Connect with us

Eleventh Circuit

Attorney Lee Segal v. That German Bank and MD Fl. Still Rages On, In This Case.

The judiciary have been moving the motion for sanctions and attorney fees against Segal around the courts and it’s now landed into this case. Once LIF publishes, no doubt it will move again.

Published

on

BCP Management, LLC v. Deutsche Bank National Trust Company

(8:21-cv-00276-CPT)

District Court, M.D. Florida

NOV 9, 2021 | REPUBLISHED BY LIT: DEC 18, 2021

So the eighty cases sanctions saga has finally ended, in favor of Segal over Deutsche Bank. After bouncing “the sanctions job” between judges and magistrates in M.D. Fl. Federal courthouse, the short straw was given to Magistrate Judge Douglas N. Frazier (retired but recalled to service).

Douglas N. Frazier was a federal magistrate judge of the United States District Court for the Middle District of Florida.

He was appointed to this position on January 8, 2000.

Frazier retired on June 30, 2015.

As of 2020, he is serving on recall status.

Below is Segal’s notice in this case of the opinion with both transcribed below.

PLAINTIFF’S NOTICE OF SUPPLEMENTAL AUTHORITY

PLAINTIFF, 11717 81st PLACE LAND TRUST, by and through the undersigned counsel submits the following Opinion & Order(s) entered by the Honorable Douglas N. Frazier, as supplemental authority: Shen Yi, LLC v. Deutsche Bank National Trust Company, et. al., U.S.D.C., MD Case No.: 2:21-cv-66-NPM, No.: 58 (Fla. January, 2022).

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing was sent via the CM/ECF Portal to Joseph T. Kohn, Esquire, Quarles & Brady, LLP, 1395 Panther Ln, Suite 300, Naples, FL 34109-7874 at joseph.kohn@quarles.com on this 28th day of January, 2022.

/s/ Lior Segal, Esquire
Lior Segal, Esquire (FBN: 37837)

OPINION AND ORDER

This matter comes before the Court on the Motion for Sanctions and Attorney’s Fees (Doc. 32) and Response (Doc. 55).

Also before the Court is the Motion to Strike Motion for Sanctions (Doc. 34) and Response (Doc.39).

Finally, Deutsche Bank National Trust Company, as Trustee (“DBNT”) filed two Requests for Judicial Notice (Docs. 33, 37).

The parties consented to proceed before a United States Magistrate Judge for all proceedings. (Doc. 24).

DBNT seeks sanctions and attorney’s fees against attorney Lee Segal a/ka Lior Segal (“Segal”) and Segal & Schuh Law Group, P.L. (“Segal & Schuh”). Segal and Segal & Schuh seek to strike the Motion for Sanctions and Attorney’s Fees (Doc. 32) as untimely.

The Court prefers to handle the Motion for Sanctions on the merits and therefore denies as moot the Motion to Strike.

I. Background and Procedural History

This is one of many – potentially eighty – virtually similar complaints filed in state courts throughout Florida against DBNT by Shen Yi, LLC’s attorney Lee Segal and Segal & Schuh Law Group, P.L. (“Segal & Schuh”) and a few other firms.

For the purpose of clarity, the Court will summarize the history of the state-court proceedings in this case.

This action stems from a state-court foreclosure action on the real property at issue, 1970 Hidden Lake Drive, Palm Harbor, Florida 34683, located in Pinellas County, Florida.

(Doc. 17, p. 8).

Shen Yi had obtained an ownership interest in the property by acquiring it for negligible consideration and, as a result, was named as a defendant in that foreclosure action.

(Doc. 17, p. 8).

The property was sold at a judicial sale, DBNT purchased the property, and Shen Yi’s interest in the property was foreclosed.

(Doc. 4, p. 5-6).

Even though the property was located in Pinellas County, Shen Yi filed a separate action on August 20, 2020, in Hendry County, Florida, contesting the foreclosure action.

(Doc. 17. p. 9).

In short, Shen Yi claims DBNT’s prosecution of the underlying foreclosure action was “fraudulent, illegal, and perjurious.”

(Doc. 3, p. 4).

First, Shen Yi claims DBNT was not the owner or holder of the note when it sought to foreclose on the note and mortgage.

(Doc. 3, p. 5).

Second, the parties in whose name the suit was prosecuted—the certificate holders—never authorized the lawsuit.

(Doc. 3, p. 5).

And third, Shen Yi asserts DBNT purported to prosecute the underlying foreclosure action as Trustee, but its trust license had been revoked.

(Doc. 3, p. 5).

Thus, Shen Yi brought a one-count complaint, alleging: a violation of Fla. Stat. § 772.101 and violations of Fla. Stat. §§ 817.535 and 772.103(1)-(4)1; a pattern of criminal activity; the improper recording of a notice of lis pendens; numerous fraudulent representations in the underlying lawsuit; and conspiracy with others to commit these alleged unlawful actions.

(Doc. 3, p. 10-11).

Shen Yi obtained a default and a default judgment against DBNT.

(Doc. 17, p. 10).

Shen Yi then obtained a Final Judgment After Default and an Amended Final Judgment After Default.

(Doc. 17, p. 10-11).

Shen Yi also moved for attorney’s fees and costs.

(Doc. 17, p. 11).

After learning about the lawsuit and immediately prior to removal, DBNT filed a Motion to Quash Service of Process, Motion to Vacate Clerk’s Default and Default Final Judgment, and Motion to Transfer Venue

(Doc. 4).

In the Motion to Quash Service of Process, DBNT claimed that Shen Yi improperly served process by, among other things, serving it on CT Corp., which is not DBNT’s registered agent, and also claimed Shen Yi named the party incorrectly.

(Doc. 4, p. 7-8, 10-13).

DBNT further claimed that after CT Corp. received the summons and complaint, it notified Segal that it was not the registered agent for

DBNT and was unable to forward the service documents.

(Doc. 4, p. 2).

DBNT then removed the action to this Court on January 26, 2021.

(Doc. 1).

After removal, the Court denied the Motion to Quash Service of Process, Motion to Vacate Clerk’s Default and Default Final Judgment, and Motion to Transfer Venue without prejudice, directing DBNT to comply with new Local Rule 1.06(c).

(Doc. 10).

On February 22, 2021, DBNT refiled its Motion to Quash Service of Process and Set Aside Clerk’s Default and Default Judgment

(Doc. 17).

Segal requested and was granted an extension of time to respond to the Motion.

(Docs. 26, 27).

Rather than responding to the motion, Segal filed a Notice of Voluntary Dismissal (Doc. 28) on April 5, 2021.

The next day, the parties filed a Stipulation Vacating Default Final Judgment and Dismissing Case With Prejudice.

(Doc. 29).

In the stipulation, the parties agreed to withdraw and vacate the Notice of Voluntary Dismissal, vacate the Final Judgment After Default entered in state court, vacate the Amended Final Judgment After Default entered in state court, discharge any liens or encumbrances, and dismiss this action with prejudice.

(Doc. 29, p. 1-2).

No mention was made of attorney’s fees.

The Court fully approved and adopted the stipulation the next day and judgment was entered on April 7, 2021.

(Docs. 30, 31).

Fourteen days later, DBNT filed the instant Motion for Sanctions and Attorney’s Fees

(Doc. 32).

II. Motion for Attorney’s Fees and Sanctions (Doc. 32)

DBNT seeks to recover attorney’s fees, costs, additional sanctions, and a disclosure of all known lawsuits against it and Bank of New York Mellon (“BNYM”) (a non-party to this action) from Segal and Segal & Schuh under both 28 U.S.C. § 1927 and the Court’s inherent authority. (Do. 32, p. 24).

In sum, DBNT asserts that the Segal and Segal & Schuh’s sanctionable conduct was comprised of:

(1) filing certain test cases in state court from December 2019 to July 2020, testing the waters to find which financial institutions would not respond to the lawsuits, and Segal would then be able to obtain quick defaults and default judgments, (Doc. 32, p. 5-6);

(2) knowingly and improperly serving DBNT and BNYM in the state court actions, by improperly serving CT Corp, which was neither financial institutions’ registered agent, improperly filing certificates of service, and never giving notice to DBNT or BNYM of any filings (Doc. 32, p. 7-9, 21- 23);

(3) filing cases in state court in counties where Segal knew that venue was improper because the property was not located there and the foreclosure action did not occur there (Doc. 32, p. 10-12);

(4) multiplying the proceedings by voluntarily dismissing the cases when a defendant appeared and then refiling similar complaints in other state-court venues, (Doc. 32, p. 12-15);

and

(5) filing frivolous complaints in state court in bad faith to vexatiously multiply the proceedings in state court by filing motions for summary judgment, improper affidavits, motions for default, and motions for default judgment, (Doc. 32, p. 15-21).

In this case and from a review of the alleged sanctionable activity, a few patterns emerged.

First, most if not all of the allegedly sanctionable activity occurred in state court before removal.

Second, DBNT chose to remove these actions, bringing them to federal court.

And third, based on the original Motion to Quash Service of Process and Vacate Clerk’s Default and Default Final Judgment (Doc. 4) filed originally in state court in the instant action, DBNT was aware of at least some of the alleged sanctionable activity at the time of removal. (Doc. 4, p. 2-9).

A. 28 U.S.C. § 1927

Under 28 U.S.C. § 1927, a court may sanction: “Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.”

Attorneys are obligated not to delay judicial proceedings intentionally and unnecessarily and must avoid dilatory tactics during litigation or be subject to possible sanctions.

Peer v. Lewis, 606 F.3d 1306, 1314 (11th Cir. 2010).

Because this provision is penal in nature, it must be strictly construed.

Norelus v. Denny’s, Inc., 628 F.3d 1270, 1281 (11th Cir. 2010).

Under the plain language of the statute, three requirements must be met in order to justify imposing sanctions:

(1) an attorney must engage in “unreasonable and vexatious” conduct;

(2) such “unreasonable and vexatious” conduct must “multipl[y] the proceedings;” and

(3) the amount of sanctions cannot exceed the costs occasioned by the objectionable conduct. Id.

An attorney multiplies proceedings “unreasonably and vexatiously” when the attorney’s conduct is so egregious that it is “‘tantamount to bad faith.’”

Amlong & Amlong, P.A. v. Denny’s, Inc., 500 F.3d 1230, 1239 (11th Cir. 2007) (citation omitted).

Bad faith “turns not on the attorney’s subjective intent, but on the attorney’s objective conduct.”

Id.

Basically, a court must compare the attorney’s conduct against the conduct of a “reasonable” attorney and make a judgment as to whether the conduct was acceptable based on an objective standard.

Id. at 1239-40.

Likewise, the term “vexatious” requires an evaluation of an attorney’s objective conduct.

Id. at 1240.

Thus, objectively reckless conduct is sufficient to warrant sanctions even if an attorney does not act knowingly or malevolently.

Id. at 1241.

Even so, an attorney’s purpose or intent may be “an important piece of the calculus,” “because a given act is more likely to fall outside the bounds of acceptable conduct and therefore be ‘unreasonabl[e] and vexatious[ ]’ if it is done with a malicious purpose or intent.”

Id.

And to be clear, neither negligent conduct alone nor a lack of merit will support a finding of bad faith under § 1927.

Id. at 1241-42.

Importantly, the language of § 1927 applies to unnecessary filings after the lawsuit has begun.

Macort v. Prem, Inc., 208 F. App’x 781, 786 (11th Cir. 2006).

The plain language of § 1927 applies to multiplying proceedings vexatiously and unreasonably before a federal court and thus § 1927 applies to filings after a lawsuit has begun in this court.

Id.; see also Smith v. Psychiatric Sols., Inc., 864 F. Supp. 2d 1241, 1269 (N.D. Fla. 2012), aff’d, 750 F.3d 1253 (11th Cir. 2014)

(finding counsel cannot “be sanctioned for conduct committed in the state court proceedings, including the filing of the initial complaint and any subsequent events in that forum.”);

Granite Rock Co. v. Int’l Bhd. of Teamsters, No. C 10-03718 JW, 2011 WL 13373980, at *3 (N.D. Cal. Mar. 17, 2011)

(finding conduct that occurred while pending in state court prior to removal not sanctionable under § 1927).

In this case, the alleged unreasonable and vexatious conduct occurred while this case was pending in state court, prior to removal.

DBNT complains of a frivolous complaint, improper service, improper filings to obtain a default and default judgment, multiple filings in other state courts, and other similar behavior that all occurred before a state court.

To award sanctions under § 1927, the Court focuses on Segal’s actions after removal.

After removal, the Court denied the first Motion to Quash Service of Process without prejudice, and then DBNT filed its second Motion to Quash Service and Motion to Vacate Clerk’s Default and Default Judgment

(Doc. 17).

Before the Court ruled on that Motion, Segal filed a Notice of Voluntary Dismissal (Doc. 28) and then the next day, the parties filed a Stipulation Vacating Default Final Judgment and Dismissing the Case with Prejudice, which the Court adopted.

(See Docs. 29, 30).

Nothing in the case before the federal court after removal amounts to multiplying the action, let alone multiplying it unreasonably or vexatiously.

In sum, rather than respond to the Motion to Quash, Segal decided to voluntarily dismiss the action and end this litigation.

As a result, Segal’s actions while in federal court do not amount to multiplying this action unreasonably and vexatiously.

DBNT has not met the requirements for sanctions under 28 U.S.C. § 1927 and therefore the Court finds no basis to award attorney’s fees or sanctions under this provision.

B. The Court’s Inherent Authority

“Federal courts possess potent inherent powers that they may use to ‘fashion an appropriate sanction for conduct which abuses the judicial process.’”

Peer v. Lewis, 571 F. App’x 840, 844 (11th Cir. 2014) (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 44-45 (1991)).

One purpose of the court’s inherent power is to police those who appear before them.

Purchasing Power, LLC v. Bluestem Brands, Inc., 851 F.3d 1218, 1223 (11th Cir. 2017) (citing Chambers, 501 U.S. at 46).

Even if procedural rules exist to sanction conduct, a court may invoke its inherent authority to sanction the same conduct.

Peer, 571 F. App’x at 844.

A court’s inherent authority extends to a full range of litigation abuses and fills in the gaps left by rule-based sanctions. Id.

A court may exercise its power to sanction for willful disobedience of a court order, and to sanction a party who acted in bad faith, vexatiously, wantonly, or for oppressive reasons.

Purchasing Power, LLC, 851 F.3d at 1223 (citing Marx v. Gen. Revenue Corp., 568 U.S. 371, 382 (2013); Chambers, 501 U.S. at 45-46).

Importantly, “[t]his power ‘must be exercised with restraint and discretion’ and used ‘to fashion an appropriate sanction for conduct which abuses the judicial process.’”

Id. (quoting Chambers, 501 U.S. at 45-46).

To unlock a court’s inherent power, a court must find bad faith.

Id.; see also Peer v. Lewis, 606 F.3d 1306, 1316 (11th Cir. 2010).

Unlike sanctions under 28 U.S.C. § 1927, the standard governing a court’s inherent power is a “subjective standard with a narrow exception for conduct tantamount to bad faith. Furthermore, recklessness alone does not constitute conduct tantamount to bad faith.”

Purchasing Power, LLC, 851 F.3d at 1223-24.

“However, in the absence of direct evidence of subjective bad faith, this standard can be met if an attorney’s conduct is so egregious that it could only be committed in bad faith.”

Id. at 1224-25.

In short, to establish sanctions under a court’s inherent power, recklessness plus a frivolous argument will suffice.

Id. at 1225.

The Court has the inherent authority to sanction a party or attorney for abuses of process that occur beyond the courtroom, such as disobeying court orders.

See Chambers v. NASCO, Inc., 501 U.S. 32, 57 (1991).

In Chambers v. Nasco, Inc. for example, the Supreme Court determined that when Plaintiff attempted to gain FCC’s permission to build a new transmission tower in direct contravention of a district court’s order to maintain the status quo pending the outcome of the litigation, this conduct fell within the scope of the district court’s sanctioning power.

501 U.S. at 57.

In Chambers, the plaintiff disobeyed a district court’s order in another unrelated proceeding and the Supreme Court found sanctions warranted.

In this case, the alleged sanctionable conduct occurred while this case was pending in state court and prior to removal.

Similarly, in the other state-court cases mentioned by DBNT that were removed to this Court – much if not all of the alleged sanctionable conduct occurred before state-court judges.

The Court declines to sanction Segal and Segal & Schuh for their conduct here.

In summary, DBNT chose to remove this action to federal court and now requests that Segal and Segal & Schuh be sanctioned for conduct that occurred in state court that included:

filing test cases in state court, knowingly improperly serving DBNT and BNYM (a non-party to this action),

knowingly filing cases in improper venues,

multiplying the proceedings by voluntarily dismissing cases and refiling them in different state-court venues,

and filing frivolous complaints, motions for summary judgment, defaults, and default judgments all in state court.

After removal in January 2021, Plaintiff filed a Notice of Voluntary Dismissal in April 2021, less than three months after removal.

And as explained above, very little occurred in the instant case prior to the case closing.

