Newman v. William L. Gunlicks Irrevocable Trust F/B/O Nissa Cox et al
Filing
33
OPINION AND ORDER granting in part and denying in part 13 Motion to dismiss. The motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and (2) is denied. The motion to dismiss is granted as to Counts I, III, and V which are dismissed without pre judice for the reasons set forth in the Opinion and Order. The Receiver may file an Amended Complaint to re-assert these claims within the time frame set forth within a forthcoming Case Management and Scheduling Order. The Motion to Strike and Motion for More Definite Statement are denied as moot. Signed by Judge John E. Steele on 9/25/2012. (SVC)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
DANIEL S. NEWMAN, as receiver for
Founding Partners Capital Management
Company; Founding Partner
StableValue Fund, L.P., Founding Partners
Stable-Value II, L.P., Founding
Partners
Global
Fund,
Ltd.,
Founding
partners
Hybrid-Value
Fund, L.P.,
vs.
Case No.
2:11-cv-479-FtM-29DNF
WILLIAM L. GUNLICKS IRREVOCABLE
TRUST F/B/O NISSA COX, NISSA COX,
individually and in her capacity as
Trustee of the William L. Gunlicks
Irrevocable Trust f/b/o Nissa Cox,
WILLIAM L. GUNLICKS IRREVOCABLE
TRUST f/b/o Annalee Good, ANNALEE
GOOD, individually
and
in
her
capacity as Trustee of the William
L. Gunlicks Irrevocable Trust f/b/o
Annalee Good, WILLIAM L. GUNLICKS
IRREVOCABLE TRUST f/b/o WILLIAM V.
GUNLICKS,
WILLIAM
V.
GUNLICKS,
individually and in his capacity as
Trustee of the William L. Gunlicks
Irrevocable Trust f/b/o William V.
Gunlicks,
Defendants.
______________________________________
OPINION AND ORDER
This matter comes before the Court on Defendants’ Motion to
Dismiss or, in the Alternative, to Strike Complaint (Doc. #13)
filed on December 20, 2011.
Plaintiff filed a response on January
20, 20121 (Doc. #16), to which defendants filed a reply on January
27, 2012 (Doc. #17).
Oral argument was held on September 24, 2012.
I.
Plaintiff Daniel S. Newman (plaintiff or Receiver) is the
Court-appointed receiver for certain Receivership Entities2 in SEC
v. Founding Partners Capital Mngmt. Co., et al., Case No. 2:09-cv229-FtM-JES-SPC
undersigned.
(M.D.
Fla.),
currently
pending
before
the
The plaintiff was appointed as Receiver on May 20,
2009, (Doc. #1, ¶2), and was authorized to institute appropriate
legal proceedings on behalf of the Receivership Entities (Id. at
¶5.)
On August 26, 2011, the Receiver filed a six-count Complaint
(Doc. #1) against:
(1) the William L. Gunlicks Irrevocable Trust
f/b/o (for the benefit of) Nissa Cox; (2) Nissa Cox, individually
and
in
her
Irrevocable
capacity
Trust
as
f/b/o
Trustee
Nissa
of
the
William
L.
Gunlicks
Cox;
(3)
William
L.
Gunlicks
Irrevocable Trust f/b/o Annalee Good; (4) Annalee Good individually
and
in
her
capacity
as
Trustee
of
the
William
L.
Gunlicks
Irrevocable Trust f/b/o Annalee Good; (5) William L. Gunlicks
1
On December 28, 2011, plaintiff was granted an extension of
time in which to respond to the motion to dismiss. (Doc. #15.)
Therefore, plaintiff’s response was timely filed.
2
Founding Partners Capital Management Company (FPCMC),
Founding Partners Stable-Value Fund, L.P., Founding Partners
Stable-Value Fund, II, L.P., Founding Partners Global Fund, Ltd.,
and Founding Partners Hybrid-Value Fund, L.P. (collectively, “the
Receivership Entities”).
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Irrevocable Trust f/b/o William V. Gunlicks; and (6) William V.
Gunlicks, individually and in his capacity as Trustee of the
William L. Gunlicks Irrevocable Trust f/b/o William V. Gunlicks
(collectively defendants) (Id. at pp. 1-2.)
The Complaint asserts
state law claims for fraudulent transfer in violation of the
Florida Uniform Fraudulent Transfers Act (FUFTA), Fla. Stat. § 726
et seq. (Counts I, III, V) and state law claims for unjust
enrichment (Counts II, IV, VI) arising out of three monetary
transfers.
