SCCY Indus. v. Hickman (In re Hickman)

TIFFANY P. GEYER UNITED STATES BANKRUPTCY JUDGE

Chapter 7

ORDER DENYING DEFENDANT'S MOTION TO DISMISS AS MOOT AND DENYING DEFENDANT'S AMENDED MOTION TO DISMISS

TIFFANY P. GEYER UNITED STATES BANKRUPTCY JUDGE

This matter comes before the Court on pro se Defendant Beau Ryne Hickman's Motion to Dismiss (the "Motion"), filed on December 9, 2022 (Doc. No. 4) as superseded by his Amended Motion to Dismiss (the "Amended Motion"), filed on December 16, 2022 (Doc. No. 5). On December 30, 2022, Plaintiff SCCY Industries, LLC, filed a response to the Amended Motion. (Doc. No. 7.) Upon review of the Amended Motion, the Response, and the law, the Court determines that a hearing is unnecessary and that the Amended Motion is due to be denied.

The only difference between the Motion and the Amended Motion is that the Amended Motion adds a "Notice of Opportunity to Object and Request for Hearing." (Doc. No. 5 at 1-2) The Notice failed to include addresses for the Clerk of Court and the Defendant and the number of days in which the opposing party should respond to the Amended Motion (id. at 1), but this has no bearing on the Court's decision here.

I. THE COMPLAINT

Plaintiff pleads five claims against Defendant: Count I - Nondischargeability of Debt - False pretenses, a false representation, or actual fraud under 11 U.S.C. § 523(a)(2)(A); Count II -Nondischargeability of Debt - Larceny under 11 U.S.C. § 523(a)(4); Count III -Nondischargeability of Debt - Embezzlement under 11 U.S.C. § 523(a)(4); Count IV -Nondischargeability of Debt - Conversion under 11 U.S.C. § 523(a)(6); and Count V -Nondischargeability of Debt - Civil Conspiracy under 11 U.S.C. § 523(a)(6). (Doc. No. 1 at 8-15.) The following allegations are taken from the Complaint.

Plaintiff is a licensed firearms manufacturer and employed Defendant from August 19, 2019, through September 23, 2020. (Id. ¶¶ 13, 14, 19.) Defendant became Chief Operating Officer ("COO") and reported directly to Plaintiff's Chief Executive Officer ("CEO"). (Id. ¶¶ 14-15.) Plaintiff alleges that although its CEO developed trust and confidence in Defendant based on Defendant's representations regarding his proficiency in marketing and handling of Plaintiff's software transition, Defendant was falsifying receipts for reimbursement of expenses within the first thirty days of his employment. (Id. ¶¶ 15-16.)

Plaintiff alleges that as its COO, Defendant owed it a fiduciary duty to perform his duties in good faith and in Plaintiff's best interest. (Id. ¶ 20.) According to Plaintiff, Defendant breached this duty in launching new software for Plaintiff before the software was ready, despite warnings that the software was not ready to launch. (Id. ¶¶ 22-23.) The early launch caused and continues to cause significant issues with its implementation, including triggering over $100,000 in costs for re-implementation and other damages. (Id. ¶¶ 24, 25.)

Plaintiff also lists other ways that Defendant allegedly breached his fiduciary duties, including the following:

(1) ignoring environmental contamination at Plaintiff's former location, resulting in approximately $48,000 in damages;

(2) misrepresenting that a Winter Park, Florida office was necessary for Plaintiff's marketing department, and then using the office for his personal benefit as a game room and storage for his personal items, resulting in unnecessary rent totaling approximately $107,000;

(3) booking over $2,000 in airline accommodations on Plaintiff's account for an event that was cancelled, but recklessly failing to cancel the accommodations for a refund;

(4) booking approximately $7,400 in airline and lodging accommodations for Defendant's personal benefit while representing to Plaintiff that they were for a company tradeshow;

(5) fraudulently altering the software "system to reflect that a significant number of Red Dot Laser Sights had shipped to customers, when in fact, [Defendant] stole these items from [Plaintiff's] inventory, causing [Plaintiff] almost $70,000 in damages;"

(6) conspiring with his girlfriend, Rosemari Petruccelli, and her company, Bespoke Florida, LLC (" Bespoke"), to defraud Plaintiff out of $150,000;

(7) charging approximately $13,000 in unexplained and unauthorized purchases on Plaintiff's credit card; and

(8) "stealing over $16,900 of [Plaintiff's] property, including, but not limited to six (6) firearms, a laptop computer, monitor, and docking station, and unauthorized or fraudulent company credit card charges." ( Id. ¶¶ 26, 29, 40.)

Regarding Petruccelli and Bespoke, Plaintiff alleges that Defendant, Petruccelli, and Bespoke fraudulently represented to Plaintiff's CEO that Bespoke was a legitimate company that would provide marketing services to Plaintiff, and based on those representations, Plaintiff and Bespoke entered into a Marketing Services Agreement (the "Agreement"). (Id. ¶¶ 32, 33.) Although Petruccelli executed the Agreement as Owner/President of Bespoke, neither she nor Bespoke intended to perform such services. (Id. ¶ 34.) Rather, this was a scheme by Defendant, Petruccelli, and Bespoke to steal $150,000 in marketing fees from Plaintiff without providing any services. (Id. ¶ 35.) Defendant, as COO overseeing marketing, represented to Plaintiff's CEO that Bespoke was performing such services pursuant to the Agreement in exchange for the fees, when Bespoke never performed the services. (Id. ¶ 36.) Plaintiff also alleges that Bespoke was a sham entity and alter ego of Defendant and Petruccelli and that Bespoke was used as their personal piggy bank and to obtain marketing fees from Plaintiff for Defendant's and Petruccelli's benefit without providing any services. (Id. ¶¶ 37-39.)

