Club Exploria, LLC et al v. Aaronson, Austin, P.A. et al
Filing
87
ORDER granting in part and denying in part 41 Motion to Dismiss the Amended Complaint. Signed by Judge John Antoon II on 10/21/2019. (EK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
CLUB EXPLORIA, LLC and CLUB
EXPLORIA MANAGEMENT, LLC,
Plaintiffs,
v.
Case No: 6:18-cv-576-Orl-28DCI
AARONSON, AUSTIN, P.A. and
AUSTIN N. AARONSON,
Defendants.
ORDE R
Plaintiffs Club Exploria, LLC (Club Exploria) and Club Exploria Management, LLC
(CEM) filed this action against law firm Aaronson, Austin, P.A. (Aaronson P.A.) and
attorney Austin N. Aaronson (Aaronson), alleging claims under the Lan ham Act, the federal
civil RICO statute, and Florida law. (Comp!., Doc. 1). The Court previously granted in part
and denied in part Defendants' motion to dismiss (Doc. 18) and allowed Plaintiffs to file an
amended complaint. (Order, Doc. 33) .
Plaintiffs have since filed an Amended Complaint (Doc. 39), and Defendants once
again move to dismiss, (Mot., Doc. 41 ). The Court having considered the motion, Plaintiffs'
Response (Doc. 46), and pertinent law, Defendants' motion is granted in part and denied
in pa rt.
I.
Factual 1 and Procedural Background
The facts were recounted in detail in this Cou rt's prior Order (Doc. 33) and are more
1
39).
The facts in the Background section are from Plaintiffs' Amended Complaint (Doc.
briefly stated here. Club Exploria is a timeshare resort developer, and owners of Club
Exploria timeshare interests contractually agree to make payments to CEM for fees and
dues. (Am. Campi.
,m 16-17). Aaronson P.A. is allegedly an "exit company" that "profit[s]
by convincing consumers that they have a purportedly 'lawful' way to 'escape' their
[timeshare ownership] obligations, without regard to whether there is any factual or other
basis" for avoiding those obligations. (kl~ 8) . Defendants allegedly provide "timesharerelief 'services'" to owners of Club Exploria timeshare interests, (id.~ 25), and "encourage
timeshare owners to pursue rescission without investigating the facts of their clients'
situation s," (id . ~ 9).
Defendants allegedly "us[e] aggressive and dramatic marketing tactics" on their
website that "suggest that all timeshare owners have an automatic or inherent right to
cancel their contractual oblig ations to pay-if only the consumer knows the right levers to
pull."
(kl ,I 10 (emphasis removed); see also kl ,I 53). As a result of Defendants'
marketing and advertising , several "affected owners" have stopped making payments to
Club Exploria and CEM. (kl ,I 12). And some affected owners "hired Defendants to send
correspondence to Club Exploria [or its predecessor] alluding to fraud as grounds for
rescinding their timeshare purchases." (kl).
Plaintiffs filed this suit on April 13, 2018, (Doc. 1), alleging six counts: (1) tortious
interference with existing contractual relationships; (2) civil RICO violations; (3) violation of
the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) ; (4) false advertising under
the Lanham Act; (5) misleading advertising in violation of section 817.41, Florida Statutes;
and (6) trade libel. Defendants moved to dismiss all counts, and in a prior Order (Doc. 33)
the Court granted that motion in part and denied it in part. Specifically, the Court dismissed
2
Count V (state law false advertising) with prejudice; dismissed Count .II (RICO) and
Plaintiffs' prayer for declaratory relief without prejudice; and otherwise denied Defendants'
motion. The Court allowed Plaintiffs to replead the RICO claim in Cm.int II.
Plaintiffs then fi led an Amended Complaint, restating all of their claims except the
dismissed state law claim for misleading advertising. 2 Defendants now move to dismiss
the repleaded RICO count and two of Plaintiffs' state law claims.
II.
Legal Standards
"A pleading that states a claim for relief 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). "[D]etailed
factual allegations" are not required, but "[a] pleading that offers 'labels and conclusions'
or 'a formulaic recitation of the elements of a cause of action will not do."' Ashcroft v. Igbal,
556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp . v. Twombly. 550 U.S. 544, 555 (2007)).
"To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain sufficient fa ctual
matter, accepted as true, to 'state a claim to relief that is plausible on its face."'
J.sL (quoting
Twombly, 550 U.S. at 570). And in considering a motion to dismiss brought under Rule
12(b)(6), a court limits its "consideration to.the well-pleaded factual allegations, documents
central to or referenced in the complaint, and matters judicially noticed." LaGrasta v. First
Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004).
Ill.
Discussion
A.
RICO (Count II)
Plaintiffs assert a claim under the federal civil RICO statute in Count II. Among the
elements of a RICO claim is "a pattern of racketeering activity." 18 U.S.C. § 1962; see also
2
In light of the dismissal of the original Count V (the state law misleading advertising
claim), in the Amended Complaint the trade libel claim is Count V rather than Count VI.
