Skypoint Advisors, LLC. v. 3 Amigos Productions LLC. et al

Filing 92

ORDER granting in part and denying in part 56 motion to dismiss. Signed by Judge John E. Steele on 4/9/2019. (FWH)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
SKYPOINT ADVISORS, LLC.,
Plaintiff,
v.

Case No:

2:18-cv-356-FtM-29MRM

3 AMIGOS PRODUCTIONS LLC.,
BLACKBURNSTEELE LLC., ISSA
ZAROUI, and MARK C CRAWFORD,
Defendants.

OPINION AND ORDER
This

matter

comes

before

the

Court

on

review

of

the

defendants’ Motion to Dismiss (Doc. #56) filed on January 17, 2019.
Plaintiff filed a Response (Doc. #64) on January 30, 2019, the
defendants filed a Reply (Doc. #72) on February 15, 2019, and
plaintiff filed a Sur Reply (Doc. #78) on February 28, 2019. For
the reasons that follow, the motion is granted, with leave to
amend.
I.
A. The Parties
Plaintiff
liability

Skypoint

company.

Advisors,

(Doc.

#52,

p.

LLC
1.)

is

a

Florida

Defendant

limited
3

Amigos

Productions, LLC is a Nevada limited liability company with three
managing members: (1) defendant BlackburnSteele, LLC, a Nevada
limited liability company, (2) defendant Issa Zaroui, a resident

of

New

York,

Virginia.

and

(3)

non-party

(Id. pp. 1-2.)

Chad

Pittman,

a

resident

of

Finally, defendant Mark Crawford is the

sole managing member of defendant BlackburnSteele.

(Id. p. 2.)

B. Factual History
According to the Second Amended Complaint, the defendants
began soliciting plaintiff in November 2016 to invest in the
production of a proposed film entitled “Lazarat Burning.”
4.)

From

then

representations

until

to

January

plaintiff

2017,

regarding

financing, and potential profits.

the
the

(Id. p.

defendants

film’s

(Id. pp. 5-6.)

made

production,

In early 2017,

plaintiff and defendant 3 Amigos entered into a “Film Financing
Agreement,”

with

plaintiff

investment in the project.
the

terms

of

the

agreeing

to

loan

$50,000

as

(Id. p. 7; Doc. #52-1, p. 32.)

agreement,

plaintiff

elected

to

an
Per

receive

a

proportional share of the film’s profits rather than interest on
the $50,000.

(Doc. #52-1, p. 33.)

The agreement contained a

distribution schedule and stated the distributions constituted
“securities” exempt from federal registration requirements.

(Id.

p. 34.) Finally, the agreement contained a choice of law provision
construing the agreement under Florida law, and a forum-selection
clause listing “any court in the State of Florida” as having
jurisdiction over the matter.
Sometime
“developed

after

entering

significant

(Id. p. 35.)
into

concerns”

2

the

related

agreement,
to

the

plaintiff

project

and

demanded a refund of its money.

(Doc. #52, pp. 10-11.)

The

defendants refused to return plaintiff’s investment and plaintiff
initiated this action on May 22, 2018.

(Id. p. 12; Doc. #1.)

C. Procedural History
On

January

3,

2019,

plaintiff

filed

its

Second

Amended

Complaint alleging the following six claims: (1) violation of
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b5 promulgated thereunder; (2) violation of Florida’s Securities
Investor Protection Act, § 517.011 et. seq., Fla. Stat.; (3) common
law fraud; (4) violation of Florida’s Deceptive and Unfair Trade
Practices Act, § 501.201 et. seq., Fla. Stat.; (5) breach of
contract; and (6) breach of fiduciary duty.

(Doc. #52, pp. 12-

26.) The first four claims are alleged against all the defendants,
while the fifth and sixth claims are alleged only against defendant
3 Amigos.

(Id.)

Plaintiff claims damages of over $90,000.

(Id.

p. 7.)
On January 17, 2019, the defendants filed the Motion to
Dismiss now before the Court.

(Doc. #56.)

The motion seeks

dismissal on the following grounds: (1) failure to satisfy pleading
requirements

as

to

Count

One;

(2)

lack

of

subject

matter

jurisdiction as to Counts Two through Six; and (3) lack of personal
jurisdiction
Zaroui.

over

defendants

(Id. pp. 11-21.)

