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Dragon Jade International, Ltd. v. Ultroid, LLC

United States District Court, M.D. Florida, Tampa Division

June 25, 2019

DRAGON JADE INTERNATIONAL, LTD., Plaintiff/Counter-Defendant,



         BEFORE THE COURT is Plaintiff's/Counter-Defendant's Motion to Dismiss (Dkt. 127), which Defendant/Counter-Plaintiff opposes (Dkt. 128). Upon consideration, the motion is GRANTED in part and DENIED in part.

         I. BACKGROUND

         Dragon Jade International, Ltd. brought this action alleging that Ultroid, LLC, Ultroid Marketing Development Corp., and Ultroid Technologies, Inc. (collectively, “Ultroid”), breached two agreements between the parties. See (Dkts. 1, 1-1, 1-2). Ultroid counterclaimed, alleging a violation of the Florida Deceptive and Unfair Trade Practices Act, violations of the federal and Florida Racketeering Influenced and Corrupt Organization Acts, fraud in the inducement, conspiracy to defraud, and breach of contract. (Dkt. 39). Dragon Jade moves to dismiss seven of the eight claims asserted in Ultroid's Second Amended Counterclaims.[1]

         II. STANDARD

         A counterclaim should contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). This rule does not require detailed factual allegations, but it demands more than an unadorned, conclusory accusation of harm. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The complaint must “plead all facts establishing an entitlement to relief with more than ‘labels and conclusions' or a ‘formulaic recitation of the elements of a cause of action.'” Resnick v. AvMed, Inc., 693 F.3d 1317, 1324 (11th Cir. 2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A court's scope of review on a motion to dismiss must be limited to the four corners of the complaint. Grossman v. Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir. 2000).

         “The complaint must contain enough facts to make a claim for relief plausible on its face.” Resnick, 693 F.3d at 1324-25. This occurs “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (internal citation omitted). The plausibility standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. Therefore, “[w]here a complaint pleads facts that are ‘merely consistent with' a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.'” Id. (quoting Twombly, 550 U.S. at 557).

         Where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has not shown that the pleader is entitled to relief. Id. at 679. In each instance, this determination is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. (internal citation omitted).

         Although it is axiomatic that the allegations of the Second Amended Counterclaims must be accepted for purposes of Dragon Jade's motion, this is “inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. “While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Id. at 679. And all reasonable inferences must be drawn in Ultroid's favor. St. George v. Pinellas Cnty., 285 F.3d 1334, 1337 (11th Cir. 2002).


         Dragon Jade moves to dismiss seven of the eight counterclaims brought by Ultroid, contending that the Second Amended Counterclaims is a shotgun pleading, or in the alternative, that Ultroid's factual allegations are insufficient and its conclusions are not supported by factual allegations. (Dkt. 127). For the reasons set out below, I agree with the contentions as they relate to Ultroid's federal and state RICO claims, as well as Ultroid's rescission claim based on a lack of shareholder approval (Count IV).

         i. Shotgun Pleading

          Dragon Jade moves to dismiss the entire Second Amended Counterclaims as an impermissible shotgun pleading. Shotgun pleadings make it “virtually impossible to know which allegations of fact [were] intended to support which claim(s) for relief.” Anderson v. Dist. Bd. Of Trs. Of Cent. Fla. Cmty. Coll., 77 F.3d 364, 366 (11th Cir. 1996). If a pleading fails “to give defendants adequate notice of the claims against them and of the grounds upon which each claim rests, ” the pleading violates the “shotgun pleading” rule. Weiland v. Palm Beach Cnty. Sheriff's Office, 792 F.3d 1313, 1323 (11th Cir. 2015). Weiland identifies four categories of shotgun pleadings, two of which Dragon Jade contends Ultroid's Second Amended Counterclaims fall within. Id. at 1321-23.

         A shotgun pleading “incorporat[es] . . . preceding paragraphs where a complaint ‘contains several counts, each one incorporating by reference the allegations of its predecessors . . ., leading to a situation where [all but the first count] contain irrelevant factual allegations and legal conclusions.” Id. at 1321 (quoting Strategic Income Fund, L.L.C. v. Spear Leeds & Kellogg Corp., 305 F.3d 1293, 1295 (11th Cir. 2002)). Dragon Jade argues that Ultroid “includ[es] multiple counts that adopt all the allegations of the preceding counts.” (Dkt. 127 at p. 5). But that is not the case. Counts I and VIII do not incorporate any allegations from the preceding counts, but rather incorporate the general allegations. And Counts II through VII justifiably incorporate the general allegations and specific paragraphs from its FDUTPA claim as the alleged conspiracy and fraud claims includ deceptive and unfair trade practices.

         Additionally, a shotgun pleading is “replete with conclusory, vague, and immaterial facts not obviously connected to any particular cause of action.” Weiland, 792 F.3d at 1322. Dragon Jade argues that Ultroid “failed to refine their allegations or identify which allegations are related to and support each claim.” (Dkt. 127 at p. 5). Dragon Jade's contentions are without merit. Drawing all reasonable inferences in Ultroid's favor, the allegations that pertain to each count are not so unrelated as to be considered immaterial.

         In sum, the allegations in the Second Amended Counterclaims do not make it “virtually impossible to know which allegations of fact are intended to support which claim(s) for relief.” Anderson, 77 F.3d at 366. Within its four corners, the counterclaims place Dragon Jade on sufficient notice of the allegations against it. Weiland, 792 F.3d at 1325 (citing Anderson, 77 F.3d at 366).

         ii. FDUTPA (Counterclaim I)

         In Count I, Ultroid alleges that Dragon Jade violated Fla. Stat. § 501.204, Florida's Deceptive and Unfair Trade Practice Act (“FDUTPA”). Dragon Jade argues that Ultroid's claim fails because it does not sufficiently allege actual damages.[2]

         The elements of a FDUTPA claim for damages are: “(1) a deceptive act or unfair practice; (2) causation; and (3) actual damages.” KC Leisure, Inc. v. Haber, 972 So.2d 1069, 1073 (Fla. 5th DCA 2008). Actual damages are “the difference in the market value of the product or service in the condition in which it was delivered and its market value in the condition in which it should have been delivered according to the contract of the parties.” Smith v. 2001 S. Dixie Highway, Inc., 872 So.2d 992, 994 (Fla. 4th DCA 2004) (citation and internal quotation marks omitted). Actual damages “do[] not include ‘actual consequential' damages”, id., “nominal damages, speculative losses, or compensation for subjective feelings of disappointment.” Rollins, Inc. v. Butland, 951 So.2d 860, 873 (Fla. 2d DCA 2006). A non-consumer FDUTPA claim may therefore survive a motion to dismiss if actual, non-speculative damages are sufficiently alleged.[3] See Economakis v. Butler & Hosch, P.A., No. 2:13-CV-832-FTM-38DN, 2014 WL 820623, at *2 (M.D. Fla. Mar. 3, 2014).

         Construed liberally, the paragraph alleging that “the Ultroid Companies have been aggrieved and damaged in that they did not end up with the remediated product that they expected to have and their shareholders have been robbed of their investment, ” and “not to mention the possible loss of the Ultroid Companies' Product and Assets for tens of millions of dollars below their worth, ” is sufficient to support actual damages. (Dkt. 126 at ¶123); see also Collins v. DaimlerChrysler Corp., 894 So.2d 988, 990 (Fla. 5th DCA 2004) (“Florida courts have allowed diminished value to serve as ‘actual damages' recoverable in a FDUTPA claim”). Accordingly, Ultroid's allegations sufficiently allege the elements of a FDUTPA claim.

         iii. RICO Claims ...

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