Mp, LLC v. Sterling Holding, LLC

• Court: District Court of Appeal of Florida
• Decided: June 28, 2017
• Docket: 15-1062
• Status: Published

Opinion

Third District Court of Appeal State of Florida

Opinion filed June 28, 2017.

THIS OPINION IS NOT FINAL UNTIL DISPOSITION OF ANY FURTHER MOTION FOR REHEARING AND/OR MOTION FOR REHEARING EN BANC. ANY PREVIOUSLY-FILED MOTION FOR REHEARING EN BANC IS DEEMED MOOT. ________________

No. 3D15-1062 Lower Tribunal No. 14-3721 ________________

MP, LLC, Appellant,

vs.

Sterling Holding, LLC, etc., et al., Appellees.

An Appeal from the Circuit Court for Miami-Dade County, Jennifer D. Bailey, Judge.

Joel S. Perwin, P.A., and Joel S. Perwin; Heller Waldman, P.L., and Glen H. Waldman and Jason Gordon, for appellant.

Duane Morris LLP, and Harvey W. Gurland, Jr., for appellee TD Bank, N.A.

Before ROTHENBERG, FERNANDEZ, and SCALES, JJ.

 Judge Fernandez did not participate in oral arguments. ON MOTION FOR REHEARING

ROTHENBERG, J.

We grant the appellant’s motion for rehearing, withdraw our opinion filed on

December 21, 2016, and substitute the following opinion in its place.1

The trial court granted TD Bank, N.A.’s (“TD”) motion to dismiss MP,

LLC’s (“MP”) claims against TD based on the conclusion that the complaint fails

to allege sufficient facts to support MP’s claims against TD. Because the facts

alleged are more than sufficient to withstand dismissal, we reverse.

Although MP has sued multiple defendants, its claims against TD are

contained in Counts II and VII for civil conspiracy; Count IV for violation of

Florida’s RICO Act statute; and Count X for aiding and abetting another

defendant’s breach of its fiduciary duties to MP. Before addressing the

allegations, it is important to note that TD is the successor in interest to Mercantile

Bank (“Mercantile”), and because they represent one entity, they will be referred

to either as “the Bank” or, when appropriate, the specific bank will be identified.

1 The appellant, MP, LLC, filed a motion for rehearing en banc of the original panel opinion. Pursuant to this Court’s Internal Operating Procedures, when a motion for rehearing en banc is unaccompanied by a motion for rehearing, the motion for rehearing en banc is treated as including a motion for rehearing which must be ruled upon by the panel. Wade v. State, 57 So.3d 993, 994 (Fla. 3d DCA 2011); see also Romero v. State, 870 So. 2d 816, 818 (Fla. 2004) (“By treating motions for rehearing en banc as including motions for rehearing, the Third District adheres to the spirit of Florida Rule of Appellate Procedure 9.040(d), which is to ‘disregard any procedural error or defect that does not adversely affect the substantial rights of the parties.’”). 2 The operative complaint alleges as follows. While Mercantile was

negotiating its takeover by TD, Mercantile realized that it needed to shore up its

portfolio of non-performing loans in order to maximize the sales price and to avoid

governmental scrutiny. Thus, the complaint alleges that Mercantile conspired with

the four majority members (“the Majority Members”) of Sterling Holding, LLC

(“Sterling”) and other entities owned by the Majority Members of Sterling (“the

Non-Sterling Entities”) without the knowledge and to the detriment of the

plaintiff, MP, which was a Minority Member of Sterling.

At the time of the alleged conspiracy, the breakdown of Sterling’s

membership interests was as follows: Arriaga Enterprises owned a 25% interest;

Howard Family Partners owned a 25% interest; Raffaele Williams owned a 25%

interest; Scott Weinberg owned a 12.5% interest (combined, “the Majority

Members of Sterling”); and MP owned a 12.5% interest. MP claims that in early

2010, when Mercantile was being sold to TD, the Non-Sterling Entities were in

financial trouble or in default of their loans with Mercantile and that these loans

were the largest non-performing loans in Mercantile’s portfolio. Thus, MP claims

that Mercantile conspired with the Non-Sterling Entities and the Majority

Members of Sterling (who all had membership interests in the Non-Sterling

Entities) to cross-collateralize these non-performing loans with solvent property

owned by Sterling.