The
Complaint
alleges
that
Founding
Partners
Capital
Management Company (FPCMC) falsely represented to its investors
that its primary fund, Stable Value, loaned money to Sun Capital
Healthcare, Inc. and Sun Capital Inc. (collectively, Sun Capital)
to purchase discounted commercial and healthcare receivables, and
that Sun Capital would, in turn, pay certain Receivership Entities
interest on the loans.
(Id. at ¶17.)
It further asserts that
William L. Gunlicks wrongfully made three transfers of equity of
FPCMC to his children’s respective trusts for no value and to the
detriment of the receivership estate.
(Id. at ¶19.)
The three
transfers were all made on or about December 20, 2008, when FPCMC
transferred $83,910.00 to each of the following trusts: (1) the
Williams L. Gunlicks Irrevocable Trust f/b/o Nissa Cox (Cox Trust),
(2) the Williams L. Gunlicks Irrevocable Trust for f/b/o Annalee
Good (Good Trust), and (3) the William L. Gunlicks Irrevocable
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Trust f/b/o William V. Gunlicks (William V. Gunlicks Trust) (Id. at
¶¶22-24.)
The Complaint alleges that the monies transferred were
monies “derived from the fraud perpetrated upon investors” (Id. at
¶¶22-24), that the Receivership Entities did not receive reasonably
equivalent value in exchange for the transfer of monies to the
trusts (Id. at ¶25), that defendants knew or had reason to believe
the Receivership Entities collateral was at risk (Id. at ¶¶26-28),
and that no consideration was paid for the transfers (Id. at ¶33.)
The Complaint alleges companion counts for each transfer. One
count seeks to set aside and recover the transfer under the FUFTA,
and the companion count seeks to recover the transferred amount
under an unjust enrichment theory.
The amended motion to dismiss
challenges only the FUFTA counts.
II.
Defendants’ Motion to Dismiss (Doc. #13) seeks to dismiss the
Complaint for lack of subject-matter jurisdiction, lack of personal
jurisdiction over the individual defendants, and failure to state
a claim upon which relief can be granted.
In the alternative,
defendants seek to strike the Complaint or part of it for seeking
improper relief.
As a final alternative, defendants seek a more
definite statement pursuant to Fed. R. Civ. P. 12(e).
Plaintiff
responds that the motion is without merit and should be denied in
its entirety.
-4-
A.
Subject Matter Jurisdiction
Defendants
assert
that
the
court
lacks
subject
matter
jurisdiction over some or all of them because the Complaint only
alleges state law claims, defendants are not named parties in the
underlying Securities and Exchange Commission action, and there are
insufficient facts alleged to establish supplemental jurisdiction
or to satisfy the requirements of 28 U.S.C. §§ 754 and 1692.
#13, p. 3.)
(Doc.
The Court disagrees with the conclusion that it lacks
subject matter jurisdiction.
A challenge to subject matter jurisdiction of the court is
brought under Fed. R. Civ. P. 12(b)(1).
When a Rule 12(b)(1)
motion is a facial challenge to the complaint, as here, the
district court may only look to the facts alleged in the complaint,
taking them as true.
McElmurray v. Consol. Gov’t of Augusta-
Richmond Cnty., 501 F.3d 1244, 1251 (11th Cir. 2007).
The rule regarding subject matter jurisdiction in a case such
as this was succinctly stated by the Fourth Circuit:
The Supreme Court has held that a district court has
ancillary subject matter jurisdiction over an action
brought by a receiver in furtherance of its appointment
where
the
district
court
had
federal
question
jurisdiction over the original action in which it
appointed the receiver.
See Riehle v. Margolies, 279
U.S. 218, 223, 49 S.Ct. 310, 73 L.Ed. 669 (1929) (“The
appointment of a receiver of a debtor's property by a
federal court confers upon it, regardless of citizenship
and of the amount in controversy, federal jurisdiction to
decide all questions incident to the preservation,
collection, and distribution of the assets. It may do
this either in the original suit . . . or by ancillary
proceedings.”) (citations omitted); Pope v. Louisville,
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N.A. & C. Ry. Co., 173 U.S. 573, 577, 19 S.Ct. 500, 43
L.Ed. 814 (1899) (noting that a court of appointment has
ancillary subject matter jurisdiction over a suit brought
by a receiver for recovery of receivership property);
White v. Ewing, 159 U.S. 36, 38-39, 15 S.Ct. 1018, 40
L.Ed. 67 (1895) (holding that a court that appoints a
receiver
for
an
insolvent
corporation
retains
jurisdiction over claims brought by the receiver against
debtors of the corporation).
