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Orange Lake Country Club, Inc. v. Castle Law Group, P.C.

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

August 16, 2019

ORANGE LAKE COUNTRY CLUB, INC. and WILSON RESORT FINANCE, L.L.C., Plaintiffs,
v.
CASTLE LAW GROUP, P.C., JUDSON PHILLIPS ESQ, CASTLE MARKETING GROUP, LLC, CASTLE VENTURE GROUP, LLC, RESORT RELIEF, LLC and WILLIAM MICHAEL KEEVER, Defendants.

          REPORT AND RECOMMENDATION

          DANIEL C. IRICK UNITED STATES MAGISTRATE JUDGE.

         This cause comes before the Court for consideration without oral argument on the following motion:

MOTION: MOTION FOR ENTRY OF DEFAULT FINAL JUDGMENT AGAINST CASTLE MARKETING GROUP, LLC AND RESORT RELIEF, LLC (Doc. 269)
FILED: April 23, 2019
THEREON it is RECOMMENDED that the motion be GRANTED in part.

         I. Background

         On June 8, 2017, Plaintiffs filed a complaint against Defendants alleging numerous causes of action stemming from what Plaintiffs describe as a campaign of false advertising meant to induce timeshare owners into breaching their timeshare agreements with Plaintiffs. See Doc. 1. Since that time, Plaintiffs have filed several amended complaints, culminating in the Fourth Amended Complaint that Plaintiffs filed on July 11, 2018. Doc. 223 (the Complaint). In the Complaint, Plaintiffs alleged five causes of action: (1) Tortious Interference with Existing Contracts; (2) Civil Conspiracy; (3) Violation of Florida's Deceptive and Unfair Trade Practices Act (FDUTPA); (4) False Advertising and Unfair Competition Under the Lanham Act; and (5) Contributory False Advertising and Unfair Competition Under the Lanham Act. Doc. 223. Castle Marketing Group, LLC (Castle Marketing) is a named Defendant in Counts 1, 2, 3, and 5. Resort Relief, LLC (Resort Relief) is a named Defendant in Counts 1 through 4.

         To date, this case has been resolved as to all Defendants with the exception of Castle Marketing and Resort Relief. See Docs. 238; 251; 260; 261; 265; 269 at 2. Castle Marketing and Resort Relief are both in default. Docs. 155; 254. Plaintiffs now seek the entry of default final judgment against these Defendants. Docs. 269 (the Motion); 270; 271; 272.

         II. Standard of Review

          The Federal Rules of Civil Procedure establish a two-step process for obtaining default judgment. First, when a party against whom a judgment for affirmative relief is sought fails to plead or otherwise defend as provided by the Federal Rules of Civil Procedure, and that fact is made to appear by affidavit or otherwise, the Clerk enters default. Fed.R.Civ.P. 55(a). Second, after obtaining clerk's default, the plaintiff must move for default judgment. Fed.R.Civ.P. 55(b). Before entering default judgment, the court must ensure that it has jurisdiction over the claims and parties, and that the well-pled factual allegations of the complaint, which are assumed to be true, adequately state a claim for which relief may be granted. See Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).[1]

         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). This standard does not require detailed factual allegations, but does demand “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Thus, the “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570). To state a plausible claim for relief, a plaintiff must go beyond merely pleading the “sheer possibility” of unlawful activity by a defendant and offer “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). If a plaintiff fails to meet this pleading standard, then the plaintiff will not be entitled to default judgment.

