United States District Court, M.D. Florida, Fort Myers Division
OPINION AND ORDER
E. STEELE SR. UNITED STATES DISTRICT JUDGE
matter comes before the Court on review of the
defendants' Motion to Dismiss (Doc. #96) filed on May 21,
2019. Plaintiff filed a Response (Doc. #102) on June 11,
2019, the defendants filed a Reply (Doc. #105) on June 26,
2019, and plaintiff filed a Sur Reply (Doc. #109) on July 11,
2019. For the reasons that follow, the motion is denied.
to the Third Amended Complaint, plaintiff Skypoint Advisors,
LLC is a Florida limited liability company by and through its
members, which include Dennis Dreni. (Doc. #93, p. 1.)
Defendant 3 Amigos Productions, LLC is a Nevada limited
liability company with three managing members: (1) defendant
BlackburnSteele, LLC, a Nevada limited liability company; (2)
defendant Issa Zaroui, a citizen of New York; and (3)
non-party Chad Pittman, a citizen of Virginia. (Id.
pp. 1-2.) Finally, defendant Mark Crawford is the sole
managing member of defendant BlackburnSteele. (Id.
to the Third Amended Complaint, the defendants, individually
and acting in concert, began soliciting plaintiff's
member Dreni in November 2016 to invest in the production of
a proposed film entitled “Lazarat Burning.”
(Id. pp. 4-5.) From November 2016 until January
2017, the defendants made representations to Dreni regarding
the film's production, financing, and potential profits.
(Id. pp. 5-25.) In early 2017, plaintiff and
defendant 3 Amigos entered into a “Film Financing
Agreement, ” with plaintiff agreeing to loan $50, 000
as an investment in the project. (Id. p. 27; Doc.
#93-1, p. 52.) Per the terms of the agreement, plaintiff
elected to receive a proportional share of the film's
profits rather than interest on the $50, 000. (Doc. #93-1, p.
53.) The agreement contained a distribution schedule and
stated the distributions constituted “securities”
exempt from federal registration requirements. (Id.
p. 54.) Finally, the agreement contained a choice of law
provision construing the agreement under Florida law, and a
forum-selection clause listing “any court in the State
of Florida” as having jurisdiction over the matter.
(Id. p. 55.)
after entering into the agreement, plaintiff “developed
significant concerns” related to the project and
demanded a refund of its money. (Doc. #93, p. 31.) The
defendants refused to return plaintiff's investment and
plaintiff initiated this action in May 2018. (Id. p.
32; Doc. #1.)
January 2019, plaintiff filed its Second Amended Complaint
alleging a claim under Section 10(b) of the Securities
Exchange Act of 1934, as well as various Florida and common
law claims. (Doc. #52, pp. 12-26.) The defendants filed a
motion to dismiss the complaint (Doc. #56), which the Court
granted in part and denied in part. (Doc. #92.) The Court
found the Section 10(b) claim failed to meet the heightened
pleading requirements of Rule 9(b) of the Federal Rules of
Civil Procedure and the Private Securities Litigation Reform
Act of 1995 (“PSLRA”), and the Court lacked
subject matter jurisdiction for the remaining claims. (Doc.
#92, pp. 14-15.) As this was the third version of the
complaint filed, the Court granted plaintiff one final
opportunity to amend and cure the pleading and jurisdictional
deficiencies. (Id. pp. 10, 14, 15.)
April 30, 2019, plaintiff filed its Third Amended Complaint
alleging the following six claims: (1) violation of Section
10(b) of the Securities Exchange Act and Rule 10b-5
promulgated thereunder; (2) violation of Florida's
Securities and Investor Protection Act, § 517.011 et.
seq., Fla. Stat.; (3) common law fraud; (4) violation of
Florida's Deceptive and Unfair Trade Practices Act,
§ 501.201 et. seq., Fla. Stat.; (5) breach of contract;
and (6) breach of fiduciary duty. (Doc. #93, pp. 32-47.) The
first four claims are alleged against all the defendants,
while the fifth and sixth claims are alleged only against
defendant 3 Amigos. (Id.) Plaintiff claims damages
of over $90, 000. (Id. p. 27.)