Indeed, the Court finds no bad faith, vexatious, wanton, or oppressive behavior in the action after removal.

The Court is mindful that it must exercise restraint and discretion when awarding sanctions under its inherent authority.

While the Court certainly does not condone the arguably contumacious behavior of Segal and Segal & Schuh in filing so many state-court actions and in how Segal conducted those proceedings, in its discretion, the Court will not exercise its inherent powers to sanction Segal and Segal & Schuh in this action for conduct that did not occur before it.

III. Judicial Notice

Also pending before the Court are DBNT’s requests for Judicial Notice (Docs. 33, 37). DBNT requests that the Court take judicial notice of summaries of certain state and federal court cases and of filings in two cases against BNYM filed by Kenneth and Kristine Kaye.

(Doc. 33, p. 2-4; Doc. 37, p. 2-4).

Under Federal Rule of Evidence 201(b)(2), the types of facts that may be judicially noticed are facts that are not subject to reasonable dispute because they: “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.”

The requests do not satisfy the requirements of judicial notice and, based on this Court’s ruling, the requests are moot and not necessary for ruling in this case.

Accordingly, it is hereby ORDERED:

(1) The Motion to Strike Motion for Sanctions (Doc. 34) is DENIED as moot.

(2) The Motion for Sanctions and Attorney’s Fees (Doc. 32) is DENIED.

(3) The Requests for Judicial Notice (Docs. 33, 37) are MOOT.

DONE and ORDERED in Fort Myers, Florida on January 28, 2022.

Copies furnished to:

Counsel of Record Unrepresented Parties

BCP Management, LLC v. Deutsche Bank National Trust Company

(8:21-cv-00276-CPT)

District Court, M.D. Florida

NOV 9, 2021 | REPUBLISHED BY LIT: DEC 18, 2021

ORDER

Under 28 U.S.C. § 455, a judge must disqualify herself in any proceeding in which her impartiality might reasonably be questioned or if the judge has personal knowledge of disputed evidentiary facts concerning the proceeding.
28 U.S.C. § 455(a) & (b)(1).

When proper grounds exist, a judge has an affirmative and self-enforcing obligation to recuse herself sua sponte.

United States v. Kelly, 888 F.2d 732, 744 (11th Cir. 1989).

Today, I presided over a settlement conference for this case. (Doc. 53).

During the settlement conference, at which the parties reached an impasse, I became privy to certain confidential information.

Consequently, recusal is warranted.

The Clerk is directed to reassign this case to another magistrate judge by random draw and provide notice to the parties of the new magistrate judge.

ORDERED in Tampa, Florida on November 9, 2021.

YOUR DONATION(S) WILL HELP US:

• Continue to provide this website, content, resources, community and help center for free to the many homeowners, residents, Texans and as we’ve expanded, people nationwide who need access without a paywall or subscription.

• Help us promote our campaign through marketing, pr, advertising and reaching out to government, law firms and anyone that will listen and can assist.

Thank you for your trust, belief and support in our conviction to help Floridian residents and citizens nationwide take back their freedom. Your Donations and your Voice are so important.



U.S. District Court
Middle District of Florida (Tampa)
CIVIL DOCKET FOR CASE #: 8:21-cv-00276-CPT

BCP Management, LLC v. Deutsche Bank National Trust Company
Assigned to: Magistrate Judge Christopher P. Tuite
Demand: $860,000

Case in other court:  Eighteenth Judicial Circuit Court, 20-CA-47023

Cause: 28:1441 Notice of Removal- Racketeering (RICO)

Date Filed: 02/02/2021
Date Terminated: 06/08/2021
Jury Demand: Plaintiff
Nature of Suit: 470 Racketeer/Corrupt Organization
Jurisdiction: Diversity
Plaintiff
BCP Management, LLC
as Trustee for 11717 81st Place Land Trust
represented by Lee Segal
Segal & Schuh Law Group, PL
18167 US Hwy 19 N Ste 100
Clearwater, FL 33764
727-824-5775
Fax: 888-672-7347
Email: lee@segalschuh.com
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
V.
Defendant
Deutsche Bank National Trust Company
as Trustee, on behalf of the Registered Holders of GSAMP Trust 2005-HE3, Mortgage Pass-Through Certificates, Series 2005-HE3
represented by Benjamin Bruce Brown
Quarles & Brady, LLP
Suite 300
1395 Panther Ln
Naples, FL 34109-7874
239/659-5026
Fax: 239/213-5426
Email: benjamin.brown@quarles.com
LEAD ATTORNEY
ATTORNEY TO BE NOTICEDJoseph T. Kohn
Quarles & Brady, LLP
Suite 300
1395 Panther Ln
Naples, FL 34109-7874
239/262-5959
Fax: 239/213-5599
Email: joseph.kohn@quarles.com
ATTORNEY TO BE NOTICED

 

Date Filed # Docket Text
11/16/2021 56 NOTICE by Deutsche Bank National Trust Company of Impasse at Settlement Conference (Kohn, Joseph) (Entered: 11/16/2021)
11/10/2021 55 Case Reassigned to Magistrate Judge Christopher P. Tuite. New case number: 8:21-cv-276-CPT. Magistrate Judge Amanda Arnold Sansone no longer assigned to the case. (JNB) (Entered: 11/10/2021)
11/09/2021 54 ORDER of recusal. Signed by Magistrate Judge Amanda Arnold Sansone on 11/9/2021. (SFC) (Entered: 11/09/2021)
11/09/2021 53 Minute Entry. Virtual Proceedings held before Magistrate Judge Amanda Arnold Sansone: SETTLEMENT CONFERENCE held on 11/9/2021. Court declares an impasse. (Via Zoom) (CDM) (Entered: 11/09/2021)
11/08/2021 52 ENDORSED ORDER taking judicial notice of 32 Exhibits for Defendant’s Motion for Sanctions. Signed by Magistrate Judge Amanda Arnold Sansone on 11/8/2021. (SFC) (Entered: 11/08/2021)
11/01/2021 51 ORDER scheduling settlement conference. Settlement Conference set for 11/9/2021 at 10:00 AM in Zoom Video Conference before Magistrate Judge Amanda Arnold Sansone. See order for details. Signed by Magistrate Judge Amanda Arnold Sansone on 11/1/2021. (SFC) (Entered: 11/01/2021)
10/29/2021 50 NOTICE by Deutsche Bank National Trust Company re 47 Order directing compliance Amended Joint Notice of Availability for Status Conference (Kohn, Joseph) (Entered: 10/29/2021)
10/29/2021 49 NOTICE by Deutsche Bank National Trust Company re 47 Order directing compliance JOINT NOTICE OF AVAILABILITY FOR SETTLEMENT CONFERENCE (Kohn, Joseph) (Entered: 10/29/2021)
10/28/2021 48 Minute Entry. Virtual Proceedings held before Magistrate Judge Amanda Arnold Sansone: STATUS CONFERENCE held on 10/26/2021. (Via Zoom) (CDM) (Entered: 10/28/2021)
10/26/2021 47 ORDER directing parties to confer re: scheduling a settlement conference for 31 Motion for Sanctions and Attorneys Fees. See order for details. Response due 10/29/2021 at noon. Signed by Magistrate Judge Amanda Arnold Sansone on 10/26/2021. (SFC) (Entered: 10/26/2021)
10/07/2021 46 ORDER setting status conference for 10/26/2021 at 02:00 PM in Zoom Video Conference before Magistrate Judge Amanda Arnold Sansone. Signed by Magistrate Judge Amanda Arnold Sansone on 10/7/2021. (SFC) (Entered: 10/07/2021)
10/05/2021 45 NOTICE by Deutsche Bank National Trust Company re 44 Order setting status conference JOINT NOTICE OF AVAILABILITY FOR STATUS CONFERENCE (Kohn, Joseph) (Entered: 10/05/2021)
10/04/2021 44 ORDER directing parties to confer re: scheduling a status conference for 31 Motion for Sanctions and Attorneys Fees. See order for details. Signed by Magistrate Judge Amanda Arnold Sansone on 10/4/2021. (SFC) (Entered: 10/04/2021)
07/22/2021 43 RESPONSE in Opposition re 31 MOTION for Sanctions and Attorney’s Fees Against Lee Segal Personally filed by BCP Management, LLC. (Attachments: # 1 Affidavit Affidavit of Zachary Heathcote)(Segal, Lee) (Entered: 07/22/2021)
07/20/2021 42 ORDER denying 41 Motion to Reconsider Order granting in part Motion to File Excess Pages. The plaintiff’s response to the defendant’s 31 Motion for Attorney’s Fees is due by July 23, 2021 and cannot exceed twenty-five pages. Signed by Magistrate Judge Amanda Arnold Sansone on 7/20/2021. (MLM) (Entered: 07/20/2021)
07/16/2021 41 First MOTION for Reconsideration re 38 Order on Motion to Stay Order on Motion to File Excess Pages by BCP Management, LLC. (Segal, Lee) Modified on 7/19/2021 to edit text (CRH). (Entered: 07/16/2021)
06/28/2021 40 NOTICE of Filing Order by BCP Management, LLC. (Attachments: # 1 Order on Motion to Consolidate Cases)(Segal, Lee) Modified on 6/28/2021 to edit text (CRH). (Entered: 06/28/2021)
06/28/2021 39 NOTICE of supplemental authority by BCP Management, LLC. (Segal, Lee) (Entered: 06/28/2021)
06/25/2021 38 ORDER denying 36 Motion to Stay Response Deadline; granting in part 37 Motion to File Excess Pages. The plaintiff’s response to the defendant’s 31 Motion for Sanctions is due by July 12, 2021 and cannot exceed twenty-five pages. See order for further details. Signed by Magistrate Judge Amanda Arnold Sansone on 6/25/2021. (MLM) (Entered: 06/25/2021)
06/21/2021 37 First MOTION for Leave to File Other Document :Response to Defendant’s Motion for Attorney Fees and/or Sanctions to Exceed 20 Pages by BCP Management, LLC. (Segal, Lee) Modified on 6/22/2021 to change event type (CRH). (Entered: 06/21/2021)
06/14/2021 36 Amended MOTION to Stay re 35 Order directing response to motion Order pdf, 31 MOTION for Sanctions and Attorney’s Fees34 Notice (Other) Request to Abate Deadlines to Respond Pending Ruling on Motion to Consolidate by BCP Management, LLC. (Segal, Lee) Modified on 6/15/2021 to edit text (CRH). (Entered: 06/14/2021)
06/08/2021 35 ORDER dismissing the case for failure to prosecute; directing the Clerk to close the case; and directing the plaintiff to respond to 31 Motion for Sanctions and Attorney’s Fees by June 14, 2021. If no response is received, the defendant’s motion will be treated as unopposed. Signed by Magistrate Judge Amanda Arnold Sansone on 6/8/2021. (MLM) (Entered: 06/08/2021)
06/04/2021 34 NOTICE by BCP Management, LLC of Filing (Attachments: # 1 Motion to Consolidate Cases)(Segal, Lee) (Entered: 06/04/2021)
05/24/2021 33 ORDER TO SHOW CAUSE as to BCP Management, LLC. See order for details. Signed by Magistrate Judge Amanda Arnold Sansone on 5/24/2021. (MLM) (Entered: 05/24/2021)
05/24/2021 32 NOTICE to the Courts to take judicial notice regarding 31 MOTION for Sanctions and Attorney’s Fees Def’s Request for Judicial Notice and Notice of Intent to Use Summaries by Deutsche Bank National Trust Company. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2)(Kohn, Joseph) (Entered: 05/24/2021)
05/24/2021 31 MOTION for Sanctions and Attorney’s Fees by Deutsche Bank National Trust Company. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3)(Kohn, Joseph) (Entered: 05/24/2021)
04/21/2021 30 ORDER denying 24 Motion to Stay Adjudication of Motion to Quash and Conduct Discovery; granting 6 Motion to Quash Service; and Vacating Default Judgment entered in state court. See order for further details and deadlines. Signed by Magistrate Judge Amanda Arnold Sansone on 4/21/2021. (MLM) (Entered: 04/21/2021)
04/15/2021 29 CERTIFICATE of interested persons and corporate disclosure statement by BCP Management, LLC. (Segal, Lee) (Entered: 04/15/2021)
04/15/2021 28 NOTICE of a related action per Local Rule 1.07(c) by BCP Management, LLC. Related case(s): No (Segal, Lee) (Entered: 04/15/2021)
04/12/2021 27 RESPONSE in Opposition re 24 MOTION to Stay re 21 Response in Opposition to Motion Adjudication of Motion to Quash, Motion to Allow Subpoena Duces Tecum to CT, Compel Deposition filed by Deutsche Bank National Trust Company. (Kohn, Joseph) (Entered: 04/12/2021)
04/06/2021 26 NOTICE by Deutsche Bank National Trust Company re 18 Notice (Other) of Filing Order Denying Consolidation for Purposes of Appeal (Attachments: # 1 Exhibit)(Kohn, Joseph) (Entered: 04/06/2021)
04/06/2021 25 NOTICE of supplemental authority re 6 MOTION to Quash Service of Process MOTION to Vacate Clerk’s Default and Default Judgment by Deutsche Bank National Trust Company. (Kohn, Joseph) (Entered: 04/06/2021)
03/29/2021 24 MOTION to Stay re 21 Response in Opposition to Motion Adjudication of Motion to Quash, Motion to Allow Subpoena Duces Tecum to CT, Compel Deposition by BCP Management, LLC. (Segal, Lee) (Entered: 03/29/2021)
03/28/2021 23 NOTICE by BCP Management, LLC re 21 Response in Opposition to Motion of Reyes Affidavit Admitting Office (Attachments: # 1 Exhibit)(Segal, Lee) (Entered: 03/28/2021)
03/28/2021 22 NOTICE by BCP Management, LLC re 21 Response in Opposition to Motion of Affidavit of Lior Segal (Attachments: # 1 Exhibit)(Segal, Lee) (Entered: 03/28/2021)
03/26/2021 21 RESPONSE in Opposition re 6 MOTION to Quash Service of Process MOTION to Vacate Clerk’s Default and Default Judgment filed by BCP Management, LLC. (Segal, Lee) (Entered: 03/26/2021)
03/17/2021 20 ENDORSED ORDER granting 19 Motion for Extension of Time to File a Response to the defendant’s 6 Motion to Quash Service of Process and Motion to Vacate Clerk’s Default and Default Judgment. The plaintiff’s response is due by March 26, 2021. Signed by Magistrate Judge Amanda Arnold Sansone on 3/17/2021. (MLM) (Entered: 03/17/2021)
03/17/2021 19 First MOTION for Extension of Time to File Response/Reply as to 6 MOTION to Quash Service of Process MOTION to Vacate Clerk’s Default and Default Judgment, 17 Order directing response to motion to Defendant’s Motion to Quash Service & Incorporated Memorandum of Law by BCP Management, LLC. (Segal, Lee) (Entered: 03/17/2021)
03/17/2021 18 NOTICE by BCP Management, LLC of Filing (Attachments: # 1 Motion to Consolidate Cases)(Segal, Lee) (Entered: 03/17/2021)
03/11/2021 17 ENDORSED ORDER directing the plaintiff to respond to the defendant’s 6 Motion to Quash Service of Process and Motion to Vacate Clerk’s Default and Default Judgment. The plaintiff’s response is due by March 19, 2021. If no response is received, the defendant’s motion will be treated as unopposed. Signed by Magistrate Judge Amanda Arnold Sansone on 3/11/2021. (MLM) (Entered: 03/11/2021)
03/09/2021 16 ORDER approving Consent to Jurisdiction by US Magistrate Judge. Case reassigned to Magistrate Judge Amanda Arnold Sansone. Signed by Judge Charlene Edwards Honeywell on 3/9/2021. (BGS) (Entered: 03/09/2021)
03/09/2021 15 NOTICE of supplemental authority re 6 MOTION to Quash Service of Process MOTION to Vacate Clerk’s Default and Default Judgment (Second Notice) by Deutsche Bank National Trust Company. (Kohn, Joseph) (Entered: 03/09/2021)
03/09/2021 14 CONSENT to trial by U.S. Magistrate Judge by Deutsche Bank National Trust Company. (Kohn, Joseph) (Entered: 03/09/2021)
03/09/2021 13 CASE MANAGEMENT REPORT. (Kohn, Joseph) (Entered: 03/09/2021)
03/03/2021 12 NOTICE of a related action per Local Rule 1.07(c) by Deutsche Bank National Trust Company. Related case(s): Yes (Attachments: # 1 Exhibit)(Kohn, Joseph) (Entered: 03/03/2021)
03/01/2021 11 NOTICE informing the parties that they may consent to the jurisdiction of a United States magistrate judge by filing Form AO 85 Notice, Consent, and Reference of a Civil Action to a Magistrate Judge using the event Consent to Jurisdiction of US Magistrate Judge. (Signed by Deputy Clerk). (BGS) (Entered: 03/01/2021)
03/01/2021 10 NOTICE to Counsel of Local Rule 1.07(c), Local Rule 3.02(a)(2), and Local Rule 3.03.