BlackburnSteele,

Crawford,

and

The motion also seeks to have sanctions

3

imposed on plaintiff for the filing of a frivolous claim.

(Id.

pp. 21-24.)
II.
A. Failure to Satisfy Pleading Requirements
Section 10(b) of the Securities Exchange Act makes it unlawful
for any person to “use or employ, in connection with the purchase
or sale of any security . . . any manipulative or deceptive device
or contrivance in contravention of such rules and regulations as
the Commission may prescribe as necessary or appropriate in the
public interest or for the protection of investors.”

15 U.S.C. §

78j(b). SEC Rule 10b–5 implements this provision by making it
unlawful to, inter alia, “make any untrue statement of a material
fact or to omit to state a material fact necessary in order to
make the statements made, in the light of the circumstances under
which they were made, not misleading.”
5(b).

17 C.F.R. § 240.10b–

The Supreme Court has “implied a private cause of action

from the text and purpose of § 10(b).”

Matrixx Initiatives, Inc.

v. Siracusano, 563 U.S 27, 37 (2011) (citation omitted).
To survive a motion to dismiss, a claim brought under Rule
10b-5(b)

must

satisfy:

(1)

the

federal

notice

pleading

requirements in Federal Rule of Civil Procedure 8(a)(2); (2) the
special

fraud

pleading

requirements

in Federal

Rule

of

Civil

Procedure 9(b); and (3) the additional pleading requirements in
the Private Securities Litigation Reform Act of 1995 (“PSLRA”).

4

In re Galectin Therapeutics, Inc. Sec. Litig., 843 F.3d 1257, 1269
(11th Cir. 2016).
Under Rule 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).

The complaint must allege

“enough facts to state a claim to relief that is plausible on its
face,” and the factual allegations “must be enough to raise a right
to

relief

above

the

speculative

level.”

Bell

Atl.

Corp.

v.

Twombly, 550 U.S. 544, 555, 570 (2007).
In

addition

to

the Rule

8(a)(2) requirements, Rule

9(b)

requires that for complaints alleging fraud or mistake, “a party
must state with particularity the circumstances constituting fraud
or mistake.”

Fed. R. Civ. P. 9(b).

While Rule 9(b) does not abrogate the concept of notice
pleading, it plainly requires a complaint to set forth:
(1) precisely what statements or omissions were made in
which documents or oral representations; (2) the time
and place of each such statement and the person
responsible for making (or, in the case of omissions,
not making) them; (3) the content of such statements and
the manner in which they misled the plaintiff, and; (4)
what the defendant obtained as a consequence of the
fraud.
In

re

Galectin,

843

F.3d

at

1269

(citations

omitted).

The

“[f]ailure to satisfy Rule 9(b) is a ground for dismissal of a
complaint.”

Id. (quoting Corsello v. Lincare, Inc., 428 F.3d 1008,

1012 (11th Cir. 2005)).

5

Finally,

the

PSLRA

also

imposes

requirements for Rule 10b–5(b) actions.

heightened
Id.

pleading

For Rule 10b–5(b)

claims predicated on allegedly false or misleading statements or
omissions, the PSLRA provides that
the complaint shall specify each statement alleged to
have been misleading, the reason or reasons why the
statement is misleading, and, if an allegation regarding
the statement or omission is made on information and
belief, the complaint shall state with particularity all
facts on which that belief is formed.
15 U.S.C. § 78u–4(b)(1).
Count

One

of

the

Second

Amended

Complaint

accuses

the

defendants of making fraudulent statements to induce plaintiff to
invest in the film project.

(Doc. #52, pp. 12-15.)

Regarding the

alleged misrepresentations, the Second Amended Complaint asserts
the following:
From November 2016 to January 2017, prior to execution
of the Agreement and while Plaintiff was in Florida,
Zaroui, Crawford, BlakcburnSteele [sic], and 3 Amigos
all reached into Florida and knowingly made a number of
misrepresentations to Skypoint via use of the internet
and telephone, including but not limited to Skype, phone
calls, video conferencing, emails, attachments, and text
messages, for the purpose of inducing Skypoint to invest
in the Project, which include, but are not limited to:
(a) that the Project was almost fully funded due to
almost two years’ worth of work by Defendants, that
Skypoint’s then proposed $50,000.00 investment was the
final investment needed to complete the budget for the
Project, and that Skypoint was the final investor
accepted for the Project;
(b) characterized Spypoint’s then proposed $50,000.00
investment as de minimus in light of the investment funds
already collected for the Project and presented 3

