Affirmation of Specific Personal Jurisdiction Through Fraudulent Misrepresentations Under the Effects Test

Introduction

Robert Scot Building Venture LLC (“RSBV”) and its affiliate RSBV Pathway LLC, both Florida limited-liability companies, advanced millions of dollars in loans to Creative Wealth Media Finance Corporation (“CWMF”), a Canadian entity controlled by Jason Cloth. The parties entered into a series of contracts from mid-2019 through 2020 to finance entertainment ventures; CWMF agreed to repay principal plus interest. When repayment did not materialize, RSBV sued for breach of contract and fraudulent misrepresentation in the Southern District of Florida.

Procedurally, RSBV obtained a default judgment against CWMF (for failure to defend) and proceeded to trial on fraud claims against Cloth personally. Cloth moved to dismiss for lack of personal jurisdiction, to set aside default against CWMF, and for a continuance; all were denied. A jury found Cloth liable for fraud, awarding $6.57 million in compensatory and $13 million in punitive damages. On appeal, Cloth challenged (1) personal jurisdiction, (2) sufficiency of the fraud pleading under Rule 9(b), (3) denial of his continuance motion, and (4) the excessiveness of punitive damages. The Eleventh Circuit affirmed in full.

Summary of the Judgment

The Eleventh Circuit’s per curiam opinion resolved four issues:

Personal Jurisdiction: Applying Florida’s long-arm statute and the Due Process Clause, the court held that Cloth’s repeated fraudulent communications directed at RSBV’s Florida principal satisfied the “effects test,” establishing specific jurisdiction.
Rule 9(b) Pleading: The court found that RSBV adequately pleaded fraud with particularity as to misrepresentations about repayment timing and project status, and that general allegations of Cloth’s knowledge were permissible.
Continuance Motion: Cloth’s eleventh-hour request for a trial continuance was denied; the court concluded he lacked diligence, had ample opportunity to secure counsel, and that RSBV and the court would have been prejudiced by delay.
Punitive Damages: Examining reprehensibility, ratio to compensatory damages, and comparable penalties, the court held the $13 million award (≈2:1 multiplier) was not unconstitutionally excessive.

The Eleventh Circuit accordingly affirmed the district court’s orders and the final judgment against Cloth and CWMF.

Analysis

1. Precedents Cited

SkyHop Tech., Inc. v. Narra (58 F.4th 1211 (11th Cir. 2023)) – Established the standard for evaluating personal jurisdiction challenges: burden-shifting when a defendant submits an affidavit and construing factual conflicts in the plaintiff’s favor.
Int’l Shoe Co. v. Washington (326 U.S. 310 (1945)) – Introduced “minimum contacts” and the concept that jurisdiction must comport with “fair play and substantial justice.”
Goodyear Dunlop Tires Operations, S.A. v. Brown (564 U.S. 915 (2011)) – Distinguished general jurisdiction (“at home” in the forum) from specific jurisdiction (claims arising out of forum contacts).
Del Valle v. Trivago GMBH (56 F.4th 1265 (11th Cir. 2022)) – Defined the “effects test” for torts: intentional, forum-aimed conduct causing foreseeable harm in the forum.
Daimler AG v. Bauman (571 U.S. 117 (2014)) – Further clarified limits on general jurisdiction.
McGinnis v. American Home Mortgage Serv., Inc. (901 F.3d 1282 (11th Cir. 2018)) and Cote v. Philip Morris USA, Inc. (985 F.3d 840 (11th Cir. 2021)) – Provided the three-factor punitive-damages test: reprehensibility, ratio, and comparable civil penalties.

These cases collectively underpin the Eleventh Circuit’s de novo review of personal jurisdiction, its deferential stance on fraud pleadings under Rule 9(b), and its framework for assessing punitive awards.

2. Legal Reasoning

a. Personal Jurisdiction

The court applied the two-step Florida analysis: (1) statutory authority under Florida’s long-arm provision (uncontested), and (2) constitutional due process. Under the effects test, a nonresident defendant’s intentional tort aimed at forum residents suffices when:

The acts are intentional;
They are expressly aimed at the forum;
They cause foreseeable harm in the forum.

