Long v. Touizer

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO.: 1:18-cv-62770-GAYLES

MELVIN B. LONG and JOSEPH

KIMBELL,

Plaintiffs,

v.

DANIEL JOSEPH TOUIZER, aka JOSEPH

TOUIZER, STEPHANE TOUIZER, aka

STEPHAN TOUIZER, PROTECTIM

INSURANCE SERVICES LLC.,

PROTECTIM HOLDINGS LLC, and

WHEAT CAPITAL MANAGEMENT LLC.,

Defendants.

_____________________________________/

ORDER

THIS CAUSE comes before the Court upon Defendants’ Motion to Dismiss Third Amended

Complaint (the “Motion”) [ECF No. 63]. The Court has reviewed the Motion and the record and is

otherwise fully advised. For the reasons set forth below, the Motion is denied.

I. BACKGROUND1

This action derives from a scheme by Defendants Daniel Joseph Touizer (“Touizer”);

Protectim Insurance Services, LLC (“Protectim Insurance”); Protectim Holdings, LLC (“Protectim

Holdings”); and Wheat Capital Management, LLC (“WCM”) (collectively “Defendants”) to

defraud investors by making false representations and misleading statements in connection with

purported stock sales. Plaintiffs Melvin Long (“Long”) and Joseph Kimbell (“Kimbell”) were

1 As the Court is proceeding on a Motion to Dismiss, it takes Plaintiffs’ allegations in the Third Amended Complaint

as true. See Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997).

purchasers of purported stock offered and sold by Defendants. At the time in question, Touizer

was CEO and controlling shareholder of WCM, a private equity real estate firm based in Florida.

Touizer was also a managing member of Protectim Insurance and Protectim Holdings, two Florida

limited liability companies.

On or about February 11, 2016, Touizer solicited Kimbell over the telephone to make an

investment in a partial unit of WCM stock. Touizer knew that Kimbell had friends in Florida in

the self-storage business and would be interested in such an investment. After that conversation,

Touizer, or someone at his direction, mailed Kimbell WCM’s business plan and solicited Kimbell

to purchase a 0.125 unit of WCM stock for $30,000.00 (the “WCM investment”). In response,

Kimbell mailed Touizer a check for that amount.

On or about June 28, 2017, Touizer again called Kimbell asking him to make an investment

in a 0.25 unit of Protectim Insurance stock for $75,000.00 (the “Protectim investment”). As a

result, Kimbell mailed Touizer a check in that amount. Thereafter, Touizer provided Kimbell with

Subscription Agreements/Documents and the Protectim Insurance Services LLC Confidential

Private Placement Offering (the “Protectim Insurance Offering”) for both the WCM and Protectim

investments. The Subscription Agreement and the Protectim Insurance Offering require that the

“subscriptions accepted by the Company will be deposited directly into the Company’s operating

account, utilized for the purposes set forth herein.” [ECF No. 51-2]. The proceeds were to be used

for “sales and marketing, working capital and general corporate purposes.” Id.

On or about August 8, 2017, Touizer called Long asking him to make an investment in a

unit of WCM stock. Touizer knew that Long was elderly and had savings that could be used for

investments. That same day, Touizer sent Long an email that stated: “you can potentially earn over

200% annually in the firm [sic] of profit sharing . . . you can start to potentially earn 15% or more

annually starting in a few months from our fee revenues to the firm.” [ECF No. 51 ¶ 33].

After that phone conversation, Touizer, or someone at his direction, mailed a package to

Long containing a business plan for WCM. Touizer solicited a purchase of one unit of WCM stock

for $300,000.00. As a result, Long mailed a check for $30,000.00 on or about August 10, 2017.

Soon thereafter, Touizer requested that Long wire the additional $270,000.00 and, in return for

sending the money via wire transfer as opposed to a check, Touizer offered Long another 1/3 unit

of WCM. Touizer also offered Long an additional 1/2 unit if he would serve on the WCM Advisory

Board, but Long did not accept that offer. Long wired the $270,000.00 balance to WCM on or

about August 21, 2017.

