United States District Court, S.D. Florida
PLATINUM PROPERTIES INVESTOR NETWORK, INC.; THE AHRTMAN MEDIA COMPANY, LLC; and JASON HARTMAN, Plaintiffs,
CHARLES SELLS, STEPHANIE PUTICH, YOUNG CHUNG, THE PIP-GROUP, LLC, and JOHN DOES 1-10, Defendants.
SMITH UNITED STATES DISTRICT JUDGE
CAUSE is before the Court on Defendants' Amended
Motion to Dismiss the Amended Complaint
(“Motion”) (ECF No. 32), which was previously
referred to the Honorable Barry S. Seltzer, United States
Magistrate Judge, for a Report and Recommendation (ECF No.
41). On April 11, 2019, Judge Seltzer issued his Report and
Recommendation (“Report”), recommending that the
Motion be granted in part and denied in part (ECF No. 49).
Specifically, the Report recommends that the Motion be
granted as to Counts I and III for Defendants Jason Hartman
and Platinum Properties Investment Network for lack of
standing, and denied for Defendant Hartman Media Company,
LLC; denied as to Count IV for all Plaintiffs; granted as to
Counts V and VI for all Plaintiffs and dismissal with
prejudice; granted as to Counts VII, XI, and XII for all
Plaintiffs and dismissal with prejudice; denied as to Counts
VIII, IX, and X; and granted as to Count XIII and dismissal
timely filed their Objections to the Report on April 25,
2019, objecting solely to Judge Seltzer's recommendation
on Counts VII (Florida statutory false advertising), XI
(common law fraud), and XII (negligent misrepresentation)
(ECF No. 52). Plaintiffs take exception with the Report's
finding that these three counts must be dismissed for failure
to plead justifiable first-party reliance as the predicate
for each of these counts. Plaintiffs contend that (1) Count
VII for false advertising does not require a competitor to
plead justifiable reliance under Florida law; (2) Count XI
for fraud does not require Plaintiffs to plead justifiable
reliance, let alone first-party reliance, and should not be
dismissed at all; and (3) Counts XI and XII, at a minimum,
should only be dismissed without prejudice and with leave to
district court may accept, reject, or modify a magistrate
judge's report and recommendation. 28 U.S.C. §
636(b)(1). Those portions of the report and recommendation to
which objection is made are accorded de novo review,
if those objections “pinpoint the specific findings
that the party disagrees with.” United States v.
Schultz, 565 F.3d 1353, 1360 (11th Cir. 2009); see
also Fed. R. Civ. P. 72(b)(3). If no objections are
filed, the district court need only review the report and
recommendation for “clear error.” Macort v.
Prem, Inc., 208 Fed.Appx. 781, 784 (11th Cir. 2006) (per
curiam); see also Fed. R. Civ. P. 72 advisory
Court has conducted a de novo review of the Report,
the record, and the applicable law.
Report recommended dismissal of Count VII for
false/misleading advertising under Florida law based on the
Amended Complaint's failure to plead first-party
reliance. Specifically, the Report found that the allegations
in the Amended Complaint at most demonstrate that a
third-party visitor to the infringing websites may have
justifiably relied on the allegedly infringing use of the
marks, but not the Plaintiffs themselves. Plaintiffs object
to this portion of the Report, arguing that Florida statutory
false/misleading advertising claims do not require the
element of first-party reliance to be met if the plaintiff is
a competitor of the defendant. Plaintiffs cite to a long list
of cases for this proposition. Objections at 3-5.
party may state a claim for statutory misleading advertising
under Florida law by pleading that the party relied on some
identifiable alleged misleading advertising plus, where
appropriate, all of the other elements of the common law tort
of fraud in the inducement, as follows: (a) the representor
made a misrepresentation of material fact; (b) the
representor knew or should have known of the falsity of the
statement; (c) the representor intended that the
representation would induce another to rely and act on it;
and (d) the plaintiff suffered injury in justifiable reliance
on the representation.” Millenium Labs., Inc. v.
Universal Oral Fluid Labs., LLC, No.
8:11-CV-1757-MSS-TBM, 2012 WL 12906334, at *4 (M.D. Fla. Aug.
