Williams v. 3rd Home Limited

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

JOHNATHAN WILLIAMS and

ANTHONY ARONA,

Plaintiffs,

v. Case No: 8:20-cv-1647-CEH-JSS

3RD HOME LIMITED, 3RD HOME

LIMITED CO. and WADE SHEALY,

Defendants.

___________________________________/

ORDER

This matter comes before the Court on the Defendants’ Motion to Dismiss

(Doc. 15) and memorandum of law in support (Doc. 18). Defendants seek an order

dismissing this case for lack of personal jurisdiction and improper venue. Plaintiffs

filed a response in opposition (Doc. 21), and Defendants replied (Doc. 26). The Court

held oral argument on the motion on February 18, 2021. Following the hearing, the

Court permitted Defendants to file additional submissions related to the forum

selection provisions bearing on the issues raised in Defendants’ motion.1 Doc. 40. The

1 Plaintiffs moved to strike Defendants’ submission as being beyond the scope of what

Defendants were permitted to file. Doc. 41. Specifically, Plaintiffs contend the Defendants

were granted leave to file documents signed by Plaintiffs that defense counsel represented

were attached to the initial Complaint, but Defendants instead filed new material not

contained in the court file. Defendants oppose the motion to strike. Doc. 42. Although it

appears the documents submitted exceed the scope of the anticipated supplemental filing, in

the interests of efficiency, the Court will deny the motion to strike. The Court has considered

the Defendants’ submission.

Court, having considered the motion, heard argument of counsel, and being fully

advised in the premises, will deny Defendants’ Motion to Dismiss.

I. STATEMENT OF FACTS2

A. Background

Plaintiff John Williams (“Williams”) resides in Hillsborough County, Florida,

and Plaintiff Anthony Arona (“Arona”) resides in Georgia (collectively “Plaintiffs”).

Doc. 1-1, ¶¶ 1, 3. Defendant 3RD Home Limited (“3RD Home Limited”) is a Cayman

Islands company founded in 2011 and registered as a foreign entity in Tennessee since

2017. Id. ¶¶ 5–8. Defendant 3RD Home Limited Co. (“3RD Home Limited Co.”) is a

Delaware corporation formed in October 2019 with registered offices in Tennessee. Id.

¶¶ 10, 11. Defendant Wade Shealy (“Shealy”) resides in Tennessee. Id. ¶ 6. Plaintiffs’

Complaint sues 3RD Home Limited and 3RD Home Limited Co. as two separate

entities, see Doc. 1-1, but according to Defendants, there is only one 3RD Home

Limited that was originally formed in the Cayman Islands, decommissioned, and

subsequently formed as a Delaware Company. Doc. 1 at 2. The Court will refer to

3RD Home Limited and 3RD Home Limited Co. collectively as “3RD Home.” Shealy

is the founder, chairman and CEO of 3RD Home. Id. ¶ 28.

3RD Home is an internet-based luxury property and travel club where members

exchange vacation homes and other benefits. Id. ¶ 15. Plaintiffs are members of 3RD

2 The facts are derived from Plaintiff’s Complaint and attachments, (Doc. 1-1), the allegations

of which the Court must accept as true in ruling on the motion, see Linder v. Portocarrero, 963

F.2d 332, 334 (11th Cir. 1992); Quality Foods de Centro Am., S.A. v. Latin Am. Agribusiness Dev.

Corp. S.A., 711 F. 2d 989, 994 (11th Cir. 1983).

Home and have purchased enough shares in unit increments to be members of the

“Founder’s Circle,” which provides additional benefits. Id. ¶¶ 10, 11. When Arona

made an initial $250,000 investment, 3RD Home had approximately 300 properties.

Id. ¶¶ 18, 19. Founding Circle members do not have to make their second home part

of the 3RD Home inventory, but at one point both Plaintiffs had properties in the 3RD

Home inventory. Id. ¶ 21. According to Plaintiffs, 3RD Home represents that it has

10,000 vacation homes in North America, Central America, the Caribbean, South

America, Asia, Europe, Australia, and Africa available to its members through its

inventory.3 Id. ¶¶ 22, 23.

In May 2020, Plaintiffs filed a complaint in Hillsborough County Circuit Court

against 3RD Home and Shealy (collectively “Defendants”). Doc. 1-1. Plaintiffs seek

relief against Defendants in three counts: petition to wind up 3RD Home under section

95, Companies Law (2020) due to Shealy’s alleged fraud, misconduct, and

mismanagement of 3RD Home (Count I); breach of fiduciary duty by Shealy (Count

II); and appointment of receiver or custodian because the assets of 3RD Home are

being misappropriated or wasted (Count III). Id. Defendants removed the action to

this court on July 17, 2020, based on diversity of citizenship. Doc. 1.

B. Jurisdictional Allegations

3 Defendants assert there are 11,0000 members in 3RD Home’s exchange program, and 3.94%

of all properties owned by members are in Florida. Doc. 16, ¶¶ 13, 14. It is not clear how

many members or participating shareholders are Florida residents.

Plaintiffs allege that general and personal jurisdiction exist because Defendants

have continuously solicited and procured business in Florida by maintaining an

interactive website that includes approximately 500 properties available for exchange

in Florida, making phone calls into Florida to solicit investors, accepting significant

financial investments from Florida residents, committing tortious acts in Florida,

causing injuries to persons within this state arising out of acts outside the state, and

breaching a fiduciary duty that caused harm in Florida. Doc. 1-1, ¶ 14; Doc. 21.

