Opinion
Case No. 8:01-CV-1176-T-27MAP
March 20, 2002
ORDER ON DEFENDANTS' MOTIONS TO DISMISS
THIS CAUSE came on to be considered on Defendants' Motion to Dismiss Amended Complaint for Failure to State a Cause of Action, Pursuant to Fed.R.Civ.P. 12(b)(6) (Dkt. 11) and Defendants' Motion to Dismiss Amended Complaint for Lack of Personal Jurisdiction, Pursuant to Fed.R.Civ.P. 12(b)(2) (Dkt. 12). The Court having reviewed said motions and being otherwise fully advised in the premises, finds that personal jurisdiction exists and Plaintiff has stated causes of action in the Amended Complaint. For the reasons discussed below, Defendants' motions are denied.
I. Introduction
Plaintiff sued Defendants for damages allegedly resulting from Defendants' legal representation of Plaintiff and Defendants' actions in orchestrating Plaintiff's termination from his CEO position with M2Direct, Inc. (Dkt. 9, Am. Compl.). Specifically, Plaintiff raised claims of breach of fiduciary duty, professional malpractice, fraud, constructive fraud, tortious interference, violation of the Florida Deceptive and Unfair Trade Practices Act, § 501 201, Fla. Stat. (1999) and civil conspiracy. (Dkt. 9). Defendants have moved to dismiss the Amended Complaint ("Complaint") contending that the Court lacks personal jurisdiction over Defendants as they lack sufficient jurisdictional contacts with Florida (Dkt. 12) and Plaintiff has failed to state claims upon which relief may be granted (Dkt. 11).
II. Motion to Dismiss for Lack of Personal Jurisdiction
A. Applicable Standards
Plaintiff bears the burden of establishing jurisdiction. Francosteel Corp. v. M/V Charm, 19 F.3d 624, 626 (11th Cir. 1994). Where, as here, an evidentiary hearing is not held on a motion to dismiss for lack of personal jurisdiction, a plaintiff must establish a prima facie case of jurisdiction to survive the motion to dismiss. Id. Plaintiff may establish a prima facie case by presenting sufficient evidence to withstand a motion for directed verdict. Id. The facts alleged in the complaint are accepted as true, to the extent that they are not controverted by defendant. Cable/ Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829, 855 (11th Cir. 1990); Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988). Where conflicts in the evidence exist, all reasonable inferences are made in favor of plaintiff. Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir. 1990).
The Eleventh Circuit has a well established standard governing motions for judgment as a matter of law or directed verdict:
If the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict, granting of the motion is proper. On the other hand, if there is substantial evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motions should be denied, and the case submitted to the jury . . . It is the function of the jury as the traditional finder of the facts, and not the Court, to weigh conflicting evidence and inferences, and to determine the credibility of witnesses.Lipphardt v. Durango Steakhouse of Brandon, 267 F.3d 1183 (11th Cir. 2001).
Once a plaintiff pleads sufficient material facts to form a basis for personal jurisdiction, the burden shifts to the defendant to challenge plaintiff's allegations. Venetian Salami Co. v. Parthenais, 554 So.2d 499, 502-03 (Fla. 1989). A defendant wishing to contest the allegations of the complaint concerning jurisdiction must file affidavits in support of his position. Id. at 502-03. If defendant sustains this burden, plaintiff must then support his jurisdictional assertions by affidavits and cannot merely rely on factual allegations in the complaint. Id. at 503.
B. Discussion
Defendants contend that this action should be dismissed pursuant to Fed.R.Civ.P. 12(b)(2) on the grounds that the Court lacks personal jurisdiction over them. (Dkt. 21 at 15-20). Federal courts apply a two-part analysis to determine whether personal jurisdiction over a non-resident exists. Cable/ Home Communication Corp., 902 F.2d at 854. First, the jurisdictional issue is examined under the state long-arm statute. Id.; ( citing Alexander Proudfoot Co. World Headquarters L.P. v. Thayer, 877 F.2d 912, 916 (11th Cir. 1989)). Second, courts ascertain whether or not sufficient "minimum contacts" exist to satisfy the Due Process Clause of the Fourteenth Amendment so that "maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Cable/ Home Communications, 902 F.2d at 855 ( quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal citations omitted)).
