Opinion
CASE NO. 21-60892-CIV-SINGHAL/VALLE
2022-02-03
EPOCH INTERNATIONAL PARTNERS, LLP, a Limited Liability Partnership, organized under the laws of England and Wales, Plaintiff, v. BIGFOOT INC., a Florida corporation, Chris Clarke, an individual, and Oren Manelis, an individual, Defendants. Smartsilk Corporation, Inc., Intervenor Plaintiff, v. Epoch International Partners, LLP; Bigfoot Inc.; James Fultz, Oren Manelis; and Step, Inc., Intervenor Defendants.
Cody Jordan Shilling, Black Law, P.A., Fort Lauderdale, FL, Kelsey K. Black, Fort Lauderdale, FL, for Plaintiff. Stephanie Reed Traband, Gabriel A. Lievano, Levine Kellogg Lehman Schneider & Grossman, Miami, FL, for Intervenor Plaintiff. Evan David Appell, Evan D. Appell, P.A., Boca Raton, FL, for Defendants Bigfoot Inc., Oren Manelis. Cody Jordan Shilling, Black Law, P.A., Fort Lauderdale, FL, Kelsey K. Black, Fort Lauderdale, FL, for Intervenor Defendants James Fultz.
Cody Jordan Shilling, Black Law, P.A., Fort Lauderdale, FL, Kelsey K. Black, Fort Lauderdale, FL, for Plaintiff.
Stephanie Reed Traband, Gabriel A. Lievano, Levine Kellogg Lehman Schneider & Grossman, Miami, FL, for Intervenor Plaintiff.
Evan David Appell, Evan D. Appell, P.A., Boca Raton, FL, for Defendants Bigfoot Inc., Oren Manelis.
Cody Jordan Shilling, Black Law, P.A., Fort Lauderdale, FL, Kelsey K. Black, Fort Lauderdale, FL, for Intervenor Defendants James Fultz.
ORDER
RAAG SINGHAL, UNITED STATES DISTRICT JUDGE
THIS CAUSE is before the Court upon Defendants’ Motion to Dismiss Counts II, III, IV, and V of Plaintiff's Amended Complaint (DE [11]). The matter is fully briefed and ripe for review. For the reasons discussed below, the Motion to Dismiss is granted.
I. INTRODUCTION
In July 2020, Plaintiff Epoch International Partners, LLP ("Epoch") placed an order for 500,000 N95 protective masks with Defendant Bigfoot Inc. ("Bigfoot") for the price of $1,200,000. (DE [5-2]). Epoch alleges it paid the contractual sum but never received the masks. Epoch's customer no longer needed the masks due to the delay and Defendants offered to sell the masks purchased by Epoch to the state of California and refund the payment price to Epoch. (DE [5] ¶¶ 15-16). The refund was never paid. The parties had conversations about a refund during the ensuing months and, on March 11, 2021, Epoch and Bigfoot executed a Settlement Agreement (DE [5-3]) whereby Bigfoot agreed to refund the payment on or before April 5, 2021, in exchange for mutual releases, a confidentiality agreement, and other terms. The refund was never paid.
Epoch filed suit to recover the refund promised in the parties’ Settlement Agreement and other damages. Its Amended Complaint (DE [5]) alleges breach of contract, violation of the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), fraud, and civil theft. The fraud counts name Defendants Clarke (Count III) and Manelis (Count IV) and the FDUTPA and civil theft counts name only Bigfoot. Bigfoot filed an Answer and Affirmative Defenses (DE [10]) to the breach of contract claim, but Defendants move to dismiss the FDUTPA, fraud, and civil theft counts. Defendants argue that Epoch's claim is merely a claim for breach of contract and the Amended Complaint fails to plausibly allege claims for FDUTPA, fraud, or civil theft.