On or about September 15, 2017, Touizer contacted Long and told him there was a

Protectim Insurance Offering where investor funds were to be used exclusively for “the

implementation of the business plan, specifically, marketing, offering and providing various

insurance products and services to consumers in the U.S.” Id. ¶ 51. Soon thereafter, Juanita Salazar,

from Protectim Insurance, emailed Long a pre-addressed Federal Express envelope so that he

could send in an investment check for the Protectim Insurance shares. Long invested a total of

$150,000.00 in Protectim Insurance and $300,000.00 in WCM for a total investment of

$450,000.00. Long signed two “Subscription Documents” outlining his investment in each entity.

Before Plaintiffs made their investments, Touizer told them over the phone that WCM and

Protectim Insurance were profitable companies and otherwise “safe” investments. He also told

Plaintiffs that the investment funds would be used for sales and marketing, working capital, and

general corporate purposes. In reality, the funds were not used or intended for that purpose. In

addition, Touizer represented that the companies would not charge commissions or fees, but

Touizer and others used investor funds to pay themselves undisclosed commissions, loans, and

fees, before and after Plaintiffs’ investment. Touizer also made fraudulent transfers of investor

funds from Protectim Insurance to Protectim Holdings without Plaintiffs’ knowledge or consent.

Neither Long nor Kimbell have been repaid, despite demands for repayment.

On or about May 11, 2018, Touizer pleaded guilty to Count I of a federal Indictment which

charged him with Conspiracy to Commit Wire and Mail Fraud, in violation of Title 18, United

States Code, Section 1349. See United States v. Touizer, No. 17-CR-60286-BB (S.D. Fla. May 11,

2018), ECF No. 93. In his signed Factual Proffer, Touizer admitted to organizing and leading a

criminal conspiracy to defraud investors using his companies, including WCM. Id. at ECF No. 94.

He admitted diverting funds to himself from the sale of stock and other interests. Touizer also

admitted that he made materially false and fraudulent statements to investors regarding the use of

investor funds, between 2010 and 2017, enabling him to steal, misappropriate, and embezzle

millions of dollars. This admission included Plaintiffs’ investments. Id.

Long initiated this action against Defendants2 on November 14, 2018. [ECF No. 1]. Long

amended his complaint twice and in the Second Amended Complaint added Kimbell. [ECF No.

30]. On November 6, 2019, the Court heard argument on Defendants’ Motion to Dismiss the

Second Amended Complaint. See [ECF No. 50]. The Court granted Defendants’ motion dismissing

the Second Amended Complaint without prejudice and granted Plaintiffs leave to amend their

complaint. [ECF No. 49]. Plaintiffs filed their Third Amended Complaint (“TAC”), [ECF No. 51],

asserting three-counts against the Defendants for fraud (Count I), breach of contract (Count II), and

unjust enrichment (Count III). The TAC is the subject of the instant Motion.

II. LEGAL STANDARD

To survive a motion to dismiss brought pursuant to Federal Rule of Civil Procedure

12(b)(6), a claim “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief

2 The original action was also brought against Saul Daniel Suster and John Kevin Reech. The Court entered a Default

Judgment against them on July 17, 2019. [ECF No. 42]. Touizer’s brother and co-defendant, Stephane Touizer (aka

Stephan Touizer), also engaged in the fraudulent scheme alleged but has not appeared or defended himself in this

action.

that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp.

v. Twombly, 550 U.S. 544, 570 (2007)). This means the complaint must contain “factual content

that allows the court to draw the reasonable inference that the defendant is liable for the misconduct

alleged.” Id. The pleadings are construed broadly, Levine v. World Fin. Network Nat'l Bank, 437

F.3d 1118, 1120 (11th Cir. 2006), and the allegations in the complaint are viewed in the light most

favorable to the plaintiff, Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367, 1370 (11th Cir.

1998). On a motion to dismiss, the court need not determine whether the plaintiff “will ultimately

prevail . . . but whether his complaint [is] sufficient to cross the federal court's threshold.” Skinner

v. Switzer, 562 U.S. 521, 530 (2011).

