States Resources Corp v. Goldsmith et al

Filing 24

ORDER: Defendants' Motion to Dismiss 7 is GRANTED. States Resources's Amended Complaint 5 is dismissed without prejudice. States Resources may file a Second Amended Complaint on or before December 20, 2013, if it so chooses. See Order for details. Signed by Judge Virginia M. Hernandez Covington on 12/5/2013. (KAK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
STATES RESOURCES CORP.,
Plaintiff,
v.

Case No. 8:13-cv-2015-T-33EAJ

LYNNE GOLDSMITH, ARNOLD
GOLDSMITH, and LJI, INC.,
Defendants.
___________________________/
ORDER
This

matter

comes

before

the

Court

pursuant

to

Defendants Lynne Goldsmith, Arnold Goldsmith, and LJI, Inc.’s
Motion to Dismiss (Doc. # 7), filed September 3, 2013.
Plaintiff

States

Resources

Corp.

filed

a

Opposition (Doc. # 8) on September 16, 2013.

Memorandum

in

For the reasons

that follow, the Court dismisses States Resources’s Amended
Complaint

without

prejudice

and

with

leave

to

amend

by

December 20, 2013.
I.

Background
States Resources Corp. is a corporation organized under

the laws of Iowa with its principal place of business in
Nebraska. (Id. at ¶ 1).

Lynne Goldsmith is a citizen of

Florida residing in Pasco County, Florida, and at all times
relevant

to

this

action,

was

the

president

and

sole

shareholder of LJI, Inc. (Id. at ¶ 2). Arnold Goldsmith, Mrs.
Goldsmith’s husband, is also a citizen of Florida residing in
Pasco County, Florida. (Id. at ¶ 3). LJI, Inc. is a dissolved
for-profit corporation which was incorporated under the laws
of Florida and which had its principal place of business in
New Port Richey, Florida. (Id. at ¶ 4).
On

August

2,

2004,

TEK-VEC,

Inc.,

a

now-dissolved

Florida corporation of which Mrs. Goldsmith was the vice
president, executed and delivered a promissory note in the
amount of $242,858.63 (“the Note”) to SunTrust Bank. (Id. at
¶ 8).

On the same day, LJI, Inc. executed and delivered to

SunTrust Bank a mortgage to secure $75,000 of the Note (“the
Mortgage”), which mortgaged the real property owned by LJI,
Inc. located at 7734 Blackstone Drive, Port Richey, Florida
34668 (“the LJI Property”). (Id. at ¶ 9).

The LJI Property

was the sole asset of LJI, Inc., which rented it out as its
sole business. (Id.). On August 2, 2004, Mrs. Goldsmith also
executed and delivered a personal guaranty agreement (“the
Guaranty”), which unconditionally guaranteed payment of the
Note and all costs arising out of any breach of the Note, to
SunTrust Bank. (Id. at ¶ 10).
On May 19, 2005, States Resources was assigned all right,
title, and interest in the Note, the Mortgage, and the

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Guaranty. (Id. at ¶ 11).

On December 1, 2006, after Mrs.

Goldsmith and LJI, Inc. defaulted, States Resources brought
suit in the Sixth Judicial Circuit in and for Pasco County,
Florida, against LJI, Inc., TEK-VEK, Inc., John Denicola,1
and Mrs. Goldsmith. (Id. at ¶ 12).

On May 8, 2007, the state

court entered a final summary judgment of foreclosure in the
amount of $174,221.89 and set a June 13, 2007, sale date for
the LJI Property. (Id. at ¶ 13). Further, that court retained
jurisdiction to enter writs of possession and a deficiency
judgment. (Id.).
On June 13, 2007, Mr. Goldsmith paid States Resources
$60,000 to cancel the foreclosure sale and release the lien
on the LJI Property. (Id. at ¶ 14). States Resources canceled
the foreclosure sale, released the lien, and applied a $60,000
credit to the amount owed. (Id.).

On September 20, 2007, the

state court entered a final summary judgment in favor of
States

Resources

in

the

amount

of

$106,623.75

for

the

remaining amounts due under the Note and the Guaranty. (Id.
at ¶ 16).

On November 5, 2007, the state court awarded

1 Denicola was a party to the state court litigation, but is
not a party to the instant action.

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attorneys’ fees to States Resources in the amount of $5,000,
bringing the total amount owed to $111,623.75. (Id. at ¶ 17).
In

early

2011,

States

Resources

learned

through

discovery in aid of execution that Mrs. Goldsmith held stock
in LJI, Inc., individually, and that such stock was subject
to execution. (Id. at ¶ 18).

