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LLC v. Albertelli

United States District Court, M.D. Florida, Fort Myers Division

February 13, 2018

CONTINENTAL 332 FUND, LLC, CONTINENTAL 298 FUND LLC, CONTINENTAL 306 FUND LLC, CONTINENTAL 326 FUND LLC, CONTINENTAL 347 FUND LLC, CONTINENTAL 355 FUND LLC, CONTINENTAL 342 FUND LLC, and CONTINENTAL 245 FUND LLC, Plaintiffs,
v.
DAVID ALBERTELLI, ALBERTELLI CONSTRUCTION INC., GEORGE ALBERTELLI, WESTCORE CONSTRUCTION, LLC, NATIONAL FRAMING, LLC, MFDC, LLC, TEAM CCR, LLC, BROOK KOZLOWSKI, JOHN SALAT, KEVIN BURKE, ANGELO EQUIZABAL, BRAVO21, LLC, KERRY HELTZEL, AMY BUTLER, U.S. CONSTRUCTION TRUST, FOUNDATION MANAGEMENT, LLC, KMM CONSTRUCTION, LLC, and WESTCORE CONSTRUCTION, L.L.C., Defendants.

          OPINION AND ORDER [1]

          SHERIPOLSTER CHAPPELL, UNITED STATES DISTRICT JUDGE

          This matter comes before the Court on nine motions to dismiss filed by Defendants David Albertelli (Doc. 80); Albertelli Construction, Inc. (“ACI”) (Doc. 81); George Albertelli (Doc. 82); Amy Butler (Doc. 83); Brook Kozlowski (Doc. 84); Kevin Burke (Doc. 85); John Salat (Doc. 86); Kerry Heltzel (Doc. 87); and Foundation Management, LLC, KIMM Construction, LLC, MFDC, LLC, National Framing, LLC, Team CCR, LLC, U.S. Construction Trust, Westcore Construction, LLC (Del.) (“Westcore I”) and Westcore Construction L.L.C. (Nev.) (“Westcore II”)[2] (Doc. 88). Plaintiffs' have filed an Omnibus Response (Doc. 97). This matter is ripe for review.

         BACKGROUND

         The 130-page Second Amended Complaint alleges that Defendants, a group of interrelated individuals and companies, perpetrated a pattern of fraud and other acts on apartment construction projects around the country. (Docs. 49; 49-1). Plaintiffs are single-purpose entities that fund apartment complex construction projects. (Doc. 49 at ¶¶ 15-24, 3 n. 1). They allege Defendants George Albertelli and his son David Albertelli (collectively, the “Albertellis”) provided bribes to an official from Plaintiffs' parent company to secure inside information and $202, 696, 588.38 in construction contracts. (Doc. 49 at ¶¶ 50, 78-79, 86, 116 - 123). Each Plaintiff contracted with either ACI or Westcore to build eight apartment complexes in five states:

• Continental 245 Fund LLC and ACI for a project in Lexington, Kentucky (the “Lexington Project”);
• Continental 298 Fund LLC and ACI for a project in Savage, Minnesota (the “Savage Project”);
• Continental 306 Fund LLC and ACI for a project in New Braunfels, Texas (the “New Braunfels Project”);
• Continental 332 Fund, LLC and ACI for a project in Fort Myers, Florida (the “Fort Myers Project”);
• Continental 326 Fund, LLC and ACI for a project in Rochester, Minnesota (the “Rochester Project”);
• Continental 355 Fund LLC and Westcore I for a project in Bryan, Texas (the “Bryan Project”);
• Continental 347 Fund LLC and Westcore I for a project in Waco, Texas (the “Waco Project”); and
• Continental 342 Fund LLC and Westcore I for a project in Longmont, Colorado (the “Longmont Project”).

(Doc. 49 at ¶¶ 116 - 123).

