Doshi v. Doshi
| Decision Date | 30 January 2019 |
| Docket Number | Case No. 3:17-cv-308-J-34JRK |
| Parties | PARESH DOSHI, an individual, and JITENDRA DOSHI, an individual, Plaintiffs, v. MAHENDRA F. DOSHI, an individual, MAHESH DOSHI, an individual, and RYAN K. BURRESS, an individual, Defendants. |
| Court | U.S. District Court — Middle District of Florida |
This cause is before the Court on Defendants' Motion to Dismiss Amended Complaint (Doc. No. 22; "Motion"), filed March 27, 2018. Plaintiffs oppose the Motion. See Plaintiffs' Response to Defendants' Motion to Dismiss Amended Complaint (Doc. No. 27; "Response"), filed April 16, 2018. The Motion has been referred to the undersigned for a report and recommendation regarding an appropriate resolution. See Order (Doc. No. 34), entered October 4, 2018.
Plaintiffs Paresh Doshi and Jitendra Doshi commenced this action on March 16, 2017 by filing a Complaint (Doc. No. 1) against Defendants Cagle Road Land LLC ("Cagle Road"),Mahendra F. Doshi, Mahesh Doshi, and Ryan K. Burress. Plaintiffs brought claims for fraudulent misrepresentation (count I), fraudulent concealment (count II), negligent misrepresentation (count III), and breach of fiduciary duty (count IV) evidently against all Defendants, and conspiracy to defraud (count V) against the individual Defendants. Defendants moved to dismiss the Complaint (Doc. No. 5), and the undersigned entered a Report and Recommendation on January 23, 2018 recommending dismissal in part (Doc. No. 14). On February 15, 2018, the Honorable Marcia Morales Howard, United States District Judge, entered an Order (Doc. No. 15) adopting the Report and Recommendation; dismissing without prejudice Counts I, III, and V; and dismissing without prejudice Counts II and IV to the extent they were brought against Defendants Mahendra F. Doshi, Ryan K. Burress, and Cagle Road.
On March 13, 2018, Plaintiffs, as permitted (Doc. No. 18), filed the operative Amended Complaint (Doc. No. 20) against Defendants Mahendra F. Doshi, Mahesh Doshi, and Ryan K. Burress. In the Amended Complaint, Plaintiffs bring claims against Defendant Mahesh Doshi for fraudulent misrepresentation (count I), fraudulent concealment (count II), negligent misrepresentation (count III), and breach of fiduciary duty (count IV); and against all Defendants for conspiracy to defraud (count V). See generally Am. Compl.
The Amended Complaint alleges generally as follows. Plaintiffs are citizens of the state of New York, and Defendants are citizens of the state of Florida (with Mahesh Doshi and Ryan K. Burress living in Jacksonville). Am. Compl. at 1-2 ¶¶ 2-6. In 2006, Plaintiff Jitendra Doshi and Defendant Mahesh Doshi, as owners of D & D of Jax, Inc., purchased property located at 5719 Cagle Road, Jacksonville, Florida 32216 ("the Property"). Id. at 2 ¶ 9. The Property was purchased for $600,000.00 from Doshi, Inc. Id. Defendant MaheshDoshi executed the 2006 deed. Id. Years later, in 2009, Plaintiff Jitendra Doshi and Defendant Mahesh Doshi "agreed to put ownership of the Property in Cagle Road . . . which was owned by [Plaintiff] Paresh Doshi and [Defendant] Mahendra Doshi." Id. at 2 ¶ 10.
The Amended Complaint alleges that Plaintiff "Paresh Doshi owned Cagle Road as agent or proxy for [Plaintiff] Jitendra Doshi, and [Defendant] Mahendra Doshi owned Cagle Road as agent or Proxy for [Defendant] Mahesh Doshi." Id. "Although equal partners with [Plaintiffs] Jitendra Doshi and Paresh Doshi, [Defendants] Mahesh Doshi and Mahendra Doshi were located in Jacksonville and dealt with the day-to-day operations and the details of Cagle Road and the Property." Id. at 3 ¶ 11.
According to the Amended Complaint, in early 2013, Defendant "Mahesh Doshi began a campaign to convince [Plaintiffs] to sell Cagle Road for a price well below fair market value of the Property." Id. at 3 ¶ 12. The Amended Complaint alleges that "[a]s part of these efforts, [Defendant] Mahesh Doshi made false statements to [Plaintiffs] regarding the value of the Property, the condition of the Property, and the potential liability of the Property." Id. at 3 ¶ 13. The Amended Complaint then lists these false statements (the "False Statements"). Id. at 3-4 ¶ 13. The Amended Complaint further alleges that, "[i]n addition to the False Statements, Mahesh Doshi intentionally withheld critical information concerning the buyer of the Property," and goes on to detail that critical information. Id. at 4 ¶ 14.
Plaintiffs allege that "[b]ased on [Defendant] Mahesh Doshi's False Statements and withholding of information about the [buyer, CRLAG FLA, LLC (hereinafter "the Buyer"), Plaintiff] Jitendra Doshi agreed to the sale of Cagle Road to Buyer for $20,000.00 in 2013." Id. at 4 ¶ 15. The Buyer was believed by Plaintiffs to be an unrelated third party. See id. at4 ¶ 14 ().
