Eddy Leal, P.A. v. Bimini Development of Village West Corporation et al
Filing
40
OMNIBUS ORDER granting 34 Plaintiff's Motion for Summary Judgment; granting 36 Plaintiff's Motion to Dismiss the counterclaim. The Court will enter judgment by separate order. Signed by Judge Robert N. Scola, Jr on 12/18/2017. (mc)
United States District Court
for the
Southern District of Florida
Eddy Leal, P.A., Plaintiff,
v.
Bimini Development of Village West
Corporation and Jarrette Bay
Investment Corporation,
Defendants.
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Civil Action No. 17–21207-Civ-Scola
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Omnibus Order on Plaintiff’s Motion to Dismiss Counterclaim and
Motion for Summary Judgment
This matter is before the Court upon the Plaintiff Eddy Leal, P.A.’s
motion to dismiss counterclaim (ECF No. 36) and motion for summary
judgment (ECF No. 34.) The Defendants/Counter-Plaintiffs did not file
responses to either of the Plaintiff’s motions despite the Court’s granting their
request for additional time in which to do so. After reviewing the motions, the
record in this case, and the applicable law, the Court grants both motions.
1. Background and Relevant Facts
In this case, Leal asserts that the Defendants knowingly filed false
Internal Revenue Service Forms 1099, thereby falsely reporting income on
behalf of the Plaintiff, in violation of 26 U.S.C. § 7434. (Am. Compl., ECF No.
12.) The Defendants and non-party Orlando Benitez, Jr. (“Benitez”) have been
in active litigation for more than seven years. (Pl.’s Statement of Material Facts
(“SOMF”), ¶ 4.) The Plaintiff represented Benitez for approximately two years.
(Id. ¶ 5.) As part of that litigation, the Defendants entered into agreed orders in
state court proceedings in which funds would be placed in the Plaintiff’s trust
account pending further order from the state court. (Id. ¶¶ 6-11.) Pursuant to
those agreed orders, the Defendants wrote monthly checks, made payable to
“Eddy Leal, P.A. Trust Account” to be deposited and held in escrow in the
Plaintiff’s trust account. (Id. ¶¶ 13, 18.)
Despite the fact that the agreed orders required that the funds be placed
in the Plaintiff’s trust account and thereby held in escrow, both of the
Defendants issued a Form 1099-Misc to the Plaintiff for the 2015 taxable year.
(Id. ¶ 14, 19.) Defendant Jarrette Bay Investment Corporation issued a Form
1099-Misc to the Plaintiff for $19,400.20 for the 2015 taxable year. (Id. ¶ 14.)
Defendant Bimini Development of Village West Corporation issued a Form
1099-Misc to the Plaintiff for $8,000 for the 2015 taxable year. (Id. ¶ 19.) The
Plaintiff contacted the Defendants to correct these improperly issued Forms
1099 but the Defendants never responded to the Plaintiff’s attempts to resolve
the issue. (Id. ¶¶ 16-17, 21-22.) Both of the Defendants filed the Forms 1099
with the Internal Revenue Service (“IRS”). (Id. ¶¶ 15, 20.) The Plaintiff contends
that the Defendants “filed the fraudulent [Forms 1099] with the IRS with the
purpose of either defrauding the IRS or harassing [the] Plaintiff.” (Id.) Moreover,
following a hearing, the state court entered an order indicating its concern with
respect to the characterization of the income reported on the 1099 issued to
the Plaintiff, and requiring the Defendant Jarrette Bay to send a letter to its
accountant indicating this concern and stating that the form should be
corrected. (Id. ¶ 16.) Defendant Bimini Development conceded at a similar
court hearing that the 1099 issued was in error and that it would be corrected
within short order. (Id. ¶ 21.) Neither Defendant corrected the 1099s. (Id. ¶ 17,
22.) Based upon the undisputed facts, the Plaintiff seeks summary judgment
on its claims for fraudulent filing of information returns against the
Defendants.
The Defendants have asserted a counterclaim against the Plaintiff for
fraud and misrepresentation, alleging that Plaintiff and Benitez entered into an
agreement for representation that Plaintiff has masked by misrepresenting its
attorneys’ fees and costs, specifically, with respect to this case. (Ans. ¶¶ 5-10,
13.) The Plaintiff seeks dismissal of the counterclaim for lack of standing and
failure to state a claim.
2. Legal Standards
A. Motion to Dismiss Standard
“A motion to dismiss a counterclaim pursuant to Federal Rule of Civil
Procedure 12(b)(6) is evaluated in the same manner as a motion to dismiss a
complaint.” Bank of Am., N.A. v. GREC Homes IX, LLC, No. 13-21718-CIV, 2014
WL 351962, at *3-4 (S.D. Fla. Jan. 23, 2014) (Altonaga, J.) (citation omitted).
When considering a motion to dismiss under Federal Rule of Civil Procedure
12(b)(6), the Court must accept all of the complaint’s allegations as true,
construing them in the light most favorable to the plaintiff. Pielage v.
McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008). A pleading need only contain
“a short and plain statement of the claim showing that the pleader is entitled to
relief.” Fed. R. Civ. P. 8(a)(2). “[T]he pleading standard Rule 8 announces does
not require detailed factual allegations, but it demands more than an
unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quotation omitted). A plaintiff must articulate
“enough facts to state a claim to relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007).
