Royal Palm Village Residents, Inc. v. Slider

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

ROYAL PALM VILLAGE

RESIDENTS, INC., et. al.,

Plaintiffs,

v. Case No: 8:19-cv-874-CEH-SPF

MONICA SLIDER, et. al.,

Defendants.

___________________________________/

ORDER

This matter comes before the Court upon Defendants' Motions for Rule 11

Sanctions [Docs. 62, 63], Plaintiffs' Omnibus Response in Opposition [Doc. 64], the

Report and Recommendation of Magistrate Judge Sean Flynn [Doc. 84], and

Defendants’ Objections [Doc. 89]. In the Report and Recommendation, Magistrate

Judge Flynn recommends that the Motions for Sanctions be denied. Having duly

considered the arguments raised in the Objections, the Court will overrule the

objections in part, and deny Defendants' Motions for Rule 11 Sanctions.

I. BACKGROUND

On April 12, 2019, Plaintiff Royal Palm Village Residents, Inc., initiated this

action as an incorporated mobile homeowner association and the legal representative

of a class of over 400 elderly current and former mobile homeowners in the Royal

Palm Village Mobile Home Park (“Royal Palm”) located in Haines City, Florida.

[Doc. 1 ¶ 17]. The 108-page Complaint named twelve defendants—including the

individual and corporate owners and operators of the Royal Palm, a law firm that

represented the owners and operators of the Royal Palm, and an attorney of the law

firm—and alleged four RICO claims under both Florida and federal law, a claim under

the Americans with Disabilities Act (“ADA”), and state-law based claims for unjust

enrichment, and violations of the Florida Deceptive and Unfair Trade Practices Act

(“FDUTPA”), and the Florida Mobile Home Act (“FMHA”). Id. at ¶¶ 22-47, 124-257.

The complaint alleged that Defendants engaged in fraudulent and conspiratorial

acts since 2015 to illegally and unreasonably deceive over 400 elderly mobile

homeowners and their representative incorporated homeowner association, Royal

Palm Village Residents, Inc., that their mobile home park was lawfully purchased by

the Defendants. Id. ¶ 1. Defendants then allegedly “acted and conspired to circumvent

statutory regulations under the Florida Mobile Home Act and engaged in further

deceit and extortion,” including forcing mobile homeowners to pay increased lot

rentals by charging a premium for certain lot rental categories which were fraudulently

described; passing on increased ad-valorem taxes to mobile homeowners; illegally

passing on annual fire and stormwater tax to mobile homeowners; deceiving mobile

homeowners into entering oppressive and illegal five-year lot rental agreements;

misleading mobile homeowners that Defendants would spend $1,000,000 on

maintenance, repair, and replacement of roads, seawalls, and common areas;

misrepresenting the legal effect of the five-year lot rental agreements; misleading

mobile homeowners that Royal Palm’s clubhouse and facilities are compliant with the

Americans with Disabilities Act; and intimidating mobile homeowners to withdraw

their complaints. Id. ¶¶ 1, 49, 58-90. The Court dismissed the Complaint, sua sponte, as

a deficient shotgun pleading and granted leave to amend the complaint. [Doc. 17 at

pp. 5-6].

On July 3, 3019, an Amended Complaint was filed by Royal Palm HOA and

additional plaintiffs: Gene Asbury, James LeMonnier, Bonnie Lohmeyer, Fred Osier,

Harry Rush, and Laurie Skemp, on behalf of themselves and the class of current and

former mobile homeowners. [Doc. 20]. The complaint named nine defendants:

Monica Slider, Sheri Woodworth, Belinda Lawson, Sun Communities, Inc., Royal

Palm Village, LLC, American Land Lease, Inc., Asset Investors Operating

Partnership, L.P., Richard Lee, and Lutz, Bobo & Telfair, P.A. and alleged four RICO

claims under both Florida and federal law and an ADA claim.1 Id. ¶¶ 3-11, 70-124.

Defendants moved to dismiss this complaint on July 19, 2019. [Doc. 25]. There, they

raised arguments as to the sufficiency of the complaint to meet the pleading

requirements of Rules 8 and 9(b), Federal Rules of Civil Procedure, and to plead a

claim for racketeering. Id. On September 12, 2019, Defendants served Plaintiffs with

a motion for sanctions as to this complaint. [Doc. 64 at p. 2].