21, 2019, the defendants filed the Motion to Dismiss now
before the Court. (Doc. #96.) The motion seeks dismissal on
the following grounds: (1) failure to satisfy pleading
requirements as to Counts One, Two and Three; (2) failure to
state a claim upon which relief can be granted as to Counts
One, Two and Three; (3) lack of subject matter jurisdiction
as to Counts Two through Six; and (4) lack of personal
jurisdiction over defendants BlackburnSteele, Crawford, and
Zaroui. (Id. pp. 9-10.) The motion also seeks to
have sanctions imposed on plaintiff for the filing of a
frivolous claim. (Id. pp. 22-24.)
Failure to Satisfy Pleading Requirements
Rule 9(b) Argument
10(b) of the Securities Exchange Act makes it unlawful for
any person to “use or employ, in connection with the
purchase or sale of any security . . . any manipulative or
deceptive device or contrivance in contravention of such
rules and regulations as the Commission may prescribe as
necessary or appropriate in the public interest or for the
protection of investors.” 15 U.S.C. § 78j(b). SEC
Rule 10b-5 implements this provision by making it unlawful
to, inter alia, “make any untrue statement of
a material fact or to omit to state a material fact necessary
in order to make the statements made, in the light of the
circumstances under which they were made, not
misleading.” 17 C.F.R. § 240.10b- 5(b). The
Supreme Court has “implied a private cause of action
from the text and purpose of § 10(b).” Matrixx
Initiatives, Inc. v. Siracusano, 563 U.S. 27, 37 (2011)
state a claim for securities fraud under Section 10(b) and
Rule 10b-5, a plaintiff must adequately allege: (1) a
material misrepresentation or omission; (2) scienter; (3) a
connection between the misrepresentation and the purchase or
sale of a security; (4) reliance; (5) economic loss; and (6)
loss causation. Meyer v. Greene, 710 F.3d 1189, 1194
(11th Cir. 2013) (citing Dura Pharms., Inc. v.
Broudo, 544 U.S. 336, 341-42 (2005)). Furthermore, to
survive a motion to dismiss, a claim brought under Rule
10b-5(b) must satisfy: (1) the federal notice pleading
requirements in Federal Rule of Civil Procedure 8(a)(2); (2)
the special fraud pleading requirements in Federal Rule of
Civil Procedure 9(b); and (3) the additional pleading
requirements in the PSLRA. In re Galectin Therapeutics,
Inc. Sec. Litig., 843 F.3d 1257, 1269 (11th Cir. 2016).
Rule 8(a)(2), a complaint must contain “a short and
plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a)(2). The
complaint must allege “enough facts to state a claim to
relief that is plausible on its face, ” and the factual
allegations “must be enough to raise a right to relief
above the speculative level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555, 570 (2007).
addition to the Rule 8(a)(2) requirements, Rule 9(b) requires
that parties alleging fraud or mistake “must state with
particularity the circumstances constituting fraud or
mistake.” Fed.R.Civ.P. 9(b).
While Rule 9(b) does not abrogate the concept of notice
pleading, it plainly requires a complaint to set forth: (1)
precisely what statements or omissions were made in which
documents or oral representations; (2) the time and place of
each such statement and the person responsible for making
(or, in the case of omissions, not making) them; (3) the
content of such statements and the manner in which they
misled the plaintiff, and; (4) what the defendant obtained as
a consequence of the fraud.
In re Galectin, 843 F.3d at 1269 (citations
omitted); see also Garfield v. NDC Health
Corp., 466 F.3d 1255, 1262 (11th Cir. 2006) (“A
sufficient level of factual support for a [Section 10(b)]
claim may be found where the circumstances of the fraud are
pled in detail. ‘This means the who, what, when[, ]
where, and how: the first paragraph of any newspaper
story.'” (citation omitted)). The “[f]ailure
to satisfy Rule 9(b) is a ground for dismissal of a
complaint.” In re Galectin, 843 F.3d at 1269
(quoting Corsello v. Lincare, Inc., 428
F.3d 1008, 1012 (11th Cir. 2005)).
the PSLRA also imposes heightened pleading requirements for
Rule 10b-5(b) actions. Id. For such claims
predicated on allegedly false or misleading statements or
omissions, the PSLRA provides that
the complaint shall specify each statement alleged to have
been misleading, the reason or reasons why the statement is
misleading, and, if an allegation regarding the statement or
omission is made on information and belief, the complaint
shall state with particularity all facts on which that belief
15 U.S.C. § 78u-4(b)(1).
One of the Third Amended Complaint accuses the defendants of
making fraudulent statements to induce plaintiff to invest in
the film project. (Doc. #93, pp. 32-36.) The Third Amended
Complaint lists the ...