Motion to Dismiss in CODY KERNS ET AL VS FXWINNING, LTD. ET AL| Trellis.Law

On July 24, 2023 a Motion,Ex Parte was filed involving a dispute between Kerns Capital Management, Inc., Kerns, Cody, Wftmb Holdings Llc, and Bbrc Real Estate, Llc, Brito Cutie, Rafael, Da Rocha Gomes Bastos, Renan, Fxwinning, Ltd., Kuschner, Julian, Lopez, Jonathan, Merino, David, for Business Torts in the District Court of Miami-Dade County.

Preview
Filing # 181922347 E-Filed 09/15/2023 02:17:54 PM

IN THE CIRCUIT COURT OF THE 11TH
JUDICIAL CIRCUIT IN AND FOR
MIAMI-DADE COUNTY, FLORIDA

Complex Business Litigation Division

CODY KERNS, et al.,

Plaintiffs,

v. CASE NO.: 2023-020202-CA-01 (CA44)

FXWINNING, LTD., et al.,

Defendants.
_______________________________________/

MOTION TO DISMISS

Defendants, Renan Da Rocha Gomes Bastos (“Bastos”) and BBRC Real Estate, LLC

(“BBRC”) (collectively, the “Defendants”), through undersigned counsel and pursuant to Florida

Rule of Civil Procedure 1.140, move to dismiss the Complaint filed by Plaintiffs, Cody Kerns,

Kerns Capital Management, Inc., and WFTMB Holdings, LLC (collectively, “Plaintiffs”), and

state:

I. INTRODUCTION

Plaintiffs were defrauded by defendants to this action other than Bastos, FxWinning, Ltd.

(“FxWinning”), Jonathan Lopez (“Lopez”), Julian Kuschner (“Kuschner”), and David Merino.

Their attempt to shoehorn in Bastos through agency or conspiracy principals is insufficient. The

Complaint—at least as against Bastos—is long on conclusory general allegations lacking any

specificity and short on actual facts. Dismissal is appropriate for the reasons set forth below.

II. FACTUAL ALLEGATIONS

Plaintiffs make 104 general allegations in the Complaint (“Compl.”). Bastos’ name in only

ten paragraphs in the body of the Complaint—mostly “on information and belief.” Succinctly:

NELSON MULLINS RILEY & SCARBOROUGH | ATTORNEYS AT LAW
One Biscayne Tower | 2 South Biscayne Blvd. 21st Floor Miami, FL 33131 | T: 305.373.9400 | F: 305.373.9443 | nelsonmullins.com
Lopez and Kuschner solicited Plaintiffs to place their funds with FxWinning, purportedly an online

foreign currency exchange trading platform; and Plaintiffs lost their money. Plaintiffs conclusorily

allege that the defendants including Bastos all worked in concert to deprive Plaintiffs of their funds

or were somehow acting as each other’s agents or were agents of FxWinning. Compl. at ¶¶5-6, 28-

29. They also allege that they were told that Bastos received commissions from FxWinning derived

from the monies they deposited. See id. at ¶10. Lastly, Plaintiffs also allege that “[u]pon

information and belief, [Bastos] served as the de facto principal operations manager for FxWinning

in the United States,” without any further elucidation.

Based on the foregoing, Plaintiffs attempt to allege five causes of action against Bastos: (a)

Count I—Common Law Fraud arising from representations made by others; (b) Count II—

FDUTPA Violations arising from representations made by others; (c) Count III—Conspiracy to

Commit Fraud; (d) Count IV—Negligent Misrepresentation arising from representations made by

others; and (e) Count VI—Unjust Enrichment. See Compl. at ¶¶105-133, 138-143. Each should be

dismissed.

III.ARGUMENT

A. Standards on Motion to Dismiss.

Motions to dismiss “test the legal sufficiency of the complaint.” Pacific Ins. Co., Ltd. v.

