Stelor Productions, v. Silvers

Filing 97

MEMORANDUM by Steven A. Silvers in opposition to [96-1] motion for leave to file sur-reply to defendants reply to stelors response to motion for attorneys fees and expenses (rb, Deputy Clerk)

Stelor Productions, v. Silvers

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Case 9:05-cv-80393-DTKH

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA STELOR PRODUCTIONS LLC f/k/a STELOR PRODUCTIONS, INC. Plaintiff/Counter-Defendant, v. STEVEN A. SILVERS, Defendant/Counter-Plaintiff. ___________________________________ CASE NO. 05-80393-CIVHURLEY/HOPKINS

SILVERS' MEMORANDUM IN OPPOSITION TO PLAINTIFF'S MOTION FOR LEAVE TO FILE SUR-REPLY TO DEFENDANT'S REPLY IN SUPPORT OF DEFENDANT'S MOTION FOR ATTORNEYS' FEES AND EXPENSES, AND FOR RULE 11 SANCTIONS
A sur-reply is not warranted here because Silvers' Reply did not raise new matters that must be responded to. Stelor has already made its argument against Silvers' request for an award of attorneys' fees and costs as the prevailing party in its opposition brief, and addressed the request for an order to show cause why sanctions should not be awarded by denying that it knew and concealed that diversity was lacking. Silvers' Reply raised no new issues, and just presented more evidence showing that Stelor actively concealed the lack of diversity. Stelor's proposed sur-reply simply remakes its prior arguments this time with new "facts" it could have submitted in opposition. And, the new facts are just as dubious as the old ones. Specifically, Stelor again asserts that Laborers Local 938 Joint Health & Welfare Trust Fund. v. B.R. Starnes Co., 827 F.2d 1454, 1458 (11th Cir. 1987) is controlling and that its analysis under the Florida mechanics lien statute, separate from the federal question jurisdiction established in the case, precludes a finding by this Court that Silvers is the prevailing party. While Laborers also briefly referenced the Florida mechanics lien statute, the Court denied an award of prevailing-party attorneys' fees without any analysis of the applicable standard in
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Florida that has since been adopted in Florida. In Moritz v. Hoyt Enterprises, Inc., 604 So.2d 807, 810 (Fla. 1992), the Florida Supreme Court held that a prevailing party must prevail on any significant issue in the litigation to obtain an award of attorneys' fees. The following year, the Florida Supreme Court extended the significant issues test of Moritz v. Hoyt to the mechanics lien statute. Prosperi v. Code, Inc., 626 So.2d 1360 (Fla. 1993)(awarding attorneys' fees to party who defeated claim under mechanics lien statute, and holding that trial judge has discretion to determine which party has prevailed on a significant issue.) See also Wendy's Inter. v. Nu-Cape Const, Inc., 169 F.R.D. 680 (M.D. Fla. 1996) (to be deemed the prevailing party, that party must show that it succeeded on some significant issue in the litigation). This "significant issue in the litigation" standard was not addressed in Laborers and therefore the case is both distinguishable and/or effectively overruled by more current Florida law. Stelor further re-argues that Silvers cites to an inapplicable line of Florida cases in which the plaintiffs voluntarily dismissed their claims and the defendants were awarded attorneys' fees as the prevailing party. While it is true that Silvers does cite to several voluntary dismissal cases in his Reply, they are relevant to show how Florida law defines a "prevailing party." And, Stelor simply ignores the on-point case of Baratta v. Valley Oak Homeowners' Assoc. at the Vineyards, Inc., 891 So.2d 1063, 1064 (Fla. 2d DCA 2004), where the court awarded prevailing-party attorneys' fees for an involuntary dismissal without prejudice on procedural grounds. 1 Stelor further mischaracterizes Silvers' argument by asserting that Silvers argues that "he did not have time to comply with the safe harbor provisions . . . ." What Silvers actually argues in his Reply is that "Stelor's conduct made it impossible to serve a motion on Stelor because

