Rosetto v. Murphy et al
ORDER granting Motion to Dismiss [DE 11] for lack of jurisdiction; denying as moot 38 Motion to Amend/Correct. This case is closed. Signed by Judge Kenneth A. Marra on 6/30/2017.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 16-81342-CIV-MARRA/MATTHEWMAN
BRUCE C. ROSETTO
and ROXANNE ROSETTO,
CHARLES MURPHY and
CLARK HILL PLC,
ORDER GRANTING MOTION TO DISMISS
THIS CAUSE is before the Court upon Defendants’ Motion to Dismiss Plaintiffs’
Amended Complaint [DE 11] and Plaintiffs’ Motion for Leave to File Second Amended
Complaint [DE 38]. The Court has carefully considered the entire Court file and is
otherwise fully advised in the premises.
This matter was removed to federal court based upon diversity of citizenship
and an unspecified amount of damages in excess of $15,000, which defendants assert
“is more than likely” to meet the $75,000.00 jurisdictional threshold. DE 1. Plaintiffs
have not objected to this assumption.
Plaintiff, Bruce Rosetto, filed a one-count complaint in circuit court for libel
per se alleging that defendant Charles Murphy, as counsel for a receiver, made
malicious false statements to the well-known legal and business publication, the Daily
Business Review (“DBR”). On April 4, 2014, the DBR published a cover story with a
large photo of Mr. Rosetto titled, Greenberg Fights Subpoena Seeking Clawback
Money from Partner. A copy of the article is attached to the complaint. The DBR
article contains two quotes from Mr. Murphy as follows: “The investigation that we
conducted to date has confirmed that Mr. Rosetto participated in securities fraud
with respect to the Royal Palm Real Estate Investment Fund”, and “Legisi sent $9.3
million in investor’s money to Royal Palm, and that money is gone.” DE 6-2, DE 69 at
2. It is only the first alleged statement that is the basis for the instant complaint.
Mr. Rosetto alleges that this first statement quoted above is a false assertion
of fact, was not couched in what was alleged in any pleading, and detrimentally
impacted his business and profession as a corporate and securities lawyer. Compl. ¶
30. Mr. Rosetto amended his complaint to add his wife, Roxanne Rosetto, as a
plaintiff with a claim for loss of consortium. DE 6.
Defendant Mr. Murphy is counsel for Robert Gordon, a receiver appointed in
the action entitled Securities & Exchange Comm’n v. Gregory N. McKnight and Legisi
Holdings, LLC, Case No. 08-11887 (E.D. Mich. 2008) (the “Receiver”). On May 7, 2009,
the Receiver commenced an action against Bruce Rosetto, Roxanne Rosetto, and
others for alleged violations of the U.S. Exchange Act, the Michigan Uniform
Securities Act, the Florida Securities Transaction Act, common law fraud,
misrepresentation, unjust enrichment, and avoidance of fraudulent transfers under
the Michigan Uniform Fraudulent Conveyances Act, among other claims. See Gordon
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v. Royal Palm Real Estate Invest Fund I, LLP, et al., Case No. 09-CV-11770 (E.D. Mich.
2009), DE 11-4 (the “Michigan Action”); DE 19, ¶ 5. In the Michigan Action, the
Receiver claimed Bruce Rosetto violated securities laws by having control over the
day-to-day activities and management of Royal Palm Investment Fund in which Legisi
invested millions of dollars and which Rosetto knew or should have known were illegal
proceeds from a Ponzi scheme Legisi was operating.
Defendants move to dismiss the Amended Complaint (“Complaint” or
“Compl.”) based on several arguments. First, they assert immunity from suit
pursuant to the Barton doctrine because Mr. Murphy was acting in the performance of
his duty to a receiver and Plaintiffs have not obtained leave from the appointing
court. Second, they argue the lawsuit is barred by Florida’s litigation privilege.
Third, they argue that the statement was pure opinion and thus not actionable. And
finally, they argue Mrs. Rosetti’s loss of consortium claim is barred by Florida’s twoyear statute of limitations. DE 11.
