Pro Premium Fin. Co. v. U.S. Premium Fin. Serv. Co.

• Decision Date: 26 October 2016
• Docket Number: Case No.: 0:16-cv-60009-UU
• Parties: PRO PREMIUM FINANCE COMPANY, INC., et al., Plaintiffs, v. US PREMIUM FINANCE SERVICE COMPANY, LLC, et al., Defendants.
• Court: U.S. District Court — Southern District of Florida

PRO PREMIUM FINANCE COMPANY, INC., et al., Plaintiffs, v. US PREMIUM FINANCE SERVICE COMPANY, LLC, et al., Defendants.

Case No.: 0:16-cv-60009-UU

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

October 26, 2016

ORDER ON MOTION TO DISMISS

THIS CAUSE is before the Court upon Defendants' Motion to Dismiss Second Amended Complaint for Failure to Prosecute in Name of Real Party in Interest, D.E. 76. The Motion is fully briefed and ripe for disposition.

THE COURT has reviewed the pertinent portions of the record and is otherwise fully advised in the premises.

BACKGROUND

The following allegations are taken from Plaintiffs' Second Amended Complaint (the "SAC"), which is the operative Complaint in this action, and exhibits filed in this action that were also filed in three state court cases in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida (the "Broward Court"), Case Nos. CACE 15-16929, CACE 16-2191 and CACE 16-6701.¹ D.E. 43.

This action stems from the sale of Pro Premium Finance Company, Inc. ("PPF") to either U.S. Premium Finance Service Company, LLC ("USPFSC"), US Premium Finance, a division of the Brand Banking Company ("USPF") or Brand Banking Company ("Brand").² Id. PPF is an insurance premium finance company that was founded by Daniel Glantz and Michael Glantz in 1987. Id. ¶ 20. PPF provides insurance premium financing for businesses and consumers that are unable to pay in full for their insurance premiums at the time such insurance premiums are due. Id. ¶ 21. Most of PPF's business involves commercial insurance policies. Id. ¶ 22. PPF had credit facilities, including a credit facility with Bank United that exceeded $50 million. Id. ¶ 32.

In July 2015, PPF was placed on notice of a potential fraud involving one of PPF's largest clients. Id. ¶ 33. PPF informed Bank United of the potential fraud. Id. ¶ 35. On September 15, 2015, Bank United ceased to fund PPF's credit facility and, shortly thereafter, declared PPF in default under the terms of its loan agreement. Id. ¶ 36.

On September 29, 2015, BankUnited filed suit in Broward Court to foreclose on its security interest and appoint a receiver. Broward Court Case No. CACE 15-16929, Compl. (Sept. 29, 2015). On October 9, 2015, the Broward Court issued an Order Appointing Receiver, which appointed James S. Howard of Glass Ratner Advisory and Capital Group, LLC as receiver of assets held in the name of PPF (the "Receiver"). D.E. 43-1. In particular, the Order provides:

Appointment: James S. Howard of Glass Ratner Advisory and Capital Group, LLC ("Receiver") is hereby appointed Receiver of those certain Branch Banking and Trust Company ("BB&T") bank accounts held in the name of Defendant PRO PREMIUM FINANCE COMPANY, INC. ("PPF") including, but not limited to, the accounts identified by the following last four digits of each such account xxxxxxxxx6019, xxxxxxxxx1656, xxxxxxxxx5640, xxxxxxxxx6000, and xxxxxxxxx9929, and all other personal property, other than bank accounts held in the name of PPF atBankUnited, as more particularly described in that certain Security Agreement dated November 27, 2012 and UCC-1 Financing Statement filed December 7, 2012 with the Florida Secured Transaction Registry, number 201208002609 (collectively, the "Collateral").

. . .

Such appointment shall be effective upon execution of this Order and shall continue until further order of this Court.

Id. p. 2, ¶ 1. The UCC-1 Financing Statement filed December 7, 2012 (the "UCC-1 Financing Statement") names PPF as the "Debtor" and provides, in relevant part:

ALL "INVENTORY," "EQUIPMENT," "GOODS" WHICH ARE OR ARE ABLE TO BECOME FIXTURES . . . "ACCOUNTS", "CHATTEL PAPER", INSTRUMENTS", GOODS", "LETTER OF CREDIT RIGHTS", "INVESTMENT PROPERTY", "SECURITIES", "COMMERCIAL TORT CLAIMS", "DOCUMENTS", GENERAL INTANGIBLES" AND "ITEMS" IN WHICH DEBTOR NOW HAS ANY RIGHTS OR HEREAFTER ACQUIRES ANY RIGHTS, HOWEVER ARISING, INCLUDING ALL BANK ACCOUNTS IN WHICH DEBTOR HAS DEPOSITED PROCEEDS OF ANY COLLATERAL . . . FILES, CORRESPONDENCE, ADVERTISING PROGRAMS, CUSTOMER LISTS, ALL MONIES BECOMING DUE TO DEBTOR FROM ANY SALE OF COLLATERAL ON ACCOUNT OF REBATES, WARRANTY SERVICE OR BONUSES; AND ALL BOOKS AND RECORDS OF DEBTOR, INCLUDING COMPUTER RECORDS AND PROGRAMS (EXCLUDING ANY LICENSED SOFTWARE), AND ALL RENTS, ROYALTIES, REVENUES, PROFITS, INTEREST, INCREASES, PRODUCTS AND PROCEEDS ARISING IN CONNECTION WITH THE FOREGOING IN WHICH DEBTOR NOW AND HEREAFTER HAS ANY RIGHTS, PRESENTLY OWNED AND HEREAFTER ACQUIRED, CREATED AND ARISING.