The stock held value because

LJI, Inc. owned and collected rental income from the LJI
Property, now free and clear of States Resources’s lien. (Id.
at ¶ 19). In an effort to collect on its deficiency judgment,
States Resources sought possession of Mrs. Goldsmith’s stock
to assert an interest in the LJI Property and the stream of
rental income. (Id. at ¶ 20).
On January 24, 2011, the Pasco County court issued an
Amended Writ of Execution and served it on Mrs. Goldsmith.
(Id. at ¶ 21).

She was also served with a Demand for Levy of

Stock requesting that she transfer possession of all shares
of LJI, Inc. stock held in her name. (Id. at ¶ 22).

Mrs.

Goldsmith failed to produce her stock certificates, and as a
result, States Resources filed a Motion to Compel Turnover of
Stock with the state court on April 7, 2011. (Id. at ¶¶ 2324).

On May 16, 2011, the state court denied the Motion,

instructing States Resources’s counsel that before it would
consider the Motion, States Resources first needed to depose

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Mrs. Goldsmith to seek information regarding the location of
the LJI, Inc. stock. (Id. at ¶¶ 25-26).

On May 17, 2011, the

following day, LJI, Inc. through Mrs. Goldsmith, executed a
Warranty Deed transferring the LJI Property, LJI, Inc.’s sole
asset, to Mr. Goldsmith, a non-judgment debtor. (Id. at ¶ 27).
On June 9, 2011, States Resources deposed Mrs. Goldsmith.
(Id.

at

¶

28).

During

the

deposition,

Mrs.

Goldsmith

testified that she was the president of LJI, Inc. but received
no salary or compensation and held no interest in the company.
(Id. at ¶ 29). She further testified that LJI, Inc.’s purpose
was to rent the LJI Property and that the LJI Property was
the only property LJI, Inc. rented. (Id. at ¶ 30).
produced

documents

confirming

that

the

LJI

She also

Property

was

indeed LJI, Inc.’s sole asset, that LJI, Inc. received monthly
rental payments that were deposited into LJI, Inc.’s bank
account, and that she owned all of the LJI, Inc. stock,
despite her contention that she had no financial interest in
LJI, Inc. (Id. at ¶ 31).
On August 2, 2013, States Resources filed the instant
Complaint against the Goldsmiths as well as against LJI, Inc.
(Doc. # 1).

On August 12, 2013, States Resources filed its

Amended Complaint against the same Defendants containing the
following counts: 18 U.S.C. § 1962(d) RICO civil conspiracy

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(Count I) and Florida common law civil conspiracy (Count II).
(Doc. # 5).2
At this juncture, Defendants seek an Order dismissing
this action due to the presence of parallel state court
proceedings
doctrine.

pursuant

to

the

Colorado

River

abstention

Defendants also contend that both counts of the

Amended Complaint are subject to dismissal pursuant to Rule
12(b)(6), Fed. R. Civ. P.
II.

Colorado River Abstention Doctrine
Defendants request that the Court dismiss this action

under the Colorado River abstention doctrine. (Doc. # 7 at
5).

In Colorado River Water Conservation District v. United

States, 424 U.S. 800, 818-20 (1976), the Supreme Court held
that a federal court could abstain from a case if “(1) a
parallel lawsuit was proceeding in state court, and (2)
judicial-administration

reasons

so

demanded

abstention.”

Jackson-Platts v. General Elec. Capital Corp., 727 F.3d 1127,
1140 (11th Cir. 2013). “Only the clearest of justifications,”
however, will merit such abstention. Colorado River, 424 U.S.
at

819.

Federal

courts

have

a

“virtually

unflagging

2 States Resources filed the Amended Complaint in response to
this Court’s August 6, 2013, Order directing States Resources
to clarify its jurisdictional allegations. (Doc. # 4).

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obligation . . . to exercise the jurisdiction given them.”
Id. at 818.

“A policy permitting federal courts to yield

jurisdiction to state courts cavalierly would betray this
obligation.” Ambrosia Coal & Constr. Co. v. Pages Morales,
368 F.3d 1320, 1328 (11th Cir. 2004).
Abstention,

then,

“is

an

extraordinary

and

narrow

exception to the duty of a District Court to adjudicate a
controversy properly before it.” Colorado River, 424 U.S. at
813 (quoting County of Allegheny v. Frank Mashuda Co., 360
U.S. 185, 188-89 (1959)).