II. LEGAL STANDARDS
At the pleading stage, a complaint must contain "a short and plain statement of the claim showing the [plaintiff] is entitled to relief." Fed. R. Civ. P. 8(a). Although Rule 8(a) does not require "detailed factual allegations," it does require "more than labels and conclusions ... a formulaic recitation of the cause of action will not do." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). To survive a motion to dismiss, "factual allegations must be enough to raise a right to relief above the speculative level" and must be sufficient "to state a claim for relief that is plausible on its face." Id. at 555, 127 S.Ct. 1955. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
In considering a Rule 12(b)(6) motion to dismiss, the court's review is generally "limited to the four corners of the complaint." Wilchombe v. TeeVee Toons, Inc. , 555 F.3d 949, 959 (11th Cir. 2009) (quoting St. George v. Pinellas Cty. , 285 F.3d 1334, 1337 (11th Cir. 2002) ). Courts must review the complaint in the light most favorable to the plaintiff, and it must generally accept the plaintiff's well-pleaded facts as true. Hishon v. King & Spalding , 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984). However, pleadings that "are no more than conclusions are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Iqbal , 556 U.S. at 679, 129 S.Ct. 1937.
III. DISCUSSION
A. FDUTPA
Bigfoot argues the FDUTPA claim (Count II) should be dismissed because it is not viable. Bigfoot contends that (1) the deceptive acts alleged in the Amended Complaint are not those for which FDUTPA provides relief; (2) the Amended Complaint fails to allege any actual damages that would be recoverable under FDUTPA; and (3) the FDUTPA allegations fail to comply with the heightened pleading requirements of Rule 9(b), Federal Rules of Civil Procedure.
The Court does not agree that the heightened pleadings of Rule 9(b) apply to Epoch's FDUTPA claim. The Court acknowledges that there is a split of authority within the Southern District as to whether Rule 9(b) applies to FDUTPA claims. See Weiss v. General Motors LLC , 418 F. Supp. 3d 1173, 1184-85 (S.D. Fla. 2019) (collecting cases). This Court agrees with the well-reasoned and thoughtful analysis made by Judge Scola in Weiss :
The goal of Florida's Deceptive and Unfair Trade Practices Act is to "protect the consuming public and legitimate business enterprises from those who engage in unfair methods of competition, or unconscionable, deceptive, or unfair acts or practices in the conduct of any trade or commerce." Fla. Stat. § 501.202(2) (2013). As the Eleventh Circuit has held, "the proscription against unfair and deceptive acts and practices sweeps far more broadly than the doctrine of fraud or negligent misrepresentation, which asks only whether a representation was technically accurate in all material respects." Hetrick v. Ideal Image Dev. Corp. , 372 Fed. Appx. 985, 992 (11th Cir. 2010). "FDUTPA's elements are more particularized than those of common law fraud." Therefore, Rule 9(b) ’s concerns with subjecting defendants to unfounded allegations of fraud is lessened by the specificity required under FDUTPA. Because "FDUTPA claims seek a remedy for conduct distinct from traditional common law torts
such as fraud[,]" the Court finds that "the uniqueness of the cause of action place[s] it outside the ambit of Rule 9(b)."
Id. at 1185 (quoting Harris v. Nordyne, LLC, 2014 WL 12516076, at * 5 (S.D. Fla. Nov. 14, 2014) ). It is not necessary, therefore, for the FDUTPA claim to meet the stringent pleading requirements of Rule 9(b).
Nevertheless, the Amended Complaint fails to state a claim for a violation of FDUTPA. "The elements comprising a consumer claim for damages under FDUTPA are: (1) a deceptive act or unfair practice; (2) causation; and (3) actual damages." Carriuolo v. Gen. Motors Co. , 823 F.3d 977, 983–84 (11th Cir. 2016) (citing City First Mortg. Corp. v. Barton , 988 So.2d 82, 86 (Fla. 4th DCA 2008) ). "A deceptive act or practice is one ‘that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer's detriment.’ " Kenneth F. Hackett & Assoc., Inc. v. GE Capital Information Tech. Solutions, Inc., 744 F. Supp. 2d 1305, 1312 (S.D. Fla. 2010) (quoting Millennium Commc'ns & Fulfill., Inc. v. Office of the Att'y Gen., 761 So.2d 1256, 1263 (Fla. 3d DCA 2000) ).
