Badger Auctioneers, Inc. v. Ali et al
ORDER granting 71 motion to dismiss; granting 85 motion to dismiss; dismissing Count III and Count V of Amended Complaint as to Defendant Ali; dismissing Third Party Complaint. Signed by Judge Gregory A. Presnell on 8/10/2017. (ED)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
BADGER AUCTIONEERS, INC.,
Case No: 6:16-cv-572-Orl-31TBS
ZAID ALI and MY FRESH MARKET
MY FRESH MARKET CORP.,
Third Party Plaintiff,
THEODORE W. FLEISNER.,
Third Party Defendant.
This matter comes before the Court on the Motion to Dismiss Counts III and V of the
Amended Complaint (Doc. 71) filed by the Defendants, Zaid Ali (henceforth, “Ali”) and My Fresh
Market Corp. (“My Fresh Market”), and the Motion to Dismiss (Doc. 85) filed by the Third Party
Defendant, Theodore Fleisner (“Fleisner”), as well as the responses in opposition to those
According to the allegations of the Amended Complaint (Doc. 66), which are accepted in
pertinent part as true for purposes of resolving the Defendants’ motion, the instant suit arose from
a March 2015 online auction of equipment from a closed Publix supermarket in Tampa. The
Plaintiff, Badger Auctioneers, Inc. (“Badger”), conducted the auction. 1 Ali successfully bid on
items totaling approximately $100,000; however, the credit card he tendered for payment was
declined. (Doc. 66 at 5). The next day, when Ali showed up to remove the items, Badger was
only able to charge $5,000 on the credit card. (Doc. 66 at 6). Ali sought to renegotiate, and
several of the items he had successfully bid on were sold to other parties, leaving items totaling
$56,995. (Doc. 66 at 6). In addition to the $5,000 paid by credit card, Ali gave Badger $21,000
in cash and a check for $30,995 drawn on a My Fresh Market account. (Doc. 66 at 6). After
receiving the cash and the check, Badger allowed Ali to remove the equipment – although Badger
states that Ali may have left some of that equipment at the site. (Doc. 66 at 6). Subsequently,
the bank declined to honor the $30,995 My Fresh Market check, saying that a stop payment had
been issued. (Doc. 66-5 at 1).
In the Amended Complaint, Badger asserts the following claims: breach of contract (Count
I); conversion (Count II); a statutory claim pursuant to Fla. Stat. § 68.065 for the dishonored check
(Count III); unjust enrichment (Count IV); and fraudulent inducement (Count V). The first four
counts are asserted against both Defendants, while Count V is asserted only against Ali. By way
of the instant motion, the Defendants seek dismissal of the claims asserted against Ali in Count III
and Count V.
Not surprisingly, My Fresh Market presents a different version of the events surrounding
the auction. As set forth in the Third Party Complaint – the factual allegations of which are
accepted in pertinent part as true for purposes of resolving Fleisner’s motion – My Fresh Market
Fleisner, the Third Party Defendant, is Badger’s CEO.
was the bidder, not Ali, 2 and it successfully bid on approximately $40,000 in equipment, not
$100,000. (Doc. 76 at 3). When representatives of My Fresh Market arrived to pick up the
equipment, Badger and its CEO, Fleisner, tried to force My Fresh Market into overpaying to have
the items loaded onto trucks for shipping. (Doc. 76 at 5). My Fresh Market was ultimately
prevented from picking up the compressors and evaporators it had won at auction – some of which
Ali observed being sold to other auction participants – and was only allowed to pick up
approximately $20,000 in other items. (Doc. 76 at 5). My Fresh Market asserts that Badger’s
“inability” to deliver the evaporators and compressors “led to the failure of My Fresh Market’s
business.” (Doc. 76 at 5).
At some point after My Fresh Market realized the compressors and evaporators had been
sold to a third party, the company alleges, Fleisner “stated he would deliver equivalent equipment
to My Fresh Market Corp. within two or three days.” (Doc. 76 at 6). No such equipment was
delivered. (Doc. 76 at 6). Based on this statement, My Fresh Market asserts a fraud claim
against Fleisner in the Third Party Complaint. (Doc. 76 at 6-7).
Federal Rule of Civil Procedure 8(a)(2) requires “a short and plain statement of the claim
showing that the pleader is entitled to relief” so as to give the defendant fair notice of what the
claim is and the grounds upon which it rests, Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103,
2 L.Ed.2d 80 (1957), overruled on other grounds, Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A Rule 12(b)(6) motion to dismiss for failure to state a
claim merely tests the sufficiency of the complaint; it does not decide the merits of the case.
According to the Third Party Complaint, Ali was “an owner” of My Fresh Market.
(Doc. 76 at 5).
Milbum v. United States, 734 F.2d 762, 765 (11th Cir.1984). In ruling on a motion to dismiss, the
Court must accept the factual allegations as true and construe the complaint in the light most
favorable to the plaintiff. SEC v. ESM Group, Inc., 835 F.2d 270, 272 (11th Cir.1988). The
Court must also limit its consideration to the pleadings and any exhibits attached thereto. Fed. R.