Botelho, 891 So. 2d 587, 588 (Fla. 3d DCA 2004). “To survive a motion to dismiss, a complaint

must allege a prima facie case.” Alvarez v. E&A Produce Corp., 708 So. 2d 997, 999 (Fla. 3d DCA

1998). “In evaluating a motion to dismiss, the court confines its consideration to the four corners

of the complaint and must accept all well-pleaded allegations as true.” Id. Dismissal is appropriate

where, as here, Plaintiffs fail to allege facts sufficient to state a cause of action. See Fla. R. Civ. P.

1.140(b)(6).

2
NELSON MULLINS RILEY & SCARBOROUGH | ATTORNEYS AT LAW
One Biscayne Tower | 2 South Biscayne Blvd. 21st Floor Miami, FL 33131 | T: 305.373.9400 | F: 305.373.9443 | nelsonmullins.com
B. Dismissal is Appropriate Because the Complaint Violates Florida Rule of Civil
Procedure 1.140(f).

“A party should plead each distinct claim in a separate count, rather than plead the various

claims against all of the defendants together.” K.R. Exch. Servs., Inc. v. Fuerst, Humphrey,

Ittleman, PL, 48 So. 3d 889, 893 (Fla. 3d DCA 2010). Plaintiffs do the exact opposite in Counts I

through IV and VI. In so doing, Plaintiffs made it nearly impossible to determine who is suing

whom for what and upon what basis. “By comingling separate and distinct claims against multiple

defendants, [Plaintiffs] violated Rule 1.110(f) for failing to state in a separate count ‘each claim

founded upon a separate transaction or occurrence.’” Id. (quoting Fla. R. Civ. P. 1.110(f)).

Plaintiffs also fail “to clearly allege how each defendant caused the injury and damages alleged.”

Id. Dismissal of the Complaint is appropriate on these grounds alone. See id.

C. Counts I and IV Should be Dismissed Because Bastos’ Liability is Based on
Insufficiently Plead Agency Relationships.

Plaintiffs attempt to allege causes of action against Bastos in Counts I and IV for fraud and

negligent misrepresentation. To do so, they must allege, among other things, that Bastos made a

false statement or misrepresentation to them. Simon v. Celebration Co., 883 So. 2d 826, 832 (Fla.

5th DCA 2004) (setting forth elements of both causes of action). While Plaintiffs allege that Bastos

made false statements or misrepresentations “either personally or through his agents,” the Plaintiffs

do not identify any statements Bastos is alleged to have made. Compl. at ¶¶ 106; 129. And they

allege only one allegation purportedly made by Bastos’ supposed agents on his behalf:

In or around March 2023, via voice notes and in telephone conversation, Kuschner
and Lopez, on their own behalf and as agents of FXWinning, Merino, da Rocha and
Brito, represented to Kern and Kerns Capital that they met with Merino and Brito
and saw $3 billion in FXWinning liquidity with their own eyes. Kuschner and
Lopez also represented that Kerns and Kerns Capital’s money was safe.

Id. at ¶ 79. Plaintiffs fail to adequately allege that Kuschner or Lopez were Bastos’ agents,

“Agency is a legal relationship created by an express or implied agreement or by operation

of law whereby the agent is authorized to act for the principal . . . .” Ocana v. Ford Motor Co., 992

So. 2d 319, 326 (Fla. 3d DCA 2008). To demonstrate that Kuschner and Lopez were Bastos’ actual

agents, Plaintiffs “must allege and ultimately prove: (a) Bastos’ acknowledgement that Kuschner

and Lopez were acting as his agents; (b) acceptance of such undertaking by Kuschner and Lopez;

and (c) Bastos’ control over Kuschner and Lopez's day-to-day activities during the course of the

agency. Id. Plaintiffs, however, allege only in a conclusory manner that “Kuschner, Lopez, Merino,

da Rocha, and Brito were at all material times hereto acting as one another’s agents.” Compl. at ¶

28. “The allegations of the complaint in this case, as they relate to actual agency, fall far short of

those necessary to establish a principal-agent relationship between [Bastos] and [Kuschner or

Lopez].” Ocana, 992 So. 2d at 326.

b. Plaintiffs Also Fail to Sufficiently Allege Apparent Agency.