Where a cause of action sounds in fraud, however, Federal Rule of Civil
Procedure 9(b) must be satisfied in addition to the more relaxed standard of
Rule 8. Under Rule 9(b), “a party must state with particularity the
circumstances constituting fraud or mistake,” although “conditions of a
person’s mind,” such as malice, intent, and knowledge, may be alleged
generally. Fed. R. Civ. P. 9(b). “The ‘particularity’ requirement serves an
important purpose in fraud actions by alerting defendants to the precise
misconduct with which they are charged and protecting defendants against
spurious charges of immoral and fraudulent behavior.” W. Coast Roofing &
Waterproofing, Inc. v. Johns Manville, Inc., 287 F. App’x 81, 86 (11th Cir. 2008)
(citations omitted). Thus, the Rule’s “particularity” requirement is not satisfied
by “conclusory allegations that certain statements were fraudulent; it requires
that a complaint plead facts giving rise to an inference of fraud.” Id. To meet
this standard, the complaint needs to identify the precise statements,
documents, or misrepresentations made; the time and place of, and the
persons responsible for, the alleged statements; the content and manner in
which the statements misled the plaintiff; and what the defendant gained
through the alleged fraud. Id.
B. Summary Judgment Standard
Summary judgment is proper if following discovery, the pleadings,
depositions, answers to interrogatories, affidavits and admissions on file show
that there is no genuine issue as to any material fact and that the moving party
is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986); Fed. R. Civ. P. 56. “An issue of fact is ‘material’ if, under the
applicable substantive law, it might affect the outcome of the case.” Hickson
Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259-60 (11th Cir. 2004). “An issue of
fact is ‘genuine’ if the record taken as a whole could lead a rational trier of fact
to find for the nonmoving party.” Id. at 1260.
All the evidence and factual inferences reasonably drawn from the
evidence must be viewed in the light most favorable to the nonmoving party.
Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Jackson v. BellSouth
Telecomms., 372 F.3d 1250, 1280 (11th Cir. 2004). “If more than one inference
could be construed from the facts by a reasonable fact finder, and that
inference introduces a genuine issue of material fact, then the district court
should not grant summary judgment.” Bannum, Inc. v. City of Fort Lauderdale,
901 F.2d 989, 996 (11th Cir. 1990).
Once a party properly makes a summary judgment motion by
demonstrating the absence of a genuine issue of material fact, whether or not
accompanied by affidavits, the nonmoving party must go beyond the pleadings
through the use of affidavits, depositions, answers to interrogatories and
admissions on file, and designate specific facts showing that there is a genuine
issue for trial. Celotex, 477 U.S. at 323-24. The nonmovant’s evidence must be
significantly probative to support the claims. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 249 (1986). The Court will not weigh the evidence or make
findings of fact. Id. at 249; Morrison v. Amway Corp., 323 F.3d 920, 924 (11th
Cir. 2003). Rather, the Court’s role is limited to deciding whether there is
sufficient evidence upon which a reasonable juror could find for the nonmoving
party. Id.
3. Analysis
At the outset, the Court notes that pursuant to the Local Rules, the
failure to file a response to a motion is sufficient cause to grant a motion by
default. See S.D. Fla. L.R. 7.1(c). Even so, the Court has considered the merits
of the motions and determines that both should be granted.
A. Motion to dismiss the counterclaim
First, the Defendants’ counterclaim is properly dismissed for failure to
comply with Rule 9(b). “[U]nder Rule 9(b), it is sufficient to plead the who, what
when, where, and how of the allegedly false statements and then allege
generally that those statements were made with the requisite intent.” Mizzaro v.
Home Depot, Inc., 544 F.3d 1230, 1238 (11th Cir. 2008). The allegations do not
possess the requisite particularity with respect to what statements the Plaintiff
made that the Defendant contend were misrepresentations or otherwise
fraudulent, and is otherwise devoid of facts with respect to when, where, and
how. Because the Court grants the Plaintiff’s motion to dismiss the
counterclaim on this ground, it does not consider the Plaintiff’s remaining
arguments.
B. Motion for summary judgment
26 U.S.C. § 7434 provides, “[i]f any person willfully files a fraudulent
information return with respect to payments purported to be made to any other
person, such other person may bring a civil action for damages against the
person so filing such return.” To establish a claim of tax fraud under 26 U.S.C.
§ 7434, the Plaintiff must prove: (1) the Defendants issued an information
return; (2) the information return was fraudulent; and (3) the Defendants
willfully issued a fraudulent information return. Leon v. Tapas & Tintos, Inc., 51
F. Supp. 3d 1290, 1297-98 (S.D. Fla. 2014) (Moreno, J.).
By failing to respond to the Plaintiff’s statement of facts in this case, the
Defendant have admitted them. According to the Local Rules, “[a]ll material
facts set forth in the movant’s statement filed and supported as required above
will be deemed admitted unless controverted by the opposing party’s
statement, provided that the Court finds that the movant’s statement is
supported by evidence in the record.” S.D. Fla. L.R. 56.1(b). Thus, the
Defendants admit that they willfully and fraudulently filed information returns
with the IRS, representing that the funds paid to the Plaintiff to be held in
escrow, were in fact income to the Plaintiff. Moreover, in support of its motion
for summary judgment, the Plaintiff submits copies of the checks written by
the Defendants to the Plaintiff’s trust account, copies of the 1099s issued by
the Defendants, copies of the IRS account transcripts confirming that the
Defendants filed the forms with the IRS, and copies of relevant underlying state
court orders. (ECF No. 33-1.) The Court finds that these documents support
the Plaintiff’s statement of facts and that they are sufficient to support the
grant of summary judgment upon the Plaintiff’s claims.
4. Conclusion
Accordingly, the Court grants the Plaintiff’s motion to dismiss the
counterclaim (ECF No. 36), and the Plaintiff’s motion for summary judgment
(ECF No. 34). The Court will enter judgment by separate order.
Done and ordered at Miami, Florida, on December 18, 2017.
________________________________
Robert N. Scola, Jr.
United States District Judge
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