1. Florida Long-Arm Jurisdiction
A federal court in a diversity action may exercise jurisdiction over a nonresident defendant only to the extent permitted by the long-arm statute of the forum state. Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 627 (11th Cir. 1996); Oriental Imports and Exports, Inc. v. Maduro Curiel's Bank, N.V., 701 F.2d 889, 890 (11th Cir. 1983). In determining whether long-arm jurisdiction is appropriate, Florida courts inquire as to whether the complaint alleges sufficient jurisdictional facts to bring the action within the ambit of the Florida long-arm statute, § 48.193, Fla. Stat. (1999). Venetian Salami, 554 So.2d at 502.
The Florida long-arm statute, § 48.193, bestows broad jurisdiction upon Florida courts and the party invoking jurisdiction under it has the burden of proving personal jurisdiction. Oriental Imports, 701 F.2d 889 at 890; Execu-Tech Business Systems, Inc. v. New Oji Paper Co., 752 So.2d 582, 584 (Fla. 2000), cert. denied, 531 U.S. 818 (2000).
a. Sections 48.193(a) and (b) of the Florida Long-Arm Statute
Plaintiff contends that personal jurisdiction over Defendants exists under sections 48.193(1)(a) and (b) of the Florida long-arm statute. To establish that defendants are carrying on business in Florida, Defendants' activities must be considered collectively and show a general course of business activity in Florida for pecuniary benefit.Sculptchair, 94 F.3d at 627. Plaintiff alleged in the Complaint that Defendants conducted business and engaged in a business venture with Plaintiff in Florida by virtue of Defendants' legal representation of Plaintiff. (Dkt. 9, ¶ 11). According to the Complaint, Defendant Sturm is licensed to practice law in Florida and acted as the responsible partner to handle legal matters of several Florida-based clients including Plaintiff. Id. All of Plaintiff's claims allegedly arose out of Defendants' legal representation of Plaintiff Id. Plaintiff also contends that Defendants committed a tort in Florida by violating the provisions of the Florida Deceptive and Unfair Trade Practices Act, § 501.201, Fla. Stat. (Dkt. 9, ¶¶ 137-146). These allegations are sufficient to shift the burden to Defendants to challenge Plaintiff's allegations. See Venetian Salami, 554 So.2d at 502-03.
Section 48.193 expressly provides in pertinent part:
(1) Any person, whether or not a citizen or resident of this state, who personally or through an agent does any of the acts enumerated in this subsection thereby submits himself or herself and, if he or she is a natural person, his or her personal representative to the jurisdiction of the courts of this state for any cause of action arising from the doing of any of the following acts:
(a) Operating, conducting, engaging in, or carrying on a business or business venture in this state or having an office or agency in this state.
(b) Committing a tortious act within this state.
b. Defendants' Evidentiary Challenge to the Allegations in the Complaint
Defendants have filed Affidavits of Glenn W. Sturm (Dkt. 12, Ex. 1), John R. Lombardi (Dkt. 12, Ex. 2) and Jennifer A. Yarnall (Dkt. 12, Ex. 3) to challenge Plaintiff's allegations. In his affidavit, Defendant Sturm avers that he does not own real property in Florida, has no business interest in Florida, maintains no Florida office or residence and employs no personnel in Florida. (Dkt. 12, Ex. 1, ¶ 3). Sturm further avers that he served as a board member of M2Direct, the board meetings for that company were typically held in Georgia and that the Plaintiff's termination as CEO took place in Atlanta, Georgia. (Dkt. 12, Ex. 1, ¶¶ 4-5).
