Court Opinion

ID: 858581
Source: CourtListenerOpinion
Date Created: 2013-04-22 13:50:29.439103+00
Date Added: 2024-06-11T13:08:48.294659
License: Public Domain

Case: 12-12049     Date Filed: 04/22/2013   Page: 1 of 12

                                                          [DO NOT PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT

                               _____________

                                No. 12-12049
                            Non-Argument Calendar
                               _____________

                   D. C. Docket No. 9:10-cv-80393-KLR

DAN THOMAS INMAN,

                                                        Plaintiff-Counter-,
                                                        Defendant,

CAPITAL HOLDINGS, USA, LLC,
a Florida Corporation,

                                                        Plantiff-Counter
                                                        Defendant-Appellant,

                                    versus

AMERICAN PARAMOUNT FINANCIAL,
a California Corporation, et al.,

                                                        Defendants-Counter
                                                        Defendants,

LAW OFFICE OF LLOYD J. MICHAELSON, P.A., et al.,

                                                        Defendants-Counter
                                                        Claimants,
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WELLS FARGO BANK, N.A.,

                                                                Defendant-Counter
                                                                Defendant-Appellee.

                                    ______________

                      Appeal from the United States District Court
                          for the Southern District of Florida
                                   ______________

                                     (April 22, 2013)

Before DUBINA, Chief Judge, WILSON and ANDERSON, Circuit Judges.

PER CURIAM:

         Plaintiff-Appellant Capital Holdings, USA, LLC (“Capital”) appeals the

district court’s order granting Defendant-Appellee Wells Fargo Bank, N.A.’s

(“Wells Fargo”) motion to dismiss Capital’s claims with prejudice and its order

denying Capital’s voluntary motion to dismiss claims against Wells Fargo without

prejudice. For the reasons set forth below, we affirm the orders of the district

court.

                                             I.

         Capital brought the underlying lawsuit against various defendants 1 after it

sustained monetary loss in a fraudulent loan scheme. Capital alleged that Cesar

         1
        The defendants included American Paramount Financial (“American”) (a private
funding group) and its president/CEO Nicholaus Skultety; Marjam, Inc. (American’s broker) and
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Nunez, an employee of Wells Fargo, misrepresented American’s ability to fund

and close loans and induced Capital to apply and pay loan fees as part of the

scheme. In its first amended complaint, Capital added Wells Fargo as a defendant

and brought claims against it, based on Nunez’s alleged representations, for

fraudulent misrepresentation, negligent misrepresentation, aiding and abetting

fraud, and negligent supervision.

       Wells Fargo filed a motion to dismiss Capital’s first amended complaint

pursuant to Federal Rule of Civil Procedure 12(b)(6), and the district court granted

its motion without prejudice and with leave to amend. With regard to the fraud

and misrepresentation claims, the district court found that Capital failed to plead

the circumstances surrounding the fraud with particularity as required by Federal

Rule of Civil Procedure 9(b) and failed to provide sufficient factual allegations to

allow the court to infer that Wells Fargo was liable for the misconduct alleged.

The court also found that the negligent supervision claim, while not subject to Rule

9(b), was deficient under Rule 8(a) because Capital failed to plead “factual

allegations from which the Court could infer that Wells Fargo or its employees

somehow made misrepresentations which deceived [Capital] into making unsafe

deposits.” [R. 70 at 13.]

its president Mark Snidero; Lloyd Michaelson and the Law Office of Lloyd J. Michaelson, P.A.
(attorneys for American and Skultety); and Cesar Nunez, a Wells Fargo employee.
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      Capital filed a second amended complaint, abandoning the aiding and

abetting claim, and Wells Fargo answered. Thereafter, the district court granted a

motion to dismiss for lack of subject matter jurisdiction filed by another defendant,

the Law Office of Lloyd J. Michaelson, P.A., but gave Capital leave to amend the

complaint for a third time. After Capital filed a third amended complaint, which

contained the same allegations against Wells Fargo as the second amended

complaint, Wells Fargo filed another motion to dismiss pursuant to Rule 12(b)(6).

In its April 29, 2011, order on the motion, the district court dismissed Capital’s

negligent supervision claim with prejudice. The district court also found that

Capital’s fraudulent and negligent misrepresentation claims were “again deficient

when viewed through the lens of Rule 9(b) and the Brooks[v. Blue Cross & Blue

Shield of Florida, Inc., 116 F.3d 1364, 1370–71 (11th Cir. 1997)] standard.” [R.

196 at 6.] However, the court “afford[ed] Capital one final opportunity to allege

its misrepresentation claims with particularity.” It stated:

      If Capital chooses to amend these claims, Capital shall, for each and
      every alleged misrepresentation, provide the name of the person
      making the misstatement, what the precise misrepresentation was
      (using direct quotations when possible), where the statement was
      made, when the statement was made, how the statement misled
      Capital, and what [] Wells Fargo gained as a result of the statement, in
      accordance with Rule 9(b) and Brooks. The failure to properly plead
      these misrepresentation[] claims as instructed will result in the
      dismissal of these claims with prejudice and may result in the
      imposition of sanctions. If Capital does not believe it can properly
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       plead these claims in accordance with Brooks and Rule 9(b), it shall
       refrain from re-filing these claims.