-Local Rule 1.07(c) requires lead counsel to promptly file a Notice of a Related Action that identifies and describes any related action pending in the Middle District.

-Local Rule 3.02(a)(2) requires the parties in every civil proceeding, except those described in subsection (d), to file a case management report (CMR) using the uniform form at www.flmd.uscourts.gov. The CMR must be filed (1) within forty days after any defendant appears in an action originating in this court, (2) within forty days after the docketing of an action removed or transferred to this court, or (3) within seventy days after service on the United States attorney in an action against the United States, its agencies or employees. Judges may have a special CMR form for certain types of cases. These forms can be found at www.flmd.uscourts.gov under the Forms tab for each judge.

-Local Rule 3.03 requires each party to file a disclosure statement with the first appearance that identifies (1) each person that has or might have an interest in the outcome, (2) each entity with publicly traded shares or debt potentially affected by the outcome, (3) each additional entity likely to actively participate, and (4) each person arguably eligible for restitution. The disclosure statement must include this certification – I certify that, except as disclosed, I am unaware of an actual or potential conflict of interest affecting the district judge or the magistrate judge in this action, and I will immediately notify the judge in writing within fourteen days after I know of a conflict. (Signed by Deputy Clerk). (BGS) (Entered: 03/01/2021)

02/26/2021 9 NOTICE of filing of affidavit in opposition to re 7 Notice of filing supplemental authority, 6 MOTION to Quash Service of Process MOTION to Vacate Clerk’s Default and Default Judgment by BCP Management, LLC (Attachments: # 1 Affidavit of Michael Roth)(Segal, Lee) Modified text on 3/1/2021 (MCB). (Entered: 02/26/2021)
02/26/2021 8 NOTICE of filing of affidavit in opposition to re 7 Notice of filing supplemental authority, 6 MOTION to Quash Service of Process MOTION to Vacate Clerk’s Default and Default Judgment by BCP Management, LLC (Attachments: # 1 Affidavit of Michael Levey)(Segal, Lee) Modified text on 3/1/2021 (MCB). (Entered: 02/26/2021)
02/23/2021 7 NOTICE of supplemental authority re 6 MOTION to Quash Service of Process MOTION to Vacate Clerk’s Default and Default Judgment by Deutsche Bank National Trust Company. (Kohn, Joseph) (Entered: 02/23/2021)
02/22/2021 6 MOTION to Quash Service of Process , MOTION to Vacate Clerk’s Default and Default Judgment by Deutsche Bank National Trust Company. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18)(Kohn, Joseph) Motions referred to Magistrate Judge Amanda Arnold Sansone. (Entered: 02/22/2021)
02/08/2021 5 CORPORATE Disclosure Statement by Deutsche Bank National Trust Company identifying Corporate Parent Deutsche Bank Holdings, Inc., Corporate Parent Deutsche Bank Trust Corporation, Corporate Parent DB USA Corporation for Deutsche Bank National Trust Company.. (Kohn, Joseph) (Entered: 02/08/2021)
02/04/2021 4 ORDER transferring case to Tampa Division. Signed by Judge Anne C. Conway on 2/4/2021. (copies mailed/emailed)(AKC) (Entered: 02/04/2021)
02/03/2021 3 INITIAL CASE ORDER – Notice of Local Rule 3.02(a)(2), which requires the parties in every civil proceeding, except those described in subsection (d), to file a case management report (CMR) using the uniform form at www.flmd.uscourts.gov. The CMR must be filed (1) within forty days after any defendant appears in an action originating in this court, (2) within forty days after the docketing of an action removed or transferred to this court, or (3) within seventy days after service on the United States attorney in an action against the United States, its agencies or employees. Counsel have 14 days from the date of this order to file their disclosure statement (if not already filed) and to notify the court of a related action (not required if there are no related actions). Signed by Judge Anne C. Conway on 2/3/2021. (copies mailed/emailed)(AKC) (Entered: 02/03/2021)
02/02/2021 2 NEW CASE ASSIGNED to Judge Anne C. Conway and Magistrate Judge Embry J. Kidd. New case number: 6:21-cv-0223-ACC-EJK. (SJB) (Entered: 02/02/2021)
02/02/2021 1 COMPLAINT and NOTICE OF REMOVAL from 18th Judicial Circuit Brevard County Florida, case number 20-CA-47023 filed in State Court on 10/19/2020. (Filing Fee $402, Receipt # 113A-17839186) filed by Deutsche Bank National Trust Company. (Attachments: # 1 Exhibit, # 2 Exhibit, # 3 Exhibit, # 4 Exhibit, # 5 Exhibit, # 6 State Court COMPLAINT, # 7 State Court Other Documents, # 8 State Court Other Documents, # 9 State Court Docket Sheet, # 10 Civil Cover Sheet)(Kohn, Joseph) Modified on 2/2/2021 to correct docket text(SJB). Modified on 2/3/2021 (MEJ). (Entered: 02/02/2021)

Editors Choice

We’re Circlin’ Back Re the Many Complaints Against Storm Damaged Florida Lawyer Scot Strems

The clients of Strems may have discovered that the insurance company was not denying their claim and they could resolve it themselves without paying 25% of the undisputed amounts to the law firm.

Published

on

LIF Commentary

Our sister website, LawsinTexas.com initially followed the Strems cases from 2020 and his surprising loan of over $1.2M from JPMorgan Chase, which we are unable to confirm has been forgiven or not (the lack of detail in this regard makes us believe it HAS been 100% forgiven).

This is galling when you take into account the type of business Strems was conducting and the 25% fee he was charging clients for sums these clients could obtain directly from the insurer without a lawyer, or more importantly the 25% fee.

The complaint below is detailed and very long.

The referee, which is a judge by the name of Dawn Denaro of the 11th Judicial Circuit of Florida is a huge fan of Scot Strems.

So much so, the once available youtube video (via the court’s own channel) of the disciplinary proceedings via zoom re Strems has been taken offline, and is labeled a ‘private video‘, despite all the incessant claims of TRANSPARENCY by the judiciary.

Y’all are lyin’ Outlaws in Dirty Black Robes at the Judiciary, that’s for sure.

Moving on, after reading this complaint, it’s pretty much a copycat of the Allan Campbell complaint we highlighted recently.

LIF is still penning more articles about Campbell’s case, and the rogue legal associates and felons he was involved with.

In that case, the Supreme Court incorrectly sanctioned Campbell to a short 3-year suspension.

We believe his actions warranted disbarment.

Here, like Campbell, Strems has several complaints ongoing, so we’ll see how the judiciary react in due course.  However, in our opinion, we agree with the Bar, it should be disbarment for Scot Strems, if justice is to be served.

Suspended attorney Strems at disbarment trial; New Bar petition says he violated suspension order – Again, this time pertainin’ to ‘Sale’ of Business.

Originally Published; Feb 1, 2022 | Republished by LIT; May 31, 2022

NATURE OF THE CASE

The Bar seeks review of the Referee’s report that recommends this Court deny a petition for contempt filed against Mr. Strems.

This Court entered an emergency suspension order on June 9, 2020, in Case No. SC20-808. (ROR p.3).

That case is currently pending on review with the Referee recommending a two-year suspension.

The Bar is seeking disbarment.

Two other subsequent disciplinary cases are also pending in SC20-842 and SC20-1739.

At the time of this suspension, Mr. Strems was the sole stockholder in The Strems Law Firm.

He had 5000 to 7000 clients and more than 100 employees, including about 30 lawyers.

(ROR p.3, T145, 319).

During the thirty-day window provided in the suspension order before he had to cease representing clients, with the help of outside counsel, Mr. Strems changed the name of his law firm to The Property Advocates, P.A.

(ROR p.69).

He had his professional association issue new, additional stock, which was sold on July 9, 2020, to three of his employee-attorneys.

(ROR p. 69).

They became the new officers of the professional association.

Simultaneously, he entered into a stock redemption agreement with the professional association

(ROR p. 70, TFB-Ex. B, p. 84).

Mr. Strems sent a letter to his clients, dated July 1, 2020, describing these events and attaching the suspension order.

(A3).

The letter did not advise them of their right to seek other counsel, and it provided notice of his suspension in a manner that the Bar maintains was misleading.

The Referee is recommending that the petition for contempt be denied because she concluded that Mr. Strems did not sell his law practice for purposes of Rule 4-1.17 of the Florida Rules of Professional Conduct.

The Bar maintains this is a sale for purposes of the Rules of Professional Conduct, and that the July 1 letter also violated the suspension order and Rules 4-1.4 and 4-8.4(c).

STATEMENT OF THE CASE AND FACTS

The Bar filed a petition for emergency suspension in Case No. SC20- 808 on June 5, 2020.

It alleged that Mr. Strems had violated numerous rules of the Florida Rules of Professional Conduct.

The focus of this first petition was misconduct during litigation by Mr. Strems and his associates.

It alleged several violations of Rule 4-5.1 relating to his duties to supervise the lawyers in his law firm and to take reasonable steps to assure those lawyers conformed to the Rules of Professional Conduct.

The Referee has recommended that Mr. Strems be found guilty of those violations and has recommended a two-year suspension.

That proceeding is still pending on review with Mr. Strems challenging the findings of guilt and with the Bar seeking disbarment.

This Court entered the emergency suspension order on June 9, 2020.

(ROR p.3).

The standard language of this order states that “Respondent is suspended from the practice of law until further order of this Court.”

But the standard language also states that he must “cease representing any clients after thirty days of this Court’s order.”

(A8).

It requires that he “immediately furnish a copy of Respondent’s suspension order to all clients.”

(A9).

It is undisputed that Mr. Strems was the sole owner of Strems Law Firm, a professional association.

This firm had expanded rapidly from 2016 to the time of the emergency suspension.

The estimates of the number of clients that needed to be furnished a copy of the suspension order varied between 5000 and 7000.

(T145, 319).

The professional association employed about 30 lawyers and had a much larger number of unlicensed employees at the time of the suspension.

(ROR p. 3).

These employees worked under Mr. Strems’ supervision in a highly computer-dependent structure of separate teams to on-board clients, handle claims before suit, and handle claims after suit.

Mr. Strems’ standard “contingency fee retainer agreement” defined “attorney” as “The Strems Law Firm, P.A.”

(A4).1

Mr. Strems’ signature was normally the signature on the agreement that was sent to the client by the on-board team because he was the only lawyer who was actually a member of the law firm.

(A7).

The contract does not specify any lawyer who will handle a matter, and no lawyer was in direct privity with the client under the terms of the contract.

But Mr. Strems recognized that he needed to notify all of these clients of his suspension.

STREMS MARKETING LETTER

1 During the final hearing, the fee agreement that was primarily discussed was the Evans contract, which is actually Respondent’s Exhibit 1 in SC20- 1739.

WAS IT FORGIVEN JPMORGAN/SBA?

When a member of a professional association becomes “legally disqualified to render such professional services,” that member must “sever all employment with, and financial interests in, such corporation.”

See § 621.10, Fla. Stat.

Thus, it is undisputed in this case that Mr. Strems had to sever his ties with the Strems Law Firm to comply fully with this Court’s order.

Mr. Strems and Strems Law Firm hired two professionals to assist in this process.

Mr. Scott K. Tozian, who is an attorney who specializes in representation of attorneys in disciplinary proceedings, was actually hired a month before this Court issued its suspension order.

(T290).

He recommended that Mr. Strems divest his interest in Strems Law Firm.

(T298).

He also recommended that Mr. Strems and the Strems Law Firm hire Mr. William Kalish to help with this process because Mr. Kalish is a tax lawyer who also has experience with compliance with the Florida Rules of Professional Conduct.

(T296-98, 406).

Mr. Kalish was retained to be the receiver to handle funds in the trust accounts and other accounts that Mr. Strems could no longer handle as a suspended lawyer.

(T415-17).

He was also retained to address the need to sever Mr. Strems ties to the Strems Law Firm.

(T407-410).

Mr. Kalish recommended that Mr. Strems divest himself of ownership in the professional association, and that the ownership should be placed “simultaneously” with three lawyers who had worked for the firm for at least a few years.

(T428-29, 500).

He did not recommend selling Mr. Strems’ stock directly to the three lawyers.

Instead, the full transfer of ownership was structured by having the professional association “redeem” Mr. Strems stock

(T426, TFB-Ex. B p. 84).

(TFB-Ex. B p. 84).

The professional association also issued new shares of stock that were simultaneously delivered to the three new owners of the association so that there would be no gap in ownership, membership, or in the officers required for the corporate entity.

(T428-29).

(TFB-Ex. B p. 6-3, 33-35, 70-77, 129-34)

A few days before this transaction, the professional association changed its name to eliminate the reference to Mr. Strems and to substitute the more generic,

The Property Advocates, P.A.

(T431).

To be clear, the Bar is not challenging this structure as a method for Mr. Strems to transfer ownership from himself to the three new owners.

Although in the petition and at the hearing, the Bar questioned the authority of Mr. Strems, as a suspended lawyer, to take actions for Strems Law Firm during the 30-day window in which he could have performed limited representation of his clients, the Referee ruled against the Bar on that issue.

Likewise, the Bar challenged whether “immediate” required faster action on some steps, but the Referee ruled against the Bar on that issue as well.

The Bar is not challenging those rulings in this review.

The Bar is challenging whether this transaction is a “sale of a law practice” for purposes of the requirement to notify clients under Rule 4- 1.17(b).

Mr. Strems did not comply with those requirements.

The Referee considered the conflicting legal opinions of two experts, (ROR pp. 79-106), as well as the conflicting legal arguments of the lawyers, and concluded that this transaction did not qualify as a sale for purposes of Rule 4-1.17.

The Referee found that it was a “mere changing of the guard” that “did not implicate Rule 4-1.17 or constitute a ‘sale of a law firm’ (sic) for purposes of Rule 4-1.17.”

(ROR p. 118)

This issue will be further addressed in the argument section because the facts are not really in dispute and the question is one of law for this Court to decide.

When Mr. Strems received the suspension order, his employees began working to obtain an accurate mailing list for the many clients.

(T69).

By July 1, 2020, Mr. Strems had drafted a letter to send to the list of clients along with this Court’s order.

(TFB-Ex. C Contempt).

The one-page letter is an exhibit in evidence and in this brief’s appendix, but it is copied here as well:

Mr. Kalish testified that he had no role in creating this letter.

(T463).

He explained that, while he did not think it was compelled by the rules, he probably would have added language about the possibility of a client changing firms.

(T464).

He believed the clients “should know what’s going on.”

(T483).

As he explained:

But the proper way would be that the clients would also assent to any arrangements of the various lawyer too, I believe.

(T483).

Mr. Tozian testified that he did not believe his office drafted this letter, but he was relatively certain that he saw it before it went out.

(T359).

He did not think the letter was an issue.

But, suffice it to say, the letter was not a plain, simple statement:

I regret to inform you that I was suspended from the practice of law on June 9, 2020. To comply with the Florida Supreme Court’s order, attached to this letter is a copy of that suspension order.

Although I can no longer represent you and will no longer be a member of this law firm after July 9, efforts are being taken so that the lawyers who work for this law firm can continue to represent you. They will contact you in the very near future. You, of course, also have the right to retain other counsel if you choose to do so.

The Bar maintains that Mr. Strems’ letter was not full compliance with this Court’s order and that it provided misleading and incomplete information to the clients in an effort to keep them with the reconstituted law firm that was obligated to make payments to Mr. Strems for a decade.

The Referee rejected the Bar’s position and ultimately is recommending that this Court find Mr. Strems not guilty of contempt and not guilty of the several violations of the Rules of Professional Conduct that are inherent in the conduct alleged in the petition for contempt.

The Referee recommends that each party bear their own costs.

Similar to the Reports of Referee in SC20-842 and SC20-1739, the Referee’s lengthy report in this case ends with a hypothetical recommendation for a penalty if this Court rejects the Referee’s recommendation of not guilty.

That recommendation is either an admonishment or a public reprimand, “concurrent with the previously recommended sanctions,” and the payment of costs.

(ROR-164-165).

The Bar maintained in the petition and at the hearing that Mr. Strems violated this order because he did not file a motion to withdraw in any of the cases filed by his law firm.

(T10).

Instead, the reconstituted law firm filed a “notice of change of firm name and email addresses” that included the sentence:

“Any other Attorneys of Record should be removed as counsel of record on behalf of Plaintiff.”

(TFB-Ex. H Contempt).

Although this notice and the response of defense counsel resulted in stays and delays of litigation, these events occurred after Mr. Strems had withdrawn from the firm.

There is evidence of at least two cases that remained pending with Mr. Strems listed as counsel of record,

(T176, TFB-Ex-K & L Contempt).2

The Referee rejected the Bar’s position on this issue, and the Bar has chosen not to seek review of that decision.

It wishes to focus this review on the two issue that can arise in other emergency suspensions: whether such a transfer of a one-lawyer professional association is a sale for purposes of Rule 4.1-17, and whether the letter providing the suspension order complied with the suspension order and the Rules of Professional Conduct.