1 Defendant Sun Communities, Inc. owns the Park directly, or indirectly through its

subsidiaries, Defendants Asset Investors Operating Partnership, L.P., and Royal Palm

Village, LLC. [Doc. 20 ¶ 6]. Royal Palm Village, LLC is identified in official court records of

the Polk County Clerk of Court as the owner and operator of the Park. Id. ¶ 7.American Land

Lease, Inc. is the previous owner and operator of the Park. Id. ¶ 8. Richard Lee is a licensed

Florida lawyer, a partner or an employee or shareholder of Defendant Lutz, Bobo & Telfair,

P.A., d/b/a Lutz, Bobo, Telfair, Eastman & Lee. Id. ¶ 10. He is identified in official court

records of the Polk County Clerk of Court as attorney of record for Royal Palm Village. Id.

The Lutz Bobo Law Firm is identified in official court records of the Polk County Clerk of

Court as attorney of record for Royal Palm Village. Id. ¶ 11.

On February 21, 2020, the Court granted Defendants’ motion to dismiss,

reasoning that the Amended Complaint was a shotgun pleading, failed to meet the

heightened standard of Rule 9(b) in pleading the racketeering claims (Counts I-IV),

and failed to state a cause of action under the Americans with Disabilities Act (Count

V). [Doc. 46 at pp. 4-8]. Plaintiffs were granted leave to amend. Id. at p. 8. They filed

their Second Amended Complaint on March 6, 2020, asserting the same RICO and

ADA claims. [Doc. 47]. Again, Defendants filed a motion to dismiss—on March 19,

2020, and served Plaintiffs with a motion for sanctions on March 20, 2020. [Docs. 48,

49; Doc. 64 at p. 2].

On May 18, 2020, Plaintiffs moved for leave to voluntarily dismiss the action,

without prejudice. [Doc. 58]. Defendants then filed their Motion for Rule 11 Sanctions

as to the Amended Complaint [Doc. 63] and Motion for Rule 11 Sanctions as to the

Second Amended Complaint [Doc. 62] and Plaintiffs filed an Omnibus Response in

Opposition [Doc. 64]. Plaintiffs filed a Notice of Voluntary Dismissal on August 8,

2020. [Doc. 68]. It was approved by the Court on October 1, 2020, and the action was

dismissed without prejudice.2 [Doc. 72].

The motions for sanctions were considered by the Magistrate Judge. As to the

Amended Complaint, Defendants argued that sanctions were appropriate as the

2 The Court agrees with the Magistrate Judge that Plaintiffs’ voluntary dismissal of this action

was self-executing and no court order was required. However, the Court routinely enters an

order of dismissal to eliminate confusion of the parties and to instruct the Clerk to close the

file. In this case, Plaintiffs filed a motion requesting dismissal [Doc. 58] and a notice of

voluntary dismissal [Doc. 68].

claims are not warranted by existing law or a nonfrivolous or good faith argument for

an extension, modification or reversal of existing law or establishment of new law and

the claims are not supported by the necessary material facts or are unlikely to have

evidentiary support after further investigation and discovery. [Doc. 63 at p. 4, 7-18].

Defendants also argued that Plaintiffs lacked standing as they had suffered no harm as

a result of the alleged wrongdoing. Id. at pp. 5-7. In seeking sanctions as to the Second

Amended Complaint, Defendants presented the same grounds and also argued that

the claims were brought in bad faith. [Doc. 62 at p. 5, 7-17, 17-18, 18-19]. Plaintiffs

presented several arguments in response, including that they sufficiently pleaded the

RICO claims and that Defendants provided no authority that would justify the

imposition of sanctions; that the cases cited by Defendants are distinguishable; that

the Second Amended Complaint is not a shotgun pleading, and properly alleges a

pattern of racketeering activity; and that they alleged standing to assert a claim

pursuant to the ADA, as the ADA applies to publicly accessible common areas at

Royal Palm Village Mobile Home Park. [Doc. 64].

