Hucke v. Kubra Data Transfer Ltd.

160 F. Supp. 3d 1320, 2015 U.S. Dist. LEXIS 176218, 2015 WL 10097623

• Court: District Court, S.D. Florida
• Decided: November 9, 2015
• Docket: CASE NO. 2:15-CV-14232-ROSENBERG/LYNCH
• Status: Published

Opinion

ORDER ADOPTING MAGISTRATE’S REPORT AND RECOMMENDATION

ROBIN L. ROSENBERG, UNITED STATES DISTRICT JUDGE

THIS MATTER is before the Court upon Magistrate Judge Lynch’s Report and Recommendation (“R & R”) [DE 31], Plaintiffs objection thereto [DE 32], Defendant’s response [DE 33], and Plaintiffs notice of supplemental authority [DE 35]. The R & R recommends granting Defendant’s Motion to Dismiss [DE 11] with prejudice. For the reasons set forth below, the Court ADOPTS Magistrate Judge Lynch’s R & R, finding his recommendations to be well reasoned and correct. However, the Court finds it appropriate to further explain its reasoning with regard to the issues raised in Plaintiffs objection, both to address the effect of the Eleventh Circuit’s recent decision in Dana’s Railroad Supply v. Attorney General, Florida, 807 F.3d 1235 (11th Cir.2015), and because Magistrate Judge Lynch’s R & R disagrees with a recent decision from this court, Pincus v. Speedpay, No. 15-80164-CIV-MARRA, 2015 WL 5820808 (S.D.Fla. Oct. 6, 2015).

I. BACKGROUND

Plaintiff has brought six claims against Defendant for unjust enrichment, money had and received, and violation of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”). See DE 1. Counts I through III are premised on Defendant’s alleged violations of Fla. Stat. § 501.0117 (the “Surcharge Statute”), and Counts TV through VI are premised on Defendant’s alleged violations of Fla. Stat. § 560.204 (the “Money Transmitter Statute”). Plaintiff alleges that he paid his residential electricity bill to Duke Energy Florida by using Defendant’s “EZ-Pay” service, and that Defendant imposed a $2.40 surcharge on Plaintiff for the privilege of making the payment with a credit card. See DE 1 at ¶¶ 21-24. . Plaintiff alleges that this surcharge violated the Surcharge Statute, and that Defendant was not properly licensed to conduct this transaction, as required under the Money Transmitter Statute. See DE 1 at ¶¶ 19-20, 40-44. Plaintiff seeks to bring this action on behalf of himself and a class of similarly situated persons. See DE 1 at ¶¶ 32-39.

Defendant moved to dismiss the complaint for failure to state a claim, arguing: (1) Plaintiff could not bring common law claims premised on these statutory violations because neither statute provides for a private right of action; and (2) Plaintiff could not bring FDUTPA claims premised on these statutory violations because (a) neither statute expressly states that it may serve as a FDUTPA predicate and (b) the statutes do not proscribe deceptive or unfair practices. See DE 11. Regarding the common law claims, Plaintiff responded that they could be brought under Florida case law providing that, where the law requires a party to have a license to conduct business, contracts by unlicensed persons to perform those services are illegal and void. See DE 24 at 11-12 (citing Fabricant v. Sears Roebuck, 202 F.R.D. 310, 320 (S.D.Fla.2001) and Vista Designs, Inc. v. Silverman, 774 So.2d 884 (Fla.Dist.Ct.App.2001)). Regarding the FDUTPA claims, Plaintiff argued the Surcharge and Money Transmitter Statutes are consumer protection statutes, and that courts have held that FDUTPA should be broadly applied. See DE 24 at 22-23.

The Court referred the Motion to Dismiss to Magistrate Judge Lynch for disposition. See DE 18. Magistrate Judge Lynch issued an R & R recommending that Plaintiffs claims be dismissed with prejudice. See DE 31. Plaintiff has objected to that recommendation. See DE 32.

II. LEGAL STANDARD

In considering a motion to dismiss, the Court must accept the allegations in the complaint as true and construe them in the light most favorable to the plaintiffs. See Resnick v. AvMed, Inc., 693 F.3d 1317, 1321 (11th Cir.2012). To survive a motion to dismiss under Rule 12(b)(6), the “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

Where a magistrate judge has submitted an R & R on a dispositive matter, and a party has filed written objections to the R & R, the Court “shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” 28 U.S.C. § 636(b)(1); see also Fed. R.Civ.P. 72(b)(3). The Court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1).