3 To consummate the transaction, MP’s signature was required. However,

because the Majority Members of Sterling and Mercantile believed that MP would

never agree to the dilution of Sterling’s interest to benefit the Bank and the Non-

Sterling Entities, which MP had no interest in, and that MP would most likely

move to enjoin the transaction and draw unwanted attention and scrutiny, MP was

not told about the transaction, which closed in April 2010. In addition to not

informing MP about the transaction, the complaint alleges that the Sterling

defendants created fraudulent documents omitting MP as a member of Sterling,

and the Bank, which had full knowledge of MP’s membership interest in

Sterling, accepted these fraudulent documents and consummated the cross-

collateralization.

MP further alleges that in January 2014, the Bank declared a technical

default of its loans to Sterling and the Non-Sterling Entities for failure to obtain the

requisite insurance and to escrow two months of property taxes. Because

Sterling’s loan could not be carved out from the properties owned by the Non-

Sterling Entities due to the cross-collateralization, a short sale was conducted and

MP’s 12.5% interest in Sterling was rendered worthless.

The trial court dismissed with prejudice MP’s fifth amended complaint

based on: (1) MP’s failure “to narrow its legal theories to those most likely to

sustain legal analysis under the facts”; (2) the trial court’s inability to “identify in

4 this repeated effort at pleading, any duty to MP which TD Bank breached”; (3)

MP’s failure to plead any facts demonstrating the Bank’s actual knowledge that the

documents it relied on, and which failed to reflect MP’s existence, were false; (4)

MP’s failure to plead the elements of conspiracy as to the Bank; and (5) MP’s

failure to allege any facts demonstrating any action taken by the Bank to defraud

MP. The trial court essentially found that if any fraud, conspiracy, or wrongdoing

took place, it was without the Bank’s knowledge and participation. As will be

demonstrated below, the complaint clearly and repeatedly alleged the Bank’s

actual knowledge and participation in the alleged wrongdoing.

The dissent agrees with the trial court that the Bank’s alleged wrongdoing is

not actionable in tort. While we agree that generally the relationship between a

lender and a borrower is contractual and thus does not normally extend the duties

past what are contractually required, in this case, MP has alleged that the Bank

conspired with the Sterling defendants to commit tortious acts against MP, and that

the Bank itself committed tortious acts against MP for its own benefit. While we

recognize that the allegations are just that – allegations, they are sufficiently pled

to withstand dismissal for failure to state a cause of action.

STANDARD OF REVIEW

Because the trial court was ruling on a motion to dismiss the complaint,

rather than on a motion for summary judgment, the trial court was “required to

5 ‘treat the factual allegations of the complaint as true and to consider those

allegations in the light most favorable to the plaintiffs.’” Siegle v. Progressive

Consumers Ins. Co., 819 So. 2d 732, 734-35 (Fla. 2002) (quoting Hollywood

Lakes Section Civil Ass’n v. City of Hollywood, 676 So. 2d 500, 501 (Fla. 4th

DCA 1996)). Whether the allegations in the complaint are sufficient to state a

cause of action is an issue of law, which we review de novo. Siegle, 819 So. 2d at

734.

THE ALLEGATIONS

I. Counts II and VII, Civil Conspiracy

The elements of a claim for civil conspiracy are: “(a) an agreement between

two or more parties, (b) to do an unlawful act or to do a lawful act by unlawful

means, (c) the doing of some overt act in pursuance of the conspiracy, and (d)

damage to plaintiff as a result of the acts done under the conspiracy.” Raimi v.