Colorado River abstention is rarer

still, “permissible in fewer circumstances than are the other
abstention doctrines.” Ambrosia Coal, 368 F.3d at 1331. Thus,
“dismissal

of

an

action

in

deference

to

parallel

state

proceedings is an extraordinary step that should not be
undertaken absent a danger of a serious waste of judicial
resources.” Noonan S., Inc. v. County of Volusia, 841 F.2d
380, 383 (11th Cir. 1988).
“As a threshold matter, a federal court may abstain under
the Colorado River doctrine only if there is a parallel state
action, which is one involving substantially the same parties
and substantially the same issues.” Jackson-Platts, 727 F.3d
at 1140 (quoting Ambrosia Coal, 368 F.3d at 1330) (internal

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quotations omitted).

The parties dispute whether the Pasco

County litigation meets this threshold.
Defendants argue that the cases are parallel, as both
address “the nature of the underlying transfer of the real
property.” (Doc. # 7 at 7).

States Resources, on the other

hand, contends that the “Pasco County Litigation is a wholly
independent and different cause of action than the case at
issue,” involving different legal issues, claims, remedies,
and parties.

(Doc. # 8 at 6-7).

The Pasco County case, it

argues, involved claims for breach of contract and mortgage
foreclosure against Mrs. Goldsmith, LJI, Inc., TEK-VEK, Inc.,
and Denicola. (Id. at 6). The instant federal case, meanwhile,
raises

civil

conspiracy

and

RICO

claims,

includes

Mr.

Goldsmith as a party, does not involve TEK-VEK, Inc. or
Denicola, and seeks damages separate and apart from the loan
documents upon which the state court claims are based.
The Court agrees with States Resources the Pasco County
case and present case are not “parallel” cases warranting
application of the Colorado River abstention doctrine.
instant

action

involves

different

parties

and

claims from those involved in the state proceeding.

The

different
However,

even if the Court were to find that the state case and the

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present

case

are

parallel

proceedings,

abstaining

under

Colorado River would, nevertheless, be improper.
Federal

courts

consider

six

factors

in

determining

whether Colorado River abstention is appropriate when faced
with a parallel state court proceeding:
(1) the order in which the courts assumed
jurisdiction over property; (2) the relative
inconvenience of the fora; (3) the order in which
jurisdiction was obtained and the relative progress
of the two actions; (4) the desire to avoid
piecemeal litigation; (5) whether federal law
provides the rule of decision; and (6) whether the
state court will adequately protect the rights of
all parties.

TranSouth Fin. Corp. v. Bell, 149 F.3d 1292, 1294-95 (11th
Cir. 1998).

The balancing of these factors is “heavily

weighted in favor of the exercise of jurisdiction.” Moses H.
Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16
(1983).

“Thus, the facial neutrality of a factor is a basis

for retaining jurisdiction, not for yielding it.” Woodford v.
Cmty. Action Agency of Greene County, Inc., 239 F.3d 517, 522
(2d Cir. 2001). No single factor determines whether the Court
will abstain or accept jurisdiction. Am. Bankers Ins. Co. of
Fla. v. First State Ins. Co., 891 F.2d 882, 884-85 (11th Cir.
1990).

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The first Colorado River factor considers whether one
court assumed jurisdiction over property before the other
court.

This factor only applies where there is a proceeding

in rem. Jackson-Platts, 727 F.3d at 1141.

“Put differently,

where there is no real property at issue, this factor does
not favor abstention.” Id. (internal quotations omitted).
There is no real property at issue in this case — States
Resources

petitions

this

Court

only

“for

damages,

plus

reasonable attorneys’ fees and costs, and such other relief
as the Court deems proper.” (Doc. # 5 at 9).

As such, this

factor does not favor abstention.
The second factor “concerns the inconvenience of the
federal forum and focuses primarily on the physical proximity
of the federal forum to the evidence and witnesses.” JacksonPlatts, 727 F.3d at 1141.

Here, neither party disputes the

convenience of the federal forum and both affirm that this
factor weighs against abstention. (Doc. ## 7 at 6; 8 at 6).
Under the third factor, the Court considers which forum
acquired jurisdiction first.

What matters is not so much

“which complaint was filed first, but rather . . . how much
progress has been made in the two actions.” Moses H. Cone,
460 U.S. at 21.

