CECILIA M. ALTONAGA, District Judge.
This case arises from an allegedly fraudulent scheme in which Plaintiffs purchased pre-converted condominium units in Orlando,
Plaintiffs were provided promotional materials by agents of Cay Clubs, stressing the partnership between Cay Clubs and IMG. (See id. at ¶¶ 190-92). On June 1, 2006, Ricky Stokes ("Stokes"), an agent of Cay Clubs, conducted a promotional "webinar" in which he made the following representations, among others:
• We're going to take this property and turn it into an IMG academy.
• IMG Academies is now joined with us, Cay Clubs in Orlando, and they're moving most of their soccer facilities to the Orlando Cay Club and that is going to be one of the biggest drivers that we're going to have with our property in Orlando.
• [The relationship with IMG] drives people to our property, which decreases the vacancy rate, which increases money in your pocket, which improves our exit strategy and says what we're telling you is true.
• IMG alone is going to represent about 50 percent occupancy in the entire project.
• Because IMG Academies becomes part of the complex, needless to say, the property values for the entire area escalate above normal appreciation values.
(Id. at ¶ 190). In another June 1, 2006 webinar, Stokes represented that IMG had agreed to bring all of its soccer training to Orlando, meaning "they have already spoken for—before we've even begun the renovations they've spoken for 60 to 70 percent of the occupancy of this entire project virtually forever." (Id. at ¶ 192).
Plaintiffs received marketing materials from Cay Clubs which included the following representation:
(Id. at ¶ 194) (emphasis in original). Cay Clubs' websites discussed the partnership between Cay Clubs and IMG, including such statements as:
(Id. at ¶ 198) (emphasis in original). IMG also made public statements on its website discussing a partnership with Cay Clubs, stating that:
(Id. at ¶ 205) (emphasis in original).
IMG promoted the Cay Club Resort and Academy through its real estate office, stating:
(Id. at ¶ 206). IMG representatives conducted tours of the IMGA Bradenton facility for prospective buyers of units in the Orlando Cay Club Resort and Academy in which IMG spoke directly about its partnership with Cay Clubs and Cay Clubs' designation as its exclusive real estate developer and partner. (See id. at ¶ 207).
Cay Clubs represented to Plaintiffs it was partnered with Sunvest through such means as a marketing brochure that stated, "The developer is Sunvest. Their department that does rehab resort projects at the wholesale level is Cay Clubs . . . Sunvest is the largest resort developer in the country." (Id. at ¶ 216). Due diligence materials also stated, "The cay clubs companies have a
Sunvest represented that it was involved in the project with Cay Clubs and IMG. Sunvest published and distributed a newsletter that addressed its strategic alliance with Cay Clubs and IMG Academies. (See id. at ¶ 220). In an SEC filing, Sunvest noted joint venture projects with Cay Clubs. (See id. at ¶ 221).
Each Plaintiff entered into a Purchase and Sale Agreement ("PSA")with an entity known as DC720JV, LLC, a subsidiary of Cay Clubs. (See id. at ¶ 230). After the execution of the Purchase and Sale Agreements, but prior to closing, Sunvest would sell the units to DC720JV, LLC. (See id.). DC720JV, LLC would then sell the units to individual buyers at prices higher than the prices it had paid to Sunvest. (See id.). Sunvest directly participated in the marketing and sale of units through its real estate brokers and agents. (See id. at ¶ 222).
Prior to the purchase of the units, Plaintiffs were provided sample appraisals of the units. (See id. at ¶ 234). The appraisals were typically $100,000 higher than the purchase prices agreed to by the Plaintiffs. (See id.). For example, on October 9, 2006, an appraiser appraised a Plaintiff's unit at $510,000; that Plaintiff purchased the unit for approximately $400,000. (See id.). The unit was recently appraised at $90,000. (See id.).
Plaintiffs each executed "leaseback" agreements at closing, in which they agreed to lease the property back to Cay Clubs for two years. (See id. at ¶ 237). The purpose of the leaseback was to allow Plaintiffs an income stream to maintain the condominiums while Cay Clubs developed the property. (See id.). Plaintiffs were to receive the leaseback funds 45 days after closing. (See id.). The leaseback funds were not escrowed and were not paid to Plaintiffs, or only minimally paid. (See id. at ¶ 238). Many units leased back to Cay Clubs were subleased by Sunvest to third party renters, and Sunvest retained the rent proceeds. (See id. at ¶ 239).