The Magistrate Judge issued the Report and Recommendation on August 2,

2021, recommending that the Court deny both motions for sanctions. [Doc. 84]. The

Magistrate Judge reasoned that sanctions are not warranted as to the Amended

Complaint as that complaint was dismissed for pleading deficiencies, not because the

claims were unavailable. Id. at pp. 7-9. The Magistrate Judge then explained that

Defendants had not demonstrated entitlement to sanctions as to the Second Amended

Complaint, as the motion was insufficient, its timing weighed against awarding

sanctions, and if Plaintiffs violated Rule 11 by failing to withdraw the complaint before

expiration of the safe harbor period, the violation was de minimis.3 Id. at pp. 9-14.

On August 23, 2021, Defendants filed Objections, presenting several

arguments. [Doc. 89]. In arguing that the granting of leave to amend should not be

dispositive of whether sanctions are appropriate, Defendants point out that the Court

did not make findings regarding the factual accuracy of the allegations and that the

Amended Complaint is so deficient, lacking in clarity, and lacking in factual and legal

support that Rule 11 sanctions are warranted. Id. at p. 3. Defendants further argue that

the claim against American Land Lease, Inc., based on the purported illegal sale of the

mobile home park, and the RICO claims against Richard Lee, and Lutz, Bobo &

Telfair, P.A. were patently unreasonable. Id. at pp. 5-13. Defendants also object to the

Magistrate Judge’s determination that the motions for sanctions were not timely, and

that the Rule 11 violation was de minimis. Id. at pp. 13-16.

II. LEGAL STANDARD

Under the Federal Magistrates Act, Congress vests Article III judges with the

power to “designate a magistrate judge to hear and determine any pretrial matter

pending before the court,” subject to various exceptions. 28 U.S.C. § 636(b)(1)(A). The

Act further vests magistrate judges with authority to submit proposed findings of fact

and recommendations for disposition by an Article III judge. 28 U.S.C. § 636(b)(1)(B).

3 The Magistrate Judge also noted that Defendants failed to confer with the opposing party in

a good faith effort to resolve the motion prior to filing it, as required by Middle District of

Florida Local Rule 3.01(g). [Doc. 84 at p. 15].

After conducting a careful and complete review of the findings and recommendations,

a district judge may accept, reject, or modify the magistrate judge's report and

recommendation. 28 U.S.C. § 636(b)(1); Williams v. Wainwright, 681 F.2d 732 (11th

Cir. 1982). If specific objections to findings of fact are timely filed, the district court

will conduct a de novo review of those facts. 28 U.S.C. § 636(b); LoConte v. Dugger, 847

F.2d 745, 750 (11th Cir.1988). If no specific objections to findings of fact are filed, the

district court is not required to conduct a de novo review of those findings. See Garvey v.

Vaughn, 993 F.2d 776, 779 n.9 (11th Cir.1993); see also 28 U.S.C. § 636(b)(1). In that

event, the district court is bound to defer to the factual determinations of the magistrate

judge unless those findings are clearly erroneous. Cooper-Houston v. S. Ry. Co., 37 F.3d

603, 604 (11th Cir. 1994). Legal conclusions must be reviewed de novo. Id.

Furthermore, objections to a magistrate judge’s report and recommendation must be

“specific” and “clear enough to permit the district court to effectively review the

magistrate judge’s ruling.” Knezevich v. Ptomey, 761 F. App'x 904, 906 (11th Cir. 2019).

III. DISCUSSION

A court may properly assess sanctions under Rule 11:

(1) when a party files a pleading that has no reasonable

factual basis; (2) when the party files a pleading that is based

on a legal theory that has no reasonable chance of success

and that cannot be advanced as a reasonable argument to

change existing law; or (3) when the party files a pleading

in bad faith for an improper purpose.

Massengale v. Ray, 267 F.3d 1298, 1301 (11th Cir. 2001) (quoting Worldwide Primates,

Inc. v. McGreal, 87 F.3d 1252, 1254 (11th Cir.1996)). The goal of Rule 11 sanctions is

to “reduce frivolous claims, defenses, or motions, and to deter costly meritless

maneuvers.” Id. at 1302. The standard for assessing conduct under Rule 11 is

“reasonableness under the circumstances,” Anderson v. Smithfield Foods, Inc., 353 F.3d

912, 915 (11th Cir. 2003), which requires courts to “determine whether

a reasonable attorney in like circumstances could believe his actions were factually

and legally justified,” Kaplan v. DaimlerChrysler, A.G., 331 F.3d 1251, 1255 (11th Cir.

