Scharrer et al v. Fundamental Administrative Services, LLC et al
Filing
73
ORDER: The Motion to Dismiss on Behalf of Defendant Fundamental Administrative Services, LLC 49 and Motion of Defendant, Christine Zack, to Dismiss Amended Complaint 50 is GRANTED. Defendant Fundamental Administrative Services, LLC's Motio n to Strike Portions of Plaintiffs' Opposition 64 and Motion of Defendant, Christine Zack, to Strike Portions of Plaintiffs' Memorandum in Opposition to Defendants' Motions to Dismiss Amended Complaint 65 are DENIED as moot. Per t he Florida Supreme Court's opinion in Goldberg v. Merrill Lynch Credit Corp., this case is dismissed without prejudice. Plaintiffs may seek a determination from the Florida Supreme Court pursuant to the advisory opinion procedures of the Rules Regulating the Florida Bar within 60 days from the date of this Order. If Plaintiffs fail to initiate the process for seeking such an advisory opinion within 60 days, dismissal shall be with prejudice. The Clerk is directed to close this case and deny any pending motions as moot. Signed by Judge James S. Moody, Jr on 7/30/2013. (LN)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
TRUSTEE BETH ANN SCHARRER,
as Chapter 7 Trustee for the Bankruptcy
Estate of Fundamental Long Term Care,
Inc., et al.,
Plaintiffs,
v.
Case No. 8:12-cv-1855-T-30MAP
FUNDAMENTAL ADMINISTRATIVE
SERVICES, LLC, et al.,
Defendants.
_____________________________________/
ORDER
THIS CAUSE comes before the Court upon the Motion to Dismiss on Behalf of
Defendant Fundamental Administrative Services, LLC (Dkt. 49), Motion of Defendant,
Christine Zack, to Dismiss Amended Complaint (Dkt. 50), Plaintiffs’ Memorandum in
Opposition to Defendants’ Motions to Dismiss Amended Complaint (Dkt. 59), Defendant
Fundamental Administrative Services, LLC’s Motion to Strike Portions of Plaintiffs’
Opposition (Dkt. 64), Motion of Defendant, Christine Zack, to Strike Portions of Plaintiffs’
Memorandum in Opposition to Defendants’ Motions to Dismiss Amended Complaint (Dkt.
65), Plaintiffs’ Response in Opposition to Defendants’ Motions to Strike (Dkt. 70), and
Defendants’ Amended Joint Reply to Plaintiffs’ Opposition to Defendants’ Motion to
Dismiss (Dkt. 69). The Court, having reviewed the motions, responses, and being otherwise
advised in the premises, concludes the motions to dismiss should be granted and the motions
to strike should be denied as moot.
BACKGROUND
Plaintiffs, Beth Ann Scharrer, as Chapter 7 Trustee for the estate of Fundamental Long
Term Care, Inc. (“FLTCI”), and Trans Health Management, Inc. (“THMI”), the wholly
owned subsidiary of FLTCI, allege in their amended complaint that the Defendants,
Fundamental Administrative Services, LLC (“FAS”), Christine Zack, and Kristi Anderson1
controlled and directed THMI’s defense of wrongful death actions by instructing the
withdrawal of THMI’s local counsel of record, resulting in large default judgments. FLTCI
and THMI allege that this involvement with the wrongful death actions constitutes the tort
of the unauthorized practice of law.
Plaintiffs brought the same cause of action premised on the same operative facts in
the original complaint, which the Court dismissed for lack of personal jurisdiction. In the
Court’s order dismissing the original complaint, the Court held that FLTCI and THMI failed
to allege sufficient facts to support either general jurisdiction or specific jurisdiction through
the “carrying on a business” or tortious act prongs of the Florida long-arm statute. Fla. Stat.
§ 48.193(2) & (1)(a) & (b). The Court specifically limited FLTCI and THMI’s right to
amend to establish personal jurisdiction by alleging a valid cause of action for the
1
Plaintiffs voluntarily dismissed with prejudice all claims against Defendant Kristi Anderson.
See Dkt. 71 & 72. Therefore, the Court will not address her motion to dismiss and motion to strike.
Page 2 of 24
unauthorized practice of law.2 The Court granted leave to amend to establish personal
jurisdiction through Fla. Stat. § 48.193(1)(b), not through Fla. Stat. § 48.193(1)(a) & (2).