Furlong, 702 So. 2d 1273, 1284 (Fla. 3d DCA 1997). There is no requirement that

each co-conspirator commit acts in furtherance of the conspiracy; it is sufficient if

each conspirator knows of the scheme and assists in some way. Charles v. Fla.

Foreclosure Placement Ctr., LLC, 988 So. 2d 1157, 1160 (Fla. 3d DCA 2008).

The trial court found that the complaint failed to allege that the Bank was a

part of the conspiracy, caused any harm, or had an independent duty to MP.

Instead, the trial court found that the allegations in the complaint only show that

6 the Bank was a passive and unknowing conduit for the alleged wrongdoings of the

Non-Sterling Entities and the Majority Members of Sterling. Based on the

following allegations taken from the operative complaint, the trial court’s findings

are clearly incorrect. The complaint clearly alleges that the Bank had actual

knowledge as to each conspiracy

A. The general allegations related to the conspiracy alleged in Count II

Paragraph 47 of the complaint alleges that prior to the April 2010 loan

closing, a Credit Approval Request Memo was prepared. Paragraph 48 alleges that

under the “Ownership/Management Composition” section of this memo, a

breakdown of the ownership of each Sterling entity was provided, and in this

breakdown, MP was listed as holding a 12.5% membership interest. Paragraph 49

states that “[a]s a consequence of the 2010 Memo, which was prepared prior to the

execution of the April 2010 transaction, the Bank was without question aware of

MP’s interest in Sterling and purposefully colluded to ram through the

transaction to MP’s significant detriment without its otherwise required

signature.” (emphasis added).

Besides purposefully keeping MP out of the loop, paragraph 51 alleges:

To further the scheme of reducing the loan ratios, Mercantile failed to include certain insurance required by the mortgage covenants in the mortgage payment for the loans. By doing so, Mercantile was able to make it further appear that the debt to income ratios of Sterling and the Non-Sterling Entities were within an acceptable range so that regulators would not require additional reserves, and Mercantile could 7 give the appearance that one of its largest loan portfolios was performing so that TD would proceed with the acquisition of Mercantile.

The next several paragraphs explain that to effectuate the cross-

collateralization, Mercantile required that each of Sterling’s members sign off on

the new obligation. The complaint then details the scheme that was allegedly

orchestrated to hide MP’s membership interest by falsifying the documents.

Paragraph 60 specifically alleges that at the closing of the loan modification,

sworn representations were made omitting MP’s membership interest in Sterling,

and states: “Of course, not only did Arriaga, Howard, Weinberg and Williams [the

Majority Members of Sterling] know this was false, but so did . . . the Bank . . . .”

(emphasis added).

Paragraphs 71 and 72 also specifically allege the Bank’s knowledge:

71. As for Mercantile’s knowledge of the fraud, beyond that which is evident by the 2009 [loan modification review] and the 2010 Memo, MP’s managing member met Nachman with Lozano [the Bank’s loan officer] a short time prior to the loan modification which closed on April 2010. Lozano was well-aware, as the loan officer who processed the loan modification of the loan on Palmetto Gardens, that MP was in fact a member of Sterling and held a 12.5% membership interest in Sterling.

72. . . . Notwithstanding that knowledge, Lozano on behalf of the Bank, participated in and manipulated matters on Mercantile’s side to make sure that the closing went through to the benefit of among others, Mercantile.

8 B. The specific allegations related to the conspiracy alleged in Count II

Count II realleges paragraphs 1 through 123 and then specifically lays out the

allegations regarding the alleged scheme by the Bank and others to falsify the

documents and omit MP’s interests as a member of Sterling in order to preclude

MP from objecting to the loan modification, cross-collateralization, and other

actions for the benefit of the co-conspirators. Paragraphs 135 and 136 allege that

there was an agreement by the Majority Members of Sterling (who also had

membership interests in the Non-Sterling Entities) to omit MP as an owner of

Sterling from the documents required by the Bank for the loan modification and

cross-collateralization. Paragraph 137 specifically alleges that the Bank and

the Bank’s loan officer, Lozano, were part of the agreement to remove MP’s

name as an owner of Sterling from these documents “while knowing that MP

was in fact an owner of Sterling.” Further, paragraph 141 alleges:

