United States District Court, M.D. Florida, Tampa Division
MARVIN I. KAPLAN, Plaintiff,
REGIONS BANK, an Alabama banking corporation, Defendant.
Charlene Edwards Honeywell United States District Judge
cause comes before the Court upon the Report &
Recommendation filed by Magistrate Judge Christopher P. Tuite
on August 7, 2019 (the “R&R”). Doc. 104. In
the R&R, Magistrate Judge Tuite recommends that Regions
Bank’s (“Regions”) Amended Motion to Strike
Kaplan’s Jury Demand (the “Motion”) be
granted and Regions’ Amended Request to Take Judicial
Notice on Amended Motion to Strike Jury Trial Demand (the
“Amended Request to Take Judicial Notice”) be
granted-in-part. Id. at 14.
parties were furnished copies of the R&R and were
afforded the opportunity to file objections pursuant to 28
U.S.C. § 636(b)(1). Marvin I. Kaplan
(“Kaplan”) timely objected to the R&R (the
“Objection”). Doc. 107. Upon consideration of the
R&R, the Objection, Regions’ response thereto, and
this Court’s independent examination of the file, it is
determined that the R&R should be adopted and
Kaplan’s Objection should be overruled.
action arises from an earlier case in the Middle District of
Florida, styled Regions Bank v. Kaplan, et al., No.
8:12-cv-1837-T-17MAP (M.D. Fla.) (“Kaplan
I”), in which Regions sued Kaplan and several of
his investment entities for, inter alia, fraudulent
concealment, civil conspiracy, conversion, and aiding and
abetting. Doc. 113 ¶¶1, 48, 57. Kaplan began
investing with Smith Advertising & Associates
(“SAA”) in 2008, which involved providing
short-term loans to SAA that supplied “bridge
financing” for SAA’s printing contracts with
cities and municipalities. Id. at
¶¶8–9, 13. The loans from investors like
Kaplan purportedly provided SAA with additional cash flow to
front the cost of printing contracts for its clients, and
various printing vendors would give a discounted price to SAA
in exchange for SAA’s upfront payment. Id. at
¶9. Rather than passing the savings from the discount
along to its customers, SAA would allegedly charge its
customers the full price of the printing vendor’s
services, retain the savings, and split the discount with the
investor as an “incentive.” Id. at
¶10. Kaplan formed several limited liability companies
or used existing ones to invest with SAA over the course of
the next few years as the size of deals grew larger.
Id. at ¶14.
The “Bundled Deals” and the Deposit
nature of the deals changed in 2011, however, as Todd Smith
(“Smith”), one of the officers of SAA, offered a
purported investment opportunity, known as the “bundled
deals.” Id. at ¶¶14, 16. Under these
“bundled deals, ” SAA would repay Kaplan in full
within a much shorter time frame, often the same day as
Kaplan’s initial investment, because the bundled deals
allegedly corresponded to SAA’s cash flow and were
based on multiple contracts that were “bundled”
together. Id. at ¶17. To execute the
“bundled deals, ” Smith would contact Kaplan
regarding certain proposed print contracts and short-term
investments. Id. at ¶19. After Kaplan and Smith
agreed to terms, Smith would create promissory notes for the
investment loans with respect to each of Kaplan’s
investment companies, write checks for both the principal
repayment and incentive payment, and overnight these items to
Kaplan. Id. The next day, Kaplan would wire the
principal investment from his investment companies to SAA.
Id. On the same day, Kaplan would receive the
repayment checks and promissory notes from Smith and deposit
the checks upon the investments’ agreed
“maturity” date, which was typically the
following day. Id.
investment companies opened bank accounts (the “Entity
Accounts”) with Regions to better accommodate the large
wire transfers for the “bundled deals.”
Id. at ¶23. Kaplan had previously opened a
personal checking account (the “Personal
Account”) with Regions, as well. Id. at
¶7; Doc. 55 at 2. In opening the Personal Account and
the Entity Accounts, Kaplan purportedly received the Deposit
Agreement for each account (the “Deposit
Agreement”). See Doc. 55 at 2–3. Kaplan
does not dispute that he received the Deposit Agreement for
each account. See Doc. 58 at 2. The Deposit
Agreement contains a jury waiver provision, which is
discussed in further detail below. Doc. 56-3 at 2–3, 7.
