Absolute Activist Value Master Fund Limited et al v. Devine
Filing
575
OPINION AND ORDER granting 530 defendant's Motion to Dissolve Ex Parte Temporary Restraining Order Based on Court's Dismissal of Counts I, II, III, IV, and VI of Plaintiffs' Amended Complaint. The Temporary Restraining Order imposed by this Court on July 1, 2015 is hereby dissolved. See Opinion and Order for details. Signed by Judge John E. Steele on 7/25/2017. (AMB)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
ABSOLUTE
ACTIVIST
VALUE
MASTER
FUND
LIMITED,
ABSOLUTE
EAST
WEST
FUND
LIMITED, ABSOLUTE EAST WEST
MASTER
FUND
LIMITED,
ABSOLUTE EUROPEAN CATALYST
FUND
LIMITED,
ABSOLUTE
GERMANY
FUND
LIMITED,
ABSOLUTE INDIA FUND LIMITED,
ABSOLUTE
OCTANE
FUND
LIMITED,
ABSOLUTE
OCTANE
MASTER FUND LIMITED, and
ABSOLUTE RETURN EUROPE FUND
LIMITED,
Plaintiffs,
v.
Case No: 2:15-cv-328-FtM-29MRM
SUSAN ELAINE DEVINE,
Defendant.
OPINION AND ORDER
This matter comes before the Court on defendant's Motion to
Dissolve Ex Parte Temporary Restraining Order Based on Court's
Dismissal of Counts I, II, III, IV, and VI of Plaintiffs' Amended
Complaint (Doc. #530) filed on March 6, 2017.
Plaintiffs filed
an Opposition to Defendant’s Fourth Motion to Dissolve Temporary
Restraining Order (Doc. #539) on March 20, 2017, to which defendant
filed a Reply (Doc. #550) on April 7, 2017, and plaintiffs filed
a Sur-Reply (Doc. #553) on April 21, 2017.
I.
On June 1, 2015, plaintiffs filed a six-count Complaint
against Ms. Susan Devine (“Devine”) alleging that Devine engaged
in a money laundering enterprise with her ex-husband, Florian Homm,
to conceal tens of millions of dollars fraudulently taken from the
plaintiffs pursuant to an illegal “Penny Stock Scheme.”
#2.)
(Doc.
Plaintiffs’ initial and Amended Complaint asserted claims
against Devine for:
(1) Violation of RICO, 18 U.S.C. § 1962(c);
(2) RICO Conspiracy, 18 U.S.C. § 1962(d); (3) Florida RICO and
Civil Remedies for Criminal Activities; (4) Florida RICO and
Florida Civil Remedies for Criminal Activities—Conspiracy; (5)
Unjust Enrichment; and (6) Constructive Trust.
(Docs. ##2, 196.)
Concurrently with the filing of the initial Complaint, plaintiffs
filed an Ex Parte Motion for Temporary Restraining Order and
Preliminary
Injunction
seeking
to
“restrain[]
Devine
from
transferring or dissipating any and all assets in her name or under
her control.”
On
July
(Doc. #3, p. 10.)
1,
2015,
this
Court
entered
an
Order
plaintiffs’ Motion for Temporary Restraining Order.
granting
(Doc. # 10.)
The Temporary Restraining Order (“TRO”) contained the following
language:
Defendant Susan Elaine Devine, her officers,
agents, servants, and employees and any
persons in active concert or participation
with them are temporarily restrained and
enjoined
from
directly
or
indirectly
- 2 -
transferring,
selling,
alienating,
liquidating, encumbering, pledging, leasing,
loaning, assigning, concealing, dissipating,
converting,
withdrawing,
or
otherwise
disposing of any money or other of Devine’s
assets, including: (i) any assets located in
bank accounts or other financial accounts in
Devine’s name (or for her benefit or the
benefit of her children) or the names of
foundations benefitting or controlled by
Devine, including but not limited to any
account of Brek Stiftung, Loyr Stiftung,
Hosifa Stiftung, Floma Foundation, and/or
Levanne Stiftung, or otherwise under her
direct or indirect control; (ii) Devine’s
residence in Naples Florida; and (iii) any
other assets of any type, and in any form,
held by Devine, or under her direct or
indirect control, anywhere in the world.