TD, as successor in interest to Mercantile, took actions in furtherance of the conspiracy through Lozano, who was an employee of Mercantile, by facilitating the refinancing and/or modification of the loan for Palmetto Gardens with knowingly fraudulent documents excluding MP’s existence, despite having direct knowledge that MP was a member of Sterling, and by accepting loan documents that intentionally omitted MP as a member of Sterling and falsely stated the membership interest of Sterling, in order to bring the loans back into balance so the sale to TD could close.

As this recitation of the allegations clearly demonstrates, Count II of the

9 operative complaint sets forth more than sufficient allegations to satisfy the

pleading requirements of civil conspiracy as it relates to the Bank. Contrary to the

trial court’s order, MP has sufficiently alleged that the Bank actually knew that the

documents it relied on, and which failed to reflect MP’s existence, were false. The

complaint alleges that the Bank was not merely a passive conduit to the conspiracy

and fraud allegedly committed by the Majority Members of Sterling; rather, the

Bank was a willing and active participant in the scheme to keep MP in the dark in

order to maximize the sales price of Mercantile to TD by shoring up Mercantile’s

portfolio.

C. The general allegations related to the conspiracy alleged in Count

VII

The conspiracy alleged in Count VII involves the short sale of Palmetto

Gardens Industrial Park (“Palmetto Gardens”), which was purchased by Sterling in

2005 with approximately $10.5 million in loans. Paragraph 22 alleges that this

was a successful venture that produced a positive yearly cash flow. On or about

June 29, 2009, Sterling entered into a promissory note, mortgage, and security

agreement with the Bank in the amount of $14.4 million (Paragraph 24). The

operative complaint further alleges that to consummate the refinancing, the

Majority Members of Sterling entered into a cross-collateralization of the Palmetto

Gardens property with other obligations in which the Majority Members of

10 Sterling had an interest, without MP’s knowledge or consent, thereby encumbering

MP’s sole interest in Sterling.

Paragraph 203 of Count VII alleges that SAA, the management company for

Sterling, and the Non-Sterling Entities

entered into an agreement whereby SAA would not pay insurance premiums or pay the escrowed property taxes to TD in order to trigger a default of the loan documents, and would fail to cure the default, for among other reasons, to trigger the cross collateralization of Palmetto Gardens, which was cash flow positive, and could be utilized to get the members of Sterling other than MP out from under the debt on the Non-Sterling Entities.

Paragraph 204 alleges that in January 2014, TD declared the anticipated technical

default of the Palmetto Gardens loans.

Count VII further alleges that when MP learned of the Bank’s declaration of

default, it filed a lawsuit against the alleged conspirators, which, at that point, did

not include the Bank. Shortly thereafter, the alleged conspirators and the Bank

conspired to sell Palmetto Gardens at a short sale at a greatly reduced price,

allowed two of the Majority Members of Sterling (Arriaga and Howard) to retain

an under- the-table interest in Palmetto Gardens, and ensured that SAA be retained

by the new owner to act as the management company for the property. Paragraphs

212 alleges that as part of the conspiracy, the Bank agreed to release all of the

guarantors from millions of dollars in guarantees, even though the properties were

sold at a discount, without requiring the guarantors to produce financial statements

11 in order to determine their ability to cover the loans or cure the defaults.

Paragraph 217 alleges that the Bank entered into this agreement with the

other alleged conspirators to avoid the allegations of wrongdoing against it in this

lawsuit and to eliminate the bad debt it was carrying. And, as already articulated,

the complaint alleges that the Bank was able to commit this conspiracy by

knowingly accepting falsified documents omitting MP’s membership interest so

that the cross-collateralization could be accomplished in the first place.

As these allegations are more than sufficient to withstand dismissal for

failing to satisfy the pleading requirements of civil conspiracy as it relates to the

Bank, the trial court erred by dismissing Counts II and VII of the fifth amended

complaint.