C. Motion to Dismiss

Defendants move to dismiss Plaintiffs’ Complaint for lack of personal

jurisdiction. Doc. 15. In support, Defendants file the affidavits of Daniel Raidt, Chief

Financial Officer (“CFO”) of 3RD Home, (Doc. 16) and Defendant Shealy (Doc. 17).

Defendants argue that Plaintiffs cannot establish general or specific jurisdiction. 3RD

Home was formed originally in the Cayman Islands and transitioned to a Delaware

company with its operational offices always being in the State of Tennessee. 3RD

Home has never been a Florida company, nor has 3RD Home registered trademark

names in Florida. 3RD Home does not maintain offices in Florida. Its directors do not

reside in Florida. 3RD Home owns no real or personal property in Florida. While

some of 3RD Home’s inventory is in Florida, Florida properties constitute only 3.94%

of its inventory and Florida revenue accounts for 5.11% of 3RD Home’s annual

revenue. As for Shealy, he resides in Tennessee, has not sold stock in Florida, and

makes all management decisions from 3RD Home’s headquarters in Tennessee. Doc.

15–18. Defendants raise two additional arguments: (1) that the corporate shield

doctrine exempts from consideration Shealy’s conduct as a corporate officer and (2)

that a forum selection clause in the Articles of Incorporation for 3RD Home Limited

Co. provides for shareholder litigation to be brought in Tennessee. Doc. 18 at 12–13.

Plaintiffs respond that they have adequately pleaded facts to support general

and specific personal jurisdiction over Defendants and that asserting jurisdiction over

these Defendants does not violate the Due Process Clause of the Fourteenth

Amendment. Doc. 21. Plaintiffs argue Shealy is not protected by the corporate shield,

where, as here, Shealy has committed a tortious act.

In their motion, Defendants alternatively move to dismiss for improper venue.

Plaintiffs argue in response that Defendants may not seek dismissal on venue grounds

where they have removed the case to federal court. Plaintiffs contend that Defendants

could have requested transfer, but not dismissal. But in any event, Plaintiffs submit

that venue is proper in the Middle District of Florida and Defendants fail to

demonstrate otherwise.

II. LEGAL STANDARD

Motions to dismiss for lack of personal jurisdiction are governed by Federal

Rule of Civil Procedure 12(b)(2). A court must dismiss an action against a defendant

over which it lacks personal jurisdiction. Smith v. Trans–Siberian Orchestra, 689

F.Supp.2d 1310, 1312 (M.D. Fla. 2010) (citing Posner v. Essex Ins. Co., 178 F.3d 1209,

1214 n.6 (11th Cir. 1999)). To withstand a motion to dismiss, a plaintiff must plead

sufficient facts to establish a prima facie case of jurisdiction over the nonresident

defendant. See id. at 1313; Virgin Health Corp. v. Virgin Enters. Ltd., 393 F. App’x 623,

625 (11th Cir. 2010). The district court must accept the facts alleged in the complaint

as true, to the extent they are uncontroverted by the defendant’s affidavits. Consol. Dev.

Corp. v. Sherritt, Inc., 216 F.3d 1286, 1291 (11th Cir. 2000). If the defendant can refute

personal jurisdiction by sustaining its burden of challenging the plaintiff’s allegations

through affidavits or other competent evidence, the plaintiff must substantiate its

jurisdictional allegations through affidavits, testimony, or other evidence of its own.

Future Tech. Today, Inc. v. OSF Healthcare Sys., 218 F.3d 1247, 1249 (11th Cir. 2000).

The district court must construe all reasonable inferences in the light most favorable

to the plaintiff when confronted with conflicting evidence. PVC Windoors, Inc. v.

Babbitbay Beach Constr., N.V., 598 F.3d 802, 810 (11th Cir. 2010); Consol. Dev. Corp.,

216 F.3d at 1291.

To determine whether personal jurisdiction exists over an out-of-state

defendant, courts undertake a two-step analysis. Cable/Home Commc’n Corp. v. Network

Prod., Inc., 902 F.2d 829, 855 (11th Cir. 1990). First, the court must determine whether

the plaintiff has alleged sufficient facts to subject the defendant to the forum state’s

long-arm statute. See Future Tech. Today, 218 F.3d at 1249. Second, if the court

determines that the forum state’s long-arm statute has been satisfied, the court must

then decide whether exercising jurisdiction comports with the Due Process Clause of

the Fourteenth Amendment to the United States Constitution. Id. In determining

whether jurisdiction comports with the Due Process Clause, the court must ask “(1)

whether [the] defendant has established sufficient ‘minimum contacts’ with the [forum

state]; and (2) whether the exercise of this jurisdiction over [the] defendant would

offend ‘traditional notions of fair play and substantial justice.’” Id. (quoting Int'l Shoe

Co. v. Washington, 326 U.S. 310, 316 (1945)). Only if both prongs of the Due Process

analysis are satisfied may this Court exercise personal jurisdiction over a nonresident

defendant. Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253, 256 (11th Cir. 1996) (citing

Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir. 1990); Internat’l Shoe, 326 U.S. at 316).

III. DISCUSION

Defendants argue that Plaintiffs cannot show that personal jurisdiction exists

because the only alleged harm to have occurred inside Florida is a purported loss of

share value and such purely economic losses cannot give rise to the court’s personal

jurisdiction.

