Latell v. Sovereign Bank et al

Filing 95

OPINION AND ORDER denying 87 Motion to Dismiss or alternatively Motion to Strike Claim for Attorneys' Fees. Plaintiffs shall file a supplemental amendment to the Fourth Amended Complaint within 7 days of this Opinion and Order properly setting forth citizenship; and the time for defendant to file its answer shall begin upon its filing. Signed by Judge John E. Steele on 4/24/2015. (RKR)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
FRANK
LATELL,
KATHLEEN
LATELL,
LATELL
CROIX
APARTMENTS, LTD, and LATELL
PEPPERTREE APARTMENTS, LTD,
Plaintiff,
v.

Case No: 2:13-cv-565-FtM-29CM

SANTANDER BANK,
Defendant.

OPINION AND ORDER
This matter comes before the Court on review of Defendant
Santander Bank National Association’s Motion to Dismiss Fourth
Amended Complaint or alternatively, Motion to Strike Claim for
Attorneys’ Fees (Doc. #87) filed on March 31, 2015.

Plaintiff

filed a Response in Opposition (Doc. #91) on April 9, 2015.
I.
Plaintiffs’ Fourth Amended Complaint (Doc. #85) is now the
operative pleading in this case.

Plaintiffs Frank Latell (Frank),

Kathleen Latell (Kathleen), Latell Croix Apartments, Ltd. (Croix),
and Latell Peppertree Apartments, Ltd. (Peppertree) allege claims
for

fraudulent

misrepresentation

(Count

I)

and

fraud

in

the

inducement (Count II) against defendant Santander Bank National

Association (Santander Bank).

The underlying facts, as set forth

in the Fourth Amended Complaint, are as follows:
Plaintiffs’ claims arise out of the default and eventual
foreclosure of two commercials loans made to Croix and Peppertree,
entities in which Frank and Kathleen are general partners.
#85,

¶¶

5,

14,

31.)

Plaintiffs

allege

that

(Doc.

Santander

Bank

purposefully made a false statement of fact that plaintiffs would
receive a loan modification after they defaulted on the mortgage
loans in order to induce plaintiff to default.
53.)

(Id. ¶¶ 44-46, 51-

Specifically, plaintiffs allege that on April 10, 2010,

plaintiff’s agent spoke to Brook Radcliffe (Radcliffe), an agent
of

Santander

Bank’s

defaulted

loan

department,

negotiate a modification of the subject loans.

seeking

to

(Id. ¶ 19.)

Radcliffe informed plaintiffs that “Santander would modify the
mortgage loans if they were in default, but until they were over
45

days

past

modification.”

due,

Santander

(Id. ¶ 21.)

would

not

even

consider

a

Plaintiffs purposefully defaulted on

the subject loans in reliance on Santander Bank’s statements. (Id.
¶ 22.)

Thereafter, Santander Bank refused to modify the loans and

as a result, plaintiffs lost the apartment complexes to foreclosure
and are allegedly liable for the deficiency on the mortgage loans.
(Id. ¶¶ 48, 55.)

2

Santander Bank moves to dismiss the Fourth Amended Complaint,
arguing that each count fails to state a claim upon which relief
can be granted.

(Doc. #87.)

is adequately pled.

Plaintiffs respond that each count

(Doc. #91.)
II.

Under Federal Rule of Civil Procedure 8(a)(2), a Complaint
must contain a “short and plain statement of the claim showing
that the pleader is entitled to relief.”

Fed. R. Civ. P. 8(a)(2).

This obligation “requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not
do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)(citation
omitted).

To survive dismissal, the factual allegations must be

“plausible” and “must be enough to raise a right to relief above
the speculative level.”

Id. at 555.