6

Amigos’s proposed acceptance of Skypoint’s $50,000.00
investment as doing a favor for Skypoint;
(c) that the preproduction work for the Project was
already paid, and that Crawford, Zaroui, and Pittman
already personally invested $30,000.00 each to the
Project;
(d) that Zaroui’s family members also invested monies
into the Project;
(e) that DigitAlb, a prominent Albanian media company,
already invested $400,000.00 into the Project;
(f) that 3 Amigos ha[d] existing contracts with
distribution companies Karo Films, the largest Russian
firm of its kind in the Russian region, and Fantastic
Film International[,] regarding distribution of the
Project
resulting
in
revenue
in
excess
of
$20,000[,]000.00;
(g) that Gabriel Garko, a preeminent Italian actor,
[wa]s playing a major role in the Project and therefore
pre-sale
forecasts
ha[d]
been
met
resulting
in
additional revenue of two to three million dollars in
the Italian market alone; and
(h) that all third-party consultants had been previously
paid prior to Skypoint’s decision to invest.
(Id. pp. 4-6.)

The Second Amended Complaint states that these

statements were false, the defendants had knowledge of their
falsity, and the defendants made the statements in an attempt to
mislead investors into investing in the project.

(Id. p. 6.)

The defendants argue that plaintiff’s § 10(b) claim fails to
meet the specificity requirements of Rule 9(b) and the PSLRA.
(Doc. #56, pp. 11-13.)

As noted, the Eleventh Circuit has stated

that Rule 9(b) requires a complaint sets forth

7

(1) precisely what statements or omissions were made in
which documents or oral representations; (2) the time
and place of each such statement and the person
responsible for making (or, in the case of omissions,
not making) them; (3) the content of such statements and
the manner in which they misled the plaintiff, and; (4)
what the defendant obtained as a consequence of the
fraud.
In re Galectin, 843 F.3d at 1269 (citations omitted).
Having
Complaint,

reviewed
the

the

Court

allegations

finds

plaintiff

in
has

particularity requirements of Rule 9(b).

the

Second

failed

to

Amended
meet

the

For example, while the

Second Amended Complaint identifies the alleged misrepresentations
and the general timeframe in which they took place, it fails to
identify

who

made

the

misrepresentations

beyond

a

general

accusation against all the defendants. See Durham v. Whitney Info.
Network, Inc., 2009 WL 3783375, *17 (M.D. Fla. Nov. 10, 2009)
(“Rule 9(b) does not allow a complaint to merely ‘lump’ multiple
defendants together but ‘require[s] plaintiffs to differentiate
their allegations when suing more than one defendant . . . and
inform each defendant separately of the allegations surrounding
his alleged participation in the fraud.’” (citation omitted));
Sewell v. D’Alessandro & Woodyard, Inc., 2008 WL 4459260, *6 (M.D.
Fla. Sept. 29, 2008) (“The Amended Complaint generally fails to
satisfy the Rule 9(b) requirements.
Complaint

fails

to

allege

For example, the Amended

specifically

who

made

what

misrepresentations, generalizing instead that misrepresentations

8

‘were made by defendants First Home Builders, D & W, and GDW and
their agents, representatives and affiliates (including other real
estate brokerage firms which acted as referring brokers).’”).
The Court also finds that the Second Amended Complaint fails
to meet the requirements of the PSLRA, which states the following:
In any private action arising under this chapter in which
the plaintiff alleges that the defendant—
(A)

made an untrue statement of a material fact;
or

(B)

omitted to state a material fact necessary in
order to make the statements made, in the
light of the circumstances in which they were
made, not misleading;

the complaint shall specify each statement alleged
to have been misleading, the reason or reasons why
the statement is misleading, and, if an allegation
regarding the statement or omission is made on
information and belief, the complaint shall state
with particularity all facts on which that belief
is formed.
15 U.S.C. § 78u-4(b)(1).

As noted, the Second Amended Complaint

alleges the defendants informed plaintiff prior to the agreement
that defendant 3 Amigos had contracts with distribution companies
for

the

film.

(Doc.

#52,

p.

5.)

Plaintiff

claims,

“upon

information and belief,” that no such contracts ever existed. (Id.
p.

10.)

