States Resources Corp v. Goldsmith et al
Filing
28
ORDER granting 26 Motion to dismiss for lack of jurisdiction. The Clerk is directed to close the case. See Order for details. Signed by Judge Virginia M. Hernandez Covington on 2/18/2014. (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. # 26), filed December 30, 2013.
Plaintiff
States
Resources
Corp.
filed
Opposition (Doc. # 27) on January 10, 2014.
a
Response
in
For the reasons
that follow, the Court grants the Motion to Dismiss after
finding that the requirements for diversity of citizenship
have not been satisfied.
I.
Background
Plaintiff States Resources is a corporation organized
under the laws of Iowa with its principal place of business
in Nebraska. (Doc. # 25 at ¶ 1).
Defendant Lynne Goldsmith
is a citizen of Florida residing in Pasco County, Florida,
and at all times relevant to this action, was the president
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and sole shareholder of LJI, Inc. (Id. at ¶ 2).
Defendant
Arnold Goldsmith, Mrs. Goldsmith’s husband, is also a citizen
of Florida residing in Pasco County, Florida. (Id. at ¶ 3).
Defendant 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., and was rented out as its
sole business. (Id.).
Mrs. Goldsmith also executed and
delivered a personal guaranty agreement (“the Guaranty”) on
August 2, 2004, which unconditionally guaranteed payment of
the Note and all costs arising out of any breach of the Note,
to SunTrust Bank. (Id. at ¶ 10).
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On May 19, 2005, States Resources was assigned all right,
title, and interest in the Note, the Mortgage, and the
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 Pasco
County 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).
County
Court
retained
jurisdiction
to
Further, the Pasco
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 it was owed. (Id. at ¶ 15).
On September
20, 2007, the Pasco County 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
1 Denicola was a party to the Pasco County Court litigation,
but is not a party to the instant action.
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the Guaranty. (Id. at ¶ 16).
On November 5, 2007, the Pasco
County Court awarded attorneys’ fees to States Resources in
the amount of $5,000, bringing the total amount owed to States
Resources 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, which was 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 Pasco County Court on April 7, 2011. (Id. at
¶¶ 23-24).
On May 16, 2011, the Pasco County Court denied
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the Motion, instructing States Resources’s counsel that,
before it would consider the Motion, States Resources first
needed to depose Mrs. Goldsmith to seek information regarding
the location of the LJI, Inc. stock. (Id. at ¶¶ 25-26).
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
Goldsmith. (Id. at ¶ 28).
Resources
deposed
Mrs.
During the deposition, Mrs.
Goldsmith testified that she was the president of LJI, Inc.
but received no salary or compensation from LJI, Inc. and
held no financial 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).
She also produced
documents confirming that the LJI 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).
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On August 2, 2013, States Resources filed its initial
Complaint in this Court against the Goldsmiths as well as
against LJI, Inc. (Doc. # 1).
On August 12, 2013, States
Resources filed its Amended Complaint with this Court against
the
same
Defendants
containing
the
following
counts:
18
U.S.C. § 1962(d) RICO civil conspiracy (Count I) and Florida
common law civil conspiracy (Count II). (Doc. # 5).2
On
September 3, 2013, Defendants filed a Motion to Dismiss the
Amended Complaint and States Resources filed a Memorandum in
Opposition on September 16, 2013. (Docs. ## 7-8). This Court
granted Defendants’ Motion to Dismiss without prejudice on
December 5, 2013, and permitted States Resources to file a
Second Amended Complaint. (Doc. # 24). On December 20, 2013,
States Resources filed its Second Amended Complaint seeking
damages for intentionally fraudulent transfer (Count I);
constructively fraudulent transfer (Count II); and Florida
common law civil conspiracy (Count III). (Doc. # 25).
At this juncture, Defendants seek an Order dismissing
the Second Amended Complaint for lack of subject matter
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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jurisdiction pursuant to Rule 12(b)(1), Fed. R. Civ. P.,
specifically on the grounds that the amount in controversy
fails to exceed the sum or value of $75,000, as required by
28 U.S.C. § 1332. Defendants also contend that all counts of
the
Second
Amended
Complaint
are
subject
to
dismissal
pursuant to Rule 12(b)(6), Fed. R. Civ. P.
II.
Legal Standard for Rule 12(b)(1)
Federal
courts
are
courts
of
limited
jurisdiction.
“[B]ecause a federal court is powerless to act beyond its
statutory grant of subject matter jurisdiction, a court must
zealously insure that jurisdiction exists over a case, and
should
itself
raise
the
question
of
subject
matter
jurisdiction at any point in the litigation where a doubt
about jurisdiction arises.”
Smith v. GTE Corp., 236 F.3d
1292, 1299 (11th Cir. 2001).
Motions
to
dismiss
for
lack
of
subject
matter
jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) may attack
jurisdiction facially or factually.
Morrison v. Amway Corp.,
323
Cir.
F.3d
920,
924
n.5
(11th
2003).
When
the
jurisdictional attack is factual, as in the instant case, the
Court may look outside the four corners of the complaint to
determine if jurisdiction exists.