"As part of the sale of Cagle Road, the parties entered into a Transfer of Membership Interest (the 'Agreement') in April 2013" in which the parties agreed that if any litigation were to arise from the Agreement, the prevailing party would be entitled to fees. Id. at 5 ¶¶ 17-18, Ex. A (the Agreement). The parties to the Agreement are Defendant Mahendra F. Doshi, Plaintiff Paresh Doshi (the sellers under the Agreement) and Buyer. Id. at Ex. A p.1. According to the Agreement, the sellers, who are represented to be the "sole members of [Cagle Road]," agree to transfer 100% interest in Cagle Road to the Buyer in exchange for the valuable consideration of $20,000.00. Id.
After the sale was consummated, Plaintiffs allege they "discovered[] the Buyer was an entity controlled by [Defendant] Mahesh Doshi and only ostensibly owned by [Defendant Ryan K.] Burress who was [] Mahesh Doshi['s employee.]" Id. at 4 ¶ 14. Evidently unbeknownst to Plaintiffs until after the sale, Defendant Mahesh Doshi "was added as a manager of Buyer in November 2015." Id. at 6 ¶ 23. According to the Amended Complaint, "[a]bsent the False Statements and concealment of information regarding the Buyer, [Plaintiffs] Jitendra Doshi and Paresh Doshi would not have sold the company whose sole asset was the Property." Id. at 5 ¶ 16.
Plaintiffs allege that in 2016, despite making no substantial repairs to the Property or addressing any remediation concerns, and "with little change in the condition of the Property or the real estate market in general, the Buyer sold the Property for $775,000.00, approximately thirty-eight times the sale in 2013." Id. at 5 ¶¶ 20-21. Defendant "MaheshDoshi executed the deed to the third-party for the 2016 sale." Id. at 6 ¶ 23. The same broker was used for both the 2013 and the 2016 sales. Id. at 5 ¶ 22. "[Upon] information and belief, the broker in 2016 valued the Property at $775,000.00." Id.
The Amended Complaint goes on to make specific allegations with respect to each count. Id. at 6-14. Those allegations, together with some of the more general ones, are addressed in detail below to the extent necessary to resolve the Motion.
Defendants seek to dismiss counts IV and V of the Amended Complaint. Motion at 7-12. As noted, count IV is for breach of fiduciary duty against Mahesh Doshi, and count V is for conspiracy to defraud against all Defendants. See Am. Comp. at 10, 11.
As to count IV, Defendants claim that Mahesh Doshi did not have a fiduciary duty to Plaintiffs. Motion at 10. Defendants focus on the allegation in the Amended Complaint that "Mahendra Doshi owned Cagle Road as an agent or proxy for Mahesh Doshi," Am. Compl. at 2 ¶ 10. See Motion at 7-8. Defendants argue that "[i]t is a legal impossibility for Cagle Road [] to be set up in the manner ple[]d in the Amended Complaint" because the Florida Statutes on limited liability corporations do not allow one individual to be a member of a corporation as an agent or proxy for another individual. Id. (citations omitted). Because it is not alleged that Mahesh Doshi had any other ownership interest in Cagle Road besides the legally impermissible one, Defendants argue that Mahesh Doshi "was not a manager, member, or agent" of Cagle Road and therefore "cannot breach a non-existent fiduciary duty." Id. at 9-10. Defendants acknowledge they "glossed over" this argument in their prior motion to dismiss, now stating that they previously "incorrectly thought the allegations [of theComplaint] showed Mahesh Doshi was not an owner and could not have another own Cagle Road for him by agency or proxy." Id. at 9.
Responding, Plaintiffs contend that Defendants have waived the argument regarding count IV by not having raised it in their prior motion to dismiss. Response at 3-4. In addition, Plaintiffs assert that count IV properly states a cause of action because there are other bases in the Amended Complaint beside the ownership by proxy allegation for the creation of a fiduciary duty, i.e., allegations that Mahesh Doshi was a joint venturer and had superior knowledge. See Response at 4 n.1. Finally, Plaintiffs argue that "Mahesh Doshi controlled Cagle Road, prior to the 2013 sale, whether listed as an owner or not," and that, "[c]onsistent with his ownership role and as detailed in the Amended Complaint, Mahesh Doshi took many steps as an owner or manager of Cagle Road[.]" Id. at 5. Thus, say Plaintiffs, they "have sufficiently alleged the basis for Mahesh Doshi's fiduciary duty." Id.
As to count V, Defendants seek dismissal because, although Plaintiffs plead the existence of an agreement by Defendants to defraud, they allegedly do not "provid[e] any information as to when, or where the agreement was reached." Motion at 10-11. Then, Defendants focus on Ryan K. Burress and Mahendra Doshi and argue Plaintiffs "fail to state with particularity how [these Defendants] knew of, and/or agreed to the scheme to defraud Plaintiffs." Id.
Responding, Plaintiffs contend that "[c]ount V provides Defendants with sufficient notice of the...
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