Court: District Court, S.D. Florida; November 25, 2014; Federal District Court
The Court addressed Defendant Justin Giarla’s Motion to Dismiss for Lack of Jurisdiction, Improper Venue, or Failure to State a Claim, along with his Motion to Transfer. The Court granted the Motion to Dismiss in part and denied it in part, while denying the Motion to Transfer.
Plaintiff Xavier Prou, a French artist known as "Blek Le Rat," filed suit against Giarla and several galleries, alleging conversion, civil theft, and racketeering, seeking $819,000 in damages and the return of artworks valued at approximately $170,000. Prou claims Giarla mismanaged sales from a consignment agreement after a 2011 art show, resulting in only partial payment for sold artworks. Giarla contends he only agreed to sell Prou's art in California and asserts he offered to return the unsold artworks.
In the jurisdiction discussion, Giarla argued the Court lacked personal jurisdiction, while Prou countered with exhibits supporting jurisdiction, though both parties focused on state law and minimum contacts, neglecting the impact of Prou's Federal RICO claims on jurisdiction.
The Amended Complaint establishes the Court's subject-matter jurisdiction based on federal question jurisdiction related to the Plaintiff's Federal RICO claims (Counts V-VIII) under 18 U.S.C. 1961, particularly sections 1962(a) and (d). The Eleventh Circuit recognizes that 18 U.S.C. § 1965(d) allows for nationwide service of process, which serves as the basis for personal jurisdiction. If personal jurisdiction is established under RICO, the doctrine of pendent personal jurisdiction applies, negating the need to rely on Florida’s long-arm statute. This doctrine permits the district court to assert personal jurisdiction over state law claims linked to a common nucleus of operative fact, even if personal jurisdiction would not otherwise exist.
In evaluating personal jurisdiction under a federal statute with nationwide service provisions, a defendant’s overall contacts with the nation, rather than just with the forum state, are considered. The Fifth Amendment's Due Process Clause is key in assessing "fairness" and "reasonableness," provided the defendant shows an infringement of liberty interests. Defendant Giarla must demonstrate that asserting jurisdiction would cause severe disadvantage in litigation compared to the Plaintiff.
Giarla's arguments focus on Florida's long-arm statute and Fourteenth Amendment minimum contacts, asserting the alleged art was shipped from France to California. However, he does not prove that personal jurisdiction would be unduly burdensome, particularly given his previous participation in art shows in Florida. Therefore, the Court finds Giarla has not presented a compelling case against personal jurisdiction.
Next, the Court must assess whether the Plaintiff sufficiently states a Federal RICO claim to survive a motion to dismiss. The Court must view the allegations favorably for the Plaintiff and accept all reasonable inferences as true. A complaint must contain enough factual matter to state a plausible claim for relief.
A claim must demonstrate facial plausibility, requiring factual content that allows reasonable inference of the defendant's liability, beyond mere possibility. Labeling or formulaic recitations are insufficient. The plaintiff alleges violations of the Federal RICO Act by Defendant Giarla, who contends the complaint lacks specificity in detailing predicate acts necessary to establish a pattern of racketeering or causal injury. The RICO Act prohibits individuals associated with an enterprise from engaging in its affairs through racketeering activity, necessitating a demonstration of conduct, enterprise, pattern, and causation of injury linked to the defendant's actions.
When alleging fraud through multiple acts of mail or wire fraud, the heightened pleading standard of Federal Rule of Civil Procedure 9(b) applies, requiring detailed allegations about each predicate act, including dates, parties involved, and content. The plaintiff claims Giarla committed seven acts of fraud and wire fraud but fails to provide sufficient details about the content of the communications, thus not meeting the required pleading standard. Consequently, the Federal RICO claims are subject to dismissal, which affects the court's jurisdiction over the remaining state law claims of conversion, civil theft, and Florida RICO. If the primary jurisdictional claim is dismissed early in litigation, related claims should also be dismissed.
Plaintiff's state law claims may be dismissed unless he establishes personal jurisdiction over a non-resident defendant, which requires a prima facie case. This is achieved by presenting sufficient evidence to withstand a directed verdict motion, with the court accepting the allegations in the Amended Complaint as true unless contradicted by uncontroverted affidavits from the defendant. If the defendant presents contradictory affidavits, the burden shifts back to the plaintiff to provide evidence unless the affidavits contain only conclusory statements regarding jurisdiction. In instances of conflicting facts, the court must interpret reasonable inferences in favor of the plaintiff.
To determine personal jurisdiction, a two-part analysis is required: first, assessing whether Florida’s long-arm statute grants a basis for jurisdiction, and second, examining whether the defendant has sufficient minimum contacts with Florida to meet due process standards. Florida's long-arm statute allows for both specific and general jurisdiction. Specific jurisdiction is linked to a defendant's activities in Florida that relate to the claims, while general jurisdiction requires continuous and systematic business contacts with the state, necessitating a more rigorous standard.