II. Count IV, Violation of the Florida Racketeer Influenced and Corrupt Organization Act

To survive a motion to dismiss Count IV, alleging a violation of the Florida

Racketeer Influenced and Corrupt Organization Act (“RICO”), MP was required to

plead the following elements:

(1) the existence of an enterprise, which [the Bank] was employed by or associated with in committing the crimes, (2) a pattern of racketeering activity, and (3) at least two ‘incidents’ of racketeering conduct that have the same or similar intents, results, accomplices, victims, or methods of commission, or that are otherwise interrelated by distinguishing characteristics and are not isolated incidents.

Shimek v. State, 610 So. 2d 632, 634-35 (Fla. 1st DCA 1992) (citing Boyd v.

12 State, 578 So. 2d 718 (Fla. 3d DCA 1991)).

In dismissing the operative complaint, the trial court concluded that the

complaint failed to sufficiently allege the Bank’s knowledge that the documents it

was relying on, when it cross-collateralized the Non-Sterling Entities non-

performing loans with solvent property owned by Sterling, were fraudulent. As

already addressed in detail, the complaint clearly and unequivocally has alleged

that the Bank was a knowing and willing conspirator with full knowledge of the

falsity of the documents it relied on to accomplish the cross-collateralization, and

the benefits it expected as a result of its participation in the alleged conspiracy.

We, therefore, turn to the elements MP was required to plead in support of its

RICO claim.

A. The existence of an enterprise which the Bank was employed by or associated with in committing the crimes

As previously addressed, the operative complaint alleges that the Bank

conspired with the Majority Members of Sterling and the Non-Sterling Entities to

cross-collateralize the largest non-performing loans, and in some cases, loans

which were in default, in Mercantile’s portfolio prior to the sale of Mercantile to

TD. To accomplish this goal, it is alleged that Mercantile conspired with the

Majority Members of Sterling to allow the Bank to cross-collateralize Sterling’s

healthy and profitable properties with other defaulting and non-performing loans

owed by the Non-Sterling Entities, in which the Majority Members of Sterling 13 each had a financial interest. And to accomplish this cross-collateralization

without drawing any attention, it is alleged that, with the Bank’s knowledge and

consent, fraudulent documents omitting MP’s interest in Sterling were prepared by

Sterling’s Majority Members and were used by the Bank. This was done because

MP, which held no interest in the Non-Sterling Entities, surely would have

objected to and would have attempted to block the transaction, which would have

drawn attention to the weaknesses in Mercantile’s portfolio. Thus, the complaint

sufficiently alleged the existence of and the Bank’s participation in the RICO

enterprise.

B. A pattern of racketeering activity

To establish a “pattern of racketeering activity,” MP was required to plead

facts establishing a continuing course of conduct or a “series of related predicates

extending over a substantial period of time,” State v. Lucas, 600 So. 2d 1093, 1094

(Fla. 1992) (quoting H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 241-43 (1989)),

which is commonly referred to as “continuity.” Jackson v. BellSouth Telecomms.,

372 F.3d 1250, 1265 (11th Cir. 2004). In Lucas, the Florida Supreme Court held

that predicate events occurring over a six-month period were sufficient to prove

continuity. Lucas, 600 So. 2d at 1093.

MP has alleged that the wrongful predicate acts took place over a period of

many months. The complaint alleges that the conspiracy, including the

14 falsification and the acceptance of the falsified documents, took place in April

2010, and the refinancing was effectuated shortly thereafter. In January 2014, the

Bank declared a technical default of the loans for Palmetto Gardens (the property

owned by Sterling) and the Non-Sterling properties due to the failure to maintain

insurance and escrow property taxes. (Paragraph 109). After the default was filed,