Robb Evans & Assocs., LLC v. Holibaugh, 609 F.3d 359, 362 (4th Cir.
2010).
See also Haile v. Henderson Nat’l Bank, 657 F.2d 816, 822
(6th Cir. 1981); Crawford v. Silette, 608 F.3d 275, 277-78 (5th
Cir. 2010).
The enactment of 28 U.S.C. § 1367 does not change this
principle.
Holibaugh, 609 F.3d at 363.
Here, the district court appointed Newman as Receiver to,
among
other
Receivership
things,
locate
Entities,
and
and
collect
authorized
the
the
assets
Receiver
appropriate legal action to fulfill its obligations.
of
the
to
take
There is no
question that the SEC enforcement action in which the Receiver was
appointed was within the subject matter jurisdiction of the federal
court, and
this
Receiver’s duties.
current
litigation
is
in
furtherance
of
the
Accordingly, the motion to dismiss pursuant to
Rule 12(b)(1) for lack of subject matter jurisdiction is denied.
B.
Personal Jurisdiction
The individual defendants seek to dismiss the claims against
them for lack of personal jurisdiction because they are residents
of Illinois and the Complaint fails to
establish a prima facie case for
-6-
allege sufficient facts to
personal jurisdiction.
(Doc.
#13,
p.
3.)
The
Court
finds
that
personal
jurisdiction
is
sufficiently alleged.
In SEC v. Vision Commc’ns, Inc., 74 F.3d 287, 290-91 (D.C.
Cir. 1996), the Court explained the two-step process for obtaining
personal jurisdiction in a case also involving a receiver in a
proceeding ancillary to an SEC enforcement action.
Step one
involved Federal Rule of Civil Procedure 4, which now provides that
“[s]erving a summons or filing a waiver of service establishes
personal jurisdiction over a defendant . . . (C) when authorized by
a federal statute.” Fed. R. Civ. P. 4(k)(1)(C). Step two required
a statute that provides the needed authorization to have the
defendant served in a district outside the territorial boundaries
of the district court where the case was filed.
The court found
that 28 U.S.C. § 16923 could provide such authorization.
To invoke
§ 1692, a receiver first must comply with 28 U.S.C. § 754, which
provides in part that “a receiver appointed in one district may
obtain jurisdiction over property located in another district by
filing in the district court of that district, within ten days
after the entry of his order of appointment, a copy of the
complaint and his order of appointment.”
3
See also SEC v. Ross, 504
“In proceedings in a district court where a receiver is
appointed for property, real, personal, or mixed, situated in
different districts, process may issue and be executed in any such
district as if the property lay wholly within one district but
orders affecting the property shall be entered of record in each of
such districts.” 28 U.S.C. § 1692.
-7-
F.3d 1130, 1145 (11th Cir. 2007); SEC v. Bilzerian, 378 F.3d 1100,
1103-05 (D.C. Cir. 2004).
Vision Commc’ns.
In Bilzerian, the Court re-visited
The Court recognized that although 28 U.S.C. §§
754 and 1692 speak solely to jurisdiction over property, or in rem
jurisdiction, “the ‘interplay’ between Rule 4(k) and 28 U.S.C. §§
754 and 1692" provides in personam jurisdiction.
Bilzerian, 378
F.3d at 1106.
Here, the Complaint sufficiently alleges that the Receiver has
filed
the
appropriate
documents
in
Illinois
(Doc.
#1,
¶4).
Defendants do not assert that the individual defendants were not
properly served with process.
Accordingly, under Vision Commc’ns
and Bilzerian, this Court has personal jurisdiction over the
individual defendants, and the motion to dismiss pursuant to Rule
12(b)(2) is denied.4
4
The Court notes that the Complaint also asserts personal
jurisdiction over the defendants because they attempted to
intervene in the ancillary proceedings to this matter. The Court
is not persuaded that these failed intervention attempts would
provide personal jurisdiction over the defendants.
In the SEC
enforcement action, the defendants attempted to intervene solely in
their “capacit[ies] as []investor[s].” SEC v. Founding Partners
Capital Mngmt. Co., et al., Case No. 2:09-cv-229-FtM-JES-SPC (M.D.