After carefully considering defendants’ first argument regarding application of
the Barton doctrine, the Court set an evidentiary hearing on the question of whether
defendant Charles Murphy was acting pursuant to the authority of the Receiver when
the alleged libelous statements were made (“subject issue”). See DE 52. The parties
filed a Joint Motion to Continue Evidentiary Hearing, to take limited discovery
regarding the subject issue which would include procuring “target document
production” by defendants, and limited depositions of Mr. Murphy and Mr. Gordon.
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DE 53. The parties represented that they anticipated to be able to present evidence
concerning the subject issue by depositions and affidavits which would obviate the
need for an evidentiary hearing. Id.
The Court granted the motion [DE 54] and on April 28, 2017, the parties
submitted a Joint Status Report. See DE 64. They stated that the depositions of the
Receiver and Mr. Murphy were taken and that documents related to the subject issue
were produced. The parties requested that they be allowed to submit further
briefing on the subject issue, under seal, which request the Court granted. See DE
65, 67. Plaintiffs submitted a memorandum in support of their position on the issue
[DE 68] and Defendants submitted a memorandum supported by eight exhibits [DE
69]. The Court has carefully considered all relevant filings, including the
supplemental briefs and exhibits.
A motion to dismiss for lack of subject matter jurisdiction brought pursuant to
Federal Rule of Civil Procedure 12(b)(1) may present either a facial or a factual
challenge to the complaint. See McElmurray v. Consol. Gov't, 501 F.3d 1244, 1251
(11th Cir. 2007) (“McElmurray”). A factual attack “challenge[s] ‘the existence of
subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside
the pleadings . . . are considered.’” See McElmurray, 501 F.3d at 1251 (quoting
Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990)). If the defendant
challenges the factual predicate of subject matter jurisdiction, this Court may then
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go beyond the allegations of the complaint, without converting the motion to dismiss
to a summary judgment proceeding, and consider evidence to determine if there are
facts to support the jurisdictional allegations. Fed. R. Civ. P. 12(b)(1); Flournoy v.
Govt. Nat’l Mortgage Assoc., 156 F. Supp. 3d 1375, 1378 (S.D. Fla. 2016); McGee v.
Cole, 993 F. Supp. 2d 639 (S.D. W. Va. 2014). While a court must accept as true a
plaintiff's allegations, a court may dismiss a complaint on a dispositive issue of law.
Marshall Cty. Bd. of Educ. v. Marshall Cty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir.
1993) (citing Executive 100, Inc. v. Martin Cty., 922 F.2d 1536, 1539 (11th Cir. 1991)
(“the court may dismiss a complaint pursuant to Federal Rule of Civil Procedure
12(b)(6) when, on the basis of a dispositive issue of law, no construction of the
factual allegations will support the cause of action.”)).
Here, Defendants advance a factual attack on the Complaint arguing this Court
lacks subject matter jurisdiction under the Barton doctrine. See e.g., Palaxar Group,
LLC v. Williams, 2014 WL 5059286, at *15 (M.D. Fla. 2014) (granting motion to dismiss
where district court considered the Barton doctrine as a factual attack on its subject
matter jurisdiction); Estate of Jackson-Platts v. Sandnes, 2014 WL 408757, at *1 (M.D.
Fla. 2014) (same). Accordingly, this Court may properly consider evidence outside
the pleadings1 in determining whether the Complaint should be dismissed.
This Court may take judicial notice of public records without converting a
motion to dismiss into a motion for summary judgment. Universal Express, Inc. v.
U.S. S.E.C., 177 F. App’x 52, 53-54 (11th Cir. 2006). In considering a motion to
dismiss, this Court may, and does in this case, take judicial notice of the public
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The Barton doctrine, established by the Supreme Court in 1881, provides that
before suit can be brought against a court-appointed receiver, “leave of the court by
which he was appointed must be obtained.” Barton v. Barbour, 104 U.S. 126, 127
(1881); see also Davis v. Gray, 83 U.S. 203, 218 (1872) (holding that the court
appointing a receiver “will not allow him to be sued touching the property in his
charge, nor for any malfeasance as to the parties, or others, without [the court's]
consent”). The Barton Court held that if leave of court was not obtained, then the
other forum lacked subject matter jurisdiction over the suit. Barton, 104 U.S. at 127;
see also, Patco Energy Express. LLC v. Lambros, 353 F.App'x 379, 381 (11th Cir. 2009).