John R. Lombardi avers in his affidavit that he is the executive director of Defendant Nelson, Mullins, Riley Scarborough, L.L.P. ("Nelson, Mullins"). (Dkt. 12, Ex. 2, ¶ 2). Nelson, Mullins is a South Carolina limited liability partnership that is registered to transact business in North Carolina, South Carolina and Georgia, the three states in which it has offices. (Dkt. 12, Ex. 2, ¶ 3). Nelson, Mullins has never sought registration in Florida, employs no personnel in Florida, owns no real or personal property in Florida and maintains no Florida office. (Dkt. 12, Ex. 2, ¶¶ 2, 3). Lombardi also avers that Plaintiff never retained Nelson, Mullins in his individual capacity with regard to any matters relating to M2Direct and Plaintiff never received or paid bills for such legal services. (Dkt. 12, Ex. 2, ¶ 6).
Jennifer A. Yarnall avers in her affidavit that she is the legal assistant for Defendants' attorneys. (Dkt. 12, Ex. 3, ¶ 2). She performed legal research to determine whether Nelson, Mullins has ever registered or qualified to conduct business in Florida and her research confirms that they have not. (Dkt. 12, Ex. 3, ¶¶ 3-4). Yarnall also researched whether Nelson, Mullins maintains a law office in Florida and found that according to the 2001 edition of a legal directory, Nelson, Mullins does not maintain an office in Florida. (Dkt. 12, Ex. 3, ¶ 5). These allegations concerning Defendants' lack of business and property in Florida are sufficient to shift the burden to Plaintiff to present evidence supporting his jurisdictional assertions. Venetian Salami, 554 So.2d at 503.
c. Plaintiff's Evidentiary Proof of Personal Jurisdiction
Plaintiff has met his burden by submitting his own affidavit (Dkt. 22) and the Affidavit of Amy L. Cook (Dkt. 23). In Plaintiff's affidavit, he provides specific details concerning his attorney-client relationship with Defendants and Defendants contacts with Florida. (Dkt. 22). According to Plaintiff, Defendants represented Plaintiff individually for almost eight years. (Dkt. 22, ¶¶ 6, 11). Although Plaintiff has always been a resident of Florida and Defendants Nelson, Mullins and Sturm are located in Georgia, Defendants performed all of the legal work related to Plaintiff and his relatives' Florida estate planning. (Dkt. 22, ¶¶ 24, 28, 29, 34). Beginning in 1991, Defendant Sturm also represented Plaintiff personally in business transactions. (Dkt. 22, ¶¶ 8, 10, 27, 36-37). Plaintiff understood that Nelson, Mullins provided the services on a complementary basis in light of the substantial fees it generated from Plaintiff's business transactions. (Dkt. 22, ¶ 35). Plaintiff also retained Defendants to serve as legal counsel to Plaintiff's various business entities including OKRA Marketing, John Harland Company, MegaMarketing and M2Direct. (Dkt. 22, ¶¶ 21, 23-52). During the course of the representation, Defendants traveled to Florida on numerous occasions to meet with Plaintiff and Plaintiff's clients and talked frequently with Plaintiff on the telephone, via email and in written correspondence. (Dkt. 22, ¶¶ 13-17, 27, 31, 59-62). Defendant Sturm also traveled to Florida to meet with clients other than Plaintiff. (Dkt. 22, ¶¶ 15-16).
Plaintiff further avers that in 1997, he Sturm and others discussed establishing MegaMarketing Corporation in Florida. (Dkt. 22, ¶¶ 36, 38). In 1998, MegaMarketing was established with corporate headquarters in Tampa, Florida. (Dkt. 22, ¶ 39). Sturm was a significant investor in MegaMarketing and became its Vice Chairman of the Board of Directors, a corporate director and was responsible for the legal representation of MegaMarketing and Plaintiff. (Dkt. 22, ¶ 40). Defendant Nelson, Mullins drafted Plaintiff's employment agreement with MegaMarketing, in which Plaintiff was named CEO and President. (Dkt. 22, ¶ 41). The agreement expressly stated "[t]his Agreement is being executed and delivered, and is intended to be performed in the State of Florida and shall be construed and enforced in accordance with the laws of the State of Florida in all respects." (Dkt. 22, ¶ 41).