A. Florida’s Long-Arm Statute

When jurisdiction is based on diversity, as it is here, Rule 4(e), Fed. R. Civ. P.,

requires that jurisdiction be determined by the state long-arm statute. Cable/Home

Commc’n Corp., 902 F.2d at 855. A defendant may be subject to personal jurisdiction

under Florida’s long-arm statute by either: (1) engaging in one of the enumerated acts

under Florida Statute § 48.193(1)(a), subjecting itself to specific personal jurisdiction;

or (2) engaging in substantial and not isolated activity within Florida, as required for

general personal jurisdiction under § 48.193(2). Carmouche v. Tamborlee Mgmt., Inc., 789

F.3d 1201, 1203–04 (11th Cir. 2015). “The reach of Florida’s long-arm statute ‘is a

question of Florida law,’ and this Court is required to apply the statute ‘as would the

Florida Supreme Court.’” Louis Vuitton Malletier, S.A. v. Mosseri, 736 F.3d 1339, 1352

(11th Cir. 2013) (quoting United Techs. v. Mazer, 556 F.3d 1260, 1274 (Fla. 11th Cir.

2009)). “Florida's long-arm statute is to be strictly construed.” Sculptchair, Inc. v.

Century Arts, Ltd., 94 F.3d 623, 627 (11th Cir. 1996) (applying Florida law) (citation

omitted).

Plaintiffs’ Complaint alleges Defendants are subject to both general and specific

personal jurisdiction under Chapter 48, Florida Statutes. See Doc. 1-1, ¶ 14.

1. General Jurisdiction

General jurisdiction exists under Florida’s long-arm statute, subjecting a

defendant to the jurisdiction of Florida courts, where a defendant is engaged in

“substantial and not isolated activity within this state, whether such activity is wholly

interstate, intrastate, or otherwise, . . . , [and] whether or not the claim arises from that

activity.” Fla. Stat. § 48.193(2). In the motion to dismiss, Defendants argue that they

do not engage in substantial, continuous activity in the state to subject them to personal

jurisdiction in Florida. They file the declarations of CEO Shealy and CFO Raidt in

support of their motion. Docs. 16, 17. Specifically, as to the corporate Defendant,

Defendants argue that 3RD Home has no offices or agents in Florida other than an

isolated employee, that its officers and board members do not reside in Florida, it does

not own real or personal property in Florida, it is not incorporated in Florida, and only

a small percentage of its overall revenue comes from Florida properties. Doc. 18 at 7–

8; Docs. 16, 17. Regarding the individual Defendant, Defendants contend Shealy does

not and has never lived in Florida, has not been employed in Florida, has not owned

property in Florida since 2003, has not sold stock in Florida, and his management

decisions were made from the Tennessee-based office. Doc. 17; Doc. 18 at 8–9.

Plaintiffs’ respond that Defendants are subject to general personal jurisdiction

in Florida because of Defendants’ ongoing activities targeting Florida customers to

invest in 3RD Home. Plaintiffs submit the declaration of Florida resident Williams to

support their arguments. Doc. 21-2. Specifically, Defendants advertise and market

approximately 500 real estate properties located in Florida through their website and

overtly target Florida investors. They solicit and accept investments from Florida

residents, like Williams, with the investment monies coming from Florida banks.

Defendants solicited Florida residents, including Williams, through telephonic and

electronic communications regarding investing in 3RD Home’s business. Doc. 21 at

9; Doc. 21-2 at 9–11. According to Defendants’ declarations, 5.11% of the company’s

annual revenue, which Plaintiffs estimated to be $250,000, comes from properties in

Florida. Doc. 16, ¶ 23.

Most of Defendants’ arguments center on their lack of presence in the State of

Florida. As the Supreme Court has explained, however, “[j]urisdiction in these

circumstances may not be avoided merely because the defendant did not physically

enter the forum State. Although territorial presence frequently will enhance a potential

defendant’s affiliation with a State and reinforce the reasonable foreseeability of suit

there, it is an inescapable fact of modern commercial life that a substantial amount of

business is transacted solely by mail and wire communications across state lines, thus

obviating the need for physical presence within a State in which business is conducted.

So long as a commercial actor’s efforts are ‘purposefully directed’ toward residents of

another State, we have consistently rejected the notion that an absence of physical

contacts can defeat personal jurisdiction there.” Burger King Corp. v. Rudzewicz, 471

U.S. 462, 476 (1985) (emphasis in original) (citations omitted).

On the record before it, the Court finds that general personal jurisdiction exists

as to 3RD Home. Through its website and officers, 3RD Home has purposely directed

its marketing and solicitation activities toward Florida residents. See Doc. 1-1 at 19–

31. While the Court recognizes that the mere posting of content to a website does not

automatically create general jurisdiction in Florida, see Trustees of Columbia Univ. in City

of New York v. Ocean World, S.A., 12 So. 3d 788, 795 (Fla. 4th DCA 2009), Defendants

here engage in solicitation activities through an interactive website to induce Florida

residents to become members of 3RD Home. In addition to Defendants’ solicitation

of and marketing to Florida residents, Defendants sent corporate communications via

email to investors in Florida, including Williams. See, e.g., Doc. 1-1 at 76–80.

