5D07-4177 Clement v. Lipson

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State: Florida

Court: Florida Fifth District Court

Docket No: 5D07-4177

Case Date: 11/17/2008

Preview:IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FIFTH DISTRICT JULY TERM 2008

TRACY CLEMENT, ERIC CLEMENT, and PAUL SWEEN, Appellants, v. Case No. 5D07-4177 CORRECTED

GARY D. LIPSON, AS RECEIVER, ETC., ET AL., Appellees. ________________________________/ Opinion filed November 21, 2008. Non Final Appeal from the Circuit Court for Seminole County, James E.C. Perry, Judge. David Schwartz & Hala Sandridge of Fowler White Boggs Banker P.A., Tampa, for Appellants. Frank M. Bedell of Winderweedle, Haines, Ward & Woodman, P.A., Orlando, for Appellee, Gary D. Lipson.

COHEN, J. Appellants, Eric Clement, Tracy Clement, and Paul Sween, challenge the trial court's denial of their motion to dismiss for lack of personal jurisdiction. The issue is whether long-arm personal jurisdiction can be asserted over them for torts committed by

the limited liability company of which they were managers. Because there is no basis to assert long-arm jurisdiction, we reverse. FACTUAL AND PROCEDURAL HISTORY Universal Luxury Coaches, LLC ("ULC"), is a Delaware limited liability company owned by co-defendants, Scott Spor and Nevada Coach Partners, LLP. ULC's office is in Sanford, Florida, and its managers were Eric Clement, Tracy Clement, Paul Sween, Conrad Clement, Scott Spor, and James Wooley. ULC was formed to sell timeshare interests in luxury motor coaches. In June 2002, ULC submitted its initial timeshare plan, which contained an investment feature, along with advertising materials to the Department of Business and Professional Regulation ("DBPR") for approval. The

DBPR rejected both the timeshare plan and advertising plan because they referred to and included an investment feature. Subsequently, ULC removed the investment

feature, withdrew the related advertising materials, and resubmitted its timeshare plan. DBPR approved this revised timeshare plan. Notwithstanding the prior rejection of the investment feature, ULC began selling timeshare interests with an investment component. Although somewhat modified from the investment feature DBPR rejected, ULC promised a ten percent return if investors signed a rental program agreement. Between December 1, 2002, and December 31, 2003, ULC sold approximately $8 million worth of timeshare interests to 172 investors, 61 of whom were Florida residents. After receiving numerous requests from investors to opt out of the program and for a return of their monies, ULC was able to return only about $1 million.

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By order dated October 5, 2004, Gary D. Lipson was appointed ULC's receiver in a companion case, State of Florida, Office of Financial Regulation v. Universal Luxury Coaches, LLC, No. 04-CA-2130-16-W (Fla. 18th Cir. Ct. Oct. 5, 2004). The order

appointing him receiver authorized and directed Lipson to file suit on behalf of ULC for the benefit of its aggrieved investors and creditors. Subsequently, he filed a ten-count second amended complaint against Appellants, individually, and a number of other corporate entities and individuals for their involvement or participation in selling these timeshare interests. According to the second amended complaint, the sale of the

timeshare interests was unlawful and fraudulent because numerous fraudulent misrepresentations and omissions were contained in both the marketing materials provided to the investors and the internal materials provided to the salespeople. The second amended complaint sought damages from Appellants for selling unregistered securities, securities fraud, fraudulently selling investments, negligent mis-

representation, violating Florida's Timesharing Act, and fraudulent transfers. Appellants moved to dismiss the complaint for lack of personal jurisdiction, accompanied by supporting affidavits. After conducting limited discovery, Lipson filed Appellants' depositions in opposition to the motion to dismiss. hearing, the trial court denied their motion to dismiss. STANDARD OF REVIEW A lower court's ruling on a motion to dismiss for lack of personal jurisdiction is reviewed de novo and involves a two-step analysis. Wendt v. Horowitz, 822 So. 2d 1252, 1256 (Fla. 2002). The first inquiry is whether the complaint alleges sufficient jurisdictional facts to bring the non-resident defendants within the ambit of the long-arm After conducting a

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statute. Id. at 1257. The second is whether sufficient minimum contacts exist to satisfy the Fourteenth Amendment's due process requirements. Id.; Doe v. Thompson, 620 So. 2d 1004, 1005 (Fla. 1993). A defendant challenging the allegations of personal jurisdiction must file an affidavit supporting his position that long-arm jurisdiction is inappropriate. Doe v.

Thompson, 620 So. 2d at 1005. The plaintiff must then demonstrate the basis for longarm jurisdiction by filing a counter-affidavit or other evidence, like a deposition transcript. Id.; Wendt v. Horowitz, 822 So. 2d at 1255 (approving plaintiff's use of deposition transcripts for the court to consider in passing upon motion to dismiss for lack of personal jurisdiction). If the affidavits or depositions conflict, then the trial court should hold a limited evidentiary hearing. Doe v. Thompson, 620 So. 2d at 1005. DISCUSSION Tracy Clement and Paul Sween are residents of Minnesota; Eric Clement is a resident of Iowa. The complaint alleges personal jurisdiction over Appellants by

generally alleging that they operated, conducted, or carried on a business venture in Florida and personally committed tortious acts that caused injury in Florida. See

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