Sturm was promoted to Vice Chairman of MegaMarketing and became "even more involved in the Tampa operations of MegaMarketing," avers Plaintiff. (Dkt. 22, ¶ 49). Sturm attended meetings related to MegaMarketing in Florida on a number of occasions. (Dkt. 22, ¶¶ 54-55).
In March 1999, according to Plaintiff's affidavit, MegaMarketing changed its name to M2Direct. (Dkt. 22, ¶ 51). Nelson, Mullins negotiated the lease for M2Direct's Tampa, Florida headquarters and operating premises. (Dkt. 22, ¶¶ 51, 52). The lawyer negotiating the lease was a real estate attorney licensed only in Florida. (Dkt. 22, ¶ 52).
Plaintiff has also submitted an Affidavit of Amy L. Cook in support of his jurisdictional allegations. (Dkt. 23). Cook is a paralegal at Plaintiff's counsel's office. (Dkt. 23, ¶ 1). Cook avers that her research revealed that Defendant Nelson, Mullins was counsel of record for two cases currently pending in the Middle District of Florida. (Dkt. 23, ¶ 5-6). Defendant Nelson, Mullins is also listed as counsel of record in reported cases in 1996, 1997 and 1999, according to Cook. (Dkt. 23, ¶¶ 7-10). Further, Cook's research indicates that Sturm was an officer or director of at least six Florida-based companies, including M2Direct. (Dkt. 23, ¶ 11).
The evidence submitted by Plaintiff goes well beyond Defendants' factual allegations concerning jurisdiction. This evidence is sufficient to meet Plaintiff's burden of establishing personal jurisdiction over Defendants. Defendants continuously conduct a substantial amount of business in Florida with Plaintiff and other clients since 1991. Defendants had an on-going business relationship with Plaintiff, representing him both in personal matters and in business transactions in an attorney-client relationship. Additionally, construing the facts in the light most favorable to Plaintiff, Defendants may have committed torts in Florida including breach of fiduciary duty, professional malpractice, fraud, constructive fraud, tortious interference, violation of the Florida Deceptive and Unfair Trade Practices Act, § 501 201, Fla. Stat. (1999) and civil conspiracy. Accordingly, the Court must examine whether "sufficient "minimum contacts" exist to satisfy the Due Process Clause of the Fourteenth Amendment so that "maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Cable/ Home Communications, 902 F.2d at 855 ( quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
2. Constitutional Due Process Considerations
Due process requires that a non-resident defendant have "fair warning" that a particular activity may subject it to the jurisdiction of a foreign sovereign. Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985). Minimum contacts in this regard involve three criteria. First, the contacts must be related to the plaintiff's cause of action or have given rise to it. Second, the contacts must involve some purposeful availment of the privilege of conducting activities within Florida, thereby invoking the benefits and protections of its laws and thirdly, the contacts within the foreign state must be such that the defendants should reasonably anticipate being hailed into court there. Asahi Metal Indus. Co., Ltd. v. Superior Court of California, 480 U.S. 102 (1987);Francosteel Corp. v. M/V Charm, 19 F.3d 624, 627 (11th Cir. 1994).
Here, Defendants purposely availed themselves of the forum state by representing Plaintiff individually and in real estate and business transactions in Florida. Defendant Sturm was an officer of several companies principally located in Florida, including M2Direct, a subject of the instant lawsuit. Defendants regularly met in Florida with Plaintiff, Plaintiff's clients and business associates and Defendants own clients. Defendants' contact with Florida took place in the context of the parties' attorney-client relationship and that contact was related to and gave rise to Plaintiff's causes of action of malpractice, breach of fiduciary duty, fraud, constructive fraud and violation of the FDUTPA. Defendants' contact with Florida was more than minimal and is such that Defendants should have reasonably anticipated being hailed into court here.