2 One case is Eduardo Mora v. United Property & Casualty Ins. Co., Case No. 17-010198 CA 13 in the 11th Circuit.

Judge Bokor held a hearing in that case on August 12, 2020.

The transcript on page 29 reflects that the judge was concerned that Mr. Strems was still counsel of record.

The transcript was used here in cross-examination, but is filed in SC20-806 as a portion of Composite Ex F.

SUMMARY OF THE ARGUMENT

Mr. Strems did not choose to build a law firm with a hierarchy of partners with years of experience working with younger associates on matters that had come into those partners due to their own professional experience.

He did not build a firm where clients often came to the firm because of the firm’s reputation but were then introduced to a partner who they agreed would represent them with the help of his or her associates and paralegals.

Instead, he built a one-man professional association with a maze of employees who handled matters for thousands of clients who had received an engagement letter signed by the only actual member of the law firm – Mr. Strems.

His was the only name in Strems Law Firm and his extensive marketing was based on that name. His clients were simply distributed among his pre-litigation teams and his litigation teams.

Thus, when he received his emergency suspension on June 9, 2020, he was faced with a serious problem. He had to leave the law firm immediately, no later than July 9. But the professional association was simply the corporate manifestation of Mr. Strems.

If he removed himself from the professional association, it ceased to exist.

He knew that if he sold his practice to another lawyer or law firm that Rule 4-1.17 would require that he notify his clients and give them the option to find another lawyer who was not burdened with the problems he had created for himself and his employees; a lawyer who actually had her practice organized so that she could talk to clients in person when needed.

That could dramatically reduce the value of the law practice he wanted to sell.

So instead of a direct sale, he accomplished precisely the same thing by issuing new stock for the three purchasers of his law practice, and then entering into a redemption agreement with the professional association so that the payments to him would be channeled through the law firm and not paid directly by the three lawyers.

By technically selling the stock in the professional association, the legal vessel that held the contracts with his clients, he claimed that the client’s professional relationship was unchanged with the professional association.

While the business relationship created by the thousands of contingency retainer agreements may have remained with the professional association, the clients ceased to have a professional relationship with Mr. Strems and that professional relationship was transferred to the three new members of the professional association.

The Florida Rules of Professional Conduct regulate the conduct of lawyers, not professional associations.

The redemption agreement may have been important to the IRS for tax purposes, but to fulfill his duties to his clients, he still needed to comply with Rule 4- 1.17.

But he did not comply with that rule.

Instead, in order to notify his clients of his suspension order, he sent them a letter, primarily in the third- person, telling them about the change in ownership and explaining that this change was why he would no longer be involved at the firm.

The Bar submits this letter is deceptive, a failure to communicate the information needed for informed consent, and a violation on the emergency suspension order.

Mr. Strems has argued that his actions are protected by advice of counsel. But this Court has clearly explained that this defense does not apply to compliance with the Florida Rules of Professional Conduct, as contrasted with some underlying legal issue with which a respondent is unversed.

In any event, the evidence in this record does not support this defense.

Because the Referee misunderstood the applicable law, this Court should reject the Referee’s recommendations and find Mr. Strems guilty of violating Rule 4-1.17, Rule 4-1-4, and Rule 4-8.4(c), and find him in contempt of the suspension order.

The sanction for these violations should be imposed with the other pending cases. Mr. Strems should be disbarred.

Two Untouchable Attorneys Who Stole Millions – Lovin’ Life in Florida

THE DECISION-MAKING PROCESS IN A DISCIPLINARY PROCEEDING AND THE STANDARD OF REVIEW

“This Court’s standard of review in a contempt case is the same as that applicable to attorney discipline cases in general.”

The Florida Bar v. Bitterman, 33 So. 3d 686, 687 (Fla. 2010).

1. Issues of Law.

This Court reviews issue of law de novo when the only disagreement is whether the material facts constitute unethical conduct.

The Florida Bar v. Brownstein, 953 So. 2d 502, 510 (Fla. 2007);

The Florida Bar v. Pape, 918 So. 2d 240, 243 (Fla. 2005).

2. Findings of Fact

As this Court explained in The Florida Bar v. Picon, 205 So. 3d 759, 764 (Fla. 2016):

“This Court’s review of a referee’s findings of fact is limited.

If a referee’s findings of fact are supported by competent, substantial evidence in the record, this Court will not reweigh the evidence and substitute its judgment for that of the referee.

The Florida Bar v. Frederick, 756 So. 2d 79, 86 (Fla. 2000).”

See also The Florida Bar v. Schwartz, 284 So. 3d 393, 396 (Fla. 2019);

The Florida Bar v. Parrish, 241 So. 3d 66, 72 (Fla. 2018);

The Florida Bar v. Vining, 721 So. 2d 1164, 1167 (Fla. 1998);

The Florida Bar v. Jordan, 705 So. 2d 1387, 1390 (Fla. 1998);

The Florida Bar v. Spann, 682 So. 2d 1070, 1073 (Fla. 1996).

3. Recommendation of Discipline

The Referee’s recommendation of discipline is subjected to greater review by this Court because of this Court’s ultimate responsibility to make that decision:

In reviewing a referee’s recommended discipline, this Court’s scope of review is broader than that afforded to the referee’s findings of fact because, ultimately, it is the Court’s responsibility to order the appropriate sanction.

See The Florida Bar v. Picon, 205 So. 3d 759, 765 (Fla. 2016) (citing The Florida Bar v. Anderson, 538 So. 2d 852, 854 (Fla. 1989)).

At the same time, this Court will generally not second-guess the referee’s recommended discipline, as long as it has a reasonable basis in existing case law and the standards.

See The Florida Bar v. Alters, 260 So. 3d 72, 83 (Fla. 2018);

The Florida Bar v. De La Torre, 994 So. 2d 1032 (Fla. 2008).

The Florida Bar v. Altman, 294 So. 3d 844, 847 (Fla. 2020).

It is also important to consider that this Court has given notice to the members of the Bar that it is moving toward harsher sanctions than in the past.

See The Florida Bar v. Rosenberg, 169 So. 3d 1155, 1162 (Fla. 2015).

In Rosenberg, this Court explained that since the decision in The Florida Bar v. Bloom, 632 So. 2d 1016 (Fla. 1994), the Court has moved toward imposing stricter sanctions for unethical and unprofessional conduct.

See also Altman at 847. As a result, case law prior to 2015 needs to be examined carefully to make certain that the application of sanctions in these earlier cases comports with current standards.

ARGUMENT

I.

The complete transfer of ownership of Strems Law Firm from Mr. Strems to three other attorneys is a “sale of law practice” under Rule 4-1.17 of the Florida Rules of Professional Conduct for which the clients were entitled to notice.

A. The central legal question within this issue, and the holding the Bar requests from this Court.

Until about forty years ago, a lawyer could sell the building from which she practiced, and the furniture and the law books connected to the practice, but the practice itself was regarded as a professional relationship that could not be sold.

In 1992, Florida adopted Rule 4-1.17, which was based on the recently developed ABA Model Rule 1.17.

See In re Amendment to Rules Regulating The Florida Bar, 605 So. 2d 252, 253 (Fla. 1992). It allowed a lawyer to sell an entire practice to one lawyer.

The rule conditioned this new ability to sell a practice on requirements that the clients be notified and be given an opportunity to consent to the substitution of counsel or to terminate the representation.

Then, as now, the comments began with the explanation that “[t]he practice of law is a profession, not merely a business,” and “clients are not commodities that can be purchased and sold at will.”

In 2006, the rule was amended to permit a sale of the entire practice or an entire area of a practice to one or more lawyers.

See In re Amendments to the Rules Regulating The Florida Bar, 933 So. 2d 417, 457 (Fla. 2006).

Although in the first sentence of the rule, this Court made clear that the item sold is a “law practice,” and a not “law firm,” because either a “lawyer” or a “law firm” could sell a “law practice,” the rule has never defined exactly what a “sale” entails when one is selling a law practice. There is no case law defining “sale” in this context.

It is not a rare occurrence that a one-lawyer law practice is organized and doing business as a professional association or other form of legal association authorized to practice law.

If Lawyer A is practicing without the use of such a separate legal entity, and she wishes to sell either the entire practice or an area of practice to another lawyer or to some other professional association, there is no question that Rule 4-1.17 applies.

Lawyer A’s “practice” is to the largest extent a collection of existing relationships with clients and the goodwill created by past and present clients.

Before Lawyer A sells her practice to Lawyer B or to “Lawyer B, P.A,” she must give notice to her clients because the clients are not “commodities.”

But Mr. Strems successfully argued to the Referee that he did not sell a practice;

the corporation merely redeemed his stock in the corporation

Because the corporation did not cease to exist and it continued to own the legal contracts with the clients that created the business relationship, he claimed he had no duty to communicate with his clients to give them notice of the total 100% transfer in ownership of the professional association and their right to retain new counsel.

But it is the complete transfer of his professional relationships with his clients to the new owners of the professional association that invokes Rule 4-1.17 of the Florida Rules of Professional Conduct.

The Bar submits that Rule 4-1.17(b) exists to protect the client’s rights.

It was not created by this Court to protect the commercial rights of a professional corporation.

The argument presented to, and accepted by, the Referee in this case would dramatically reduce the client’s right to be represented by a licensed lawyer of his or her choice, and to understand that he or she had that right.

No matter what legal entities are involved, when 100% of the control of a “legal practice” is transferred from one lawyer to another lawyer or group of lawyers, this is a sale of a “law practice” that invokes the right of the clients to be informed under Rule 4-1.17.

In this case, the Bar is asking this Court to hold that when a lawyer facing an emergency suspension transfers his entire practice for consideration to other lawyers, either directly from lawyer to lawyer, or indirectly through a transaction involving a transfer of a professional association that is used as the legal vessel containing the lawyer’s professional relationships with his clients, that transaction for consideration is a “sale of law practice,” requiring compliance with Rule 4-1.17(b).

B. Rule 4-1.17 governs the sale of a law practice, not the sale of a law firm.

Rule 4-1.17 plainly states that it applies to the sale of a law practice and not the sale of a law firm.

Its first three subsections state:

A lawyer or a law firm may sell or purchase a law practice, or an area of practice, including good will, provided that:

a) Sale of Practice or Area of Practice as an Entirety. The entire practice, or the entire area of practice, is sold to 1 or more lawyers or law firms authorized to practice law in Florida.

b) Notice to Clients. Written notice is served by certified mail, return receipt requested, on each of the seller’s clients of:

1) The proposed sale

2) The client’s right to retain counsel;

and

3) The fact that the client’s consent to the substitution of counsel will be presumed if the client does not object within 30 days after being served with notice.

The “practice” in this context includes the professional relationship with the clients and the good will that has been created over the life of the practice.

The purchaser may keep some or all of the employees of the predecessor lawyer and may be purchasing physical or computer files and programs that help service the clients.

But the “practice” has little value without the ongoing professional relationship with the clients.

The adoption of this rule ended the complete prohibition on selling a practice, but the compromise requires the lawyer benefiting from the sale to take very specific steps to protect the clients.

Admittedly, a practice is normally sold in a more direct sale of the business relationship than occurred in this case. But this is not a rule about the taxation of the sale or the basis for a new asset.

The clients had an established attorney-client relationship with Mr. Strems.

He was the only lawyer who was an actual member of the law firm, and he was also the lawyer signing the contracts and making first communication with the clients.

It was his credentials in all the advertising that gave them assurance (albeit inaccurately) that their claims would be carefully supervised by a very experienced lawyer.

It is lawyers who must obey the Rules of Professional Responsibility, not professional associations.

It is the lawyer who has skill as an advocate, not the professional association. The lawyer may delegate some of the work on a matter to an employed associate or even a paralegal, especially with the client’s knowledge and consent, but the lawyer is still the responsible supervisor.

The corporation cannot assume that professional function.

By the entire transfer of his practice to the three new owners, Mr. Strems was attempting to transfer that attorney-client relationship without providing the notice required by Rule 4-1.17(b).

He was not telling his clients that they had the right to find another lawyer under these circumstances.

C. The Referee misunderstood the concept of a sale of the legal practice, in part, because of the language of Mr. Strems’ standard “Contingency Fee Retainer Agreement.”

As Rule 4-5.8(a) explains, “the contract for legal services creates a legal relationship between the client and law firm and between the client and individual members of the law firm. . . .”

It further explains that “[n]othing in these rules creates or defines those relationships.”

In other words, the Florida Rules of Professional Conduct address the professional relationship between a lawyer and a client – not the business relationship between the client and the law firm.

Admittedly, there is some overlap between those relationships, especially in the area of reasonable fees. But the Florida Rules of Professional Conduct exist to protect clients and to protect the reputation of the profession of law and the courts that profession serves.

They are not trumped by the business interests of the lawyer or the law firm.

The standard “Contingency Fee Retainer Agreement” utilized by Mr. Strems was odd in a number of respects.3

But for purposes of this review, the major oddity is its use of the word “Attorney” as the shorthand reference for “The Strems Law Firm P.A.” (A. 4-7).

The contract’s heading does not reference the law firm, but the first line of the contract explains that the client is retaining and employing THE STREMS LAW FIRM, P.A. (hereinafter “Attorney”).

Mr. Strems signs the contract on the line for “Attorney” to sign.

The word “Attorney” occurs throughout the document.

This retainer agreement does not retain “Lawyer X and Lawyer X, P.A.’ In fact the body of the contract contains no reference to “lawyer” or to the word “Attorney” meaning anything except the professional association.

The contract authorizes “Attorney” to file a lawsuit for the client, but there is no discussion of what lawyer, other than Mr. Strems, will represent the client.

In this bulk practice, the client is represented by a pre-litigation team, and if necessary, by a subsequent litigation team. But the contract does not specify the team, much less the lawyers in the team.

The client is given no right to select a particular lawyer.

3 Different portions of the contact create issues addressed in SC20-842 and SC20-1739.

The required “Statement of Client’s Rights” is, of course, appended to the firm’s contract.

It discusses “lawyers.”

It explains in paragraph 3 that the client has the right to know about a “lawyer’s education, training and experience” before hiring a lawyer.

The contract has an auto-fill checkmark explaining that the client understands, but the only lawyer the client typically knows about when entering into the contract is Mr. Strems.

This contract is undoubtedly owned by the professional association.

As a business relationship, it presumably continues to be owned by the professional association when 100% of that entity is transferred from one lawyer to another lawyer or group of lawyers.

But calling the professional association “Attorney” in the contract does not make that association a “lawyer” for purposes of the Florida Rules of Professional Conduct.

The question here is about the professional relationship between the client and the lawyer—and the duty to communicate with a client when the lawyer who signs the retainer agreement can no longer be in the professional relationship with his client because he has sold the law firm that owns the business relationship.

Mr Strems argued, and the Referee concluded, that the unchanged business relationship through the ownership of the contract by the professional association (when the entire practice is transferred from one lawyer to another group of lawyers) prevents the operation of Rule 4-1.17.

Respectfully, that is simply an error of law.

It conflates the business relationship with the professional relationship to the detriment of the client and to the detriment of the judicial system.

D. The fact that the lawyers purchasing the practice were three of the many lawyers employed by the professional association did not alter the requirements of Rule 4-1.17.

The three attorneys who owned all the stock, and thus the “practice” after the simultaneous closing were Orlando Romero, Hunter Patterson, and Christopher Narchet.

(T122).

Mr. Romero has since died.

(T160).

Mr. Narchet only became employed by the Strems Law Firm in its Coral Gables office in July 2017.

(T116).

He never worked on one of the pre-litigation teams.

(T117).

His first litigation job was as a member of one of the Strems litigation teams.

(T123).

He was promoted to a team leader on one of the litigation teams prior to purchasing his interest in the law firm.

(T118).

He explained that the three purchasers “decided that the best course of action for our clients was to obviously maintain the same representation for them.”

(T120).

He further said:

“Obviously, the choice was left in their (the clients’) hands as well, you know, whether they wished to continue with our services as their counsel or not.”

(T121).

But he does not claim they reached out to the thousands of clients to discuss this with them.

Thus, Mr. Strems did not provide notice to his clients under Rule 4- 1.17(b) of their rights, and the new owners unilaterally decided the best interest of the clients as well.

But the clients may not have wished to be represented by a lawyer with so little experience as Mr. Narchet.

They also may have discovered that the insurance company was not denying their claim and they could resolve it themselves without paying 25% of the undisputed amounts to the law firm.

Respectfully, keeping the clients with the new owners of the law firm was in the best interests of Mr. Strems and the new owners, but in light of the conditions that brought on the emergency suspension and the methods used to sign up some of the clients, the clients may very well have been better off to select different representation if that option had been presented to them with fair disclosure.

The Bar submits that there is no exception to Rule 4-1.17(b) when the sale is to three lawyers currently employed by the professional association.

Admittedly, at least a few of these clients were involved in litigation in which one of the new owners may have been their lead attorney of record.

But even then, the clients had entered into engagements to be represented by the Strems Law Firm when the only managing and supervising lawyer was Mr. Strems.

The many clients whose files were in pre-litigation would have had no prior contact with the new owners.