See also Edwards v. Prime

Inc., 602 F.3d 1276, 1291 (11th Cir. 2010).
than

an

unadorned,

This requires “more

the-defendant-unlawfully-harmed-me

accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(citations
omitted).
In deciding a Rule 12(b)(6) motion to dismiss, the Court must
accept all factual allegations in a complaint as true and take
them in the light most favorable to plaintiff, Erickson v. Pardus,
551 U.S. 89 (2007), but “[l]egal conclusions without adequate
factual support are entitled to no assumption of truth,”

3

Mamani

v.

Berzain,

omitted).

654

F.3d

1148,

1153

(11th

Cir.

2011)(citations

“Threadbare recitals of the elements of a cause of

action, supported by mere conclusory statements, do not suffice.”
Iqbal, 556 U.S. at 678.
consistent

with

a

defendant’s

facially plausible.”
1337

(11th

omitted).

Cir.

“Factual allegations that are merely
liability

fall

short

of

being

Chaparro v. Carnival Corp., 693 F.3d 1333,

2012)(internal

quotation

marks

and

citations

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.”

Iqbal, 556 U.S. at 679.
III.

A.

Prior Pleadings
Santander

Bank

first

argues

that

exhibits

attached

to

plaintiffs’ prior pleadings contradict the allegations contained
in the Fourth Amended Complaint.

(Doc. #87, p. 6.)

However, “[a]s

a general rule, an amended complaint supersedes and replaces the
original complaint unless the amendment specifically refers to or
adopts the earlier pleading.”

Schreane v. Middlebrooks, 522 F.

App'x 845, 847 (11th Cir. 2013).

Once the district court accepts

the amended pleading, “the original pleading is abandoned by the
amendment, and is no longer a part of the pleader's averments
against his adversary.”

Id. (quotation omitted).

4

Plaintiff’s

Fourth Amended Complaint did not “specifically refer to or adopt”
the Verified First Amended Complaint.

Id.

Therefore, the Court

will not consider exhibits attached to a prior pleadings when
deciding this motion to dismiss.
B.

Future Action
Santander Bank next argues that the alleged misrepresentation

was a promise of future action, and thus an action for fraud cannot
stand.

(Doc. #87, pp. 6-7.)

An action for fraud generally may

not be predicated on statements of opinion or promises of future
action, but rather must be based on a statement concerning a past
or existing fact.
Supp.

750,

757

Florida Dep't Ins. v. Debenture Guar., 921 F.

(M.D.

Fla.

1996).

However,

the

courts

have

recognized exceptions to this rule where the person expressing the
opinion is one having superior knowledge of the subject of the
statement and the plaintiff can show that the person knew or should
have known from facts in his or her possession that the statement
was false, id., or that the person promising future action does so
with no intention of performing, or with a positive intention not
to perform.

Prieto v. Smook, Inc., 97 So. 3d 916, 918 (Fla. 4th

DCA 2012).
The

Fourth

Amended

Complaint

alleges

that

when

the

misrepresentation was made, Santander Bank knew it was false and
had no intention of modifying the loans upon plaintiffs default.

5

(Doc. #85, ¶¶ 45, 52.)

These allegations fall within a recognized

exception to the rule that fraud may not be based on statements of
opinion or promises of future actions.

Therefore, the plaintiffs’

allegations are sufficient to support the fraud claims.
C.

Pleading Fraud with Particularity
Next, Santander Bank asserts that plaintiffs’ do not plead

fraud with particularity and fail to allege monetary loss or other
injury.

(Doc. #87, pp. 7-8.)

The Court disagrees.

The Fourth Amended Complaint alleges that on April 10, 2010,
Radcliffe, a representative of Santander Bank, told plaintiffs
they would receive loan modification only after they defaulted on
the mortgage loans. 1

(Doc. #85, ¶ 43.)

Because of Santander

Bank’s misrepresentation, plaintiffs’ intentionally defaulted on
the mortgage loans and Santander Bank gained profit from the sale
of the apartment complexes and default interest rate.

