only gas stations, but also office buildings and mixed-use real estate developments.

The result was an alphabet soup of companies. First, there was FLOMAQ, LLC (“FLOMAQ”), which was owned 50% by FLOHIO, LLC (“FLOHIO”), an Ohio lira- *338 ited liability company in which Mr. Bavelis had an indirect interest, and 50% by MAQ Management, Inc. (“MAQ Management”), named with the initials of its president, Mr. Qureshi. Tr. at 459-60. The successor in interest to FLOMAQ was FLOVEST, LLC (“FLOVEST”), formed in 2004 by equal members MAQ Management and FLOHIO. Tr. 461; Debtor’s Ex. 14. The members of FLOHIO were Bavelis Family, LLC (“Bavelis Family”), Yessios Limited Partnership and Vakaleris Family Limited-Partnership, with each owning one-third of FLOHIO. The Bavelises’ three daughters each owned 30% of Bavelis Family, with Mr. Bavelis and Mrs. Bavelis each owning 5%. Mr. Bavelis was the manager of FLOHIO. Tr. at 460.

After FLOVEST came BMAQ, LLC (“BMAQ”), formed in 2005 by equal members Bavelis Family and Qureshi Family, LLC (“Qureshi Family”), of which Mr. Qureshi was a manager. Debtor’s Ex. 15; Tr. at 461. Next there was GMAQ, LLC (“GMAQ”), formed in 2006 by equal members Mr. Bavelis and Mr. Qureshi. Debt- or’s Ex. 16; Tr. at 461. Finally, George Real Estate Holdings, LLC (“George Real Estate”) was formed. Tr. at 461-62. The original members of George Real Estate were Mr. Bavelis and an individual affiliated with Mr. Qureshi. However, an unsigned, amended and restated operating agreement submitted by the parties suggests that GMAQ later became the sole member of George Real Estate. Debtor’s Ex. 17. The limited liability companies formed by Mr. Bavelis and Mr. Qureshi will be collectively referred to as the “Ba-velis-Qureshi LLCs.”

FLOVEST eventually became the owner of several properties, including a gas station in Indiana, a truck stop in Ohio and an office building and several parcels of land in Florida. It also began developing a shopping center in Lake Mary, Florida that the parties referred to as the “Lake Mary Project.” Tr. at 463. BMAQ acquired four gas stations as well as land in Florida and Georgia. Tr. at 462-63. In order to finance these projects, Mr. Bavelis and Mr. Qureshi caused FLOVEST and BMAQ to obtain loans from various lenders, Tr. at 463-64, including Fifth Third Bank (“Fifth Third”), First Southern Bank (“First Southern”), Colonial Bank, N.A. (“Colonial Bank”) and Heartland Bank. The aggregate principal amount of the debt owed by FLOVEST and BMAQ to those banks was approximately $21 million. Of this amount, the vast majority (more than $18 million) was the debt of FLOVEST.

Mr. Bavelis personally guaranteed (or otherwise had personal liability on) all of this debt, Debtor’s Exs. 19-26, 2 Tr. at 464-65, and Mr. Qureshi personally guaranteed at least some of it. Debtor’s Exs. 23, 26. GMAQ had no bank debt, so Mr. Bavelis had no guarantee obligations with respect to that company. Tr. at 462. Likewise, there is no evidence that Mr. Bavelis guaranteed any debt of George Real Estate or that it had any debt.

The relationship between Mr. Bavelis and Mr. Qureshi was good for several years, but it began to deteriorate after Mr. Bavelis came to believe that Mr. Qureshi and MAQ Management were not providing a sufficient share of the funds to service the debt of BMAQ and FLOVEST. Tr. at 467-68. 3 In order to service that debt, Mr. *339 Bavelis borrowed money from FLOHIO and Pella Company. Tr. at 467-68; 472.

8. The Debtor’s Relationship with Mr. Doukas

Mr. Bavelis was about to meet a different sort of businessman in Mr. Doukas. According to a biography he provided to Mr. Bavelis, Mr. Doukas was born in Greece and was educated in medicine at the University of Pisa in Italy and in business at the New York Institute of Technology. He began, the bio stated, his “investment career” in Long Island, New York, leading to a self-proclaimed “very successful career as a financier and real estate developer.” Debtor’s Ex. 46 at GB 000790. Mr. Doukas’s business, by his own account, was “creating] a leverage that you can negotiate so it will make money....” Tr. at 843:22-23. “I buy things ... that are dead....” Tr. at 843:23-24. “[T]hese days they call me undertaker because T buy things that are finished, they don

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