Part of the rationale underlying Barton is that the court appointing the receiver has
in rem subject matter jurisdiction over the receivership property. Barton, 104 U.S.
at 136. As the Supreme Court explained, allowing the unauthorized suit to proceed
“would have been a usurpation of the powers and duties which belonged exclusively
to another court.” Id. The Barton doctrine also applies to the receiver’s agents. See
Lawrence v. Goldberg, 573 F.3d 1265, 1269 (11th Cir. 2009).
Plaintiffs assert the Barton doctrine does not apply because (1) the Receiver
did not authorize Mr. Murphy to speak to the media; (2) the case in which the
record filings in the Michigan cases that are referenced in the pleadings, and
attached to the sealed supplemental filing, DE 69. See Myrtyl v. Nationstar Mortg.
LLC, Case No. 15-CIV-61206, 2015 WL 4077376, at *1 (S.D. Fla. July 6, 2015) (citing
Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1278 (11th Cir. 1999)).
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Receiver’s authority emanates was closed at the time Mr. Murphy’s statement was
made; (3) statements to the media are outside the scope of the Receiver’s duties;
and (4) the statement violated Michigan Rules of Professional Conduct. As discussed
below, Plaintiffs’ arguments do not overcome the effect of the Barton doctrine.
Authorization to Speak with the DBR
Plaintiffs argue the Barton doctrine does not apply because they specifically
allege that the Receiver did not direct Mr. Murphy to speak with the DBR, and neither
the Receiver nor the SEC have submitted a sworn statement averring that Mr.
Murphy’s alleged statement was authorized. DE 6 at ¶ 33, DE 13 at 6. In response,
the Receiver submitted a declaration stating
In response to a request for an interview from Julie Kay of the Daily
Business Review to Charles Murphy, I authorized Charles Murphy,
pursuant to Section XVII of the Order, to speak with Julie Kay regarding
the Michigan Action and proceedings involving a subpoena served on the
Greenberg Traurig firm.
See Declaration of Robert Gordon, ¶ 8, DE 19-1. After limited discovery and
supplemental briefing on the subject issue, the Receiver testified that he authorized
Mr. Murphy to speak to the press, which was within his authority to allow.2 DE 69 at
4, Ex. 4. In addition, the Receiver sent an email to Mr. Murphy granting him authority
to speak to the DBR by stating: “I don’t care if you talk to [the reporter at the DBR]
as long as it’s purely factual.” DE 69 at 4, Ex. 5. The Receiver testified that when he
See section 3, infra.
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used the word “factual,” he included authority for Mr. Murphy to give an opinion, so
long as the statement was, in fact, an accurate statement of his opinion. DE 69 at 5.
Moreover, Mr. Murphy’s statement was based directly on public court filings
such as the Receiver’s Complaint against the Rosettos in the Michigan Action (DE 114) and the Receiver’s Response to Greenberg Taurig’s Motion to Quash Subpoena
(“Receiver’s Response”) in the matter styled In re: FINRA, Case No. 090169, Case No.
13-MC-81015 (S.D. Fla. 2013) (DE 69, Ex. 7), see n.4 infra. In the Receiver’s
Response, the Receiver alleges “Bruce Rosetto was not only an attorney for the
Respondents, but also participated directly in the fraud by creating the Royal Palm
Fund specifically for the purpose of soliciting the funds of McKnight and Legis
Marketing.” DE 69 at 6, Ex. 6. In the Receiver’s Complaint, the Receiver details
Bruce Rosetto’s participation in securities fraud by explaining Bruce Rosetto’s
“control over the day-to-day policy and management such that he functioned as a
manager, partner, officer and director of the [Royal Palm Real Estate] Investment
Fund Partnership, [Royal Palm Investment] Management Company, and [Royal
Marketing Services, LLC].” See First Amended Complaint, ¶ 19, Receiver v. Bruce C.
