Lewis v. Seneff
| Decision Date | 19 August 2009 |
| Docket Number | Case No. 6:07-cv-1245-Orl-22DAB. |
| Citation | 654 F.Supp.2d 1349 |
| Parties | Robert LEWIS and Sutter Capital Management, LLC, on behalf of themselves and all others similarly situated, Plaintiffs, v. James M. SENEFF, Jr.; Robert A. Bourne; CNL Realty Corporation; and FF-TSY Holding Company II, LLC, formerly known as Trustreet Properties, Inc., Defendants. |
| Court | U.S. District Court — Middle District of Florida |
George E. Ridge, Cooper, Ridge & Safi, PA, Jacksonville, FL, Harold B. Obstfeld, Harold B. Obstfeld, PC, Joseph Sternberg, Lawrence A. Sucharow, Labaton Sucharow, LLP, Kimberly Marie Donaldson, Kimberly L. Kimmel, Nicholas E. Chimicles, Chimicles & Tikellis, LLP, Haverford, PA, Lawrence P. Kolker, Wolf, Haldenstein, Adler, Freeman & Herz, LLP, New York, NY, Richard J. Lantinberg, Law Offices of Richard J. Lantinberg, P.A., Jacksonville, FL, for Plaintiffs.
Elizabeth J. Betta, James W. Thomas, Jr., Scott B. Schreiber, Arnold & Porter, LLP, Washington, DC, Kimberly Marie Donaldson, Chimicles & Tikellis, LLP, Haverford, PA, Thomas Todd Pittenger, Kristopher Kest, Lowndes, Drosdick, Doster, Kantor & Reed, PA, Orlando, FL, Kenya Jamila Reddy, Samuel J. Salario, Jr., Carlton Fields, PA, Tampa, FL, for Defendants.
This case is before the Court on FF-TSY Holding Company II, LLC's Motion to Dismiss the Second Amended Complaint (Doc. No. 77), and James M. Seneff, Jr.'s, Robert A. Bourne's and CNL Realty Corporation's Motion to Dismiss the Second Amended Complaint (Doc. No. 79), both filed October 17, 2008. The United States Magistrate Judge has submitted a report recommending that the motions be granted.
After an independent de novo review of the record in this matter, and consideration of the Objection to the Report and Recommendation filed by Sutter Capital Management LLC and Robert Lewis (Doc. No. 95) and the responses to the Objection filed by the Defendants (Doc. Nos. 98 and 99), the Court agrees entirely with the findings of fact and conclusions of law in the Report and Recommendation. Therefore, it is ORDERED as follows:
1. That the Report and Recommendation filed July 10, 2009 (Doc. No. 94) is ADOPTED and CONFIRMED and made a part of this Order.
2. The Motions to Dismiss filed by Defendants (Doc. Nos. 77 and 79) are GRANTED. The Second Amended Complaint is dismissed with prejudice.
This cause came on for consideration with oral argument1 on the following motion filed herein:
THEREON it is RECOMMENDED that the motion be GRANTED.
THEREON it is RECOMMENDED that the motion be GRANTED.
This proposed class action arises out of the merger of three of America's primary restaurant real estate companies involved in the ownership, leasing and financing of restaurant properties. Plaintiffs Robert Lewis and Sutter Capital Management LLC ("Plaintiffs"), two limited partners on behalf of a proposed class of 45,000 limited partners in eighteen related limited partnerships, allege that Defendants James M. Seneff, Jr., Robert A. Bourne, CNL Realty Corporation (the "General Partners") undervalued the limited partners' units in order to divert to themselves $140 million in merger consideration that Plaintiffs allege should have been paid to the limited partners; Plaintiffs are also suing the successor to the merged entity, FF-TSY Holding Company II, LLC ("FF-TSY"), for claims related to the merger. Doc. No. 51.
The General Partner Defendants and FF-TSY each move for dismissal of claims asserted in the Plaintiffs' Second Amended Complaint, arguing that Plaintiffs as limited partners lack standing to assert what are essentially derivative claims of the limited partnerships, and their claims are barred by the doctrine of issue preclusion from a previous litigation on the matter. For the reasons set forth herein, the Court recommends that the Motions to Dismiss (Doc. Nos. 77, 79) be GRANTED.