(Id. at 66-67.)
Additionally, the Court ordered Devine to produce
“documents sufficient to identify all assets, anywhere in the
world, currently under her direct or indirect control.”
68.)
In
response,
Devine
produced
a
list
of
(Id. at
eighty-two
individually identified assets, eleven of which were shown as being
held by Devine for the benefit of her children, Isabella Devine
(“Isabella”) and/or Conrad Homm (“Conrad”).
(Docs. ##116-1, 130-
1.)
Due to the freezing of these assets, on October 2, 2015, Laird
Lile, as custodian f/b/o Isabella Devine and Conrad Homm, Orion
Corporate & Trust Services, Ltd., Hosifa Stiftung Foundation,
200017, and Conrad Homm moved to intervene as a matter of right to
protect their interests in assets subject to the Court’s TRO.
(Docs. ##103, 105.)
On December 7, 2015, the Court allowed
- 3 -
intervention
by
Laird
Lile
in
his
custodial
capacity,
Orion
Corporate & Trust Services, Ltd., and Conrad Homm. (Doc. #156.)
The TRO was initially in place for a period of fourteen days
and has since been modified, (Docs. ##68, 76, 198, 230, 233, 275,
313, 333, 445, 556), and, pursuant to agreement of the parties,
extended through
the
trial
on
the
merits,
(Docs.
##81,
83).
Defendant moved to dissolve the TRO (Doc. #96) and her motion was
denied on April 19, 2016 (Doc. #368). 1
On February 8, 2017, the Court granted in part and denied in
part defendant’s Motion to Dismiss Amended Complaint, dismissing
without prejudice plaintiffs’ federal and Florida RICO claims and
dismissing with prejudice plaintiffs’ constructive trust claim,
leaving only the unjust enrichment claim remaining.
(Doc. #521.)
The Court allowed plaintiffs twenty-one days to amend, should they
desire.
(Id.)
On February 28, 2017, plaintiffs notified the
Court that they would be proceeding on their sole remaining state
law claim of unjust enrichment. (Doc. #527.)
1
On May 17, 2016, defendant sought reconsideration of the
Court’s Order denying her Motion to Dissolve Temporary Restraining
Order, (Doc. #380), and on May 19, 2016, defendant filed a Notice
of Interlocutory Appeal of the Court’s Order denying her Motion to
Dissolve Temporary Restraining Order, (Doc. #383). The Motion for
Reconsideration has since been denied as moot due to the change in
posture as a result of this Court’s Order on defendant’s Motion to
Dismiss and the newly-filed Motion to Dissolve currently before
the Court.
- 4 -
On May 8, 2017, the Court directed plaintiffs to file a Second
Amended Complaint containing only their unjust enrichment claim
and the related allegations. (Doc. #559.)
plaintiffs
filed
a
Second
pleading before the Court.
Amended
On May 15, 2017,
Complaint,
the
operative
(Doc. #560.)
The Second Amended Complaint contains one count for unjust
enrichment
under
Florida
law.
(Id.)
The
extensive
factual
allegations have been set forth in the Court’s previous order (see
Doc. #521) and remain substantially the same in the plaintiffs’
Second Amended Complaint. 2
The crux of the allegations are that
Devine and her ex-husband, Florian Homm, fraudulently took and
concealed tens of millions of dollars from the plaintiffs pursuant
to an illegal Penny Stock Scheme.
(Doc. #560.)
Plaintiffs’
unjust enrichment claim is based on Devine’s direct involvement in
transferring and concealing the proceeds of the Penny Stock Scheme
which belonged to plaintiffs.
(Id.)
The unjust enrichment count
alleges that a direct benefit was conferred on Devine as a result
of the Penny Stock Scheme, Devine was aware of this benefit, and
provided
no
consideration
in
exchange.
(Id.
at
97-98.)