Construing the evidence in a light favorable to the non-moving party, Defendants

actively solicited Florida investors, accepted investments from Florida residents,

marketed 500 properties for exchange or rent in Florida, rented properties in Florida,

and collected money from Florida residents investing as members and from members

utilizing the properties in Florida. 3RD Home is marketing and managing

approximately 500 Florida properties, and the Court cannot say that the revenues

generated from the use and rental of these Florida properties is de minimis. See, e.g.,

TRW Vehicle Safety Sys., Inc. v. Santiso, 980 So. 2d 1149, 1153 (Fla. 4th DCA 2008)

(where actual sales were a small percentage (less than 1%) of total sales, they were

considered de minimis and could not support a finding of continuous and systematic

business contacts for personal jurisdiction purposes). Additionally, 3RD Home

registered with the Florida Division of Corporations to do business in Florida.4 Doc.

21-3. General jurisdiction over 3RD Home has been established.

2. Specific Jurisdiction

Plaintiffs allege Defendants are subject to the Court’s specific jurisdiction

because they carried on business in Florida, committed tortious acts in Florida, and

caused injuries in Florida. In relevant part § 48.193 provides:

(1)(a) A person, whether or not a citizen or resident of this

state, who personally or through an agent does any of the

acts enumerated in this subsection thereby submits himself

or herself and, if he or she is a natural person, his or her

personal representative to the jurisdiction of the courts of

this state for any cause of action arising from any of the

following acts:

1. Operating, conducting, engaging in, or carrying on

a business or business venture in this state or having an

office or agency in this state.

2. Committing a tortious act within this state.

. . .

6. Causing injury to persons or property within this

state arising out of an act or omission by the defendant

outside this state, if, at or about the time of the injury, . . .:

a. The defendant was engaged in solicitation or

service activities within this state;

. . .

4 The Florida Division of Corporations lists an individual with a Venice, Florida address, as

the registered agent for 3RD Home. Doc. 21-3 at 8. Venice is in Sarasota County, which is

within the Middle District of Florida.

Fla. Stat. § 48.193(1)(a)(1), (2), (6)(a).

a. Carrying on a Business or Business Venture in Florida

Florida Statute § 48.193(1)(a)(1) provides for personal jurisdiction over

defendants who are “carrying on a business or a business venture” in Florida or have

an office or agency in Florida. A plaintiff establishes that a defendant is carrying on a

business or business venture in the state, if the activities of the defendant sought to be

served, when considered collectively, “show a general course of business activity in

the State for pecuniary benefit.” Sculptchair, Inc., 94 F.3d at 627 (quoting Dinsmore v.

Martin Blumenthal Assocs., Inc., 314 So.2d 561, 564 (Fla. 1975)). “That requirement can

be satisfied either by (1) ‘doing a series of similar acts for the purpose of thereby

realizing pecuniary benefit or’ (2) ‘doing a single act for such purpose with the

intention of thereby initiating a series of such acts.’” RMS Titanic, Inc. v. Kingsmen

Creatives, Ltd., 579 F. App’x 779, 783–84 (11th Cir. 2014) (quoting Wm. E. Strasser

Constr. Corp. v. Linn, 97 So. 2d 458, 460 (Fla. 1957)).

In the motion to dismiss, in Defendant’s reply, and at the hearing, Defendants

do not directly respond to the argument that specific jurisdiction is invoked under §

48.193(1)(a)(1), other than to argue that Shealy does not reside in Florida and 3RD

Home does not have offices or agents in Florida. But Plaintiffs’ argument is broader,

as it contends that Defendants’ collective business activities show a general course of

business activity in the state for pecuniary benefit. The Court agrees.

In determining whether a defendant has engaged in a “general course of

business activity” giving rise to personal jurisdiction under § 48.193(1)(a)(1), the

Eleventh Circuit has identified a list of relevant, but not dispositive, factors for courts

to consider: “(1) the presence and operation of an office in Florida; (2) the possession

and maintenance of a license to do business in Florida; (3) the number of Florida

clients served; and (4) the percentage of overall revenue gleaned from Florida clients.”

RMS Titanic, Inc., 579 F. App’x at 784 (citations and internal quotation marks

omitted). 3D Home is registered to do business in the State of Florida. Doc. 21-3 at 4.

Although not working from a traditional office, Defendants concede at least one

employee works in Florida. Shealy actively solicited investments from clients in

Florida, including Williams, to join a “private club for the owners of luxury second

homes” Doc. 21-2 ¶ 9. 3d Home’s inventory includes approximately 500 properties in

Florida that it rents or offers to its members for use. Defendants actively advertise and

solicit Florida investors through 3d Home’s interactive website. As noted above,

5.11% of the company’s annual revenue comes from properties in Florida.

Significantly, this figure appears tied to rental or use of Florida homes and not to

investment monies received from Florida, which for Williams alone was an

investment of $737,500 from Florida bank accounts. Consideration of these factors

weighs in favor of finding that Defendants were engaged in a general course of business

activity in Florida.

Defendants contest that they solicited Williams, and instead claim that

Williams contacted Defendants regarding becoming a member after learning about

3RD Home from his friend Arona. Doc. 27, ¶ 6. Defendants also refute that the

“Certificate of Authority” issued by the Florida Secretary of State means Defendants

are “doing business” in Florida, explaining the registration in Florida was merely for

compliance purposes in connection with payroll taxes for a single employee, who

works remotely from Florida. Id. ¶ 3; Doc. 26 at 2. When confronted with such

conflicting evidence, the Court must construe all reasonable inferences in the light

most favorable to the plaintiff. PVC Windoors, Inc., 598 F.3d at 810; see also Crystal

Brands, Inc. v. Food Movers Int’l, Inc., 593 F.3d 1249, 1257 (11th Cir. 2010) (“Where the

plaintiff’s complaint and supporting evidence conflict with the defendant’s affidavits,

the court must construe all reasonable inferences in favor of the plaintiff.”). In so

doing, the Court finds Plaintiffs have established the Court has specific jurisdiction

over Shealy and 3RD Home under Fla. Stat. § 48.193(1)(a)(1).

b. Committing a Tortious Act in Florida

Alternatively, as to Shealy, he is alleged to have committed a tortious act in

Florida, subjecting him to personal jurisdiction in Florida courts. Fla. Stat. §

48.193(1)(a)(2). Where the threshold question of personal jurisdiction turns on

whether a tort is committed in Florida, the court necessarily must review the

allegations of the complaint to determine if a cause of action is stated. 8100 R.R. Ave.