Kaplan reviewed online the balances of the Entity Accounts to
ensure sufficient funds existed before wiring any funds to
SAA, but Regions’ systems did not possess the ability
to distinguish between “cleared” and
“available” funds. Doc. 113 ¶¶23–
24. Kaplan invested in the “bundled deals, ”
which progressively grew larger, without incident from
November 2011 through January 2012. Id. at ¶26.
January of 2012, Kaplan made a series of wire transfers for
large sums of money to SAA. Id. at
¶¶28–29, 31–32, 36. Unbeknownst to
Kaplan, however, Regions had placed a hold on the
reimbursement checks for one of the agreements between Kaplan
and SAA after SAA’s bank alerted Regions to possible
fraud in SAA’s account. Id. at ¶33.
SAA’s reimbursement checks to Kaplan for these
transfers subsequently failed to clear and were returned.
Id. at ¶¶ 34, 36–37, 41– 42,
46–47. As a result, the Entity Accounts were overdrawn
by millions of dollars. See Id . at ¶¶42,
thereafter filed the Kaplan I lawsuit against
Kaplan, Kaplan’s investment entities, and others,
seeking damages for the overdrafts. Id. at ¶48.
Regions filed an amended complaint in Kaplan I in
2013, which asserted tort claims against Kaplan and his
investment companies for, inter alia, fraudulent
concealment, civil conspiracy, conversion, and aiding and
abetting. Id. at ¶57. The trial in Kaplan
I commenced in June of 2016. Id. at ¶60.
The court subsequently ruled in favor of Kaplan and against
all of Regions’ tort claims. Id. at ¶61.
Present Action, Jury Trial Waiver, and Procedural
initiated this action in November of 2017, alleging claims
against Regions for malicious prosecution and abuse of
process. Doc. 1 ¶¶67–87. The Court dismissed
Kaplan’s abuse of process claim in August of 2018. Doc.
37 at 10. In relevant part, Kaplan alleges that Regions
brought claims against Kaplan for fraudulent concealment,
conversion, aiding and abetting conversion, and civil
conspiracy in Kaplan I when it knew or should have
known that such claims lacked a factual basis. Doc. 113
¶69. Kaplan demands a jury trial for its claim. Doc. 32.
Regions moves to strike this jury trial demand and also
requests the Court to take judicial notice of numerous
filings and documents in Kaplan I. Docs. 55, 57.
support of its argument that Kaplan’s jury trial demand
should be struck, Regions points to the jury waiver clause in
the Deposit Agreement. Doc. 55 at 15–18. As previously
mentioned, Kaplan received the Deposit Agreement when he
opened the Personal Account and Entity Accounts. See Id
. at 2–3; Doc. 58 at 2. The Deposit Agreement
contains the following language on its second page:
ARBITRATION AND WAIVER OF JURY TRIAL. THIS AGREEMENT
CONTAINS PROVISIONS FOR BINDING ARBITRATION AND WAIVER OF
JURY TRIAL. YOUR ACCEPTANCE OF THIS AGREEMENT INCLUDES YOUR
ACCEPTANCE OF AN AGREEMENT TO SUCH PROVISIONS. WHEN
ARBITRATION IS INVOKED FOR CLAIMS SUBJECT TO ARBITRATION, YOU
AND REGIONS WILL NOT HAVE THE RIGHT TO PURSUE THAT CLAIM IN
COURT OR HAVE A JURY DECIDE THE CLAIM AND YOU WILL NOT HAVE
THE RIGHT TO BRING OR PARTICIPATE IN ANY CLASS ACTION OR
SIMILAR PROCEEDING IN COURT OR IN ARBITRATION.
Doc. 56-3 at 2. The Deposit Agreement’s jury waiver
clause is located within a section of the Deposit Agreement
entitled “ARBITRATION AND WAIVER OF JURY
TRIAL.” Id. at 3. In relevant part,
that section provides, “Whether any controversy
is arbitrated or settled by a court, you and we voluntarily
and knowingly waive any right to a jury trial with respect to
such controversy to the fullest extent allowed by
law.” Id. at 7 (emphasis in original).
The Deposit Agreement defines “any controversy . . .
between [Kaplan] and [Regions]” as a “Claim,
” which the Deposit Agreement affords a broad meaning.
