Rosen v. Jamila (In re Case)
| Decision Date | 24 February 2022 |
| Docket Number | Adv. Case No. 21-01091-PDR,Case No. 20-23672-PDR |
| Citation | 636 B.R. 834 |
| Parties | IN RE: Kesi Jamila CASE, Debtor. Jerry Rosen, et al., Plaintiffs, v. Kesi Jamila Case, Defendant. |
| Court | U.S. Bankruptcy Court — Southern District of Florida |
Robert C. Gindel, Boynton Beach, FL, for Plaintiffs.
Michael A. Gort, Gort Law, P.A., Jupiter, FL, for Defendant.
ORDER GRANTING, IN PART, DEFENDANT'S MOTION TO DISMISS SECOND AMENDED COMPLAINT
To survive dismissal, a complaint must comply with the pleading requirements under Fed. R. Civ. P. 8, and when the cause of action involves fraud, the heightened requirements under Fed. R. Civ. P. 9. A third attempt that fails to do so after clear instructions from the Court on how to comply justifies dismissal with prejudice.
Plaintiffs Jerry Rosen, Vicki Bellofiore, William Pontus, and Sara Pontus filed their Second Amended Complaint alleging that the Defendant is personally indebted to them because of their transactions with her company, K&K Design and Construction, LLC ("K&K"). The Plaintiffs allege the debts are nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(A) for money obtained by false pretenses, false representation, or actual fraud; and under 11 U.S.C. § 523(a)(6) for willful and malicious injury by the debtor to another entity or to the property of another entity. The Defendant moved to dismiss with prejudice ("Motion to Dismiss").
The Defendant owned and managed K&K with her partner, Kimberly Henlin. In 2019, K&K entered two separate home remodeling contracts, with William and Sara Pontus (the "Pontuses") in February, and Jerry Rosen and Vicki Bellofiore (the "Rosens") in August. The Plaintiffs allege that they are the victims of various misrepresentations in reliance upon which they entered the subject contracts and paid K&K. The Plaintiffs further allege that K&K failed to perform causing damages for which the Defendant is personally liable, and that the liability is nondischargeable.
The Defendant, who filed her Chapter 7 petition on December 15, 2020,1 listed the Rosens in her schedules as disputed creditors with an unsecured claim of $66,140, and the Pontuses with a disputed unsecured claim of $0.2 On March 15, 2021, the Plaintiffs filed this adversary proceeding ("First Complaint") which contained one count objecting to discharge of the debts, but also asserting the Defendant's personal liability under a Florida statute, civil conspiracy, aiding and abetting, and alter ego.3
On May 21, 2021, the Defendant moved to dismiss the complaint for failure to state a claim, arguing various pleading deficiencies ("First Motion").4 Without seeking leave as required by Fed. R. Bankr. P. 7015, the Plaintiffs amended their complaint ("Amended Complaint").5 See Fed. R. Bankr. P. 7015 ; Fed. R. Civ. P. 15(a)(1)(B). In response, the Defendant filed Combined Motions to Strike and to Dismiss for Failure to State a Claim ("Second Motion"), alleging similar pleading deficiencies as the First Motion.6 Noting that the Defendant's Second Motion failed to address the Plaintiffs’ noncompliance with Bankruptcy Rule 7015, the Court sua sponte granted the Plaintiffs leave to amend their complaint, deemed the Amended Complaint as properly filed, and denied the First Motion as moot.7 Following a hearing on the Second Motion on August 5, 2021, the Court dismissed the Amended Complaint without prejudice due to the pleading deficiencies.8
The Plaintiffs then amended their complaint on September 9, 2021 ("Second Amended Complaint"). Unlike the previous complaints that included only one count, the Second Amended Complaint separates the causes of action into six counts:
The Defendant responded with the Motion to Dismiss, once again arguing pleading deficiencies, but this time asking for dismissal with prejudice, contending "[t]hree strikes should be sufficient."9 The Defendant again argues the Second Amended Complaint is a "shotgun" pleading, contains conclusory statements throughout, violates Rule 9, and lacks factual allegations specifically against the Defendant. The Plaintiffs responded in opposition10 and the Court held a hearing on the matter on November 24, 2021 ("November Hearing").
The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1334(b). The Court has statutory authority to hear and determine this case under 28 U.S.C. § 157(b)(2)(I) and the general order of reference from the United States District Court for the Southern District of Florida. S.D. Fla. Local Rule 87.2(a). Venue is proper under 28 U.S.C. § 1409.