Plaintiff claims both specific and general jurisdiction, citing Florida Statute 48.193(1)(a)(1), (2), and (7), which allows jurisdiction over non-residents who engage in business, commit tortious acts, or breach contracts within the state.
To establish that a defendant is conducting business within a state for jurisdictional purposes, the collective activities of the defendant must demonstrate a general course of business activity aimed at financial gain. In this case, the Plaintiff claims to have entered a consignment agreement with Defendant Giarla, resulting in the sale of eleven paintings in Florida. The Plaintiff alleges that Giarla failed to remit the proceeds and return unsold artwork. Supporting his claims, the Plaintiff presents unsworn declarations from Darren Johnston, who witnessed Giarla exhibiting the artwork in Miami, and from himself, stating Giarla acted as a sales agent. The Plaintiff also includes email communications regarding sales and payment plans.
In contrast, Defendant Giarla asserts that his only agreement with the Plaintiff pertained to an exhibit in San Francisco, claims he was in California during the alleged events, and states that none of the purchasers were from Florida. However, the Court, viewing the allegations favorably toward the Plaintiff, determines that Giarla conducted business in Florida for profit and that the Plaintiff's injuries arose from Giarla's actions in the state, thereby establishing specific jurisdiction under Florida Statute 48.193(1)(g).
Regarding general jurisdiction, the Plaintiff invokes Florida Statute 48.193(2), which allows for jurisdiction over defendants engaged in substantial, not isolated, activity in the state. The Plaintiff argues that Giarla's activities in Florida over five years, including misleading advertisements, warrant general jurisdiction. Evidence provided includes images of a website listing Giarla’s gallery at the Scope art exhibition and another website promoting his gallery’s participation in Miami. In opposition, Giarla presents his own unsworn declaration denying direct marketing to Florida residents and asserting that he only exhibited the Plaintiff’s art in California during the relevant timeframe.
Defendant Giarla has engaged in significant and systematic business activities in Florida, leading the Court to establish general jurisdiction over him. To determine if Giarla has sufficient "minimum contacts" with Florida, the Court refers to established legal principles, including the necessity for a defendant to foresee being brought into court due to their activities in the forum state. Jurisprudence emphasizes that purposeful engagement in the forum state is critical for establishing minimum contacts. Plaintiff alleges that Giarla marketed his artwork to Florida residents, participated in multiple events in the state, and advertised his exhibitions well in advance. Evidence includes Giarla’s website, which cites his involvement in various projects in Florida. This demonstrates that Giarla's actions constitute sufficient minimum contacts to subject him to personal jurisdiction, resulting in the denial of his Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(2).
Additionally, Plaintiff's Amended Complaint seeks the recovery of personal property located in California, which includes unsold artworks. Under Florida law, the replevin action requires in rem jurisdiction since it necessitates the court to act directly on the property in question.
An action for replevin requires that the property in question be located within the state and subject to the court's jurisdiction. The court first verifies the existence of in rem jurisdiction before assessing whether the plaintiff has met all elements of replevin. In this case, the plaintiff's property is claimed to be in galleries controlled by the defendants, but is acknowledged to be located in California, not Florida. This failure to establish in rem jurisdiction means the court lacks subject-matter jurisdiction over the replevin action, which is subject to dismissal under Federal Rule of Civil Procedure 12(b)(1).
Regarding the venue for remaining state law claims, the plaintiff argues that the Southern District of Florida is appropriate due to their residence and the location of damages. However, defendant Giarla contends that the plaintiff's allegations do not demonstrate that Giarla does business, or that relevant transactions occurred, in Florida. Under federal law, proper venue may be established where any defendant resides, where significant events related to the claim occurred, or where the defendant is subject to personal jurisdiction. The plaintiff bears the burden of proving proper venue, and the court accepts the plaintiff's allegations as true unless contradicted by the defendant’s affidavits. The court can consider additional facts outside the complaint to determine venue and must resolve conflicts in favor of the plaintiff.
Plaintiff asserts that venue is appropriate in this Court due to significant events related to his claims occurring in this District, including the display and sale of his artwork and the alleged conversion of his property and funds. Plaintiff references Johnston’s unsworn declaration, which states that Defendant Giarla displayed Plaintiff's artwork at Scope 2011 in Miami, Florida, and includes his own declaration claiming Giarla acted as a sales agent without remitting payment for sales. In response, Defendant Giarla argues that the galleries he operates are simply assumed names of his sole proprietorship and not separate corporations as alleged by Plaintiff. He further claims he lacks any Florida business licenses or offices and asserts that he only exhibited Plaintiff's works in his San Francisco gallery, denying any direct marketing to Florida residents and stating no buyers from Florida purchased Plaintiff's art. Giarla also refutes residing or working in Florida for the past twenty-four years. Although Plaintiff’s Amended Complaint does not claim Giarla resides in Florida, his declaration insists Giarla displayed and sold the artwork there. The Court determines that Plaintiff's claims arise from Giarla’s business activities in Florida, fulfilling the statutory venue requirement under 28 U.S.C. 1391(b)(2). Consequently, the Court denies Giarla’s Motion to Dismiss for Improper Venue.