         If the plaintiff is entitled to default judgment, then the court must consider whether the plaintiff is entitled to the relief requested in the motion for default judgment. If the plaintiff seeks damages, the plaintiff bears the burden of demonstrating entitlement to recover the amount of damages sought in the motion for default judgment. Wallace v. The Kiwi Grp., Inc., 247 F.R.D. 679, 681 (M.D. Fla. 2008). Unlike well-pled allegations of fact, allegations relating to the amount of damages are not admitted by virtue of default; rather, the court must determine both the amount and character of damages. Id. (citing Miller v. Paradise of Port Richey, Inc., 75 F.Supp.2d 1342, 1346 (M.D. Fla. 1999)). Therefore, even in the default judgment context, “[a] court has an obligation to assure that there is a legitimate basis for any damage award it enters[.]” Anheuser Busch, Inc. v. Philpot, 317 F.3d 1264, 1266 (11th Cir. 2003); see Adolph Coors Co. v. Movement Against Racism and the Klan, 777 F.2d 1538, 1544 (11th Cir. 1985) (explaining that damages may be awarded on default judgment only if the record adequately reflects a basis for an award of damages). Ordinarily, unless a plaintiff's claim against a defaulting defendant is for a liquidated sum or one capable of mathematical calculation, the law requires the district court to hold an evidentiary hearing to fix the amount of damages. See Adolph Coors, 777 F.2d at 1543-44. However, no hearing is needed “when the district court already has a wealth of evidence from the party requesting the hearing, such that any additional evidence would be truly unnecessary to a fully informed determination of damages.” See S.E.C. v. Smyth, 420 F.3d 1225, 1232 n.13 (11th Cir. 2005); see also Wallace, 247 F.R.D. at 681 (“a hearing is not necessary if sufficient evidence is submitted to support the request for damages”).

         III. Analysis

         A. Subject Matter Jurisdiction

         Plaintiffs allege that the Court has diversity jurisdiction over this case. Doc. 269 at 7. A federal court has diversity jurisdiction over civil actions where there is complete diversity of citizenship among the opposing parties and the amount in controversy exceeds $75, 000.00, exclusive of interest and costs. 28 U.S.C. § 1332(a). Upon review of the Complaint, the Court finds that Plaintiffs have sufficiently demonstrated that the parties are completely diverse and the amount in controversy exceeds $75, 000.00, exclusive of interest and costs. Doc. 223 at 2-3. Therefore, the undersigned finds that the Court has subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1332.

         B. Personal Jurisdiction

         The undersigned finds that the Court has personal jurisdiction over Resort Relief because Resort Relief appeared in this action through counsel and answered the Complaint without timely raising a defense of lack of personal jurisdiction. See Doc. 231; Pardazi v. Cullman Med. Ctr., 896 F.2d 1313, 1317 (11th Cir. 1990) (explaining that “[a] party that fails to raise a defense of lack of personal jurisdiction at the appropriate time is deemed to have conferred personal jurisdiction on the court by consent.”).

         With respect to Castle Marketing, the undersigned finds that Plaintiffs failed to establish the existence of personal jurisdiction. The undersigned will issue a separate order discussing the reasons behind this finding and denying without prejudice the Motion to the extent it seeks default final judgment against Castle Marketing.

         C. Default

         Resort Relief initially appeared in this action on June 30, 2017 and has since actively participated in this litigation. See, e.g., Docs. 17; 18; 22; 36; 63; 105; 113; 206. On July 11, 2018, Plaintiffs filed the operative Complaint in this matter. Doc. 223. Resort Relief filed an Answer and Affirmative Defenses to Plaintiffs' Complaint. Doc. 231.

         On September 12, 2018, counsel for Resort Relief filed a motion to withdraw as counsel that the Court granted. Docs. 240; 245. The Court gave Resort Relief until October 19, 2018 to obtain new counsel. Doc. 245 at 2. The Court specifically cautioned Resort Relief that if no counsel appeared on its behalf by that date, then “the Clerk may enter default following the submission of an appropriate motion by Plaintiffs.” Id. No. counsel has since appeared on behalf of Resort Relief. In light of Resort Relief's failure to obtain counsel, Plaintiffs moved for clerk's default, which the Clerk entered on October 26, 2018. Docs. 252, 254. Given the foregoing, the undersigned finds that the Clerk properly entered default against Defendant for failure to timely respond to the Complaint.