“Apparent agency exists only if each of the following three elements is present: 1) a

representation by the purported principal; 2) reliance on that representation by a third party; and

3) a change in position by the third party in reliance on the representation.” Id. (emphasis in

original). “Here, there is no evidence that the purported principal, [Bastos], made any

representation to [Plaintiffs], the purported third part[ies].” Id. at 327 (emphasis in original).

Plaintiffs’ allegations establishing apparent agency are insufficient as a matter of law. Id. This

Court should accordingly dismiss Counts I and IV against Bastos for the reasons set forth above.

D. Plaintiffs Insufficiently Allege a Cause of Against Bastos for Violating the
Florida Deceptive and Unfair Trade Practices Act.

Plaintiffs assert a cause of action in Count II for FDUTPA violations but do not allege a

single act that Bastos took which forms the basis for their claim. They conclusorily allege that

4
NELSON MULLINS RILEY & SCARBOROUGH | ATTORNEYS AT LAW
One Biscayne Tower | 2 South Biscayne Blvd. 21st Floor Miami, FL 33131 | T: 305.373.9400 | F: 305.373.9443 | nelsonmullins.com
Bastos (along with other defendants) “committed deceptive acts,” undertook “unfair and

unconscionable acts,” and made unspecified misrepresentations. Where, as here however, “the

gravamen of the claim sounds in fraud, as here, the heightened pleading standard . . . applies.” New

York Packaging II LLC v. Priv. D Cap. Grp. Corp., 2023 WL 2306690, at *10 (S.D. Fla. Mar. 1,

2023); accord State Farm Mut. Auto. Ins. Co. v. Performance Orthopaedics & Neurosurgery, LLC,

278 F. Supp. 3d 1307, 1327 (S.D. Fla. 2017) (applying heightened pleading standard to FDUTPA

claim). Plaintiff’s lack of specificity is accordingly fatal.

But Plaintiffs do not even meet their pleading burden should this Court decline to impose

the heightened standard. “In order to proceed against an individual for a violation of FDUTPA, a

plaintiff must allege that the individual was a ‘direct participant’ in the dealings.” Aboujaoude v.

Poinciana Dev. Co. II, 509 F. Supp. 2d 1266, 1277 (S.D. Fla. 2007). In doing so, Plaintiffs must

allege that Bastos “was a “direct participant” in the actions which constituted a violation of

FDUTPA.” Id. They do not. Nor do Plaintiffs allege that Bastos had any “measure of control over

[FXWinning]'s deceptive practices,” which might have otherwise stated a cause of action. KC

Leisure, Inc. v. Haber, 972 So. 2d 1069, 1073 (Fla. 5th DCA 2008). Having failed to do so,

dismissal of Count II is appropriate.

E. Plaintiffs Fail to Adequately Allege a Cause of Action for Conspiracy.

Plaintiffs attempt to allege a cause of action for conspiracy in the most general manner—

doing little more than reciting the elements of the claim. But “[g]eneral allegations of conspiracy,”

such as those Plaintiffs make, “are inadequate.” Eagletech Commc'ns, Inc. v. Bryn Mawr Inv. Grp.,

Inc., 79 So. 3d 855, 863 (Fla. 4th DCA 2012). Plaintiffs instead “must set forth clear, positive, and

specific allegations of civil conspiracy.” Id. (internal quotation omitted). Plaintiffs do not do so.

Merely alleging that co-conspirators were “engaged in the same ‘scheme,’ alone,” as Plaintiffs do,

5
NELSON MULLINS RILEY & SCARBOROUGH | ATTORNEYS AT LAW
One Biscayne Tower | 2 South Biscayne Blvd. 21st Floor Miami, FL 33131 | T: 305.373.9400 | F: 305.373.9443 | nelsonmullins.com
“are insufficient to state a claim for civil conspiracy.” Honig v. Kornfeld, 2019 WL 1509666, at

*3 (S.D. Fla. March 8, 2019).

Nor do they “plead sufficient facts that an agreement existed between [Bastos] and the

other defendants to commit a wrongful act.” Meridian Tr. Co. v. Batista, 2018 WL 4693533, at *6

(S.D. Fla. Sept. 26, 2018). “[T]to satisfy the heightened pleading standard for conspiracy claims

based in fraud, Plaintiffs must at least show some evidence of agreement between the defendants.”