Plaintiffs allege that Devine thus has been unjustly enriched and
it
would
be
inequitable
for
Devine
2
to
retain
the
benefits
The minor changes are due to the removal of allegations
relating to the dismissed claims.
- 5 -
conferred.
(Id. at 98.)
Plaintiffs’ Second Amended Complaint
seeks the following relief:
(a) An order that Devine, her officers, agents,
servants, and employees and any persons in active
concert or participation with them be, and are,
restrained and enjoined from directly or indirectly
transferring, selling, alienating, liquidating,
encumbering,
pledging,
leasing,
loaning,
assigning, concealing, dissipating, converting,
withdrawing, or otherwise disposing of any money or
other of Devine’s assets;
(b) An accounting;
(c) Disgorgement;
(d) Imposition of a constructive trust; and
(e) Such other legal and equitable relief as the
Court may deem just and proper.
(Id. at 98-99.)
Plaintiffs do not specifically seek a money
judgment.
Defendant moves to dissolve the Ex Parte TRO as a result of
the dismissal of Counts I, II, III, IV, and VI.
(Doc. #530.)
Although the Motion to Dissolve was filed before plaintiffs filed
their Second Amended Complaint, 3 the arguments presented in the
Motion
to
Dissolve
remain
applicable
to
the
Second
Amended
Complaint.
II. Subject Matter Jurisdiction
After dismissal of plaintiffs’ federal claims, the Court has
a sua sponte obligation to confirm that it continues to have
subject matter jurisdiction over the remaining claim and parties
3
Defendant’s Motion to Dissolve was filed on March 6, 2017
(Doc. #530) and plaintiffs’ Second Amended Complaint was not filed
until May 15, 2017 (Doc. #560).
- 6 -
before it.
Williams v. Chatman, 510 F.3d 1290, 1293 (11th Cir.
2007).
District Courts have original jurisdiction over civil actions
involving parties with diverse citizenship where the amount in
controversy exceeds $75,000.00.
28 U.S.C. § 1332.
jurisdiction
diversity,
requires
complete
plaintiff is diverse from every defendant.
i.e.,
Diversity
that
every
Palmer v. Hosp. Auth.
of Randolph Cty., 22 F.3d 1559, 1564 (11th Cir. 1994) (citing
Strawbridge v. Curtiss, 7 U.S. 267, 267 (1806)).
Within their
Second Amended Complaint, plaintiffs allege that there is complete
diversity of citizenship because “the Funds are citizens of a
foreign state and Devine is a citizen of Florida.” 4
(Doc. #560,
¶ 25.)
Plaintiffs allege that they are corporations registered
in
Cayman
the
Islands
shares.’” (Id. ¶ 9.)
as
“exempted
‘compan[ies]
limited
by
They allege that both their places of
incorporation and principal places of business are in the Cayman
Islands.
(Id.)
Plaintiffs further allege that the “amount in
controversy exceeds $75,000, exclusive of interest and costs”
(id.), and the alleged facts clearly supports this allegation.
4
While plaintiffs allege elsewhere that Devine is a citizen
of the United States and Brazil (id. ¶ 10), the Eleventh Circuit
has held that “an individual who is a dual citizen of the United
States and another nation is only a citizen of the United States
for the purposes of diversity jurisdiction under § 1332(a).”
Molinos Valle Del Cibao, C. por A. v. Lama, 633 F.3d 1330, 1341
(11th Cir. 2011).
- 7 -
The
Second
Amended
Complaint
thus
adequately
alleges
federal
jurisdiction based upon diversity of citizenship.
III.
A. Standard for Dissolution
As previously stated by this Court, a temporary restraining
order that has been extended beyond the time period specified in
Federal Rule of Civil Procedure 65 is treated as a preliminary
injunction.
Sampson v. Murray, 415 U.S. 61, 87 (1974).
When
moving to dissolve a preliminary injunction, “the movant must show
a change in circumstances that justifies the relief requested.”