However,

because

plaintiff

has

not

stated

“with

particularity all facts on which that belief is formed,” 15 U.S.C.
§ 78u-4(b)(1), it has failed to meet the pleading requirements of
the PSLRA.

9

Accordingly, the Court finds Count One of the Second Amended
Complaint fails to meet the requirements of Rule 9(b) and the
PSLRA, and the claim will be dismissed without prejudice. 1

While

this is the third version of the complaint filed, the Court will
give plaintiff one final chance to amend.

Furthermore, because

Count One is subject to dismissal due to the pleading deficiencies,
the Court finds it is unnecessary to address the other alleged
deficiencies raised by the defendants.

See Serefex Corp. v.

Hickman Holdings, LP, 695 F. Supp. 2d 1331, 1342 (M.D. Fla. Feb.
23, 2010) (dismissing claim for failure to meet the requirements
of Rule 9(b) and noting “the Court need not address the other
claimed deficiencies in plaintiff’s § 10(b) and Rule 10b-5 claim”).
B. Lack of Subject Matter Jurisdiction
The defendants argue that the Court should dismiss Counts Two
through Six for lack of subject matter jurisdiction.
p. 17.)

(Doc. #56,

In raising these claims in the Second Amended Complaint,

1

The Court does not need to address at this time plaintiff’s
“group pleading theory.” (Doc. #78, pp. 4-5.) However, the Court
notes that it is unclear whether that doctrine is still viable
under the PSLRA and Rule 9(b). See Sewell, 2008 WL 4459260, *6
(noting the Eleventh Circuit has not decided whether the group
pleading doctrine is viable under the PSLRA and Rule 9(b)); see
also Murdeshwar v. Search Media Holdings Ltd., 2011 WL 7704347,
*12 (S.D. Fla. Aug. 8, 2011) (noting a split among the circuits
over the continued validity of the group pleading doctrine under
the PSLRA).

10

plaintiff asserts this Court has both supplemental jurisdiction
pursuant to 28 U.S.C. § 1367, and diversity jurisdiction pursuant
to 28 U.S.C. § 1332.

(Doc. #52, pp. 16, 19, 21, 23, 25.)

In the

Motion to Dismiss, the defendants challenge both of plaintiff’s
jurisdictional claims.

(Doc. #56, pp. 17-18.)

Having reviewed

the pleadings and arguments, the Court finds plaintiff has failed
to plead sufficient facts to invoke this Court’s jurisdiction.
Regarding the complaint’s claim that Counts Two through Six
are within this Court’s jurisdiction pursuant to 28 U.S.C. § 1367,
the Court has now dismissed the only federal claim in the Second
Amended

Complaint.

Therefore,

plaintiff

cannot

rely

upon

supplemental jurisdiction for the remaining non-federal claims.
See 28 U.S.C. § 1367(c)(3) (providing that district courts may
decline to exercise supplemental jurisdiction if the court has
dismissed all claims over which it has original jurisdiction);
Raney v. Allstate Ins. Co., 370 F.3d 1086, 1089 (11th Cir. 2004)
(“We have encouraged district courts to dismiss any remaining state
claims when, as here, the federal claims have been dismissed prior
to trial.”).
over

the

Accordingly, the Court can only have jurisdiction

non-federal

claims

if

the

requirements

are

met

for

diversity jurisdiction.
Diversity
complete

jurisdiction

diversity

of

under

28

citizenship,

U.S.C.
and

that

§

1332
the

requires

matter

in

controversy exceed the sum or value of $75,000, exclusive of

11

interest and costs.

Morrison v. Allstate Indem. Co., 228 F.3d

1255, 1261 (11th Cir. 2000).

The defendants argue plaintiff has

failed to meet the amount-in-controversy requirement because there
is no support for plaintiff’s claimed damages of $90,000.
#56, pp. 18-19.)

(Doc.

Plaintiff’s pre-complaint demand for a refund

requested the defendants return the $50,000 investment and $2,500
in interest.

(Doc. #52-2, p. 59.)

The defendants argue that

plaintiff’s new allegation of an additional $40,000 in damages is
simply an effort to meet the amount-in-controversy requirement,
and is a “self-serving, conclusory, eleventh-hour claim . . . not
entitled to any usual good faith presumptions.”
18.)

(Doc. #56, p.

Plaintiff responds by asserting the damages are claimed in

good faith, (Doc. #64, p. 13), as well as providing an affidavit
from plaintiff’s president that the amount is accurate, (Doc. #65,
p. 3.)