Accordingly, the Court will not revisit those issues which it has already analyzed,
particularly because the amended complaint also fails for the same reasons to sufficiently
allege facts supporting either general jurisdiction or that Defendants were “carrying on a
business” in Florida.3
In order to satisfy the tortious prong of the Florida long-arm statute, Plaintiffs have
included a host of allegations in their amended complaint in an attempt to allege a cause of
action based on the unauthorized practice of law.4 The gravamen of Plaintiffs’ claim remains
that Defendants made “[t]he strategic decision and defense strategy to cease all defense of
the Nursing Home Cases.” Dkt. 46, Am. Compl. ¶ 49. Although Plaintiffs admit that local
Florida counsel, the law firm of Quintairos, Prieto, Wood & Boyer, P.A. (“Quintairos Firm”)
appeared in court on behalf of THI and THMI, Plaintiffs allege that “[t]he extent of the
Defendants’ control over the services provided by local Florida counsel rendered the
2
“This case is dismissed without prejudice to Plaintiffs to amend within twenty (20) days
from the date of this Order to state a cause of action for the unauthorized practice of law that would
establish personal jurisdiction over the Defendants pursuant to Fla. Stat. § 48.193(1)(b).” Dkt. 44.
3
Plaintiffs attempt to avert this conclusion by discussing a group of Samaritan Care entities
that conduct business in Florida in their response to the motions to dismiss, which they allege are
the alter-egos and predecessors to FAS. Even if that were true and properly alleged in the complaint
(instead of raised in their response), those entities were dissolved in 2008.
4
Many of these allegations are completely irrelevant to the default judgments entered in the
wrongful death actions. Accordingly, they cannot serve as the basis of establishing personal
jurisdiction through the tortious prong of the Florida long-arm statute because the facts establishing
the cause of action must also give rise to personal jurisdiction. Fla. Stat. § 48.193(1).
Page 3 of 24
Defendants the actual providers of the legal services on behalf of THMI in Florida,
regardless of the lack of official appearance in the Nursing Home Cases.” Dkt. 46, Am.
Compl. ¶ 77. Thus, Plaintiffs’ alleged tort of the unauthorized practice of law is based on the
theory of undue influence over local counsel of record so that the Defendants’ actions can
be considered the practice of law.
To establish this novel theory, Plaintiffs alleged the following allegations, many of
which mirror allegations made in the original complaint:
As part of its control and direction of THMI’s defense, Zack and Anderson, on
behalf of FAS, communicated with opposing parties as the purported
representatives of THI and THMI, served as contact for conferences on legal
disputes, argued and advocated the merits of the Nursing Home Cases,
evidentiary issues, and discovery matters. The Defendants, through their
control and direction of THMI’s defense, have interfered with various courts’
administration of the Nursing Home cases, and severely injured THMI in the
process. Id. ¶¶ 45-46.
On April 28, 2010, in each of the Nursing Home Cases, Anderson sent an
email to THMI’s attorneys in Florida directing them to cease any defense of
their respective cases and to withdraw as counsel for both THMI and THI. Id.
¶ 48.
Zack and Anderson’s control of the defense of THMI in the Nursing Home
Cases was not merely providing assistance to a member of The Florida Bar,
but was instead the direct provision of legal services in Florida. Id. ¶ 78.
By controlling, directing, and participating in THMI’s defense and
representing themselves in Florida as counsel for THMI, Zack and Anderson
construed and interpreted the legal effect of Florida law and statutes on behalf
of THMI, and made decisions on behalf of THMI that required legal skill and
a knowledge of the law greater than that possessed by the average citizen. Id.
79.
The Defendants engaged in the unauthorized practice of law in Florida in
violation of decisions by the Florida Supreme Court, by among other things,
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preparing or assisting in the preparation of legal documents for THMI,
corresponding with opposing parties or the attorneys of opposing parties as the
representatives of THMI, and by holding a licensed Florida attorney out to the
public as THMI’s counsel, when, in fact, Defendants were controlling,
orchestrating and conducting the defense of THMI. Id. ¶ 92.
As counsel for FAS’ customers, Zack has traveled to Florida in order to attend
mediations and monitor jury trials in Florida. Zack was physically present in
Florida at the outset of trial in the Nunziata case, and attempted to solicit the
services of a local attorney to represent THMI. Zack has traveled to Florida
to personally retrieve litigation files pertaining to the defense of THMI. Id.
¶ 94.
In the Nursing Home cases, Anderson personally supervised, directed and
controlled the employment and activities of Florida lawyers, including
supervising, directing and controlling the actions taken by Florida lawyers in
Florida courts. Anderson personally instructed Florida defense counsel to file
particular pleadings in the Nursing Home cases, to cease their defense of
THMI in the Nursing Home Cases, and to wrongfully and/or unlawfully
conceal a pending claims bar date. Anderson answered discovery requests
purportedly on behalf of THMI knowing such discovery would be filed with
the Florida courts. Id. ¶ 96.
Upon local counsel’s withdrawal in Jackson, Anderson was personally
identified by the Pinellas County Circuit Court as the representative to receive
orders, filings and other documents on behalf of THI and THMI. Id. ¶ 97.
