FLATAU et al v. SHERMAN FINANCIAL GROUP LLC et al

Filing 73

ORDER GRANTING 66 Motion to terminate the stay and GRANTING motion to file second amended and recast complaint. The second amended complaint will not moot the pending motions to dismiss. However, the Court wi ll allow the Defendants 14 days from the date of this order to supplement their motions to dismiss should they feel that is necessary. Greene & Cooper, LLP is DISMISSED without prejudice from this action, and Arrow Financial Services LLC is JOINED as a Defendant. Ordered by US DISTRICT JUDGE MARC THOMAS TREADWELL on 6/23/2015. (tlh)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
MACON DIVISION
WILLIAM M. FLATAU, et al.,
Plaintiffs,
v.
SHERMAN FINANCIAL GROUP LLC,
SHERMAN ORIGINATOR LLC,
SHERMAN ACQUISITIONS LLC, LVNV
FUNDING LLC, RESURGENT CAPITAL
SERVICES LP, GREENE AND COOPER
LLP, and ATLAS ACQUISITIONS LLC,
Defendants.

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CIVIL ACTION NO. 5:14-CV-245 (MTT)

ORDER
Before the Court is the Plaintiffs’ motion to terminate the stay and renewed
motion for leave to file a second amended and recast complaint.1 (Doc. 66). The
Defendants do not oppose lifting the stay. Accordingly, the Plaintiffs’ motion to
terminate the stay is GRANTED.
In the proposed second amended complaint, the Plaintiffs seek to “streamline”
the facts relevant to the Georgia R.I.C.O. Act claim, add allegations regarding service of
process in the state court proceedings, “add Arrow Financial Services LLC as a
defendant,” and “remove Greene & Cooper as a defendant.” (Docs. 71 at 6; 71-1).
Leave to amend should be “freely give[n] ... when justice so requires.” Fed. R. Civ. P.
1

When the Plaintiffs moved the court to stay the case on December 11, 2014, they also moved the Court
to permit the Plaintiffs to file a second amended and recast complaint after the state court’s resolution of
their motion to set aside the default judgment. (Doc. 56). The Court granted the motion to stay, but the
Plaintiffs’ motion to file a second amended complaint remained pending. (Doc. 63). The Plaintiffs now
renew that pending motion.

15(a)(2). The Court “need not, however, allow an amendment (1) where there has been
undue delay, bad faith, dilatory motive, or repeated failure to cure deficiencies by
amendments previously allowed; (2) where allowing amendment would cause undue
prejudice to the opposing party; or (3) where amendment would be futile.” Bryant v.
Dupree, 252 F.3d 1161, 1163 (11th Cir. 2001) (citing Foman v. Davis, 371 U.S. 178,
182 (1962)). “[D]enial of leave to amend is justified by futility when the complaint as
amended is still subject to dismissal.” Hall v. United Ins. Co. of Am., 367 F.3d 1255,
1263 (11th Cir. 2004) (internal quotation marks and citation omitted).
The Defendants oppose allowing the Plaintiffs to file a second amended
complaint and argue the Court should rule on the pending motions to dismiss the
current amended complaint. The primary focus of the Defendants’ motions to dismiss is
a factual attack on the Court’s subject matter jurisdiction pursuant to the RookerFeldman doctrine. (Docs. 20-22). When a defendant makes a factual attack on a
court’s subject matter jurisdiction, the court is permitted to consider matters outside the
pleadings and weigh the evidence to ensure that it has the power to hear the case.
Lawrence v. Dunbar, 919 F.3d 1525, 1529 (11th Cir. 1990). “In the face of a factual
challenge to subject matter jurisdiction, the burden is on the plaintiff to prove that
jurisdiction exists.” OSI, Inc. v. United States, 285 F.3d 947, 951 (11th Cir. 2002)
(citations omitted).
Because the Rooker-Feldman doctrine is the threshold and primary issue in the
Defendants’ motions to dismiss, it is in the interest of justice to allow the Plaintiffs, who
bear the burden to prove subject matter jurisdiction, to file their second amended
complaint. The Plaintiffs seek to streamline the facts and clarify the legal issues so that

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the case may proceed more efficiently and to support its contention that subject matter
jurisdiction exists. For example, in the first amended complaint, the Plaintiffs suggest a
different Calvin Davis was sued in state court. (Doc. 10, ¶¶ 39, 64). Actually, the
argument that a different Calvin Davis was sued is more clearly stated in the Plaintiffs’
briefing. (Doc. 32 at 2 (“Will the real Calvin Davis please stand up?”)). This argument
became problematic when documents surfaced suggesting a connection between the
“real” Calvin Davis and the address for the Calvin Davis sued in state court. (Doc. 461). In the proposed second amended complaint, the Plaintiffs allege facts supporting
their new argument that Calvin Davis was not properly served in the state court action.
The Court agrees the second amended complaint will clarify the facts relevant to the
determination of subject matter jurisdiction.
Accordingly, the Court does not find that the Plaintiffs’ motion to amend is futile.
Neither has there been undue delay, bad faith, dilatory motive, or repeated failure to
cure deficiencies. And allowing the amendment will not cause undue prejudice to the
Defendants. Thus, the Plaintiffs’ motion to file a second amended and recast complaint
is GRANTED. (Doc. 66). As the Plaintiffs acknowledge, the second amended
complaint will not moot the pending motions to dismiss. However, the Court will allow
the Defendants 14 days from the date of this order to supplement their motions to
dismiss should they feel that is necessary.
Finally, as requested by the Plaintiffs, Greene & Cooper, LLP is DISMISSED
without prejudice from this action, and Arrow Financial Services LLC is JOINED as a
Defendant.

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SO ORDERED, this 23rd day of June, 2015.
S/ Marc T. Treadwell
MARC T. TREADWELL
UNITED STATES DISTRICT COURT

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