III. ANALYSIS

A. Claims Based on the Surcharge Statute

After Magistrate Judge Lynch issued his R & R, the Eleventh Circuit issued its opinion in Dana’s Railroad Supply, which finds that the Surcharge Statute is an unconstitutional abridgment of free speech. 807 F.3d at 1238-40. Plaintiff filed a notice of supplemental authority alerting the Court to this case, and he appears to concede that his claims based on the Surcharge Statute should be dismissed. See DE 35 n.l. Given the Eleventh Circuit’s finding that the Surcharge Statute violates the United States Constitution, the Court agrees and Counts I — III of the Complaint are DISMISSED with prejudice.

This Court thus finds it unnecessary to address Plaintiffs objections to the R & R as to Counts I — III. However, the Court will address Plaintiffs objections as to Counts IV-VI, which are based on the Money Transmitter Statute, because Plaintiff asserts that those claims remain viable. See DE 35 n.l.

B. Claims Based on the Money Transmitter Statute

1. Common Law Claims

Plaintiff argues he can bring common law claims for restitution and money had and received based on Florida case law stating that, where the law requires licenses to conduct business, contracts by the unlicensed to perform licensed services are illegal and void. See DE 24 at 11-12; DE 32 at 5-6. In the R & R, Magistrate Judge Lynch acknowledges this Florida doctrine, but finds that “[t]he law does not appear to convey the benefit of this doctrine in all instances of statutory or regulatory non-compliance.” DE 31 at 8. Rather, he concludes, the case law suggests

that something more than just the violation of a statute ... is needed. The case law suggests that there must be some indication that the regulatory violation also renders the underlying transaction void or otherwise creates grounds for private restitution.... That is, some indication in the subject regulatory statute that opens the door to pursuing either restitution or declaratory judgment.

Id. at 9-11. Magistrate Judge Lynch concedes that this is not explicitly stated in the relevant case law, but finds it to be implicitly so. Id. at 11. He concludes:

[TJhere is no per se bar that precludes a plaintiff from basing an unjust enrichment cause of action (or its equivalent) on a violation of a statute. Nor, conversely, will a statutory violation always support an unjust enrichment cause of action. This Court gleans from the ... case law that the answer lies somewhere in the middle. Whether a statute’s violation can be redressed through an unjust enrichment cause of action depends on the statute’s wording. The statute must do more than require regulatory compliance. The statute must take the added step, either expressly or impliedly, to confer some benefit to private parties that can be redressed through restitution. This may include deeming a contract or a bill void and unenforceable. Or, there must be some strong public policy at issue that warrants the same relief.

Id. at 13-14. Magistrate Judge Lynch finds that the Money Transmitter Statute does not contain such language or implicate such public policy concerns, and accordingly concludes that the Plaintiff cannot bring equitable common law claims based on violations of that statute. Id. at 14-16.

Plaintiff objects to Magistrate Judge Lynch’s conclusion that there must be “something more,” in terms of statutory language or public policy, to allow a plaintiff to bring an equitable common law claim premised on a statutory violation. See DE 32 at 3-4. Plaintiff relies on Pincus v. Speedpay, No. 15-80164-CIV-MAR-RA, 2015 WL 5820808 (S.D.Fla. Oct. 6, 2015), which considered the same case law and materially identical claims, but reached the opposite conclusion. This Court respectfully disagrees with Pincus and adopts the analysis set forth in Magistrate Judge Lynch’s R & R.

In allowing the plaintiffs to bring common law claims based on violations of the Surcharge Statute and Money Transmitter Statute, Pincus relied on State Farm Fire and Casualty Co. v. Silver Star Health and Rehab, 739 F.3d 579 (11th Cir.2013) and declined to rely on Buell v. Direct General Insurance Agency, Inc., 267 Fed.Appx. 907 (11th Cir.2008). However, this Court agrees with Magistrate Judge Lynch that, although those cases reached opposing results, they are not inconsistent. Both cases actually “show[] the importance of the underlying statute’s language.” DE 31 at 12.

