JOHN E. STEELE, District Judge.
This matter comes before the Court on review of Plaintiff's Motion to Dismiss Defendant's Counterclaims and Third-Party Claims (Doc. #12) filed on July 26, 2018. Defendant filed a Response (Doc. #20) on September 17, 2018.
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). This obligation "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do."
On June 4, 2018, plaintiff Larry Harris filed his Complaint (Doc. #1) against Henry Jan for damages stemming from a breach of a promissory note in the amount of $300,000. Plaintiff alleges that defendant agreed to repay the principal amount on July 3, 2017, with interest accruing on the unpaid balance at a rate of 12% per annum. Plaintiff alleges that defendant made no payments, and the Note provides for a default interest rate of 15% per annum. Plaintiff seeks $391,701.37 as of May 31, 2018, with interest, plus attorney fees. In response, defendant filed an Answer and Counterclaim (Doc. #9) which also purports to add a Jane Doe and John Doe as third-party defendants. Defendant does not present a statement of subject-matter jurisdiction, however the Court notes that two counts present a federal question. For purposes of review, the Court will assume that the Court has subject-matter jurisdiction in this basis.
Defendant/Counter-plaintiff Jan alleges that he entered into various business loan arrangements in or around 2010 with plaintiff/counter-defendant Harris, through his company Healthcare of Today, Inc. Jan states that this business became insolvent and he was unable to continue cash repayment for the business loan. Jan alleges that Harris continued to harass him for repayment "even though he had technically been paid in full" by taking stock that secured the original notes, and Harris sought to have Jan ratify the note and provide a personal guaranty. (Doc. #9, ¶ 7.) Jan signed the note because "of the constant threats, calls and harassment" even though he believed the notes had been paid in full. (
Jan filed for bankruptcy protection, but Harris continued to contact him even during its pendency. The bankruptcy case was dismissed, and Jan continued with payments. Jan alleges that Harris demanded that he violate securities laws and Jan's settlement with the SEC by arranging inside information "and to illegally collect funds from a publicly traded company". (
Under the heading of "Joinder of Additional Defendants", Jan inserts that Jane Doe and John Doe have a significant role and should be included. Nothing further is stated, no factual basis provided, and no counts stated. Therefore no Third-Party Complaint is presented and it will be dismissed.
Jan goes on to assert the following counterclaims: extortion, wiretapping, violation of the automatic stay in Bankruptcy Court, violations of Florida Usary Laws, two counts for RICO violations, and unjust enrichment. Harris seeks to dismiss the counterclaims arguing that: (1) extortion is not an actionable civil claim; (2) both Florida and federal laws have an exception allowing for the recording of one's own phone conversations; (3) the Court should defer jurisdiction of an alleged violation of the automatic stay to the Bankruptcy Court; (4) the usary claim fails to allege facts of an interest rate exceeding the lawful rate of interest under the relevant Florida Statute; (5) Jan fails to state a claim for violations of RICO; and (6) that the claim for unjust enrichment is deficient.
As argued by Harris, there is no recognized private right of action for extortion in Florida and specifically under Fla. Stat. § 836.05.
Although Jan is a resident of California, the suit was filed in Florida and the Promissory Note provides that Florida law applies in case of a default. (Doc. #1-1, p. 3.) As California law does not apply to the case, and the claim is not presented as a claim under California law, the claim must be dismissed.
Harris argues that the claim must be dismissed because both Florida law and federal law recognize an exception to the prohibition on recording communications. Once again, Jan argues that California law provides protection if there was no consent.
Federal law provides a right to a civil cause of action under 18 U.S.C. § 2520, as does California and Florida. Under the California Statute, consent of all parties is indeed required to record a conversation. Cal. Penal Code § 632(a). Under the Florida Statute, as long as the intercept is not disclosed improperly, it does not apply to prohibit recording one's own conversation.
Jan may be asserting a claim under California law, but that has not specifically been pled. In fact, no statutory, common law, or constitutional basis is referenced. Only one line is contained in Count II, that Harris admitted to record phone conversations without the consent of Jan, and no other context. The motion to dismiss will be granted because the one line fails to provide a short and plain statement for relief.
As a preliminary matter, Count III also only alleges one line, that Harris ignored bankruptcy laws by harassing him and trying to collect money during his Chapter 13 case. In his Response, Jan provides that he filed a Chapter 7 case in California on February 27, 2012, and he would not object if the issue is better handled by the Bankruptcy Court. Jan does not indicate in the Counterclaim whether the issue was raised with the Bankruptcy Court, or under what basis he may bring a stand-alone civil action for a violation of 11 U.S.C. § 362. The fact is, that any purported violation of the automatic stay should be handled by the Court that imposed the stay, i.e., the Bankruptcy Court.
Jan alleges that the "effective interest rate" is actually greater than 18%, which violates Fla. Stat. § 687.03(3). Jan alleges that the only way he would owe "anywhere close to $300,000" is if an interest rate in excess of 50%. (Doc. #9, ¶ 33.) The Promissory Note provides for an interest rate of 12% on all unpaid balances retroactive to January 1, 2016. (Doc. #1-1, p. 3.) In case of default and the acceleration of the amount due, the Note bears a rate of 15% percent per annum from the date of demand until paid. (
Jan asserts two claims under the Racketeering Influenced and Corrupt Organizations Act (RICO). Jan asserts that the case involves an "unlawful debt" as defined in 18 U.S.C. § 1961(6), which is a debt "incurred or contracted in gambling activity" in violation of laws relating to usury,
There are no factual allegations that the debt incurred in this case was as a result of a gambling debt. It is in fact admittedly based on a Note signed by Jan. (Doc. #9, ¶ 8.) Further, there is no allegation that Harris is an enterprise, or what specific racketeering activities in § 1961(a) are at issue. The motion to dismiss will be granted as to Count V of the Counterclaims.
In the other RICO claim, Count VI, Jan alleges a conspiracy to violate 18 U.S.C. § 1962(c), through § 1962(d), with the unidentified third-parties. To establish a claim, of a RICO conspiracy, plaintiff must show that Harris agreed to the overall objective of the conspiracy, or show that Harris agreed to commit two predicate acts.
To assert unjust enrichment, Jan must allege that a benefit was conferred on Harris, it was voluntarily accepted and retained, and that it would be inequitable for Harris to retain the benefit without first paying the value to Jan.
Accordingly, it is now
Plaintiff's Motion to Dismiss Defendant's Counterclaims and Third-Party Claims (Doc. #12) is