Club Exploria, LLC v. Aaronson, Austin, P.A., Case No: 6:18-cv-576-Orl-28DCI

• Decision Date: 21 October 2019
• Docket Number: Case No: 6:18-cv-576-Orl-28DCI
• Parties: CLUB EXPLORIA, LLC and CLUB EXPLORIA MANAGEMENT, LLC, Plaintiffs, v. AARONSON, AUSTIN, P.A. and AUSTIN N. AARONSON, Defendants.
• Court: U.S. District Court — Middle District of Florida

CLUB EXPLORIA, LLCand CLUB EXPLORIA MANAGEMENT, LLC, Plaintiffs, v. AARONSON, AUSTIN, P.A.and AUSTIN N. AARONSON, Defendants.

Case No: 6:18-cv-576-Orl-28DCI

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION

October 21, 2019

ORDER

Plaintiffs Club Exploria, LLC (Club Exploria) and Club Exploria Management, LLC (CEM) filed this action against law firm Aaronson, Austin, P.A. (Aaronson P.A.) and attorney Austin N. Aaronson (Aaronson), alleging claims under the Lanham Act, the federal civil RICO statute, and Florida law. (Compl., Doc. 1). The Court previously granted in part and denied in part Defendants' motion to dismiss (Doc. 18) and allowed Plaintiffs to file an amended complaint. (Order, Doc. 33).

Plaintiffs have since filed an Amended Complaint (Doc. 39), and Defendants once again move to dismiss, (Mot., Doc. 41). The Court having considered the motion, Plaintiffs' Response (Doc. 46), and pertinent law, Defendants' motion is granted in part and denied in part.

I. Factual¹ and Procedural Background

The facts were recounted in detail in this Courts prior Order (Doc. 33) and are morebriefly stated here. Club Exploria is a timeshare resort developer, and owners of Club Exploria timeshare interests contractually agree to make payments to CEM for fees and dues. (Am. Compl. ¶¶ 16-17). Aaronson P.A. is allegedly an "exit company" that "profit[s] by convincing consumers that they have a purportedly 'lawful' way to 'escape' their [timeshare ownership] obligations, without regard to whether there is any factual or other basis" for avoiding those obligations. (Id. ¶ 8). Defendants allegedly provide "timeshare-relief 'services'" to owners of Club Exploria timeshare interests, (id. ¶ 25), and "encourage timeshare owners to pursue rescission without investigating the facts of their clients' situations," (id. ¶ 9).

Defendants allegedly "us[e] aggressive and dramatic marketing tactics" on their website that "suggest that all timeshare owners have an automatic or inherent right to cancel their contractual obligations to pay—if only the consumer knows the right levers to pull." (Id. ¶ 10 (emphasis removed); see also id. ¶ 53). As a result of Defendants' marketing and advertising, several "affected owners" have stopped making payments to Club Exploria and CEM. (Id. ¶ 12). And some affected owners "hired Defendants to send correspondence to Club Exploria [or its predecessor] alluding to fraud as grounds for rescinding their timeshare purchases." (Id.).

Plaintiffs filed this suit on April 13, 2018, (Doc. 1), alleging six counts: (1) tortious interference with existing contractual relationships; (2) civil RICO violations; (3) violation of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA): (4) false advertising under the Lanham Act; (5) misleading advertising in violation of section 817.41, Florida Statutes; and (6) trade libel. Defendants moved to dismiss all counts, and in a prior Order (Doc. 33) the Court granted that motion in part and denied it in part. Specifically, the Court dismissedCount V (state law false advertising) with prejudice; dismissed Count II (RICO) and Plaintiffs' prayer for declaratory relief without prejudice; and otherwise denied Defendants' motion. The Court allowed Plaintiffs to replead the RICO claim in Count II.

Plaintiffs then filed an Amended Complaint, restating all of their claims except the dismissed state law claim for misleading advertising.² Defendants now move to dismiss the repleaded RICO count and two of Plaintiffs' state law claims.

II. Legal Standards

"A pleading that states a claim for relief must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "[D]etailed factual allegations" are not required, but "[a] pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). "To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570). And in considering a motion to dismiss brought under Rule 12(b)(6), a court limits its "consideration to the well-pleaded factual allegations, documents central to or referenced in the complaint, and matters judicially noticed." LaGrasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004).

III. Discussion

A. RICO (Count II)

Plaintiffs assert a claim under the federal civil RICO statute in Count II. Among the elements of a RICO claim is "a pattern of racketeering activity." 18 U.S.C. § 1962; see alsoSedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985). "Racketeering activity" is defined in RICO as including, but not limited to, any of numerous specified violations of criminal law. See 18 U.S.C. § 1961(1)(B) (listing violations of Title 18 of the United States Code that constitute "racketeering activity"). And a "'pattern of racketeering activity' requires at least two acts of racketeering activity," 18 U.S.C. § 1961(5), though two acts may not always suffice to constitute a pattern, Sedima, 473 U.S. at 496 n.14.