Realty Trust v. R.W. Tansill Constr. Co., 638 So. 2d 149, 151 (Fla. 4th DCA 1994). Count

II of Plaintiffs’ Complaint sues Shealy for breach of fiduciary duty. Doc. 1-1, ¶¶ 74–

80. Under Florida law, a claim for breach of fiduciary duty is an intentional tort. See,

e.g., Goodwin v. Sphatt, 114 So. 3d 1092, 1094 (Fla. 2d DCA 2013). “The elements of a

claim for breach of fiduciary duty are: the existence of a fiduciary duty, and the breach

of that duty such that it is the proximate cause of the plaintiff’s damages.” Gracey v.

Eaker, 837 So. 2d 348, 353 (Fla. 2002).

Plaintiffs allege that Shealy is the founder, chairman, and CEO of 3RD Home

and the sole holder of all its management shares. Doc. 1-1 ¶ 28. As such, Shealy is

alleged to have a fiduciary duty to make decisions in the best interest of the members

of 3RD Home, including Plaintiffs. Id. ¶ 76. Plaintiffs allege that Shealy breached his

fiduciary duty by mismanaging 3RD Home’s employees, misusing funds invested in

3RD Home for his own gain and benefit, committing waste through the purchase of

excessive marketing, knowingly misrepresenting the number of homes in 3RD Home’s

inventory to members, giving himself massive raises while 3RD Home cannot make a

profit, issuing forged resolutions, keeping his own share sales secret, selling shares

without Directors’ approval, and removing a Director who questioned his

mismanagement. Doc. 1-1, ¶ 79. As a result of Shealy’s tortious conduct, Plaintiffs

allege they have been injured, including injury to Williams in Florida. Id. ¶ 79; Doc.

21-2 ¶ 23. As Plaintiffs have alleged the existence of a fiduciary duty, breach of that

duty, and damages proximately caused by the breach, see Gracey, 837 So. 2d at 353,

Count II of Plaintiffs’ Complaint states a claim for breach of fiduciary duty.

Turning to the jurisdictional analysis, Plaintiffs have proffered evidence to

support their allegations that, through telephonic and email communications, Shealy

solicited Williams, a Florida resident, to invest in 3RD Home. Shealy represented to

Williams the value and benefit of the potential investment and through electronic

communications into Florida, provided Williams with documents, attachments, and

links containing information that Williams relied on in making his investments in

excess of seven hundred thousand dollars. Doc. 21-2 ¶¶ 6–17. Plaintiffs allege that after

inducing Williams to invest, Shealy breached his fiduciary duty to Plaintiffs and others

by making decisions that were not in the best interests of 3RD Home’s members, and

as a result, Plaintiffs suffered damages. Shealy’s tortious conduct, his related

communications directed to Florida, and the resulting injuries suffered by Williams in

Florida subject Shealy to personal jurisdiction in Florida courts.

Defendants argue that personal jurisdiction over Shealy cannot exist in Florida

based on tortious conduct as it relates to Plaintiff Arona since Arona is a Georgia

resident. Doc. 26 at 1. At the hearing, the Court inquired of defense counsel whether

Arona’s non-Florida-resident status affected the Court’s jurisdictional analysis.

Defendants could not direct the Court to any case law or authority holding that

personal jurisdiction may not be asserted over a defendant in such circumstances.

In the personal jurisdiction analysis, it is the “defendant’s conduct that must

form the necessary connection with the forum State that is the basis for its jurisdiction

over him.” Walden v. Fiore, 571 U.S. 277, 285 (2014). Further, “a plaintiff’s contacts

with the forum State cannot be ‘decisive in determining whether the defendant’s due

process rights are violated.’” Id. (quoting Rush v. Savchuk, 444 U.S. 320, 332 (1980)).

Thus, Arona’s non-Florida-resident status alone does not preclude a finding of

personal jurisdiction over Shealy where Defendant Shealy’s connections with the

forum have been established.

Next, Defendants argue that the alleged tortious conduct by Shealy occurred in

Tennessee, not in Florida. The Court notes, however, that the Florida Supreme Court

recognizes that “for purposes of the [long-arm] statute, the defendant does not have to

be physically present in Florida for the tortious act to occur in Florida.” Internet Sols.

Corp. v. Marshall, 39 So. 3d 1201, 1206 (Fla. 2010). Rather, a defendant can commit a

tortious act within the State “by sending telephonic, electronic, or written

communications into Florida, provided the cause of action arose from those

communications.” Id.; see also Wendt v. Horowitz, 822 So. 2d 1252, 1260 (Fla. 2002).

Here, Plaintiffs’ claims of misrepresentation and mismanagement are connected to

Defendants’ allegedly duplicitous marketing and solicitation of Williams in Florida

and other corporate communications sent to Williams in Florida.