MP filed the instant lawsuit against the alleged conspirators, except for the Bank,

and put the Bank on notice that it might be added to the lawsuit. The complaint

alleges that, thereafter, the Majority Members of Sterling, the Bank, and SAA, the

management company, “entered into an agreement to use the excuse of the

technical default to enter into a contract for a short sale to a buyer who was all too

familiar with Arriaga and Howard” (Paragraph 112); sold the properties at a

reduced price (Paragraph 118); and released the guarantors from their personal

guarantees for the Palmetto Gardens property without even attempting to

determine if the guarantors had sufficient assets to satisfy the loan deficiency

(Paragraph 121). The purpose of this agreement was to allow the Bank and the

Majority Members of Sterling to eliminate the debt on the Non-Sterling properties

and to hopefully avoid allegations of wrongdoing by MP (Paragraph 122).

Therefore, because the alleged predicate acts spanned not just months, but years,

the continuity or pattern of racketeering activity requirement was adequately pled.

C. The final element—The existence of at least two incidents of racketeering conduct 15 The third and final element which must be pled when alleging a RICO

violation is the existence of “at least two ‘incidents’ of racketeering conduct that

have the same or similar intents, results, accomplices, victims, or methods of

commission, or that are otherwise interrelated by distinguishing characteristics and

are not isolated incidents.” Shimek, 610 So. 2d at 635. For the sake of brevity, we

will not repeat the allegations already articulated, which include at least two acts:

(1) the falsification and use of falsified documents to facilitate the plan to cross-

collateralize Sterling’s healthy property with underperforming loans owed by the

Non-Sterling Entities, in which the Majority Members of Sterling each held a

financial interest; and (2) the creation of a technical default on the Sterling and

Non-Sterling properties, which enabled the Bank to sell the properties and

eliminate the bad debt associated with the non-performing Non-Sterling Entities

loans.

The intent of the co-conspirators was the same: financial gain. The

purpose, result, and method of commission were all interrelated: to keep MP out

of the loop in order to facilitate the cross-collateralization without drawing any

attention, and to subsequently use the healthy Sterling properties to allow the

Majority Members of Sterling to eliminate their bad debts with the Bank and to

allow the Bank to remove these bad debts from its books.

Because the elements of RICO were all pled in the operative complaint, the 16 trial court erred by dismissing Count IV based on MP’s failure to sufficiently plead

a cause of action.

III. Count X, Aiding and Abetting Another Defendant’s Breach of its Fiduciary Duty to MP

The trial court’s order failed to articulate the grounds upon which it

dismissed Count X. We will, therefore, state the elements of aiding and abetting

the breach of another’s fiduciary duty, which admittedly is an uncommon, and yet

not an unheard of cause of action, see Pearlman v. Alexis, No. 09-20865-CIV,

2009 WL 3161830, *5 (S.D. Fla. Sept. 25, 2009) (noting that Florida law

recognizes the tort of aiding and abetting a breach of another’s fiduciary duty);

Williamson v. Answer Phone of Jacksonville, Inc., 118 So. 2d 248, 250 (Fla. 1st

DCA 1960) (reversing the trial court’s order dismissing Williamson’s complaint,

in which she alleged that the telephone company had changed a classification title

“for the purpose of aiding and abetting [the other] defendants—in the

accomplishment of their intention and purpose to defraud the public and injure the

plaintiff.”), and then examine the allegations contained in the operative complaint

to determine whether MP satisfied the pleading requirements.

To establish a cause of action for aiding and abetting another defendant’s

breach of its fiduciary duty to the plaintiff, the plaintiff must allege: “(1) a

fiduciary duty on the part of the wrongdoer; (2) a breach of fiduciary duty; (3)

17 knowledge of the breach by the alleged aider and abettor; and (4) the aider and

abettor’s substantial assistance or encouragement of the wrongdoing.” S&B/BIBB

Hines PB 3 Joint Venture v. Progress Energy Fla., Inc., 365 Fed. Appx. 202, 207

(11th Cir. 2010) (applying Florida law); Pearlman, 2009 WL 3161830 at *5. The

Eleventh Circuit Court of Appeal, interpreting Florida law in Perlman v. Wells

Fargo Bank, N.A., 559 Fed. Appx. 988, 993 (11th Cir. 2014), and Lawrence v.

