KENNETH A. MARRA, District Judge.
This cause is before the Court upon Defendant CMAX Finance LLC's Motion to Dismiss the First Amended Complaint (DE 14). The Motion is fully briefed and ripe for review. The Court has carefully considered the Motion and is otherwise fully advised in the premises.
Plaintiff Razor Capital, LLC ("Plaintiff") brings this five-count First Amended Complaint
According to the allegations of the FAC, which this Court must accept as true for purposes of this motion, Plaintiff buys, sells and collects on defaulted consumer debt including defaulted residential mortgages. Defendant holds itself out and acts as a lender to, and agent and broker of, companies seeking to sell debt portfolios which include such defaulted debt. This action arises out of Plaintiff's $730,000.00 purchase of a pool of defaulted debt (hereinafter, "mortgage loan file") that Defendant was brokering. (FAC ¶1.) Beginning in 2011, Defendant began discussions with the principals of a company called HP Debt Exchange, LLC ("HP Debt") for the purpose of lending money to HP Debt to purchase pools of delinquent consumer debt. Thereafter, Defendant successfully originated a loan to HP Debt that enabled HP Debt to purchase certain pools of delinquent consumer debt. One of Defendant's closely affiliated special purpose vehicles, CMAX Finance Partners I, LLC ("CMAX I") funded this loan. Defendant both serviced the loan and monitored the collateral. HP Debt's purchase included the mortgage loan file, which HP Debt then pledged as collateral back to CMAX I. (FAC ¶2.)
When the debt portfolio underperformed and HP Debt defaulted on its loan, Defendant discovered multiple material defects with the collateral, making it undesirable for Defendant to foreclose on the collateral as a remedy to recover upon its loan to HP Debt. (FAC ¶3.) Defendant then devised a plan to broker the debt/collateral for sale to a third party and pocket the proceeds from any sale, rather than foreclose upon the collateral. Defendant concealed and failed to disclose the material defects it discovered when it marketed the mortgage loan file for sale to third parties. Had Plaintiff known about these defects, it would not have purchased the mortgage loan file. (FAC ¶4.) Defendant also concealed the "sloppy" business practices and documentation of the seller to induce Plaintiff to purchase the mortgage loan file. (FAC ¶6.) Plaintiff paid a materially inflated price. (FAC ¶8.)
After the closing, Plaintiff discovered that many of the accounts in the mortgage loan file were subject to settlements that neither Defendant nor HP Debt disclosed and which substantially reduced the unpaid principal balance of the mortgage loan file. (FAC ¶¶86-87.) Plaintiff tried to unwind the agreement and obtain a full refund from HP Debt. (FAC ¶89.) In so doing, Plaintiff spoke with Defendant, who averred that it did not know about the settlements and were "similarly duped." (FAC ¶¶90-97.) Defendant concealed its true level of knowledge and suggested that Plaintiff and Defendant file a "joint action" against HP Debt. (FAC ¶98.) Had Plaintiff known that Defendant had retained over 90% of the funds it sought to recover, it would have made immediate demands on Defendant to recover the funds. (FAC ¶103.) Instead, Plaintiff filed suit against HP Debt on February 4, 2013 and Plaintiff obtained a default judgment against HP Debt upon which it has been unable to collect. (FAC ¶¶105, 110.) As part of the documents Plaintiff received from Defendant during that litigation,
Defendant moves to dismiss on the following grounds: (1) the unjust enrichment, FDUTPA and tortious interference claims are barred by Florida's four-year statute of limitations; (2) the doctrine of delayed discovery does not apply to the fraud in inducement and negligent misrepresentation claims; (3) Plaintiff had a duty to reasonably investigate the material facts affecting its purchase; (4) Plaintiff should have named CMAX 1 as the defendant and (5) the claim for punitive damages are insufficiently pled and unsupported by Florida law.
Plaintiff responds that (1) Defendant's argument that Plaintiff has sued the wrong party amounts to Defendant improperly asking that the Court not take the allegations of the FAC as true; (2) the statute of limitations arguments involve factual issues that cannot be resolved on a motion to dismiss; (3) Defendant's fraudulent concealment tolls the statute of limitations for the claims of unjust enrichment, violation of FDUTPA and tortious interference; (4) the claims for fraud and negligent misrepresentation are timely under the delayed discovery doctrine; (5) the FAC properly pleads that Defendant's omissions and misrepresentations were material to Plaintiff and (6) the FAC sufficiently pleads facts to support an award of punitive damages.
In reply, Defendant contends that the face of the FAC demonstrates that neither equitable tolling nor the delayed discovery doctrine are applicable. Specifically, Defendant claims that fraudulent concealment does not equitably toll Florida's statute of limitations on any claims. Defendant also claims that the delayed discovery doctrine does not delay accrual of Plaintiff's claims for fraud and negligent misrepresentation as a matter of law.
Plaintiff has filed a sur-reply to address the application of equitable tolling.
Rule 8(a)(2) of the Federal Rules of Civil Procedure requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The Supreme Court has held that "[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 `entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level."