Additionally, “[u]nder Florida law, a nonresident defendant commits ‘a tortious

act within Florida’ when he commits an act outside the state that causes injury within

Florida.” Louis Vuitton Malletier, S.A., 736 F.3d at 1353 (emphasis in original) (citing

Licciardello v. Lovelady, 544 F.3d 1280, 1283 (11th Cir. 2008)); see also Posner v. Essex Ins.

Co., 178 F.3d 1209, 1216 (11th Cir. 1999). Williams asserts he suffered injuries in

Florida. Doc. 21-2, ¶ 23. He states Shealy’s tortious conduct resulted in his $737,500

investment from his Florida bank accounts to be wasted or devalued, he has lost the

use of those funds, and he has incurred fees and costs. Doc. 21-2, ¶¶ 23, 24.

Defendants argue that the injury may not be purely economic but must be

accompanied by personal injury or property damage. While this argument is

persuasive as it relates to an assertion of jurisdiction under § 48.193(6)(a),5 Defendant’s

argument under § 48.193(1)(a)(2) is unavailing. See, e.g., Kim v. Keenan, 71 F. Supp.

2d 1228, 1234 (M.D. Fla. 1999) (fact that financial harm was the sole injury did not

preclude a finding of personal jurisdiction under §§ 48.193(1)(a) and (b) [predecessor

sections to §§ 48.193(1)(a)(1) and (2)] based on conducting a business venture in the

state and committing a tort in the state).

B. Due Process

Having found Florida’s long-arm statute reaches these Defendants, the Court

turns next to the due process inquiry, which requires the Court to engage in a two-part

inquiry. In the first prong, the Court considers whether Defendants engaged in

minimum contacts with Florida. In the second prong, the Court must consider

whether exercising personal jurisdiction over Defendants would offend “traditional

notions of fair play and substantial justice.” Cronin v. Washington Nat’l Ins. Co., 980

F.2d 663, 670 (11th Cir. 1993) (citing Internat’l Shoe Co., 326 U.S. at 316; Madara, 916

F.2d at 1515–16). “The Due Process Clause protects an individual’s liberty interest in

not being subject to the binding judgments of a forum with which he has established

5 A defendant subjects himself to the jurisdiction of Florida courts if he “caus[es] injury to

persons or property within this state arising out of an act or omission by the defendant outside

this state, if, at or about the time of the injury, … [t]he defendant was engaged in solicitation

or service activities within this state.” Fla. Stat. § 48.193(1)(a)(6)(a). In Florida, “it is well-

established, however, that mere economic injury without accompanying personal injury or

property injury does not confer personal jurisdiction over nonresident defendants under

section 48.193(1)(f),” the predecessor section to § 48.193(1)(a)(6)(a). Sculptchair, 94 F.3d at

629 (citations omitted). Because Plaintiffs have neither alleged nor established personal injury

or property damage aside from the purely economic loss pleaded in the complaint, no basis

exists for asserting personal jurisdiction over Defendants under § 48.193(1)(a)(6)(a).

no meaningful ‘contacts, ties, or relations.’” Burger King Corp., 471 U.S. at 471–72

(quoting Internat’l Shoe, 326 U.S. at 319). Defendants fail to address the due process

inquiry in their motion.

1. Minimum Contacts

Florida courts recognize three criteria to establish the existence of minimum

contacts: First, the contacts must be related to the plaintiff’s cause of action or have

given rise to it. Second, the contacts must involve some purposeful availment of the

privilege of conducting activities within the forum, thereby invoking the benefits and

protections of its laws. Finally, the defendant’s contacts within the forum state must

be such that it should reasonably anticipate being haled into court there. See Sculptchair,

94 F.3d at 631.

The proffered evidence shows Defendants deliberately and purposefully

targeted and solicited Florida residents to invest in 3RD Home. Through their

interactive website and electronic and telephonic communications into the state,

Defendants advertised their approximate 500 Florida properties and solicited

investors. Defendants benefited in a pecuniary way from Floridians investing in the

company and from members renting Florida properties. Where a defendant “has

created ‘continuing obligations’ between himself and residents of the forum . . . he

manifestly has availed himself of the privilege of conducting business here.” Burger

King Corp., 471 U.S. at 476.

Defendants have actively targeted Florida residents for investment in 3RD

Home and rental of properties in Florida. Defendants, over the years, have continued

to aggressively grow their number of properties in Florida. “Active internet solicitation

can subject a defendant to personal jurisdiction.” Nida Corp. v. Nida, 118 F. Supp. 2d

1223, 1229 (M.D. Fla. 2000) (citations omitted). 3RD Home’s interactive website

specifically solicits Florida investors, offering them the ability to purchase 3RD Home

services such as “All Florida Exchange Properties” and “All Florida Rental

Properties.” Users can post reviews, become an investor, rent a Florida property, and

make reservations. Despite Defendants’ claim that members own the properties,

Defendants market the properties as their own: “Your dream Florida vacation is

possible with our exclusive collection of properties.” Doc. 21-3. These activities,

collectively, demonstrate that Defendants have availed themselves of the benefits and

privileges of doing business in Florida and therefore should reasonably anticipate the

possibility of being sued in Florida.