Civ. P. 10(c); see also GSW, Inc. v. Long County, Ga., 999 F.2d 1508, 1510 (11th Cir. 1993).
The plaintiff must provide enough factual allegations to raise a right to relief above the
speculative level, Twombly, 550 U.S. at 555, 127 S.Ct. at 1966, and to indicate the presence of the
required elements, Watts v. Fla. Int’l Univ., 495 F.3d 1289, 1302 (11th Cir. 2007). Conclusory
allegations, unwarranted factual deductions or legal conclusions masquerading as facts will not
prevent dismissal. Davila v. Delta Air Lines, Inc., 326 F.3d 1183, 1185 (11th Cir. 2003).
In Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 173 L.Ed.2d 868 (2009), the Supreme
Court explained that a complaint need not contain detailed factual allegations, “but it demands
more than an unadorned, the-defendant-unlawfully-harmed-me accusation. A pleading that offers
labels and conclusions or a formulaic recitation of the elements of a cause of action will not do.
Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement.”
Id. at 1949 (internal citations and quotations omitted). “[W]here the well-pleaded facts do not
permit the court to infer more than the mere possibility of misconduct, the complaint has alleged –
but it has not ‘show[n]’ – ‘that the plaintiff is entitled to relief.’” Id. at 1950 (quoting Fed. R.
Civ. P. 8(a)(2)).
Analysis – Defendant’s motion
Count III – Bad Check
Florida Statute § 68.065(3)(a) provides in pertinent that,
In any civil action brought for the purpose of collecting a payment
instrument, the payment of which is refused by the drawee because
of lack of funds, lack of credit, or lack of an account, or where the
maker or drawer stops payment on the instrument with intent to
defraud, and where the maker or drawer fails to pay the amount
owing, in cash, to the payee within 30 days after a written demand
therefor, as provided in subsection (4), the maker or drawer is liable
to the payee, in addition to the amount owing upon such payment
instrument, for damages of triple the amount so owing.
In Count III, Badger asserts a claim under Section 68.065(3)(a) against Ali and, in the
alternative, My Fresh Market. (Doc. 66 at 8). Badger contends that, even though the check was
drawn on a My Fresh Market account rather than Ali’s personal account, Ali was still a “maker or
drawer” of the check because he signed it and included his personal information, including his
driver’s license number, on the check. (Doc. 66 at 8). Badger also asserts, on information and
belief, that Ali lacked the authority to sign the check because “the funds were for items Mr. Ali
purchased at auction in his individual capacity.” (Doc. 66 at 8).
Ali argues that the claim must be dismissed as to him because he was not a maker or
drawer of the check. Ali is correct. Badger does not cite, and the Court has not uncovered, any
statute or case law suggesting that adding a person’s driver’s license number to a corporate check
makes that person personally liable on the instrument.
Badger’s second assertion – that Ali was using a corporate check (and funds) for a personal
purchase, and therefore he was a drawer of the check for purposes of Section 68.065(a) – runs
afoul of Florida law governing signatures by representatives on negotiable instruments:
If a representative signs the name of the representative as drawer of
a check without indication of the representative status and the check
is payable from an account of the represented person who is
identified on the check, the signer is not liable on the check if the
signature is an authorized signature of the represented person.
Fla. Stat. § 673.4021(3) (emphasis added). Badger contends that Ali’s signature on the My Fresh
Market Check was unauthorized because he was using corporate funds to buy equipment for
himself. However, Florida’s version of the Uniform Commercial Code defines “unauthorized
signature” as one made “without actual, implied, or apparent authority.” Fla. Stat. § 671.201(44).
Thus, the purpose for which the signature was made is not relevant. For purposes of determining
whether a signature was “authorized,” the issue is the relationship between the signer and the
represented person. Badger has not alleged that Ali lacked the actual (or implied or apparent)
authority to sign My Fresh Market checks, as required to hold him personally liable under Fla.
Stat. § 673.4021(3). Accordingly, it has not alleged that Ali was a maker or drawer of the check
at issue, as required to state a claim against him under Fla. Stat. § 68.065(3). Count III will be
dismissed as to Ali.
Count V – Fraud in the Inducement
In Count V, Badger alleges that by registering for the auction and providing a credit card,
Ali falsely represented that he had sufficient funds to pay for the items for which he was the
successful bidder. (Doc. 66 at 10). Instead, Badger contends, Ali intended to “buy out” the
auction – meaning that he intended to “bid above [his] actual resources and then renegotiate the
price of the property down after the auction.” (Doc. 66 at 11). Badger contends that, due to this
misrepresentation, it was fraudulently induced into entering into an auction contract with Ali.
(Doc. 66 at 10-11).