CWI, Inc. v. LDRV Holdings Corp., No. 8:13-CV-93-T-35MAP, 2013 WL
12123229, at *2 (M.D. Fla. Oct. 16, 2013) (citing Hodge v. Dep't
of Hous. & Urban Dev., 862 F.2d 859, 861–62 (11th Cir. 1989)).
Where a movant establishes a change in circumstances “between entry
of the injunction and the filing of the motion that . . . render[s]
the
continuance
of
the
injunction
in
its
original
form
inequitable,” the Court may modify the injunction in light of the
changed circumstances.
Id. (quoting Favia v. Ind. Univ. of Pa.,
7 F.3d 332, 337-38 (3d Cir. 1993)).
Since the entry of the injunction and the filing of the
underlying
Motion
to
Dissolve
Ex
Parte
Temporary
Restraining
Order, this Court entered an Order dismissing some of plaintiffs’
claims, in particular those arising under federal law.
#521.)
(See Doc.
As a result, the sole remaining claim is a state law claim
- 8 -
for unjust enrichment.
The Court finds this a sufficient change
in circumstances to justify review of the arguments presented in
defendant’s Motion to Dissolve.
Defendant correctly asserts that
because the federal claims have been dismissed, they can no longer
support the maintenance of the TRO, and its continued viability
must be analyzed based on the remaining state law claim of unjust
enrichment.
(Doc. #530, p. 10.)
Defendant asserts that the Ex Parte TRO should be dissolved
because plaintiffs’ only surviving cause of action does not provide
an adequate basis for the pre-judgment restraint of assets.
at 9.)
(Id.
Alternatively, defendant asserts that defendant’s “non-
Florida assets must be released from the Ex Parte TRO because
Florida law does not permit restraint of assets outside of this
state and certainly not worldwide.”
(Id.)
Plaintiffs respond that defendant’s Motion to Dissolve is
moot because it is duplicative of her motion for reconsideration 5
and the sole issue is whether the Court has legal authority to
maintain
the
TRO.
Plaintiffs
also
argue
that
defendant’s
assertions regarding the likelihood of success on the merits of
the unjust enrichment claim are not properly before the Court. 6
5
Defendant’s Motion for Reconsideration has been denied as
moot, thus mooting plaintiffs’ argument on this issue.
6
The Court agrees that the issue is whether the Court has
the legal authority to maintain the TRO with plaintiffs’ sole
remaining unjust enrichment cause of action. However, this legal
authority necessarily carries with it the obligation to confirm
- 9 -
(Doc. #539, pp. 3-15.)
Plaintiffs also assert that when initially
issuing the TRO, the Court correctly applied the law which supports
the order prohibiting the transfer of items located both in and
outside of Florida.
(Id. at 15-21.)
B. Viability of the TRO for the Unjust Enrichment Claim
Defendant asserts that plaintiffs’ unjust enrichment claim
does not support maintenance of the TRO because it requires proof
beyond a reasonable doubt, which plaintiffs cannot establish;
plaintiffs have failed to sufficiently trace the res of the trust
to the assets of the defendant; plaintiffs have not shown that
they directly enriched defendant; and Florida law prohibits the
imposition
of
preliminary
injunctive
circumstances presented in this case.
relief
under
the
(Doc. #530, pp. 11-19.)
The Court addresses the last issue first.
1) Availability of Preliminary Injunctive Relief for Unjust
Enrichment Claim
Federal law supported the issuance of the TRO when it was
initially entered, and still provides the procedural mechanism for
issuance of preliminary injunctive relief.
Ferrero v. Associated
Materials, Inc., 923 F.2d 1441, 1448 (11th Cir. 1991).
Defendant
that, as the case stands now, there is a likelihood of success on
the underlying claim. The Court finds that defendant’s arguments
presented are validly raised due to the change in posture of the
case.
- 10 -
asserts, however, that the TRO must now be dissolved because
Florida law does not allow for preliminary injunctive relief for
plaintiffs’ sole remaining state law claim of unjust enrichment.
(Doc. #530, pp. 18-19.)
The Court agrees.
Federal law governs the issuance, and dissolution, of a
preliminary injunction in a diversity action.
at 1448.