Fla.)(Doc. #298, p. 1.) Here, William L. Gunlicks, Annalee Good,
and Nissa Cox are sued in their individual capacities as the
beneficiaries of their respective trusts. This is separate and
apart from their role as investors. In addition, the Court notes
that at oral argument the counsel for the Receiver argued that
personal jurisdiction was appropriate pursuant to Fla. Stat. §
736.0202.
This statute provides in relevant part that “[b]y
accepting a distribution from [] a trust, the recipient submits
personally to the jurisdiction of the courts of this state
regarding any matter involving the distribution.” There are no
(continued...)
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C.
Failure to State Claim
In deciding a Rule 12(b)(6) motion to dismiss, the Court must
accept all well-pleaded factual allegations in a complaint as true
and take them in the light most favorable to plaintiff.
Erickson
v. Pardus, 551 U.S. 89, 94 (2007); Christopher v. Harbury, 536 U.S.
403,
406
(2002).
“To
survive
dismissal,
the
complaint’s
allegations must plausibly suggest that the [plaintiff] has a right
to relief, raising that possibility above a speculative level; if
they do not, the plaintiff’s complaint should be dismissed.” James
River Ins. Co. v. Ground Down Eng’g, Inc., 540 F.3d 1270, 1274
(11th Cir. 2008) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555–56 (2007)); see also Edwards v. Prime, Inc., 602 F.3d 1276,
1291 (11th Cir. 2010).
The former rule-that “[a] complaint should
be dismissed only if it appears beyond doubt that the plaintiffs
can prove no set of facts which would entitle them to relief,” La
Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir.
2004)-has been retired by Twombly.
at 1274.
James River Ins. Co ., 540 F.3d
Thus, the Court engages in a two-step approach: “When
there are well-pleaded factual allegations, a court should assume
their veracity and then determine whether they plausibly give rise
to an entitlement to relief.”
Ashcroft v. Iqbal, 556 U.S. 662
4
(...continued)
allegations in the Complaint that the alleged fraudulent transfers
were ever distributed from the defendants’ respective trusts.
-9-
(2009).
The Court need not accept as true legal conclusions or
mere conclusory statements.
Id.
Defendants contend that the Complaint has not adequately pled
fraudulent transfer claims under FUFTA because it failed to allege
that the Receivership Entities are creditors, failed to allege any
debtors, and failed to allege what claim the creditor has against
the debtor.
Defendants also assert that the Complaint does not
identify the underlying debt or judgment owed, or the identity of
the debtor entity. (Doc. #13, pp. 5-7.) In response, the Receiver
contends that he has properly asserted a claim under FUFTA because
he has pled a constructive fraud claim and therefore need not
specifically identify a creditor, debtor, or claim.
(Doc. #16,
pp.6-7.)
Under FUFTA, a transfer is voidable if fraudulent. Fla. Stat.
§ 726.108. The Complaint specifically states that the FUFTA claims
are brought pursuant to Fla. Stat. § 105(1)(a) and (b).
§
726.105(1)(a)
concerns
actual
fraud
726.105(1)(b) concerns constructive fraud.
also addressed in Fla. Stat. § 726.106.
while
Fla. Stat.
Fla
Stat.
Constructive fraud is
Fla. Stat. §
726.105
provides:
(1) A transfer is made or obligation incurred by a debtor
is fraudulent as to a creditor, whether the creditor’s
claim arose before or after the transfer was made or the
obligation was incurred, if the debtor made the transfer
or incurred the obligation:
(a) With actual intent to hinder, delay, or defraud
any creditor of the debtor; or
-10-
§
(b) Without receiving a reasonably equivalent value
in exchange for the transfer or obligation, and the
debtor:
1. Was engaged or was about to engage in a
business or a transaction for which the remaining assets
of the debtor were unreasonably small in relation to the
business or transaction; or
2. Intended to incur, or believed or reasonably
should have believed that he or she would incur, debts
beyond his or her ability to pay as they became due.
Section 726.106(1) provides:
A transfer made or obligation incurred by a debtor is
fraudulent as to a creditor whose claim arose before the
transfer was made or the obligation was incurred if the
debtor made the transfer or incurred the obligation
without receiving a reasonably equivalent value in
exchange for the transfer or obligation and the debtor
was insolvent at that time or the debtor became insolvent
as a result of the transfer or obligation.
The relevant applicable legal principles under the FUFTA are well
settled.
The applicable statutory provisions in this area of the
law are exceedingly clear. A “creditor” who possesses a
“claim” may seek a number of remedies to prevent the
fraudulent transfer of assets. Among the remedies are
avoidance of the transfer, attachment, an injunction,
appointment of a receiver, and “any other relief the
circumstances may require.” § 726.108(1)(b), Fla. Stat.