The PSAs entered into between Plaintiffs and DC720JV, LLC contained disclaimers concerning earlier representations about the property. (See id. at ¶ 242). The Purchase and Sale Agreements contained materially different terms from the oral representations made to the Plaintiffs. (See id.). Among the disclaimers and acknowledgments contained in the PSAs are such statements as:
(PSA, Exhibit A to Declaration of Peter W. Homer [D.E. 12-2], at 1) (bold text in original). Additional material provisions state;
(Id. at ¶ 1).
(Id. at ¶ 3).
(Id. at ¶ 5).
(Id. at ¶ 9).
(Id. at ¶ 13.6).
(Id. at ¶ 15.1).
(Id. at ¶ 25.4).
(Id. at ¶ 25.5).
(Id. at ¶ 38).
(Id. at ¶ 41).
No development of any kind nor any condominium conversions ever took place at the Eaglewood Apartments. (See Compl. at ¶ 243). Plaintiffs paid more than $70 million in purchase money and thousands in membership fees, and none of these monies were ever returned to Plaintiffs. (See id.). Plaintiffs allege the properties they purchased are essentially worthless, located in a "low-end abandoned moldy bug and rodent infested apartment complex." (Id.)
Plaintiffs filed suit against Sunvest and IMG, asserting the following counts: (1) Count One for declaratory relief under the Florida Deceptive and Unfair Trade Practices Act (the "FDUTPA"), Fla. Stat. § 501.201 et. seq.; (2) Counts Two and Three for violations of the FDUTPA;
II. LEGAL STANDARD
A motion to dismiss a complaint for failure to state a claim requires that a court accept the facts pleaded as true and construe them in the light most favorable to the plaintiff. See Quality Foods de Centro America, S.A. v. Latin American Agribusiness Dev. Corp., S.A., 711 F.2d 989, 994-95 (11th Cir.1983). "Federal Rule of Civil Procedure 8(a)(2) requires only `a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to `give the defendant fair notice of what the . . . claim is and the grounds upon which it rests. . . .'" Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). Nevertheless, "[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations. . . a plaintiff's obligation to provide the `grounds' of his `entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. . . ." Id. at
The analysis of a 12(b)(6) motion is limited primarily to the face of the complaint and attachments thereto. Brooks v. Blue Cross & Blue Shield, 116 F.3d 1364, 1368-69 (11th Cir.1997). However, where the plaintiff refers to certain documents in the complaint and those documents are central to the plaintiff's claim, then the Court may consider the documents part of the pleadings for purposes of a Rule 12(b)(6) dismissal, and having such documents attached to the motion to dismiss will not require conversion of the motion into a motion for summary judgment. (Id.). Furthermore, the Court may take judicial notice of public records, in this instance documents filed in a state court lawsuit between the parties, without converting the motion to dismiss to a summary judgment motion. See Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1280 (11th Cir.1999) (court may consider public SEC records at motion to dismiss stage without requiring automatic conversion to the summary judgment stage).
Defendants assert that all of Plaintiffs' claims must fail, for various reasons. Each argument is addressed in turn.
A. The FDUTPA
Defendants challenge Plaintiffs' FDUTPA claims stated in Counts One, Two and Three. Four principal reasons are advanced: (1) the written contracts bar Plaintiffs from asserting FDUTPA claims; (2) Plaintiffs have failed to plead Defendants' direct involvement in the unfair trade practices complained about; (3) Plaintiffs do not have standing to seek declaratory relief; and (4) Plaintiffs have failed to plead the FDUTPA counts with the requisite particularity. These arguments fail to persuade.
1. The Written Contracts Do Not Bar Plaintiffs' FDUTPA Claims
Defendants assert "[i]t is well-settled under Florida law that a plaintiff's reliance on a defendant's alleged prior misrepresentations that contradict the express terms of the ensuing written agreement is unreasonable as a matter of law, and bars recovery under both the FDUTPA and claims of fraudulent inducement." (Defendants' Motion to Dismiss ("Mot. Dismiss") [D.E. 12] at 6). Defendants assert the various disclaimers found in the PSAs mandate that Plaintiffs' FDUTPA claims be dismissed.