2003). In doing so, “[t]he court is expected to avoid using the wisdom of hindsight and

should test the signer’s conduct by inquiring what was reasonable to believe at the time

the pleading, motion, or other paper was submitted.” Fed. R. Civ. P. 11, Advisory

Comm. Notes, 1983 Amend. Determinations as to whether Rule 11 has been violated

are committed to the discretion of the trial court. Anderson, 353 F.3d at 915.

Timeliness of Rule 11 Motions

As an initial matter, the timing of Defendants’ filing of their motions for

sanctions does not preclude their entitlement to sanctions against Plaintiffs in this case.

In the Report and Recommendation, the Magistrate Judge reasoned that because

Defendants did not file their motions for sanctions until after Plaintiffs voluntarily

dismissed their action, the requested sanctions are not warranted.4 [Doc. 84 at p. 14].

Defendants object to this finding, contending that a violation of Rule 11 is complete

when the paper is filed and the safe harbor period has expired, and that the violation

is not expunged by a voluntary dismissal. [Doc. 89 at pp. 14-15].

4 As to this finding, the Magistrate Judge specifically cited to the Second Amended

Complaint.

Pursuant to Rule 11(c)(2), a motion for sanctions “must be served under Rule

5, but it must not be filed or be presented to the court if the challenged paper, claim,

defense, contention, or denial is withdrawn or appropriately corrected within 21 days

after service or within another time the court sets.” Fed. R. Civ. P. 11(c)(2). “The

purpose of Rule 11(c)(2)'s safe harbor provision is to allow an attorney who

violates Rule 11 to correct the alleged violation within twenty-one days without being

subject to sanctions.” Peer v. Lewis, 606 F.3d 1306, 1315 (11th Cir. 2010). As such,

“a motion for sanctions ‘should be served promptly after the inappropriate paper

is filed.’ ” Hyde v. Irish, 962 F.3d 1306, 1311 (11th Cir. 2020) (quoting Peer, 606 F.3d

at 1312). As noted earlier, Plaintiffs filed their Amended Complaint on July 3, 3019.

Defendants moved to dismiss the complaint on July 19, 2019, and served Plaintiffs

with a motion for sanctions on September 12, 2019. The Amended Complaint was not

withdrawn. Defendants’ Motion to Dismiss was granted on February 21, 2020, but

with leave to amend. Plaintiffs then filed their Second Amended Complaint on March

6, 2020. Defendants again moved to dismiss, on March 19, 2020, and served Plaintiffs

with a motion for sanctions on March 20, 2020. Plaintiffs voluntarily dismissed the

action on May 18, 2020 and on August 8, 2020. Defendants filed their Motions for

Rule 11 sanctions on June 2, 2020.

The record reflects that neither the Amended Complaint nor the Second

Amended Complaint was withdrawn during the safe harbor period. This supports the

availability of Rule 11 sanctions against Plaintiffs. See Peer, 606 F.3d at 1315 (“The

purpose of Rule 11(c)(2)'s safe harbor provision is to allow an attorney who

violates Rule 11 to correct the alleged violation within twenty-one days without being

subject to sanctions.”); In re Evergreen Sec., Ltd., 570 F.3d 1257, 1273 (11th Cir. 2009)

(“The safe harbor provision allows attorneys to withdraw motions like this within

twenty-one days from the date of filing. If a party so withdraws the motion, it is not

sanctionable.”).

Additionally, that the motions for sanctions were filed after Plaintiffs moved to

dismiss the complaint does not warrant denial. “Rule 11 motions are collateral to an

action and are not barred if filed after a dismissal order, or after entry of judgment.”

Baker v. Alderman, 158 F.3d 516, 523 (11th Cir. 1998); Mahone v. Ray, 326 F.3d 1176,

1180 (11th Cir. 2003) (“As both the Supreme Court and we have recognized, Rule 11

motions raise issues that are collateral to the merits of an appeal, and as such may be

filed even after the court no longer has jurisdiction over the substance of the case.”).

“Although the timing of sanctions rests in the district judge's discretion, Rule 11

sanctions normally will be determined at the end of litigation.” Id. (quotation omitted).