Plaintiffs filed their original proposed class action Complaint in this Court on August 2, 2007. Doc. No. 1. The parties moved to have the case designated a Track Three case and to stay various deadlines. Doc. Nos. 35, 37. District Judge Antoon stayed the deadlines for filing the Motion for Class Certification, the Case Management Report, and conducting discovery until further order of the Court. Doc. No. 37. Following the Defendants filing their Motions to Dismiss the Complaint (Doc. Nos. 46, 47), Plaintiffs filed their Amended Class Action Complaint on November 15, 2007. Doc. No. 51. The Motions to Dismiss the original Complaint were denied as moot. Doc. No. 55. Defendants subsequently filed Motions to Dismiss the Amended Complaint (Doc. Nos. 58, 60) on January 8, 2008. The Motions to Dismiss were referred to this Court on July 22, 20082.
On August 5, 2008, 2008 WL 3200273 this Court entered an Order to Show Cause (Doc. No. 67) why the case should not be dismissed for lack of subject matter jurisdiction3, and the parties filed responses (Doc. Nos. 68, 69, 70). Plaintiffs were ordered to re-file their claims clarifying the basis for jurisdiction, and they filed their Second Amended Class Action Complaint on September 15, 2008. Doc. No. 72. On October 3, 2008 the Court set a briefing schedule and Defendants filed their Motions to Dismiss on October 17, 2008 (Doc. Nos. 77, 79), Plaintiffs filed their opposition (Doc. No. 81) on November 17, 2008, and Defendants filed their Replies on December 5, 2008. Doc. Nos. 84, 85. The Court heard oral argument on January 8, 2009. See Doc. No. 92 (transcript). Plaintiffs sought and were granted leave to file a supplemental memorandum, which they filed on January 23, 2009. Doc. No. 91. The matter is now ripe for determination.
In deciding a Rule 12(b)(6) motion to dismiss, a court must accept all factual allegations in the complaint as true and read them in the light most favorable to the plaintiff. Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007); Christopher v. Harbury, 536 U.S. 403, 406, 122 S.Ct. 2179, 153 L.Ed.2d 413 (2002). To satisfy the Rule 8 pleading requirements, a complaint must contain a short and plain statement showing an entitlement to relief, and the statement must "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 553, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations omitted). Previously, the general standard provided that a complaint should not be dismissed for failure to state a claim unless it appeared beyond doubt that plaintiff could prove no set of facts that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).
However, the former "no set of facts" language in Conley v. Gibson, has been "retired" in favor of a somewhat heightened requirement for a plaintiff to supply more than just any conceivable set of facts tending to support a claim, but "enough facts to state a claim to relief that is plausible on its face." Huggins v. Marriott Ownership Resorts, Inc., No. 6:07-cv-1514-Orl-22KRS, 2008 WL 552590 (M.D.Fla. Feb. 27, 2008) () (Conway, J.); see also In re Faro Technologies Securities Litigation, 534 F.Supp.2d 1248, 1255 (M.D.Fla.2007) ().
"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, ... a plaintiff's obligation to provide the `grounds' of his `entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 556, 127 S.Ct. 1955 (internal citations omitted). "Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the complaint's allegations are true." Id. at 1965. Plaintiff must plead enough facts to state a plausible, and not merely conceivable, basis for the claim. Ashcroft v. Iqbal, ___ U.S. ____, 129 S.Ct. 1937, 1940, 173 L.Ed.2d 868 (2009); Twombly, 550 U.S. at 556, 127 S.Ct. 1955. Determining whether a complaint states a plausible claim is context-specific, requiring the reviewing court to draw on its experience and common sense. Iqbal, ___ U.S. at ____, 129 S.Ct. at 1940; Twombly, 550 U.S. at 556, 127 S.Ct. 1955. Dismissal is also warranted under Rule 12(b)(6) if, assuming the truth of the factual allegations of a plaintiff's complaint, there remains a dispositive legal issue which precludes relief. Neitzke v. Williams, 490 U.S. 319, 326, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989); Brown v. Crawford County, Ga., 960 F.2d 1002, 1009-10 (11th Cir.1992).
The Plaintiffs5 were investors in eighteen CNL Income Fund Limited Partnerships6 (collectively the "CNL Income Funds"), organized between 1985 and 1995 as Florida limited partnerships. Second Amended Complaint, Doc. No. 72 ¶¶ 16, 18. The CNL Income Funds sought to acquire both new and existing restaurant properties, which were leased primarily to operators of selected national and regional fast-food restaurant chains. Doc. No. 72 ¶ 29. Defendants Seneff and Bourne served as the General Partners (collectively the "General Partners") of the CNL Income Funds, along with CNL Realty Corporation; Seneff and Bourne also owned 50% of CNL Realty Corporation. Doc. No. 72 ¶¶ 22-25. Seneff and Bourne were also directors, stockholders7 and creditors of CNL Restaurant...
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