The Florida Supreme Court holds that dismissals for failure to prosecute are without prejudice. See Moosum v. Orlando Regional Health Care, 826 So.2d 945, 948-49 (Fla. 2002) ("The rule provides for dismissal without prejudice of action wherein no record activity has taken place for a year.") (emphasis added).
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Silvers had no basis for knowing that its allegations of diversity were false until Stelor finally admitted this (although it omitted the entire truth)." Silvers' point is not that he did not have time to file a safe-harbor motion, but instead he was (as was the Court) deceived by Stelor's repeated verified statements that none of its members are domiciled in Florida. Without having personal knowledge of Stelor's members ­ which Stelor refused to identify in opposition to Stelor's Motion to Dismiss, thereby perpetuating Stelor's deception ­ Silvers' Rule 11 motion would not have had a good-faith basis. This is why this case is one that warrants the Court, on its own initiative, to enter an order to show cause as to why this Court should not enter Rule 11 sanctions against Stelor. Moreover, while Stelor again argues that Silvers cannot meet a heightened standard akin to contempt for Rule 11 sanctions to issue (which is incorrect, he can), Stelor inexplicably groups into its argument that a heightened standard also applies to a court-initiated award of fees under Florida Statute § 57.105. But section 57.105 has no such requirement and provides in relevant part that: Upon the court's initiative. . . the court shall award a reasonable attorney's fee . . . on any claim . . . in which the court finds that the losing party or losing party's attorney knew or should have known that a claim . . . (a) was not supported by the material facts necessary to establish the claim . . . ." There is no heightened standard set forth in the text of this statute that requires any more proof for this Court, upon its own initiative, to award attorneys' fees than the losing party or its attorney knew or should have known Stelor's diversity claim was not supported by the material facts. The mere fact that Mr. Epstein (Vice-Chairman of Stelor's board) and one of its submembers by Stelor's own admission have maintained their domiciles in Florida all along meets "knew or should have known" standard. Indeed, Mr. Epstein's own knowledge of his domicile, as an officer and director of Stelor, should be imputed to Stelor. See Beck v. Deloitte & Touche, et al., 144 F.3d 732, 736 (11th Cir. 1998)(citing Florida law rule that the knowledge of a
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corporation's directors is imputed to the corporation). 2 Stelor's argument that Silvers has waived any claim for fees against Stelor's counsel is also overstated and omits the last part of the email exchange between counsel. 3 Notwithstanding that, Silvers is not seeking an award of fees or sanctions against the firm of Burlington Weil Schwiep Kaplan & Blonsky, and withdraws any statement that implies this. Silvers' position is that the conduct of Stelor, and in particular Esrig, of concealing diversity, and filing declaration after declaration containing blatantly false statements compels an award of sanctions. 4 Esrig's casual attitude toward filing unsubstantiated and false statements in a federal court action, and apparent indifference to the burden it places on Silvers to obtain evidence to show the Court that these statements are perjured, is mind-boggling. The Court must put an end to this, and send a message to Stelor and Esrig that this conduct will not be tolerated. Moreover, the supplemental declarations Stelor seeks leave to file only further show that Esrig is undaunted by the threat of sanctions for committing perjury, and is now apparently suborning perjury of others aligned with Stelor. 5 For example, it is ridiculous to accept the unsubstantiated statement by Esrig and his employee that they have searched Stelor's computer
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Stelor's argument as to why its conduct should not be sanctioned is premature. Silvers' motion for sanctions requests that the Court issue an Order to Show Cause. Stelor can raise whatever argument it has regarding sanctions in response to that Order.

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In which Silvers' counsel clarified that "we also are not waiving the right to recover them in the event the Court on its own initiative decides to issue an order awarding them." See Sur-Reply at Exhibit K. In response to the amount of fees that Silvers claims, Stelor responds that Silvers is only entitled to $2,000 of time attributable to litigating the jurisdiction issue. While this argument hardly dignifies a response, it was Stelor that forced Silvers to litigate numerous other issues in this frivolous action, including but not limited to motions for temporary restraining orders and preliminary injunctions, an evidentiary hearing, objections to the district court, an appeal to the Eleventh Circuit, and a motion to transfer this case to another judge.
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In his latest Declaration, Esrig again refers to Silvers as a "convicted felon" in an attempt to discredit Silvers' position on why sanctions are warranted. Silvers' credibility is not at issue; the evidence we have to refute Stelor's argument consists of the inconsistency in Esrig's declarations, public documents, Stelor's own documents, and the testimony of third parties. Silvers filed just one declaration early in this case setting forth the facts supporting his termination of the license, which was well substantiated.
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system and confirmed that no document exists that lists Mr. Epstein's address in Florida considering that little of what Esrig has previously testified to has proven to be true. Here again are provable false statements. Exhibit A is the Excel spreadsheet created by Stelor that lists the residence of Mr. Epstein as Lake City, Florida. The embedded properties of that document show that it was authored by Esrig himself in 2004, and has been maintained by Julie Depue, a current employee of Stelor. And, what is most compelling about Stelor's proposed Sur-Reply is not what is actually said, but rather what is not said. Esrig's prior Declaration filed in opposition to Silvers' Motion claimed he had numerous and repeated conversations with each investor/member in which he directly asked each to confirm that none currently reside in Florida. Noticeably missing from the supplemental Declarations of Stelor's Vice-Chairman Epstein and Mr. Gruendl is any statement that Esrig or its counsel ever directly asked them to provide their state of domicile for the purpose of this litigation. The excuse now is that Esrig somehow was confused about the various states of domicile for several of Stelor's members and sub-members. 6 A simple e-mail, address form, and/or verbal conversation directed to each member easily would have answered this question. But it is evident from Stelor's failure to address this point head on that these conversations never took place. 7

