Lawrie et al v. The Ginn Companies, LLC et al
Filing
304
ORDER adopting 289 Report and Recommendation to the extent discussed in the Order and granting Defendants' Motions to Dismiss 275 276 277 278 279 . This case is dismissed with prejudice. The Clerk should close the file. Signed by Judge Timothy J. Corrigan on 9/19/2014. (WG)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
JACKSONVILLE DIVISION
GORDON LAWRIE, et al,
Plaintiffs,
v.
Case No: 3:09-cv-446-J-32JBT
GINN DEVELOPMENT COMPANY,
LLC, GINN TITLE SERVICES, LLC,
LUBERT-ADLER PARTNERS, L.P.,
FIFTH THIRD BANCORP, FIFTH
THIRD BANK, Michigan, WACHOVIA
BANK, N.A., and SUNTRUST
MORTGAGE, INC.,
Defendants.
ORDER
Eleven plaintiffs, purchasers of high end residential lots, filed a class action
complaint to redress what they claimed to be a wide-ranging scheme involving real
estate and mortgage fraud. (Doc. 1). After Defendants moved to dismiss the complaint,
(Doc. 35, 59, 60, 61, 62, 63), Plaintiffs filed an amended complaint on behalf of nineteen
plaintiffs. (Doc. 71). Defendants filed motions to dismiss the amended complaint. (Doc.
84, 85, 86, 88, 89, 90). The Court granted those motions without prejudice, noting that
the first amended complaint was long and confusing, and failed to demonstrate how
any particular Plaintiff was directly affected by Defendants’ allegedly wrongful
activities. (Doc. 139 at 9-10).
Plaintiffs then filed a second amended complaint, (Doc. 141), which Defendants
moved to dismiss, (Doc. 149, 150, 151, 152, 153, 154, 155). The Court adopted the
Report and Recommendation of the assigned United States Magistrate Judge (who
conducted a hearing on the motions), and dismissed the second amended complaint.
(Doc. 268). Amongst many other problems, the second amended complaint purported
to bring a claim for forty-two different property transactions, but only discussed five
of those transactions. (Doc. 268 at 3). When combined with Plaintiffs’ failure to allege
that any Plaintiff paid a higher price in purchasing a property because of any
particular false statement, the Court found the second amended complaint deficient.
(Doc. 268 at 3). Over objection, the Court gave Plaintiffs the opportunity to file a third
amended complaint but warned that failure to state a viable claim would result in
dismissal with prejudice. (Doc. 268 at 7).
Plaintiffs filed their third amended complaint (“TAC”) (Doc. 272), which
Defendants moved to dismiss, (Doc. 275, 276, 277, 278, 279). The Magistrate Judge
issued
a
comprehensive,
thirty-seven
page
Report
and
Recommendation
recommending dismissal of the TAC with prejudice. (Doc. 289). Plaintiffs objected to
the Report and Recommendation, (Doc. 294), and Defendants responded to Plaintiffs’
objections, (Doc. 299, 300, 301, 302, 303). The case is now before the undersigned for
consideration of the Report and Recommendation and a de novo decision on the
motions to dismiss. 1
Although the Magistrate Judge has done a very thorough job, the undersigned
is obligated to take a fresh look at the 142-page TAC. Upon de novo review, the Court
Any part of a magistrate judge’s disposition that has been properly objected
to must be reviewed de novo. FED. R. CIV. P. 72(b)(3).
1
2
agrees with the Magistrate Judge that Plaintiffs’ complaint is due to be dismissed for
violations of Federal Rules of Civil Procedure 8 and 9 and because it fails to
demonstrate how Defendants’ alleged misconduct caused Plaintiffs’ losses. Thus, the
Court adopts and incorporates the Report and Recommendation’s findings and
reasoning on these points and adds the following commentary.
Plaintiffs have brought claims on behalf of all persons or entities that purchased
real estate in “Ginn developments” during an unspecified period. (Doc. 272 at 105).