Bank of Am. N.A., 455 Fed. Appx. 904, 907 (11th Cir. 2012), specifically held

that when a claim of aiding and abetting is asserted against a bank, the knowledge

element can only be satisfied if the plaintiff pleads facts demonstrating that the

bank had actual knowledge of the underlying wrongs committed. See also Wiand

v. Wells Fargo Bank, N.A., 938 F. Supp. 2d 1238, 1244 (M.D. Fla. 2013).

Count I specifically alleges that as the managing member of Sterling,

Arriaga owed a fiduciary duty to each of the members of Sterling, including MP,

and paragraph 127 lists eleven ways in which Arriaga breached his fiduciary duty

to MP. Paragraph 129 also alleges that Howard Law Offices, the firm that

represented Sterling in the 2010 loan modification and cross-collateralization, and

Howard individually, owed a fiduciary duty to Sterling, including MP, and that

Howard Law Offices and Howard breached that duty by preparing documents

omitting MP’s membership interest in Sterling and misrepresenting Sterling’s

membership interests. Thus, the first two elements were clearly alleged in the

18 operative complaint. The third and fourth elements: the Bank’s knowledge of the

breach of fiduciary duties owed to MP by Arriaga, Howard Law Offices, and

Howard, and the Bank’s substantial assistance or encouragement of their

wrongdoings, were also painstakingly pled in MP’s complaint. It was, therefore,

error for the trial court to dismiss Count X of MP’s complaint.

CONCLUSION

The trial court’s dismissal of MP’s complaint was based on its inaccurate

reading of the operative complaint and consideration of the elements relevant to

each cause of action. Although the trial court’s dismissal was based primarily on

MP’s failure to allege knowledge on the part of the Bank, the operative complaint

clearly and repeatedly alleged the Bank’s actual knowledge of and willing

participation in the alleged wrongdoing. The trial court therefore erred by

dismissing MP’s complaint.

Reversed; remanded.

FERNANDEZ, J., concurs.

19 MP, LLC v. Sterling Holding, LLC, etc., et al.

3D15-1062

SCALES, J. dissenting.

I respectfully dissent and would not grant MP, LLC’s motion for rehearing

in this case. While the majority opinion is compelling, and contains an excellent

outline of the facts and causes of action alleged by MP, LLC, I would affirm the

trial court’s dismissal of MP, LLC’s claims against TD Bank, N.A. because I am

not persuaded that a commercial lender owes the alleged underlying duties to a

minority member of one of the lender’s borrowers.

Indeed, if true, the alleged actions of TD’s predecessor, Mercantile Bank,

might border on the unethical; but I agree with the trial court that such actions are 20 simply not actionable in tort. In my view, the duties Mercantile, a commercial

lender, owed to participants in the commercial transaction with Mercantile’s

borrower, Sterling Holding, LLC, are specified in the parties’ written loan

documents. See generally Silver v. Countrywide Home Loans, Inc., 760 F. Supp.

2d 1330, 1339 (S.D. Fla. 2011) (“[T]here is no tort duty to process loans

competently. The relationship [between bank and borrower] is contractual; there is

either a breach of that contract or not.”) In my view, under the facts of this case,

Mercantile owed no common law tort duties to its borrower, Sterling, much less to

MP, LLC, a minority member of Sterling. See, e.g., Watkins v. NCNB Nat’l Bank

of Fla., 622 So. 2d 1063 (Fla. 3d DCA 1993).

I am particularly concerned that the majority opinion imposes previously

unrecognized obligations on commercial lenders to police the internal corporate

governance of their borrowers. From a practical perspective, the majority’s

reversal seems to entangle lenders in borrowers’ internal disputes. Not only might

such entanglements deter lenders from making otherwise prudent loans, but to

impose such duties on lenders might encourage an uncomfortable level of bank-

meddling into the strictly internal affairs of borrowers.

I would deny rehearing.

21 22