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face."
"A statute of limitations bar is "an affirmative defense, and plaintiffs are not required to negate an affirmative defense in their complaint."
With respect to the claims for unjust enrichment, FDUTPA and tortious interference, Plaintiff asserts that the doctrine of equitable tolling applies. Equitable tolling may delay the running of the statute of limitations period based on the plaintiff's "blameless ignorance" and the lack of prejudice to the defendant.
This Court has previously held that Florida law does not permit the application of equitable tolling based on circumstances not listed in Florida Statute §95.051.
Nonetheless, Plaintiff has provided authority to the contrary and the Court will analyze it. The most persuasive case Plaintiff provided is
To begin,
Plaintiff also cites a line of cases that it claims stands for the proposition that equitable tolling applies when a plaintiff alleges fraudulent concealment. While it is certainly true that Florida law permits a tolling of the statute of limitations when there has been fraud or fraudulent concealment, this is not the same as "equitable tolling."
In other words, "fraudulent concealment goes beyond mere non-disclosure, and must constitute active and willful concealment."
Based on the facts alleged post-closing, the Court finds that Plaintiff has alleged adequate facts to allow the claims to go forward based on the doctrine of fraudulent concealment. (FAC ¶¶ 86-117.)
With respect to the fraud and negligent misrepresentation claims, Plaintiff invokes the doctrine of delayed discovery. This doctrine "generally provides that a cause of action does not accrue until the plaintiff either knows or reasonably should know of the tortious act giving rise to the cause of action."
According to Defendant, it did not have either exclusive or superior knowledge nor did it prevent further investigation. Defendant states that, with due diligence, Plaintiff could have discovered that CMAX 1 was HP Debt's lender and that CMAX I received some of the sale proceeds to satisfy its loan. (Mot. at 7.) With respect to the alleged defects in the portfolio, Defendant claims that the FAC demonstrates that Plaintiff failed to investigate various aspects of the portfolio before agreeing to purchase it. Finally, Defendant also claims that the FAC is devoid of any facts that Defendant acted as a broker for either HP Debt or Plaintiff, or otherwise incurred a duty to Plaintiff. (Mot. at 8.)
In response, Plaintiff points out that the FAC makes numerous allegations that Defendant misrepresented or concealed facts material to Plaintiff's purchase of the mortgage loan file and post-sale investigation. (FAC ¶¶37-39, 49, 52-53, 56, 58-60, 65-70, 81-83, 86-87, 98, 115, 129, 141, 150, 158.)
In any event, the Court finds that it is not apparent from the face of the FAC that Plaintiff's claims are time-barred. To the contrary, the arguments made by the parties demonstrate that the delayed discovery issue is inextricably woven into factual questions surrounding the transaction at issue here. The Court cannot conclude from the face of the FAC that dismissal of the complaint based on delayed discovery is appropriate. Instead, the facts relating to what Plaintiff knew or should have known about this transaction should be explored through discovery. Likewise, Defendant's challenges to the FAC's assertion that Defendant acted as a broker and therefore had a duty to Plaintiff cannot be resolved at the motion to dismiss stage either.
Lastly, the Court denies Defendant's request to dismiss the request for punitive damages from the FAC. Simply put, "it is not appropriate at the motion to dismiss stage to sort out the type of damages that can be awarded."
Accordingly, it is hereby
(a) Absence from the state of the person to be sued.
(b) Use by the person to be sued of a false name that is unknown to the person entitled to sue so that process cannot be served on the person to be sued.
(c) Concealment in the state of the person to be sued so that process cannot be served on him or her.
(d) The adjudicated incapacity, before the cause of action accrued, of the person entitled to sue. In any event, the action must be begun within 7 years after the act, event, or occurrence giving rise to the cause of action.
(e) Voluntary payments by the alleged father of the child in paternity actions during the time of the payments.
(f) The payment of any part of the principal or interest of any obligation or liability founded on a written instrument.
(g) The pendency of any arbitral proceeding pertaining to a dispute that is the subject of the action.
(h) The period of an intervening bankruptcy tolls the expiration period of a tax certificate under s. 197.482 and any proceeding or process under chapter 197.
(i) The minority or previously adjudicated incapacity of the person entitled to sue during any period of time in which a parent, guardian, or guardian ad litem does not exist, has an interest adverse to the minor or incapacitated person, or is adjudicated to be incapacitated to sue; except with respect to the statute of limitations for a claim for medical malpractice as provided in s. 95.11. In any event, the action must be begun within 7 years after the act, event, or occurrence giving rise to the cause of action.
Paragraphs (a)-(c) shall not apply if service of process or service by publication can be made in a manner sufficient to confer jurisdiction to grant the relief sought. This section shall not be construed to limit the ability of any person to initiate an action within 30 days after the lifting of an automatic stay issued in a bankruptcy action as is provided in 11 U.S.C. s. 108©.
(2) A disability or other reason does not toll the running of any statute of limitations except those specified in this section, s. 95.091, the Florida Probate Code, or the Florida Guardianship Law.
Florida Statute § 95.051.