Ferrero, 923 F.2d
It is state law, however, that determines whether
injunctive relief is available for the given state cause of action
or remedy.
Noventa Ocho LLC v. PBD Props. LLC, 284 F. App’x 726,
728 & n.4 (11th Cir. 2008) (looking to Florida law to see if
preliminary injunctive relief is available); Sims Snowboards, Inc.
v. Kelly, 863 F.2d 643, 647 (9th Cir. 1988); APR Energy, LLC v.
First Inv. Grp. Corp., 88 F. Supp. 3d 1300, 1312 (M.D. Fla. 2015).
While Florida Statute section 77.031 does provide a mechanism
for prejudgment garnishment of a defendant’s assets, 7 plaintiffs
7
This statute provides:
Before judgment has been obtained
plaintiff against the defendant:
by
the
(1) A writ of garnishment shall be issued by
the court or by the clerk on order of the
court.
(2) To obtain issuance of the writ, the
plaintiff, or the plaintiff's agent or
attorney, shall file in the court where the
action is pending a verified motion or
affidavit alleging by specific facts the
nature of the cause of action; the amount of
the debt and that the debt for which the
plaintiff sues is just, due, and unpaid; that
the garnishment is not sued out to injure
- 11 -
did
not
utilize
requesting
the
or
attempt
imposition
of
to
utilize
the
TRO.
this
(Doc.
mechanism
#3.)
when
Instead,
plaintiffs requested and received the imposition of a temporary
restraining order under Federal Rule of Civil Procedure 65.
Doc. #10.)
either the defendant or the garnishee; and
that the plaintiff believes that the defendant
will not have in his or her possession, after
execution is issued, tangible or intangible
property in this state and in the county in
which the action is pending on which a levy
can be made sufficient to satisfy the
plaintiff's claim. The writ of garnishment
shall set forth a notice to the defendant of
the right to an immediate hearing for
dissolution of such writ pursuant to s. 77.07.
Upon issuance of the writ of garnishment, the
clerk of the court shall provide by mail a
copy of the writ to the defendant.
(3) Except when the plaintiff has had an
attachment writ issued, no writ of garnishment
before
judgment
shall
issue
until
the
plaintiff, or the plaintiff's agent or
attorney, gives a bond with surety to be
approved by the clerk payable to the defendant
in at least double the amount of the debt
demanded, conditioned to pay all costs,
damages,
and
attorney's
fees
that
the
defendant sustains in consequence of the
plaintiff's improperly suing out the writ of
garnishment. A garnishment bond is not void or
voidable because of an informality in it, nor
shall the obligors be discharged because of
the informality, even though the garnishment
is dissolved because of the informality.
(4) The motion or pleading need not negative
any exemptions of the defendant.
Fla. Stat. § 77.031 (emphasis added).
- 12 -
(Id.;
The general rule in Florida is that a preliminary injunction
cannot be issued solely to preserve funds to satisfy eventual
monetary relief.
Pianeta Miami, Inc. v. Lieberman, 949 So. 2d
215, 217 (Fla. 3d DCA 2006) (“It is well settled that an injunction
cannot be used to restrain the use of a party’s unrestricted assets
prior to the conclusion of an action at law.” (citation omitted));
Lawhon v. Mason, 611 So. 2d 1367, 1368 (Fla. 2d DCA 1993) (“An
injunction cannot be used to enforce money damages or prevent a
party from disposing of assets prior to the conclusion of an action
at law.” (citation omitted)). See also Rosen v. Cascade, 21 F.3d
1520, 1527 (11th Cir. 1994).
“Even where the party seeking
injunctive relief alleges that the opposing party may dissipate
bank
assets,
a
judgment
for
money
damages
is
adequate
and
injunctive relief is improper, notwithstanding the possibility
that
a
money
judgment
will
be
uncollectible.”
Aisenberg, 758 So. 2d 705, 706 (Fla. 4th DCA 2000).
Weinstein
v.
The test is
“whether a judgment can be obtained, not whether, once obtained,
it will be collectible.”
