6315 Magazine, LLC v. Flot Nola, LLC

• Decision Date: 21 August 2020
• Docket Number: CIVIL ACTION NO. 20-1472 SECTION M (4)
• Parties: 6315 MAGAZINE, LLC v. FLOT NOLA, LLC, BOUYANCE, INC., THE FLOAT CONFERENCE, L.L.C., RESET, L.L.C, INTERNATIONAL THERAPEUTIC FLOATATION CONFERENCE, L.L.C., CECIL ROEBUCK, AND LYDIA BREIGHNER
• Court: U.S. District Court — Eastern District of Louisiana

6315 MAGAZINE, LLC v. FLOT NOLA, LLC, BOUYANCE, INC., THE FLOAT CONFERENCE, L.L.C.,RESET, L.L.C, INTERNATIONAL THERAPEUTIC FLOATATION CONFERENCE, L.L.C.,CECIL ROEBUCK, AND LYDIA BREIGHNER

CIVIL ACTION NO. 20-1472 SECTION M (4)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA

August 21, 2020

ORDER & REASONS

Before the Court is a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure filed by defendants Cecil Roebuck, Lydia Breighner, Float Nola, LLC f/k/a Flot Nola, LLC ("Flot Nola"), Reset, LLC ("Reset"), International Therapeutic Floatation Conference, LLC ("ITFC"), Bouyance, Inc. ("Bouyance"), and The Float Conference LLC ("TFC") (collectively, "Defendants").¹ Plaintiff 6315 Magazine, LLC ("Plaintiff") responds in opposition,² and Defendants reply in further support of their motion.³ Having considered the parties' memoranda, the record, and the applicable law, the Court issues this Order & Reasons granting the motion as to Plaintiff's claims brought under the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. § 1962(c) & (d), and dismissing Plaintiff's pendent Louisiana state-law claims pursuant to 28 U.S.C. § 1367(c)(3).

I. BACKGROUND

This matter concerns a breached lease agreement. Plaintiff owns real property located at 6024 Magazine Street in New Orleans, Louisiana ("the premises").⁴ Roebuck and Breighner are the vice-president and president, respectively, of Flot Nola, a floatation therapy spa.⁵ On September 13, 2018, Roebuck and Breighner, acting on Flot Nola's behalf, entered into a lease for the premises.⁶ Roebuck and Breighner personally guaranteed the lease.⁷ The lease term was from October 1, 2018, to December 31, 2028.⁸ Because the premises were gutted, Plaintiff agreed to pay $104,000 of the construction costs for Flot Nola to build out the property to meet its needs.⁹

Roebuck and Breighner, acting individually and on Flot Nola's behalf, submitted to Plaintiff a business plan as part of the lease negotiations and application.¹⁰ Plaintiff alleges that the business plan falsely stated that Roebuck had a master's degree and Ph.D. to support the notion that Roebuck had the ability and background to develop the float therapy business.¹¹ Plaintiff also alleges that Flot Nola sent Plaintiff an email with false financial information.¹²

Plaintiff alleges that Flot Nola, Roebuck, and Breighner breached the lease from its inception by failing to: (1) pay the rent timely; (2) pay the late fees associated with the past due rent; (3) pay the property taxes due under the lease; (4) comply with the method of payment set forth in the lease; (5) pay the insurance premiums due under the lease; (6) maintain the premises; (7) prevent liens from being placed on the property; (8) provide commercial insurance coveringthe property; and (9) acquire the appropriate licenses and permits.¹³ According to Plaintiff, Flot Nola, Roebuck, and Breighner improperly diverted to their personal use at least $70,000 of the $104,000 earmarked for the build-out,¹⁴ and that this "misuse of the build out funds is ... a part of a continuing fraudulent scheme to bilk Plaintiff and others in order to support a scam business centered upon the solicitation of subscriptions and memberships for flotation therapy spas and conferences that are essentially dysfunctional and/or non-existent."¹⁵ Plaintiff claims that Flot Nola never operated as a going concern.¹⁶

Plaintiff filed in state court three eviction suits against Flot Nola.¹⁷ Trial on the third eviction suit was held on March 2, 2020; and, on March 16, 2020, the court granted Plaintiff's petition for eviction requiring Flot Nola to vacate the premises.¹⁸ Plaintiff alleges that Roebuck and Breighner took immovable fixtures from, and caused damage to, the premises before vacating it.¹⁹ Plaintiff further alleges that, on March 25, 2020, Roebuck contacted by mail or email RTW Construction, LLC ("RTW"), a creditor of Flot Nola, in an attempt to have RTW place a lien on the premises for unpaid construction work.²⁰

Plaintiff alleges that Roebuck's and Breignher's behavior with respect to the Flot Nola lease is part of a larger scheme. In a section of the complaint titled "The Buoyance Scheme" Plaintiff describes a flotation spa business called Euphoric Composure ("Euphoric") that was started by Roebuck and Breighner in Virginia in 2007.²¹ Roebuck and Breighner sold Euphoricin 2010 for $50,000 in cash and owner-financed debt.²² After a few months, they placed the purchaser in default and repossessed the equipment.²³