Alhassid v. Bank of Am., N.A., 60 F. Supp. 3d 1302, 1320 (S.D. Fla. 2014). “Aside from Plaintiffs'

conclusory and unsupported assertions of an agreement, nowhere in the . . . Complaint do Plaintiffs

provide any factual predicate to demonstrate that [Bastos] ‘agreed with other defendants to defraud

Plaintiffs.” Meridian Tr. Co., 2018 WL 4693533 at *6.

That Bastos may have allegedly received commissions as a result of FxWinning’s

fraudulent scheme is of no import. “[Bastos] could have . . . received a commission, without ever

knowing [FXWinning’s scheme] was fraudulent or agreeing to participate in the fraud.” Principal

Life Ins. Co. v. Mosberg, 2010 WL 473042, at *6 (S.D. Fla. Feb. 5, 2010). Plaintiffs thus fail to

state a cause of action against Bastos in Count III for Conspiracy. Id.

F. Plaintiff’s Cause of Action in Count VI for Unjust Enrichment Should Be
Dismissed Because They Fail to Allege That They Conferred a Direct Benefit
on Bastos.

To adequately state a cause of action for unjust enrichment, Plaintiffs must allege that they

directly conferred a benefit to Bastos. See Extraordinary Title Srvc’s, LLC v. Fla. Power & Light

Co., 1 So. 3d 400, 404 (Fla. 3d DCA 2009) (dismissing unjust enrichment claim with prejudice for

failure to allege direct benefit. They allege the exact opposite, however.

Plaintiffs allege—on information and belief—that Bastos received commissions from

“FxWinning’s system” that were derived from the funds that Plaintiffs had deposited with

FxWinning. Compl. at ¶¶69-71. However, they allege “absolutely no relationship with [Bastos].”
6
NELSON MULLINS RILEY & SCARBOROUGH | ATTORNEYS AT LAW
One Biscayne Tower | 2 South Biscayne Blvd. 21st Floor Miami, FL 33131 | T: 305.373.9400 | F: 305.373.9443 | nelsonmullins.com
Extraordinary Title Srvc’s, LLC, 1 So. 3d at 404. Plaintiffs delivered their funds to FxWinning—

not Bastos—having been solicited to do so by Lopez and Kuschner (again, not Bastos). “Basted

upon these facts, which are not in dispute, the Plaintiff[s] cannot allege nor establish that [they]

conferred a direct benefit upon [Bastos].” Id.

Plaintiffs creatively allege that Bastos’ commissions were “derived directly from the

money Plaintiffs invested in FxWinning.” Compl. at ¶¶71. As here, where the alleged benefit is

the receipt of “benefits (in the form of commissions) from others—not directly from [Plaintiffs],”

dismissal is appropriate. Penton v. Centennial Bank, No. 4:18-CV-00450-AW-CAS, 2019 WL

6769661, at *8 (N.D. Fla. Nov. 22, 2019).

G. Plaintiffs Cause of Action Against BBRC in Count VII Should be Dismissed.

Plaintiffs attempt in Count VII to establish transferee liability in BBRC simply because

Bastos allegedly “transferred ill-gotten gains from the FxWinning Scheme . . . to BBRC in order

to purchase property located at 2608 Biarritz Drive, Miami Beach, Florida 33141.” Compl. at ¶145.

What they do not allege is legion.

Plaintiffs do not allege that Bastos’ transfer to BBRC was made when Bastos “was engaged

or was about to engage in a business or a transaction for which the remaining assets of the debtor

were unreasonably small in relation to the business or transaction” or that he “[i]ntended to incur,

or reasonably should have believed that [he] would incur, debts beyond [his] ability to pay as they

became due. But they must do so in order to state a claim for fraudulent transfer pursuant to section

726.105(b), Florida Statutes. Fla. Stat. § 726.105(b) (2023). Nor do they allege that Bastos was

insolvent at the time of the transfer or became insolvent as a result, which is necessary to state a

claim for fraudulent transfer under section 726.106. See Fla. Stat. § 726.106(1) (2023).