Here, the timing of the filing of the motions for sanctions does not warrant denial of

sanctions.

Factual or Legal Basis of Claims

The Court agrees with the Magistrate Judge that Defendants have not

sufficiently demonstrated that Rule 11 sanctions are warranted in this case. In their

Objections, they argue that the claims against Defendants American Land Lease, Inc.,

and Richard Lee and Lutz, Bobo & Telfair, P.A are patently unreasonable as there

was no factual basis for the claims against these Defendants. Rule 11(b) states that:

By presenting to the court a pleading . . . an attorney . . .

certifies that to the best of the person's knowledge,

information, and belief, formed after an inquiry reasonable

under the circumstances:

(2) the factual contentions have evidentiary support or,

if specifically so identified, will likely have evidentiary

support after a reasonable opportunity for further

investigation or discovery[.]

Fed. R. Civ. P. 11(b)(3). Defendants first argue that Plaintiffs contradict their claim

that American Land Lease—the park’s previous owner—engaged in an illegal sale of

the park in 2014, by alleging in the complaint that American Land was acquired. That

American Land, as owner of the park, was acquired by Sun Communities is not by

itself sufficient to show the absence of a factual basis for naming American Land Lease

in the RICO claims in Counts II and IV of the Amended Complaint.5 In fact, that

complaint alleged that American Land Lease concealed that the offer to acquire

American Land Lease was solicited and also misrepresented that it was unsolicited,

the consequence of which was to frustrate Plaintiff HOA’s statutory right of first

refusal to purchase the park. [Doc. 20 ¶¶ 27-32]. Therefore, Defendants have not

5 In Count II of the Amended Complaint, Plaintiffs allege that the Defendants “shared the

common purpose of defrauding Plaintiffs of money or property through the use of the

fraudulent forced surrender of the Plaintiffs’ resale purchasers’ right to assume the resale

sellers’ prospectus.” [Doc. 20 ¶¶ 83(a), 87]. Count IV presents a myriad of allegations,

including that if the park is offered for sale by the owner, “the Royal Palm HOA has a

[statutory] right to be notified of the offer, the price and the terms and conditions of sale, and

permitted 45 days to execute a contract meeting the price, terms and conditions” and that

Plaintiffs were deceived that the park was lawfully purchased by Defendants Sun

Communities and Royal Palm Village. Id. ¶¶ 107, 19. Plaintiffs also allege that Defendants

acted and conspired to circumvent statutory regulations under the Florida Mobile Home Act

and engaged in further acts of deceit. Id. ¶ 20.

established a basis for sanctioning Plaintiffs for the claims against American Land

Lease, Inc.

As to the claims against the lawyer Defendants—Richard Lee and Lutz, Bobo

& Telfair, P.A, the Amended Complaint alleged that they inserted a waiver of

mediation in the lot rental agreement, in violation of Florida Statutes, and then relied

on that void provision to cause the Florida Department of Business and Professional

Regulation (DBPR) to withdraw mediation.6 Id. ¶¶ 19, 42, 47-50. Importantly, the

Amended Complaint contains the following pertinent allegation:

Defendants Richard Lee and the Lutz Bobo Law Firm

drafted or co-authored the correspondence to the DBPR

requesting that the previous grant of mediation be

withdrawn which incorporated fraudulent misrepresentations

regarding the Plaintiffs’ legal right to petition for mediation

and is not the normal and standard provision of legal services.

Defendants Richard Lee and the Lutz Bobo Law Firm acted

with fraudulent intent as the legal opinions they expressed were

not honestly held but only expressed to advance the scheme.

Defendants Richard Lee and the Lutz Bobo Law Firm were

aware of the fraud and cloaked the requested withdrawal with a

feigned authority of the Five Year Agreement which, in fact,

violated The Florida Mobile Home Act, Chapter 723, Fla.

Stat., In this manner, Defendants Richard Lee and the Lutz

Bobo Law Firm substantially assisted in the commission of the

fraud.

6 Pursuant to the Florida Mobile Home Act “[e]ither party [to a mobile home lot rental

agreement] may petition the division to appoint a mediator and initiate mediation

proceedings.” Fla. Stat. § 723.038(1). The Act further provides that “[a]ny provision in the

rental agreement is void and unenforceable to the extent that it attempts to waive or preclude

the rights, remedies, or requirements set forth in this chapter or arising under law.” Fla. Stat.

