Landmark Bank, N.A. v. Cmty. Choice Fin., Inc.

CourtUnited States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
Docket NumberCASE NO. 17-60974-CIV-ALTONAGA/Goodman
Decision Date28 September 2017

LANDMARK BANK, N.A., Plaintiff,

CASE NO. 17-60974-CIV-ALTONAGA/Goodman


September 28, 2017


THIS CAUSE comes before the Court on Defendants, Community Choice Financial, Inc. ("CCFI") and Buckeye Check Cashing of Florida, Inc.'s ("Buckeye's") Motion to Dismiss Amended Complaint [ECF No. 43], filed on July 26, 2017. Defendants seek dismissal of Plaintiff, Landmark Bank, N.A.'s seven-count Amended Complaint [ECF No. 40] on the grounds it fails to state a claim upon which relief may be granted, and the Court lacks jurisdiction over Defendant CCFI. Plaintiff filed a Memorandum of Law in Opposition ("Response") [ECF No. 45], to which Defendants filed a Reply [ECF No. 51].

Also before the Court is Plaintiff's Request for Judicial Notice [ECF No. 52]. Defendants oppose Plaintiff's Request (see Opposition to Request [ECF No. 53]) on the basis the documents attached to Plaintiff's Request are irrelevant and the Request itself is untimely. (See id. 4). Plaintiff filed its Reply [ECF No. 54] on September 12, 2017. Defendants' argument "[i]f Centennial believed there was an inconsistency . . . the time to raise this would have been in connection with its opposition, not after briefing was completed on the Motion to Dismiss" (Opp'n 4 (alterations added)), is well-taken.

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Although "[c]ourt documents from a prior proceeding are matters of public record and 'capable of accurate and ready determination by resort to sources whose accuracy could not reasonably be questioned," Weaver v. Mateer & Harbert, P.A., No. 5:09-cv-514-Oc-34TBS, 2012 WL 3065362, at *3 n.7 (M.D. Fla. July 27, 2012) (alteration added; internal quotation marks omitted) (quoting Horne v. Potter, 392 F. App'x 800, 802 (11th Cir. 2010)), the Request is untimely. Local Rule 7.1 provides: "[a]ll material in support of any motion, response, or reply . . . shall be served with the filing." S.D. FLA. L.R. 7.1(c) (alterations added). The documents attached to the Request are copies of documents filed in the state court proceedings, in existence prior to Plaintiff's filing of its Response to the Motion, and Plaintiff has not shown good cause to depart from the requirements of the Local Rules. Therefore, the Court declines to take judicial notice of the documents attached to the Request in connection with Plaintiff's Response.

The Court has carefully considered the parties' written submissions, the record,1 and applicable law. For the reasons explained below, the Motion to Dismiss is granted in part and denied in part.


This case arises out of a series of complex financial transactions involving Plaintiff, Defendants, certain of Defendants' subsidiaries, and a number of third parties not named in this action. The Amended Complaint seeks money damages in connection with Defendants' alleged conspiracy to defraud Plaintiff by coordinating with certain non-parties to execute numerous fraudulent conveyances designed to destroy Plaintiff's security interests, and to tortiously interfere with Plaintiff's business and contractual relationships. (See generally Am. Compl.).

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A. Parties and Relevant Entities

Plaintiff is a national banking association authorized to transact business in Florida. (See id. ¶ 3). It is the successor-in-interest, through the Federal Deposit Insurance Corporation, to now-defunct Valley Bank. (See id. ¶¶ 3, 51).

Defendant, CCFI, is an Ohio corporation conducting business in Florida, either directly or indirectly through its agent-subsidiaries. CCFI is "the corporate hub of a multi-state network of agent-subsidiaries through which CCFI operates as a provider of alternative financial services." (Id. ¶ 7). Those alternative financial services include prepaid debit card services, check cashing, credit servicing, and short- and medium-term consumer loans. (See id. ¶¶ 6-7, 11). CCFI is licensed to do business in Florida. (See id. ¶ 8).

"[CCFI's] agent-subsidiaries conduct business solely for CCFI, . . . act as the exclusive agents for . . . CCFI in the jurisdictions in which they are licensed[,]" and "exist and function solely to achieve CCFI's business purposes." (Id. ¶¶ 12-13 (alterations added)). "CCFI exerts significant operational control over its agent-subsidiaries." (Id. ¶ 14). For example, CCFI controls the location of retail stores and signage and store design for all locations. (See id. ¶ 21).

CCFI utilizes a national training coordinator, and employs district managers and internal staff to review each retail store nationwide. (See id. ¶¶ 15-16). CCFI has a centralized information management system for all retail stores "to support customer service . . . , and to manage the transaction risk, collections, record-keeping, compliance, and daily reporting of [all] its retail stores." (Id. ¶ 17 (alterations added)). "CCFI maintains primary processing systems for its internet lending operations in a single facility, which . . . serves all of CCFI's agent-subsidiaries offering financial services over the internet." (Id. ¶ 18 (alteration added)). CCFI has a centralized collections division and, as receivables age, "collection responsibility shifts solely

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to CCFI's internal collection division." (Id. ¶ 19). CCFI's collection activities are centralized at call centers in Ohio and Arizona. (See id.). CCFI also maintains a centralized legal and compliance department responsible for company-wide policies. (See id. ¶ 20).