Epoch alleges that Bigfoot committed a deceptive and/or unfair practice by inducing it to enter into the agreement to purchase the N95 masks in exchange for immediate payment of $1,200,000 and failing to provide the masks or refund the purchase price, and by inducing Epoch to enter into a settlement agreement by making false and misleading comments about Bigfoot's ability to pay without any intention of paying. (DE [5] ¶ 38). But these allegations mirror the breach of contract claim and are insufficient to state a claim under FDUTPA. See Willard v. Home Depot, U.S.A., Inc., 2009 WL 1884395, at *2 (N.D. Fla. Jun. 29, 2009) ("complaint that merely alleges intentional breach of contract is insufficient to state a claim under FDUTPA").
The "inducements" alleged by Epoch are merely promises to pay and excuses as to why payment had not been made when promised. See Complaint (DE [5] ¶¶ 13-22, 38). There are no allegations of statements made or actions taken by Defendants that pertain to anything outside the terms of the parties’ contract. By contrast, in Kenneth F. Hackett & Assoc., 744 F. Supp. 2d at 1313 (cited by Epoch), Judge Altonaga refused to dismiss the FDUTPA claim, finding that it did not mirror the breach of contract claim but, rather, included allegations of wrongdoing that exceeded the terms of the contract and involved a non-party. Here, however, the statements or actions allegedly made by Defendants pertain only to the performance (or non-performance) of the parties’ contract. The Amended Complaint fails, therefore, to state a claim under FDUTPA.
B. Fraud
Counts II and III allege fraud by defendants Clarke and Manelis, both of whom are officers of Bigfoot. According to the Amended Complaint (DE [5]), Epoch paid Bigfoot $1.2 million on July 31, 2020, for N95 masks but the masks were never delivered. (Id. ¶ 1). On March 8, 2021, Clarke agreed to refund the money paid. (Id. ¶ 44). Epoch and Bigfoot entered into a Settlement Agreement on March 11, 2021, with a deadline of April 5, 2021 to pay the refund. (Id. ¶ 21). Some time after March 17, 2021, Manelis sent a screenshot of Bigfoot's bank statement showing a balance of $108,659,023.08 (Id. ¶ 22) and stated that he just needed time to reconcile the payment but that the refund would be made by the April 5, 2021 deadline. (Id. ¶ 22). After the payment was not timely made, Clarke allegedly told Epoch that the refund could not be made because Bigfoot did not have the cashflow. (Id. ¶ 24).
"Under Florida law, the elements of common-law fraud are (1) a false statement of fact; (2) known by the person making the statement to be false at the time it was made; (3) made for the purpose of inducing another to act in reliance thereon; (4) action by the other person in reliance on the correctness of the statement; and (5) resulting damage to the other person." Gustin v. Bank , 859 Fed. Appx. 889, 891 (11th Cir. 2021) (citing Gandy v. Trans World Computer Tech. Group , 787 So. 2d 116, 118 (Fla. 2d D.C.A. 2001) ). "Generally, the false statement of material fact necessary to establish fraud must concern a past or existing fact. However, ‘if the plaintiff can demonstrate that the person promising future action does so with no intention of performing or with a positive intention not to perform, such a promise may also constitute a fraudulent misrepresentation.’ " Prieto v. Smook, Inc., 97 So. 3d 916, 917-18 (Fla. 4th DCA 2012) (quoting Mejia v. Jurich , 781 So. 2d 1175, 1177 (Fla. 3rd DCA 2001) ).
Even assuming the Amended Complaint adequately alleges that Clarke and Manelis made statements of fact they knew were false, the Amended Complaint fails to allege facts that would plausibly establish the elements of inducement, reliance, or damage. The screenshot of the bank statement cannot have induced Epoch to enter into the Settlement Agreement. The screenshot includes pending transactions made on March 17, 2021, nearly a week after the Settlement Agreement was signed. (DE [5] ¶ 22). No inducement was possible. Likewise, Clarke's alleged misrepresentation that Bigfoot lacked money to issue a refund (DE [5] ¶ 45) could not possibly induce reliance on the part of Epoch. The Amended Complaint fails to plausibly allege actionable fraud by Clarke.
Epoch alleges that Manelis’ repeated explanations and promises to refund the $1.2 million amounted to fraud. Epoch claims it delayed hiring a lawyer and filing suit in reliance on Manelis’ and Clarke's promises. But the Amended Complaint alleges no damages caused by that delay; the statute of limitations has not expired, nor does Epoch allege any damages other than the unpaid refund. Nowhere does the Amended Complaint allege facts to support the claim that Clarke, Manelis, or Bigfoot fraudulently induced Epoch into paying Bigfoot $1.2 million. The Amended Complaint fails to state a claim for fraud.