Whether the new attorneys in charge of managing and supervising the employees of the law firm had been employees of the firm or had come from outside the law firm, the clients still had a right to be told that they were no longer in privity with Mr. Strems’ law firm, but with a reconstituted law firm with entirely new owners.

Mr. Strems argued to the Referee that the position of the Bar would mean the Rule 4-1.17(b) would need to be invoked every time a partner left a law firm with multiple members.

That really is not a fair reading of the rule.

The rule covers the sale of an “entire practice” or an “entire area of practice.”

When new partners buy their shares in an existing law firm with multiple shareholders or old partners sell their shares, the event is normally not a purchase or sale of even an “area” of the practice.

The Bar is only arguing here that a sale occurs when there is a 100% change in the ownership of the professional association.

The disclosure requirements of Rule 4.1-17 are actually just an extension of the duty to communicate with your client under Rule 4.1-4.

In the remaining thirty days before Mr. Strems could no longer represent a client, he still had a duty to “explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.”

See Rule 4-1.4(b).

As we will see in the next issue, he did not accomplish that requirement.

II.

Mr. Strems’ July 1, 2020, letter was not the notice required by Rule 4-1.17, but rather was a document providing misleading information for Mr. Strems’ benefit.

Mr. Strems did not begin sending out notices of his suspension in June to clients who had an immediate need for this information.

For example, the clients who had just sent in their signed retainers and had not been processed by the on-boarding team were not sent notice of his suspension prior to the completion of that process.

Instead, that team simply continued to send out Mr. Strems’ standard notice of representation to the insurance carriers.

(T803) (TFB-EX- Composite A Contempt) .

When he did provide notice to the clients, Mr. Strems did not send out a personal letter simply informing each client that he had been suspended by the Florida Supreme Court and providing a copy of the suspension order.

Instead, he mailed out a letter about “Your Insurance Claim” to “Dear Client.”

(TFB-Ex. C Contempt).

The letter begins with a one-sentence paragraph:

“Our work continues on your file, but we write this letter to advise of changes at the law firm and matters regarding me.”

Thus, although the letter is going to tell the client about his “matters,” it is carefully crafted as a letter from the whole law firm – from us, not from me.

The next paragraph explains that the “ownership” of the law firm is changing (even though this is not a sale).

It is changing by “advancing three of our present lawyers as shareholders.”

Mr. Strems explains that he will “no longer be the owner of the law firm or involved at the firm because of this change of ownership.”

But the truth is that he will no longer be involved because he has been suspended and he must divest himself of ownership in the firm because he has been suspended.

The next paragraph explains that the clients claim has been handled by a “specifically assigned attorney at the law firm and support staff,” which will not be affected by these changes.

That lawyer is not identified in the letter.

Mr. Strems claims that he had not been “directly responsible for your matter,” even though he had signed the contingency agreement with them and was the only shareholder in the firm.

He was not “directly” involved in the sense that he had delegated the matter to his employees, but he had been suspended because of the evidence that he had mismanaged those employees.

Despite the reasons for his suspension, he assures his clients that “the lawyers responsible for your matter will continue without any change to seek the best settlement or judgment for your case.”

(emphasis supplied).

Then, in the middle of the document in a paragraph containing one compound sentence, he states: “I will no longer be involved in the firm and I have been suspended from the practice of law, as per the attached Order.”

The next paragraph explains that the “new name of the firm will be The Property Advocates, P.A. and if you see that name on further papers we send to you there is no reason for your concern.”

(A3).

Mr. Strems, of course is not part of that “we.”

Instead of telling the client that they may seek to retain other counsel in light of his suspension and the sale of the firm, he tells them “there is no reason for your concern.”

The next paragraph says:

“Again, we greatly value your confidence in us as your attorneys to complete your claim and get the best result for you possible for the damage to your house.”

This letter is signed only by Scot Strems, and it is not signed by him for Strems Law Firm, like the first letter he sent to the clients.

(A3).

But he will not be completing their claims and negotiating the final settlement amounts.

Then the next two paragraphs state:

“We will stay in touch over the next few weeks and bring you up to date on our continuing efforts on your behalf.”

“Please feel free to contact our office with any questions you may have.”

Of course, Mr. Strems will not and cannot stay in touch with them.

And one of the reasons that Mr. Strems was suspended was because it was so difficult to get through to a lawyer if you contacted the office.

Ms. Mendizabal, who had worked with the firm since 2017 and was the managing attorney in the Miami office, explained that the firm had the same protocol for communicating with clients after this letter was sent out as before.

(T61, 64, 84).

They had a separate “team” that answered the telephones and a call center to handle overflows.

(T84).

Mr. Strems knew when he signed this letter that the firm was not structured to allow these clients to call the unidentified lawyer “specifically assigned” to their case to obtain the information needed to make an informed decision about staying with the law firm.

The Bar maintains that, once Mr. Strems decided not to send a simple letter notifying his clients of his suspension, but rather decided to send a firm letter announcing the complete change in ownership of the law practice, he needed to comply with Rule 4-1.17(b).

He needed to tell his clients that they had a right to retain other counsel.

Instead, he used the letter as a marketing tool for the new owners to assure that they would be able to keep those clients and receive the contingency fees needed to fund his buy-out.

Once Mr. Strems decided to inform his clients of the status of representation, under Rule 4-1.4(a), entitled “Informing Client of Status of Representation,” he needed to provide the clients with accurate information needed for the client to make an informed decision.

Under Rule 4-1.4(b), he needed to “explain [the] matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.”

He knowingly sent out a letter that did not fulfill these requirements. He intentionally avoided providing a full disclosure for his own self-interest.

Instead of recognizing the problems within the firm and sharing with the clients that he had allowed the firm to grow too quickly, that the firm had problems communicating with its clients, and that it had difficulty timely complying with discovery rules and court orders—and perhaps explaining how the new owners planned to address these problems – he told them that things would go on “without any change” and that there was “no reason for your concern.”

Under Rule 4-8.4(c), a lawyer has an obligation not to engage in conduct involving dishonesty, deceit, or misrepresentation.

This letter is not honest with his clients.

It misrepresented why he would no longer be the owner of the law firm or involved at the firm.

It misrepresented many things by omission that he needed to explain once he decided to send the content of this letter to his clients.

He did this in an effort to assure that the clients stayed with the new lawyers who now owned the law practice.

There is no factual dispute about the content of this letter or the facts surrounding the sending of this letter.

And Mr. Kalish and Mr. Tozian did not write this letter or provide any advance opinion that this was an appropriate letter – even assuming that “advice of counsel” has become a defense for this type of violation.

But the Referee nevertheless concluded that these facts did not violate these rules.

(ROR 149-150).

The Bar submits that the Referee made an error in law when she concluded that these facts violate none of the applicable rules.

III.

“Advice of Counsel” should not be a defense when the advice concerns the Rules themselves and not some underlying area of law with which the lawyer is unfamiliar.

Mr. Strems repeatedly emphasized to the Referee that he had relied upon the advice of the two lawyers he hired to assist with the suspension order.

Just like he wished to blame his mismanagement on his associates in Case No. SC20-808, he seeks to shift responsibility for complying with the Florida Rules of Professional Conduct to his lawyers.

He is seeking to expand the scope of this Court’s recent decision in The Florida Bar v. Herman, 297 So. 3d 516 (Fla. 2020), which recognized a very limited version of the advice of counsel defense.

In Herman, the issue concerned the truthfulness of Mr. Herman’s financial disclosures in his bankruptcy filings.

Mr. Herman was not a bankruptcy lawyer, and he had experienced bankruptcy counsel representing him in that proceeding.

His disclosures had been thoroughly discussed with his lawyer and the information Mr. Herman provided to his lawyer was accurate and sufficient for his lawyer to make a legal decision for his client.

The bankruptcy court found that the filings were so inaccurate as to warrant a denial of discharge, but this Court explained:

“To establish that Herman is guilty of misconduct, the Bar would have to prove by clear and convincing evidence not only that Herman’s bankruptcy disclosures were false or misleading, but also that Herman knew that they were false or misleading.”

Id. at 520.

This Court decided that it was the advice of his counsel about bankruptcy law that kept Mr. Herman from knowing his answers were misleading.

But in Herman this Court explained:

The reason an advice of counsel defense is usually unavailable in Bar discipline proceedings is that the Bar rules themselves charge Florida lawyers with knowledge of the rules and of “the standards of ethical and professional conduct prescribed by this court.”

R. Regulating Fla. Bar 3-4.1.

But here, Herman does not claim that he relied on the advice of counsel as to the meaning and requirements of any Bar rule.

Nor does this case have anything to do with Herman’s work as an attorney serving clients

Id. at 520.

Thus, Herman is not precedent for the proposition that Mr. Strems can hire lawyers to handle his suspension order and wash his hands of his own need to comply with the order and the rules.

Expanding Herman to this context would create the most slippery of slopes.

The responsibility for each lawyer in Florida to comply with the Florida Rules of Professional Conduct must not be a delegable duty.

The Bar recognizes that reliance upon the formal opinion of a lawyer who specializes in Bar matters, after complete and accurate disclosure, might very well be a mitigating factor for conduct committed in reliance upon that opinion.

See The Florida Bar v. St. Louis, 967 So. 2d 108, 118 (Fla. 2007)

(“Thus, a defense based on advice of counsel is not available to respondents in Florida Bar discipline cases unless specifically provided for in a rule or considered as a matter in mitigation.”).

But the notion that a lawyer can be exempt from the rules because he may have discussed aspects of the rules with the counsel selling his practice to other lawyers by means of a sophisticated corporate transaction is a dangerous and unwarranted expansion of Herman.

Even if advice of counsel were expanded to these circumstances, Mr. Strems did not establish this defense.

The evidence related to this issue is summarized in the following paragraphs.

The Evidence.

Mr. Strems retained Mr. Tozian, an experienced lawyer who regularly defends lawyers in disciplinary proceedings, to assist him about a month before this Court entered the emergency suspension order.

(T296).

Because Mr. Tozian was concerned about performing the transfer of the law firm correctly, Mr. Tozian advised Mr. Strems to retain a second lawyer, Mr. Kalish, who is a tax and transaction lawyer.

(T298-299).

Mr. Tozian explained that he recommended this, in part, because had had a prior case where the Bar had questioned the method by which the transfer occurred.

(T299).

Mr. Tozian contended in his testimony that Rule 4-1.17(b) did not apply in this case.

(T374).

He did not recall if he specifically discussed Rule 4- 1.17(b) with Mr. Strems.

(T379).

But he thought it was discussed that this was equivalent to the death of a lawyer.4

He explained:

“We looked at it as one person in the firm is gone, and the rest of the firm was going to soldier on.”

(T378). He did not see the transaction they created to be a “traditional sale.”

(T378). Instead, he explained:

“I mean, if you’ve got a firm with 30

4 The comments to Rule 4-1.17 explain that “[t]his rules applies, among other situations, to the sale of a law practice by representatives of a lawyer who is deceased.”

people and one person is out of the mix, whether they die or they’re suspended or they decide that selling shoes at Nordstrom’s would be a better vocation, it doesn’t really matter how the person left the firm.”

(T378).

He did not seem to take into consideration that only one lawyer in this case owned the firm.

He saw the transaction as “a much more efficient way to divest Mr. Strems of his interest – and , you know, a client can fire you at any time.”

(T379-380).

He personally thought the only time a lawyer has a duty to disclose to a client that they have the right to retain another lawyer was when the client was “unhappy with the decision-making” or “unhappy with the results.”

(T382)

On redirect, in a series of leading questions, Mr. Tozian testified that he approved of the transaction as fashioned by Mr. Kalish “[t]o the extent that I understood it and to the extent to which the Rules Regulating the Florida Bar applied.”

(T383).

He confirmed that he had advised Mr. Strems that “the notification was done in compliance with the Supreme Court’s order.”

(T384).

Mr. William Kalish testified that he was retained by Mr. Strems and the Strems Law Firm in June 2020.

(T403).

One of his roles was to serve as the receiver for the trust account issues.

(T413).

That role is not significant to this review.

He also provided advice to Mr. Strems and Strems Law Firm concerning compliance with the suspension order.

(T408).

The three employed attorneys who purchased the stock for the reconstituted law firm were not represented by him.

(T408-409).

He has experience providing tax and transactional advice to clients, especially lawyers and law firms.

(T411).

He was the main person involved in deciding to use the device of the redemption agreement and the newly issued stock for this transfer because, in his opinion, it avoided issues of quantum meruit if a new law firm took over from Strems Law Firm.

(T415-416).

Even though Mr. Strems claimed not to have been directly involved in these cases, Mr. Kalish was concerned that other approaches would involve 7500 quantum meruit decisions, which the redemption agreement avoided by buying Mr. Strems’ stock for a fair market value of

(T419, 426-427).

He testified that Mr. Strems was following his advice.

(T416-417).

In his opinion, every part of his advice to Mr. Strems was in the best interests of the clients.

(T419).

He understood that Rule 4-1.17 would require giving notice to the clients that they were free to get another lawyer, but he believed “that could cause a disruption.”

(T420).

He believed his solution to the transfer of ownership was not a “sale” and that it did not require compliance with Rule 4-1.17.

(T421).

He reasoned that, as a matter of corporate law, the law firm was not sold;

it was renamed and the stockholders were traded out.

(T422- 424).

He opined that a redemption was not a sale.

(T424).

His opinion appears to be influenced by his training as a tax lawyer, and he was not asked whether the transaction was a sale of a “law practice” for purposes of considering the interests of the clients.

(T424-425).

In answer to a question by the Referee, he admitted that “it is conceivable if read as a sale, that it would be governed by Rule 1.17.”

(T425).

But he seemed to believe, if that were true, it would apply every time that Mr. Strems hired a new lawyer as an employee.

(T425).

Mr. Kalish reasoned that, if the sale of stock and the redemption were simultaneous, there was no disruption in the professional association, and since the clients probably regarded the employed lawyer who was currently the team leader assigned to their case as their lawyer, it was not a sale that required notice to the clients of their right to retain alternate counsel.

(428- 429).

He seemed to equate this with a situation where existing shareholders invite a practicing lawyer to join the firm.

(T437).

He read from his affidavit explaining that Rule 4-1.17 did not apply because this did not involve “two separate entities engaged in a transfer of clients.”

(T452, R-Ex. 12).

As explained earlier in the Statement of Facts, Mr. Kalish testified that he had no role in creating the July 1 letter.

(T463).

He explained that, while he did not think it was compelled by the rules, he probably would have added language about the possibility of changing firms.

(T464).

He believed the clients “should know what’s going on.”

(T483).

As he explained:

But the proper way would be that the clients would also assent to any arrangements of the various lawyer too, I believe.

The Law

It is clear that Mr. Strems never asked either lawyer for a formal opinion on this. Mr. Tozian did not fully appreciate the fact that Mr. Strems was the only member of the professional association, and he equated this situation with a more typical law firm with multiple partners or shareholders.

Mr. Kalish would have advised Mr. Strems to explain the arrangement to the clients in the July 1 letter, if asked.

Thus, the evidence on advice of counsel is not a basis to find that Mr. Strems did not violate the specific rules of conduct and the suspension order in this proceeding.

The evidence may not even support a mitigating factor when determining the sanction.

A Comment on the two experts

It is not uncommon in Bar proceedings for lawyers to provide expert testimony that includes explanations of some area of specialized law.

For example, in the Herman case both sides presented experts on bankruptcy law.

This type of testimony would usually be inadmissible under the formal rules of evidence in a typical trial.

See Lee Cnty. v. Barnett Banks, Inc., 711 So. 2d 34, 34 (Fla. 2d DCA 1997)

(“Expert testimony is not admissible concerning a question of law. Statutory construction is a legal determination to be made by the trial judge, with the assistance of counsels’ legal arguments, not by way of ‘expert opinion.’”).

But in this case, Mr. Strems retained Professor Timothy P. Chinaris as an expert on the Florida Rules of Professional Conduct, and the Bar responded by hiring Professor Anthony Alfieri.

(T575-76, 722).

Predictably, Professor Chinaris provided expert opinions on these rules that helped Mr. Strems, and Professor Alfieri provided opinions that helped the Bar.

Professor Chinaris believed that Rule 4-1.17 applied only to transfers for consideration to lawyers “outside” the firm, and he concluded that the three employed associates were inside the firm such that a 100% transfer to them did not invoke the rule.

(R-Ex-9, p. 4).

He supported his interpretation not with the text of the rule, but with a comment discussing the fact that attorney-client privilege did not bar preliminary discussions involved in such a transaction with an outside lawyer.

The Referee adopted this legal reasoning.

(ROR p.112-114).

But the comment does not suggest that the rule applies only when there might be an attorney-client privilege issue.

Instead, the rule is drafted to protect the client and to make sure the client is not treated like a “commodity.”

Professor Chinaris’s opinion as a forensic expert does not seem to give the clients their due.

Professor Alfieri had a longer report and a longer explanation as to why he believed that Rule 4-1.17 did apply in this context.

(TFB-Ex. 1 p. 27).