Defendants contend that the state court

asserted jurisdiction over the case in November of 2006,

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nearly seven years before States Resources filed the instant
action in this Court. (Doc. # 7 at 6).

Defendants argue that

States Resources, “having read the writing on the wall,” now
“seeks another forum in which to reclaim the Real Property
which they previously released in exchange for $60,000 from
Mr. Goldsmith.” (Id. at 7).

States Resources concedes that

the state court asserted jurisdiction years before federal
court,

but

counters

that

the

instant

action

involves

different claims, different parties, and different remedies.
(Id. at 7, 8).
Nothing presented to this Court suggests that the state
court has addressed the allegedly wrongful transfer of the
LJI Property or the resulting conspiracy claims that States
Resources raises here.

Although the state court action was

filed years prior to this action, it does not appear that the
state case has made more progress as to the present issues,
and the Court accordingly finds that this factor does not
“weigh[]

heavily

in

favor

of

dismissal,”

as

Defendants

suggest. (Doc. # 7 at 6).
The fourth factor evaluates the potential for piecemeal
litigation and does not favor abstention unless accepting
jurisdiction “will likely lead to piecemeal litigation that
is abnormally excessive or deleterious.” Ambrosia Coal, 368

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F.3d at 1333.

The Court is not persuaded that accepting

jurisdiction will likely lead to abnormally excessive or
deleterious piecemeal litigation, and the fourth factor thus
weighs against abstention.
The fifth factor concerns whether federal law or state
law provides the rule of decision.

Defendants argue that

both Count II and the basis of Count I are “clearly [matters]
of Florida law.” (Doc. # 7 at 8).

The mere presence of state

law issues, however, will weigh in favor of dismissal only in
rare circumstances. Am. Banks Ins. Co. of Fla. v. First State
Ins. Co., 891 F.2d 882, 886 (11th Cir. 1990).

This factor

only favors abstention where “the applicable state law is
particularly complex or best left for state courts to resolve.”
Jackson-Platts, 727 F.3d at 1143.

Nothing suggests that

Florida civil conspiracy “is the kind of complex law that
raises

thorny

and

difficult

state

law

questions”;

Id.,

federal courts in fact regularly consider such claims. See,
e.g., Astro Tel, Inc. v. Verizon Fla. LLC, No. 8:11-cv-2224T-33TBM, 2013 WL 5781658 (M.D. Fla. Oct. 25, 2013).

This

factor thus does not weigh in favor of abstention.
Under the sixth and final factor, the Court considers
whether the state court can adequately protect the rights of
the parties.

Defendants argue that this factor weighs in

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favor of abstention because the state proceedings have been
ongoing since 2006.

“Clearly,” they contend, “the interests

of the plaintiff have been adequately protected in the forum
that

the

plaintiff

initially

chose.”

(Doc.

#

7

at

8).

Defendants do not argue, however, that the federal forum is
inadequate to protect the rights of the parties.

“The fact

that both forums are adequate to protect the parties’ rights
merely renders this factor neutral.” Noonan S., 841 F.2d at
383; accord Ambrosia Coal, 368 F.3d at 1334 (“This factor
will only weigh in favor or against abstention when one of
the fora is inadequate to protect a party’s rights.”)

Thus,

the final factor does not weigh in favor of abstention.
As none of the Colorado River factors weigh in favor of
abstention and in light of the Court’s robust and unflagging
duty

to

exercise

its

jurisdiction,

the

Court

denies

Defendants’ request for dismissal pursuant to the Colorado
River abstention doctrine. The Court will now evaluate States
Resources’s claims under the calculus of Rule 12(b)(6), Fed.
R. Civ. P.
III. Rule 12(b)(6) Analysis
In reviewing a motion to dismiss for failure to state a
claim, a trial court accepts as true all factual allegations
in the complaint and construes the facts in the light most

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favorable to the plaintiff.

Jackson v. Bellsouth Telecomms.,

372 F.3d 1250, 1262 (11th Cir. 2004).

However, courts are

not “bound to accept as true a legal conclusion couched as a
factual allegation.”

Papasan v. Allain, 478 U.S. 265, 286

(1986).
In Bell Atlantic Corp. v. Twombly, the Supreme Court
articulated the standard by which claims should be evaluated
on a motion to dismiss:
While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide
the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action
will not do. Factual allegations must be enough to
raise a right to relief above the speculative level.
550 U.S. 544, 555 (2007) (internal citations omitted).
In

accordance

with

Twombly,

Federal

Rule

of

Civil

Procedure 8(a) calls “for sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible on its
face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (quoting

Twombly, 550 U.S. at 570).