In support of this assertion, Defendants cite several cases in which district courts in the State of Florida, applying Florida law, have dismissed FDUTPA and fraudulent inducement claims based on disclaimer language and integration clauses in contracts between the parties. See Century Land Dev., L.P. v. FFL Dev., L.L.C., No. 07-14377, 2008 WL 1850753 (S.D.Fla. Apr. 24, 2008); Garcia v. Santa Maria Resort, Inc., 528 F.Supp.2d 1283 (S.D.Fla.2007); Zlotnick v. Premier Sales Group, Inc., 431 F.Supp.2d 1290 (S.D.Fla.2006). The cases cited by Defendants involved defendants who were parties to contracts that contradicted prior representations, and are therefore distinguishable from the facts alleged here. In this case, Defendants are not alleged to be parties to any contracts with Plaintiffs.
Defendants have expressly disavowed any connection to the Purchase and Sale Agreements entered into by Plaintiffs and DC720JV, LLC. In March, 2008, IMG and Sunvest moved the state court in Orange County, Florida, to stop arbitration proceedings Plaintiffs had initiated against them. (See Plaintiffs' Memorandum of Law in Opposition to Defendants' Motion to Dismiss ("Plaintiffs' Response"), Exhibit A [D.E. 38-2]). The arbitration proceedings brought by Plaintiffs were based upon an arbitration clause contained in the PSAs. In its Application to Stay Arbitration Proceeding, IMG stated "IMGA is not a party to any contracts with Respondents, let alone any contracts with them that contain any arbitration provisions." (Id. at 2). Similarly, Sunvest stated it "is neither a party to the purchase and sale agreement . . . nor to any purchase and sale agreement with Defendants." (Id. at 13).
"A non-signatory to a contract cannot invoke the benefits of a contract and, at the same time, disavow portions that impose an obligation." Doeff v. Transatlantic Reinsurance Co., No. 07-2110, 2007 WL 4373041, at *4 (E.D.Pa. Dec. 13, 2007) (citations omitted). "The doctrine of equitable estoppel prevents a [party] from asserting that the contract's arbitration clause does not bind him because he did not sign the contract while simultaneously seeking to enforce those provisions that benefit him." Id. (citation omitted); see also Int'l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411, 418 (4th Cir.2000) ("In the arbitration context, . . . a party may be estopped from asserting that the lack of his signature on a written contract precludes enforcement of the contract's arbitration clause when he has consistently maintained that other provisions of the same contract should be enforced to benefit him.").
2. Plaintiffs Sufficiently Pled Defendants' Involvement in the Unfair and Deceptive Trade Practices
Defendants next argue that Plaintiffs have not sufficiently pled Defendants' involvement in any unfair or deceptive trade practices. According to Defendants
(Mot. Dismiss at 10-11). Such allegations, Defendants claim, are insufficient to state a claim under the FDUTPA.
To state a claim under the FDUTPA, one need not show the defendant was the principal actor involved in the violative acts, or that the defendant initiated those acts. See Sundance Apartments I, Inc. v. General Elec. Capital Corp., 581 F.Supp.2d 1215, 1222 (S.D.Fla. 2008) (it is sufficient to allege that a party directly participated in a violation of the FDUTPA, even if that violation was initiated by another); K.C. Leisure, Inc. v. Haber, 972 So.2d 1069, 1073-74 (Fla. 5th DCA 2008) (FDUTPA liability extends beyond the corporate seller to others who participated in the deceptive acts). What one must allege to state a claim under the FDUTPA is (1) a deceptive act or unfair practice; (2) causation; and (3) actual damages. Rollins, Inc. v. Butland, 951 So.2d 860, 869 (Fla. 2d DCA 2006).
In their Complaint, Plaintiffs make several specific allegations against IMG and Sunvest to demonstrate Defendants' participation in the FDUTPA violations. Plaintiffs allege IMG posted statements on its website stating Cay Clubs is IMG's "in-house real estate development partner," and provided links to the Orlando Cay Clubs' website (see Compl. at ¶ 205); IMG promoted the project through its real estate sales office, stating "[a]n Academy Realty sales agent will provide the utmost professional expertise in not only advertising your unit in the marketing mediums our corporate office has deemed most effective, but, more importantly, in receiving top dollar for the value of your unit within the Orlando Cay Club Resort and Academy" (id. at ¶ 206); and IMG conducted tours of its Bradenton facility to prospective buyers of units in the Orlando Cay Club Academy, and explained it was involved in the Orlando Cay Clubs development. (See id. at ¶ 207). These allegations are more than sufficient to demonstrate IMG's involvement with and participation in the development scheme.