But the Florida Rules of Professional Conduct are simply a subset of rules of law.

Lawyers are called upon to read them carefully and obey them.

This Court reviews the rules de novo to determine whether they apply to a set of facts or not.

See The Florida Bar v. Brownstein, 953 So. 2d 502, 510 (Fla. 2007).

The undersigned frankly questions whether this “testimony” by experts, not addressing issues of fact, but rather addressing legal conclusions that are reviewed de novo by this Court, is a proper subject for testimony.

It reads more like closing arguments from the witness stand than evidence.

It might be better for this Court simply to indicate that such testimony is not a necessary or proper part of a disciplinary proceeding.

IV.

Mr. Strems should be found guilty of contempt and of violations of the Florida Rules of Professional Conduct.

This Court has inherent contempt powers that, in this context, are expressly incorporated into the general rules of procedure for disciplinary proceedings.

See The Florida Bar v. Ross, 732 So. 2d 1037, 1041 (Fla. 1998); Rule 3-7.11(f).

The Bar recognizes that a finding of guilt in this contempt proceeding requires proof that Mr. Strems “intentionally and willfully” violated the terms of the order.

See The Florida Bar v. Forrester, 916 So.2d 647, 650 (Fla. 2005).

A violation does not require Mr. Strems to admit his guilt, and it can be established by circumstantial evidence.

Id. at 652.

The standard emergency suspension order entered by this Court on June 9, 2020, required Mr. Strems “to immediately furnish a copy of Respondent’s suspension order to all clients.”

The Referee found that the delay until July 1, 2020, to send out a copy of the order was not such a long delay as to violate the requirement of immediacy, and the Bar is not challenging that ruling in this review.

The Referee seemed to believe that the actual content of Mr. Strems’ letter sending a copy of suspension order to his clients would be of no concern to this Court so long as it attached a copy of his suspension order.

But the Bar submits that any licensed lawyer would know that an emergency suspension order is an exceptional and very serious matter.

The order to furnish a copy of the suspension order to clients does not mandate the precise method by which the order is delivered, but any lawyer would know that it must be provided in a manner that is not deceptive.

Given the requirements of Rule 4-1.4 that a lawyer “shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation,” the requirement to furnish a copy of the suspension order to a client normally includes a concomitant duty to accurately explain to the client the legal effect of this order.

But Mr. Strems sandwiched his statement revealing his suspension to his clients in the middle of a marketing letter for the reconstituted law firm, written mostly in the third person, assuring them that another lawyer would continue for them ”without any change.”

He told his clients they had no reason for concern, despite the concerns that caused this Court to enter the emergency suspension.

He intermingled the notice of his suspension with the law firm’s explanation, in the third person, of the total transfer of ownership to three unnamed attorneys.

The Bar submits that the undisputed facts in this case demonstrate an intentional and willful disregard for this Court’s order to provide the order to the client.

That intentional disregard was designed to protect Mr. Strems’ buy-out.

Even if this Court concludes that the conduct is not violative of its order, as explained earlier, the evidence clearly demonstrates a violation of Rule 4-1.4 (communication), Rule 4-1.17(b) (failure to provide the proper notice of the sale), and Rule 4-8.4(c) (misrepresentation to client).

The Petition expressly discussed the violation of Rule 4-1.17.

Rule 4-1.4 and Rule 4-8.4 were not expressly discussed in the petition.

But the failures to communicate with the clients and the misrepresentations to the client were directly related to what was and was not communicated to clients as a result of the suspension order.

They were discussed in Professor Alfieri’s report, which was disclosed prior to the final hearing.

(TFB-Ex. A).

Professor Chinaris discussed both of these violations in his direct examination prior to Professor Alfieri’s testimony.

(T629-631, 642-643).

Thus, the two additional violations were “within the scope of the conduct and rule violations specifically charged.”

The Florida Bar v. Fredericks, 731 So. 2d 1249, 1254 (Fla. 1999).

For purposes of due process, Mr. Strems had notice and had an opportunity to be heard. Paraphrasing Fredericks, “because [Mr. Strems] was made aware of the conduct alleged by the Bar to be unethical and had the opportunity to be heard as to this conduct, there was no violation of due process.”

Id. at 1254.

The Referee’s recommendations on these violations were based primarily on her legal determination that the transaction was not a sale.

The facts of what was and was not communicated to the clients in the letter are undisputed.

The Bar submits that the letter delivering the suspension order contained misrepresentations designed to secure a client base for the reconstituted law firm, and it failed to communicate both the right to retain other counsel and the circumstances that might warrant the client to consider that option.

Mr. Strems should be found guilty of these three violations.

V.

The Court should either impose the sanction in this case in conjunction with Case No. SC20-806, Case No. SC20-842, and Case No. SC20-1739, or the issue of the proper sanction should be remanded to the Referee for consideration following this Court’s determination of guilt.

The Referee is recommending that the sanction in this case be “concurrent” with the sanction in the other pending cases.

The Bar agrees with this recommendation to the extent that it suggests that this Court should simply impose a single sanction for the conduct in all three cases.

See The Florida Bar v. Inglis, 660 So. 2d 697 (Fla. 1995);

The Florida Bar v. Greenspahn, 396 So. 2d 182, 183 (Fla. 1981)

(“Under the peculiar facts of this matter, however, we determine the appropriate discipline from the totality of the conduct as though all of the charges had been presented to us in one proceeding.”).

The Bar is already recommending disbarment in those three cases. These violations would add incrementally to the sanction for those cases.

The four proceedings collectively demonstrate a lawyer who devised improper methods to obtain homeowners’ signatures on 25% contingency fee contracts without any direct discussions with the client about a need for representation and often before the homeowners had an objective reason to believe they needed an attorney to handle their insurance claims.

Then he created a law firm structure that did not adequately communicate with the clients and could not handle the onslaught of lawsuits that he filed, leading to sanctions and Kozel orders against the lawyers he employed.

When it came time for settlement, relying on the improper language of his contract, he negotiated global settlements that maximized his payment, and minimized the clients’ returns.

And when this Court entered its emergency suspension, rather than sending his clients a straight-forward letter explaining his suspension, he sent a letter from the law firm explaining that there should be no reason for them to be concerned, and that he would no longer be involved at the firm because other lawyers had become its shareholders.

He did not tell the clients the whole story or tell them they had a right to retain new counsel.

He did not tell them this information because then there could be insufficient money to pay his buy-out from the firm.

Mr. Strems’ numerous, strategic violations of the Florida Rules of Professional Conduct warrant permanent disbarment.

However, if the Court decides that a separate sanction is appropriate in this case, this Court should not rely upon the Referee’s hypothetical evaluation and should remand for a proper sanction hearing.

The Bar submits that there is a dishonest or selfish motive associated with the misconduct in this proceeding that would warrant more than a public reprimand – especially if the three pending cases were treated as prior disciplinary offenses.

See §3.2(b) (1) & (2), Florida’s Standards for Imposing Lawyer Sanctions;

The Florida Bar v. Patterson, SC19-2070, 2021 WL 5832861, at *6 (Fla. 2021) (overlapping prior discipline);

The Florida Bar v. Koepke, 327 So.3d 788, 789 (Fla. 2021) (disbarment for first disciplinary violation).

CONCLUSION

This Court should reject the Referee’s recommendation for findings of not guilty on the charge of contempt for the reasons explained in this brief.

It should find Mr. Strems guilty of contempt, as well as guilty of violations of Rules 4-1.4, 4-1.17, and 4-8.4(c).

It should impose a combined sanction in this proceeding and the three pending proceedings of permanent disbarment.

It should award the Bar its costs.

Respectfully submitted,

/s/ Chris W. Altenbernd
Chris W. Altenbernd, Esq.
Florida Bar No: 197394
Email: service-caltenbernd@bankerlopez.com
BANKER LOPEZ GASSLER P.A.
501 E. Kennedy Blvd., Suite 1700
Tampa, FL 33602
(813) 221-1500; Fax No: (813) 222-3066

Continue Reading

Appellate Circuit

Constance Daniels, Student of Hard Knocks, Admonished Florida Lawyer and Friend of The Eleventh Circuit

LIF cannot comprehend how the People of Florida and the United States of America are so accepting of Brazen Corruption.

Published

on

LIF COMMENTARY

The article below starts with Constance Daniels failure to pay for her law school tuition loan issued in 2003. She defaulted in 2005 per the complaint. The USA won a judgment of $164k+ in 2011.

In 2010, Wells Fargo commenced foreclosure proceedings in state court, Hillsborough County.

While all this was going on, Ms Daniels, a Republican, was attempting to become a State judge in 2014, which failed.

In late November of 2017 a settlement was reached, dismissing the Wells Fargo foreclosure complaint.

In 2017-2018, lawyer Daniels was failing to look after her client(s). Many moons later, in 2021, that would result in a slap on the wrist by the referee, Hon. Daniel D. Diskey for Fl. Bar.

Then we move onto the June 2018 complaint, filed by Daniels against the mortgage servicer. It was removed to the lower court in Middle District  of Florida Federal Court.

The court, via one of the Moody clan of judges, sided with Select Portfolio Servicing, LLC and this formed the appeal which was decided this week by the 11th Circuit.

In Nov. 2020, Wells Fargo filed a renewed foreclosure complaint against Daniels and her homestead in State court. In Sept 2021, Wells Fargo voluntarily dismissed the case and terminated the lis pendens ‘due to loan modification’.

The issue for LIF in this case is quite clear. Who the 11th Circuit has chosen to upend it’s prior stance that mortgage servicers can do no wrong under the FDCPA, despite irrefutable facts confirming otherwise.

For example, LIF refers to the case we highlighted regarding a deficiency judgment (State case, March 2022):

Florida Lawyer Stephanie Schneider Appeals a Mortgage Foreclosure Deficiency Judgment

In that case, LIF investigated beyond the court opinions to discover the wife is a Florida Lawyer and her husband, Laurence Schneider is owner of S&A Capital, Inc., a mortgage investment company, has built a national portfolio of performing mortgages that have been written off by other financial institutions.

Our angst is clear. Lawyers are being treated preferentially by the courts over regular citizens and homeowners.

In the case of Daniels, whilst she may have legitimate arguments, there have been many citizens who have failed before her by the wordsmithing by the Federal and Appellate Court(s), which has refused to apply the correct legal interpretation of the FDCPA, or clarify the question(s) with the federal consumer agency, the CFPB.

Whilst LIF is unhappy with the anti-consumer watchdog, the Consumer Financial Protection Bureau (CFPB) which is a revolving door for staff to leave the Bureau and go work for a creditor rights law firm without any restriction or time limit (non-compete), the Daniels case should have been referred to the CFPB for interpretation about the matters of ‘first impression’.

The Second Circuit recently did so for a RESPA question in Naimoli v Ocwen and we highlighted the case on our sister website, LawsInTexas.com (Laws In Texas). Instead of doing so in Daniels, there is a dissenting opinion by Judge Lagoa, who’s father in law is a  senior judge in SD Florida (Paul C. Huck) and her hubby is a Jones Day Partner and apparently the leader of the Miami Chapter of the Federalist Society. Lagoa herself is a former Florida Supreme Court justice appointed by Gov DeSantis who ‘ensured he puts conservatives on the bench so that anyone coming to court knows how the court will rule’.

LIF anticipates the Daniels case will be subject to a rehearing petition and presented to the full en banc court for reconsideration. The opinion here is similar to the recent Newsom FDCPA opinion, which was too negative towards Wall St and the financial banking services community. As such, it was vacated by the en banc panel while they reconsider. The courts’ decision is currently pending.

In this case, there is still time for the 11th Circuit to correctly ask the CFPB to provide its opinion on the underlying facts raised on appeal and decided by the 3-panel.

However, what the judiciary won’t do is apply this retroactively to the thousands of cases which have been incorrectly tossed in the last 14 years, resulting in homeowners losing their homes to wrongful foreclosures.

United States v. Daniels (2011)

(8:11-cv-01058)

District Court, M.D. Florida

MAY 13, 2011 | REPUBLISHED BY LIT: MAY 26, 2022

USA Motion for Summary Judgment with Exhibits, Doc. 13, Aug 17, 2011

ORDER granting  Motion for summary judgment in favor of the Plaintiff and against the defendant in the amount of $109,813.74,

together with accrued interest in the amount of $54,097.10 as of February 28, 2011,

plus interested at the rate of 8.25 percent per annum and a daily rate of $24.80, until the date of judgment;

for post-judgment interest, at the legal rate, from the entry of final judgment until the date of payment;

and for such other costs of litigation otherwise allowed by law.

The Clerk of Court is directed to close the case.

Signed by Judge Elizabeth A. Kovachevich on 9/22/2011.

(SN) (Entered: 09/22/2011)

U.S. District Court
Middle District of Florida (Tampa)
CIVIL DOCKET FOR CASE #: 8:11-cv-01058-EAK-AEP

USA v. Daniels
Assigned to: Judge Elizabeth A. Kovachevich
Referred to: Magistrate Judge Anthony E. Porcelli
Demand: $164,000
Cause: 28:1345 Default of Student Loan
Date Filed: 05/13/2011
Date Terminated: 09/22/2011
Jury Demand: None
Nature of Suit: 152 Contract: Recovery Student Loan
Jurisdiction: U.S. Government Plaintiff
Plaintiff
USA represented by I. Randall Gold
US Attorney’s Office – FLM
Suite 3200
400 N Tampa St
Tampa, FL 33602-4798
813/274-6026
Fax: 813/274-6247
Email: FLUDocket.Mailbox@usdoj.gov
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
V.
Defendant
Constance Daniels represented by Constance Daniels
PO Box 6219
Brandon, FL 33608
PRO SE

 

Date Filed # Docket Text
05/13/2011 1 COMPLAINT against Constance Daniels filed by USA. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Civil Cover Sheet)(MRH) (Entered: 05/13/2011)
05/13/2011 2 Summons issued as to Constance Daniels. (MRH) (Entered: 05/13/2011)
05/13/2011 3 ORDER regulating the processing of civil recovery actions. Service must be perfected by 09/10/2011. Signed by Deputy Clerk on 5/13/2011. (MRH) (Entered: 05/13/2011)
05/13/2011 4 STANDING ORDER: Filing of documents that exceed twenty-five pages. Signed by Judge Elizabeth A. Kovachevich on 7/15/08. (MRH) (Entered: 05/13/2011)
05/19/2011 5 NOTICE of designation under Local Rule 3.05 – track 1 (CLM) (Entered: 05/19/2011)
05/20/2011 6 CERTIFICATE OF SERVICE re 3 ORDER regulating the processing of civil recovery actions by USA (Gold, I.) Modified on 5/20/2011 (MRH). (Entered: 05/20/2011)
05/25/2011 7 CERTIFICATE OF SERVICE by USA (Notice of Designation Under Local Rule 3.05) (Gold, I.) (Entered: 05/25/2011)
07/06/2011 8 RETURN of service executed on 7/5/11 (Marshal 285) by USA as to Constance Daniels. (MRH) (Entered: 07/06/2011)
07/27/2011 9 MOTION for default judgment against Constance Daniels by USA. (Gold, I.) Modified on 7/27/2011 (MRH). NOTE: TERMINATED. INCORRECT MOTION RELIEF. ATTORNEY NOTIFIED. ATTORNEY TO REFILE. (Entered: 07/27/2011)
07/27/2011 10 MOTION for entry of clerk’s default against Constance Daniels by USA. (Gold, I.) Motions referred to Magistrate Judge Anthony E. Porcelli. (Entered: 07/27/2011)
07/28/2011 11 CLERK’S ENTRY OF DEFAULT as to Constance Daniels. (MRH) (Entered: 07/28/2011)
07/29/2011 12 ANSWER to 1 Complaint by Constance Daniels.(BES) (Entered: 07/29/2011)
08/17/2011 13 MOTION for summary judgment by USA. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Gold, I.) (Entered: 08/17/2011)
09/09/2011 14 ENDORSED ORDER TO SHOW CAUSE as to Constance Daniels.. The plaintiff filed a motion for summary judgment on 8/17/11. The defendant had up to and including 9/3/11 to respond to the motion. To date no response has been filed. Therefore, it is ORDERED that the defendant has up to and including 9/19/11 in which to show cause why the pending motion should not be granted. Signed by Judge Elizabeth A. Kovachevich on 9/9/2011. (SN) (Entered: 09/09/2011)
09/22/2011 15 ORDER granting 13 Motion for summary judgment in favor of the Plaintiff and against the defendant in the amount of $109,813.74, together with accrued interest in the amount of $54,097.10 as of February 28, 2011, plus interested at the rate of 8.25 percent per annum and a daily rate of $24.80, until the date of judgment; for post-judgment interest, at the legal rate, from the entry of final judgment until the date of payment; and for such other costs of litigation otherwise allowed by law. The Clerk of Court is directed to close the case.. Signed by Judge Elizabeth A. Kovachevich on 9/22/2011. (SN) (Entered: 09/22/2011)
10/12/2011 16 ABSTRACT of judgment as to Constance Daniels. (DMS) (Entered: 10/12/2011)

Order GRANTING Summary Judgment for $164k Student Loan Debt, Doc. 15, Sep 22, 2011

Daniels v. Select Portfolio Servicing, Inc.