         D. Liability

         a. Count 1 - Tortious Interference with Existing Contracts

         Under Florida law, the tort of contractual interference occurs when (1) a contract exists; (2) a third party has knowledge of the contract; (3) the third party intentionally interferes with a party's rights under the contract; (4) there is no justification or privilege for the interference; and (5) there are damages. Doc. 83 at 4 (citing Mariscotti v. Merco Group At Akoya, Inc., 917 So.2d 890, 892 (Fla. 3d DCA 2005)). Plaintiffs argue that the well-pled factual allegations in the Complaint establish that Resort Relief tortiously interfered with their existing contracts. Doc. 269 at 8-9. The undersigned agrees.

         In the Complaint, Plaintiffs allege that they have valid and legally enforceable contracts with their clients related to Plaintiffs' timeshare units, and that Resort Relief had knowledge of these contracts. Doc. 223 at ¶¶ 104-05. Plaintiffs also allege that Resort Relief intentionally used false and misleading advertising to induce Plaintiffs' clients into paying large upfront fees to retain Castle Law Group, P.C. (Castle Law) for the purpose of exiting their timeshare agreements with Plaintiffs. Id. at ¶¶ 26, 30, 45-46, 61-63, 66-67, 69, 71-77, 79-81, 88-89, 93, 95-97, 106-18. For instance, Plaintiffs allege that Resort Relief stated on its website that “[w]e are successful over 93 percent of the time.” Id. at ¶ 45; see also Doc. 223 at ¶ 72 (discussing other false statements made by Resort Relief). But, contrary to Resort Relief's representations, Castle Law was largely unsuccessful in its efforts to get Plaintiffs' clients released from their timeshare contracts and Resort Relief's statements boasting of Castle Law's significant successes were false and intentionally misleading. Doc. 223 at ¶¶ 67, 89, 93, 97 Further, Plaintiffs allege that in its efforts to get Plaintiffs' clients released from their timeshare contracts, Castle Law, without prior investigation or any legitimate grounds for doing so, instructed Plaintiffs' clients to stop making their mortgage, maintenance, and tax payments owed to Plaintiffs. Id. at ¶¶ 46, 81, 97. Plaintiffs allege that as a result of Resort Relief's actions, Plaintiffs' clients have terminated, or have sought to terminate, their contractual relationships with Plaintiffs, thereby damaging Plaintiffs. Id. at ¶¶ 95-96. Plaintiffs allege that Resort Relief did not have any justification or privilege for the interference with Plaintiffs' contractual relationships. Id. at ¶¶ 98, 114, 117.

         Accepting the foregoing well-pled factual allegations as true solely for the purposes of this Motion, the undersigned finds that Resort Relief tortiously interfered with Plaintiffs' contractual relationships. Therefore, the undersigned finds the Plaintiff is entitled default final judgment against Resort Relief as to Count 1 of the Complaint.

         b. Count 2 - Civil Conspiracy

         A civil conspiracy claim requires: (1) an agreement between two or more parties, (2) to do an unlawful act or to do a lawful act by unlawful means, (3) the doing of some overt act in furtherance of the conspiracy, and (4) damage to plaintiff as a result of the acts done under the conspiracy. Doc. 83 at 6-7 (citing Charles v. Fla. Foreclosure Placement Ctr., LLC, 988 So.2d 1157, 1159-60 (Fla. 3d DCA 2008)). Plaintiffs argue that the well-pled factual allegations in the Complaint establish that an agreement existed between Resort Relief and the other Defendants to unlawfully interfere with Plaintiffs' contractual relationships. Doc. 269 at 9-10. The undersigned agrees.