§ 723.032(2).

Id. ¶ 50 (emphasis added). While Noerr-Pennington immunity7 applies to administrative

and judicial proceedings, it does not protect one who has engaged in

misrepresentations before a governmental agency acting in an administrative or

judicial capacity. St. Joseph's Hosp., Inc. v. Hosp. Corp. of Am., 795 F.2d 948, 955 (11th

Cir. 1986). Plaintiffs have alleged just that, such that a reasonable attorney in like

circumstances could believe allegations in the complaint were factually and legally

justified.

As Defendants point out, “the litigation privilege in Florida . . . essentially

provid[es] legal immunity for actions that occur in judicial proceedings.” Echevarria,

McCalla, Raymer, Barrett & Frappier v. Cole, 950 So. 2d 380, 383 (Fla. 2007).

Additionally, “[a]bsolute immunity covers ongoing litigation and ‘conduct that is

necessarily preliminary to judicial proceedings.’ ” Pace v. Bank of New York Mellon Tr.

Co. Nat'l Ass'n, 224 So. 3d 342, 344 (Fla. 5th DCA 2017) (quoting AGM Invs., LLC v.

Bus. Law Grp., P.A., 219 So.3d 920, 924 (Fla. 2d DCA 2017)). “Statements ‘necessarily

7 “That doctrine provides, in the Supreme Court's words, that ‘defendants are immune from .

. . liability for engaging in conduct (including litigation) aimed at influencing decisionmaking

by the government.’ ” SmileDirectClub, LLC v. Battle, 4 F.4th 1274, 1281 (11th Cir. 2021)

(quoting Octane Fitness, LLC v. Icon Health & Fitness, Inc., 572 U.S. 545, 556, (2014)).

“Noerr immunity was extended to administrative and judicial proceedings in [California Motor

Transport Co. v. Trucking Unlimited, 404 U.S. 508 (1972)].” St. Joseph's Hosp., Inc. v. Hosp. Corp.

of Am., 795 F.2d 948, 955 (11th Cir. 1986). The doctrine rests in large part on the general First

Amendment guarantees of freedom to petition and freedom of association. McGuire Oil Co. v.

Mapco, Inc., 958 F.2d 1552, 1562 (11th Cir.), (citing Bill Johnson's Restaurants, Inc. v. NLRB, 461

U.S. 731, 741 (1983)), certified question answered, 612 So. 2d 417 (Ala. 1992).

preliminary’ to judicial proceedings include pre-suit communications required by

statute or by contract as a condition precedent to suit.” Orange Lake Country Club, Inc.

v. Reed Hein & Assocs., LLC, 367 F. Supp. 3d 1360, 1372 (M.D. Fla. 2019) (citing Pledger

v. Burnup & Sims, Inc., 432 So.2d 1323, 1326 (Fla. 4th DCA 1983)). The Amended

Complaint alleges a continuing series of events, including Defendants’ inclusion of a

void waiver provision in the lot rental agreement, leading to the Lawyer Defendants’

letter to the Department of Business and Professional Regulations citing to that

provision. Because all the predicate acts pertinent to the alleged fraudulent conduct

are not necessarily preliminary to the judicial proceeding or constitute pre-suit

communications, Defendants have not demonstrated that a reasonable attorney

apprised of these facts would find the privilege applicable. That the privilege

potentially applies to part of the facts, when viewed in isolation, does not render it

applicable to the facts when considered as a whole. The objection therefore lacks merit.

The last argument Defendants make on this point is that “it is well settled that

the Lawyer Defendants’ actions cannot constitute participation in the affairs of the

alleged RICO ‘enterprise’ ” such that Plaintiffs cannot state a substantive RICO claim

or a RICO conspiracy claim as a matter of law. [Doc. 89 at p. 9]. However, as the

Magistrate Judge notes in the Report and Recommendation, the Court dismissed the

RICO claims for lack of particularity and specifically noted that if the pleading

remained deficient after the amendment, the Court would address the additional

arguments for dismissal if raised in later motions.8 [Doc. 84 at p. 8]. In doing so, the