Under Florida law, “fraud in the inducement” occurs when one party’s ability to negotiate
and make informed decisions as to the contract is undermined by the other party’s pre-contractual
fraudulent behavior. Bradley Factor, Inc. v. United States, 86 F.Supp.2d 1140, 1145 (M.D. Fla.
2000). The elements of a claim for fraud in the inducement in Florida are: (1) that the defendant
misrepresented a material fact; (2) that the defendant knew or should have known that the
statement was false; (3) that the defendant intended that the representation would induce the
plaintiff to enter into a contract or business relation; and (4) that the plaintiff was injured by acting
in justifiable reliance on the misrepresentation. Barnes v. Burger King Corp., 932 F. Supp. 1420,
1425 (S.D. Fla. 1996) (citing cases).
However, to be valid, a fraudulent inducement claim must be separate from any breach of
contract claim. Tiara Condominium Association, Inc. v. Marsh & McLennan Cos., Inc., 110 So.
3d 399, 408 (Fla. 2013) (Pariente, J., concurring) (stating that limitation of economic loss rule to
products liability cases did not affect common law principle requiring that tort claims be
independent of any breach of contract claim). This tort is not independent of the breach. All
Badger is claiming is that, at the time he entered the contract, Ali intended to breach it by not
paying as much as he had bid. The harms of which Badger complains in Count V – loss of
profits, loss of sales, and so on (Doc. 66 at 11) – arise from Ali’s (alleged) failure to pay as much
as he had bid. Misrepresentations relating to the breaching party’s performance of the contract do
not give rise to an independent action in tort. HTP, Ltd. v. Lineas Aereas Costarricenses, S.A.,
685 So. 2d 1238, 1240 (Fla. 1996). Count V will be dismissed.
Analysis – Third Party Complaint
As noted above, in its Third Party Complaint, My Fresh Market contends that, after it
successfully bid on evaporators and coolers at the auction, Badger sold those items to someone
else. (Doc. 76 at 6). Shortly thereafter, My Fresh Market asserts, Fleisner committed fraud by
telling the company that he, personally, would provide substitute evaporators and coolers within
three days. (Doc. 76 at 6). Relying on this promise, My Fresh Market made no effort to obtain
evaporators and coolers on its own. (Doc. 76 at 6). Fleisner did not provide any such substitute
equipment, and My Fresh Market went out of business. (Doc. 76 at 6).
Under Florida law, the elements for actionable fraud are
(1) a false statement concerning a material fact; (2) knowledge by
the person making the statement that the representation is false; (3)
the intent by the person making the statement that the representation
will induce another to act on it; and (4) reliance on the
representation to the injury of the other party.
Lance v. Wade, 457 So. 2d 1008, 1011 (Fla. 1984).
Fleisner raises three arguments in favor of dismissal of this claim. He argues that My
Fresh Market has failed to properly plead detrimental reliance, that My Fresh Market has not pled
fraud with the requisite particularity, and that the claim is barred because it is a disguised breach
of contract claim. While the first two arguments appear to have merit, the Court need only
address the third, because as pled, this is not a fraud claim.
“Fraud” is a deception deliberately practiced in order to secure gain. See, e.g., Alvarez v.
State, 800 So. 2d 237, 238 (Fla. 3d DCA 2001). In the scenario set out in the Third Party
Complaint, Fleisner is not alleged to have sought to secure anything from My Fresh Market.
Rather, he is alleged to have personally (and falsely) promised to give My Fresh Market tens of
thousands of dollars’ worth of refrigeration equipment out of his own pocket. My Fresh Market
alleges that Fleisner intended that it rely on his promise “and not challenge [Badger’s] act in [sic]
selling the original compressors and evaporators to a third party, which did not successfully bid on
those items”. (Doc. 76 at 6-7). While preventing such a challenge might benefit the entity that
sold the equipment to a third party – i.e., Badger – it would not provide any benefit to Fleisner
individually. 3 Accordingly, My Fresh Market has not stated a claim against Fleisner for fraud.
In consideration of the foregoing, it is hereby
In addition, Fleisner is alleged to have promised to provide the replacement equipment
within three days, (Doc. 76 at 6), meaning that it was inevitable that My Fresh Market would learn
in very short order that the promise had been false. My Fresh Market provides no explanation as
to how Badger (or Fleisner) would have expected to benefit from a 72-hour delay by My Fresh
Market in challenging the resale of the equipment.
ORDERED that the Motion to Dismiss Counts III and V of the Amended Complaint (Doc.
71) is GRANTED. Count III is DISMISSED WITHOUT PREJUDICE as to Defendant Zaid
Ali, only, and Count V is DISMISSED WITHOUT PREJUDICE. And it is further
ORDERED that the Motion to Dismiss Third Party Complaint (Doc. 85) is GRANTED,
and the Third Party Complaint (Doc. 76) is DISMISSED WITHOUT PREJUDICE.
DONE and ORDERED in Chambers, Orlando, Florida on August 10, 2017.
Copies furnished to:
Counsel of Record
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