Rosetto, Royal Palm Real Estate, et al., Case No. 09-11770 (E.D. Mich. 2009), DE 114. The Receiver alleges “. . . Bruce Rosetto recognized that Legisi was offering
untenable rates of return to its ‘members’ through the sale of unregistered securities
and, therefore, knew or should have known that Legisi was operating a Ponzi
scheme.” Id. at ¶ 38. Further, the Receiver alleges that Bruce Rosetto made
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numerous material omissions in connection with the sale of securities. Id. at ¶ 63.
Based on the foregoing, the alleged statement made to the media clearly
originate from the Receiver’s court filings. Since Murphy’s statement was a
reiteration of the position asserted by the Receiver in the pending litigation, the
contention that the alleged libelous statement to the DBR was not authorized by the
Receiver is rejected.3
Status of the Michigan Action
Plaintiffs acknowledge the general proposition that a plaintiff must obtain
leave from the appointing court in order to sue a receiver or his agents. See
Response [DE 13] at 6; Lawrence v. Goldberg, 573 F.3d 1265, 1269 (11th Cir. 2009)
(the Barton doctrine applies to actions against a receiver as well as a receiver's
counsel); Scharrer v. Fundamental Admin. Serv., LLC, 2013 WL 12169310, at *3 (M.D.
Fla. 2013) (same). They claim, however, that “the Michigan Action, the relevant case
In their supplemental memorandum of law in opposition to the Motion,
Plaintiffs ague that “Mr. Murphy was not authorized to make false statements. The
crux of this case is whether the DBR statements were false.” DE 68 at ¶ 9. Plaintiffs
further argue that “this factual attack on subject matter jurisdiction implicates an
element of Rosetto’s libel cause of action . . . [and] [a]s such, the determination of
subject matter jurisdiction is premature . . .” Id. at ¶ 10.
The Court is not examining the merits of Plaintiffs’ Complaint regarding
whether the statement was false, only whether Mr. Murphy is immune from suit
pursuant to the Barton doctrine. Simply put, was Mr. Murphy acting pursuant to the
authority of the Receiver or not? Whether the statement was libelous is not the
question. In determining whether the Barton doctrine applies, you do not look to the
merits of the claim being asserted, but to whether this Court has the authority to
hear the matter. If the Receiver or his agents had to defend the merits of the case in
order to determine whether the doctrine applied, the doctrine would be ineffectual.
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from which the Receiver’s authority emanates, was closed” when the alleged libelous
statement was made, and therefore, the Barton doctrine does not apply. Id. They
cite Buckley v. Fitzsimmons, 509 U.S. 259, 277 n.8 (1993) for the proposition that
“[Absolute immunity] does not apply to or include any publication of defamatory
matter before the commencement, or after the termination of the judicial
proceeding . . .” Id. The Court rejects Plaintiffs contention.
Plaintiffs are correct in stating that the Michigan Action was closed before the
DBR article was published. They are incorrect, however, in the inferences they
attempt to draw from that fact, namely, that because the Michigan Action was
closed, the Michigan Action was over, or that the Receiver was not still acting on
behalf of the estate. In fact, contrary to the ordinary sense of the word, it is not
unusual for a case to continue long after it is closed. See, e.g., Securities &
Exchange Comm’n v. Michael Lauer, 03-CV-80612-MARRA (closed on 9/22/09, last
order entered on 4/28/17).
The Michigan Action was closed for “administrative and statistical purposes”
pending arbitration proceedings in a related FINRA action. In the order closing the
case, the court emphasized that a live dispute still existed despite the case’s closure
Nothing in this Order or within the related docket entry shall be
construed as constituting a dismissal of the issues or representing a final
disposition of this matter.
See Order Dismissing Case Pending Arbitration Proceedings, SEC Receiver v. Bruce C.