Id. at 3. Specifically, the Deposit Agreement
Claim has the broadest possible meaning and includes,
but is not limited to, any controversy, claim, counterclaim,
dispute or disagreement arising out of, in connection with or
relating to any one or more of the following: (1) the
interpretation, execution, administration, amendment or
modification of the Agreement or any agreement; (2) any
account; (3) any charge or cost incurred pursuant to the
Agreement or any agreement; (4) the collection of any amounts
due under the Agreement, any agreement or any account; (5)
any alleged contract or tort arising out of or relating in
any way to the Agreement, any account, any agreement, any
transaction, any advertisement or solicitation, or your
business interaction or relationship with us; (6) any breach
of any provision of the Agreement; (7) any statements or
representations made to you with respect to the Agreement,
any agreement, any account, any transaction, any
advertisement or solicitation, or your business, interaction
or relationship with us; (8) any property loss, damage or
personal injury; (9) any claim, demand or request for
compensation or damages from or against us; (10) any damages
incurred on or about our premises or property; or (11) any of
the foregoing arising out of, in connection with or relating
to any agreement which relates to the Agreement, any account,
any credit, any transaction or your business, interaction or
relationship with us.
Id. at 3–4 (emphasis in original). The Deposit
Agreement also states that the “waiver of jury trial
shall survive your death, the closing of your account and the
termination of any of your business or transaction(s) with
us, any bankruptcy to the extent consistent with applicable
bankruptcy law and shall also survive as to any Claim covered
within the scope of this [Deposit] Agreement.”
Id. at 6–7.
consideration of the Motion, the Amended Request to Take
Judicial Notice, the response in opposition to the Motion,
the reply, the supplemental reply, and the parties’
oral arguments, Magistrate Judge Tuite issued the R&R.
(Doc. 104). Magistrate Judge Tuite recommends that the Court:
(1) grant the Motion; and (2) grant-in-part the Amended
Request to Take Judicial Notice insofar as it relates to the
Deposit Agreement. Id. at 14.
the entry of Magistrate Judge Tuite’s R&R, this
Court ordered Kaplan to show cause as to why this action
should not be dismissed for lack of subject matter
jurisdiction as a result of Kaplan’s failure to
properly plead diversity of citizenship. Doc. 111 at 4.
Kaplan subsequently filed a response and an amended
complaint. Docs. 112, 113. Aside from omitting the abuse of
process claim and adding allegations to clarify the
citizenship of the parties, the amended complaint is
identical to the original complaint. See Doc. 112 at 2;
Doc. 113 ¶¶2–3.
party makes a timely and specific objection to a magistrate
judge’s report and recommendation, the district judge
“shall make a de novo determination of those
portions of the report or specified proposed findings or
recommendations to which objection is made.” 28 U.S.C.
§ 636(b)(1)(C). With regard to those portions of the
report and recommendation not objected to, the district judge
applies a clearly erroneous standard of review. See Gropp
v. United Airlines, Inc., 817 F.Supp. 1558, 1562 (M.D.
Fla. 1993). The district judge may accept, reject, or modify,
in whole or in part, the magistrate judge’s findings or
recommendations. 28 U.S.C. § 636(b)(1)(C). The district
just may also receive additional evidence or recommit the
matter to the magistrate judge with instructions.
Id; Local R. M.D. Fla. 6.02(a). “The district
court retains the discretion to consider new evidence and
argument raised for the first time in an objection to a
report and recommendation.” Cooper v. Dolgencorp,
LLC, No. 5:11-cv-158-Oc-10GJK, 2011 WL 13323145, at *1
n.2 (M.D. Fla. June 24, 2011) (citing Williams v.
McNeil, 557 F.3d 1287, 1292 (11th Cir. 2009)).
raises two main objections to the R&R: (1) Magistrate
Judge Tuite erred in concluding that the malicious
prosecution claim falls within the scope of the jury waiver;
and (2) Magistrate Judge Tuite erred in concluding that the
Deposit Agreement permits the jury waiver to survive
termination and cover claims arising thereafter. Doc. 107 at
4–12. The Court will address each objection.
Judge Tuite Correctly Decided that the Malicious Prosecution
Claim Falls Within the Scope of the Jury Waiver
argues that Magistrate Judge Tuite erred in concluding that
the malicious prosecution claim in this action falls within
the scope of the jury waiver of the Deposit Agreement. Upon
review, the ...