The Court must now determine whether the exercise of personal jurisdiction over Defendants comports with "fair play and substantial justice." Sculptchair, 94 F.3d at 631. Relevant factors include "the burden on the defendant, the interest of the forum . . . and the plaintiff's interest in obtaining relief." Asahi Metal Indus. Co. v. Superior Court of California, 480 U.S. 102 (1987). Here, as in Robinson v. Giamarco Bill, P.C., 74 F.3d 253, 259 (11th Cir. 1996), "[t]he State of Florida has a significant interest in adjudicating a dispute involving services provided by out-of state professionals to its resident, concerning assets located within its borders. The plaintiff, a Florida resident, has a great interest in the convenience of litigating in [his] home state." Further, the burden on Defendants caused by litigating in Florida is not substantial given that Georgia is located relatively close to Florida and Defendants can take advantage of modern methods of transportation and communication. See Robinson, 74 F.3d at 259.
Accordingly, the Court finds that the facts and inferences point overwhelmingly in favor of the Court's exercise of personal jurisdiction over Defendants such that reasonable people could not arrive at a contrary conclusion. Defendants' Motion to Dismiss Amended Complaint for Lack of Personal Jurisdiction, Pursuant to Fed.R.Civ.P. 12(b)(2) (Dkt. 12) is therefore denied.
The Court now turns to Defendant's motion to dismiss pursuant to 12(b)(6). (Dkt. 11).
III. Motion to Dismiss for Failure to State a Claim
A. Applicable Standards
A court should not grant a motion to dismiss "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); South Florida Water Management Dist. v. Montalvo, 84 F.3d 402, 406 (11th Cir. 1996). All well-pleaded factual allegations accepted as true and are viewed in the light most favorable to the nonmoving party. Hishon v. King Spalding, 467 U.S. 69, 73 (1984).
The threshold is "exceedingly low" for a complaint to survive a motion to dismiss for failure to state a claim, Ancata v. Prison Health Services, Inc., 769 F.2d 700, 703 (11th Cir. 1985). as motion to dismiss for failure to state a claim merely tests the sufficiency of the complaint, see Milburn v. United States, 734 F.2d 762, 765 (11th Cir. 1984). "The liberal rules as to the sufficiency of a complaint make it a rare case in which a motion on this ground should be granted." St. Joseph's Hospital, Inc. v. Hospital Corporation of America, 795 F.2d 948, 949 (11th Cir. 1986).
A corollary to Rule 12(b)(6) is Federal Rule of Civil Procedure 8. Rule 8 requires that a plaintiff provide a short and plain statement of the claim showing that he is entitled to relief. The statement "must give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley, 355 U.S. at 85. If the complaint is "too general," it will not provide fair notice to the defendant of the claims plaintiff alleges. Boston Maine Corp. v. Town of Hampton, 987 F.2d 855, 865 (1st Cir. 1993). However, a plaintiff is not required to "allege a 'specific fact' to cover every element or allege 'with precision' each element of a claim" so long as the complaint contains "either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory."Roe v. Aware Woman Center for Choice, Inc., 253 F.3d 678, 683 (11th Cir. 2001) (internal citations omitted); 5 Charles A. Wright and Arthur R. Miller, Federal Practice and Procedure § 1216 at 154-59 (2d ed. 1990).