Named Plaintiffs are purchasers of lots in five different Ginn developments in Florida
and North Carolina who assert that they paid more than fair market value for those
lots, which they would not have done had they known the lots’ true market value. (Doc.
272 at 124-25). The Report and Recommendation summarizes the TAC as follows:
[L]ike the [First Amended Complaint], ‘[t]he sheer length
and confusing structure of the [TAC] makes it difficult to
parse.’ This is a serious defect that has never been cured. . .
. Plaintiffs allege that from approximately 2002 to 2006, the
thirteen named Plaintiffs purchased properties in at least
five residential communities located in at least two different
states (Florida and North Carolina), which were ‘developed
by the Ginn and Lubert-Adler Defendants at prices that
were fraudulently inflated.’ The scheme allegedly ‘involved
every step of the real estate purchase process,’ . . . . The
named Plaintiffs purport to bring this action ‘on their own
behalf and . . . on behalf of a Class of all persons or entities
that purchased real estate in Ginn developments, including
but not limited to [the Named Developments],’ apparently
from 1998 through ‘the present date’ (the alleged time frame
for the fraudulent scheme), ‘or such time as will be
established after a thorough review of Defendants’ records.’
(Doc. 289 at 4-6 (internal footnotes and citations omitted)). As the Report and
Recommendation describes Plaintiffs’ claims and the requisite legal standards in
detail, the Court will not duplicate that work here.
3
Plaintiffs assert that they have adequately responded to the Court’s request for
more detailed allegations. They therefore object to the Report and Recommendation
because, among other reasons, they believe it advocates for dismissal of the TAC for
excessive length. (Doc. 294 at 4). The problem with the TAC, however, is not just its
length, but its lack of focus and clarity and inability to connect the alleged actions of
Defendants to any losses allegedly suffered by Plaintiffs.
In dismissing the second amended complaint, the Court instructed Plaintiffs
that they needed to demonstrate how Plaintiffs paid a higher price because of specific
actions of Defendants. (Doc. 268 at 3). Instead, Plaintiffs have continued to bring
generalized (though serious) allegations of wrongdoing against Defendants, without
tying those allegations to Plaintiffs’ purchases. For example, Plaintiffs spend twentyfour pages discussing a loan Defendants’ procured from Credit Suisse. (Doc. 272 at 6285). Yet, Plaintiffs assert that their damages were the result of paying more than the
fair market value of the properties at the time of purchase, (Doc. 272 at 124-25),
transactions that, for all but one of the named Plaintiffs, occurred well before the
Credit Suisse deal, (Doc. 272 at 18-39). As such, the Credit Suisse deal cannot have
caused Plaintiffs’ damages as alleged.
Plaintiffs make a number of other allegations of misconduct, from
misrepresentations Defendants made in e-mails to non-Plaintiffs, (Doc. 272 at 45), to
the use of deceptive sales tactics, (Doc. 272 at 44-45), to the recording of false
information to be used in creating appraisals, (Doc. 272 at 45, 49-51), without ever
explaining how, if at all, these actions relate to Plaintiffs’ purchases. These allegations
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of misconduct that are seemingly unconnected to Plaintiffs’ harm violates Rule 8’s
requirement that Plaintiffs make a short, plain statement showing that they are
entitled to relief.
While the TAC describes Plaintiffs’ purchases of thirty lots, Plaintiffs fail to tie
any of Defendants’ misconduct to the particular lot sales. In most cases, the only
connection Plaintiffs draw between the allegations of misconduct and Plaintiffs’
purchases is that a bank employee 2 suggested to a specific Plaintiff that the property
was being sold for its market value or that the appraised value would support the
mortgage. (Doc. 272 at 20, 26, 27, 28, 29, 32, 33, 38). Under Rule 9, however, fraudbased
claims
require
plaintiffs
to
state
the
time
and
place
of
alleged
misrepresentations. Ziemba v. Cascade Intern., Inc., 256 F.3d 1194, 1202 (11th Cir.