In Silver Star, the Eleventh Circuit allowed an insurance company to bring an unjust enrichment claim for money it paid to a medical clinic that was not properly licensed. 739 F.3d at 582. Although the relevant statute, the Florida Health Care Clinic Act (Chapter 400) did “not expressly refer to a judicial remedy, it provide[d] that ‘[a]ll charges or reimbursement claims made by or on behalf of a clinic that ... is not so licensed ... are unlawful charges, and therefore are noncompensable and unenforceable.’ ” Id. at 583 (quoting Fla. Stat. § 400.9935(3)). In Buell, the Eleventh Circuit affirmed the dismissal of plaintiffs claims for money had and received and recission based on violations of the Florida Unfair Insurance Trade Practices Act (“FUITPA”): specifically, allegations of “sliding” and that the insurance agents were not properly licensed. 267 Fed.Appx. at 908-09. Finding that “the Florida legislature created a private cause of action for certain FUITPA violations but not others,” and not for the violations alleged by plaintiff, the Eleventh Circuit declined to “use the common law of contracts [sic] to circumvent this deliberate remedial limitation.” Id. at 909. Buell specifically rejected plaintiffs’ argument “that the availability of a statutory remedy should be irrelevant, as Florida common law makes rescission or restitution available to protect an innocent party from the consequences of a contract whose subject matter is illegal,” finding this argument ran afoul of the Florida Supreme Court’s holding in Murthy v. N. Sinha Corp., 644 So.2d 983, 985 (Fla.1994). Buell, 267 Fed.Appx. at 909-10.

The Pincus decision finds Buell unpersuasive on the basis that Buell misinterpreted the Florida Supreme Court’s decision in Murthy:

The Buell Court, however, overlooked the fact that while the Florida Supreme Court in Murthy ruled that the statute in question did not create a cause of action, it also stated that “[w]e agree that an owner may recover from a negligent qualifying agent, but only under a common law theory of negligence.” Murthy, 644 So.2d at 986-87. Hence, Murthy did not preclude other available civil causes of action that might already exist. Murthy simply stated that the statute did not create the remedy.

Pincus, 2015 WL 5820808, at *3. This Court respectfully disagrees, and agrees with the Buell court’s finding that allowing broad enforcement of statutes via the common law would run afoul of the approach taken by the Florida Supreme Court in Murthy.

In Murthy, homeowners alleging negligent construction of home improvements attempted to bring claims for negligent performance of a contract, discharge of a fraudulent lien, and violation of Florida’s minimum building codes against the qualifying agent of the corporation that had acted as general contractor. 644 So.2d at 984-85. The Florida Supreme Court agreed that Chapter 489, which required a corporation acting as general contractor to have a qualifying agent, imposed a duty on the qualifying agent “to supervise a corporation’s construction projects, but [found] that failuré to meet that duty does not give rise to a private cause of action against a corporation’s qualifying agent.” Id. However, the court concluded that “an owner may recover from a negligent qualifying agent, but only under a common law theory of negligence or through the administrative remedies available pursuant to Chapter 489.” Id. at 986-87.

Thus, at best, Murthy appeared to allow the statute in question to establish the existence of a duty for purposes of a common law negligence claim, notwithstanding the absence of a statutory cause of action. This is not the same as concluding that a statutory violation gives rise to a claim of unjust enrichment or money had and received.¹ The plaintiffs in Murthy “alleged both property damage and personal injury,” damages that could support a claim for negligence regardless of the statutory violation. Id. at 985. The fact that the defendant’s behavior may have violated a statute would simply make it easier for the plaintiffs to prove defendant’s behavior was negligent. See generally deJesus v. Seaboard Coast Line R. Co., 281 So.2d 198, 200-01 (Fla.1973) (discussing how a statutory violation may establish negligence per se or be prima facie evidence of negligence). Here, in contrast, Plaintiff has not alleged any injury that would exist independent of the alleged statutory violations: he simply alleges that, because the Defendant violated the Money Transmitter Statute, it would be inequitable for Defendant to keep Plaintiffs money. See DE 1 at ¶¶ 53-61. In other words, Plaintiff argues that the parties’ transaction is void because plaintiff did not receive the benefit of his bargain, i.e., the consideration received by the plaintiff was inadequate as a matter of law. See generally Bohlke v. Shearer’s Foods, LLC, No. 9:14-CV-80727, 2015 WL 249418 (S.D.Fla. Jan. 20, 2015) (when defendant has given adequate consideration to someone for the benefit conferred, a claim of unjust enrichment fails).

This Court agrees with Defendant that Murthy stands for the proposition that, “where a defendant has injured a plaintiff in a way that gives rise to a common law claim (in Murthy, performed construction work in a negligent fashion), the mere fact that the defendant might also have violated a statute without any private right of action does not preclude a plaintiff from asserting its existing common law claims.” DE 33 at 9. However, “[njothing in Mur-thy stands for the proposition that a plaintiff may assert a common law claim” where “Plaintiff has not alleged any injury that would exist independent of the purported statutory violations.” Id. Buell considered the latter situation, which Murthy simply did not address.