         After the contracts were executed, Defendants allegedly engaged in coordinated schemes to enrich the Albertellis. (Doc. 49 at ¶¶ 128-229). On this basis, the Second Amended Complaint lodges counts ranging from the Racketeer Influenced and Corrupt Organizations Act (“RICO”) to professional negligence. (Doc. 49). Defendants move to dismiss arguing the Second Amended Complaint violates Federal Rule of Civil Procedure 8(a) and 9(b). (Docs. 80, 81, 82, 83, 84, 85, 86, 87, 88).

         STANDARD

         Federal Rule of Civil Procedure 8(a)(2) states that a pleading must contain a short and plain statement of a claim showing that the pleader may have relief. Rule 8(a)(2)'s purpose is to “give the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal punctuation omitted). “Each allegation must be simple, concise, and direct.” Fed.R.Civ.P. 8(d)(1).

         Fraud allegations are subject to heightened pleading standards under Federal Rule of Civil Procedure 9(b), which requires a party to “state with particularity the circumstances constituting fraud.” Generally, this occurs where the pleading alleges

(1) precisely what statements were made in what documents or oral representations or what omissions were made, and
(2) the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making) same, and
(3) the content of such statements and the manner in which they misled the plaintiff, and
(4) what the defendants obtained as a consequence of the fraud.

Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1371 (11th Cir. 1997) (internal quotations omitted). Allegations relating to “[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally.” Id.

         Rule 9(b) “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.” Id. at 1370-71 (internal quotations omitted). Although it imposes a heightened pleading standard, the Eleventh Circuit has cautioned that “Rule 9(b) must not be read to abrogate [R]ule 8 . . . and a court considering a motion to dismiss for failure to plead fraud with particularity should always be careful to harmonize the directives of [R]ule 9(b) with the broader policy of notice pleading.” Friedlander v. Nims, 755 F.2d 810, 813 (11th Cir. 1985). Courts have found requisite particularity in a pleading that lacked specifics but presented sufficient description to apprise defendants of the allegations against them. See Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir. 1984) (list containing fraud allegations and nature of statements found to meet the Rule 9(b) threshold, even though precise words were not alleged); see also Brooks, 116 F.3d at 1371 (“alternative means are also available to satisfy the rule.”). Though “[i]t is certainly true that allegations of date, place or time [are traditional indicia of particularity] . . . nothing in the rule requires them.” Seville Indus. Mach. Corp., 742 F.2d at 791.

         Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a pleading for failure to state a claim upon which relief can be granted. The Twombly-Iqbal plausibility standard guides such dismissals. This standard requires a plaintiff to allege sufficient facts “to raise a reasonable expectation that discovery will reveal evidence” to support a claim. Twombly, 550 U.S. at 556. The court must accept all factual allegations in a plaintiff's complaint as true and take them in the light most favorable to the plaintiff. Pielage v. McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008). This acceptance is limited to well-pleaded factual allegations. La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004). Alleging “the-defendant-unlawfully harmed me” is insufficient. Iqbal, 556 U.S. at 677. “Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement.” Id. (internal modifications omitted).

         DISCUSSION

         Defendants argue that nearly all the forty-four counts in the Second Amended Complaint should be dismissed. Some arguments apply to more than one count. The Court will address each.

         A. RICO - Counts 1-3[3]

         Count 1 alleges that Defendants violated the RICO Act by perpetrating several schemes to defraud Plaintiffs on construction projects across the country. (Doc. 49 at ¶¶ 62-236). Counts 2 and 3 incorporate the entire pleading with Count 1 to allege Defendants conspired to violate Florida's RICO Act and did so. (Doc. 49 at ¶¶ 237-57). Defendants argue these counts should be dismissed because they do not satisfy Rules 8(a) or 9(b). The Court agrees.

         First, the 76 pages of allegations to support Count 1 do not constitute short or plain statements under Rule 8(a)(2). Although Count 1's allegations are complex, Plaintiff must still satisfy the pleading requirements. “While a complaint containing RICO claims is often required to be somewhat lengthier than other complaints, the assertion of RICO claims does not in itself excuse a plaintiff from satisfying the ...


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