United States District Court, M.D. Florida, Orlando Division
CJS INVESTORS, LLC and CARY J. SIEGEL, Plaintiffs,
MATT BERKE and SSLS-FACTORING, LLC, Defendants.
GREGORY A. PRESNELL UNITED STATES DISTRICT JUDGE
matter comes before the Court without a hearing on the Motion
to Dismiss (Doc. 19) filed by the Defendants, Matt Berke
(henceforth, “Berke”) and SSLS-Factoring, LLC
(“SSLS”), and the response in opposition (Doc.
24) filed by the Plaintiffs, CJS Investors, LLC
(“CJS”) and Cary J. Siegel
instant case involves a falling-out among the owners of a
Florida limited liability company: HBC Strategies, LLC
(“HBC”). According to the allegations of the
Complaint (Doc. 2), which are accepted in pertinent part as
true for purposes of resolving the instant motion, Siegel is
the sole owner of CJS. (Complaint at 2). In October 2014, CJS
established HBC by filing articles of organization with the
Florida Department of State. (Complaint at 2). Siegel has
been president of HBC, a facilities maintenance company,
since its inception. (Complaint at 2, 5). On the same day it
filed the articles of organization, CJS executed an operating
agreement (henceforth, the “Operating
Agreement”), which, among other things, sets forth that
HBC is to be managed by a board of managers. (Complaint at
6). At the outset, CJS was the sole member of HBC, owning all
1, 000 of HBC's membership units, as well as being its
sole manager. (Complaint at 6). In the succeeding months,
Walter Crossley invested in HBC and received 100 membership
units. (Complaint at 8).
2014 and the first half of 2015, a Georgia limited liability
company, Red Wizard Group, LLC (“Red Wizard”),
made a number of loans totaling several hundred thousand
dollars to HBC pursuant to a promissory note (the
“Note”). (Complaint at 8-9). On August 6, 2015,
HBC entered into a loan modification agreement (henceforth,
the “LMA”) with Defendant SSLS, to which Red
Wizard had transferred all of its interest in the
(Complaint at 9). The LMA altered several terms of the Note,
such as the interest rate to be paid by HBC and the deadline
for paying off the loan, and authorized HBC to borrow up to
another $575, 000. (Complaint at 9). The LMA also provided
that HBC “shall grant” 460 membership units to
SSLS and 50 to Defendant Berke. (Doc. 2-3 at 10). Thus, as of
the date of the LMA, SSLS owned 46 percent of HBC, Crossley
owned 10 percent, and Berke 5 percent. (Complaint at 10). The
Complaint also lists Siegel as owning the remaining 39
percent of HBC as of that date, via CJS. (Complaint at 10).
As part of this arrangement, Berke was named CFO of HBC.
(Complaint at 10-11).
included two provisions under which portions of SSLS's
460 membership units could be shifted to Siegel. First, the
LMA provided that if HBC paid off the loan on time and with
no “events of default, ” SSLS would transfer 20
of its membership units to Siegel. (Complaint at 11). The
second potential equity shift involved National Landscape
Management, another company controlled by Van de Grift (who
controlled Red Wizard and SSLS). (Complaint at 12). SSLS
agreed that if HBC or Siegel helped land a maintenance
contract for National Landscape Management with one of
HBC's customers, SSLS would transfer 50 of its membership
units to Siegel. (Complaint at 12). As with the 20-unit
shift, this 50-unit shift was made contingent upon HBC paying
off the loan on time and without any events of default.
(Complaint at 11-12).
parties agree that HBC paid off the loan in August 2017,
before it was due. They also agree that prior to that payoff,
HBC and Siegel helped National Landscape Management obtain a
maintenance contract with one of HBC's customers.
However, they disagree as to whether any events of default
occurred before the loan was paid. As a result, they also
disagree as to whether Siegel is entitled to the 2 percent
and 5 percent equity shifts from SSLS.
addition, the parties agreed to have HBC buy out
Crossley's 10 percent interest in October 2017, but they
disagree as to what happened (or should have happened) to
those 100 shares. The Plaintiffs allege that the parties
agreed to distribute Crossley's 10 percent interest to
each owner in proportion to the interest each already owned.
(Complaint at 14). The Defendants argue that those 100
membership units are simply being held by HBC.
the Plaintiffs allege in the Complaint that, as a result of
the equity shifts from SSLS to Siegel and the distribution of
Crossley's interest, they now own the majority share of
the end of 2017, the parties' disagreement over their
respective ownership shares came to a head. SSLS and Berke
refused to sign an amended Operating Agreement that would
have reflected that the Plaintiffs, between them, owned 51.1
percent of HBC. (Complaint at 14-15). In addition, Berke made
year-end ownership distributions to himself and to SSLS that
the Plaintiffs allege were unjustified. (Complaint at 15).
Eventually, Siegel purported to terminate Berke and cut off
his access to the company's books, while Berke and SSLS
purported to vote themselves onto CBC's board of managers
and fire Siegel.
February 16, 2018, CJS and Siegel filed the instant suit in
state court in Orange County, Florida. The suit was removed
to this Court on March 12, 2018.
Rule of Civil Procedure 8(a)(2) requires “a short and
plain statement of the claim showing that the pleader is
entitled to relief” so as to give the defendant fair
notice of what the claim is and the grounds upon which it
rests, Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct.
99, 103, 2 L.Ed.2d 80 (1957), overruled on other
grounds, Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A Rule
12(b)(6) motion to dismiss for failure to state a claim
merely tests the sufficiency of the complaint; it does not
decide the merits of the case. Milburn v. United
States, 734 F.2d 762, 765 (11th Cir.1984). In ruling on
a motion to dismiss, the Court must accept the factual
allegations as true and construe the complaint in the light
most favorable to the plaintiff. SEC v. ESM Group,
Inc., 835 ...