         In the Complaint, Plaintiffs allege that Resort Relief and Defendants conspired to interfere with Plaintiffs' contractual relationships. Doc. 223 at ¶¶ 121-25. Specifically, as it pertains to Resort Relief, Plaintiffs allege that Castle Marketing, on behalf of Castle Law, retained Resort Relief to intentionally use false and misleading advertising as part of a scheme to induce Plaintiffs' clients into paying large upfront fees to retain Castle Law for the purpose of exiting the clients' timeshare agreements with Plaintiffs. Id. at ¶¶ 26, 30, 41, 45-47, 61-63, 66-67, 69, 71-77, 79-81, 88-89, 93, 95-97, 124-128. Then, as previously discussed, Castle Law, without prior investigation or any legitimate grounds for doing so, instructed Plaintiffs' clients to stop making their mortgage, maintenance, and tax payments owed to Plaintiffs. Id. at ¶¶ 46, 81, 97. Plaintiffs allege that as a result of Resort Relief's actions, Plaintiffs' clients have terminated, or have sought to terminate, their contractual relationships with Plaintiffs, thereby damaging Plaintiffs. Id. at ¶¶ 95-96. Plaintiffs allege that Defendants did not have any justification or privilege for the interference with Plaintiffs' contractual relationships. Id. at ¶¶ 98, 127.

         Accepting the foregoing well-pled factual allegations as true solely for the purposes of this Motion, the undersigned finds that Resort Relief engaged in a conspiracy to tortiously interfere with Plaintiffs' contractual relationships. Therefore, the undersigned finds the Plaintiff is entitled default final judgment against Resort Relief as to Count 2 of the Complaint.

         c. Count 3 - Violation of Florida's Deceptive and Unfair Trade Practices Act

         FDUTPA provides, in pertinent part, that “[u]nfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.” Doc. 177 at 9 (quoting Fla. Stat. § 501.204(1)). “Trade or commerce” is defined as “the advertising, soliciting, providing, offering, or distributing, whether by sale, rental, or otherwise, of any good or service, or any property, whether tangible or intangible, or any other article, commodity, or thing of value, wherever situated.” Id. (quoting Fla. Stat. § 501.203(8)). A claim for damages under FDUTPA has three elements: (1) a deceptive act or unfair practice; (2) causation; and (3) actual damages. Id. (citing Caribbean Cruise Line, Inc. v. Better Bus. Bureau of Palm Beach Cty., Inc., 169 So.3d 164, 167 (Fla. 4th DCA 2015)). Plaintiffs argue that the well-pled factual allegations in the Complaint establish that Resort Relief violated FDUTPA through unfair methods of competition, unconscionable acts and practices, and unfair and deceptive practices in the conduct of trade or commerce that caused Plaintiffs damages. Doc. 269 at 10-12. The undersigned agrees.

         As previously discussed, Plaintiffs allege in the Complaint that Resort Relief intentionally used false and misleading advertising to induce Plaintiffs' clients into paying large upfront fees to retain Castle Law for the purpose of exiting their timeshare agreements with Plaintiffs; that Castle Law, without prior investigation or any legitimate grounds for doing so, instructed Plaintiffs' clients to stop making their mortgage, maintenance, and tax payments owed to Plaintiffs; that as a result of Resort Relief's actions, Plaintiffs' clients have terminated, or have sought to terminate, their contractual relationships with Plaintiffs, thereby damaging Plaintiffs; that Plaintiffs clients were placed into default as a result of Resort Relief's actions; and that Resort Relief did not have any justification or privilege for the interference with Plaintiffs' contractual relationships. Doc. 223 at ¶¶ 26, 30, 45-46, 61-63, 66-67, 69, 71-77, 79-81, 88-89, 93, 95-97, 138, 144, 146. Given the foregoing well-pled factual allegations, which the undersigned must accept as true solely for the purposes of this Motion, the undersigned finds that Resort Relief was engaged in trade or commerce, engaged in deceptive acts or unfair practices, and caused actual damages to Plaintiffs. See Al Amjad Ltd. v. Ocean Marine Engines, LLC, 2017 WL 1365580, at *4 (M.D. Fla. Apr. 14, 2017) (stating that “[a]n act or practice is deceptive if likely to mislead the consumer acting reasonably in the circumstances, to the consumer's detriment” and is unfair “if it causes consumer injury that is substantial, not outweighed by any countervailing benefits to consumers or competition, and one that consumers themselves could not have reasonably avoided”) (citation and internal quotations omitted). The ...


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