Furthermore, the approach taken in Buell — i.e., refusing to allow plaintiffs to evade legislative intent through use of a restitution-based cause of action — is consistent with Murthy’s holding that “legislative intent” should be “the primary factor” in deciding whether a statutory cause of action exists. 644 So.2d at 985. Because “[jjudicially inventing a right to sue — based on a statute that provides no right to sue — arrogates to the judiciary a power of the legislature” and “ignores not only the formal separation of powers but also the legislature’s superior legislative competence,” courts should be cautious when allowing plaintiffs to bring an equitable common law claim premised on violation of a statute that provides no explicit statutory cause of action. Lemy v. Direct General Finance Co., 884 F.Supp.2d 1236, 1238 (M.D.Fla.2012) (denying reconsideration of dismissal of common claims based on violation of insurance statute), affirmed at 559 Fed.Appx. 796 (11th Cir.2014); see also QBE Ins. Corp. v. Chalfonte Condo. Apt. Ass’n, Inc., 94 So.3d 541, 552-53 (Fla.2012) (declining to void hurricane deductible in insurance policy, based on insurer’s failure to comply with a statutory notice provision, because statute did not provide for that remedy and “courts cannot provide a remedy when the Legislature has failed to do so”). Where, as here, the plaintiff alleges no injury apart from violation of the statute, the Court agrees with Magistrate Judge Lynch’s conclusion that there must be “something more,” in terms of statutory language or public policy, to allow the plaintiff to bring a restitution-based cause of action based solely on violation of the statute.

The Florida case law cited by Plaintiffs, see DE 32 at 5-6, does not compel a different result. In Cooper v. Paris, 413 So.2d 772 (Fla.Dist.Ct.App.1982), which held an investor could seek restitution for money paid to an unlicensed real estate broker, the Florida court explicitly noted that the relevant statute “subjects the unlicensed real estate agent not only to forfeiture of his right to compensation but also to criminal liability. § 475.42, Fla. Stat.” Id. at 774 (emphasis added). Thus, there was language in the statute indicating the legislature’s intent to void such a transaction.

In Vista Designs, Inc. v. Silverman, 774 So.2d 884 (Fla.Dist.Ct.App.2001), the Florida Fourth District Court of Appeal ruled that an unlicensed attorney was required to disgorge the proceeds he earned under a contract of representation, even though the court “acknowledge[d] that unlike real estate brokers, there are no specific regulatory measures equivalent to Chapter 475 which require disgorgement of fees under the facts in this situation.” Id. at 887. However, the court found that “regulatory measures make it a criminal offense to practice law without a license, see section 454.23, Fla. Stat., and the admission of attorneys to practice law is considered a judicial function, see section 454.021, Fla. Stat.” Id. Here, as discussed further below, the Money Transmitter Statute does not implicate a traditional judicial function and does not invoke the same public policy concerns.

The Money Transmitter Statute provides: “[A] person may not engage in, or in any manner advertise that they engage in, the selling or issuing of payment instruments or in the activity of a money transmitter, for compensation, without first obtaining a license under this part.” Fla. Stat. § 560.204(1).² Violations of the Money Transmitter Statute are enforced by the Office of Financial Regulation of the Financial Services Commission. See generally Fla. Stat. §§ 560.105, 560.113, 560.114; see also Fla. Stat. § 560.103(7), (25) (definitions). The statute does not indicate that a violation of the licensing requirement voids a transaction engaged in by the unlicensed Money Transmitter.³ The statute does refer to possible restitution, but only in the context of an administrative enforcement action:

In addition to, or in lieu of, any other remedies provided under this chapter, the office may apply to the court hearing the matter for an order directing the defendant to make restitution of those sums shown by the office to have been obtained in violation of this chapter. Such restitution shall, at the option of the court, be payable to the administrator or receiver appointed under this section or directly to the persons whose assets were obtained in violation of this chapter.

Fla. Stat. § 560.113(3) (emphasis added); see also Fla. Stat. § 560.116 (“Any person having reason to believe that a provision of this chapter is being violated, has been violated, or is about to be violated, may file a complaint with the office setting forth the details of the alleged violation.”) (emphasis added). In light of the Florida Legislature’s indication that this statute should be enforced by the Office of Financial Regulation of the Financial Services Commission, the Court agrees with Magistrate Judge Lynch that violations of the Money Transmitter Statute cannot serve as the basis for a common law claim of unjust enrichment or money had and received, as this would essentially allow an end-run around the Legislature’s decision not to provide a statutory cause of action. Accordingly, Counts IV and V are DISMISSED with prejudice.