(citation omitted).
Id. at 708 (Gross, J., concurring)
Florida law recognizes an exception to this
general rule that preliminary injunctive relief is improper to
preserve funds in an action at law where a party seeks injunctive
relief “to protect what is asserted to be the res of a trust during
the pendency of litigation.”
M.I. Indus. USA Inc. v. Attorneys’
Title Ins. Fund, Inc., 6 So. 3d 627, 629 (Fla. 4th DCA 2009)
- 13 -
(citing Gruder v. Gruder, 433 So. 2d 23, 24 (Fla. 4th DCA 1983));
Weinstein, 758 So. 2d at 707-08 (noting that the party requesting
the injunction did not “seek an injunction to an action to impose
a constructive trust on the bank accounts” (Gross, J., concurring)
(citations omitted))).
While a claim for unjust enrichment is often referred to as
equitable, in Florida, unjust enrichment is an action at law. 8
Because unjust enrichment is an action at law, money damages are
available, and therefore such a claim does not alone support the
imposition of preliminary injunctive relief.
M.I. Indus. USA
Inc., 6 So. 3d at 629 (dissolving preliminary injunction that froze
assets because “an action for unjust enrichment is an action at
law,” therefore “money damages will suffice to compensate any
loss”);
Weinstein, 758 So. 2d 705, 707 (Fla. 4th DCA 2000) (Gross,
J., concurring).
Further, “[a]n action at law does not become an
equitable action simply because a request for an injunction has
8
This Court, and even some Florida courts, have described a
cause of action for unjust enrichment as equitable. See Llorca v.
Rambosk, No. 2:15-cv-17-FtM-29CM, 2015 WL 2095805, at *2 (M.D.
Fla. May 5, 2016) (quoting Tooltrend, Inc. v. CMT Utensili, SRL,
198 F.3d 802, 805 (11th Cir. 1999)). However, this relates to the
fact that it is invoked in regard to the sense of fairness, not
the “equity side of the court.” Commerce P’ship 8098 Ltd. P’ship
v. Equity Contracting Co., Inc., 695 So. 2d 383, 390 (Fla. 4th DCA
1997) (“Although some Florida courts have described [unjust
enrichment] as being ‘equitable in nature,’ the term has been used
in a sense of ‘fairness,’ to describe that quality which makes an
enrichment unjust, and not as a reference to the equity side of
the court.”).
- 14 -
been made.”
Lopez-Ortiz v. Centrust Sav. Bank, 546 So. 2d 1126,
1127 (Fla. 3d DCA 1989) (citation omitted).
Plaintiffs’ Second Amended Complaint only requests equitable
relief and does not, on its face, request monetary damages for
their unjust enrichment claim.
(Doc. #560, pp. 98-99.)
Despite
the equitable titles affixed to the relief requested, plaintiffs
are essentially seeking one thing – money. 9
Should plaintiffs
receive the relief requested in their Second Amended Complaint,
they
would
obtain
an
award
of
monetary
damages.
Because
plaintiffs are requesting monetary damages for their action at
9
The County's claims in this case, while
sounding in equity, are no more than a claim
for damages stemming from a breach of
contract: Count I of the complaint seeks a
declaration determining whether SUFA charged
and collected fees in excess of that allowed
by the parties' contract and, if so, whether
the County is entitled to any portion of the
excess collected; Count II seeks an accounting
to determine whether any fees collected by
SUFA should have been paid to the County; and
Count III seeks only to freeze SUFA's bank
accounts
because
“[o]n
information
and
belief,” SUFA had been collecting fees in
excess of that allowed and had been either
misusing these funds or failing to remit them
to the County as alleged in Counts I and II of
the complaint.
Because the allegations
assert no more than a breach of contract
compensable by a damage award, no irreparable
harm essential to secure injunctive relief
freezing SUFA's bank accounts could be
demonstrated.