B. Discussion
1. Counts I, II, V and VII: Breach of Fiduciary Duty, Malpractice, Tortious Interference and Conspiracy
Defendants maintain that Plaintiff failed to state a cause of action for breach of fiduciary duty, malpractice, tortious interference and conspiracy against them. (Dkt. 11). Applying the liberal pleading requirements of Fed.R.Civ.P. 12(b)(6), Plaintiff has stated a claim for relief with respect to those claims. Plaintiff has sufficiently alleged Defendants breached their fiduciary duty owed to Plaintiff in Count I. See Jacobs v. Vaillancourt, 634 So.2d 667, 670 (Fla. 2d DCA 1994); see also Gomez v. Hawkins Concrete Constr. Co., 623 F. Supp. 194 (N.D. Fla. 1985). Plaintiff has also stated a claim upon which relief may be granted for professional malpractice. See Hold v. Manzini, 736 So.2d 138, 142 (Fla. 3d DCA 1999). Similarly, the allegations in the Complaint state a claim for tortious interference and civil conspiracy.See Salit v. Ruden McClosky, Schuster Russell, P.A., 742 So.2d 381, 386 (Fla. 4th DCA 1999) (officer or director's privilege to interfere is destroyed where employee acts with ulterior purposes); Greenberg v. Mount Sinai Medical Center of Greater Miami, Inc., 629 So.2d 252, 256 (Fla. 3d DCA 1993) (tortious interference); see also Lipsig v. Ramlawi, 760 So.2d 170, 180-81 (Fla. 3rd DCA 2000) (corporation cannot conspire with its own directors, officers, or employees except when such individual has an independent personal stake, apart from that of the corporation, in achieving the object of the conspiracy) and Greenberg, 629 So.2d at 256 (civil conspiracy).
2. Counts III and IV: Fraud and Constructive Fraud
Fraud
In Count III, Plaintiff purports to plead a cause of action for fraud. The essential elements of common law fraud are (1) a false statement of fact, (2) known by the person making the statement to be false at the time it was made, (3) made for the purpose of inducing another to act in reliance thereon, (4) action by the other person in reliance on the correctness of the statement, and (5) resulting damage to the other person. Gandy v. Trans World Computer Technology Group, 787 So.2d 116 (Fla. 2d DCA 2001).As a general rule, an action for fraud may not be predicated on statements of opinion or promises of future action, but instead must be based on a statement concerning a past or existing fact. Mejia v. Jurich, 781 So.2d 1175 (Fla. 3d DCA 2001). For example, a false statement amounting to a promise to do something in the future is not actionable fraud. Maunsell v. American General Life and Accident Insurance Co., 707 So.2d 916 (Fla. 3d DCA 1998). An exception has been recognized. however, "where the promise to perform a material matter in the future is made without any intention of performing or is made with a positive intention not to perform." Perry v. Cosgrove, 464 So.2d 664, 666 (Fla. 2d DCA 1985); Gandy, supra.
Additionally, under certain circumstances, a cause of action for fraudulent concealment may be established.
It is fundamental that a suppression of truth may constitute fraud as much as a false suggestion, provided that it is material to the transaction. A distinction must be drawn, however, between passive and active concealment. The former involves mere silence or failure to disclose a fact, while the latter involves a purpose or design. It is only when there is a duty to reveal the fact that mere non-disclosure constitutes fraud.Franklin v. Brown, 159 So.2d 893, 898 (Fla. 1st DCA 1964). In other words, a defendant's knowing concealment or non-disclosure of a material fact may support an action for fraud where there is a duty to disclose.Gutter v. Wunker, 631 So.2d 1117 (Fla. 4th DCA 1994).
Here, Plaintiff has alleged in the Complaint that Defendants, as his attorneys, had a duty to disclose material facts. (Dkt. 9, ¶¶ 86, 116-121). Plaintiff alleges that the Defendants concealed the facts that Sturm orchestrated Plaintiff's termination as CEO and President of M2Direct, that Plaintiff's investments in M2Direct were in jeopardy and that the IPO Defendants handled would not be profitable. See (Dkt. 12, ¶¶ 73-74). Plaintiff also alleged that Sturm made misrepresentations of fact when he stated: "I'll get the cash;" Plaintiff's personal guarantee of the bank loan was a "no brainer" and a "slam dunk;" that he told Nelson, Mullins that if Defendants' dual representation of Plaintiff and M2Direct posed a problem, Sturm would leave the firm and take the business elsewhere are sufficient allegations of material misrepresentation of facts. See (Dkt. 12, ¶¶ 51, 55, 69).