As to Sunvest, Plaintiffs allege that in a newsletter published and distributed by Sunvest, it discussed its strategic alliance with Cay Clubs and IMG in the Orlando
Plaintiffs have sufficiently alleged Defendants' participation in the development project and specific representations made by each Defendant to establish FDUTPA liability against Defendants.
3. Plaintiffs Have Standing to Seek Declaratory Relief under the FDUTPA
Defendants assert Plaintiffs lack standing to seek declaratory relief under the FDUTPA, arguing "[t]o obtain declaratory or injunctive relief, a plaintiff must demonstrate that there was a violation of the law, that there is a serious risk of continuing irreparable injury if the relief sought is not granted, and the absence of an adequate remedy at law." (Mot. Dismiss at 11). Defendants claim because Plaintiffs have not alleged an ongoing violation, they lack standing for injunctive or declaratory relief. (See id.). Defendants are confusing the requirements for injunctive or declaratory relief under federal statutes with the quite different requirements under the FDUTPA.
Section 501.211, Florida Statutes, states as follows:
As the Florida First District Court of Appeal has explained, "[s]ection 501.211(1), Florida Statutes[,] is broadly worded to authorize declaratory and injunctive relief even if those remedies might not benefit the individual consumers who filed the suit." Davis v. Powertel, Inc., 776 So.2d 971, 975 (Fla. 1st DCA 2000). The FDUTPA "is designed to protect not only the rights of litigants, but also the rights of the consuming public at large." Id.; see also Hialeah Automotive, LLC v. Basulto, No. 3D07-855, ___ So.3d ___, 2009 WL 187584 (Fla. 3d DCA 2009) (finding declaratory relief an available remedy under Fla. Stat. § 501.211(1)); Schauer v. Morse Operations, Inc., 5 So.3d 2, 7 (Fla. 4th DCA 2009) ("[S]ection 501.211 provides that a person aggrieved by a violation of FDUTPA may obtain a declaratory judgment that an act or practice violates FDUTPA.").
The statute is clear on its face. Any person aggrieved by a violation of the FDUTPA may seek declaratory and/or injunctive relief under the statute. There is no requirement that a plaintiff show an ongoing practice or irreparable harm, and declaratory relief is available regardless of whether an adequate remedy at law also exists. Because Plaintiffs have stated a claim of a violation of the FDUTPA, they
Plaintiffs also satisfy the requirements for threshold standing under Article III. "`[S]tanding is a threshold jurisdictional question which must be addressed prior to and independent of the merits of a party's claims.'" Bochese v. Town of Ponce Inlet, 405 F.3d 964, 974 (11th Cir.2005) (quoting Dillard v. Baldwin County Comm'rs, 225 F.3d 1271, 1275 (11th Cir.2000)). "To have standing, a plaintiff must establish (1) an injury in fact, which is concrete and particularized and actual or imminent; (2) a causal connection between the injury and the causal conduct; and (3) a substantial likelihood that a favorable decision will redress the injury." Amnesty Intern., USA v. Battle, 559 F.3d 1170, 1177 (11th Cir.2009) (citing Granite State Outdoor Adver. v. City of Clearwater, Fla., 351 F.3d 1112, 1116 (11th Cir.2003)).
Plaintiffs have established the requisite elements for Article III standing. Plaintiffs allege a clear injury in fact: the loss of over $70 million. Plaintiffs have also demonstrated the causal connection between the Defendants' misrepresentations and Plaintiffs' loss. Finally, Plaintiffs maintain that if the Court enters a declaratory judgment that Defendants' conduct violates the FDUTPA, Plaintiffs will be able to seek redress for their losses.