Page 10 of 16
Rosetto, Royal Palm Real Estate, et al., Case No. 09-CV-11770 (E.D. Mich. 2009). DE
In fact, the record reveals that the Receiver reported to the court on June 5,
2015, over one year after Mr. Murphy’s comments to the DBR, that he was continuing
to monitor the Michigan Action. See, Tenth Interim Report of Receiver dated June 5,
2015, Securities & Exchange Comm’n v. McKnight, et al., Case No. 08-CV-11887 (E.D.
Mich. 2008) (“The Receiver intends to continue . . . pursuing the Estate’s claims . . .
in the Royal Palm litigation). DE 11-6 at 7-8. Thus, despite the fact the case in which
the Receiver was appointed was technically closed for administrative and statistical
purposes, it was not dismissed, and the Receiver and his agents were still active in
the litigation4 at the time of the alleged libelous statements.
Statements Made to the Media
Plaintiffs also claim that the Barton doctrine does not apply because Mr.
Murphy’s statements were made to the media. This argument is unpersuasive. The
Order Appointing Receiver specifically states “[t]he Receiver is authorized to
communicate with all such persons as he deems appropriate to inform them of the
status of this matter and the financial condition of the Receiver Estates.” See DE 11-
Case in point, the Receiver and his agents were involved in a subpoena
related action with Greenberg Taurig in the matter styled In re: FINRA, Case No.
090169, Case No. 13-MC-81015 (S.D. Fla. 2013) (“Subpoena Action”). The Subpoena
Action was the basis of the DBR article that stemmed from the Receiver’s subpoena
to Greenberg Traurig, Bruce Rosetto’s employer, seeking various files related to
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1 at 9. In his deposition, the Receiver testified that the media are encompassed
within the persons he deems appropriate to inform of the status of the Michigan
Action. DE 69 at 8-9, Exh. 4, Gordon Depo. 28-29. Further, the order appointing the
In no event shall the Receiver or Retained Personnel be liable to anyone
for their good faith compliance with their duties and responsibilities as
Receiver or Retained Personnel, nor shall the Receiver or Retained
Personnel be liable to anyone for any actions taken or omitted by them
except upon a finding by this Court that they acted or failed to act as a
result of malfeasance, bad faith, gross negligence, or in reckless
disregard of their duties.
See id. at 4.
In Property Management & Investments, Inc. v. Lewis, 752 F.2d 599 (11th Cir.
1985) (“Property Management”), the appellant alleged that the receiver caused
injury to and destruction of its business property by, among other things, “maliciously
and deliberately releas[ing] news reports to the media ... that were false and
defamatory.” The appellant provided examples of the alleged defamatory reports
released to the media which concerned the financial activities of the appellant that
had led to the state court lawsuit and the establishment of the receivership. The
Eleventh Circuit Court of Appeals found that this action did not indicate that the
receiver engaged in activities prima facie beyond the scope of his official function.
Property Management, 752 F.2d at 603. Since nothing in the complaint “indicated
that [the receiver] had acted outside his authority,” the court held the action was
properly dismissed pursuant to Fed. R. Civ. P. 12(b)(6) on grounds of immunity.
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Property Management, 752 F.2d at 604.
Plaintiffs argues Property Management is distinguishable on the facts because
in Property Management, the receiver was active, the receiver’s statements were
arguably within the scope of his duties, and there were no allegations of professional
misconduct. DE 13 at 7-8. Plaintiffs also argue that Property Management was
decided before Ball v. D'Lites Enterprises, Inc., 65 So.3d 637 (Fla. Dist. Ct. App. 2011)
(“Ball”) and Buckley v. Fitzsimmons, 509 U.S. 259 (1993) (“Buckley”). The state
court of appeal in Ball held that absolute immunity afforded by the litigation
privilege did not extend to statements made to the world at large through a website
and which were not made in connection with a judicial proceeding. Ball, 65 So.3d at
641. The Supreme Court in Buckley held that prosecutors are entitled to absolute
immunity for prosecutorial acts, but not for investigative or administrative acts.
Buckley, 509 U.S. at 278.