(2018-Present)

(8:18-cv-01652)

District Court, M.D. Florida

ORDER

THIS CAUSE comes before the Court upon Defendant’s Motion to Dismiss Plaintiff’s Second Amended Complaint (Dkt. 24) and Plaintiff’s Response in Opposition (Dkt. 27).

The Court, having reviewed the motion, response, and being otherwise advised in the premises, concludes that Defendant’s motion should be granted.

Specifically, Plaintiff’s second amended complaint will be dismissed with prejudice because any further amendment is futile.

BACKGROUND

As the Court explained in its prior Order granting Defendant’s motion to dismiss, (see Dkt. 22), Plaintiff Constance Daniels initially filed suit in Florida state court against Defendant Select Portfolio Servicing, Inc. (“SPS”) alleging three Florida claims, which included a claim under Florida’s civil Racketeer Influenced and Corrupt Organizations (“RICO”) Act.

On July 10, 2018, SPS removed the case to this Court based on diversity jurisdiction.

On August 6, 2018, SPS moved to dismiss the entire complaint.

In relevant part, SPS argued that the complaint failed to allege any of the elements of a RICO claim.

On August 27, 2018, Daniels filed an amended complaint, which mooted SPS’s motion to dismiss.

Daniels’ amended complaint alleged two claims: a claim under the Fair Debt Collection Practices Act (“FDCPA”) and a claim under the Florida Consumer Collections Practices Act (“FCCPA”).

Both claims relied on the same allegations.

To summarize, Daniels alleged that SPS had “improperly servic[ed]” her mortgage loan “in reckless disregard” of her consumer rights. (Dkt. 12).

The amended complaint did not attach any mortgage statements.

SPS moved to dismiss Daniels’ amended complaint based on her failure to allege that SPS ever attempted to collect the mortgage balance.

The Court granted SPS’s motion.

The Court noted that the amended complaint did not identify or attach any communication from SPS to Daniels.

The Court also surmised that the dispute was more akin to a dispute about an improper accounting of Daniels’ mortgage.

The Court dismissed the FDCPA and FCCPA claims and provided Daniels a final opportunity to amend her complaint.

Daniels filed a second amended complaint.

The allegations are largely unchanged.

But, significantly, Daniels attaches multiple monthly mortgage statements that SPS sent to her.

She now claims that these mortgage statements constitute debt collection activity under the FDCPA and FCCPA.

SPS’s motion to dismiss argues that the monthly mortgage statements comply with Regulation Z of the Truth in Lending Act (the “TILA”)—they were not communications in connection with the collection of a debt—and therefore do not constitute debt collection activity under the FDCPA and FCCPA.

As explained further below, the Court agrees with SPS’s position based on the Court’s detailed review of the monthly mortgage statements.

Therefore, the second amended complaint will be dismissed with prejudice.

STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) allows a court to dismiss a complaint when it fails to state a claim upon which relief can be granted.

When reviewing a motion to dismiss, a court must accept all factual allegations contained in the complaint as true.

Erickson v. Pardus, 551 U.S. 89, 94 (2007) (internal citation omitted).

It must also construe those factual allegations in the light most favorable to the plaintiff.

Hunt v. Aimco Properties, L.P., 814 F.3d 1213, 1221 (11th Cir. 2016) (internal citation omitted).

To withstand a motion to dismiss, the complaint must include “enough facts to state a claim to relief that is plausible on its face.”

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

A claim has facial plausibility “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Pleadings that offer only “labels and conclusions,” or a “formulaic recitation of the elements of a cause of action,” will not do.

Twombly, 550 U.S. at 555.

DISCUSSION

The FDCPA and FCCPA prohibit debt collectors from using a “false, deceptive, or misleading representation or means in connection with the collection of any debt.”

See e.g. 15 U.S.C. § 1692e (emphasis added);

Fla. Stat. § 559.72 (“In collecting debts, no person shall . . .”) (emphasis added).

It is axiomatic then that the “challenged conduct is related to debt collection” to state a claim under either statute.

Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1216 (11th Cir. 2012);

see also Garrison v. Caliber Home Loans, Inc., 233 F. Supp. 3d 1282, 1286 (M.D. Fla. 2017) (“the FCCPA is a Florida state analogue to the federal FDCPA.”) (internal citations omitted).

“[T]he Eleventh Circuit has not established a bright-line rule” as to what qualifies as “in connection with the collection of any debt.”

Dyer v. Select Portfolio Servicing, Inc., 108 F. Supp. 3d 1278, 1280 (M.D. Fla. 2015).

“As a general principle, the absence of a demand for payment is not dispositive,” and courts should “instead consider whether the overall communication was intended to induce the debtor to settle the debt.”

Wood v. Citibank, N.A., No. 8:14-cv-2819-T-27EAJ, 2015 WL 3561494, at *3 (M.D. Fla. June 5, 2015) (citations omitted).

The second amended complaint attaches multiple monthly mortgage statements.1

Because the communications at issue here are all monthly mortgage statements, a discussion of the TILA is necessary.

The TILA requires SPS, a servicer, to send monthly mortgage statements.

12 C.F.R. § 1026.41. Specifically, 12 C.F.R. § 1026.41(d) requires that servicers provide debtors with detailed monthly mortgage statements containing, among other things: the “amounts due;” the “payment due date;” “the amount of any late payment fee, and the date that fee will be imposed if payment has not been received;” “an explanation of amount due, including a breakdown showing how much, if any, will be applied to principal, interest, and escrow and, if a mortgage loan has multiple payment options, a breakdown of each of the payment options;” “any payment amount past due;” a breakdown of “the total of all payments received since the last statement” and “since the beginning of the current calendar year;” “a list of all transaction activity that occurred since the last statement;” “partial payment information;” “contact information;” and detailed “account information” and “delinquency information.”

The Consumer Financial Protection Bureau (the “CFPB”) has issued a bulletin providing that a

“servicer acting as a debt collector would not be liable under the FDCPA for complying with [monthly mortgage statement] requirements.”

Implementation Guidance for Certain Mortgage Servicing Rules, 10152013 CFPB GUIDANCE, 2013 WL 9001249 (C.F.P.B. Oct. 15, 2013).

Courts have largely followed this guidance.

See, e.g., Jones v. Select Portfolio Servicing, Inc., No. 18-cv-20389, 2018 WL 2316636, at *3 (S.D. Fla. May 2, 2018) (citing 12 C.F.R. § 1026.41(d));

Brown v. Select Portfolio Servicing, Inc., No. 16-62999-CIV, 2017 WL 1157253 (S.D. Fla. Mar. 24, 2017) (noting the guidance and finding that monthly mortgage statements in compliance with the TILA were not debt collection).

The monthly mortgage statements at issue here were in conformity with the TILA requirements.

Moreover, the subject statements were substantially similar to model form H-30(B) provided by Appendix X to Part 1026 of TILA Regulation Z.

See also Jones, 2018 WL 2316636, at *4 (noting the similarities between a monthly mortgage statement and the model form in concluding no debt collection).

Although the monthly mortgage statements may not be identical to model form H-30(B), the differences are not significant deviations.

Notably, the plaintiff in Brown brought a nearly identical lawsuit against SPS.

The court explained in detail why the plaintiff was unable to state a claim under the FDCPA and FCCPA because the monthly mortgage statement was required to be sent pursuant to the TILA.

The complaint in Brown was dismissed with prejudice because “amendment would be futile” given that the basis for the claims was a monthly mortgage statement that was not actionable as a matter of law.

See 2017 WL 1157253, at *2-*4.

Also, the Jones court discussed in detail the numerous prior decisions addressing this issue, including multiple cases from this district that have held that monthly mortgage statements

“are almost categorically not debt collection communications under the FDCPA.”

2018 WL 2316636, at *5 (citing cases).

The particular monthly mortgage statements before the court in Jones were also sent by SPS and were substantively identical to the statements at issue in this case and in Brown.

Most recently, in Mills v. Select Portfolio Servicing, Inc., No. 18-cv-61012- BLOOM/Valle, 2018 WL 5113001 (S.D. Fla. Oct. 19, 2018), the court “agree[d] with the reasoning in Jones and [concluded] that the Mortgage Statements at issue [were] not communications in connection with a collection of a debt.” Id. at *2.

In conclusion, the substance of the monthly mortgage statements at issue in this case is substantially similar to model form H-30(B).

Any minor discrepancies in the language—when taken in the context of the document as an otherwise carbon copy of form H-30(B)—do not take the statements out of the realm of a monthly mortgage statement and into the realm of debt collection communications.

It is therefore ORDERED AND ADJUDGED that:

1. Defendant’s Motion to Dismiss Plaintiff’s Second Amended Complaint (Dkt.

24) is granted.

2. Plaintiff’s Second Amended Complaint is dismissed with prejudice.

3. The Clerk of Court is directed to close this case and terminate any pending motions as moot.

DONE and ORDERED in Tampa, Florida on December 18, 2018.

 

 

 

 

Copies furnished to: Counsel/Parties of Record

Judge Bert Jordan’s “Reputation” Warning to New Florida Lawyers

Constance Daniels Admonished by the Florida Bar (2021)

Constance Daniels, P.O. Box 6219, Brandon, admonishment in writing and directed to attend Ethics School effective immediately following a November 24 court order.

(Admitted to practice: 1995)

Daniels failed to act with reasonable diligence and failed to communicate with her client in connection with a dissolution of marriage action.

Daniels also failed to timely respond to the Bar’s formal complaint.

(Case No: SC21-683)

Constance Daniels v. Select Portfolio Servicing, Inc. (2022)

11th Cir., Published Opinion

(19-10204, May 24, 2022)

“A matter of first impression” 14 Years after the great recession and greatest theft of citizens homes in the history of the United States.

It’s quite incredulous how the 11th Circuit selects a Sanctioned Fl. Republican Lawyer, a failed judicial candidate and one who is facing foreclosure, for this ‘landmark’ published opinion in 2022.

Panel Author, Judge Bert Jordan, joined by Judge Brasher with a dissenting opinion by Judge Babs Lagoa

11th Circuit revives FDCPA lawsuit over mortgage statement language

How Westlaw is Summarizing the Latest Eleventh Circuit Opinion

(May 26, 2022)

Resolving an issue of first impression, a divided federal appeals panel has held that mortgage servicers can be liable under the Fair Debt Collection Practices Act for inaccuracies in monthly mortgage statements that contain additional debt-collection language.

Daniels v. Select Portfolio Servicing Inc., No. 19-10204, (11th Cir. May 24, 2022).

In a 2-1 decision, the 11th U.S. Circuit Court of Appeals on May 24 reinstated Constance Daniels’ lawsuit against Select Portfolio Servicing Inc., in which she alleges the company used faulty mortgage statements to try to collect payments she did not owe.

Writing for the panel majority, U.S. Circuit Judge Adalberto J. Jordan acknowledged that Select Portfolio was required to issue the mortgage statements under the Truth in Lending Act, 15 U.S.C.A. § 1638.

However, the mortgage statements fell within the scope of the FDCPA’s prohibition on false or misleading representations, 15 U.S.C.A. § 1692e, because they included additional debt-collection language — “this is an attempt to collect a debt” — the opinion said.

Judge Jordan reasoned that “in determining whether a communication is in connection with the collection of a debt, what could be more relevant than a statement in the communication than ‘this is an attempt to collect a debt’?”

U.S. Circuit Judge Barbara Lagao dissented, saying the majority treated the language like “magic words” that could convert an otherwise routine mortgage statement into a communication covered by the FDCPA.

Judge Lagoa also argued that the decision created a circuit split, although the panel majority insisted that the facts of Daniels’ case distinguished it from others in which federal circuit courts seemed to reach a contrary result.

District Court tosses FDCPA claims

Daniels sued Select Portfolio in the U.S. District Court for the Middle District of Florida in July 2018.

According to the suit, Daniels had prevailed in a state court foreclosure action brought by lender Wells Fargo in 2015, with the judge sanctioning Wells Fargo and enforcing an earlier loan modification agreement between the parties.

But Daniels’ mortgage servicer, Select Portfolio, later issued several monthly mortgage statements misstating the principal balance and amount due, and falsely claiming that her loan was in arrears, the suit says.

At least three of the mortgage statements included the sentence, “This is an attempt to collect a debt,” according to the suit.
Daniels accuses Select Portfolio of using false or misleading representations in connection with the collection of a debt, in violation of the FDCA and the Florida Consumer Collection Practices Act, Fla. Stat. Ann. § 559.72.

Select Portfolio moved to dismiss, saying Daniels was attempting hold it liable for issuing mortgage statements that are required under the Truth in Lending Act.

U.S. District Judge James S. Moody Jr. agreed and dismissed the suit in December 2018. Daniels v. Select Portfolio Servs. Inc., No. 18-cv-1652, (M.D. Fla. Dec. 18, 2018).

Judge Moody said that any discrepancies in language between Select Portfolio’s monthly statements and what is required under TILA “do not take the statements out of the realm of a monthly mortgage statement and into the realm of debt collection communications.”

On appeal, Daniels argued that compliance with TILA does not make a mortgage servicer immune from suit under the FDCPA and, even if it did, the monthly statements at issue included language beyond what is necessary under TILA.

Kaelyn S. Diamond and Michael A. Ziegler of the Law Office of Michael A. Ziegler represented Daniels.

Benjamin B. Brown and Joseph T. Kohn of Quarles & Brady LLP represented Select Portfolio.

By Dave Embree

YOUR DONATION(S) WILL HELP US:

• Continue to provide this website, content, resources, community and help center for free to the many homeowners, residents, Texans and as we’ve expanded, people nationwide who need access without a paywall or subscription.

• Help us promote our campaign through marketing, pr, advertising and reaching out to government, law firms and anyone that will listen and can assist.

Thank you for your trust, belief and support in our conviction to help Floridian residents and citizens nationwide take back their freedom. Your Donations and your Voice are so important.



Continue Reading

Appellate Circuit

Deutsche Bank and Nationstar Watch as 11th Circuit Discharge the Shotgun Despite Hunt’s Pleadings

There can be no doubt that this is a frivolous appeal and we would not hesitate to order sanctions if appellant had been represented by counsel.

Published

on

Hunt v. Nationstar Mortg., No. 21-10398

(11th Cir. May 27, 2022)

MAY 27, 2022 | REPUBLISHED BY LIT: MAY 30, 2022

Before ROSENBAUM, GRANT, and MARCUS, Circuit Judges. PER CURIAM:

Christopher M. Hunt, Sr., proceeding pro se, appeals following the district court’s dismissal of his civil complaint arising out of his 2006 purchase of residential property located in Atlanta, Georgia (the “Property”).

Hunt purchased the Property using proceeds from a loan that he eventually defaulted on, which prompted Nationstar Mortgage, LLC (“Nationstar”), then servicer of the loan, to seek a non-judicial foreclosure on the Property.

After filing or being named in a variety of related lawsuits,1 Hunt filed the instant pro se complaint in Georgia state court in June 2020 and named as defendants Nationstar, the Deutsche Bank National Trust

1 See, g., Hunt v. Nationstar Mortg., LLC, 684 F. App’x 938 (11th Cir. 2017) (unpublished) (“Hunt I”);

[MARCUS, ROSENBAUM AND ANDERSON]

Hunt v. Nationstar Mortg., LLC, 779 F. App’x 669 (11th Cir. 2019) (unpublished);

[PRYOR,W., GRANT AND ANDERSON]

Hunt v. Nationstar Mortg., LLC, 782 F. App’x 762 (11th Cir. 2019) (unpublished);

[PRYOR,W., GRANT AND ANDERSON]

Deutsche Bank Tr. Co. Am., as Tr. for Fifteen Piedmont Ctr. v. Hunt, 783 F. App’x 998 (11th Cir. 2019) (unpublished).

[TJOFLAT, JORDAN AND NEWSOM]

Companies (“Deutsche Bank”), and Jay Bray, the CEO of Nationstar.

He alleged that they had committed, inter alia, mortgage fraud and wrongful foreclosure in violation of federal laws, including the Sarbanes-Oxley Act and the Dodd-Frank Act.2

The district court denied a variety of preliminary motions filed by Hunt;

dismissed, without prejudice, the complaint as to defendant Bray for failure to effect proper service;

and

dismissed, with prejudice, the complaint as to Deutsche Bank and Nationstar, because it was a “shotgun” pleading, was barred by res judicata, and failed to state a claim upon which relief could be granted.3

After thorough review, we affirm.

I.

Whether a court has subject-matter jurisdiction, including removal jurisdiction, is a question of law that we review de novo.

See McGee v. Sentinel Offender Servs., LLC, 719 F.3d 1236, 1241 (11th Cir. 2013).

We also review de novo a denial of a motion to

2 Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745 (hereinafter “Sarbanes-Oxley Act”), and the Dodd-Frank Wall Street Reform and Con- sumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010) (hereinafter “Dodd-Frank Act”).