(Id. ¶¶ 30,

47-48, 54-55.)
The Court finds plaintiffs have pled fraud with particularity
because the allegations describe who committed the fraud, the
misrepresentation that was made, when and where it occurred, and

1In

addition to this statement, Counts I and II also include
the broad language “inter alia” (Doc. #70, ¶¶ 40, 47). The Court
will not consider such allegations because they do not sufficiently
identify the precise statements of material fact as required by
Federal Rule of Civil Procedure 9(b).

6

that the defendant knew the statements were false but used the
misrepresentation to induce plaintiff’s reliance.

Accordingly,

the allegations are particular enough to put the defendant and the
Court on notice of the circumstances constituting the fraud in
accordance with the demands of Federal Rule of Civil Procedure
9(b).
The

Court

also

finds

that

the

Fourth

Amended

adequately alleges monetary loss or other injury.

Complaint
Plaintiffs

allege that they lost their investment in the apartment complexes
as a result of their detrimental reliance on Santander Bank’s
misrepresentation.

(Doc. # 85, ¶ 44.)

The loss of the apartment

complexes is sufficient to show plaintiffs suffered a present loss
or injury.

Therefore, the Court finds that plaintiffs’ alleged

injury is adequately pled.
D.

Amendment to the Loan Documents
Santander

Bank

asserts

that

plaintiffs’

reliance

on

the

misrepresentations are unreasonable as a matter of law because the
misstatements are oral amendments to the loan documents.
#87, pp. 8-10.)

(Doc.

In the motion to dismiss, Santander Bank cites to

provisions in the loan documents which prohibit any modification
except by a signed writing, and also notes the absence of a

7

guaranteed loan modification in the event of default. 2
However,

plaintiffs’

fraud

claims

are

not

based

on

(Id.)

the

loan

documents themselves, but rather on a subsequent misrepresentation
made

by

Santander

Bank.

Specifically,

the

alleged

misrepresentation involved what plaintiffs needed to do to receive
a loan modification.

(Doc. #85, ¶ 43.)

The plaintiffs do not

allege that Santander Bank agreed to certain terms or conditions
that conflicted with or modified the existing loan documents.
Therefore,

at

this

stage

in

the

litigation,

the

plaintiffs’

allegations are sufficient to survive the motion to dismiss.
E.

Duplicative Claims
Santander Bank next argues that one of plaintiff’s claims

should be dismissed as duplicative.

(Doc. #87, p. 11.)

While the

claims are closely related, they contain different elements and
may be alleged in the alternative.
A cause of action for fraud in the inducement (Count I)
requires plaintiff to allege that defendant: “(1) made a statement
concerning a material fact, (2) knowing that the statement was

2“Although

analysis of a Rule 12(b)(6) motion is limited
primarily to the face of the complaint and attachments thereto, a
court may consider documents attached to the motion to dismiss if
they are referred to in the complaint and are central to the
plaintiff's claim.” Starship Enters. of Atlanta, Inc. v. Coweta
County, Ga., 708 F.3d 1243, 1253 n.13 (11th Cir. 2013) (quoting
Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364,
1368–69 (11th Cir. 1997) (citation omitted)).

8

false, (3) with intent that the plaintiffs act on the false
statement; and (4) the plaintiffs were damaged as a result of their
reasonable reliance on the false statement.”

Gemini Investors

III, L.P. v. Nunez, 78 So. 3d 94, 97 (Fla. 3d DCA 2012).

A claim

for fraudulent misrepresentation (Count II) must allege: “(1) a
false statement concerning a material fact; (2) the representor's
knowledge that the representation is false; (3) an intention that
the representation induce another to act on it; and (4) consequent
injury by the party acting in reliance on the representation.”
Butler v. Yusem, 44 So. 3d 102, 105 (Fla. 2010).

Unlike fraud in

the inducement, “[j]ustifiable reliance is not a necessary element
of fraudulent misrepresentation.”
dismiss

either

count.

Federal

Id.
Rule

There is no basis to
of

Civil

Procedure

8(e)

(allowing a plaintiff to plead in the alternative).
F.