III. DISCUSSION

A. Count I (Fraud)

Defendants present several arguments in their Motion as it relates to Plaintiffs’ fraud claim:

(1) the claim is duplicative of their breach of contract claim and therefore not actionable; (2) the

alleged fraudulent statements are non-actionable puffery; (3) Plaintiffs’ allegations are conclusory

and lack specificity as required by Federal Rule of Civil Procedure Rule 9; and (4) the allegations

in the TAC contradict the contract language, and are thus barred by the parol evidence rule. The

Court addresses each argument in turn.

1. Fraud Claim as an Independent Tort

Defendants argue that Plaintiffs’ fraud claim is duplicative of their breach of contract claim

in violation of the economic loss doctrine. The economic loss doctrine precludes recovery in tort

when it flows from a contractual breach. Future Tech Int'l, Inc. v. Tae Il Media, Ltd., 944 F. Supp.

1538, 1568 (S.D. Fla. 1996).

Fraudulent inducement is an independent tort in that it requires proof of facts

separate and distinct from the breach of contract. It normally “occurs prior to the

contract and the standard of truthful representation placed upon the defendant is not

derived from the contract,” i.e., whether the defendant was truthful during the

formation of the contract is unrelated to the events giving rise to the breach of the

contract.

HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So. 2d 1238, 1239 (Fla. 1996) (citations

omitted).

Plaintiffs’ fraud claim arises from representations made prior to the contract, upon which

Plaintiffs relied in deciding to invest with Defendants. Touizer told Plaintiffs that no commission or

fees would be charged to investors; 2) the investments were “safe investments”; 3) the investment

companies were successful and profitable; and 4) the funds would be deposited directly into the

Company’s operating account and used for “sales and marketing, working capital and general

corporate purposes.” [ECF No. 51 ¶¶ 72–75, 93]. By contrast, Plaintiffs’ breach of contract claim

rests on promises that derived from the existence of the contract, not those made prior. Plaintiffs’

breach of contract claim rests on the allegation that Defendants violated provisions of the

Subscription Agreement and the terms of the Protectim Insurance Offering, which required that

the “subscriptions accepted by the Company will be deposited directly into the Company’s

operating account, utilized for the purposes set forth herein,” which were for “sales and marketing,

working capital and general corporate purposes.” Id. ¶ 93. While there is overlap between the

claims, Plaintiffs’ fraud claim is supported by separate and distinct facts from their breach of

contract claim. See Yamashita v. Merck & Co., No. 11-CV-62473, 2012 WL 488030, at *2 (S.D.

Fla. Feb. 14, 2012) (“[I]nducing a party to enter into a contract by misrepresenting a material fact

on which the party justifiably relies to its detriment constitutes an independent tort.”). Therefore,

Plaintiffs properly allege their fraud claim as an independent tort.

2. Alleged Misrepresentations

Despite Touizer’s criminal guilty plea to the same underlying conduct, Defendants argue that

the alleged misrepresentations are non-actionable puffery. “A claim of fraudulent misrepresentation

is not actionable if premised on a mere opinion, rather than a material fact.” MDVIP, Inc. v. Beber,

222 So. 3d 555, 561 (Fla. 4th DCA 2017). A “matter of opinion rather than fact ... constitutes non-

actionable puffery.” Id. Puffery is “generalized, vague, nonquantifiable statements of corporate

optimism.” Carvelli v. Ocwen Fin. Corp., 934 F.3d 1307, 1318 (11th Cir. 2019). “[W]here the

person expressing the opinion [has] superior knowledge of the subject of the statement and the

plaintiff can show that said person knew or should have known from facts in his or her possession

that the statement was false, then the opinion may be treated as a statement of fact.” Soltero v.

Swire Dev. Sales, Inc., No. 08-CV-20260, 2008 WL 11411529, at *2 (S.D. Fla. June 17, 2008).

Here, to induce Plaintiffs to invest in his companies, Touizer told Plaintiffs that the

investments were safe and that Protectim Insurance and WCM were successful and profitable.