3
Sedima, S.P.R.L. v. lmrex Co., 473 U.S. 479,496 (1985). "Racketeering activity" is defined
in RICO as including, but not limited to, any of numerous specified violations of criminal
law. See 18 U.S.C. § 1961 (1 )(8) (listing violations of Title 18 of the United States Code
that constitute "racketeering activity"). And a '"pattern of racketeering activity' requires at
least two acts of racketeering activity," 18 U.S.C. § 1961 (5), though two acts may not
always suffice to constitute a pattern, Sedima, 473 U.S. at 496 n.14.
In their initial Complaint, Plaintiffs alleged mail fraud (18 U.S.C. § 1341) and wire
fraud (18 U.S.C. § 1343) as the predicate acts for their RICO claim.
But in ruling on
Defendants' initial motion to dismiss, this Court ruled that Plaintiffs' mail fraud allegations,
which were based on the repeated sending of prelitigation letters, fell short, leaving
Plaintiffs with only one predicate act-wire fraud via website advertising. (Doc. 33 at 9).
In their Amended Complaint, Plaintiffs again rely on the website advertising as one
predicate act, and they attempt to plead "a second predicate act," (Doc. 46 at 5), by alleging
that Defendants "engag[ed] in monetary transactions in property derived from specified
unlawful activity" (18 U.S.C. § 1957)-another of the predicate offenses listed in 18 U.S.C.
§ 1961 (1 )(B). (Am. Comp I.
,r 73).
Plaintiffs' predicate act allegations again are insufficient. The Amended Complaint
does not adequately plead a violation of § 1957, which requires, among other things,
"engag[ing] or attempt[ing] to engage in a monetary transaction in criminally derived
property of a value greater than $10,000." 18 U.S.C. § 1957(a). The Amended Complaint
does not allege a transaction of greater than $10,000 or any facts plausibly supporting any
such transaction.
Instead, it alleges merely that Defendants "engaged in one or more
transactions involving ... criminally derived proceeds that, upon information and belief,
4
exceeded $10 ,000 in isolation or in the aggregate ."
(Am. Campi.
allegations of "in isolation or in the aggregate" 3 are not sufficient.
11
80).
But these
The statute plainly
requires a transaction in excess of $10,000-not an aggregation of transactions that
exceeds $10,000. A transaction less than $10,000 does not qualify. See _
United States v.
Wright, 651 F.3d 764, 772 (7th Cir. 2011) ("Because the financial transaction involved less
than the $10,000 minimum the statute requires, [the defendant]'s conviction for violating
§ 1957 must be set aside."); see also United States v. Rivera-Izquierdo, 850 F.3d 38, 48
(1st Cir. 2017) (discussing Wright and noting "the statutorily imposed $10,000-pertransaction threshold for 'criminally derived property'" in § 1957); United States v.
Bazazpour, 690 F.3d 796, 801 (6th Cir. 2012) .4
In sum , Plaintiffs' § 1957 allegations are insufficient to allege a "second predicate
act.'' and Plaintiffs have not pleaded "a pattern of racketeering activity." Accordingly, their
RICO claim fails to state a claim for which relief can be granted, and Count II will be
dismissed with prejudice .5
3
In their response, Plaintiffs characterize paragraph 80 of the Amended Complaint
as alleging "upon information and belief that Aaronson has engaged in at least one
transaction exceeding $10,000." (Doc. 49 at 7). But that is not what paragraph 80 says ,
and no supporting facts for such an allegation are alleged or asserted in any event.
4
In a footnote in their response memorandum , Plaintiffs assert that in United States
v. Atkins, 881 F.3d 621 (8th Cir. 2018), the Eighth Circuit "suggest[ed] that separate actions
involving , in the aggregate, more [than] $10 ,000 in criminally derived funds satisfies the
$10,000 threshold . . . when the criminally derived funds were used to purchase a single
item. " (Doc. 46 at 6 n.2). But in Atkins the court noted that "[t]he violative transaction was
Atkins' purchase of a $13,000 tractor" with the funds that were deposited piecemeal. 861
F.3d at 626. Other Eighth Circuit cases note the "a transaction" element of§ 1957. See,
~ . United States v. Johnson, 450 F.3d 366, 375 (8th Cir. 2006); United States v. Pizano ,
421 F.3d 707, 722 (8th Cir. 2005).
5
In their motion, Defendants argue additional reasons for dismissal of the RICO
count. First, they argue that Plaintiffs do not allege a RICO "enterprise" distinct from
Aaronson P.A. They are correct on this point. The Court noted in its prior Order-in
rejecting arguments about an insufficient "association in fact" enterprise-that Plaintiffs had
5
B.
Tortious Interferen ce (Count I) and FDUTPA (Count Ill)
Defendants also argue in this second motion to dismiss that Plaintiffs' state law
claims for tortious interference and violation of FDUTPA are barred by Florida's "single
action rule," which "prohibits defamation claims from being re-cast as additional, separate
torts . .. if all of the claims arise from the same defamatory publication," Kinsman v.