In their initial Complaint, Plaintiffs alleged mail fraud (18 U.S.C. § 1341) and wire fraud (18 U.S.C. § 1343) as the predicate acts for their RICO claim. But in ruling on Defendants' initial motion to dismiss, this Court ruled that Plaintiffs' mail fraud allegations, which were based on the repeated sending of prelitigation letters, fell short, leaving Plaintiffs with only one predicate act—wire fraud via website advertising. (Doc. 33 at 9). In their Amended Complaint, Plaintiffs again rely on the website advertising as one predicate act, and they attempt to plead "a second predicate act," (Doc. 46 at 5), by alleging that Defendants "engag[ed] in monetary transactions in property derived from specified unlawful activity" (18 U.S.C. § 1957)—another of the predicate offenses listed in 18 U.S.C. § 1961(1)(B). (Am. Compl. ¶ 73).

Plaintiffs' predicate act allegations again are insufficient. The Amended Complaint does not adequately plead a violation of § 1957, which requires, among other things, "engag[ing] or attempt[ing] to engage in a monetary transaction in criminally derived property of a value greater than $10,000." 18 U.S.C. § 1957(a). The Amended Complaint does not allege a transaction of greater than $10,000 or any facts plausibly supporting any such transaction. Instead, it alleges merely that Defendants "engaged in one or more transactions involving . . . criminally derived proceeds that, upon information and belief,exceeded $10,000 in isolation or in the aggregate." (Am. Compl. ¶ 80). But these allegations of "in isolation or in the aggregate"³ are not sufficient. The statute plainly requires a transaction in excess of $10,000—not an aggregation of transactions that exceeds $10,000. A transaction less than $10,000 does not qualify. See United States v. Wright, 651 F.3d 764, 772 (7th Cir. 2011) ("Because the financial transaction involved less than the $10,000 minimum the statute requires, [the defendant]'s conviction for violating § 1957 must be set aside."); see also United States v. Rivera-Izquierdo, 850 F.3d 38, 48 (1st Cir. 2017) (discussing Wright and noting "the statutorily imposed $10,000-per-transaction threshold for 'criminally derived property'" in § 1957); United States v. Bazazpour, 690 F.3d 796, 801 (6th Cir. 2012).⁴

In sum, Plaintiffs' § 1957 allegations are insufficient to allege a "second predicate act," and Plaintiffs have not pleaded "a pattern of racketeering activity." Accordingly, their RICO claim fails to state a claim for which relief can be granted, and Count II will be dismissed with prejudice.⁵

B. Tortious Interference (Count I) and FDUTPA (Count III)

Defendants also argue in this second motion to dismiss that Plaintiffs' state law claims for tortious interference and violation of FDUTPA are barred by Florida's "single action rule," which "prohibits defamation claims from being re-cast as additional, separate torts . . . if all of the claims arise from the same defamatory publication," Kinsman v. Winston, Case No. 6:15-cv-696-Orl-22GJK, 2015 WL 12839267, at *5 (M.D. Fla. Sept. 15, 2015). Defendants assert that Counts I (tortious interference) and III (FDUTPA) are barred under this rule because they are based on the defamatory statements that are the subject of Plaintiffs' trade libel claim in Count V. Plaintiffs respond that Defendants may not raise this argument in their second Rule 12(b)(6) motion because they did not raise it in their initial motion and that the argument fails on its merits in any event. Plaintiffs are correct on both scores.

First, although Defendants raised numerous arguments in their first 12(b)(6) motion, the single action rule as a bar to Counts I and III was not one of them—though it was available at that time. Thus, it is not proper for Defendants to now raise this argument in their second 12(b)(6) motion. See Fed. R. Civ. P. 12(g)(2) ("[A] party that makes a motion under this rule must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier motion."); Leyse v. Bank of Am.Nat'l Ass'n, 804 F.3d 316, 320-21 (3d Cir. 2015) (finding it improper for district court to consider successive 12(b)(6) motion, noting that "[t]he procedural bar of Rule 12(g)(2) . . . covers all motions to dismiss for failure to state a claim, regardless of the grounds asserted"); see also In re Apple iPhone Antitrust Litig., 846 F.3d 313, 317-20 (9th Cir. 2017) (noting that "Rule 12(g)(2) provides that a defendant who fails to assert a failure-to-state-a-claim defense in a pre-answer Rule 12 motion cannot assert that defense in a later pre-answer motion under Rule 12(b)(6), but the defense may be asserted in...