Defendants again move to dismiss the amended complaint based on the Plaintiffs’
failure to allege facts to support personal jurisdiction under Fla. Stat. § 48.193(1)(b) and for
failure to state a cause of action under Rule 12(b)(6). Plaintiffs respond that they have
sufficiently alleged a cause of action for the unauthorized practice of law. The Court
disagrees. Accordingly, the motions to dismiss should be granted.
Page 5 of 24
PERSONAL JURISDICTION STANDARD OF REVIEW
A federal court sitting in diversity may properly exercise personal jurisdiction over
a defendant only if the plaintiff meets the requirements of the state long-arm statute and the
Due Process Clause of the Fourteenth Amendment. Posner v. Essex Ins. Co., Ltd., 178 F.3d
1209, 1214 (11th Cir. 1999); Venetian Salami Co. v. Parthenais, 554 So. 2d 499, 502
(Fla.1989). Thus, a plaintiff must show defendant’s activities and contacts in Florida satisfy
Florida’s long-arm statute to obtain personal jurisdiction. “If the plaintiff satisfies this
requirement, a defendant who wishes to challenge personal jurisdiction must provide
admissible evidence that refutes the essential jurisdictional facts set forth in the plaintiff’s
complaint.” Kitroser v. Hurt, 85 So. 3d 1084, 1087 (Fla. 2012). “If a defendant fully refutes
the jurisdictional allegations, then the burden shifts back to the plaintiff to prove the basis for
jurisdiction.” Id.
If the Court concludes that personal jurisdiction exists under Florida’s long-arm
statute, it must next consider whether defendant’s contacts with the state of Florida are
sufficient to satisfy the Due Process Clause of the Fourteenth Amendment. Venetian Salami
Co., 554 So. 2d at 501. The due process inquiry requires the Court to determine whether a
defendant has minimum contacts with the forum state and whether the exercise of jurisdiction
would “offend traditional notions of fair play and substantial justice.” Internet Solutions
Corp. v. Marshall, 557 F.3d 1293, 1295-96 (11th Cir. 2009).
Page 6 of 24
DISCUSSION
I.
Florida Statute § 48.193(1)(b) Tortious Act
Florida Statute § 48.193(1)(b) provides that a defendant, “whether or not a citizen or
resident of this state,” is subject to the jurisdiction of Florida courts for any cause of action
arising from “committing a tortious act within this state.” Florida courts construing this
provision have noted that the alleged tortfeasor’s physical presence in Florida is not required.
Wendt v. Horowitz, 822 So.2d 1252, 1260 (Fla. 2002). Rather, a tortious act “can occur
through telephonic, electronic, or written communications into Florida” as long as the cause
of action arises from the communications directed into the state. Id.
The Eleventh Circuit has held that “[i]n our technologically sophisticated world
permitting interstate business transactions by mail, wire, and satellite signals, physical
presence by the nonresident defendant is not necessary for personal jurisdiction in the forum
state.” Cable/Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829, 857
(11th Cir. 1990) (citing Burger King, 471 U.S. at 476). See generally Brennan v. Roman
Catholic Diocese of Syracuse New York, 2009 WL 941765 (11th Cir. April 9, 2009)5
(vacating district court’s dismissal for lack of personal jurisdiction where plaintiff suffered
injury in Florida arising from defendant’s alleged intentional misconduct in New York and
its fraudulent representations directed to him in Florida); Horizon Aggressive Growth, L.P.,
5
Unpublished opinions are not binding precedent in the court; however they may be cited as
persuasive authority. See 11th Cir. R. 36-2.
Page 7 of 24
421 F.3d at 1168 (11th Cir. 2005) (reversing district court’s dismissal for lack of personal
jurisdiction under Florida’s long-arm statute where complaint alleged defendant’s
communications from California to plaintiff in Florida intended to deceive and defraud
plaintiff); Acquardo v. Bergeron, 851 So. 2d 665, 671 (Fla. 2003) (finding jurisdiction under
Fla. Stat. § 48.193(1)(b) where an out-of-state defendant allegedly defamed a Florida resident
during a single phone call made into Florida).
However, even if out-of-state communications can support the basis for a tort
committed within Florida, the complaint must state a cause of action for which relief can be
granted. See Russo v. Fink, 87 So. 3d 815, 818-19 (Fla. 4th DCA 2012) (finding that
defendant was not within reach of long-arm statute because plaintiff failed to allege sufficient
facts in complaint to state cause of action for tortious acts in Florida); Silver v. Levinson, 648
So. 2d 240, 241 (Fla. 4th DCA 1995) (stating that “because the threshold question of
personal jurisdiction turns on whether defendant committed an intentional tort in Florida, we
must also necessarily review the complaint to determine whether it states a cause of action”).
Accepting the allegations as true, a court must first determine whether a cause of action has
properly been pled before it can find Florida’s tortious act prong of the long-arm statute
satisfied.
a.