4. Plaintiffs' FDUTPA Claims Are Pled with Sufficient Particularity
Defendants argue Plaintiffs' FDUTPA claims are not pled with sufficient particularity to satisfy Fed.R.Civ.P. 9(b). The requirements of Rule 9(b) do not apply to claims under the FDUTPA. "FDUTPA was enacted to provide remedies for conduct outside the reach of traditional common law torts such as fraud, and therefore, `the plaintiff need not prove the elements of fraud to sustain an action under the statute.'" Florida v. Tenet Healthcare Corp., 420 F.Supp.2d 1288, 1310 (S.D.Fla.2005) (quoting Davis, 776 So.2d at 974). Because Rule 9(b) does not apply to FDUTPA claims, its requirements cannot serve as a basis to dismiss those claims.
B. Fraudulent Inducement
Defendants contend Count Four, alleging fraudulent inducement, fails for two reasons: (1) the disclaimers in the contracts bar the claim; and (2) the claim is not pled with sufficient particularity to satisfy Fed.R.Civ.P. 9(b).
1. The Written Contracts Do Not Bar Plaintiffs' Fraudulent Inducement Claim
As is the case with the FDUTPA claims, because Defendants are not parties to the contracts, they may not benefit from its disclaimers. The PSAs therefore do not affect the viability of Plaintiffs' claim of fraudulent inducement.
2. The Fraudulent Inducement Claim Is Pled with Sufficient Particularity
Rule 9(b), Fed.R.Civ.P., provides: "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Defendants argue Plaintiffs' claim of fraudulent inducement is not pled with sufficient particularity to satisfy Rule 9(b). Interpreting Rule 9(b), the Eleventh Circuit has explained:
Ziemba v. Cascade Int'l, Inc., 256 F.3d 1194, 1202 (11th Cir.2001) (quoting Brooks v. Blue Cross and Blue Shield of Florida, Inc., 116 F.3d 1364, 1371 (11th Cir.1997)).
As summarized above, Plaintiffs have made many specific allegations of fraud, including exactly what misleading statements were made, when and where they were made, and in several instances, by whom they were made. "Plaintiffs are not expected to specify the exact time and the particular place of each factual omission or misrepresentation, but they must provide a sufficiently narrow time frame from which defendants could derive notice as to when the misrepresentations were made." Flamenbaum v. Orient Lines, Inc., No. 03-22549-CIV, 2004 WL 1773207, at *6 (S.D.Fla. July 20, 2004). Plaintiffs' allegations of fraud are sufficient to put Defendants on notice as to the precise misconduct with which they are charged, and therefore satisfy Rule 9(b).
Defendants further argue that Plaintiffs lump Defendants together in an impermissible fashion. (See Mot. Dismiss at 12). A review of the Complaint shows just the opposite. Plaintiffs clearly delineate which statements are attributed to Cay Clubs and its agents, which are attributed to IMG and its agents, and which to Sunvest and its agents. Finally, Defendants argue that Plaintiffs fail to identify which specific Plaintiffs heard or read which misleading statements. This argument does not address Rule 9(b) issues; rather, Defendants here are arguing reliance, which goes to the merits of the claim rather than any pleading deficiency.
In sum, Plaintiffs have sufficiently pled their fraudulent inducement claim to satisfy Rule 9(b), and dismissal is not warranted.
C. Conversion and Civil Theft
1. Plaintiffs State a Claim for Conversion
Defendants argue Plaintiffs' claims for conversion and civil theft in Count Five must be dismissed. They maintain that because the property alleged to have been converted is money, which is fungible, the money must be specifically identifiable or the claim fails. (See Mot. Dismiss at 14). Defendants cite cases from Florida courts and explain that Florida recognizes conversion claims for money only in limited circumstances in which, for instance, a bailor improperly delivered an envelope full of money, or a bank failed to deposit a bag of money into the proper account. (See id.). Defendants cite to Fla. Desk, Inc. v. Mitchell Intern., Inc., 817 So.2d 1059 (Fla. 5th DCA 2002), and Belford Trucking Co. v. Zagar, 243 So.2d 646 (Fla. 4th DCA 1970).
The circumstances under which Florida courts recognize conversion claims of money are not quite as limited as Defendants suggest. While bailment scenarios may constitute the majority of money conversion cases, conversion of money may also exist when a party pays money to another for a specific purpose, as long as the money is "delivered at one time, by
In this case, Plaintiffs claim Defendants took their money, which was delivered by each Plaintiff at one time, by one act, and in one mass when each Plaintiff closed on a particular unit at Eaglewood Apartments. Plaintiffs allege that when Defendants took their money, they had no intention of delivering the promised consideration in exchange for the funds, namely, the transformation of the apartment complex into a luxury resort.