2001). Plaintiffs have failed to provide any specifics of any of the alleged
misrepresentations by bank employees.
Nor have Plaintiffs provided any other specific, well-pleaded allegation tying
Defendants’ wrongful conduct to Plaintiffs’ purchases. Indeed, in the whole 142 pages
of the complaint and 85 pages of exhibits attached thereto, at best, Plaintiffs only
mention misconduct with respect to five of the thirty lot purchases. 3
The person responsible for the misstatement is named with respect to some
purchases, (See Doc. 272 at 20), but is unnamed with respect to others, (See Doc. 272
at 28), in violation of Rule 9.
2
Specifically, Plaintiffs assert that banks improperly conducted appraisals
with respect to Miller’s purchase of 110 Bella Colina, (Doc. 272 at 52, 99-100), the
Billingtons’ purchase of 134 Bella Collina, (Doc. 272 at 55), the Friezes’ purchase of
227 Reunion, (Doc. 272 at 55, 93), the Friezes’ purchase of 391 Bella Collina, (Doc. 272
at 54), and Gordon Lawrie and Charles McKinlay’s purchase of 390 Bella Collina, (Doc.
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In the absence of allegations connecting Plaintiffs’ purchases to Defendants’
wrongdoing, Plaintiffs’ complaint fails to adequately allege causation. This failing, as
well as Plaintiffs’ inter-related violations of Rules 8 and 9, dooms the TAC. As
Plaintiffs’ claims are therefore due to be dismissed regardless, and because Plaintiffs
disclaim any reliance on a fraud-on-the-market theory, the Court need not address the
availability of such a theory in this context. Nor does the Court reach the issue of
whether an inflated purchase price theory is appropriate in this context, since, even if
it were, Plaintiffs have failed to allege how Defendants’ behavior caused them to pay
an inflated purchase price. 4
Because the Court recognizes the complexity of the matter and the obvious
belief by these Plaintiffs that they have been harmed, the Court has afforded Plaintiffs
multiple opportunities to plead a viable complaint. However, on its fourth try,
Plaintiffs’ TAC suffers from the same deficiencies as the other three complaints. It
does not do a good enough “job of concisely identifying who did wrong, what specific
actions they took that were wrong and how the Plaintiffs were proximately and
adversely affected by these actions.” (Doc. 139 at 19). By maintaining this suit as a
RICO class action on behalf of “thousands” of lot purchasers, (Doc. 272 at 105), over
many developments and a number of states and alleging a scheme that “involved every
step of the real estate purchase process”, (Doc. 272 at 2), the TAC is at once too broad
272 at 54).
Because this Order is strictly limited to this case as pleaded in the TAC, the
Court does not view it as precedential for any of the other “Ginn cases” currently
pending in this Court.
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and yet not specific enough. The TAC violates Rules 8 and 9 and fails to adequately
demonstrate causation and must be dismissed. Because this is Plaintiffs’ fourth
complaint and because the Court has previously given Plaintiffs every opportunity to
allege a viable complaint, this time, that dismissal must be with prejudice. 5
Accordingly, it is hereby
ORDERED:
1.
The Report and Recommendation, (Doc. 289), of the United States
Magistrate Judge is ADOPTED and incorporated herein to the extent discussed
above.
2.
Defendants’ Motions to Dismiss, (Doc. 275, 276, 277, 278, 279), are
GRANTED.
3.
This case is dismissed with prejudice. The Clerk should close the file.
DONE AND ORDERED in Jacksonville, Florida the 19th day of September,
2014.
w.
Copies with the Report and Recommendation (Doc. 289) attached to:
Counsel of record
Plaintiffs alternatively suggest that the Court permit them to “restate the
claims on an individualized basis if they so choose,” (Doc. 294 at 21), but it is too late
for that. Given the Court’s previous admonitions, if Plaintiffs truly wanted to restate
their claims on an individualized basis, they would have done so by now.
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Honorable Joel B. Toomey
United States Magistrate Judge
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