Plaintiff further alleges that Defendants made the statements with the knowledge they were false or without knowledge of their truth or falsity under circumstances in which Defendants should have known of their falsity. (Dkt. 12, ¶ 118). Plaintiff alleges that Defendants' promises to perform acts in the future were made with no intention of performing. (Dkt. 12, ¶ 120). Further, Plaintiff alleges that the misrepresentations and omissions were made with the intention of inducing reliance and that Plaintiff did in fact rely upon the misrepresentations and omissions and suffered damages as a result. (Dkt. 12, ¶ 119, 121). As such, Plaintiff has stated a cause of action for fraud.
Constructive Fraud
In Count IV, Plaintiff purports to plead a cause of action for constructive fraud. Constructive fraud exists where a duty arising from a confidential or fiduciary relationship has been abused, Harrell v. Branson, 344 So.2d 604 (Fla. 1st DCA 1977), or where an unconscionable advantage has been taken. Beers v. Beers, 724 So.2d 109 (Fla. 5th DCA 1998). "Constructive fraud may be based on misrepresentation or concealment, or the fraud may consist of taking an improper advantage of the fiduciary relationship at the expense of the confiding party."Beers, 724 So.2d at 116. Florida courts have construed the term "fiduciary or confidential relation" as being very broad. Whittle v. Ellis, 122 So.2d 237, 240 (Fla. 2d DCA 1960).
Plaintiff has alleged that the parties had a fiduciary relationship as they had an attorney-client relationship. (Dkt. 12, ¶¶ 122-124). "The relationship between an attorney and client is a fiduciary relation of the very highest character, and the attorney owes a duty of undivided loyalty to the client." Forgione v. Dennis Pirtle Agency, Inc., 701 So.2d 557, 560 (Fla. 1997). Plaintiff alleged that the fiduciary relationship was abused when Defendants made misrepresentations, omissions and took improper advantage of the parties' relationship by inducing Plaintiff to personally guaranty bank loans and ousting Plaintiff as CEO of M2Direct for Defendants' own benefit. (Dkt. 12, ¶ 125, 126). These allegations are sufficient to state a claim for constructive fraud.
3. Count VI: Florida Deceptive and Unfair Trade Practices Act
Defendants also contend that Plaintiff failed to state a cause of action under the Florida Deceptive and Unfair Trade Practices Act, § 501.204, Fla. Stat. (2000) ("FDUTPA"). The FDUTPA establishes a civil cause of action for unfair methods of competition, unconscionable acts or practices and unfair or deceptive acts or practices in conducting any trade or commerce. § 501.204, Fla. Stat. The express purpose of the statute is to provide protection for "the consuming public at large and legitimate business enterprises from those who engage in unfair methods of competition, or unconscionable, deceptive, or unfair acts or practices. . . ." § 501.22(2). Under the statute, only a "consumer" may recover actual damages for unfair trade practices. § 501.211(2). The statute defines consumer as "an individual; child, by and through its parent or legal guardian; firm; association; joint venture; partnership; estate; trust; business trust; syndicate; fiduciary; corporation; or any other group or combination." § 501.203(7). Additionally, the statute expressly provides that "'trade or commerce' means the advertising, soliciting, providing, offering, or distributing, whether by sale, rental, or otherwise, of any good or service, or any property, whether tangible or intangible, or any other article, commodity, or thing of value, where ever situated. 'Trade or commerce' shall include the conduct of any trade or commerce, however denominated, including any nonprofit or not-for-profit person or activity." § 501.203(8).
Florida law provides little guidance concerning whether the FDUTPA applies to an individual's claim that attorneys committed malpractice, acted deceptively and unfairly while providing legal services. In LJS Company v. Marks, 480 F. Supp. 241 (S.D. Fla. 1979), cited by Defendants, the court interpreted a previous version of the FDUTPA to exclude a corporation from suing a law firm under the Act for malpractice on the grounds that the corporation was not a consumer. That court specifically "emphasized the limited nature of its holding," stating:
Prior to 1979 the FDUTPA did not define consumer. It did, however, define "consumer transaction" to mean "a sale, lease, assignment, award by chance, or other disposition of an item of goods, a consumer service, or an intangible to an individual for purposes that are primarily personal, family, or household or that relate to a business opportunity that requires both his expenditure of money or property and his personal services on a continuing basis and in which he has not been previously engaged, or a solicitation by a supplier with respect to any of these dispositions." § 501.203(1), Fla. Stat. (1979).