Goldberg v. Merrill Lynch Credit Corporation
In 2010, the Florida Supreme Court interpreted Rule 10-7.1(d)(3) of the Rules
Regulating the Florida Bar as permitting a party to bring a private civil action against an
Page 8 of 24
unlicensed practitioner to recover fees and damages.6 Goldberg v. Merrill Lynch Credit
Corp., 35 So. 3d 905, 907 (Fla. 2010). Specifically, the Florida Supreme Court made two
important rulings: (1) “ [parties] have standing to seek restitution of any claimed damages
and are not jurisdictionally barred from initiating a civil action for recovery of any damages
caused by the unlicensed practice of law;”7 and (2) “[t]o state a cause of action for damages
under any legal theory that arises from the unauthorized practice of law, we hold that the
pleading must state that this Court has ruled that the specified conduct at issue constitutes the
unauthorized practice of law.” Id. This latter element, pleading a prior ruling by the Florida
Supreme Court that states the alleged conduct constitutes the unauthorized practice of law,
does not require that the accused defendant has already been subject to a Florida Bar
proceeding. Id. at 908. Rather, it eliminates a cause of action premised on conduct that is
an issue of first impression before the Florida Supreme Court. Id.
The Court highlights the specificity of the Florida Supreme Court’s language: “a cause
of action for damages under any legal theory that arises from the unauthorized practice of
law.” (emphasis added). This is not the creation of an entirely novel tort of the unauthorized
practice of law; rather, the unauthorized practice of law is a foundational prerequisite to
6
Rule 10-7.1(d)(3) states in pertinent part: “Nothing in this section shall preclude an
individual from seeking redress through civil proceedings to recover fees or other damages.”
7
Zack argues this language mandates that only restitution claims may be brought under
Goldberg’s theory and that Florida’s long-arm statute does not include claims sounding in
restitution. However, a clear reading of the case does not support this assertion. The Florida
Supreme Court repeatedly stated a party may bring a cause of action for damages and there is no
language implying those damages are limited to restitution claims.
Page 9 of 24
bringing another tort arising from the same facts. Id. at 906 (discussing that petitioners
brought claims for unjust enrichment and for money had and received based on the same
activity which was the unauthorized practice of law). Here, Plaintiffs fail to mention another
tort (and Defendants do not object to that failure), although the Court assumes they intended
to allege legal malpractice.8
b.
Florida Supreme Court Cases
In an attempt to find one similar case, Plaintiffs littered their amended complaint with
citations to ten cases. The standard is high though: “the specified conduct at issue” must
have been held to be the unauthorized practice of law by the Florida Supreme Court.
Goldberg, 35 So. 3d at 907 (emphasis added). It should be obvious that a claim premised
upon the unauthorized practice of law in Florida must allege actions taken by defendants in
Florida.9 Plaintiffs’ inability to identify a single, factually analogous case proves the demise
of their claim. The Court will now analyze and distinguish each of the ten cases from the
alleged facts in the amended complaint.
8
A keycite of Goldberg. v. Merrill Lynch reveals that no court has relied upon it for finding
a sufficiently pled private right of action based on the unauthorized practice of law. Only two cases
even cite to it: In re Harris, 458 B.R. 591, 596 (Bkr. N.D. Fla. 2011) (holding that the Florida
Supreme Court had not ruled that the alleged conduct constitutes the unauthorized practice of law),
and Morningstar Holding Corp. v. G2, LLC, 2012 WL 287517, at *9 (D. Idaho Jan. 31, 2012)
(holding same). Accordingly, there is no precedent, either binding or persuasive, for this Court to
rely upon in its determination that the unauthorized practice of law is an independent tort.
9
The Court’s order dismissing the original complaint cites Rule 4-5.5(b) of the Rules
Regulating the Florida Bar that sets forth the generally prohibited conduct constituting the
unlicensed practice of law in Florida. See Dkt. 44. Besides holding out to the public, all other
prohibited activities require action undertaken in Florida.
Page 10 of 24
i.
The Florida Bar v. Town, 174 So. 2d 395 (Fla. 1965)
In Town, an accountant held himself out to be “a specialist in the incorporation of
businesses” and offered to handle the details of corporate formation. 174 So. 2d 395, 396.
The Florida Supreme Court held that “the preparation of charters, bylaws and other
documents necessary to the establishment of a corporation, being the basis of important
contractual and legal obligations, comes within the definition of the practice of law.” Id. at
397. Accordingly, respondent was permanently enjoined “from forming corporations for
others, including the preparation of charters, bylaws, resolutions, and other documents
incidental to the contractual rights of the corporation, its incorporators, and stockholders.”
Id.
Plaintiffs cite to Town for the general proposition that “[t]he practice of law is defined
to include the giving of legal advice and counsel to others as to their rights and obligations
under the law even if such matters may not then or ever be the subject of proceedings in a
court.” Dkt. 59 at 23. This broad definition, although mentioned as a foundation for why
Town’s activities were not allowed, clearly fails to meet the Florida Supreme Court’s
admonition that the case cited must have held “that the specified conduct at issue constitutes
the unauthorized practice of law.” Goldberg, 35 So. 3d at 907. There are no allegations that
Zack or Anderson drafted any corporate documents establishing a corporation in Florida,
much less the establishment of THMI.