These arguments are unpersuasive. See section 1 and 2 supra, and section 4,
infra. Moreover, neither Ball nor Buckley relate to a receivers’ immunity or the
Barton doctrine. As such, neither case has any relevance to the scope of a receiver’s
agent’s duties or the application of the Barton doctrine. Accordingly, Plaintiffs’
position that statements to media are categorically beyond the scope of a receiver’s
duties is rejected.
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Michigan Rules of Professional Conduct
Plaintiffs assert that Mr. Murphy’s statement to the DBR demonstrates that the
statement falls outside the scope of the Receiver’s authority because it violates the
Michigan Rule of Professional Conduct (“MRPC”) 3.6. MRPC 3.6, Trial Publicity,
provides, in relevant part:
A lawyer who is participating or has participated in the
investigation or litigation of a matter shall not make an extrajudicial statement that
the lawyer knows or reasonably should know will be disseminated by means of public
communication and will have a substantial likelihood of materially prejudicing an
adjudicative proceeding in the matter. A statement is likely to have a substantial
likelihood of materially prejudicing an adjudicative proceeding when it refers to a
civil matter triable to a jury, a criminal matter, or any other proceeding that could
result in incarceration, and the statement relates to:
the character, credibility, reputation, or criminal record of a party, of a
suspect in a criminal investigation or of a witness, or the identity of a
witness, or the expected testimony of a party or witness;
Notwithstanding paragraph (a), a lawyer who is participating or has
participated in the investigation or litigation of a matter may state without
elaboration:(1) the nature of the claim, offense, or defense involved;(2) information
contained in a public record;(3) that an investigation of a matter is in progress;
No lawyer associated in a firm or government agency with a lawyer
subject to paragraph (a) shall make a statement prohibited by paragraph (a).
Plaintiffs argue that Mr. Murphy’s extrajudicial statement to the DBR stating
that the Receiver’s investigation “conducted to date has confirmed that Mr. Rosetto
participated in securities fraud . . .” violates MRPC 3.6 because it bears upon Mr.
Rosetto’s character, reputation and his anticipated testimony. “Defendants’ breach
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of their ethical obligation further demonstrates that their statement falls outside the
scope of the Receiver’s authority.” DE 13 at 7.
In the first instance, it should be apparent that a receiver can never be given
the power to commit a tort, nor could he authorize one of his agents to commit a
tort. Mr. Murphy acknowledges that to be the case by admitting the Receiver would
not authorize him to violate the Michigan Rules of Professional Conduct. DE 69 at 7.
But as previously indicated,5 the question is not whether the alleged libelous
statement made by Mr. Murphy violated the Michigan Rules of Professional Conduct.
The question is when he made the alleged statement, was he acting under and
pursuant to the authority of Receiver? Whether the statement was, in fact, libelous
or a violation of the Michigan Rules of Professional Conduct is not the question at this
juncture. Once again, if all a plaintiff had to do to circumvent the Barton doctrine
was allege a receiver or his agents committed a tort, the doctrine would be
eviscerated. Because Mr. Murphy was acting pursuant to and under the authority of
the Receiver, the claim that he violated the Michigan Rules of Professional Conduct is
irrelevant to the instant analysis.
The Court finds that the Barton doctrine applies in this case and that Plaintiffs
must obtain leave from the court that appointed the Receiver in Securities &
See n. 3, supra.
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Exchange v. Gregory N. McKnight and Legisi Holdings, LLC, Case No. 08-11887 (E.D.
Mich. 2008) in order to bring this action in this Court. Accordingly, it is hereby
ORDERED AND ADJUDGED that Defendants’ Motion to Dismiss Plaintiffs’
Amended Complaint [DE 11] is GRANTED based on lack of subject matter jurisdiction
under the Barton doctrine. Because the Court lacks subject matter jurisdiction, the
remainder of Defendants’ motion has been rendered moot. Plaintiffs’ Motion for
Leave to File Second Amended Complaint [DE 38], which seeks to add a claim for
punitive damages, is denied as moot. This case is dismissed without prejudice. Any
other pending motions are denied as moot. This case is closed.
DONE AND ORDERED in Chambers at West Palm Beach, Palm Beach County,
Florida, this 30th day of June, 2017.
KENNETH A. MARRA
United States District Judge
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