Winston, Case No. 6:15-cv-696-Orl-22GJK, 2015 WL 12839267, at *5 (M.D. Fla. Sept. 15,
20 15) . Defendants assert that Counts I (tortious interference) and Ill (FDUTPA) are barred
under this rule because they are based on the defamatory statements that are the subject
of Plaintiffs' trade libel claim in Count V. Plaintiffs respond that Defendants may not raise
this argument in their second Rule 12(b)(6) motion because they did not raise it in their
initial motion and that the argument fails on its merits in any event. Plaintiffs are correct on
both scores.
First, although Defendants raised numerous arguments in their first 12(b)(6) motion,
the single action rule as a bar to Counts I and Il l was not one of them-th ough it was
available at that time. Thus, it is not proper for Defendants to now raise this argument in
their second 12(b)(6) motion. See Fed. R. Civ. P. 12(g)(2) ("[A] party that makes a motion
under this rule must not make another motion under this rule raising a defense or objection
that was available to the party but omitted from its earlier motion."); Leyse v. Bank of Am.
sufficiently alleged a legal-entity enterprise-Aaronson P.A. (Doc. 33 at 8). But Plaintiffs
have not established a basis for Aaronson P.A. itself to be liable as a RICO "person," as
the only "enterprise" that Plaintiffs allege is Aaronson P.A. itself. See generally United
States v. Goldin Indus., Inc., 219 F.3d 1268 (11th Cir. 2000) (en bane) (holding that the
RICO "person" must be distinct from the RICO enterprise). Thus, even aside from the
ruling in the text of this Order based on a lack of predicate acts, the RICO count would be
due to be dismissed as against Aaronson P.A. (but not Aaronson) on this basis as well.
Defendants also argue that Plaintiffs have not sufficiently alleged a relationship
between predicate acts. The Court has found that Plaintiffs have not sufficiently alleged
two predicate acts, and thus the issue of relatedness does not come into play here.
6
Nat'I Ass'n, 804 F.3d 316, 320-21 (3d Cir. 2015) (finding it improper for district court to
consider successive 12(b)(6) motion, noting that "[t]he procedural bar of Rule 12(g)(2) . ..
covers all motions to dismiss for failure to state a claim, regardless of the grounds
asserted"); see also In re Apple iPhone Antitrust Litig., 846 F.3d 313 , 317-20 (9th Cir.
2017) (noting that "Rule 12(g)(2) provides that a defendant who fails to assert a failure-testate-a-claim defense in a pre-answer Rule 12 motion cannot assert that defense in a later
pre-answer motion under Rule 12(b)(6), but the defense may be asserted in other ways,"
and collecting cases on the issue).
Second, even if it were proper for the Court to entertain this argument in the face of
Defendants' failure to raise it in their first motion, the court cannot conclude that the single
action rule bars Count I or Count Ill. As an initial matter, there is some debate among
courts about whether the rule applies only where the defamation claim in the case is
barred-by, for example, the statute of limitations or an immunity defense-or applies also
in cases where that claim remains viable. Compare, e.g., Kinsman, 2015 WL 12839267,
at *5-6, with Fin. Info. Techs., Inc. v. Lopez, Case No. 8:15-cv-2784-T-30AEP, 2016 WL
688052, at *3 (M.D. Fla. Feb. 19, 2016) . This Court need not weigh in on this debate,
however, because the rule only applies where the secondary counts are based solely on
the facts underpinning the defamation count. See, e.g., Fridovich v. Fridovich, 598 So. 2d
65, 69 (Fla. 1992) ("Obviously, if the sole basis of a complaint for emotional distress is a
privileged defamatory statement, then no separate cause of action exists." (emphasis
added)); Callaway Land & Cattle Co. v. Banyan Lakes C. Corp., 831 So. 2d 204, 208 (Fla .
4th DCA 2002) (finding claims barred where they were "based on the same facts and
circumstances as the . . . disparagement claim").
7
Here, Plaintiffs aptly note that their
tortious interference and FDUTPA claims are not based solely on the website statements
that ground their trade libel claim . Instead, those counts include allegations regarding
letters Defendants sent to the owners and advice that Defendants gave to the ownersnot defamatory statements published about Plaintiffs. Thus, even assuming that the single
action rule could apply here-where the trade libel claim is still viable-it does not bar these
other claims at this stage of the case. Defendants' motion is denied insofar as it is directed
at Counts I and Ill.
IV.
Conclusion
Accordingly, it is ORDERED that Defendants' Motion to Dismiss the Amended
Complaint (Doc. 41) is GRANTED in part and DENIED in part. The motion is granted as
to Plaintiffs' RI CO claim (Count II), which is hereby dismissed with prejudice. The motion
JO N ANTtJONII
United States District Judge
I
Copies furnished to:
Counsel of Record
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