United States District Court, M.D. Florida, Tampa Division
MARVIN I. KAPLAN, Plaintiff,
REGIONS BANK, an Alabama banking corporation, Defendant.
Charlene Edwards Honeywell, United States District Judge
matter comes before the Court upon the Defendant's Motion
to Dismiss and Supporting Memorandum of Law. (Doc. 11),
Plaintiff's response in opposition (Doc. 26) and
Defendant's reply (Doc. 29). In the Motion, Defendant
contends that the Court should dismiss the Complaint pursuant
to Federal Rule of Civil Procedure 12(b)(6). Doc. 11. It
argues that Plaintiff does not properly establish a claim for
malicious prosecution or abuse of process. Id. It
also argues that Plaintiff attempts to recover damages
allegedly sustained by nonparties and includes immaterial
allegations. Id. Plaintiff opposes the Motion, and
in the alternative, requests an opportunity to amend. Doc.
26. The Court, having considered the Motion and being fully
advised in the premises, will grant-in-part Defendant's
Motion to Dismiss.
STATEMENT OF FACTS
Marvin Kaplan, brings this action against Defendant, Regions
Bank, for compensatory and special damages, punitive damages,
attorneys' fees, and costs. Doc. 1 at ¶ 87. Kaplan
alleges two causes of action: Count I for Malicious
Prosecution and Count II for Abuse of Process. Id.
approximately July 2008, Larry Starr approached Kaplan
regarding a potential investment opportunity with Smith
Advertising & Associates (“SAA”); he invested
$50, 000 in SAA through Starr. Id. at ¶¶
8, 13. In December 2008, Kaplan was introduced to Todd Smith,
who convinced Kaplan to begin dealing directly with SAA and
continued to invest in the purported “factoring
investments.” Id. at ¶¶ 14, 15. He
eventually formed several limited liability companies
(“LLCs”) and used existing ones to invest with
SAA on a larger scale. Id. at ¶ 14.
Kaplan used his bank accounts at Regions Bank to fund the
transactions. Id. In February 2011, Todd Smith
emailed Larry Starr with a new purported investment
opportunity which became known as the “bundled
deals.” Id. at ¶ 16. Unbeknownst to
Kaplan, the “bundled deals” were a fabricated
sham that were all part of Todd Smith's fraudulent
transactions, collectively known as the “Smith
Scheme.” Id. at ¶ 20.
on at least January 23, 2012, Regions Bank knew that Todd
Smith was engaged in some form of fraudulent activity but did
nothing to alert Kaplan. Id. at ¶ 38. By
January 24, 2012, Kaplan's investment company accounts
were overdrawn by nearly $12 million. Id. at ¶
42. Regions Bank filed suit against Kaplan's investment
companies and another party on January 30, 2012, seeking
damages for the overdrafts (the “Underlying
Litigation”). Id. at ¶ 48.
Federal Bureau of Investigation (“FBI”) and the
United States Secret Service deemed Kaplan to be a victim of
a massive, Ponzi-like scheme orchestrated by Todd Smith.
Id. at ¶ 55. At trial, the agencies went to
great lengths to describe Kaplan's lack of knowledge of
the fraudulent scheme until after it collapsed. Id.
Regions Bank did not conduct any investigation of the details
of the SAA scheme and, in fact, questioned its existence
throughout the litigation and at trial. Id. at
¶ 56. Instead, in 2013, Regions Bank amended its
original 2012 complaint and levied a series of tort claims
against both Kaplan and his companies for fraudulent
concealment, civil conspiracy, conversion, and aiding and
abetting. Id. at ¶ 57. Regions Bank did this
after the FBI confirmed that Kaplan was an innocent victim of
the Smith Scheme. Id. at ¶ 55. Regions Bank had
access to, and was aware of, the federal indictment but chose
to proceed with its claims. Id. at ¶ 57.
23, 2017, the federal judge presiding over the trial in the
Underlying Litigation issued a 41-page Opinion and Order,
ruling in favor of Kaplan on all of Regions Bank's tort
claims. Id. at ¶ 61. The Order specifically
found that “there is no evidence that Marvin I. Kaplan
had actual knowledge that ‘the transactions were not
legitimate,' in the sense that Marvin I. Kaplan had
actual knowledge of the Ponzi scheme, or the transactions
were carried on in furtherance of the Ponzi scheme executed
by Todd Smith, SAA, and others.” Id. On
November 7, 2017, the Court issued an Order of final judgment
against Todd Smith, Gary Smith, Lucy Smith, and SAA.
Id. at ¶ 62. The Order also held that
Kaplan's investment companies were defrauded by the Smith
Scheme and awarded the companies more than $75 million in
damages. Id. Kaplan has been
“blacklisted” in the banking community and
labelled a “check-kiter” which has caused a loss
of business deals, partnerships, and reputation. Id.
at ¶ 64.
survive a motion to dismiss under Rule 12(b)(6), a pleading
must include a “short and plain statement of the claim
showing that the pleader is entitled to relief.”
Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009)
(quoting Fed.R.Civ.P. 8(a)(2). Formulaic recitations of the
elements of a cause of action are not sufficient.
Id. (citing Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 555 (2007)). Furthermore, mere naked assertions
are not sufficient. Id. The complaint must plead
sufficient factual content permitting the reasonable
inference that the defendant is liable for malicious
prosecution and abuse of process. Id. (quoting
Twombly, 550 U.S. at 570). “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. (citation omitted). The court, however, is not
bound to accept as true a legal conclusion stated as a
“factual allegation” in the complaint.
Count 1: Malicious Prosecution
argues that Kaplan cannot assert the rights of, and recover
damages sustained by, nonparties. Because Kaplan alleges
various wrongs Regions Bank committed against other parties
including his LLCs and his wife, it argues that Kaplan has no
standing to bring Count I. Kaplan responds that the Complaint
is clear that it seeks relief for his damages individually.
He maintains that the referenced paragraphs provide
background and context; they are not the basis for relief.
must assert their own rights and cannot rest upon the rights
of others. Granite State Outdoor Adver. v.City of
Clearwater, 351 F.3d 1112, 1116 (11th Cir. 2003). The
inference drawn from the allegations of the Complaint is that
Kaplan was the sole beneficiary of these shell companies and
that all of Regions Bank's interactions with Kaplan were
done through and by him rather than through the companies.
The Complaint goes to great lengths to explain the
relationship between Kaplan and Regions Bank rather than the
activities undertaken by his companies. The harm incurred by
the companies and Kaplan's wife are mentioned as
incidental details in the Complaint rather than as a factual
basis upon which Kaplan attempts to state his claim.
Essentially, in Count I, Kaplan seeks relief for malicious
prosecution based on the ...