Black v. Bryant

• Decision Date: 16 November 1995
• Docket Number: No. 95-830-CIV-T-17(B).,95-830-CIV-T-17(B).
• Parties: John M. BLACK, Jr., individually, John Black, III, individually, and Black Fox Investments, a California general partnership, Plaintiffs, v. Thomas J. BRYANT, individually Bryant & Company, CPA's, P.A., A Florida corporation, Walt Walters, individually, Alan Arterbury, individually, and Malcolm Barnebey, individually, Defendants.
• Court: U.S. District Court — Middle District of Florida

905 F. Supp. 1046

John M. BLACK, Jr., individually, John Black, III, individually, and Black Fox Investments, a California general partnership, Plaintiffs, v. Thomas J. BRYANT, individually Bryant & Company, CPA's, P.A., A Florida corporation, Walt Walters, individually, Alan Arterbury, individually, and Malcolm Barnebey, individually, Defendants.

No. 95-830-CIV-T-17(B).

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

November 16, 1995.

COPYRIGHT MATERIAL OMITTED

Michael Paul Sampson, Holland & Knight, Lakeland, FL, for plaintiffs.

Jonathan Stidham, Wofford H. Stidham, Lane, Trohn, Clarke, Bertrand, Vreeland & Jacobsen, P.A., Bartow, FL, for defendants.

ORDER OF REFERRAL ON MOTION TO DISMISS

KOVACHEVICH, District Judge.

This cause comes before the Court on Defendant Malcolm Barnebey's Motion to Dismiss pursuant to Rule 12(b)(2), Federal Rules of Civil Procedure, for want of personal jurisdiction, filed with supporting affidavit on August 7, 1995 (Docket No. 11). Plaintiffs filed both a Response to Defendant's Motion to Dismiss (Docket No. 16) and an Affidavit in support of the Response (Docket No. 17) on September 5, 1995.

I. BACKGROUND

The complaint in this cause of action was filed on June 1, 1995, by Plaintiffs John M. Black, Jr., John Black III, and Black Fox Investments, a California general partnership. The complaint contains nine (9) counts, however, Defendant Barnebey has been named only in the following counts: Count V (fraud against Barnebey), Count VI (conspiracy to commit fraud), Count VII (conversion against all defendants), and Count VIII (civil theft against all defendants).

For purposes of this Order and determination of the jurisdictional issue, the Court herein summarizes the allegations set forth within the Plaintiffs' Verified Complaint (Docket No. 1) and, to the extent they are uncontroverted by the Defendant's Affidavit, must accept them as true. Madara v. Hall, 916 F.2d 1510 (11th Cir.1990). Plaintiffs' allegations that are directly related to or involve Defendant Malcolm Barnebey are set forth with specificity. Additionally, the Court includes a list of the parties and related entities as they have been alleged and identified in Plaintiffs' complaint, for reference and understanding.

The following is a summary of the parties and related entities involved in this cause:

1.) John M. Black, Jr. ("Black") is a resident of California and, at all material times, an officer, director, and shareholder of Lighthouse Reef Resort Limited ("LRRL").

2.) LRRL is a Belizean limited liability corporation which runs a resort in Belize.

3.) John M. Black III ("J. Black III") is a resident of California.

4.) Black Fox Investments, Inc. ("Black Fox") is a general partnership organized under the laws of the state of California.

5.) Thomas J. Bryant ("Bryant") is a resident of Polk County, Florida and is licensed as a certified public accountant pursuant to Florida law. Bryant is president of Bryant & Company, CPA's, P.A. ("Bryant & Co.") and engaged in the practice of public accounting in Florida.

6.) Bryant & Co. is a corporation organized under the laws of the state of Florida and engaged in the practice of public accounting in Florida. At all material times, Bryant and Bryant & Co. were doing business in the state of Florida.

7.) Walt Walters ("Walters") is a resident of Polk County, Florida. At all material times, Walters was doing business in the state of Florida.

8.) Alan Arterbury ("Arterbury") is a resident of Texas. At all material times hereto, Arterbury was an officer, director, and shareholder of LRRL.

9.) Projects Caribbe, Ltd. ("Projects Caribbe"), is a Bahamian corporation that Walters formed, and in part owns, which received and maintains an ownership interest in LRRL.

10.) Blue Lagoon, Inc. ("Blue Lagoon"), is a Texas corporation that Arterbury formed, and in part owns, which received and maintains an ownership interest in LRRL. Blue Lagoon is allegedly represented as a scuba diving resort operated by Arterbury.

11.) Northern Cay Development Corporation, Inc. ("Northern Cay") is a corporation organized under the laws of Florida and licensed to do business in Florida. At all material times hereto, Northern Cay was to be LRRL's United States affiliate.

12.) Northern Two Cayes Co. Ltd. ("Northern Two Cayes") was formed by Black on March 26, 1978, for the purpose of owning and developing resorts in Belize, Central America.