[Id. at 9.] At the conclusion of its order, the district court clarified that Wells

Fargo’s motion to dismiss was granted, that Capital’s claim for negligent

supervision was dismissed with prejudice, and that Capital’s failure to file an

amended complaint with regard to the fraudulent and negligent misrepresentation

claims “will result in dismissal of [those] claims . . . with prejudice.” [Id. at 12–

13.]

       Instead of filing an amended complaint, Capital filed a motion to voluntarily

dismiss the claims against Wells Fargo pursuant to Federal Rule of Civil Procedure

41(a)(2). On July 5, 2011, the district court denied Capital’s motion, concluding

that Capital’s failure to file an amended complaint within the allowed 15-day

period operated as a dismissal with prejudice as to the fraudulent and negligent

misrepresentation claims, such that there were “no claims currently pending

against Wells Fargo which could possibly be voluntarily dismissed without

prejudice under Rule 41(a)[(2)].” [R. 241 at 3–4.] With the conclusion of the

litigation as to the other defendants, Capital then perfected this appeal.

                                           II.

       “We review de novo a Rule 12(b)(6) dismissal of a complaint for failure to

state a claim.” Speaker v. U.S. Dep’t of Health & Human Servs. Ctrs. for Disease
                                            5
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Control & Prevention, 623 F.3d 1371, 1379 (11th Cir. 2010). “In ruling on a

12(b)(6) motion, the Court accepts the factual allegations in the complaint as true

and construes them in the light most favorable to the plaintiff.” Id.

      “[W]e review a district court’s decision to allow a voluntary dismissal

without prejudice under Rule 41(a)(2) only for an abuse of discretion.”

Pontenberg v. Boston Scientific Corp., 252 F.3d 1253, 1256 (11th Cir. 2001).

Similarly, we review a district court’s dismissal for failure to comply with the rules

of the court for an abuse of discretion. Betty K Agencies, Ltd. v. M/V MONADA,

432 F.3d 1333, 1337 (11th Cir. 2005).

                                          III.

      After reviewing the record and reading the parties’ briefs, we affirm the

district court’s grant of dismissal with prejudice in favor of Wells Fargo as to all

claims and denial of Capital’s voluntary motion to dismiss without prejudice based

on the district court’s April 29, 2011 and July 5, 2011 well-reasoned orders.

Moreover, we rely on additional reasoning set forth below.

                                          A.

      Federal Rule of Civil Procedure 8(a)(2) requires that a pleading contain “a

short and plain statement of the claim showing that the pleader is entitled to relief.”

      While a complaint attacked by a Rule 12(b)(6) motion to dismiss does
      not need detailed factual allegations, a plaintiff’s obligation to provide
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         the grounds of his entitlement to relief requires more than labels and
         conclusions, and a formulaic recitation of the elements of a cause of
         action will not do.

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1964–65

(alteration, citations, and internal quotation marks omitted). “Factual allegations

must be enough to raise a right to relief above the speculative level . . . on the

assumption that all the allegations in the complaint are true (even if doubtful in

fact).” Id. at 555, 127 S. Ct. at 1965. Federal Rule of Civil Procedure 9(b)

provides: “In alleging fraud or mistake, a party must state with particularity the

circumstances constituting fraud or mistake.” Rule 9(b) “serves an important

purpose in fraud actions by alerting defendants to the precise misconduct with

which they are charged and protecting defendants against spurious charges of

immoral and fraudulent behavior.” Brooks, 116 F.3d at 1370–71 (internal

quotation marks omitted). Rule 9(b) may be satisfied when the complaint sets

forth:

         (1) precisely what statements were made in what documents or
         oral representations or what omissions were made, and

         (2) the time and place of each such statement and the person
         responsible for making (or in the case of omissions, not
         making) same, and

         (3) the content of such statements and the manner in which they
         misled the plaintiff, and

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      (4) what the defendants obtained as a consequence of the fraud.

Id. at 1371 (internal quotation marks omitted).

      We agree with the district court that Capital failed to plead sufficient factual

allegations in its third amended complaint to support its negligent supervision

claim as required by Rule 8(a) or its fraudulent and negligent misrepresentation

claims as required by Rule 9(b). Specifically, Capital’s negligent supervision

claim is deficient because it failed to plead sufficient factual allegations that Wells

Fargo was aware or should have been aware that Nunez was predisposed to

committing the wrongs alleged in the third amended complaint. See Dep’t of

Envtl. Prot. v. Hardy, 907 So. 2d 655, 660 (Fla. Dist. Ct. App. 2005) (noting that,

under Florida law, to state a claim for negligent supervision “[t]he plaintiff must

allege facts sufficient to show that once an employer received actual or

constructive notice of problems with an employee’s fitness, it was unreasonable for

the employer not to investigate and take corrective action”). Likewise, with regard

to Capital’s claims for fraudulent and negligent misrepresentation, we agree with

the district court that the allegations contained in the third amended complaint do

not meet the requirements of Rule 9(b) described in Brooks.