(2002). A transfer is fraudulent if made “without
receiving a reasonably equivalent value in exchange for
the transfer or obligation and the debtor was insolvent
at that time or the debtor became insolvent as a result
of the transfer or obligation.” § 726.106(1), Fla. Stat.
(2002).
To utilize the protections of chapter 726, however, a
plaintiff must show that he or she has a “claim” which
qualifies the party as a “creditor.” See § 726.102(4),
Fla. Stat. (2002). As defined in section 726.102, a
“claim” is broadly constructed and “means a right to
payment, whether or not the right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable,
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secured, or unsecured.” § 726.102(3), Fla. Stat. (2002).
Thus, as is universally accepted, as well as settled in
Florida, “A ‘claim’ under the Act may be maintained even
though ‘contingent’ and not yet reduced to judgment.”
Cook v. Pompano Shopper, Inc., 582 So.2d 37, 40 (Fla. 4th
DCA 1991); see also Money v. Powell, 139 So.2d 702, 703
(Fla. 2d DCA 1962) (“In this state contingent creditors
and tort claimants are as fully protected against
fraudulent transfers as holders of absolute claims.”).
Friedman v. Heart Institute of Port St. Lucie, Inc., 863 So. 2d
189, 192 (Fla. 2003).
“This language is extremely broad.”
Dillon
v. Axxsys Int’l, Inc., 185 Fed. App’x 823, 830 (11th Cir. 2006).
The FUFTA does not, however, create a cause of action against an
aider or abettor to a fraudulent transaction.
Freeman v. First
Union National Bank, 865 So. 2d 1272 (Fla. 2004).
At oral argument, counsel for the receiver conceded that his
Complaint did not adequately identify a “creditor” “claim”, or
“debtor.”
He asserts, however, that he need not specifically
identify these entities because he has asserted a constructive,
rather than actual, fraud claim.
In support, he cites to an non-
binding opinion, Wiand v. Buhl, No. 8:10-CV-75-T-17MAP, 2011 WL
6048829 (M.D. Fla. Nov. 3, 2011)(Pizzo, Mag.)(adopted, 2011 WL
6048741 (M.D. Fla. Dec. 6, 2011)(Kovachevich, J.).
The first section of Fla. Stat. § 726.105 states that “[a]
transfer is made or obligation incurred by a debtor is fraudulent
as to a creditor, whether the creditor’s claim arose before or
after the transfer was made or the obligation was incurred, if the
debtor made the transfer or incurred the obligation.”
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Fla. Stat.
§ 726.105 (emphasis added).
The statute continues to provide two
alternative manners in which to proceed on a claim either (a) if
the debtor acted with intent to either “hinder delay, or defraud
any creditor of the debtor” or (b) if the transfer was made without
receiving reasonably equivalent
value.
Id.
The Court is not persuaded by Wiand and declines to read the
statute in such a way as to render the terms “creditor” and
“debtor” effectively meaningless.
Market Co. v. Hoffman, 101 U.S.
112, 15-16 (1979)(“It is a cardinal rule of statutory construction
that significant and effect shall, if possible, be accorded to
every word.”); see also Untied States v. Nordic Village, Inc., 503
U.S. 30, 36 (1992). The Receiver has failed to adequately identify
a “creditor” and “debtor” and therefore, the Court dismisses the
FUFTA claims without prejudice, and with leave to amend within the
time frame set forth within a forthcoming Case Management and
Scheduling Order.
Because the Court dismisses the FUFTA claims,
the Motion to Strike and Motion for More Definite Statement are
denied as moot.
Accordingly, it is now
ORDERED:
Defendants’ Motion to Dismiss or, in the Alternative, to
Strike Complaint
1.
(Doc. #13) is GRANTED IN PART and DENIED IN PART:
The motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1)
and (2) is DENIED.
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2.
The motion to dismiss is GRANTED
as to Counts I, III, and
V which are dismissed without prejudice for the reasons set forth
above.
The Receiver may file an Amended Complaint to re-assert
these claims within the time frame set forth within a forthcoming
Case Management and Scheduling Order.
3.
The
Motion
to
Strike
and
Motion
for
More
Definite
Statement are DENIED AS MOOT.
DONE AND ORDERED at Fort Myers, Florida, this
September, 2012.
Copies:
Counsel of record
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25th
day of
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