Defendants point to these statements as mere corporate optimism. However, any arguable statements

of corporate optimism are intertwined with Touizer’s factual misrepresentations about the

companies’ profitability and how Plaintiffs’ investments would be used. See, e.g., Bellocco v.

Curd, No. 802CV1141T27TBM, 2005 WL 2675022, at *2 (M.D. Fla. Oct. 20, 2005) (reading

statements of corporate optimism in conjunction with other factual allegations). Touizer knew

these statements were false as evidenced by his admission of such.3 See Touizer, No. 17-CR-

60286-BB, ECF No. 94. Therefore, these allegations in the TAC are sufficient to survive dismissal.

3. Specificity of Fraud Allegations

Defendants argue that Plaintiffs’ fraud claim must also be dismissed because it lacks the

specificity required to plead fraud under Rule 9(b). Federal Rule of Civil Procedure 9(b) requires

that fraud be pleaded with specificity. Fed. R. Civ. P. 9(b); Cooper v. Blue Cross & Blue Shield of

Fla., Inc., 19 F.3d 562, 568 (11th Cir. 1994). Rule 9(b) is satisfied if the complaint sets forth:

3 Plaintiffs incorporated Touizer’s factual proffer relating to his guilty plea into their TAC. See [ECF No. 51-4 at 19].

(1) precisely what statements were made in what documents or oral representations

or what omissions were made, and

(2) the time and place of each such statement and the person responsible for making

(or, in the case of omissions, not making) same, and

(3) the content of such statements and the manner in which they misled the plaintiff,

and

(4) what the defendants “obtained as a consequence of the fraud.”

Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1371 (11th Cir. 1997) (citations

omitted). Failure to satisfy Rule 9(b) is a ground for dismissal of a complaint. Corsello v. Lincare,

Inc., 428 F.3d 1008, 1012 (11th Cir. 2005).

In the TAC, Plaintiffs allege that on specific dates in 2017, Defendants, through Touizer,

induced Plaintiffs to invest approximately $555,000 in WCM and Protectim Insurance stock

through false and misleading statements. Touizer told Plaintiffs that no commission or fees would

be charged to investors, the investments were “safe investments,” the investment companies were

successful and profitable, and the funds would be used for sales and marketing, working capital

and general corporate purposes. Plaintiffs allege that they relied on these false and misleading

statements to their detriment. Accordingly, these allegations are pled with sufficient particularity

to state a fraud claim.

4. Parol Evidence Rule

Lastly, Defendants argue that Plaintiffs’ fraud claim is barred by the parol evidence rule.

Parol evidence is only admissible to prove fraudulent inducement when it does not directly

contradict the terms of the agreement. Ungerleider v. Gordon, 214 F.3d 1279, 1282 (11th Cir.

2000). It is not evident from the TAC that Plaintiffs’ fraud allegations are contradicted by the

contractual language. Therefore, this issue is more appropriate for resolution at summary

judgment.

For the reasons set forth above, the Motion to Dismiss Count I is denied.

B. Count II (Breach of Contract)

Defendants argue that Plaintiffs’ breach of contract claim fails because Plaintiffs did not

attach all the pertinent contracts to the TAC or reference the specific contract provisions at issue.

As a threshold matter, unlike Florida Rule of Civil Procedure 1.130, “there is no corresponding

Federal Rule of Civil Procedure that requires a copy of the contract be attached to a complaint

alleging a breach of contract claim.” Mancil’s Tractor Serv., Inc. v. T&K Constr., LLC, No. 15-

CV-80520, 2015 WL 12866331, at *3 (S.D. Fla. July 28, 2015). “A document referenced in a

complaint that is central to a plaintiff's claim is considered part of the complaint for purposes of a

Rule 12(b)(6) motion, even if such document is not physically attached to the complaint.” In re All

Am. Semiconductor, Inc., 490 B.R. 418, 427 n.12 (Bankr. S.D. Fla. 2013) (citing Day v. Taylor,

400 F.3d 1272, 1276 (11th Cir. 2005)). Nevertheless, Plaintiffs attached to the TAC what they

assert are the contracts relevant to their claims. Plaintiffs need not refer or attach to the TAC other

contractual agreements that have no apparent bearing on the claims at issue.