It merely decides that this plaintiff is not a consumer and therefore has no private right of action for damages under the 'Little FTC Act.' This Court does not decide that the Act covers the attorney-client relationship, nor that the attorney-client relationship is exempted from the Act. This Court does not construe the Act as a whole to be limited to consumer transactions.480 F. Supp. at 244. The instant case is distinguishable from LJS Company since an individual rather than a corporation is requesting relief. Additionally and more important, the statute has been amended to include both corporations and individuals as consumers and the definition of "consumer transaction" has been deleted from the statute.
In Beacon Property Management, Inc. v. PNR, Inc., 785 So.2d 564 (Fla. 4th DCA 2001), also cited by Defendants, the court considered whether the FDUTPA applied to a landlord's conduct in intentionally neglecting leased property. The Beacon court concluded that the claims were not encompassed in the FDUTPA as a "breach of the covenant to maintain the premises in a commercial lease is not inherently unconscionable or deceptive, and it does not seem to involve the 'methods of competition' or 'trade practices' affecting competition. 785 So.2d at 567-68. The court also concluded that a "single instance of doing something does not make it a method or practice" and that the evidence in that case did not prove "a regular and systematic way of competition, or 'habitual or customary action or way of doing something.'" 785 So.2d at 568. In the instant case, Plaintiff has alleged that Defendants engaged in "multiple instances of wrongdoing" from 1998 through 2000. (Dkt. 9, ¶¶ 140-141). Plaintiff alleged that Defendants made deceptive representations about the success and status of the IPO and Plaintiff's personal guarantees for loans and continuously failed to disclose and concealed Sturm's intention to take control of M2Direct. (Dkt. 9, ¶¶ 137, 140). Additionally, Plaintiff's case is distinguishable from Beacon in that it involves attorney malpractice rather than a landlord's breach of covenants.
Despite the lack of case authority directly addressing the application of the FDUTPA to malpractice claims by an individual, it is clear that the concept of "unfair and deceptive" is extremely broad. Urling v. Helms Exterminators, Inc., 468 So.2d 451 (Fla. 1st DCA 1985); Day v. Le-Jo Enterprises, Inc., 521 So.2d 175, 178 (Fla. 3d DCA 1988). A practice is unfair when it "'offends established public policy and when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers,' (or competitors or other businessmen)." Day, 521 So.2d at 178 (quoting Spiegel, Inc. v. Federal Trade Comm'n, 540 F.2d 287, 293 (7th Cir. 1976)). Additionally, the FDUTPA expressly includes the provision of "services" and the Florida Attorney General has opined that the provision of legal services is encompassed within the FDUTPA. See § 501.203(8); Op. Att'y Gen. Fla. 076-226 (1976). Plaintiff's allegations concerning unfair and deceptive acts committed by Defendants in the process of providing legal services state a claim under the broad provisions of the FDUTPA. Plaintiff claims that Defendants repeatedly acted in an unethical and unscrupulous manner and that such conduct occurred while Defendants rendered services to Plaintiff. (Dkt. 9, ¶¶ 137, 139-144). These allegations are sufficient to state a claim under the FDUTPA. Accordingly, it is,
ORDERED AND ADJUDGED that:
1. Defendants' Motion to Dismiss Amended Complaint for Failure to State a Cause of Action, Pursuant to Fed.R.Civ.P. 12(b)(6) (Dkt. 11) and Defendants' Motion to Dismiss Amended Complaint for Lack of Personal Jurisdiction, Pursuant to Fed.R.Civ.P. 12(b)(2) (Dkt. 12) are DENIED.
2. Defendant shall answer the Amended Complaint within twenty (20) days from the date of this Order.DONE AND ORDERED.