II. LEGAL STANDARD

The Amended Motion is brought pursuant to Federal Rules of Civil Procedure 8, 9, and 12, which are made applicable to this adversary proceeding under Federal Rules of Bankruptcy Procedure 7008, 7009, and 7012, respectively. "Rule 12(b)(6) provides that before an answer is filed a defendant may seek dismissal of a complaint if the complaint fails to state a claim." Fed. R. Civ. P. 12(b)(6); In re MacQuarrie, No. 6:14-BK-13112-KSJ, 2017 WL 3172807, at *1 (Bankr. M.D. Fla. July 26, 2017). In reviewing a motion to dismiss under Rule 12(b)(6), the court reviews only the allegations in the complaint, which the court must accept as true and construe in the light most favorable to the plaintiff. Brophy v. Jiangbo Pharm., Inc., 781 F.3d 1296, 1301 (11th Cir. 2015).

Rule 8(a)(2) states that a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." A complaint must contain more than "a formulaic recitation of the elements of a cause of action . . . ." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007). The plaintiff must plead sufficient factual matter to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 677-78, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). This requires the plaintiff to allege "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Rule 9(b) requires a plaintiff pleading fraud to allege "with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." This "means identifying the who, what, when, where, and how of the fraud alleged." Omnipol, A.S. v. Multinational Def. Servs., LLC, 32 F.4th 1298, 1307 (11th Cir. 2022). The purpose of Rule 9(b) is to put the defendant on notice as to the specific misconduct and to protect the defendant against false charges of corrupt and dishonest behavior. Durham v. Bus. Mgmt. Assocs., 847 F.2d 1505, 1511 (11th Cir. 1986).

III. THE AMENDED MOTION

In the Amended Motion, Defendant argues that the Complaint should be dismissed because the Agreement Plaintiff attached to the Complaint is unsigned and does not reference him by name or position. (Doc. No. 5 ¶ 9.) In addition, Defendant generally argues that Plaintiff failed to sufficiently claim what marketing services were not provided, what financial payments he requested or received, and that the Agreement "contains an Adobe Acrobat generic signature font for Bespoke Florida, LLC." (Id.)

None of these arguments warrant dismissing the Complaint. Plaintiff is not asserting a claim against Defendant for breach of contract; thus, it is of no moment at this stage of the litigation that the Agreement may lack Plaintiff's and Defendant's signatures. Defendant is on notice that the services that were not provided were for marketing, and Plaintiff specifically alleges that no services at all were provided. (Doc. No. 1 ¶ 36.) Further, Plaintiff alleges in the Complaint that it suffered damages of approximately $150,000 due to Defendant's fraud and conspiracy with Petruccelli and Bespoke. (Id. ¶ 40(b).)

Defendant also argues that the Complaint should be dismissed because the claims are not pleaded with particularity. (Doc. No. 5 ¶ 11.) Defendant argues that the items "Red Dot Laser Sights" are not sufficiently described, that Plaintiff did not allege when the Red Dot Laser Sights were taken or where they were taken from, and that Plaintiff did not specify the quantity of the Red Dot Laser Sights. (Id. ¶ 11(a).) Defendant also complains that the allegations regarding airfare and lodging are approximations "without specifics to the purchases in question for personal benefit of the Defendant." (Id. ¶ 11(c).) Defendant argues that Plaintiff does not specify the expenses Defendant claimed and "[u]nauthorized expenses do not equate to fraud or larceny." (Id. ¶ 11(d).) Regarding the firearms Defendant allegedly stole, Defendant argues that Plaintiff failed to allege where and when they were taken by him, where they were taken from, when Defendant possessed them, and their serial numbers and products. (Id. ¶ 11(e).) Regarding the allegations of theft of the computer, monitor, and docking station, Defendant states that Plaintiff failed to provide the items' serial numbers and the model and MAC address of the computer. (Id. ¶ 11(f).)

The allegations in the Complaint are sufficiently specific to survive Defendant's Amended Motion. The Complaint contains the "who, what, when, where, and how of the fraud alleged." Omnipol, 32 F.4th at 1307. As one example, Plaintiff alleges that Defendant made the false statement of material fact that a Winter Park office was necessary for the marketing department, that Defendant knew this was false when he made the statement, that Defendant intended Plaintiff to act on the statement, and that Plaintiff suffered damages of approximately $107,000 in renting the Winter Park office that Defendant then used for his personal benefit. (Doc. No. 1 ¶¶ 26(b), 52-55.) Plaintiff sufficiently alleges when the fraud occurred by stating that it occurred during Plaintiff's employment from August 19, 2019, through September 23, 2020. (Id. ¶¶ 13, 19.)

The Complaint contains sufficient details to provide Defendant notice of the allegations against him, goes far beyond a simple recitation of the elements of the causes of action, and states claims for relief that are plausible on their face.

Accordingly, it is ORDERED:

1. The Motion (Doc. No. 4) is DENIED AS MOOT;

2. The Amended Motion (Doc. No. 5) is DENIED; and

3. Within fourteen days of the date of service of this Order, Defendant must file an answer to the Complaint.