2, 2012). When the party alleging misleading advertising is a
competitor of the defendant in selling the goods or services
to which the misleading advertisement relates, an allegation
of competition is permitted to “stand-in” for the
element of direct reliance that a consumer is obligated to
plead. Id. (citing Workplace Corp., v. Office
Depot, Inc., 1990 WL 106727, at *1 (M.D. Fla. 1990)
(while reliance is a necessary element when the plaintiff is
a consumer, it is not necessarily an element when the
plaintiff is a competitor)); see also Bluestar Entm't
Int'l, Inc. v. Cooper, No. 07-23245-CIV, 2008 WL
11333068, at *3 (S.D. Fla. July 18, 2008) (“when the
party alleging false advertising is a competitor of the
defendant in selling the goods or services to which the
misleading advertisement relates, an allegation of
competition is permitted to ‘stand-in' for the
element of direct reliance that a consumer is obligated to
plead.”) (internal quotation marks omitted).
have alleged that Defendants made knowingly false
advertisements about Plaintiffs using counterfeit websites
and phony email addresses in an attempt to “control the
market and destroy competition.” Am. Compl. at ¶
230. Plaintiffs further alleged that their clients and
colleagues relied on these false and misleading
representations in Defendant's advertisements, which
damaged Plaintiffs. Id. at ¶ 228. Though
Plaintiffs have only pled third-party reliance by its
customers and consumers and not first-party reliance,
Plaintiffs have alleged that they are competitors with
Defendants in the real estate investment industry.
Id. at ¶¶ 2, 59. As these two parties are
direct competitors in the same industry, Plaintiffs'
allegations of competition can stand in for the element of
direct reliance. The Court therefore finds that
Plaintiffs' allegations are sufficient to support a claim
for statutory misleading advertising under Florida law.
XI and XII
Report similarly recommends dismissal of Counts XI and XII
for common law fraud (fraudulent misrepresentation) and
negligent representation, respectively, based on the Amended
Complaint's failure to plead first-party reliance. As it
pertains to the fraud count, Plaintiffs contend that under
Florida law, justifiable reliance is not a necessary element
of fraudulent misrepresentation, citing to the Florida
Supreme Court case of Butler v. Yusem, 44 So.3d 102
(Fla. 2010). Alternatively, Plaintiffs argue that both Counts
XI and XII should not be dismissed with prejudice so that
Plaintiffs can be afforded the opportunity to supplement and
clarify the Complaint to adequately allege those claims.
Butler, the Florida Supreme Court reviewed whether
the appellate court had correctly held that the
plaintiff's failure to establish justifiable reliance was
a bar to recovery based on fraudulent misrepresentation. The
reviewing court determined that justifiable reliance was not
a requisite element to a claim for fraudulent
misrepresentation, citing the four elements of the claims as
“(1) a false statement concerning a material fact; (2)
the representor's knowledge that the representation is
false; (3) an intention that the representation induce
another to act on it; and (4) consequent injury by the party
acting in reliance on the representation.” 44 So.3d at
105 (emphasis omitted) (citing Johnson v. Davis, 480
So.2d 625, 627 (Fla. 1985)). Plaintiffs interpret these
elements as permitting third-party reliance as a predicate
for their fraud claim, arguing that they only need to plead
that (1) there was a representation that “induce[d]
another to act, ” and (2) there was a
consequent injury “by the party acting in
reliance on the representation.” Id.
(emphasis added). Plaintiffs therefore cite Butler
for the proposition that they need not plead first-party
reliance to maintain their fraud claim.
interpretation of this standard, however, is not supported by
the case law examining misrepresentation claims in Florida.
Take Butler, which itself involved first-party
reliance, not third-party, as there the plaintiff alleged
that he had been the target of fraudulent misrepresentation,
not any third-party. As the Report correctly noted, there are
some well-established circumstances in which a plaintiff can
properly plead a claim for fraudulent or negligent
misrepresentation through indirect reliance. However, those
circumstances contemplate that the party claiming injury
based on the misrepresentation is the same party who relies
on said misrepresentation-none of which are met here.
See Report at 22-23 (collecting cases). Plaintiffs
have not cited to any authority under Florida law that would
support their contention that a third-party's reliance on
a misrepresentation is sufficient to plead a claim in either
fraudulent or negligent misrepresentation where there has
been no actual reliance on that misrepresentation by the
plaintiff. Thus, Counts XI and XII must be dismissed for
failure to state a claim. To afford Plaintiffs an opportunity
to supplement their allegations, the Court will dismiss these
claims without prejudice.
other recommendations in the Report were not objected to by
either party. Upon review of these recommendations, the Court
finds them to be well-reasoned and correct, and ...