      Capital’s argument that Wells Fargo’s “intransigence” during discovery

somehow prevented Capital from pleading particular facts is misguided.

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[Appellant’s Br. at 14.] Rules 8(a) and 9(b) are pleading standards which apply

before the discovery period begins and cannot be relied upon to defeat a motion to

dismiss for failure to state a claim. See Chudasama v. Mazda Motor Corp., 123

F.3d 1353, 1367 (11th Cir. 1997) (“Facial challenges to the legal sufficiency of a

claim or defense, such as a motion to dismiss based on failure to state a claim for

relief, should . . . be resolved before discovery begins.”); see also Kaylor v. Fields,

661 F.2d 1177, 1184 (8th Cir. 1981) (“Discovery should follow the filing of a well-

pleaded complaint. It is not a device to enable a plaintiff to make a case when his

complaint has failed to state a claim.”). By Capital’s own admission, it “was in no

better position to plead more definitive facts about Wells[ Fargo’s] involvement”

in the loan fraud scheme after the court’s April 29, 2011 order. [Appellant’s Br. at

14.] Capital was not placed in an “unwinnable procedural position” [id. at 15] by

the district court’s requirement that it plead its claims against Wells Fargo in

accordance with the Federal Rules of Civil Procedure. As we have explained

before, delaying a ruling on a motion to dismiss “encourages abusive discovery

and, if the court ultimately dismisses the claim, imposes unnecessary costs.”

Chudasama, 123 F.3d at 1368. Consequently, “neither the parties nor the court

have any need for discovery before the court rules on [a] motion [to dismiss].” Id.

at 1367. Because Capital failed to adequately plead a claim for relief against Wells

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Fargo, and because we find no merit in its argument that it was entitled to

discovery to assist in doing so, we affirm the district court’s dismissal in favor of

Wells Fargo.2

                                                 B.

       Pursuant to Federal Rule of Civil Procedure 41(a)(2), “an action may be

dismissed at the plaintiff’s request only by court order, on terms that the court

considers proper.” “In exercising its broad equitable discretion under Rule

41(a)(2), the district court must weigh the relevant equities and do justice between

the parties in each case, imposing such costs and attaching such conditions to the

dismissal as are deemed appropriate.” Pontenberg, 252 F.3d at 1256 (internal

quotation marks omitted). “[I]n most cases a dismissal should be granted unless

the defendant will suffer clear legal prejudice, other than the mere

prospect of a subsequent lawsuit, as a result.” McCants v. Ford Motor Co., 781

F.2d 855, 856–57 (11th Cir. 1986) (emphasis omitted). “It is clear that a district

court does, and indeed must, have the power to control and direct the cases on its

       2
          In addition, we conclude that the district court acted within its discretion in finding that
because “Capital failed to amend the claims [against Wells Fargo,] . . . by operation of the [April
29, 2011] order, those claims have been dismissed with prejudice.” [R. 241 at 3.] “While
dismissal is an extraordinary remedy, dismissal upon disregard of an order, especially where the
litigant has been forewarned, generally is not an abuse of discretion.” Moon v. Newsome, 863
F.2d 835, 837 (11th Cir. 1989).
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docket.” Burden v. Yates, 644 F.2d 503, 505 (5th Cir. 1981).3 “It is also clear that

a district court’s power to control its docket includes the inherent power to dismiss

a case.” Id.

       Capital argues that the district court abused its discretion by denying

Capital’s motion for voluntary dismissal without prejudice because it “fail[ed] to

weigh the equities of the parties, particularly . . . the absence of any clear legal

prejudice to Wells” [Appellant’s Br. at 20], and because it failed to apply the test

for imposing sanctions described in Betty K Agencies, Ltd., 432 F.3d at 1337–38.

We disagree.

       The district court exercised its discretion to control its docket by generously

affording Capital the option of filing its third amended complaint in the underlying

litigation. The court expressly instructed Capital that it must allege particular facts

to support the elements of each misrepresentation claim and “[t]he failure to

properly plead [those] claims as instructed will result in the dismissal of these

claims with prejudice and may result in the imposition of sanctions.” [R. 196 at 9.]

The court warned that Capital’s failure to file a fourth amended complaint within

15 days “will result in dismissal of [those] claims.” [Id. at 13.] Based on the

district court’s order, Capital had two options. Thus, Capital’s argument that the
       3
        In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), we
adopted as binding precedent all decisions of the former Fifth Circuit handed down before
October 1, 1981.
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district court abused its discretion in denying Capital’s attempt to circumvent the

district court’s order by inventing a third option—filing a motion for voluntary

dismissal pursuant to Rule 41(a)(2)—is not persuasive. Capital’s failure to file an

amended complaint effectively caused the district court’s April 29, 2011, order to

operate as a dismissal with prejudice of Capital’s fraudulent and negligent

misrepresentation claims. Accordingly, there was no need for the court to engage

in an analysis of Capital’s Rule 41(a)(2) motion for voluntary dismissal.

                                         IV.

      For the foregoing reasons, we affirm the district court’s grant of Wells

Fargo’s motion to dismiss and its denial of Capital’s Rule 41(a)(2) motion.

      AFFIRMED.

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