Stand Up for Animals, Inc. v. Monroe County, 69 So. 3d 1011, 1013
(Fla. 3d DCA 2011)
- 15 -
law,
Florida
injunctive
law
relief
precludes
to
the
preserve
otherwise unrestricted funds.
the
imposition
ultimate
of
preliminary
availability
of
Therefore, the only viable basis
for the continued imposition of the TRO is to protect the res of
a constructive trust.
The Court will now address defendant’s
arguments challenging the availability of a constructive trust as
a remedy under the circumstances of this case.
2) Tracing of Assets to Support Constructive Trust
Defendant asserts that plaintiffs’ request for a constructive
trust as a remedy for their unjust enrichment claim does not
support the continued imposition of the TRO because plaintiffs
have failed to sufficiently trace the res of the trust to the
assets of the defendant.
(Doc. #530, pp. 12-16.)
Florida law is clear that a constructive trust may be imposed
only where the trust res is “specific, identifiable property or if
it can be clearly traced in assets of the defendant.”
Stand Up
for Animals, Inc., 69 So. 3d at 1013-14 (citation omitted); Bank
of Am. v. Bank of Salem, 48 So. 3d 155, 158 (Fla. 1st DCA 2010).
“Because the res of a trust must be specifically identifiable,
funds deposited into an account and comingled [sic] with other
funds cannot ordinarily be the subject of an injunction.” Stand Up
for Animals, Inc., 69 So. 3d at 1013–14 (emphasis added) (citation
omitted).
See also BNB Constr., Inc. v. Nicon Constr., Inc., 13
So. 3d 1107, 1108 (Fla. 4th DCA 2009); M.I. Indus. USA Inc., 6 So.
- 16 -
3d
at
629
(finding
injunction
improper
where
funds
were
commingled).
A review of the tracing allegations reveals that most, if not
all, of the funds plaintiffs are seeking to establish as the res
of a constructive trust have been commingled multiple times with
funds in other accounts and with other funds when purchasing real
estate and other items. (See Doc. #2, pp. 14, 59-64; Doc. #560,
pp. 14, 57-63 (discussing difficulty tracing assets; discussing
“one
dozen
cash
discussing
funds
discussing
cash
transactions”
being
between
“further
transactions
2007
and
distributed”
to
prevent
2009
among
tracing;
at
PHZ;
accounts;
discussing
transfers that consist “at least in part of Penny Stock Scheme
proceeds”; discussing transfers to numerous existing accounts));
(Doc. #3, p. 16 (discussing that proceeds used to purchase gold
and other metals are not easily traced; discussing cash withdrawals
and deposits among accounts)); (Doc. #10, pp. 37 (discussing 83%
of funds transferred were from Penny Stock Scheme; discussing
transfer of €4 million, approximately €1,660,217 originated from
the recent sale of plaintiffs’ stock; discussing transfers in and
out and among numerous accounts)).
Due to the commingling of funds in accounts and when investing
in real estate and other items, the cash transactions, and the
admitted difficulty in tracing the assets, the Court does not find
a substantial likelihood that plaintiffs will be able to ultimately
- 17 -
establish their entitlement to the imposition of a constructive
trust. 10
Plaintiffs have not set forth any factual basis for this
Court to find that the funds were not commingled and instead point
to case law out of the Southern District of New York and a federal
bankruptcy case.
(Doc. #539, p. 13 n.10.)
The Court finds that
these cases are either factually distinguishable or not binding on
this Court.
The clear trend in Florida is to not allow preliminary
injunctive relief to protect the res of a constructive trust where
the funds have been commingled.
Accordingly, it is hereby
ORDERED AND ADJUDGED:
1.
Defendant's
Motion
to
Dissolve
Ex
Parte
Temporary
Restraining Order Based on Court's Dismissal of Counts I, II, III,
IV, and VI of Plaintiffs' Amended Complaint (Doc. #530) is GRANTED.
2.
The Temporary Restraining Order imposed by this Court on
July 1, 2015 is hereby dissolved.
DONE and ORDERED at Fort Myers, Florida, this __25th__ day of
July, 2017.
Copies: Counsel of Record
10
The Court clarifies that it does not hold that it is
impossible to trace the funds among the assets.
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