A plausible claim for relief must

include “factual content [that] allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.”

Id.

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A.

Count I - RICO Conspiracy

States Resources alleges that on May 17, 2011, the
Goldsmiths and LJI, Inc. “agreed to wrongfully transfer the
LJI Property to Arnold [Goldsmith] in order to hinder States
Resources’s judgment collection efforts.” (Doc. # 5 at ¶ 33).
As a result, States Resources claims that the LJI Property
“has

been

wrongfully

sheltered

from

execution,

and

therefore . . . [States Resources] has suffered damage.” (Id.
at ¶ 39).

States Resources argues that these alleged facts

demonstrate the existence of a RICO conspiracy between Lynne
Goldsmith, Arnold Goldsmith, and LJI, Inc. in violation of 18
U.S.C. § 1962(d). (Id. at ¶ 32-39).

The Goldsmiths and LJI,

Inc. move to dismiss this count pursuant to Rule 12(b)(6),
Fed. R. Civ. P., arguing that States Resources fails to state
a cause of action. (Doc. # 7 at 8-9).
Under section 1962(d) of the RICO statute, it is illegal
to conspire to violate one of RICO’s substantive provisions.
18

U.S.C.

§ 1962(d).

“A

plaintiff

can

establish

a

RICO

conspiracy claim in one of two ways: (1) by showing that the
defendant agreed to the overall objective of the conspiracy;
or (2) by showing that the defendant agreed to commit two
predicate acts.” Am. Dental Ass’n v. Cigna Corp., 605 F.3d
1283, 1293 (11th Cir. 2010) (quoting Republic of Panama v.

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BCCI Holdings (Luxembourg) S.A., 119 F.3d 935, 950 (11th Cir.
1997)).

A plaintiff need not demonstrate direct evidence of

a RICO agreement; a conspiracy “may be inferred from the
conduct of the participants.” Id. at 1293 (quoting Republic
of Panama, 119 F.3d at 950).
Agreement to an overall objective of the conspiracy can
be proven by circumstantial evidence showing “that ‘each
defendant must necessarily have known that the others were
also conspiring to participate in the same enterprise through
a

pattern

of

racketeering

activity.’”

United

States

v.

Shenberg, 89 F.3d 1461, 1471 (11th Cir. 1996) (emphasis added).
“Racketeering activity” is defined under 18 U.S.C. § 1961(1)
in the form of numerous predicate acts.

States Resources

offers no argument that the alleged acts evince knowledge on
the part of the Goldsmiths or LJI, Inc. that others conspired
to commit specific RICO predicates, nor does it argue that
those acts themselves constitute such predicates.

Having

failed to allege racketeering activity or the contemplation
of racketeering activity, either by showing an agreement to
an overall objective or an agreement to commit two predicate
acts, States Resources fails to establish a viable RICO
conspiracy claim.

As such, the Court grants the Motion to

Dismiss as to Count I.

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B.

Count II – Civil Conspiracy

“The

elements

of

a

civil

conspiracy

are:

(a)

a

conspiracy between two or more parties, (b) to do an unlawful
act or to do a lawful act by unlawful means, (c) the doing of
some overt act in pursuance of the conspiracy, and (d) damage
to plaintiff as a result of the acts performed pursuant to
the conspiracy.” Kurnow v. Abbott, 114 So. 3d 1099, 1102 n.4
(Fla. 1st DCA 2013) (emphasis omitted).
States Resources alleges that the Goldsmiths and LJI,
Inc. “transferred the Property in an attempt to shield the
LJI

Property,

Goldsmith’s

Mrs.

ownership

Goldsmith’s

LJI

interest

LJI

in

States Resources.” (Doc. # 5 at ¶ 47).

stock,
from

and

Mrs.

execution

by

As a result, States

Resources claims it suffered damage. (Id. at ¶ 50). According
to States Resources, these actions demonstrate the existence
of a civil conspiracy under Florida law. (Id. at ¶¶ 40-50).
The Goldsmiths and LJI, Inc. move to dismiss this count,
arguing that States Resources has failed to state a claim
upon which relief can be granted. (Doc. # 7 at 9-10).
Although

States

Resources

alleges

that

two

or

more

parties “conspired” to commit an action and that it suffered
damage as a result, it fails to allege that the action — the
transfer of the LJI Property to Mr. Goldsmith —

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was unlawful

Copies to: All Counsel of Record

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