Regarding the remaining state law claims of conversion, civil theft, and Florida RICO, the Court will evaluate whether Plaintiff adequately pled these claims. It emphasizes the necessity of accepting the complaint's factual allegations as true and drawing reasonable inferences in favor of the Plaintiff. For conversion under Florida law, the Plaintiff must demonstrate ownership of the property and that the Defendant wrongfully asserted control over it, along with evidence of damage, not merely liability.
A person with a right to possess property who demands its return and does not receive it has experienced a conversion. The Plaintiff claims that eleven artworks were sold under a consignment agreement with Defendant Giarla, who failed to provide full payment. The Plaintiff further alleges that Giarla unlawfully retained $103,000.00 and several artworks, with the intent to exercise ownership over both. The Plaintiff made multiple demands for their return via email, phone, and certified mail. Given these allegations, the Court concludes that the Plaintiff has sufficiently stated a claim for conversion, resulting in the denial of Giarla’s motion to dismiss Count I of the Amended Complaint.
Regarding civil theft under Florida Statute 772.11(1), the Plaintiff must prove by clear and convincing evidence that they suffered harm due to violations of specific statutes, which entitles them to triple damages and attorney's fees. To establish civil theft, it must be shown that conversion occurred with criminal intent. The Plaintiff alleges that Giarla acted with criminal intent and knowingly misappropriated funds that were not legally his, intending to deprive the Plaintiff of their rights to those funds. The Court finds that these assertions are sufficient to support a claim for civil theft, leading to the denial of Giarla’s motion to dismiss Count II.
For claims under the Florida RICO Act, a plaintiff must demonstrate participation in an enterprise through a pattern of criminal activity and must show awareness of any fraudulent communications. Additionally, continuity and proof of proximate cause and detrimental reliance are required for civil remedies. The Plaintiff's case includes these necessary elements, warranting the continuation of their claims under the Florida RICO Act.
A plaintiff must establish a causal connection between their alleged injury and the specific acts of racketeering to succeed in a claim under Florida RICO. In the Amended Complaint, Plaintiff claims that Defendant Giarla intended to cause significant hardship but fails to specify the predicate acts involved, only vaguely referencing conversion, theft, fraud, and conspiracy. The Court notes the lack of detail regarding the methods used by Giarla to commit fraud and finds no demonstration of continuity in Giarla's actions or a causal link to the Plaintiff's injuries. Additionally, Plaintiff does not assert any awareness or reliance on the alleged acts. Consequently, the Court grants Defendant Giarla’s motion to dismiss Count IV for insufficient factual allegations.
Regarding the motion to transfer the case to the Northern District of California, Defendant Giarla argues for this under 28 U.S.C. § 1404(a), which allows transfer to a more convenient forum. The burden lies with Giarla to prove that the alternative forum is more suitable, considering both private and public interests. The Court evaluates factors such as the Plaintiff's choice of forum, convenience for parties and witnesses, access to evidence, and the financial burden of transfer. Public factors include the forum's familiarity with the law and its interest in the case. Ultimately, the Court retains discretion over the transfer decision, reversible only for an abuse of discretion.
Defendant Giarla claims that an adequate alternative forum exists in California since the Plaintiff engaged in activities related to the agreement there, including traveling, selling art, and suing a California defendant. However, the Court finds that the private and public factors do not favor transferring the case. The Court respects the Plaintiff's initial choice of the Southern District of Florida, noting that while Giarla argues for convenience based on his location and non-party witnesses in California, the Plaintiff counters that a transfer would primarily benefit Giarla and lead to significant prejudice against him, as he and most relevant witnesses reside in Florida.
The Court highlights that Giarla participated in events in Florida and that the only known witness, Darren Johnston, also lives in Miami, making trial in California impractical. Although modern technology facilitates document access, Giarla has not demonstrated that private factors support transfer. Regarding public factors, the absence of a forum selection clause or choice of law provision indicates that Florida law governs the performance of the contract, aligning with the Plaintiff's claims under both federal and Florida law. Additionally, Florida has a vested interest in the case due to the Plaintiff's residence and claims of injury stemming from actions in Miami.
The Court also notes that Giarla did not provide evidence of congestion in the California court system. Consequently, Giarla's Motion to Transfer is denied. The Court partially grants Giarla's Motion to Dismiss; it is denied for Counts I and II but granted for Counts III through VIII. The Plaintiff is ordered to file a Second Amended Complaint within 14 days, and the Court recognizes the validity of the declarations submitted by both Johnston and the Plaintiff, as well as Giarla's declaration, under 28 U.S.C. 1746(2).