Standing
Santander Bank also asserts plaintiffs Frank and Kathleen

lack standing to bring claims against Santander Bank because there
were neither the owners of the properties that secured the Loans
or the named borrower on the Loans.

(Doc. #87, pp. 11-12.)

In

order to establish standing, a plaintiff must adequately allege
and ultimately prove, three elements: (1) that he or she has
suffered an “injury-in-fact”; (2) a causal connection between the
asserted

injury-in-fact

and

the

9

challenged

conduct

of

the

defendant; and (3) that the injury likely will be redressed by a
favorable decision.

Shotz v. Cates, 256 F.3d 1077, 1081 (11th

Cir. 2001) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555,
560

(1992)).

As

general

partners

of

Croix

and

Peppertree

apartments, Frank and Kathleen are subject to liability for the
obligations

of

the

partnership.

See

Fla.

Stat.

§

620.1404.

Plaintiffs’ have alleged a sufficient stake in the controversy to
satisfy standing requirements.
G.

Florida’s Litigation Privilege
Santander Bank argues that Florida’s litigation privilege

bars plaintiffs claim because the fraudulent statement was made
prior to the foreclosure actions.

(Doc. #87, p. 12-14.)

Florida

recognizes an absolute litigation privilege that “must be afforded
to any act occurring during the course of a judicial proceeding
... so long as the act has some relation to the proceeding.”
Levin, Middlebrooks, et al. v. U.S. Fire Ins. Co., 639 So. 2d 606,
608 (Fla. 1994).
before

any

initiated.

The statement made by Santander Bank was made

litigation

or

contemplation

of

litigation

was

Therefore, the litigation privilege does not apply.
IV.

Santander Bank also moves to strike plaintiff's demand for
attorneys' fees.

Pursuant to Rule 12(f) of the Federal Rules of

Civil Procedure, a party may move to strike “any insufficient

10

defense or any redundant, immaterial, impertinent, or scandalous
matter” within the pleadings.

The court enjoys broad discretion

in determining whether to grant or deny these motions to strike.
Anchor Hocking Corp. v. Jacksonville Elec. Auth., 419 F. Supp.
992, 1000 (M.D. Fla. 1976).
Santander

Bank

contends

that

the

Court

should

strike

plaintiffs' request for attorneys' fees because there is no basis
for the demand.

(Doc. #87, p. 14.)

Florida generally follows the

American Rule requiring litigants to pay their own attorneys' fees.
“If the party seeking attorneys' fees can demonstrate the specific,
certain and conclusive existence of malice or fraud, attorneys'
fees are available.”
(11th Cir. 1985).

Cook v. Deltona Corp., 753 F.2d 1552, 1564

It would be premature to strike attorneys' fees

when plaintiffs allege fraud.

Natarajan v. Paul Revere Life Ins.

Co., No. 804-CV-2612-T-17TGW, 2009 WL 1117405, at *2 (M.D. Fla.
Apr. 24, 2009).

Therefore, the Motion to Strike is denied.
V.

The

Fourth

Amended

Complaint

fails

to

adequately

allege

subject matter jurisdiction because it does not identify any
limited partners of Croix or Peppertree or state that there are no
limited partners.

Pursuant to 28 U.S.C. § 1653, Plaintiffs shall

file a supplemental amendment to the Fourth Amended Complaint

11

within seven (7) days of the date of this Opinion and Order
properly setting forth the citizenship of plaintiffs.
Accordingly, it is now
ORDERED:
1.

Defendant, Santander Bank, National Association's Motion

to Dismiss Fourth Amended Complaint or alternatively, Motion to
Strike Claim for Attorneys’ Fees (Doc. #87) is DENIED.
2.

The time for defendant to file its answer shall begin

upon the filing of the supplemental amendment to the Fourth Amended
Complaint.
DONE AND ORDERED at Fort Myers, Florida, this
April, 2015.

Copies: Counsel of record

12

24th

day of