In its Securities and Exchange Commission filings, CCFI defines the term "company" to include CCFI and its agent-subsidiaries. (See id. ¶ 23). CCFI is the 100 percent stockholder and indirect parent company of Defendant, Buckeye. (See id. ¶ 6). Buckeye is also an Ohio corporation authorized to conduct business in Florida. (See id. ¶ 24). According to the Amended Complaint, Buckeye is one of CCFI's agent-subsidiaries and exists only to achieve CCFI's business purposes. (See id. ¶¶ 24-26).

Non-party Buckeye Check Cashing of Florida II, LLC ("Buckeye II") is a Florida limited liability company, first formed in 2012 to serve as Buckeye and CCFI's agent-subsidiary in southeast Florida. (See id. ¶ 29). Until January 2016, Buckeye was the sole member of Buckeye II. (See id. ¶ 28).

The Osman Family Network is a collection of businesses owned, managed, and controlled by members of the Osman family, among them Osman Family Holdings, LLC ("OFH"). (See id. ¶¶ 36, 51). Also among those businesses are certain entities engaged in check cashing and payday lending in Southeast Florida. (See id. ¶ 37). Those entities are: Foremost Inc. ("Foremost"), Check Cashing U.S.A., Inc. — now known as The Osmans, Inc. — ("CCUSA"), and Armando's, Inc. ("Armando's" together with Foremost and CCUSA, "Pledgors"). (See id.). The Osman Family Network also owns and operates plant nursery businesses, Medallion Container Nurseries, LLC ("MCN") and MGNF, LLC. (See id. ¶ 64). Valley Bank had an active lending relationship with at least some of the Osman Family Network

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entities until those businesses defaulted on various loan obligations to Valley Bank between October and December 2013. (See id. ¶¶ 36, 64).

B. The Buckeye Transactions

In April 2012, The Osman Family Network sold its check cashing business and assets to Buckeye for $42,000,000. (See id. ¶ 40; see also id., Ex. A, Asset Purchase Agreement [ECF No. 40-1]). In connection with this transaction, CCFI caused Buckeye II to be formed as a Delaware limited liability company in June 2012. (See Am. Compl. ¶ 42). The transaction was structured so Buckeye would hold the Pledgors' membership interests in the check cashing and payday lending business entities, and Buckeye II would become the owner of the entities' assets. (See id. ¶ 43).

In exchange, Buckeye II executed and delivered a secured term note dated August 1, 2012 for eight million dollars in favor of the Pledgors ("Buckeye II Note"). (See id. ¶ 45; see also id. Ex. B, Buckeye II Note [ECF No. 40-2]). CCFI also conveyed to Pledgors ten million dollars' worth of CCFI common stock. (See Am. Compl. ¶ 46; see also id., Ex. C, Stock Certificate [ECF No. 40-3]). As a result, Pledgors became shareholders of CCFI, subject to the restrictions of a Shareholders Agreement dated April 29, 2011, which prohibited Pledgors from transferring, assigning, pledging, or otherwise encumbering the stock until certain conditions precedent had been satisfied. (See id. ¶¶ 49-50).

An amendment to the Asset Purchase Agreement also granted Pledgors a "put option" giving them the right to require Buckeye II to purchase all, but not less than all, of the CCFI Stock at a purchase price of $12.76 a share. (See Am. Compl. ¶ 47; see also id., Ex. D, First Amendment to Asset Purchase Agreement [ECF No. 40-4] ¶ 8). The "Put Option" was set to ripen in July 2017. (See Am. Compl. ¶ 48).

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C. The Osman Family Network Loans

1. The OFH Loan

During 2012 and 2013, OFH executed and delivered a series of promissory notes in favor of Valley Bank, which resulted in a Consolidated, Amended and Restated Promissory Note dated February 13, 2013 in the amount of $5,500,000 ("OFH Loan"). (See id. ¶ 52; see also id., Ex. E, OFH Loan [ECF No. 40-5]). Pledgors executed a Security Agreement dated November 30, 2012, granting Valley Bank a security interest in the Buckeye II Note and certain related agreements. (See Am. Compl. ¶ 53; see also id., Ex. F, Security Agreement [ECF No. 40-6]). Pledgors also collaterally assigned the Buckeye II Note to Valley Bank through a Collateral Assignment of Note and Collateral Documents (the "Collateral Assignment"), which conditionally assigned Valley Bank a first position security interest in all assets of Buckeye II (the "Buckeye II Collateral"). (See Am. Compl. ¶ 54; see also id., Ex. G, Collateral Assignment [ECF No. 40-7]).

2. The MCN and MGNF Loans

MGNF executed two promissory notes in...

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