Page 11 of 24
ii.
Tannenbaum v. Gerstein, 267 So. 2d 824 (Fla. 1972)
In Tannenbaum, petitioner was under suspension when he admittedly prepared
contracts, drew up corporate minutes, and advised corporation’s executives. 267 So. 2d 824,
826. The Florida Supreme Court affirmed the Circuit Court of Dade County in disbarring
petitioner because it found that, “with [petitioner’s] corporate background and twenty years’
experience as a practicing attorney in this state, [he was] by his own admission in control of
a corporation’s legal affairs.” Id. Like Town, Plaintiffs cite to Tannenbaum for the general
proposition that “the practice of law is not limited to litigation in the courts, but includes the
giving of legal advice and counsel, and the preparation of legal instruments and contracts by
which legal rights are defined or secured, regardless of whether or not such matters are or
may be the subject of litigation.” Id. at 826-27. Again, the specific conduct of contract
drafting is not at issue in this case, and Tannenbaum fails to support Plaintiffs’ cause of
action for the unauthorized practice of law.
iii.
The Florida Bar v. Gordon, 661 So. 2d 295 (Fla. 1995) and The Florida Bar v.
Warren, 655 So. 2d 1131 (Fla. 1995)10
Craig Warren, d/b/a Craig D. Warren and Associates, P.A., was an unlicensed person
who purported to represent various persons in litigation, collected fees from such persons
10
In their response, Plaintiffs note that these first four mentioned cases “are not provided to
the Court as the precedent required by Goldberg v. Merrill Lynch Credit Corp., 35 So. 3d 905 (Fla.
2010). Instead, these cases are cited to establish that the practice of law in Florida is much broader
than the specific activities described in Rule 4-5.5(b) of the Rules Regulating the Florida Bar.” Dkt.
59 at 23 n.17. Although that may be true, the argument that these cases can support the finding that
Defendants engaged in the unauthorized practice of law are appropriately addressed to the Florida
Supreme Court, which must decide all instances of first impression.
Page 12 of 24
under the guise of being a lawyer, and failed to perform the promised services. 655 So. 2d
1131, 1132. Farrell Gordon engaged in the exact same activities, except he did not have a
fictitious law firm. 661 So. 2d 295, 295. The Florida Supreme Court held this was the
unlicensed practice of law and enjoined Warren and Gordon from doing numerous activities,
including: advising persons of their rights and duties under Florida or federal law; giving
advice and making decisions on behalf of others that requires legal skill; explaining legal
remedies and possible courses of action to individuals that affect their procedural and
substantive legal rights, duties, and privileges; corresponding with parties or attorneys of
parties as the representative of a client relative to legal matters; and preparing pleadings and
other legal documents for third parties. Warren, 655 So. 2d at 1132-33; Gordon, 661 So. 2d
at 296.
Plaintiffs incorrectly rely upon the list of prohibitions as a definition of what
constitutes the unauthorized practice of law. There are no allegations in the amended
complaint that FAS, either through Zack or Anderson, advertised as a law firm, represented
THMI in litigation, held themselves out to opposing counsel as THMI’s legal counsel (not
merely representatives in a corporate capacity), collected fees under the guise of being
lawyers, or failed to perform promised legal services. The factual differences are selfexplanatory.
Moreover, Plaintiffs’ conclusory allegations that Defendants represented THMI in the
nursing home cases fails to meet basic pleading requirements. Legal conclusions are not
entitled to the assumption of truth. Ashcroft v. Iqbal, 556 U.S. 662 (2009). On the contrary,
Page 13 of 24
legal conclusions “must be supported by factual allegations.” Id. Indeed, “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). Here, Plaintiffs fail to explain in what capacity Defendants represented THMI to
opposing counsel, in what court they represented THMI, or on what pleading they
represented THMI. Without more, these allegations are too conclusory in nature to establish
a claim based on the unauthorized practice of law.
iv.
The Florida Bar v. Consolidated Business & Legal Forms, Inc., 386 So. 2d 797
(Fla. 1980)11
In Consolidated Business & Legal Forms, Inc., 386 So. 2d 797 (Fla. 1980) (per
curiam), the Florida Supreme Court held that a Florida corporation which was “engaged in
the business of offering legal services through members of The Florida Bar who [we]re its
full time employees” was engaged in the unauthorized practice of law because the officers
and stockholders, who were non-lawyers, controlled the corporation and their sole purpose
was personal financial gain. Id. at 798. The Florida Supreme Court made several important
observations. First, this corporation “differs from businesses who maintain lawyers as full
time employees primarily to further a course of business other than the practice of law.” Id.