. . .

THE COLLATERAL IS DESCRIBED BY TYPES AS DEFINED IN THE UNIFORM COMMERCIAL CODE AS ADOPTED IN FLORIDA AS OF THE DATE OF THIS FINANCING STATEMENT ("UCC"). WORDS IN QUOTATION MARKS HEREIN SHALL HAVE THE MEANINGS ASCRIBED OT THEM IN THE UCC.(emphasis added)

D.E. 46-1 p. 2.

Sometime in 2015, PPF hired a business broker to explore options for selling the business. D.E. 43 ¶¶ 39. The broker introduced PPF to US Premium Finance, a division of Brand Bank out of Georgia. Id. Beginning in September 2015, PPF engaged in extensive negotiations with U.S. Premium Finance regarding a potential acquisition of PPF's assets. Id. ¶¶ 40-78. These negotiations were held principally between William Villari, president of USPF, USPFSC and/or Brand, and Daniel Glantz and Tony Perez ("Perez") of PPF. Id. During these negotiations, US Premium Finance, acting through Villari, repeatedly represented that, if PPF agreed to be sold to US Premium Finance, then PPF's business model would continue forward, unchanged, following the sale. Id. Specifically, US Premium Finance represented that the company would: (1) continue to operate under the PPF brand; (2) operate within US Premium Finance as its own autonomous entity; (3) use the same operating platform, commission program and referring agents as in the past; (4) use the same business model with respect to the manner in which PPF funded loans as in the past; and (5) fund all new business (i.e., new premium financing) using US Premium Finance's own collateral. Id. ¶¶ 68-83. Plaintiffs allege that US Premium Finance was aware of the falsity of each of these representations and aware of Plaintiffs' reliance on them. Id. ¶ 84.

On October 12, 2015, PPF, without the authorization or participation of the Receiver, executed an Asset Purchase Agreement ("APA"), through which it sold certain assets to US Premium Finance. Id. ¶ 93. US Premium Finance paid no money to acquire PPF under the APA. Id. ¶ 94. Instead, US Premium Finance provided consideration in the form of an agreement to fund all new business moving forward and, possibly, hire certain PPF employees. Id. The APA was executed by William Villari, President of US Premium Finance, on behalf of US Premium Finance. Id. ¶ 95. Plaintiffs attach the APA to the SAC. D.E. 43-9.

On October 14, 2015, in reliance on US Premium Finance's representations, Daniel Glantz and Tony Perez each executed employment agreements with USPF entitled Master Agreements (the "Master Agreements"). D.E. 43 ¶ 102; D.E. 14-2. The Master Agreements contain broad restrictive covenants that prohibit Daniel Glantz and Tony Perez from working in the industry in any manner whatsoever for a period of two years, should these individuals terminate employment with USPF. D.E. 43 ¶¶ 103-105. The Master Agreements are executed by Daniel Glantz and Tony Perez in their individual capacities and Mr. Villari in his capacity as President of US Premium Finance, a division of the Brand Banking Company. Id. ¶ 106; D.E. 43-2.

Beginning in late October 2015, Defendants restructured PPF's former business model by: (1) beginning to process all new business through Defendants' management platforms; (2) placing Mr. Villari, Neal Dunoff and Matthew Essery in charge of all PPF operations; and (3) changing PPF's protocol for processing new incoming loans. Id. ¶¶ 111-122. These changes have altered PPF's core business model and caused friction between PPF and referring insurance agents who had done business with PPF in the past and have damaged PPF's profitability and standing in the industry. Id. ¶¶ 129, 132. Because Daniel Glantz's and Tony Perez's compensation is substantially tied to PPF's performance, Plaintiffs allege that Defendants' actions have adversely affected Daniel Glantz's and Tony Perez's respective compensation. Id. ¶ 138.

Since October 2015, Defendants have also allegedly used several million dollars of PPF's collateral to fund new loans. Id. ¶ 143. Plaintiffs allege that Defendants' use of this collateral violated the APA and, moreover, prevented PPF from using collateral to pay down its financialobligations to Bank United, among others, thereby causing PPF to incur substantial additional accrued interest. Id. ¶¶ 144, 146.

The developments described above have resulted in four lawsuits. First, as discussed above, BankUnited first filed suit on August 29, 2015 in Broward Court Case No. CACE 15-16929 to foreclose on its security interest in PPF's personal property and appoint the Receiver.

Second, on January 4, 2016, Plaintiffs filed the instant case in the U.S. District Court for the Southern District of Florida. D.E. 1.

Third, on February 5, 2016, USPF filed Broward Court Case No. CACE 16-2191 against E.T.I. Financial Corp., Daniel Glantz, Tony Perez, and PPF, alleging that Daniel Glantz, Tony Perez and PPF breached the APA, the Master Agreements, their fiduciary duty of loyalty, committed fraud and converted USPF's software and data. Broward Court Case No. CACE 16-2191, Compl. ¶¶ 83-127 (May 5, 2016). USPF also alleged that E.T.I. Financial Corp. tortiously interfered with USPF's contracts with Daniel Glantz and Perez. Id.

Lastly, on April 13, 2016, BankUnited filed suit in Broward County Circuit Court against Robert Granite ("Granite"), Mr. Villari, USPF, USPFSC, Daniel Glantz, Toni Glantz and PPF, alleging claims for tortious interference against USPF, Mr. Villari and Granite; conversion against USPF, Mr....