Muller v. Zaibet

• Docket Number: 23-cv-22276-BLOOM/Otazo-Reyes
• Decision Date: 27 October 2023
• Parties: PATRICK MULLER and MOUNA BOUZID, Plaintiffs, v. ITEB ZAIBET, et al., Defendants.
• Court: U.S. District Court — Southern District of Florida

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PATRICK MULLER and MOUNA BOUZID, Plaintiffs,
v.
ITEB ZAIBET, et al., Defendants.

No. 23-cv-22276-BLOOM/Otazo-Reyes

United States District Court, S.D. Florida

October 27, 2023

ORDER ADOPTING MAGISTRATE JUDGE'S REPORT AND RECOMMENDATIONS

BETH BLOOM, UNITED STATES DISTRICT JUDGE

THIS CAUSE is before the Court upon Plaintiffs Patrick Muller and Mouna Bouzid's (“Plaintiffs”) Objection to Magistrate Judge's Report and Recommendation recommending that Defendant Luxury Property Trust's (“Defendant Trust”) Motion to Dissolve Lis Pendens be granted, ECF No. [89] (“Objection”). Defendant Trust filed a Response in Opposition to Plaintiffs' Objection, ECF No. [91] (“Response”). The Court has carefully reviewed the Magistrate Judge's Report and Recommendation, ECF No. [84], the Objection and Response, the record in this case, the applicable law, and is otherwise fully advised. For the reasons that follow, the Objection is overruled, and the Court adopts the Report and Recommendation.

I. Background

Plaintiffs initiated this action on June 20, 2023. ECF No. [1]. Plaintiffs' Complaint alleges various claims against Defendants. The Complaint generally alleges that Plaintiffs are victims of an international investment and real estate scheme involving Defendants, most notably Defendants Iteb Zaibet and Lolita C. Rebulard (“Principal Defendants”). Count XIII of the Complaint seeks

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the imposition of an equitable lien over various properties and a vehicle. Plaintiffs allege that these assets “were purchased with the Plaintiffs' funds (due to fraud) - with the knowledge of the Defendants.” ECF No. [1] at 25.

Plaintiffs filed Notices of Lis Pendens, ECF Nos. [13]-[14], predicated on their claim for imposition of equitable liens over two of the properties referenced in Count XIII, namely Unit 2501 located at 888 Biscayne Boulevard, Miami, Florida (“2501 Property”) and Unit 4401 located at 1100 Biscayne Boulevard, Miami, Florida (“4401 Property”). See ECF No. [1] ¶¶ 33-34, 105107. Plaintiffs thereafter filed an Amended Notice of Lis Pendens, ECF No. [47], that corrects an error in the 2501 Property's legal description.

Defendant Trust filed a Motion to Dissolve Lis Pendens (“Motion”) on June 30, 2023.^[1]ECF No. [21]. Defendant Trust's Motion requests that the Court discharge the Notices of Lis Pendens on the 2501 Property and the 4401 Property (“Properties”) because the Properties are not properly subject to lis pendens. Defendant Trust's Motion argues that Count XIII of the Complaint fails to comply with the requirements of § 48.23 of Florida Statutes, the provision governing lis pendens. § 48.23 of Florida Statutes provides in part:

An action in any of the state or federal courts in this state operates as a lis pendens on any real or personal property involved therein or to be affected thereby only if a notice of lis pendens is recorded in the official records of the county where the property is located and such notice has not expired pursuant to subsection (2) or been withdrawn or discharged

Defendant Trust argues that the Notices of Lis Pendens should accordingly be dissolved because Plaintiffs' Complaint fails to allege a recorded lien against the Property. Moreover, Defendant Trust contends that the Court should not order lis pendens on the Properties because

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this is an action for money damages, and because Plaintiffs fail to show a fair nexus between their claim to equitable ownership of the Properties and the Properties themselves.

Plaintiffs' respond that Defendant Trust's Motion should be denied because they have established a fair nexus between the Properties and their claim of equitable ownership. Plaintiffs argue that a fair nexus is established because the Complaint alleges that Principal Defendants made false statements to Plaintiffs regarding the use of Plaintiffs' funds to acquire the 2501 Property, that those false statements induced Plaintiffs to transfer funds to Principal Defendants, who then diverted part of these funds to Defendant Trust for the property taxes and maintenance costs of the 2501 Property and to acquire the 4401 Property. Plaintiffs contend that those allegations establish a fair nexus between their equitable ownership claim and the Properties, and the Motion should accordingly be denied. Defendant Trust replies that Plaintiff's recitation of the allegations in their Complaint fails to meet Plaintiffs' obligation to make a minimal showing justifying lis pendens on the Properties. Defendant Trust argues that none of the evidence Plaintiffs proffer establishes a fair nexus between the Properties and Plaintiffs' claim.

On August 24, 2023, the Court referred the Motion, among others, to Magistrate Judge Alicia Otazo-Reyes for a Report and Recommendation (“R&R”). ECF No. [68]. Judge Otazo-Reyes conducted an evidentiary hearing on the Motion on September 6, 2023. ECF No. [76].