Defendants argue the facts of this case are distinguishable from the cases relied on by Plaintiffs. They first argue that several of the cases cited by Plaintiffs involve the payment of monies which were to be held in specific, discrete accounts, whereas here, Plaintiffs' payments were not required to be held in discrete accounts. (See Reply at 15). Although this factual distinction exists, the holdings of these cases were not based on the discrete account factor, but on the "at one time, by one act, in one mass" factor, which is satisfied in this case.
Defendants also attempt to distinguish Rosenthal Toyota, Inc., 824 F.2d 897. In Rosenthal, the plaintiff car dealer paid the Toyota distributor for the delivery of several vehicles. Id. at 899. The distributor deposited the dealer's check, but never delivered the cars. Id. The car dealer provided evidence to show the distributor did not intend to deliver the cars when it cashed the car dealer's checks. Id. at 900. The car dealer filed suit against the distributor alleging conversion and civil theft, among other counts, and the Eleventh Circuit affirmed a jury verdict in favor of the plaintiff on all counts. Id. at 906.
Defendants argue the facts of this case differ from Rosenthal because in Rosenthal, when the plaintiff delivered the funds, the specific property he was to receive was given to another person. In this case, Defendants maintain, "at the time Plaintiffs delivered their funds to DC720JV, LLC, they received from DC720JV, LLC exactly what they paid for under the contract: an `as is' condominium unit." (Reply at 16).
Plaintiffs dispute they paid for "as is" condominium units. They further dispute that the terms of the Purchase and Sale Agreements were clear as to the "as is" condition of the units. Notably, the PSAs contain language related to construction completion dates and permitting, including deadlines for the seller to complete construction on the units. (See PSA at ¶¶ 5, 9). Those paragraphs clearly contemplate improvements being made by the seller.
Plaintiffs allege that when they paid the full purchase price of the converted, luxury condominium units to DC720JV, LLC, they did so based upon representations made by Defendants. They further allege that at the times of payment, Defendants had no intention of performing any of the improvements represented to Plaintiffs. According to Plaintiffs, Defendants simply
2. Plaintiffs State a Claim for Civil Theft
Defendants argue that if Plaintiffs' conversion claim fails, the civil theft claim must also fail. Defendants further argue Plaintiffs' civil theft claim must fail because Plaintiffs do not allege criminal intent. Under Florida law, "[t]o establish a claim for civil theft, a party must prove that a conversion has taken place and that the accused party acted with criminal intent." Gasparini v. Pordomingo, 972 So.2d 1053, 1056 (Fla. 3d DCA 2008).
Because Plaintiffs have successfully pled a claim for conversion, they need only allege criminal intent for the civil theft claim to survive. Plaintiffs need not prove criminal intent at this juncture; they need only plead it, which they have. Plaintiffs allege Defendants acted "knowingly and with the intent to permanently deprive each Plaintiff of their property, and appropriate it to their own use or the use and benefit of others not entitled to it." (Compl. at ¶ 284). Plaintiffs have stated a claim for civil theft sufficient to survive a motion to dismiss.
D. Purported Partnership
Plaintiffs seek to hold Defendants liable not only for their own conduct, but for the conduct of Cay Clubs as well, based on a purported partnership theory. Defendants argue Plaintiffs' theory fails and no liability can attach to Defendants for any acts of Cay Clubs.
Florida Statute Section 620.8308 provides:
Consistent with the statute, Plaintiffs' Complaint alleges a purported partnership existed between Defendants and Cay Clubs such that liability will attach to Defendants for Cay Clubs' actions.
Nevertheless, Defendants argue that under Florida law, purported partnership liability attaches only when a plaintiff has extended credit to a purported partnership, or has entered into a contractual relationship with the purported partner. Liability will not attach, according to Defendants, for tort actions. Defendants begin their argument in support of this position relying on Florida Statute Section 620.635, the predecessor to Section 620.8308. Section 620.635 did, indeed, limit purported partnership liability to cases in which the plaintiff had extended credit on the faith of the partnership representation. However, Section 620.635 was replaced by Section 620.8308, and no such limitation exists in the current statute.