In 2011, Roebuck and Breighner opened Buoyance, another flotation therapy spa, in North Carolina.²⁴ They sold Buoyance, along with its spa equipment, client lists, current memberships, and other assets on January 31, 2018.²⁵ Roebuck signed the sale agreement on Buoyance's behalf.²⁶ Plaintiff alleges that Roebuck and Breighner falsely overstated the value of Buoyance's assets and recurring revenue, misrepresented the condition of the equipment, and filed false financial statements and income tax returns in connection with the sale.²⁷ Further, Plaintiff alleges that Roebuck interfered in the sale agreement by refusing to transfer and assign Buoyance's building lease to the buyers.²⁸ On May 16, 2019, Roebuck allegedly arrived at Buoyance's former location, gave the new owners a letter, and ordered them to vacate because Buoyance was still on the lease and the buyers were late with their payments on the sale agreement. Roebuck then changed the locks and seized all of the equipment.²⁹

Plaintiff also alleges that Roebuck and Breighner created and advertised at least two "false" therapeutic conferences, ITFC and TFC, which both solicited and received services and money from various venues, suppliers, and public subscribers, using the mail and internet solicitations.³⁰ Plaintiff contends that the conferences were never held and that Roebuck and Breighner diverted the funds to their own use.³¹

Finally, Plaintiff alleges that Flot Nola, in two separate loans, borrowed $160,000 from the Granoff Trust, securing the loans with income from the sale of Buoyance and with physical assets of Flot Nola that were either fixtures of the premises or had been promised to other vendors.³² The loan proceeds were allegedly deposited into Breighner's bank account, and the Granoff Trust has never been repaid.³³

Plaintiff filed this action on May 18, 2020, alleging that Roebuck's fraudulent business activities constitute a pattern of racketeering in violation of RICO, 18 U.S.C. §1962(c), and that Defendants conspired to violate RICO as prohibited by 18 U.SC. § 1962(d).³⁴ Plaintiffs also allege Louisiana state-law claims, including: (1) fraud against Defendants; (2) damage to the premises and conversion against Roebuck, Breighner, and Flot Nola; (3) breach of the lease and breach of a consent judgment against Flot Nola; and (4) libel and harassment against Roebuck.³⁵ Plaintiff seeks attorney's fees from all Defendants under RICO or the lease agreement.³⁶

I. PENDING MOTION

Defendants argue that Plaintiff's complaint does not state a RICO claim against Roebuck under § 1962(c) because Plaintiff fails to allege sufficient facts demonstrating that Roebuck conducted an association-in-fact enterprise through a pattern of related and continuous acts of mail and wire fraud or that Plaintiff was injured as a result of any such activity.³⁷ Defendants also argue that Plaintiff cannot state a RICO conspiracy claim under § 1962(d) because Plaintiff has not stated a claim under § 1962(c), and alternatively, because Plaintiff does not allege sufficiently any agreement between the Defendants to violate RICO.³⁸ Further, Defendantsargue that Plaintiff either cannot maintain as a matter of law, or fails to adequately allege facts supporting, claims for: (1) fraud against all Defendants; (2) harassment and libel against Roebuck; (3) violation of the consent judgment against all Defendants; and (4) attorney's fees against any Defendant except Flot Nola.³⁹

In opposition, Plaintiff argues that it stated a plausible RICO claim by alleging that Roebuck, together with an association-in-fact enterprise consisting of the entities he owned and operated, used fraudulent mail and email communications to conduct a pattern of racketeering activity with the common purpose of economic gain for Roebuck.⁴⁰ Plaintiff argues that its factual allegations of related and continuous acts of mail and wire fraud undertaken by Roebuck are sufficient, pointing to what it contends are specific predicate acts alleged in the complaint.⁴¹ Finally, Plaintiff argues that it was damaged by the alleged racketeering activity when: (1) Flot Nola, Roebuck, and Breighner fraudulently converted the build-out money to their personal use; (2) Flot Nola breached the lease; and (3) Roebuck and Breighner removed fixtures from, and caused damage to, the premises.⁴² Plaintiff argues that it has adequately alleged each state-law claim.⁴³ Moreover, Plaintiff argues that as guarantors of the lease, Roebuck and Breighner, along with the lessee, Flot Nola, are liable for attorney's fees thereunder, and all Defendants are liable for attorney's fees under RICO.⁴⁴

III. LAW & ANALYSIS

A. The Legal Standards

1. Rule 12(b)(6) of the Federal Rules of Civil Procedure

The Federal Rules of Civil Procedure require a complaint to contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Rule 8 "does not require 'detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The statement of the claim must "'give the defendant fair notice of what the ... claim is and the grounds upon which it rests.'" Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A pleading does not comply with Rule 8 if...