Second, the non-lawyer officers controlled the lawyer employees to such a degree as to
encourage “a high volume turnover of clients in order to increase his income” by
11
The Court already discussed this case in its order dismissing the original complaint.
Because Plaintiffs included new allegations directed at meeting the standard set in Consolidated
Business, the Court will address it again here.
Page 14 of 24
“maintaining cost efficiency and profit.” Id. Third, if the corporation ceased to provide legal
services, “then it would cease to exist as an income producing enterprise.”
The differences between the structure and practice of FAS and Consolidated Business
are glaring. FAS is not a Florida corporation nor are Zack and Anderson licensed to practice
in Florida. Unlike Consolidated Business, FAS does not maintain any offices in Florida. Id.
at 799. FAS retains Zack and Anderson primarily to further their business of “administrative
back office support” to medical facilities. There are no allegations that FAS encourages Zack
or Anderson to have a “high volume turnover of clients in order to increase [its] income.”
And FAS certainly would continue to exist in the absence of the alleged advising and
directing of THMI’s defense in the Florida litigation.
In the original complaint, Plaintiffs alleged that FAS’ purpose was to provide a range
of “administrative back office support services to long-term care companies, providers,
skilled nursing facilities, long-term acute care hospitals, outpatient therapy care clinics, and
hospices,” not legal services. Now, in an effort to conform to Consolidated Business,
Plaintiffs allege that “[a]mong other services, FAS, by and through its legal and risk
management departments, performs legal services for third parties in exchange for a fee.”
Dkt. 46, Am. Compl. ¶ 8. Plaintiffs also allege that “[i]n Florida, FAS sufficiently held itself
out to the public as a provider of legal services for the Florida public, such that FAS has been
hired by Samaritan Care Hospice of Osceola, Inc., an Orlando-based company that is
registered to conduct and actively conducts business in Florida.” Id. ¶ 9.
Page 15 of 24
These new allegations are insufficient to bring FAS within the purview of
Consolidated Business. Not only does FAS still exist to provide mostly non-legal services,
Plaintiffs allegations are once again conclusory at best. How does FAS “hold itself out to the
public as a provider of legal services”? This legal conclusion must be supported with factual
allegations. The amended complaint does not address how FAS advertised to Samaritan.
Rather, that relationship likely arose because Samaritan is a related entity to FAS, which
Plaintiffs recognize in their response. Lastly, FAS’ services for Samaritan are irrelevant to
its purported “legal services” to THMI in the wrongful death actions, and thereby cannot
support a cause of action premised upon it.
Thus, Consolidated Business does not set forth an applicable precedent as to satisfy
the Florida Supreme Court’s pleading requirement to state a cause of action for the
unauthorized practice of law.
v.
The Florida Bar v. Glueck, 985 So. 2d 1052 (Fla. 2008) and The Florida Bar v.
Hunt, 429 So. 2d 1201 (Fla. 1983)
Glueck primarily addressed when an improper partnership exists between a consulting
company and an attorney. The Florida Bar found that Glueck had violated the Rule of
Professional Conduct 4-5.4(c), which states: “A lawyer shall not form a partnership with a
nonlawyer if any of the activities of the partnership consist of the practice of law.” 985 So.
2d 1052, 1056. An improper business relationship, although a reason for discipline by the
Page 16 of 24
Florida Bar, is not the equivalent of the unauthorized practice of law. Thus, that part of
Glueck is irrelevant to the instant case.12
In Glueck, the Florida Supreme Court did find that Glueck assisted a nonlawyer in the
improper provision of legal services, namely the selection of legal forms to be completed for
clients. Id. at 1057. Unfortunately for Plaintiffs, the amended complaint does not allege that
Zack or Anderson selected and completed legal forms on behalf of THMI for Florida
litigation. In this regard, it is inapposite.
Hunt also discusses the improper formation of a professional association where
nonlawyers were corporate officers and directors, amidst a host of other violations equally
inconsequential to the instant case. 429 So. 2d 1201. The Plaintiffs cite Hunt for the “settled
position that a corporation is prohibited from practicing law and cannot do so indirectly by
employing lawyers to practice for it.” Dkt. 59 at 28 n.18.
The only relevant holding relates to Hunt’s supervision of a disbarred attorney, Paul
C. Mueller, who he permitted to prepare pleadings and to have direct contact with clients in
two specific cases. 429 So. 2d at 1204. Plaintiffs allege that Defendants “prepar[ed] or
assist[ed] in the preparation of legal documents for THMI.” Dkt. 46, Am. Compl. ¶ 92.
First, assisting in preparing pleadings is not what the Florida Supreme Court held was the
unlicensed practice of law. Second, the amended complaint does not identify what legal
12
Plaintiffs appear to cite Glueck purely for its proposition related to the improper formation
of a partnership with a nonlawyer.
