United States District Court, S.D. Florida
ORDER ON DEFENDANTS' MOTION TO DISMISS
N. Scola, Jr., United States District Judge.
Plaintiff, Eddy Leal, P.A., brings this lawsuit against the
Defendants Bimini Development of Village West Corporation and
Jarrette Bay Investment Corporation, alleging that the
Defendants knowingly filed false Internal Revenue Service
Form 1099s, thereby falsely reporting income on behalf of the
Plaintiff. This matter is before the Court on the
Defendants' motion to dismiss the amended complaint. For
the reasons set forth in this Order, the Court
denies the motion to dismiss (ECF
Defendants and non-party Orlando Benitez, Jr.
(“Benitez”) have been in active litigation for
more than seven years. (Am. Compl. ¶ 6, ECF No. 12.) The
Plaintiff represented Benitez for approximately two years.
(Id. ¶ 7.) As part of that litigation, the
Defendants entered into agreed orders in state court
proceedings in which funds would be placed in the
Plaintiff's trust account pending further order from the
state court. (Id. ¶¶ 8-13.) Pursuant to
those agreed orders, the Defendants wrote monthly checks,
made payable to “Eddy Leal, P.A. Trust Account”
to be deposited and held in escrow in the Plaintiff's
trust account. (Id. ¶¶ 17, 30.)
the fact that the agreed orders required that the funds be
placed in the Plaintiff's trust account and thereby held
in escrow, both of the Defendants issued a Form 1099-Misc to
the Plaintiff for the 2015 taxable year. (Id. ¶
18, 31.) Defendant Bimini Development of Village West
Corporation issued a Form 1099-Misc to the Plaintiff for $8,
000 for the 2015 taxable year. (Id. ¶ 31.)
Defendant Jarrette Bay Investment Corporation issued a Form
1099-Misc to the Plaintiff for $19, 400.20 for the 2015
taxable year. (Id. ¶ 18.) The Plaintiff
contacted the Defendants to correct these improperly issued
Form 1099s but the Defendants never responded to the
Plaintiff's attempts to resolve the issue. (Id.
¶¶ 20-22, 33-35.) Both of the Defendants filed the
Form 1099s with the Internal Revenue Service
(“IRS”). (Id. ¶¶ 19, 32.) The
Plaintiff alleges that the Defendants “filed the
fraudulent [Form 1099s] with the IRS with the purpose of
either defrauding the IRS or harassing [the]
Plaintiff.” (Id. ¶¶ 19, 32.)
amended complaint asserts causes of action for fraudulent
filing of information returns pursuant to 26 U.S.C. §
7434. The Defendants have moved to dismiss the amended
complaint for failure to state a claim upon which relief can
be granted. The Defendants claim that the Plaintiff has
failed to meet the heightened pleading standard of Federal
Rule of Civil Procedure 9(b) because the Plaintiff did not
attach to its amended complaint proof that the Form 1099s
were filed with the IRS.
Rule of Civil Procedure 8(a) requires “a short and
plain statement of the claims” that “will give
the defendant fair notice of what the plaintiff's claim
is and the ground upon which it rests.” Fed.R.Civ.P.
8(a). The Supreme Court has held that “[w]hile a
complaint attacked by a Rule 12(b)(6) motion to dismiss does
not need detailed factual allegations, a plaintiff's
obligation to provide the ‘grounds' of his
‘entitlement to relief' requires more than labels
and conclusions, and a formulaic recitation of the elements
of a cause of action will not do. Factual allegations must be
enough to raise a right to relief above the speculative
level.” Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 555 (2007) (internal citations omitted).
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim
to relief that is plausible on its face.” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quotations and
citations omitted). “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.” Id. Thus,
“only a complaint that states a plausible claim for
relief survives a motion to dismiss.” Id. at
679. When considering a motion to dismiss, the Court must
accept all of the plaintiff's allegations as true in
determining whether a plaintiff has stated a claim for which
relief could be granted. Hishon v. King &
Spalding, 467 U.S. 69, 73 (1984).
Federal Rule of Civil Procedure 9(b), “a party must
state with particularity the circumstances constituting fraud
or mistake, ” although “conditions of a
person's mind, ” such as malice, intent, and
knowledge, may be alleged generally. Fed.R.Civ.P. 9(b).
“The ‘particularity' requirement serves an
important purpose in fraud actions by alerting defendants to
the precise misconduct with which they are charged and
protecting defendants against spurious charges of immoral and
fraudulent behavior.” W. Coast Roofing &
Waterproofing, Inc. v. Johns Manville, Inc., 287 F.
App'x 81, 86 (11th Cir. 2008) (citations omitted). To
meet this standard, a complaint asserting a violation of 26
U.S.C. § 7434 states a claim by alleging the “who,
” “what, ” “when, ” “why,
” and “how, ” of the defendants'
allegedly unlawful acts. Diaz v. In Season Distribs.,
LLC, No. 1:16-cv-21877, 2016 WL 4401141, at *2 (S.D.
Fla. Aug. 17, 2016) (Ungaro, J.).
amended complaint alleges that the Defendants willfully filed
a fraudulent information return with the IRS, in violation of
26 U.S.C. § 7434. As a result, the Plaintiff alleges
that the Defendants are liable to the Plaintiff in an amount
equal to the greater of $5, 000.00 or the sum of actual
damages to the Plaintiff, costs, and reasonable
attorneys' fees. The Defendants allege that the amended
complaint only “casually refer[s] to a supposed
‘account transcript' from the IRS that is neither
affixed to the Amended Complaint nor are the contents
described with any requisite Rule 9(b) particularity”
and therefore the Plaintiff's claim must be dismissed.
(Mot. 3, ECF No. 23.)
U.S.C. § 7434 provides, “[i]f any person willfully
files a fraudulent information return with respect to
payments purported to be made to any other person, such other
person may bring a civil action for damages against the
person so filing such return.” To establish a claim of
tax fraud under 26 U.S.C. § 7434, the Plaintiff must
prove: (1) the Defendants issued an information return; (2)
the information return was fraudulent; and (3) the Defendants
willfully issued a fraudulent information return. Leon v.
Tapas & Tintos, Inc., 51 F.Supp.3d 1290, 1297-98
(S.D. Fla. 2014) (Moreno, J.).
Plaintiff alleges that (1) the Defendants “filed the
fraudulent information return with the IRS, ” (2)
“with the purpose of either defrauding the IRS or
harassing Plaintiff, ” and (3) despite “direct
knowledge that the funds were not income to Plaintiff.”
(Am. Compl. ¶¶ 18-19, 31-32, ECF No. 12.) The
Plaintiff attaches copies of the false Form 1099s to the
amended complaint. (Id. Ex. 5, Ex. 7.) The Plaintiff
also alleges that account transcripts confirm that the
Defendants filed the Form 1099s with the IRS. (Id.
¶¶ 19, 32.) The Defendants dispute these
allegations, claiming that they are ...