Magistrate Judge cited Anderson v. Smithfield Foods, Inc., 353 F.3d 912 (11th Cir. 2003),

where the appellate court found that the district court had abused its discretion in

awarding sanctions in a like circumstance. In that case, the “district court found that

the Plaintiffs had filed a pleading advancing claims that had no possible chance of

success.” Id. at 915. The appellate court found that “[i]n light of the paucity of

controlling precedent and the district court's first dismissal order, Plaintiffs' counsel

were not unreasonable in pleading the RICO claims in the Second Amended

Complaint.” Id. at 916. The court specifically reasoned that:

While the district court's first dismissal does state that RICO

is not the proper remedy for Plaintiffs to pursue, the order

also points out the pleading defects in the Plaintiffs' RICO

claims and gives the Plaintiffs leave to file a Second

Amended Complaint. This approach created an ambiguity.

Based on this ambiguity, a reasonable lawyer could

interpret the order as inviting better-pleaded RICO claims.

Thus, we cannot say, in light of the first dismissal order, that

a reasonable lawyer must have known that improved RICO

claims would have no reasonable chance of success.

Id. Considering the Court’s grant of leave to refile and lack of warning not to refile

under RICO, the Court cannot conclude that only an unreasonable lawyer would

replead those claims. Id. Accordingly, there is no merit to Defendants’ objections to

the Magistrate Judge’s finding that Plaintiffs did not violate Rule 11 by filing either the

8 The Court did not undertake an analysis of Plaintiffs’ RICO claims on the merits, other

than as to lack of particularity.

Amended or the Second Amended Complaint. Indeed, the Court agrees with the

Magistrate Judge’s finding.

Granting of Leave

Defendants argue that the granting of leave to amend should not be

determinative on the issue of whether sanctions are appropriate. This is not an accurate

characterization of the Magistrate Judge’s reasoning in recommending a denial of

sanctions. The Magistrate Judge reasoned that when the Court dismissed the initial

complaint, the Court did not indicate that any of Plaintiffs’ claims were not being

properly pursued. Instead, the Court pointed out defects pursuant to Rules 8 and 10

of the Federal Rules of Civil Procedure. The Magistrate Judge further reasoned that

the Court raised these same deficiencies when it dismissed the amended complaint,

but never indicated that any of Plaintiff’s claims were not being properly pursued such

that a reasonable lawyer would have known that improved claims would have no

chance of success. That leave to amend was allowed is not determinative. Rather, it is

a factor that a court should consider when assessing whether a reasonable attorney

would believe a better pleaded complaint would have a reasonable chance of success—

as the appellate court’s decision in Anderson shows. In this case, there was no

determination by the Court that the claims were being improperly pursued, and

Plaintiffs were given leave to amend. A reasonable attorney, apprised of all these facts,

would not have been on notice that the claims, in either the Amended or Second

Amended Complaint, were not legally or factually justified.9

Accordingly, it is hereby ORDERED:

1. Defendants’ Objections to the Report and Recommendation [Doc. 89]

are OVERRULED-in-part and SUSTAINED-in-part.

2. Except as to the determination that the timing of the filing of the motions

weigh against awarding sanctions, the Court will adopt, confirm, and

approve the Magistrate Judge’s Report and Recommendation [Doc. 84]

and it is made a part of this Order for all purposes, including appellate

review. Exercising its discretion, the Court declines to impose Rule 11

sanctions as the facts and legal issues presented do not clearly warrant

sanctions.

3. Defendants' Motion for Rule 11 Sanctions as to Plaintiffs' Amended

Complaint [Doc. 63] is DENIED.

4. Defendants' Motion for Rule 11 Sanctions as to Plaintiffs' Second

Amended Complaint [Doc. 62] is DENIED.

DONE AND ORDERED in Tampa, Florida on September 15, 2021.

9 Defendants also object to the Magistrate Judge’s finding that any violation of Rule 11 as to

the Second Amended Complaint was de minimis. Because Defendants failed to establish a

violation of Rule 11, the Court need not address this argument. However, the Court agrees

with the Magistrate Judge’s finding. Defendants’ objection will be overruled.

CAaMewce: Edwards Mone gl pel

Charlene Edwards Honeywell

United States District Judge

Copies to:

Counsel of Record and Unrepresented Parties, if any

18