Further, where a plaintiff alleges the commission of an intentional tort, such an

allegation may support the exercise of personal jurisdiction over the nonresident

defendant who has no other contacts with the forum if the plaintiff suffers the “effects”

or the “brunt of the harm” caused by the defendant’s act in the forum state. Licciardello,

544 F.3d at 1285 (citing Calder v. Jones, 465 U.S. 783, 790 (1984)). The Supreme Court

has explained that, unlike a person “charged with mere untargeted negligence,” the

perpetrator of an intentional tort can reasonably anticipate being haled into a forum

where the challenged actions could have a “potentially devastating impact” upon the

targeted party. Calder, 465 U.S. at 789–90. Plaintiffs have established the Defendants’

minimum contacts with the forum to satisfy the first part of the inquiry.

2. Fair Play and Substantial Justice

The Court next considers whether exercising personal jurisdiction over

Defendants comports with “fair play and substantial justice.” Sculptchair, 94 F.3d at

631 (citations omitted). Relevant factors for the Court’s determination include “the

burden on the defendant, the forum’s interest in adjudicating the dispute, the plaintiff’s

interest in obtaining convenient and effective relief and the judicial system’s interest in

resolving the dispute.” Licciardello, 544 F.3d at 1288 (citing World–Wide Volkswagen

Corp. v. Woodson, 444 U.S. 286, 292 (1980)).

Here, neither Defendants’ motion to dismiss nor affidavits offer any argument

or evidence that the exercise of personal jurisdiction over the Defendants would place

any burden on Defendants. See Docs. 15–18. Moreover, while the burden on

Defendants to travel to Florida is not insignificant, “modern methods of transportation

and communication reduce this burden significantly.” Robinson, 74 F.3d at 259

(citation omitted). In contrast, Plaintiff Williams, a Florida resident, has a strong

interest in obtaining efficient and convenient relief in this forum, and Florida “has a

very strong interest in affording its residents a forum to obtain relief from intentional

misconduct of non-residents causing injury in Florida.” Licciardello, 544 F.3d at 1288;

see also Robinson, 74 F.3d at 259 (“The State of Florida has a significant interest in

adjudicating a dispute involving services provided by out-of-state professionals to its

resident, concerning assets located within its borders.”). Accordingly, the Court finds

that exercising personal jurisdiction over Defendants comports with the Due Process

Clause of the Fourteenth Amendment.

C. Corporate Shield Doctrine

Shealy argues that because the claims against him are “primarily management-

related claims,” the corporate shield doctrine prohibits this Court’s exercise of personal

jurisdiction over him where the only relevant contacts with Florida are acts that he

performed to benefit 3RD Home. Doc. 18 at 12. For purposes of personal jurisdiction

under Florida law, the corporate shield doctrine distinguishes “between a corporate

officer acting on one’s own and a corporate officer acting on behalf of one’s

corporation.” Doe v. Thompson, 620 So. 2d 1004, 1006 (Fla. 1993). “Florida courts have

held ‘that it is unfair to force an individual to defend a suit brought against him

personally in a forum with which his only relevant contacts are acts performed not for

his own benefit but for the benefit of his employer.’” Louis Vuitton Malletier, S.A., 736

F.3d at 1355 (quoting Doe, 620 So. 2d at 1006) (internal quotation marks omitted). Of

significance, under Florida law, the corporate shield doctrine is inapplicable where the

corporate officer commits an intentional tort. Doe at 1006 n.1 (stating “[a] corporate

officer committing fraud or other intentional misconduct can be subject to personal

jurisdiction”). Although he argues the claims against him are related to his managerial

duties, many of the allegations against Shealy stem from acts he performed for his own

personal benefit. Because Plaintiffs allege that Shealy committed an intentional tort,

Shealy’s corporate shield defense to personal jurisdiction fails under Florida law. See

Louis Vuitton Malletier, S.A., 736 F.3d at 1354–55.

D. Forum Selection Clause

“Consideration of whether to enforce a forum selection clause in a diversity

jurisdiction case is governed by federal law, . . . not state law.” P & S Bus. Machines,

Inc. v. Canon USA, Inc., 331 F.3d 804, 807 (11th Cir. 2003) (citing Stewart Org., Inc. v.

Ricoh Corp., 487 U.S. 22, 28–29 (1988)). Under federal common law, forum selection

clauses are to be interpreted by reference to “ordinary contract principles.” Snapper,

Inc. v. Redan, 171 F.3d 1249, 1261 (11th Cir. 1999).

In their motion, Defendants argue that the purchase agreements signed by both

of the Plaintiffs expressly provide for the application of Cayman law. Additionally,

Defendants generally reference the Tennessee forum selection clause contained in

3RD Home Limited Co.’s Delaware Articles of Incorporation, although Defendants

do not make the specific argument that Tennessee is the proper forum. Finally,

Defendants argue there are no papers designating Florida as the proper forum. Doc.

18 at 13.

At the hearing, Defendants could not point the Court to a contract signed by

the Plaintiffs consenting to a Tennessee forum selection clause. At the request of

Defendants, the Court gave Defendants until February 22, 2021 to supplement the

record with forum selection provisions bearing on the issues in this case. In response,

Defendants filed the initial purchase agreements signed by Plaintiffs. Docs. 40-1, 40-

2. Defendants indicate that subsequent agreements signed by Plaintiffs contained the

identical language, but Defendants do not provide for the Court’s consideration any

subsequent documents. The purchase agreements filed by Defendants are signed by

Arona and Williams, but do not contain a forum selection provision. Rather,

Defendants rely on language from the purchase agreements purportedly binding the

purchasers to a confidential information memorandum and the Articles of

Incorporation “which may be amended from time to time.” See, e.g., Doc. 40-1 at 4.