Eaton v. Dorchester Dev.,
Inc., 692 F.2d 727, 732 (11th Cir. 1982).
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In a factual
attack,
the
presumption
of
truthfulness
afforded
to
a
plaintiff under Fed. R. Civ. P. 12(b)(6) does not attach.
Scarfo v. Ginsberg, 175 F.3d 957, 960 (11th Cir. 1999)(citing
Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990)).
Because the very power of the Court to hear the case is at
issue in a Rule 12(b)(1) motion, the Court is free to weigh
evidence outside the complaint.
Eaton, 692 F.2d at 732.
28 U.S.C. § 1332 provides that district courts shall
have original jurisdiction of all civil actions where the
matter in controversy exceeds the sum or value of $75,000 and
is between citizens of different states or countries.
In
this case, it is undisputed that the parties are of diverse
citizenship.
The only question is whether the amount in
controversy exceeds the $75,000 jurisdictional threshold.
III. Jurisdictional Analysis
Seeking dismissal, Defendants argue that the Complaint
fails to allege facts, which, if proven, would demonstrate
that the real property at issue, the LJI Property, is valued
in excess of $75,000 or that States Resources has suffered
damages in excess of $75,000.
In response, States Resources
contends that the amount in controversy is the full amount of
its judgment against Mrs. Goldsmith ($111,623.75), not just
the value of the property transferred.
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However, States
Resources failed to assert an amount in controversy in its
Second Amended Complaint despite claiming that jurisdiction
in this Court is proper. (Doc. # 25 at ¶ 5). States Resources
simply alleged: “Jurisdiction is proper in the United States
District Court pursuant to 28 U.S.C. § 1332 because SRC is a
citizen of Nebraska and Lynne, Arnold and LJI are citizens of
Florida,” but never alleged an amount in controversy.
States
Resources
referenced
multiple
values
(Id.).
in
its
Second Amended Complaint including the following: August 2,
2004, Mortgage for LJI Property in the amount of $75,000 (Id.
at
¶
9);
May
8,
2007,
Pasco
County
Court
judgment
of
foreclosure in the amount of $174,221.89 (Id. at ¶ 13);
$60,000 paid by Mr. Goldsmith to States Resources to cancel
the foreclosure sale of the LJI Property (Id. at ¶¶ 14-15);
September 20, 2007, Pasco County Court judgment in favor of
States Resources in the amount of $106,623.75 (Id. at ¶ 16;
Ex. A); and November 5, 2007, Pasco County Court award of
$5,000 in attorneys’ fees to States Resources to bring the
total amount owed to $111,623.75. (Id. at ¶ 17; Ex. B).
The fact that some of the values referenced in the
factual
background
section
of
the
Complaint
exceed
the
jurisdictional amount is of no consequence to this Court.
States Resources must provide a reasonable link between those
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amounts and the relief it is seeking in this Court.
It has
not done so.
Defendants
Property,
produced
including
documentation
supporting
regarding
evidence
of
the
the
LJI
$60,000
payment by Mr. Goldsmith to States Resources. (Doc. # 26).
Defendants included two documents signed by Cory Butler3: (1)
the June 19, 2007, Release of Property from Mortgage regarding
the LJI Property (Id. at Ex. D) and (2) the July 11, 2007,
Affidavit which included, among other statements, that “the
parties agreed to cancel the subject foreclosure sale and to
release the subject real property from Plaintiff’s mortgage
in exchange for payment of $60,000.00 which was received and
credited on June 13, 2007.”
(Id. at Ex. E).
Defendants also
indicate that the value of the LJI Property according to the
Pasco County Property Appraiser is $28,141.00.
This Court has already permitted States Resources to
amend its initial Complaint twice and is not persuaded by
States Resources’s mere reference to various values in excess
of $75,000 as means of establishing that the jurisdictional
3 Butler is not a party to this suit.
Butler signed the
documents provided to this Court acting in his capacity as
States Resources’s Special Assets Account Officer. (Doc. #
26 at Ex. D-E).
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threshold has been satisfied.
The entry of the state court’s
final judgment in excess of $75,000 does not supply the
present court with jurisdiction.
Due to the lack of evidence
regarding the values of Mrs. Goldsmith’s LJI, Inc. stock
before the transfer of the LJI Property or the LJI Property
itself other than the $60,000 paid for its release from lien
and cancellation of foreclosure sale, this Court finds that
the jurisdictional threshold has not been satisfied.
As it
has been determined that the requisite amount in controversy
for diversity jurisdiction has not been established, this
Court
grants
Amended
Defendants’
Complaint
is
Motion
dismissed
to
for
Dismiss.
lack
of
The
Second
jurisdiction
pursuant to Rule 12(b)(1), Fed. R. Civ. P.
Accordingly, it is hereby
ORDERED, ADJUDGED, and DECREED:
(1)
Defendants’ Motion to Dismiss (Doc. # 26) is GRANTED.
States Resources’s Amended Complaint (Doc. # 25) is
dismissed for lack of jurisdiction.
(2)
The Clerk is directed to close the case.
DONE and ORDERED in Chambers in Tampa, Florida,
this 18th day of February, 2014.
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Copies to: All Counsel of Record
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