C. Civil Theft
Count IV of the Amended Complaint alleges civil theft in violation of Florida Statute § 772.11. The Amended Complaint alleges that Bigfoot has unlawfully retained the $1.2 million belonging to Epoch (DE [5], ¶ 59) and further alleges that "Bigfoot, through Manelis and Clarke, intended to and did commit a pattern of illegal and felonious acts in order to permanently deprive Plaintiff of its right to benefit from the funds and personal protective equipment and appropriate such funds to their own use." (Id., ¶ 60). Bigfoot argues that Epoch's civil theft claim is a recasting of its breach of contract claim; Bigfoot argues that the Amended Complaint fails to allege any facts that Bigfoot engaged in civil theft.
Under Florida law, a defendant commits civil theft when it "(1) knowingly (2) obtained or used, or endeavored to obtain or use, [a plaintiff's] property with (3) ‘felonious intent’ (4) either temporarily or permanently to (a) deprive [the plaintiff] of its right to or a benefit from the property or (b) appropriate the property to [the defendant's] own use or to the use of any person not entitled to the property." United Techs. Corp. v. Mazer , 556 F.3d 1260, 1270 (11th Cir. 2009) (citing Fla. Stat. §§ 772.11 and 812.014(1) ). "In order to establish an action for civil theft, the claimant must prove the statutory elements of theft, as well as criminal intent." Gersh v. Cofman , 769 So. 2d 407, 409 (Fla. 4th DCA 2000) (citing Country Manors Ass'n v. Master Antenna Sys., Inc., 534 So.2d 1187, 1191 (Fla. 4th DCA 1988) ).
"Where the property at issue is also the subject of a contract between the parties, a civil theft claim requires additional proof of ‘an intricate sophisticated scheme of deceit and theft.’ " Id. (quoting Trend Setter Villas of Deer Creek v. Villas on Green, 569 So.2d 766, 767 (Fla. 4th DCA 1990) ). For instance, civil theft may be found despite the existence of a contract "where defendants or their employees have stolen or embezzled funds, which were entrusted to them by the plaintiffs, for their own benefit." Pharma Funding, LLC v. FLTX Holdings, LLC, 2021 WL 1166051, at *6-7 (S.D. Fla. Mar. 8, 2021) (citations omitted). Additionally, a civil theft may arise "when a plaintiff owns funds and the money is given to the defendant to temporarily hold in a segregated and identifiable account, which the defendant then refuses to return." Id. "[T]he civil theft ... must go beyond, and be independent from, a failure to comply with the terms of the contract." Id. at *6 (quoting Ginsberg v. Lennar Fla. Holdings, Inc., 645 So. 2d 490, 495 (Fla. 3rd DCA 1994) ).
The Amended Complaint fails to allege facts that would support a claim for civil theft. Although Epoch relates numerous explanations for non-payment of the refund and unfulfilled promises to issue the refund, there are no allegations that Bigfoot or anybody acting on its behalf stole or embezzled money in a scheme that meets the definition of civil theft. Further, the Amended Complaint does not clearly allege that the payment Epoch made to Bigfoot was to be held by Bigfoot in a trust account or another segregated and identifiable account. The Amended Complaint, as drafted, fails to state a claim for civil theft.
IV. CONCLUSION
The Amended Complaint fails to state a claim for violations of FDUTPA, common law fraud, or civil theft. At the hearing, counsel for Epoch asked for leave to amend. The Amended Complaint was filed before the summonses were issued. The Court concludes, therefore, that leave to amend should be granted. Accordingly, it is hereby
ORDERED AND ADJUDGED that Defendants’ Motion to Dismiss Counts II, III, IV, and V of Plaintiff's Complaint (DE [11]) is GRANTED. Plaintiff shall file a Second Amended Complaint by FEBRUARY 17, 2022. If Plaintiff chooses not to amend, it shall file a notice of its intent to proceed only on the breach of contract claim by FEBRUARY 17, 2022 .
DONE AND ORDERED in Chambers, Fort Lauderdale, Florida, this 3rd day of February 2022.