Page 17 of 24
documents Zack or Anderson prepared nor does it allege that they did so independent of the
Quintairos Firm.
Lastly, the Plaintiffs fail to allege facts that would permit a reasonable inference that
their direct communications with THMI gave it the impression that an attorney-client
relationship had been formed and that FAS was acting as THMI’s legal counsel in the
wrongful death cases. Unquestionably, FAS directly communicated with THMI because of
their business relationship to provide administrative services.
However, direct
communication with a client is alone insufficient to render it the unauthorized practice of
law. Hunt simply does not show the mirror “specified conduct” required by Goldberg.
vi.
The Florida Bar v. We The People Forms & Services Center of Sarasota, Inc., 883
So. 2d 1280 (Fla. 2004)
We The People Forms and Services Center of Sarasota, Inc., and Danielle Kingsley
were not members of the Florida Bar, but had advertised to the public that they could
complete legal forms, directly met with and provided legal advice to clients, and contacted
opposing parties and the attorneys for opposing parties on behalf of clients in reference to
legal matters. 883 So. 2d 1280, 1281. The referee identified by name at least eight cases in
which they had improperly done so. Based on these activities, the Florida Supreme Court
found they had engaged in the unauthorized practice of law by:
(1) providing customers with legal assistance in the selection, preparation, and
completion of legal forms; (2) correcting customers’ errors or omissions; (3)
preparing or assisting in the preparation of pleadings and other legal
documents for their customers; (4) corresponding with opposing parties or the
attorneys of opposing parties as the representative of a customer in a legal
Page 18 of 24
matter; (5) hiring a licensed Florida attorney to provide legal advice to
respondents’ customers; (6) holding a licensed Florida attorney out to their
customers as respondents’ supervising attorney; and (7) advertising their
services in such a way that led the public to believe that respondents were
capable of providing legal services.
Id. at 1281-82.
Plaintiffs latch onto the above description and summarily allege it against Defendants
in the amended complaint. See Am. Compl. ¶ 92. However, several key differences
distinguish it from the instant case. First, it is never alleged that Defendants selected or
completed legal forms on behalf of THMI. Second, We The People hired an attorney, Robert
Norgard, to provide legal services to their clients yet held him out to be their supervising
attorney while they performed legal services. That authority structure is absent between FAS
and the Quintairos Firm. There are no allegations that FAS hired the Quintairos Firm on its
behalf in order to assist in FAS’ provision of legal services to THMI. The Quintairos Firm
was hired by THMI to be its legal counsel in the wrongful death actions, even if FAS, in its
capacity as a provider of administrative services, selected the law firm to be hired by THMI.
More important, there are no allegations that THMI believed FAS was its legal representative
in the wrongful death actions or that Zack or Anderson told opposing counsel they were
THMI’s attorneys in those cases.
Finally, Plaintiffs’ allegations fail to identify what legal documents Zack or Anderson
prepared for THMI or who they corresponded with as the representatives of THMI. The
amended complaint admits they did not appear as counsel of record before any Florida court.
Page 19 of 24
Legal conclusions are inadequate to state a cause of action. Accordingly, the factual
similarities run short yet again.
vii.
The Florida Bar v. Neiman, 816 So. 2d 587 (Fla. 2002) and The Florida Bar v.
Dale, 496 So. 2d 813 (Fla. 1986)
In Neiman, a convicted felon acted as an attorney for over seven years. The Florida
Supreme Court found Neiman to have been engaged in the unauthorized practice of law by:
serving as a primary contact for conferences on legal disputes; holding himself
out as an attorney in dealings with others; attempting to argue and advocate the
merits of cases, the applicability of the law, evidentiary issues, liability issues,
discovery matters, and settlement matters with opposing counsel; attempting
to analyze statutory and case law and to discuss it with clients and opposing
counsel; trying to advise clients on the strengths and weaknesses of their cases
and on how to proceed; actively participating in and presenting clients’ cases
at mediation sessions; actively participating in and presenting the
complainants’ cases at settlement sessions; extensively involving himself with
fee arrangements; attempting to advise clients of their obligations under legal
documents; drafting detailed letters and legal documents; signing court-filed
documents; and discussing legal documents with clients without any attorney
present.
816 So. 2d 587, 588.
Plaintiffs allege that Defendants, through their direction of Florida counsel and control
of the defense of THMI and THI, were the primary contact in Florida (not local counsel) on
behalf of THMI in the nursing home cases for conferences on legal disputes and that
defendants communicated with opposing parties as the purported representatives of THMI,
argued and advocated the merits of the cases, evidentiary issues, and discovery matters. As
before, these conclusions are not supported with factual allegations. Plaintiffs do not deny
that the Quintairos Firm was at all times counsel of record. Instead, they make the creative
Page 20 of 24
argument that “[t]he extent of the Defendants’ control over the services provided by local
Florida counsel rendered the Defendants the actual providers of the legal services on behalf
of THMI in Florida, regardless of the lack of official appearance in the Nursing Home
Cases.” Dkt. 46, Am. Compl. ¶ 77. There are no allegations that the Defendants signed any
court-filed documents, participated or presented THMI’s case at mediation or settlement
sessions, involved themselves in the fee arrangement between THMI and the Quintairos
Firm, or drafted letters on behalf of THMI. Clearly, this is not the same conduct found in
Neiman.