The confidential memorandum states: “The company is a Cayman Islands exempted

company limited by shares and registered to do business in the State of Tennessee,

USA.” Doc. 40-3 at 8. The memorandum does not contain a forum selection clause.

It is dated September 25, 2012 and is not signed by Plaintiffs.

Additionally, Defendants filed a Memorandum of Association dated December

14, 2018. Doc. 40-4. The Memorandum includes a provision that “[t]he Company has

power to register by way of continuation as a body corporate limited by shares under

the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the

Cayman Islands.” Id. at 2. The Memorandum does not contain a forum selection

provision and is not signed by Plaintiffs.

Next Defendants file “Actions taken by written consent of the Board of

Directors of 3RD Home Limited Co.,” dated October 18, 2019. Doc. 40-5. The

document appears to adopt resolutions approving the filing of Articles of

Incorporation for 3RD Home in Delaware, the appointment of officers, and issuing

by-laws. The document is signed by 3RD Home Board of Directors and is not signed

by Plaintiffs. The document does not contain a forum selection provision. Defendants

attach a resolution signed by Shealy, as the sole holder of management shares of 3RD

Home, and dated October 18, 2019, in which Shealy adopts a resolution to de-register

3RD Home in the Cayman Islands and register by way of continuation as a

corporation in Delaware. Doc. 40-6. The document does not contain a forum selection

provision and is not signed by Plaintiffs.

The last document filed by Defendants is the Certificate of Incorporation for

3RD Home Limited Co., a Delaware corporation, (Doc. 40-7) which was already of

record. See 16-5. The Certificate is signed by Shealy and dated October 18, 2019. Doc.

40-7 at 6. The Certificate is not signed by Plaintiffs. The Certificate appears to be the

only document of record containing a forum selection provision. Article X of the

Certificate provides for “Exclusive Jurisdiction for Certain Actions.” Id. at 5. The

provision indicates the State of Tennessee will be the courts with exclusive jurisdiction

of the actions enumerated in Article X, unless the Board or one of its committees

approves an alternate forum.

Neither Defendants’ motion nor defense counsel, at the hearing, provided

authority, or even argument, demonstrating the validity or enforceability of this forum

selection clause on these Plaintiffs for the claims asserted. The motion does not

assert the applicability of this Tennessee forum selection provision, but Defendants

now appear to suggest that Plaintiffs’ signed purchase agreements from 2012 bind

them to a forum selection clause written seven years later in a certificate of

incorporation of a successor entity. Additionally, Defendants indicate there are

subsequent purchase agreements (that are purportedly identical) that have been signed

by Plaintiffs in the interim, but Defendants do not proffer those to the Court. On this

record, Defendants have failed to demonstrate the validity and enforceability of a

mandatory forum selection clause to the claims asserted here.

E. Venue

Defendants’ motion, alternatively, seeks dismissal for improper venue. Doc. 15.

Neither Defendants’ motion nor memorandum of law presents any argument, citation

of authority, or even discussion as to why venue is improper here. For this reason,

alone, the motion to dismiss for improper venue is due to be denied.

Moreover, this case was removed from state court by Defendants. “Once a case

is properly removed to federal court, a defendant cannot move to dismiss on § 1391

venue grounds.” Hollis v. Fla. State Univ., 259 F.3d 1295, 1299 (11th Cir. 2001) (citing

Polizzi v. Cowles Magazines, Inc., 345 U.S. 663, 665 (1953)). Rather, in removed actions,

venue is governed by § 1441, which provides that “any civil action brought in a State

court of which the district courts of the United States have original jurisdiction, may

be removed by the defendant or the defendants, to the district court of the United States

for the district and division embracing the place where such action is pending.” 28

U.S.C. § 1441(a); see also Hollis, 259 F.3d at 1299. Plaintiffs sued in Hillsborough

County Circuit Court, and thus for removal purposes, the Tampa Division of the

Middle District of Florida is the proper venue under § 1441(a).

As stated by the Hollis court, “[a] defendant dissatisfied with venue after

removal may, however, seek a transfer to another division or district under federal

law.” 259 F.3d at 1296 (citing 28 U.S.C. § 1404(a)). As noted by Plaintiffs, Defendants

have not requested transfer.° Venue is proper in this Court under § 1441(a), and thus

the motion to dismiss on venue grounds is due to be denied.

IV. CONCLUSION

Plaintiffs have established that both general and specific jurisdiction exists.

Additionally, the due process inquiry has been satisfied. Further, venue is proper in

this Court. Accordingly, it is hereby

ORDERED:

1. Defendants’ Motion to Dismiss (Doc. 15) is DENIED.

2. Defendants shall file their response to Plaintiffs’ Complaint within

fourteen (14) days of this Order.

3. Plaintiffs’ motion to strike (Doc. 41) is DENIED.

DONE AND ORDERED in Tampa, Florida on March 4, 2021.

halen 2 AJ ards Kn TO pl el □□

Charlene Edwards Honeywell

United States District Judge

Copies to:

Counsel of Record and Unrepresented Parties, if any

° Plaintiffs additionally argue Defendants waived their right to seek a transfer of venue. Doc.

21 at 20. It is unlikely Defendants have waived a challenge based on forum non conveniens

grounds. See 14D Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal

Practice and Procedure § 3828 (3d ed. 2008) (“In modern litigation, there is generally no time

limit on when a motion to dismiss for forum non conveniens must be made, which differentiates

it from the time limits on a motion to dismiss for improper venue set out in Rule 12(h)....”).

The Court need not address transfer as it has not been raised.

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