While Stelor attempts to tiptoe around the incredible coincidences of Mr. Gruendl moving to and from Florida with the action being filed in between, Stelor has failed to address the fact that Mr. Gruendl maintained his Florida domicile during his temporary move to Washington State. It is not the temporary residence that matters in diversity analysis, it is the domicile or permanent home. See Sunseri v. Macro Cellular Partners, 412 F.3d 1247, 1249 (11th Cir. 2005) ("A person's domicile is the place of his `true, fixed, and permanent home and principal establishment, and to which he has the intention of returning whenever he is absent therefrom.' "). Furthermore, the truthfulness of Mr. Gruendl's testimony is questionable considering that in December 2004, Mr. Gruendl signed mortgage documents representing that within 60 days his Sarasota, Florida property would be his principal residence. See Exhibit B at page 8. This action was filed many months later. 7 We are hesitant to suggest this lack of corroborating evidence because it is likely Esrig will just fabricate evidence as he did when we refuted his lack of knowledge that Googles merchandise was offered for sale on the www.cafepress.com website. After we presented the emails he sent in 2002 to Mr.
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Indeed, once we discovered the identity of Stelor's investor/ members we were able to easily access the public documents that demonstrate Messrs. Epstein and Gruendl's Florida domiciles. It is beyond incredulous that Esrig did not know the true domicile of Stelor's investor/members, or that he had any conversation with any of them. It is far more probable that Esrig has known the truth all along, concealed it, and now has persuaded others to join in this scheme to defraud the Court. Esrig is just digging a deeper hole for Stelor and himself with these new declarations, further proving our point that Silvers is entitled to an award of his attorneys' fees and costs. CONCLUSION The Court should deny Stelor's Motion For Leave to File A Sur-Reply, and strike the Notice of Filing Supplemental Declarations submitted in support thereof. Respectfully submitted this 20th day of December 2005. Adam T. Rabin (FBN: 985635) DIMOND KAPLAN & ROTHSTEIN, PA 525 S. Flagler Drive, Suite 200 West Palm Beach, Florida 33401 T: 561-671-2110 / F: 561-671-1951 s/ Gail A. McQuilkin Gail A. McQuilkin (FBN: 969338) Kenneth R. Hartmann (FBN: 664286) KOZYAK TROPIN & THROCKMORTON, PA 2525 Ponce de Leon, 9th Floor Miami, Florida 33134 T: 305-372-1800 / F: 305-372-3508

Paul Worsham to show that Esrig not only had knowledge that Googles merchandise was being offered for sale, he was in fact instrumental in setting up the account, Esrig tried to refute this by concocting an story that maybe he did know about this site, but that Mr. Worsham was some crazy person who did this all on his own. He then attached a "letter" supposedly sent to Mr. Worsham berating him for setting up the account. Despite that this makes no sense in light of Esrig's prior emails, even the untrained eye can see that the "letter" has a very poor cut- and-past job of Stelor's logo and address. Esrig is further discredited by the fact that Stelor has always maintained a link from the Googles Web page to the www.cafepress.com store. See Exhibit C.
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CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing was served by e-mail and U.S. Mail on this 20th day of December, 2005 upon Kevin C. Kaplan, Burlington, Weil, Schwiep, Kaplan, & Blonsky, P.A., 2699 South Bayshore Drive, Penthouse A, Miami, Florida 33133. s/ Gail A. McQuilkin
3339/103/260752.1

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