Fed. R. Bankr. P. 7012 applies Fed. R. Civ. P. 12 to adversary proceedings. Motions under Rule 12(b)(6) are designed to test the legal sufficiency of the complaint. See GSW, Inc. v. Long Cty. , 999 F.2d 1508, 1510 (11th Cir. 1993). When deciding a motion under Rule 12(b)(6), the Court must limit its consideration to the four corners of the complaint, treat all well-pleaded facts as true, and interpret all facts in the light most favorable to the plaintiff. See Ortiz v. Deutsche Bank AG (In re Estrategias en Valores, S.A.) , 628 B.R. 722, 726 n.1 (Bankr. S.D. Fla. 2021) (citing Resnick v. AvMed, Inc. , 693 F.3d 1317, 1321–22 (11th Cir. 2012) ); Harvey M. Jasper Retirement Tr. v. Ivax Corp. , 920 F. Supp. 1260, 1263 (S.D. Fla. 1995) (quoting Milburn v. United States , 734 F.2d 762, 765 (11th Cir. 1984) ).
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Plausibility requires that "the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. A plaintiff need not include detailed factual allegations, but "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 555, 127 S.Ct. 1955 (internal quotations omitted).
The Motion to Dismiss argues that the Complaint should be dismissed because the allegations are insufficient to state causes of action under § 523(a)(2)(A) and 523(a)(6) and as a shot gun pleading.
In general, to state a claim, adversary complaints must satisfy Fed. R. Bankr. P. 7008, which applies Fed. R. Civ. P. 8. Under Rule 8(a)(2), a claim for relief must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Where the adversary complaint asserts a claim for fraud, however, the allegations must satisfy the heightened pleading standard under Fed. R. Bankr. P. 7009, which applies Fed. R. Civ. P. 9.11
Rule 9 requires the complaint to "state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b) ; Fed. R. Bankr. P. 7009. Because "fraud often cannot be pled with certainty before discovery," courts "look carefully for specific allegations of fact giving rise to a strong inference of fraudulent intent, keeping in mind that the pleading of scienter may not rest on a bare inference that a defendant must have had knowledge of the facts." Wilson Family Foods, Inc. v. Brown (In re Brown) , 457 B.R. 919, 925 (Bankr. M.D. Ga. 2011) (internal quotation marks omitted) (quoting Maldonado v. Dominguez , 137 F.3d 1, 9–10 (1st Cir. 1998) ). When more than one actor is alleged to have participated in the fraudulent transactions, the plaintiff cannot "vaguely attribute alleged fraud," but "must individualize the allegations and give specific facts as to each." Id. The plaintiff must allege fraud with sufficient particularity to allow the defendant "a reasonable opportunity to answer the complaint and adequate information to frame a response." Future Tech Int'l v. Tae Il Media , 944 F. Supp. 1538, 1571 (S.D. Fla. 1996) (internal quotation marks and citation omitted); First City Nat'l Bank & Tr. Co. v. Fed. Deposit Ins. Co. , 730 F. Supp. 501, 513 (E.D.N.Y. 1990) ("Facts supporting allegations of fraud in a complaint must be specific enough to allow the defendant ‘a reasonable opportunity to answer the complaint’ and provide the defendant with ‘adequate information to form a response.’ " (quoting Ross v. A.H. Robins Co. , 607 F.2d 545, 557–58 (2d Cir. 1979) ).
"Under Rule 9(b), a plaintiff must allege: (1) the precise statements, documents, or misrepresentations made; (2) the time, place, and person responsible for the statement; (3) the content and manner in which these statements misled the Plaintiffs; and (4) what the defendants gained by the alleged fraud." Sampson v. Washington Mut. Bank , 453 F. App'x 863, 866 (11th Cir. 2011) (citation and internal quotation marks omitted). "To be precise, to survive a motion to dismiss, Plaintiffs must assert the who, what, when, and where of the purported fraud." In re Taylor, Bean, & Whitaker Mortg. Corp. , 2011 WL 5245420, at *5 (Bankr. M.D. Fla. 2011).
Section 523(a)(2)(A) excepts from discharge any debt "for money, property, services ... to the extent obtained by ... false pretenses, a false representation, or actual fraud." To state a claim under § 523(a)(2)(A), the plaintiff must plead that "the debtor made a false statement with the purpose and intention of deceiving the creditor; the...
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