Opinion
Case No. 8:07-CV-1866-T-24MAP.
March 21, 2008
ORDER
Plaintiffs, eleven Florida homeowners allegedly defrauded by nineteen named Defendants and twenty John Doe Defendants, filed this action for civil RICO violations, violations of the federal Truth in Lending Act, the Florida Unlawful Mortgage Brokering and Mortgage Lending Act, the Florida usury statute, and civil conspiracy. Generally, the Plaintiffs allege the Defendants clouded the titles on Plaintiffs' real estate properties pledged as collateral by Plaintiffs for unlawful, usurious loans made by Defendants. Four of the Defendants, Christopher Tomasulo, Thomas Clayton Little, Michael Walter Gaines, and Southeast Advertising, Inc., now move to dismiss Plaintiffs' claims pursuant to Fed.R.Civ.P. 12(b)(6) and Fed.R.Civ.P. 9(b) because the Plaintiffs fail to state claims upon which relief can be granted and fail to satisfy the heightened pleading standard required for fraud claims ( see docs. 3, 11, 12, and 20). Defendant Tomasulo also moves for a more definite statement and to strike the complaint pursuant to Fed.R.Civ.P. 10(b) (docs. 5-6). After consideration, the motions to dismiss are denied without prejudice, Defendant Tomasulo's motion to strike is granted in part, and Defendant Tomasulo's motion for more definite statement is granted, and Plaintiffs are directed to replead the complaint to correct the deficiencies discussed below. A. Discussion 1. Rule 9(b) issues
United States District Judge Susan C. Bucklew referred these motions to me for a report and recommendation pursuant to 28 U.S.C. § 636 and Local Rule 6.01(b). See doc. 27. But after consultation with her, this resolution of the motions by order is appropriate because it does not result in a disposition of the action on the merits.
Five of the Plaintiffs' six counts sound in fraud. Consequently, the Plaintiffs must meet Rule 9(b)'s heightened pleading standard: "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Thus, Plaintiffs must allege facts as to the time, place, and substance of the Defendants' alleged fraud, the details of the Defendants' allegedly fraudulent acts, when they occurred and who engaged in them. Corsello v. Lincare, Inc., 428 F.3d 1008, 1012 (11th Cir. 2005); Brooks v. Blue Cross Blue Shield of Florida, Inc., 116 F.3d 1364, 1380-81 (11th Cir. 1997). For their civil RICO claim, the Eleventh Circuit's pleading requirements per Rule 9(b) are more specific: (1) the precise statements, documents, or misrepresentations made; (2) the time and place of and person responsible for the statement; (3) the content and manner in which the statements misled the Plaintiffs; and (4) what the Defendants gained by the alleged fraud. Ambrosia Coal Construction Co. v. Pages Morales, 482 F.3d 1309, 1316-17 (11th Cir. 2007) (affirming dismissal of complaint for failure to meet Rule 9(b) requirements). Additionally, Plaintiffs must link their specific allegations to the causes of action pled in their complaint. Wagner v. First Horizon Pharmaceutical Corp., 464 F.3d 1273, 1278-79 (11th Cir. 2006). Finally, because Plaintiffs have named multiple Defendants as "RICO Persons," Rule 9(b) requires the Plaintiffs to inform each Defendant in that count about the nature of his alleged participation in the fraud. Id.
The Plaintiffs' complaint misses Rule 9(b)'s marks. Instead of specifics, the Plaintiffs essentially lump all the Defendants together by incorporating into every count a common set of allegations — "Facts Common to All Counts." For example, the civil RICO claim (Count I) asserts that the "RICO Persons" (all the Defendants excluding Safe Harbor Foundation of Florida, Inc., which acted as the "enterprise") participated directly and indirectly in a pattern of racketeering activity and through collecting unlawful debt (doc. 1 at ¶ 64). The "RICO Persons" committed "continuous acts over a span of time, affecting all Plaintiffs" and sent false statements through the U.S. Mails and over interstate wire including but not limited to the web site and the flyer (doc. at ¶¶ 67-69).
Plaintiffs' truth in lending claim (Count II) takes the same approach. That count identifies Defendants "Silverstone Lending LLC, Silverstone Financial LLC, Porcelli, Harris, and Tomasulo are `Creditors' within the meaning of 15 U.S.C. § 1601(f) because they originated more than two `high cost' mortgages within a twelve month period at the time of the events described in this complaint" (¶ 72). Similar to Count I, however, the claim lacks the specificity required by Rule 9(b), as the Plaintiffs fail to set forth specific allegations supporting the elements of their truth in lending act claim. The claim fails to set forth any allegations as to Tomasulo making or collecting on specific loan(s), his failure to disclose certain loan terms, or his disclosure of false or misleading information.
The same pattern of conclusory allegations follows in Plaintiffs' state claims for unlawful mortgage brokering and lending (Count III), usury (Count IV), and civil conspiracy (Count VI).
Federal courts deciding supplemental state law claims are required to apply state substantive law but federal procedural law. United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966); Lundgren v. McDaniel, 814 F.2d 600, 605 (11th Cir. 1987). Hence, Rule 9(b) likewise applies to these counts.