2. FDUTPA Claim

As with Plaintiffs common law claims, Magistrate Judge Lynch recommends dismissal with prejudice of Count VI, Plaintiffs FDUTPA claim based on violation of the Money Transmitter Statute. See DE 31 at 16-21. Magistrate Judge Lynch finds that violations of the Money Transmitter Statute cannot serve as a predicate for FDUTPA claims because: (1) the statute does not expressly state it may serve such a purpose; and (2) it does not accomplish the same goal as the FDUTPA because it does not prescribe a deceptive or unfair practice or act. See id. Magistrate Judge Lynch “acknowledges that the FDUTPA is to be applied broadly,” but finds “there still is a limit to how far the FDUTPA can reach,” and Plaintiffs arguments “show nothing more than a general, indirect link between the subject statute! ] and consumer protection goals.” Id. at 20 (emphasis added). Magistrate Judge Lynch notes that “the only ‘deception’ was to cause the Plaintiff to pay a fee that otherwise is illegal.... The Plaintiff had a range of payment options to choose from with full disclosure of the fee for the online credit card payment option.” Id. at 20-21.

Plaintiff again relies on Pincus, which reached the opposite conclusion. See DE 82 at 10; Pincus, 2015 WL 5820808 at *5. The discussion of this issue in Pincus is as follows: “With respect to the FDUTPA claim, the Court rejects Defendant’s contention that Plaintiff has not alleged the necessary elements. Courts have regarded FDUTPA as ‘extremely broad’ and the statute is designed to protect the consuming public from those who would engage in deceptive or unfair trade practices.” Id. at *5 (citing Day v. Le-Jo Enters., Inc., 521 So.2d 175, 178 (Fla.Dist.Ct.App.1988)).

“To establish a claim under the FDUTPA, [a plaintiff] must show (1) a deceptive act or unfair practice, (2) causation, and (3) actual damages.” State Farm Mut. Auto. Ins. Co. v. Med. Serv. Ctr. of Fla., Inc., 108 F.Supp.3d 1343, 1354 (S.D.Fla.2015). “A deceptive act or practice is ‘one that is likely to mislead consumers and an unfair practice is one that offends established public policy and one that is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.’ ” Id. (quoting Washington v. LaSalle Bank Nat’l Ass’n, 817 F.Supp.2d 1345, 1350 (S.D.Fla.2011). A violation of “[a]ny law, statute, rule, regulation, or ordinance which proscribes unfair methods of competition, or unfair, deceptive, or unconscionable acts or practices” may'serve as a predicate for a FDUTPA claim. Fla. Stat. § 501.203(3)(c). Statutes may serve as predicates for a FDUTPA claim under section 501.203(3)(c) in one of two ways: “First, the text of a statute may expressly state that it is to serve as a FDUTPA predicate .... Second, a court may find that a statute proscribes unfair and. deceptive trade practices and therefore operates as an implied FDUTPA predicate.” Parr v. Maesbury Homes, Inc., No. 609CV-1268-ORL-19GJK, 2009 WL 5171770, at *7 (M.D.Fla. Dec. 22, 2009).

Plaintiff has produced no authority, other than Pincus, stating that the Money Transmitter Statute may serve as a FDUTPA predicate. See DE 32 at 10-13; see also DE 31 at 19. The Court agrees with Magistrate Judge Lynch’s conclusion that the Money Transmitter Statute does not proscribe unfair and deceptive trade practices, particularly considering the facts alleged in support of the violations at issue here. See DE 31 at 20-21.

Accordingly, it is hereby ORDERED AND ADJUDGED:

1. Magistrate Judge Lynch’s Report and Recommendation [DE 31] is RATIFIED, APPROVED, AND ADOPTED in its entirety;

2. Defendant’s Motion to Dismiss [DE 11] is GRANTED;

3. The Complaint [DE 1] is DISMISSED WITH PREJUDICE;

4. The Clerk of the Court is directed to CLOSE THIS CASE; and

5. All pending motions are DENIED AS MOOT and all deadlines are TERMINATED.

DONE AND ORDERED in Chambers, Fort Pierce, Florida, this 9th day of November, 2015.

1 . The Court agrees with Magistrate Judge Lynch that unjust enrichment and money had and received are different names for the same theory of restitution-based equitable relief. See Kelly v. Palmer, Reifler & Assocs., P.A., 681 F.Supp.2d 1356, 1384 (S.D.Fla.2010) (noting that, in Florida, the elements of restitution, unjust enrichment, and money had a received are the same).

2 . The Court is assuming arguendo, as did Magistrate Judge Lynch, that Defendant qualifies as a "money transmitter” that is required to be licensed under the statute. See DE 31 at 14.

3 . The Court rejects Plaintiffs’ argument that the statute's reference to "for compensation” is equivalent to the statutory language at issue in Silver Star, which provided that charges in violation of the statute were "noncompensa-ble.” See DE 32 at 9.