General Allegations

The allegations set forth in Plaintiffs' complaint begin when Northern Two Cayes agreed with LRRL to purchase land in Belize for the purpose of developing and operating a resort thereon. Upon agreement, Black was designated to the Board of Directors for LRRL and invested $50,000.00, (U.S.) as seed capital in the project. On May 9, 1989, LRRL's Board held its organizational meeting in Texas. At that meeting, Black was elected President and shares of stock were issued to shareholders. LRRL's organizers had previously agreed that one share of stock in LRRL would be issued per $100.00, (U.S.) investment.

Subsequently, Blue Lagoon (Arterbury) and Walters agreed to invest certain amounts of money in LRRL. Plaintiffs later discovered that such investments were either never contributed or only portions of the agreed upon amounts were invested. On July 19, 1989, Walters was elected to LRRL's Board of Directors and later became general contractor for construction of three villas at the resort. Walters was also a client of Bryant & Co., whose accounting and financial services he and Bryant offered to Black and LRRL for the purpose of overseeing escrow funds related to construction at the resort. Bryant later established two escrow accounts under the direction of LRRL.

In March 1990, an injunction was obtained against LRRL on matters unrelated to these proceedings. As a result, LRRL was prevented from issuing equity and all future shareholder contributions were to be in the form of loans until the injunction could be lifted and the shares issued. At such time, those who advanced funds could exercise options to convert debt to equity.

In January of 1991, Black acted on LRRL's behalf and advised Bryant to incorporate Northern Cay in Florida for the purpose of receiving, depositing, and remitting funds paid to LRRL in the United States. In turn, Bryant opened a bank account in the name of Northern Cay in Lakeland, Florida. Bryant is also alleged to have applied to the Florida Department of State for registration of "Lighthouse Reef Resort" as Northern Cay's fictitious name. Plaintiffs allege that Bryant later falsely identified expenses in LRRL's books, and disbursed and transferred escrow funds without authorization. In February 1992, in Texas, Arterbury, Black, Bryant and Walters were elected to the Northern Cay Board of Directors.

Defendant Barnebey is not mentioned in Plaintiffs' complaint until allegations are made concerning the July 17, 1992, shareholders and board meetings held on behalf of LRRL. On this date, Defendant Barnebey is alleged to have been elected to the Board of Directors as an "independent director". Plaintiffs allege that Barnebey had a long time relationship with Arterbury's father, which Barnebey and Arterbury failed to disclose prior to the election. Plaintiffs' complaint does not indicate where the July 17, 1992, meetings were convened.

Barnebey was in attendance at the July 17, 1992, meeting, during which minutes from a previous board meeting were amended to reflect that Black was due an additional 350 shares and a motion to authorize an additional 10,000 shares carried. Later during the July 17, 1992, LRRL board meeting, Bryant presented a financial report to the directors and the board voted to postpone the issuance of shares in exchange for prior advances to LRRL. Additionally, Arterbury was elected President and Black was elected Secretary/Treasurer. On July 30, 1992, Barnebey was copied on a fax from Arterbury to Black concerning expenditures and bank transfers from accounts of LRRL and Northern Cay.

On September 25, 1992, Barnebey attended an LRRL Board of Directors meeting held in Houston, Texas. At that meeting, Arterbury, Walters, and Barnebey voted to issue Projects Caribbe 150 shares; Black and Lutz, another member of the board, opposed. After discussion, Arterbury, Walters, and Barnebey voted to issue Projects Caribbe an additional 100 shares and credit its stock subscription account with $6,000.00 (U.S.).

Also during that meeting, Arterbury presented an unsigned copy of a "Directors' Consent in Lieu of a Meeting", pursuant to which LRRL's board would authorize issuance of stock in exchange for commissions that LRRL owed Blue Lagoon. Arterbury, presenting the unsigned document, allegedly advised the Board that he had a signed document and requested that stock be issued. Plaintiffs allege that based on this representation, Barnebey and Walters, in turn, voted with Arterbury to issue the additional stock. Black moved, and all voted, to issue Blue Lagoon 465 shares to satisfy its claim for services and advances.

At that meeting, Walters notified the shareholders that he was offering for sale the shares held by Projects Caribbe. Black moved that 500 shares be issued to J. Black III for $50,000.00 (U.S.) to satisfy a portion of his option to purchase LRRL shares; the motion failed. Walters, Arterbury, and Barnebey voted against issuing Plaintiffs shares for their advances. Barnebey then left prior to adjournment of the meeting.

Plaintiffs allege that the rift between the shareholders was a conspiracy hatched by Arterbury and Walters to block the issuance of shares to Plaintiffs for advances they had made to LRRL. Plaintiffs maintain that they advanced money to LRRL, which LRRL did receive, in expectation that one share would be issued for each US $100 advanced. Moreover, Plaintiffs allege that Arterbury, Walters, and Barnebey unfairly exercised their powers as directors for the improper purpose of...