Further, this Court has found allegations that specifically identify portions of the contract

that were breached sufficient to withstand a motion to dismiss. See Mancil's Tractor Serv., Inc.,

2015 WL 12866331, at *3 (“Count I sufficiently identifies the provisions of the Subcontract that

Mancil is alleged to have breached. Mancil’s motion to dismiss the breach of contract claim for

failure to attach a copy of the contract shall be denied.” (citations omitted)). Here, the TAC sets

forth specific provisions of the contracts that Plaintiffs contend were breached:

DEFENDANTS violated the provisions of the Subscription Agreement (Exhibits 1

and 4) and the terms of the Protectim LLC Confidential Private Placement Offering

(Exhibit 3, page 6), which required that the “subscriptions accepted by the

Company will be deposited directly into the Company’s operating account, utilized

for the purposes set forth herein.” The investor funds were not deposited and used

according to the provisions of the Subscription Agreements and the Protectim LLC

Confidential Private Placement Offering, because, in part, the investor funds were

not used for “sales and marketing, working capital and general corporate purposes.”

[ECF No. 51 at 19].

In addition, the Protectim Protectim [sic] LLC Confidential Private Placement

Offering required PROTECTIM, once funded, to secure appropriate insurance

agency and agent licensing and agreements with one or more insurers, but

TOUIZER failed to fulfill these obligations, due to his fraudulent transfers of fund

to benefit himself and other entities. (See Exhibit 3, pages 9 and 10).

Id. According, the Motion to Dismiss Count II is denied.

C. Count III (Unjust Enrichment)

Defendants argue that there can be no unjust enrichment claim where the parties agree that an

express contract exists. Under Florida law, a party may plead unjust enrichment as an alternative

for relief if the parties contest whether an express contract exists governing the subject of the

dispute. Martorella v. Deutsche Bank Nat. Tr. Co., 931 F. Supp. 2d 1218, 1227 (S.D. Fla. 2013).

Otherwise, the unjust enrichment claim fails. Id. In this case, Plaintiffs allege that they were

fraudulently induced into entering the express contract that exists between the parties, thereby

making the contract voidable. See Lance Holding Co. v. Ashe, 533 So. 2d 929, 930 (Fla. 4th DCA

1988) (“It is a fundamental proposition that a contract induced by fraud is voidable”). Under these

circumstances, dismissal of Plaintiffs’ unjust enrichment claim would be premature. See Shaheen

Real Estate LLC v. Daniel Joseph Touizer et al., Case No. 19-CV-60942-RS (S.D. Fla. July 21,

2020), ECF No. 59 (denying motion to dismiss unjust enrichment claim as premature where the

plaintiff alleged fraudulent inducement); Coffey v. WCW & Air, Inc., No. 3:17-CV-90-MCR-CJK,

2018 WL 4154256, at *9 (N.D. Fla. Aug. 30, 2018) (“It would be premature to decide that

Plaintiffs are precluded from raising an unjust enrichment claim” where Defendants deceived

Plaintiffs into entering purchase agreements). Further, the law “does not require the dismissal (at

the motion to dismiss stage) of an unjust enrichment claim merely because an express contract

exists that arguably governs the conduct complained of.” In re Checking Account Overdraft Litig.,

694 F. Supp. 2d 1302, 1321 (S.D. Fla. 2010). As this issue is best left for summary judgment, the

Motion to Dismiss Count III is denied.

IV. CONCLUSION

Based on the foregoing, it is ORDERED AND ADJUDGED as follows:

1. The Motion, [ECF No. 63], is DENIED.

2. Defendants shall file an answer to the Third Amended Complaint on or before February

25, 2021.

DONE AND ORDERED in Chambers at Miami, Florida this 11thday of February, 2021.

Df

DARRIN P. GAYLES

UNITED STATES DI ICT JUDGE

1]