At this stage of the proceedings, the Court will assume

plaintiff has acted in good faith as to its damages.

28 U.S.C. §

1332(a); see also Federated Mut. Ins. Co. v. McKinnon Motors, LLC,
329 F.3d 805, 807 (11th Cir. 2003) (“A plaintiff satisfies the
amount in controversy requirement by claiming a sufficient sum in
good faith.”). 2

2

Plaintiff’s Initial Complaint did not allege diversity
jurisdiction or claim an amount of damages. (Doc. #1.) To the
extent the defendants rely upon this fact to suggest the new
$90,000 claim of damages is not made in good faith, (Doc. #56, p.
18), the Court rejects that argument. See Rockwell Int’l Corp. v.
United States, 549 U.S. 457, 473-74 (2007) (“[W]hen a plaintiff

12

Even assuming plaintiff has met the amount-in-controversy
requirement, however, the Court finds it has failed to demonstrate
diversity of citizenship.

See Cadet v. Bulger, 377 F.3d 1173,

1179 (11th Cir. 2004) (noting that federal courts “are obligated
to inquire into subject-matter jurisdiction sua sponte whenever it
may be lacking”).

Plaintiff and two of the defendants in this

action are limited liability companies.

A limited liability

company is a citizen of any state of which one of its members is
a citizen.

Rolling Greens MHP, L.P. v. Comcast SCH Holdings

L.L.C., 374 F.3d 1020, 1022 (11th Cir. 2004).

To sufficiently

allege citizenship, “a party must list the citizenships of all the
members of the limited liability company.” Id. The Second Amended
Complaint fails to meet this requirement.

Furthermore, to the

extent the Second Amended Complaint describes the residency of the
defendants, (Doc. #52, p. 2), “[c]itizenship, not residence, is
the key fact that must be alleged in the complaint to establish
diversity for a natural person,” Taylor v. Appleton, 30 F.3d 1365,
1367 (11th Cir. 1994).
As plaintiff has failed to demonstrate complete diversity,
Counts Two through Six of the Second Amended Complaint will also

files a complaint in federal court and then voluntarily amends the
complaint, courts look to the amended complaint to determine
jurisdiction.”).

13

be dismissed with one final opportunity to amend. 3
C. Sanctions
The defendants request the Court impose sanctions pursuant to
section 78u-4(c) of the PSLRA.

(Doc. #56, pp. 21-24.)

That

provision requires the Court to make “record specific findings”
regarding compliance by each party and each attorney with the
requirements of Rule 11(b) of the Federal Rules of Civil Procedure.
15 U.S.C. § 78u-4(c)(1). 4

However, the provision only applies

“upon final adjudication of the action.”

Id.

As the Court is

dismissing the Second Amended Complaint with leave to amend, there
has not been a final adjudication and the defendants’ request for
sanctions under section 78u-4(c) is denied.
Accordingly, it is now
ORDERED:
1. The defendants’ Motion to Dismiss (Doc. #56) is GRANTED in
part and DENIED in part.

Count One of the Second Amended

3

Given the Court’s determination regarding the pleading
deficiencies of Count One and the lack of subject matter
jurisdiction over Counts Two through Six, the defendants remaining
arguments regarding Rule 12(b)(6) and 12(b)(3) will be denied
without prejudice. The defendants may re-raise the arguments if
plaintiff can file an amended complaint that cures the pleading
and jurisdictional deficiencies.
4

Rule 11(b) imposes a duty upon attorneys to “refrain from
filing or pursuing frivolous claims.” Mirabilis Ventures, Inc. v.
Palaxar Grp., LLC, 2010 WL 5582878, *9 (M.D. Fla. Dec. 15, 2010)
(citation omitted).

14

Complaint is dismissed without prejudice for failure to meet
the heightened pleading requirements of Rule 9(b) and the
PSLRA, and Counts Two through Six are dismissed without
prejudice for lack of subject matter jurisdiction.
2. The defendants’ request for sanctions under section 78u-4(c)
is DENIED.
3. Plaintiff is granted leave to file a third and final amended
complaint within TWENTY-ONE (21) DAYS of this Opinion and
Order.
DONE AND ORDERED at Fort Myers, Florida, this
April, 2019.

Copies: Counsel of record

15

9th

day of