These counts fail to distinguish among Defendants, specify their respective roles in the alleged fraud, or identify with particularity the suspect mortgage loan and usurious transactions. Although none of these counts meet Rule 9(b)'s specificity requirements, Plaintiffs' conspiracy count is particularly illustrative for its conclusory allegations. That count vaguely describes the "Known Defendants" took "numerous overt acts to further the conspiracy" "in conscious disregard of and indifference to Plaintiffs' rights" (¶ 102-03). See American United Life Insurance Co. v. Martinez, 480 F.3d 1043, 1067-68 (11th Cir. 2007) (finding civil conspiracy count failed to comply with Rule 9(b) because it failed to allege specifics about fraud, the agreement, the dates, and each conspirator's reasons to know of the fraud).
2. declaratory judgment
Aside from Plaintiffs' fraud accusations, they also seek a declaratory judgment restoring their ownership in their real property and clearing the claims and encumbrances caused by Defendants' illegal acts (see Count V at ¶ 100). This count fails for reasons other than Rule 9(b). A party seeking a declaratory judgment must allege a "justiciable controversy." Maryland Casualty Co. v. Pacific Coal Oil Co., 312 U.S. 270 (1941). While Plaintiffs' allegations in Count V indicate that Defendants' actions have clouded Plaintiffs' titles, they fail to state a claim because they do not describe a justiciable controversy between the parties. The allegations do not include the essential elements of a declaratory judgment action, and fail to identify the affected properties, the Plaintiffs' claimed title to such properties, and how the titles became "clouded."
3. other issues
Not only does the complaint fail to comply with Rule 9(b)'s requirements, other reasons justify judicial action. The deficiencies in the complaint's structure are strikingly similar to those identified by the Eleventh Circuit in Wagner, supra: 1) the specific counts of the complaint, wherein plaintiffs demarcate their causes of action, are insufficiently detailed for purposes of Rule 9(b), and 2) the elements of these claims are insufficiently linked to the large fact section that proceeds the counts. Wagner, 464 F.3d at 1278-79. Noting it could not determine whether plaintiffs' claims were "meritorious or precisely the kind of abusive litigation Congress sought to prevent," the Wagner court labeled the complaint "the proverbial shotgun pleading." Id. ("shotgun pleadings are those that incorporate every antecedent allegation by reference into each subsequent claim for relief"). While the district court dismissed the Wagner complaint, on appeal the Eleventh Circuit determined that the proper remedy for a shotgun pleading and failure to connect causes of action to facts generally alleged was to order a repleading of the complaint under Rule 12(e). The circuit has repeatedly criticized shotgun pleadings like this and encouraged courts to intervene early in the litigation for a host of beneficial purposes. See United States ex el. v. McInteer, 470 F.3d 1350, 1354 n. 6 (11th Cir. 2006); Byrne v. Nezhat, 261 F.3d 1075, 1132-33 (11th Cir. 2001) (citing litany of reasons for preemptive judicial action if necessary); Magluta v. Samples, 256 F.3d 1282, 1284 (11th Cir. 2001) (striking complaint against fourteen defendants containing allegations against all defendants without distinction and counts that incorporated all general allegations regardless of materiality to each specific count); Cesnik v. Edgewood Baptist Church, 88 F.3d 902, 905 (11th Cir. 1996); Beckwith v. City of Daytona Beach Shores, 58 F.3d 1554, 1567 (11th Cir. 1995); Pelletier v. Zweifel, 921 F.2d 1465, 1517-18 (11th Cir. 1991). Accordingly, when faced with such a pleading, the trial court should, based on its inherent authority and whether or not requested to do so by the party's adversary, require the party to file a repleader. Byrne, 470 F.3d at 1133.
Additionally, Plaintiffs' complaint is objectionable for the reasons stated in Defendant Tomasulo's motion seeking to strike the Plaintiffs' "Introduction" to the complaint (see doc. 6). See Coyne v. Lucky M.K., Inc., 2005 WL 1309267 (M.D. Fla. 2005) (directing plaintiff to strike introduction section of complaint for failure to comply with the federal rules of procedure because paragraphs were unnumbered and referred to more than a single set of circumstances).
D. Conclusion
For the reasons stated, it is hereby
ORDERED:
1. Defendants Tomasulo, Little, Gaines, and Southeast Advertising, Inc's motions to dismiss Plaintiffs' complaint (docs. 3, 11, 12, and 20 ) are DENIED without prejudice.
2. Defendant Tomasulo's motion for more definite statement (doc. 5) is GRANTED. Plaintiffs are directed to replead the complaint in its entirety to correct the deficiencies discussed in this Order. Plaintiffs are on notice that if they fail to comply with this Order and file a repleader with the same deficiencies the Court may strike the pleading or, depending on the circumstances, dismiss the case and consider inposition of monetary sanctions. See Byrne, supra, 261 F.3d at 1133.
3. Defendant Tomasulo's motion to strike (doc. 6) is GRANTED to the extent that it seeks to strike the one and one-half page introduction from Plaintiffs' complaint.