In Dale, the Florida Supreme Court enjoined a Mississippi attorney from the
unauthorized practice of law in Florida because he “affirmatively represent[ed] that he was
able and willing to render legal assistance and counsel” in Florida to Florida clients.
Specifically, Dale told his client that he would write the title insurance and act as closing
agent in the purchase of property in Pensacola, Florida, and then proceeded to represent his
client in the business negotiations for such property.
Dale is markedly different from what the amended complaint alleges against the
Defendants. Nothing in the amended complaint sets forth facts from which a court could
conclude that Zack and Anderson affirmatively represented that they were able and willing
to render legal assistance in Florida to THMI. Assuredly, the amended complaint states legal
conclusions that they did affirmatively represent to others that they could render legal
assistance in Florida, although it fails to allege those representations were made to THMI,
the only relevant party to this claim for the unauthorized practice of law. Notably absent are
Page 21 of 24
factual allegations, such as Dale’s representation to act as a closing agent for a land purchase
in Florida.
The complaint states that Defendants “directed” and “controlled” THMI’s defense,
but it fails to state how they did that or to whom they communicated these authoritative
instructions. Presumably, the direction was given to THMI’s local counsel, the Quintairos
Firm. But that fact, a communication to a law firm on behalf of their client, is not what the
Florida Supreme Court found to be the unauthorized practice of law in Dale.
Plaintiffs’ fatal flaw with all of the ten cases is that none include the “specified
conduct” required by the Florida Supreme Court.
2.
Conclusion
As in the Court’s order dismissing the original complaint, the Court concludes that
jurisdiction does not exist under the Florida long-arm statute. The Court need not address
whether sufficient minimum contacts exist to satisfy the Due Process Clause of the
Fourteenth Amendment. Additionally, since the Court lacks personal jurisdiction over the
Defendants, it is barred from addressing the remaining claims related to Fed. R. Civ. P.
12(b)(6). Posner v. Essex Ins. Co., Ltd., 178 F.3d 1209, 1214 n.6 (11th Cir. 1999) (“A court
without personal jurisdiction is powerless to take further action.”); see Read v. Ulmer, 308
F.2d 915, 917 (5th Cir. 1962) (“It would seem elementary that if the court has no jurisdiction
over a defendant, the defendant has an unqualified right to have an order entered granting its
motion to dismiss.”).
Page 22 of 24
In Goldberg v. Merrill Lynch Credit Corp., the Florida Supreme Court advised that
the proper procedure for an action of first impression premised on the unauthorized practice
of law is either to stay or dismiss the case without prejudice while the plaintiffs seek a
determination pursuant to the advisory opinion procedures of the Rules Regulating the
Florida Bar. 35 So. 3d at 907. Consequently, this case is dismissed without prejudice and
Plaintiffs may commence such proceedings with sixty days. If Plaintiffs fail to initiate such
proceedings within sixty days, dismissal shall be with prejudice.
It is therefore ORDERED AND ADJUDGED that:
1.
Motion to Dismiss on Behalf of Defendant Fundamental Administrative
Services, LLC (Dkt. 49) and Motion of Defendant, Christine Zack, to Dismiss
Amended Complaint (Dkt. 50) is GRANTED.
2.
Defendant Fundamental Administrative Services, LLC’s Motion to Strike
Portions of Plaintiffs’ Opposition (Dkt. 64) and Motion of Defendant,
Christine Zack, to Strike Portions of Plaintiffs’ Memorandum in Opposition
to Defendants’ Motions to Dismiss Amended Complaint (Dkt. 65) are
DENIED as moot.
3.
Per the Florida Supreme Court’s opinion in Goldberg v. Merrill Lynch Credit
Corp., this case is dismissed without prejudice.
Plaintiffs may seek a
determination from the Florida Supreme Court pursuant to the advisory
opinion procedures of the Rules Regulating the Florida Bar within sixty (60)
days from the date of this Order. If Plaintiffs fail to initiate the process for
Page 23 of 24
seeking such an advisory opinion within sixty (60) days, dismissal shall be
with prejudice.
4.
The Clerk is directed to close this case and deny any pending motions as moot.
DONE and ORDERED in Tampa, Florida on July 30, 2013.
Copies furnished to:
Counsel/Parties of Record
S:\Odd\2012\12-cv-1855.finalordermtdismiss.frm
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