Defendants also attempt to bolster their claim that purported partnership liability does not extend to tort claims by citing cases from other states. Their argument fails to persuade. First, Defendants have cited no Florida case containing any limitation on purported partnership liability. The statute on its face contains no limiting language; absent a case holding otherwise,
Finally, Plaintiffs cite numerous cases in which purported partnership liability has been found to apply to tort claims. See, e.g., Irwin Seating Co. v. IBM, No. 1:04-CV-568, 2007 WL 2351007, at *11 (W.D.Mich. Aug. 15, 2007); Glazer v. Brookhouse, 471 F.Supp.2d 945, 948-50 (E.D.Wis.2007); American Cas. Co. v. Costello, 174 Mich.App. 1, 435 N.W.2d 760, 762-63 (1989); Baranowski v. Strating, 72 Mich.App. 548, 250 N.W.2d 744, 749 n. 4 (1976); Frye v. Anderson, 248 Minn. 478, 80 N.W.2d 593, 603 (1957); Cook v. Coleman, 90 W.Va. 748, 111 S.E. 750, 752 (1922). While there is no reported Florida case on point, the abundance of cases applying purported partnership liability to tort claims is persuasive. Given the language of the statute following its amendment, there is no indication that Florida courts would find purported partnership liability does not apply to tort claims.
Defendants finally argue Plaintiffs have not adequately pled they relied to their detriment on the existence of a partnership between Cay Clubs and Defendants, and even if they did, that reliance is unreasonable as a matter of law. A review of the Complaint makes clear Plaintiffs have pled reliance. Plaintiffs repeatedly allege they relied on the representations that Cay Clubs was partnered with Defendants in the development project. For example, Plaintiffs make the following allegations:
(Compl. at ¶ 189).
(Id. at ¶ 212).
(Id. at ¶ 219).
(Id. at ¶ 227). These allegations demonstrate actual reliance by Plaintiffs on the partnership between Defendants and Cay Clubs. No pleading deficiency exists to warrant dismissal.
As to whether Plaintiffs' reliance was unreasonable as a matter of law, Defendants point to the disclaimer language in the PSAs signed by each Plaintiff. Again, Defendants are precluded from benefitting from language within a contract they are not parties to and have disavowed to obtain a Rule 12(b)(6) dismissal. Moreover, even if they could invoke the disclaimers, the contract language does not render Plaintiffs' reliance unreasonable as a matter of law.
Admittedly, several courts applying Florida law have found that fraudulent misrepresentation claims and FDUTPA claims are barred by disclaimer clauses because those clauses rendered the plaintiffs' reliance unreasonable as a matter of law. See, e.g., Garcia, 528 F.Supp.2d at 1295; Zlotnick, 431 F.Supp.2d at 1295; Rosa v. Amoco Oil Co., 262 F.Supp.2d 1364, 1368 (S.D.Fla.2003). The same reasonableness requirement exists for purported partnership claims. See, e.g., U.S. for Use and Benefit of Krupp Steel Prods., Inc. v. Aetna Ins. Co., 923 F.2d 1521 (11th Cir.1991) (noting the doctrine of equitable estoppel generally requires reasonable reliance). That requirement notwithstanding, disclaimer clauses will not bar fraud claims unless those clauses expressly and specifically address and contradict the misrepresentations on which the claims are based. Indulgence Yacht Charters, Ltd. v. Ardell Inc., No. 08-60739, 2008 WL 4346749, at *7 (S.D.Fla. Sept. 16, 2008).
In this case, Plaintiffs claim Defendants held themselves out as partners with Cay Clubs and allowed Cay Clubs to represent that Defendants were its partners. Plaintiffs allege they relied on this representation to their detriment, believing the partnership would develop the property into a luxury resort and sports training facility. Nothing in the Purchase and Sale Agreements contradicts any prior oral or written statements regarding the purported partnership between Cay Clubs and Defendants. There is no provision in the Agreements that Cay Clubs will not partner with IMG or Sunvest; there is no provision that a sports training complex will not be built; nor is there a provision that the property will not be converted to a five-star resort. The language of the PSAs does not render Plaintiffs' reliance on the purported partnership unreasonable as a matter of law so as to warrant a dismissal of the Complaint for the failure to state a claim. Plaintiffs' theory of liability against Defendants for the actions of Cay Clubs does not fail under Florida partnership law.
In accordance with the foregoing, it is