3 Hunt also named Christian Sewing, the Chief Executive Officer (“CEO”) of Deutsche Bank, as a defendant, but he later voluntarily dismissed him.

And after filing the complaint, Hunt sought to add yet another defendant, the Albertelli Law Firm (“Albertelli Law”).

Bray, Sewing and Albertelli Law have not filed any briefs on appeal.

remand to state court. Conn.

State Dental Ass’n v. Anthem Health Plans, 591 F.3d 1337, 1343 (11th Cir. 2009).

A district court’s decision regarding the indispensability of a party is reviewed for abuse of discretion.

United States v. Rigel Ships Agencies, Inc., 432 F.3d 1282, 1291 (11th Cir. 2005).

We will disturb a district court’s refusal to change venue only for a clear abuse of discretion.

Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253, 255 (11th Cir. 1996).

We also review the district court’s denial of a motion for recusal for abuse of discretion.

Jenkins v. Anton, 922 F.3d 1257, 1271 (11th Cir. 2019).

We review a district court’s grant of a motion to dismiss for insufficient service of process, under Rule 12(b)(5), by applying a de novo standard to questions of law, and a clear error standard to the court’s findings of fact.

Albra v. Advan, Inc., 490 F.3d 826, 829 (11th Cir. 2007).

But when a party fails to object to a magistrate judge’s findings or recommendations in a report and recommendation, he “waives the right to challenge on appeal the district court’s order based on unobjected-to factual and legal conclusions.” 11th Cir. R. 3-1.

Under the circumstances, we review a claim on appeal only “for plain error,” if “necessary in the interests of justice.” Id.

We review the dismissal of a “shotgun” pleading under Rule 8 for abuse of discretion.

Vibe Micro, Inc. v. Shabanets, 878 F.3d 1291, 1294 (11th Cir. 2018).

When appropriate, we will review a district court’s dismissal for failure to state a claim under Rule 12(b)(6) de novo.

Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1056–57 (11th Cir. 2007).

We will also review a dismissal

based on res judicata de novo.

Jang v. United Techs. Corp., 206 F.3d 1147, 1149 (11th Cir. 2000).

We review de novo a district court’s conclusions on collateral estoppel, but review its legal conclusion that an issue was actually litigated in a prior action for clear error.

Richardson v. Miller, 101 F.3d 665, 667–68 (11th Cir. 1996).

While pro se pleadings are liberally construed, issues not briefed on appeal are normally forfeited and we will generally not consider them.

Timson v. Sampson, 518 F.3d 870, 874 (11th Cir. 2008).

An appellant can abandon a claim by:

(1) making only passing reference to it;

(2) raising it in a perfunctory manner without supporting arguments and authority;

(3) referring to it only in the “statement of the case” or “summary of the argument”;

or

(4) referring to the issue as mere background to the appellant’s main arguments.

Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d 678, 681– 82 (11th Cir. 2014).

In addition, if a district court’s order rested on two or more independent, alternative grounds, the appellant must challenge all of the grounds to succeed on appeal.

See id. at 680.

When an appellant fails to challenge on appeal one of the grounds on which the district court based its judgment, he is deemed to have abandoned any challenge of that ground, and it follows that the judgment is due to be affirmed.

See id.

II.

Liberally construed, Hunt’s brief on appeal seeks to challenge the district court’s decisions:

(1) denying remand of his case to state court

and

denying his request to file an amended complaint adding another defendant, Albertelli Law;

(2) denying his request

to transfer the case;

(3) denying his request to disqualify the judge;

(4) dismissing, without prejudice, his complaint as to defendant Bray for failure to effect proper service;

and

(5) dismissing his complaint, with prejudice, as to Deutsche Bank and Nationstar.

To be sure, Hunt’s arguments about these decisions by the district court are not clearly stated.

But even if we were to assume that he has preserved his arguments on appeal, they fail on the merits.

First, we are unpersuaded by Hunt’s arguments that the district court should have allowed him to file an amended complaint to add another party to the suit, which would have deprived the federal court of jurisdiction, and should have remanded the case to state court.

Federal courts have diversity-of-citizenship jurisdiction when the parties are citizens of different states and the amount in controversy exceeds $75,000.

28 U.S.C. § 1332(a)(1).

A corporation is a citizen of every state where it was incorporated and the one state in which it has its principal place of business.

Daimler AG v. Bauman, 571 U.S. 117, 133, 137 (2014); 28 U.S.C. § 1332(c)(1).

A defendant may remove any civil action brought in a state court to a federal district court that has original jurisdiction over the action.

28 U.S.C. § 1441(a).

The removing party bears the burden of proving that removal jurisdiction exists.

McGee, 719 F.3d at 1241.

Here, the district court did not err in denying Hunt’s motion to remand. As we’ve held in a previous appeal, his motion was based on his belated and fraudulent attempts to join Albertelli Law, in an effort to defeat the district court’s diversity jurisdiction.

See Hunt I, 684 F. App’x. at 942-44.

However, Hunt asserted federal

claims in his complaint, so the district court had jurisdiction in any event.

28 U.S.C. § 1441(a).

Accordingly, the district court correctly denied Hunt’s requests to remand the case and acted within its discretion to deny joinder.

Rigel Ships Agencies, Inc., 432 F.3d at 1291.

We also find no merit to Hunt’s claims that the district court should have transferred venue of his lawsuit.

A district court may transfer a civil action to any other district or division where it may have been brought “for the convenience of the parties and witnesses, and in the interest of justice.”

Robinson, 74 F.3d at 260 (quoting 28 U.S.C. § 1404(a)).

But in this case, the district court did not err because Hunt did not provide any cognizable reason for a transfer.

It appears that Hunt’s transfer request was based on his belief that case law in the United States District Court for the Middle District of Georgia would be more favorable to him – which is not a legitimate reason for transfer.

See 28 U.S.C. § 1404(a).

Similarly, we reject Hunt’s argument that the district court judge should have recused himself.

A judge must sua sponte recuse himself “in any proceeding in which his impartiality might reasonably be questioned” or “

[w]here he has a personal bias or prejudice concerning a party.”

28 U.S.C. § 455(a), (b)(1).

“The test is whether an objective, disinterested, lay observer fully informed of the facts underlying the grounds on which recusal was sought would entertain a significant doubt about the judge’s impartiality.”

Parker v. Connors Steel Co., 855 F.2d 1510, 1524 (11th Cir. 1988).

“Ordinarily, a judge’s rulings in the same or a related case may not serve as

the basis for a recusal motion.”

McWhorter v. City of Birmingham, 906 F.2d 674, 678 (11th Cir. 1990).

“The judge’s bias must be personal and extrajudicial; it must derive from something other than that which the judge learned by participating in the case.”

Id.

“The exception to this rule is when a judge’s remarks in a judicial context demonstrate such pervasive bias and prejudice that it constitutes bias against a party. Mere friction . . . however, is not enough to demonstrate pervasive bias.”

Thomas v. Tenneco Packaging Co., 293 F.3d 1306, 1329 (11th Cir. 2002) (quotation marks omitted).

As the record before us makes clear, no “objective, disinterested, lay observer fully informed of the facts underlying” these circumstances “would entertain a significant doubt about the judge’s impartiality.”

Parker, 855 F.2d at 1524.

Accordingly, the district court did not abuse its discretion in denying Hunt’s request for recusal or disqualification.

Nor do we find any merit to Hunt’s argument that the district court erred in dismissing the complaint against defendant Bray for lack of proper service.

When a federal court is considering the sufficiency of process after removal, it does so by looking to the state law governing process.

See Usatorres v. Marina Mercante Nicaraguenses, S.A., 768 F.2d 1285, 1286 n.1 (11th Cir. 1985).

Georgia law provides that service made “outside the state” of Georgia is to be done “in the same manner as service is made within the state.”

O.C.G.A. § 9-10-94.

Under Georgia law, service on natural persons is to be made “personally, or by leaving copies thereof at the defendant’s dwelling house or usual place of abode with some

person of suitable age and discretion then residing therein, or by delivering a copy of the summons and complaint to an agent authorized . . . to receive service of process.”

O.C.G.A. § 9-11-4(e)(7).

Notably, Hunt does not dispute these proposed findings set forth by the magistrate judge’s Report and Recommendation (“R&R”), that Hunt:

(1) mailed service to Bray;

and

(2) completed “corporate service” on Deutsche Bank, which Hunt asserted was also effective to serve Bray.

11th Cir. R. 3-1.

But, as the district court determined, Georgia law applied here and required personal service in these circumstances.

Albra, 490 F.3d at 829; O.C.G.A. § 9-11-4(e)(7).

Bray therefore was not properly served under Georgia law, and, for that reason, the district court did not err in dis- missing Hunt’s suit without prejudice as to Bray.

Finally, we find no error in the district court’s denial of injunctive relief and its dismissal of Hunt’s complaint against the two remaining defendants, Nationstar and Deutsche Bank.

A district court has the inherent authority to control its docket and ensure the prompt resolution of lawsuits, which includes the ability to dismiss a complaint on “shotgun” pleading grounds.

Shabanets, 878 F.3d at 1295.

We have described four types of “shotgun” com- plaints:

(1) those containing multiple counts where each count adopts all allegations of all preceding counts;

(2) those replete with conclusory, vague, and immaterial facts not obviously connected to any particular cause of action;

(3) those that do not separate each cause of action or claim for relief into different counts;

and

(4) those asserting multiple claims against multiple defendants without

specifying which of the defendants are responsible for which acts or omissions, or which of the defendants the claim is brought against.

Weiland v. Palm Beach Cnty. Sheriff’s Off., 792 F.3d 1313, 1321–23 (11th Cir. 2015).

“Shotgun” pleadings violate Rule 8, which requires “a short and plain statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), by failing to, in one degree or another, give the defendants adequate notice of the claims against them and the grounds upon which each claim rests.

Shabanets, 878 F.3d at 1294–96.

We generally require district courts to allow a litigant at least one chance to remedy any deficiencies before dismissing the complaint with prejudice, where a more carefully drafted complaint might state a claim.

See id.; Silberman v. Miami Dade Transit, 927 F.3d 1123, 1132 (11th Cir. 2019).

But it need not grant leave to amend the complaint when further amendment would be futile.

Silberman, 927 F.3d at 1133.

Under federal law, res judicata, or claim preclusion, bars a subsequent action if

“(1) the prior decision was rendered by a court of competent jurisdiction;

(2) there was a final judgment on the merits;

(3) the parties were identical in both suits;

and

(4) the prior and present causes of action are the same.”

Jang, 206 F.3d at 1148– 49 & n.1 (quotation marks omitted).

We have held that “if a case arises out of the same nucleus of operative facts, or is based upon the same factual predicate, as a former action, the two cases are really the same ‘claim’ or ‘cause of action’ for purposes of res judicata.”

Baloco v. Drummond Co., Inc., 767 F.3d 1229, 1247 (11th

Cir. 2014) (quotation marks omitted and alterations adopted).

“In addition, res judicata applies not only to the precise legal theory presented in the prior case, but to all legal theories and claims arising out of the nucleus of operative fact” that could have been raised in the prior case.

Id. (quotation marks omitted and alterations adopted).

Collateral estoppel, or issue preclusion, “refers to the effect of a judgment in foreclosing relitigation of a matter that has been litigated and decided.”

Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 77 n.1 (1984).

Thus, “collateral estoppel is appropriate only when the identical issue has been fully litigated in a prior case.”

In re McWhorter, 887 F.2d 1564, 1567 (11th Cir. 1989) (quotation marks omitted).

“The party seeking to invoke collateral estoppel bears the burden of proving that the necessary elements have been satisfied.”

Id. at 1566.

“[C]hanges in the law after a final judgment [generally] do not prevent the application of res judicata and collateral estoppel, even though the grounds on which the decision was based [may be] subsequently overruled.”

Precision Air Parts, Inc. v. Avco Corp., 736 F.2d 1499, 1503 (11th Cir. 1984).

To safeguard investors in public companies and restore trust in the financial markets, Congress enacted the Sarbanes-Oxley Act of 2002, 116 Stat. 745.

See S. Rep. No. 107-146, pp. 2–11 (2002).

The Act contains several provisions, including a whistleblower protection provision which prohibits a publicly traded company or its officers from discharging an “employee” for providing information to a supervisory authority about conduct that the employee

“reasonably believes” constitutes a violation of federal laws against mail fraud, wire fraud, bank fraud, securities fraud, any SEC rule or regulation, or any provision of federal law relating to fraud against shareholders.

See 18 U.S.C. § 1514A(a)(1).

The Dodd-Frank Act whistleblower provision provides protection to individuals who provide “information relating to a violation of the securities laws to the” Securities and Exchange Commission (“SEC”).

15 U.S.C. § 78u-6(a)(6).

Thus, “[t]o sue under Dodd-Frank’s anti-retaliation provision, a person must first provide information relating to a violation of the securities laws to the [SEC].”

Dig. Realty Trust, Inc. v. Somers, 138 S. Ct. 767, 772–73 (2018) (quotation marks omitted and alterations adopted).

In his brief on appeal, Hunt does not expressly address the lower court’s “shotgun” pleading determination, and, as a result, the district court’s dismissal of the complaint is due to be affirmed.

Sapuppo, 739 F.3d at 681–82.

But in any event, the district court did not err in finding that his complaint was a “shotgun” pleading.

As the record reflects, the complaint consisted of three numbered paragraphs that spanned paragraphs and pages; failed to isolate claims by defendants;

and largely failed to discuss any facts — thereby falling into several of our identified categories of prohibited “shotgun” pleadings.

Weiland, 792 F.3d at 1321-23.

The district court also was correct that amendment would have been futile.

For one, res judicata and collateral estoppel barred Hunt’s claims for breach of contract and fraud, since Hunt sued the same parties for the same alleged breach of contract and fraud in several prior cases.

See, e.g., Hunt I, 684 F. App’x at 944.4

These decisions were final judgments and were “rendered by a court of competent jurisdiction,” “on the merits,” against the same parties, and “the prior and present causes of action [were] the same.”

Jang, 206 F.3d at 1149.

Moreover, even if some of Hunt’s claims had not been explicitly presented in any of his prior cases, they would still be barred by res judicata because every claim arose from the same facts as each of his prior cases, and he could have raised them in any of the prior proceedings.

Baloco, 767 F.3d at 1247.

Also, despite Hunt’s arguments, there have been no “changes in the law” that would “prevent the application of res judicata and collateral estoppel” in this case.

Precision Air Parts, 736 F.2d at 1503.

In addition, Hunt’s claims under the Sarbanes-Oxley Act and Dodd-Frank Act were futile because they fail to state a claim upon which relief could be granted.

As the record reflects, Hunt did not allege that he was an “employee” under the Sarbanes-Oxley Act, nor that he “provide[d] information relating to a violation of the securities laws to the [SEC]” as required under the Dodd-Frank Act.

4 To the extent that Hunt challenges the district court’s decisions under Fed. R. Civ. P. 60(b), we conclude that he has not identified any “extraordinary circumstances” entitling him to relief, and the district court did not abuse its discretion in this respect.

Toole v. Baxter Healthcare Corp., 235 F.3d 1307, 1316 (11th Cir. 2000) (quotation marks omitted).

Somers, 138 S. Ct. at 772–74.

Accordingly, Hunt did not state a cause of action under these statutes, and we affirm.

AFFIRMED.5

5 All of Hunt’s pending motions, which he filed after we imposed a filing restriction on him, are DENIED to the extent they request any relief.

For their part, Nationstar and Deutsche Bank have filed renewed motions for sanctions, requesting monetary sanctions against Hunt for his numerous motions before this Court under 11th Cir. R. 27-4.

Hunt is pro se and we DENY the motions for sanctions at this time.

See Woods v. I.R.S., 3 F.3d 403, 404 (11th Cir. 1993)

(“There can be no doubt that this is a frivolous appeal and we would not hesitate to order sanctions if appellant had been represented by counsel. However, since this suit was filed pro se, we conclude that sanctions would be inappropriate.”).

Although we are reluctant to impose sanctions on pro se appellants, we warn Hunt that our Court has imposed sanctions in circumstances like these, even for pro se litigants, and he is strongly cautioned against bringing any further frivolous motions or claims.

See Ricket v. United States, 773 F.2d 1214, 1216 (11th Cir. 1985)

(imposing sanctions on a pro se appellant who had been warned by the district court that the issues on appeal were frivolous).

YOUR DONATION(S) WILL HELP US:

• Continue to provide this website, content, resources, community and help center for free to the many homeowners, residents, Texans and as we’ve expanded, people nationwide who need access without a paywall or subscription.

• Help us promote our campaign through marketing, pr, advertising and reaching out to government, law firms and anyone that will listen and can assist.

Thank you for your trust, belief and support in our conviction to help Floridian residents and citizens nationwide take back their freedom. Your Donations and your Voice are so important.



Continue Reading

Most Read

Copyright © 2022 LawsInFlorida.com is an online brand name which is wholly owned by Blogger Inc., a nonprofit 501(c)(3) registered in Delaware | Caricatures by DonkeyHotey