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Skypoint Advisors, LLC v. 3 Amigos Productions LLC

United States District Court, M.D. Florida, Fort Myers Division

September 23, 2019

SKYPOINT ADVISORS, LLC., Plaintiff,
v.
3 AMIGOS PRODUCTIONS LLC., BLACKBURNSTEELE LLC., ISSA ZAROUI, and MARK C CRAWFORD, Defendants.

          ORDER AND OPINION

          JOHN E. STEELE, SENIOR UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on the defendants’ Motion for Reconsideration (Doc. #116) filed on August 9, 2019. The defendants seek reconsideration of this Court’s July 25, 2019 Order and Opinion (Doc. #111) denying the defendants’ motion to dismiss. In the alternative, the defendants request the Court amend the July 25th order to include a certificate for interlocutory appeal. Plaintiff filed a Response (Doc. #121) on August 22, 2019. For the reasons that follow, the motion is denied.

         I. A. The Parties

         According 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. p. 2.)

         B. Factual History

         According to plaintiff, 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.)

         Sometime 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.)

         C. Procedural History

         In 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 (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.)

         On 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.)

         On May 21, 2019, the defendants filed another motion to dismiss. (Doc. #96.) The motion sought dismissal on a variety of grounds, but specifically argued the Section 10(b) claim should be dismissed for (1) failing to satisfy the heightened pleading requirements of the PSLRA and Rule 9(b), and (2) failing to state a claim upon which relief can be granted. (Id. pp. 11-17.) On July 25, 2019, the Court denied the motion. (Doc. #111.) Regarding the Section 10(b) claim, the Court found the Third Amended Complaint met the heightened pleading requirements of Rule 9(b) and the PSLRA, and alleged sufficient facts to state a claim. (Id. pp. 8-18.)

         On August 9, 2019, the defendants filed the motion for reconsideration now before the Court. (Doc. #116.) The motion requests the Court reconsider its prior Order and Opinion denying the motion to dismiss, asserting the Court “was in error regarding the law to be applied, the application of the law to the allegations of the [Third Amended Complaint] or in fully understanding or addressing Defendants’ arguments.” (Id. p. 6.) Alternatively, if reconsideration shall be denied, the defendants request the Court certify its prior Order and Opinion for immediate interlocutory appeal. (Id. p. 19.) The Court will address each of these arguments in turn.

         II.

         A. Legal Standard for Reconsideration

         A non-final order may be revised at any time before the entry of a final judgment. Fed.R.Civ.P. 54(b). The decision to grant a motion for reconsideration is within the sound discretion of the trial court, Region 8 Forest Serv. Timber Purchasers Council v. Alcock, 993 F.2d 800, 806 (11th Cir. 1993), and courts have delineated three major grounds justifying reconsideration: “(1) an intervening change in controlling law; (2) the availability of new evidence; [and] (3) the need to correct clear error or prevent manifest injustice, ” Sussman v. Salem, Saxon & Nielsen, P.A., 153 F.R.D. 689, 694 (M.D. Fla. 1994) (citation omitted). Additionally, appropriate circumstances for reconsideration include situations in which “the Court has obviously misapprehended a party’s position, or the facts, or mistakenly has decided an issue not presented for determination.” United States v. Halifax Hosp. Med. Ctr., 2013 WL 6284765, *1 (M.D. Fla. Dec. 4, 2013).

         However, reconsideration of a court’s order “is an extraordinary remedy and a power to be ‘used sparingly, ’” Santamaria v. Carrington Mortg. Servs., LLC, 2019 WL 3537150, *2 (M.D. Fla. July 10, 2019) (citation omitted), with the burden “upon the movant to establish the extraordinary circumstances supporting reconsideration, ” Mannings v. Sch. Bd. of Hillsborough Cty., Fla., 149 F.R.D. 235, 235 (M.D. Fla. 1993). The motion “must demonstrate why the court should reconsider its past decision and set forth facts or law of a strongly convincing nature to induce the court to reverse its prior decision.” Santamaria, 2019 WL 3537150, *2 (citation omitted).

         B. Relevant Factual Allegations from the Third Amended Complaint

         The defendants’ motion for reconsideration focuses on the Court’s ruling regarding the Section 10(b) claim in the Third Amended Complaint. Section 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) (citation omitted).

         The Third Amended Complaint’s Section 10(b) claim accuses the defendants of making fraudulent statements to induce plaintiff to invest in a film project. (Doc. #93, pp. 32-36.) The Third Amended Complaint lists the following as examples of the misrepresentations made by the defendants:

(a) that the Project was almost contractually fully funded due to almost two years’ worth of work by Defendants[;]
. . .
(b) that Skypoint’s then proposed $50, 000.00 investment was the final investment needed to complete the budget for the Project, describing Skypoint’s then proposed $50, 000.00 investment as contingent in that the expenditure thereof may not be necessary for the completion of the Project, and that Skypoint was the final investor accepted for the Project[;]
. . .
(c) mischaracterized Skypoint’s then proposed $50, 000.00 investment as de minimus in light of the investment funds already collected for the Project and presented 3 Amigos’s proposed acceptance of Skypoint’s $50, 000.00 investment as doing a favor for Skypoint[;]
. . .
(d) that all of the production work for the Project was already paid[;]
. . .
(e) that Crawford, Zaroui, and Pittman already personally invested at least $30, 000.00 each to the Project[;]
. . .
(f) that DigitAlb, a prominent Albanian media company, already invested approximately $400, 000.00 into the Project[;]
. . .
(g) that 3 Amigos had existing contracts with distribution companies Karo Films, the largest Russian firm of its kind in the Russian region, and Fantastic Film International regarding distribution of the ...

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