A. R&R

In her analysis, Magistrate Judge Otazo-Reyes concluded that Plaintiffs failed to show that the Properties are properly subject to a lis pendens under Florida law. Judge Otazo-Reyes correctly recognized that § 48.23 Florida Statues governs lis pendens and noted that § 48.23(3) provides that “the court shall control and discharge the recorded notice of lis pendens as the court would grant and dissolve injunctions.” R&R at 3 (quoting Fla. Stat. Ann. § 48.23(3)). To avoid discharge, Judge

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Otazo-Reyes explained that Plaintiffs must “show a fair nexus between the property and the dispute.” Id. (quoting Med. Facilities Develop, Inc. v. Little Arch Creek Props., Inc., 675 So.2d 915, 917 (Fla. 1996)). This showing requires a “good faith, viable claim[.]” Id. (quoting Blue Star Palms, LLC v. LED Trust, LLC, 128 So.3d 36, 38 (Fla. 3d DCA 2012)). Judge Otazo-Reyes observed that Plaintiffs rely on “their equitable lien claim” to support lis pendens on the Properties and accordingly proceeded to analyze whether Plaintiffs have shown a fair nexus between the Properties and the dispute.

1. 2501 Property

Judge Otazo-Reyes began her analysis of the 2501 Property by noting that “[i]t is undisputed that [Defendant] purchased the 2501 Property in 2018, well before Plaintiffs' alleged relationship with the Principal Defendants began in 2020.” Id. (citing Warranty Deed, ECF No. 21-3], ECF No. [1] ¶¶ 22-23). Judge Otazo-Reyes accordingly found that “Plaintiffs cannot support their allegation in Count XIII of the Verified Complaint that their funds were used to purchase the 2501 Property.” R&R at 3.

Judge Otazo-Reyes then moved to Plaintiffs' second basis for lis pendens, namely, that Principal Defendants “and/or Defendant Trust” used “an unknown sum” of the allegedly fraudulently obtained funds “to pay the 2021 Miami-Dade County Real Estate Taxes and maintenance costs associated” with the 2501 Property. Id. (citing ECF No. [1] at 11). Judge Otazo-Reyes reviewed the documentation Plaintiffs provided to support their claim, a “certified translation of an email sent by [Defendant] Rebulard on April 29, 2020, that talks about borrowing money from Plaintiffs to pay some taxes.” Id. at 4 (citing ECF No. [78] at 7-8). Judge Otazo-Reyes found that “this proffer was too vague to establish a fair nexus between the 2501 Property and the dispute” because this email fails to show that “any money was actually paid by Plaintiffs[.]” Id.

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Judge Otazo-Reyes concluded that Plaintiffs failed to show they have a “good faith viable claim” against the 2501 Property, and the Notice of Lis Pendens on the 2501 Property should accordingly be discharged. Id. (citing Fla. Stat. Ann. § 48.23(3); Med. Facilities, 675 So.2d at 917).

2. 4401 Property

Judge Otazo-Reyes then evaluated whether a fair nexus exists regarding the 4401 Property.

In support of their claim, Plaintiffs' “proffered a sales contract for the 4401 Property, dated December 9, 2021, showing the [Defendant] Trust as buyer” and “bank account statements for Defendant AAA Plus Financial Group, Inc. showing wire transfers from [Plaintiff] Muller.” Id. (citing ECF Nos. [1-4] at 3-4, [1-5]). Plaintiffs also attempted to trace Plaintiff Muller's funds to the purchase of the 4401 Property after the evidentiary hearing Judge Otazo-Reyes conducted on the Motion. Id. at 4-5. Judge Otazo-Reyes found that Plaintiffs proffered evidence failed to trace the funds to the Property because “(1) funds have not been traced from AAA to the originator of the Wire Transfers, Martha L. Mendez, P.A.; (2) the amounts shown on the Wire Transfers do not match the amounts shown on the AAA Statements (3) the 4401 Property is not mentioned on the Wire Transfers.” Id. at 5. Judge Otazo-Reyes concluded that Plaintiffs' proffer purporting to establish a fair nexus between their claims and the 4401 Property “is too vague[,]” and that Plaintiffs have therefore failed to show “that they have a good faith claim for the imposition of an equitable lien on the 4401 Property[.]” Id. Judge Otazo-Reyes accordingly recommended that the Notice of Lis Pendens on the 4401 Property should also be discharged. Id. (citing Fla. Stat. § 48.23(3); Med. Facilities, 675 So.2d at 917).

Judge Otazo-Reyes recommended that the Court grant the Motion and discharge the Notices of Lis Pendens. Alternatively, Judge-Otazo Reyes recommended that Plaintiffs be required

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to post a bond in the amount of $311,454.55, representing one year of default interest for the 4401 Property.^[2]Id. n. 3.

B. Plaintiffs' Objections

On October 10, 2023, Plaintiffs filed an untimely Objection to Judge Otazo-Reyes's R&R.^[3]Plaintiffs contend that Judge Otazo-Reyes erred in misconstruing established law and in interpreting the documentation Plaintiffs offered to support their claims. Plaintiffs assert that Judge Otazo-Reyes erred as a matter of law in finding that Plaintiffs' fail to show a fair nexus between the dispute and the Properties. Plaintiffs argue that Judge Otazo-Reyes...