Cloth’s emails to RSBV’s Florida principal falsely promised timely loan repayment and misrepresented the status of the “Pathway” project. Those misrepresentations were made with full knowledge they would harm RSBV in Florida—satisfying all three prongs. The court further found that litigating in Florida did not violate “fair play and substantial justice”: Cloth failed to show undue burden; Florida had an interest in protecting its residents; and RSBV’s interest in convenient relief outweighed any inconvenience.

b. Fraud Pleading Under Rule 9(b)

Federal Rule of Civil Procedure 9(b) requires identification of “who, what, when, where, and how.” The Eleventh Circuit held that RSBV met this standard by specifying:

“Who”: Jason Cloth acting on behalf of CWMF;
“What”: false representations about prior-loan repayment schedules and the multi-season greenlight;
“When/Where”: emails and communications exchanged between mid-2019 and 2021 with RSBV’s principal in Florida;
“How”: alleging Cloth knew the statements were false and intended to induce new loans.

The court also confirmed that knowledge and intent may be pled “generally,” and that RSBV sufficiently alleged justifiable reliance and resulting injury.

c. Denial of Continuance

Under Romero v. Drummond and SEC v. Levin, a continuance request is evaluated on:

Party diligence;
Effectiveness of continuance to remedy;
Inconvenience to court and opposing party;
Harm to moving party.

Cloth’s counsel withdrew months before trial; he neither secured new representation nor participated in pretrial proceedings; and his eleventh-hour motion lacked a substantive justification. The court concluded denial was neither arbitrary nor prejudicial to fairness.

d. Punitive Damages Review

In reviewing punitive damages for excessiveness, the three guideposts are:

Reprehensibility: Intentional fraud to induce millions in new loans;
Ratio: A 2:1 punitive-to-compensatory ratio falls well within due-process bounds given prior Eleventh Circuit precedent favoring single-digit multipliers;
Comparable Penalties: No analogous civil sanction suggested a lower ceiling.

Because Cloth neither objected at trial nor cited superior comparisons on appeal, the court found no plain error.

3. Impact

This decision reinforces several principles in federal and Florida practice:

Cross-Border Jurisdiction: Fraudulent misrepresentations directed at a state resident—via email or other media—will establish specific jurisdiction under the effects test, even if the defendant resides abroad.
Pleading Fraud: A plaintiff may survive a Rule 9(b) challenge by identifying the substance of misrepresentations, even if scienter is alleged generally.
Case Management: Courts will strictly enforce trial schedules and deny last-minute continuances where defendants fail to demonstrate diligence.
Punitive Awards: Firms and individuals face the prospect of substantial punitive multipliers so long as they remain within established single-digit ranges and reflect actionable misconduct.

Practitioners should note the Eleventh Circuit’s continued willingness to exercise jurisdiction over nonresidents for online communications and to uphold robust punitive awards against bad-faith tortfeasors.

Complex Concepts Simplified

Effects Test: A theory of specific personal jurisdiction allowing a court to hear claims when a defendant’s intentional, forum-directed act causes harm the defendant knows is likely to be felt in the forum.
Specific vs. General Jurisdiction: Specific jurisdiction exists when the claim “arises out of” the defendant’s forum contacts; general jurisdiction requires the defendant to be essentially “at home” in the forum.
Rule 9(b) Particularity: Although heightened for fraud, courts permit “general” allegations of intent or knowledge provided the fraudulent statements themselves are pleaded with detail.
Punitive Damages Guideposts: Courts measure excessiveness by (1) how blameworthy the conduct was, (2) the punitive-to-compensatory ratio, and (3) comparisons to statutory or regulatory penalties.

Conclusion

The Eleventh Circuit’s ruling in Robert Scot Building Venture LLC v. Jason Cloth reaffirms that deliberate, forum-targeted fraud suffices to found specific personal jurisdiction over nonresidents, even in cross-border financing contexts. It clarifies that Rule 9(b) does not preclude fraud actions where misrepresentations are precisely described and averments of scienter are permitted in general terms. The decision also underscores the importance of diligence in pretrial proceedings and confirms that punitive awards up to single-digit multiples of compensatory damages comport with due process.

For litigators, this case serves as a cautionary tale: misrepresentations made across state or national lines can expose principals personally to suit in the victim’s home forum, and last-minute procedural gambits—whether to avoid jurisdiction or delay trial—are rarely rewarded. The ruling will influence both jurisdictional strategy in transnational tort cases and the calculus of punitive damages in fraud litigation.