They instead attempt to allege a claim transferee liability for Bastos’ allegedly fraudulent

transfer pursuant to section 726.105(a) on the grounds that Bastos had the actual intent to hinder,
7
NELSON MULLINS RILEY & SCARBOROUGH | ATTORNEYS AT LAW
One Biscayne Tower | 2 South Biscayne Blvd. 21st Floor Miami, FL 33131 | T: 305.373.9400 | F: 305.373.9443 | nelsonmullins.com
delay, or defraud his creditors. See Compl. at ¶147. The Florida Fraudulent Transfer Act, however,

“was adopted to prevent an insolvent debtor from transferring assets away from creditors when the

debtor’s intent is to hinder, delay, or defraud any of its creditors.” Oginsky v. Paragon Props. of

Costa Rica LLC, 785 F. Supp. 2d 1353, 1369 (S.D. Fla. 2011) (emphasis added). The mere fact

that Bastos used his money to fund the purchase of a home in a trust does not automatically make

that transfer fraudulent—especially where there are no allegations that Bastos is insolvent.

Plaintiffs base their cause of action on the grounds that they possessed a “claim” as defined

in section 726.102(4) “when the transfer. . . was made.” Compl. at ¶146. This assumes, of course,

that Plaintiffs even have a claim against Bastos, which as set forth above, they do not. Lacking a

“claim,” Plaintiffs are not “creditors” as the Florida’s fraudulent transfer statute contemplates. See

Fla. Stat. § 726.102(4)(5) (2023).

Nor do Plaintiffs allege that they provided any funds to Bastos or that Bastos transferred

their funds to BBRC to purchase the subject property. They have accordingly “not demonstrated

the requisite fraud or egregious conduct” necessary to establish a cause of action for fraudulent

transfer. Conseco Servs., LLC v. Cueneo, 904 So. 2d 438, 440 (Fla. 3d DCA 2005). To wit, their

sole basis to establish transferee liability is the baseless allegation that Bastos “owed and owes

Plaintiffs for the scheme perpetrated against Plaintiffs” by FxWinning and others. Compl. at ¶146.

That is insufficient to establish BBRC’s liability, however.

IV. CONCLUSION

WHEREFORE, Defendants, Renan Da Rocha Gomes Bastos and BBRC Real Estate,

LLC, respectfully requests that this Court dismiss Counts I, II, III, IV, VI, and VII of the Complaint

with prejudice, and grant such other and further relief as this Court deems just and proper.

NELSON MULLINS RILEY
& SCARBOROUGH LLP
2 South Biscayne Blvd., 21st Floor
Miami, Florida 33131
Telephone: 305.373.9436

By: /s/ Justin B. Kaplan
Justin B. Kaplan | Fla. Bar No. 33725
Justin.Kaplan@nelsonmullins.com
Ryan K. Todd | Fla. Bar No. 91679
Ryan.Todd@nelsonmullins.com
Elaine Kussurelis | Fla. Bar No. 1019234
Elaine.Kussurelis@nelsonmullins.com

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 15th day of September 2023, a true and correct copy of
the foregoing was sent by e-mail via the Florida Courts eFiling Portal (pursuant to Rule 2.516,
Florida Rules of Judicial Administration and Administrative Order SC13-49), to all counsel of
record.

/s/ Justin B. Kaplan
Justin B. Kaplan

Case Info

Judge

CA44 - Downtown Miami - Judge Walsh, Lisa S Track Judge’s New Case

Case No.

(Subscribe to View)

Document Filed Date

September 15, 2023

Case Filing Date

July 24, 2023

County

Parties

Barakat, Brian Attorney for the Defendant
BBRC Real Estate, LLC Defendant
Bianchi, Jaime Augusto Attorney for the Defendant
Brito Cutie, Rafael Defendant
da Rocha Gomes Bastos, Renan Defendant
FXWinning, Ltd. Defendant
Kaplan, Justin B Attorney for the Defendant
Kerns Capital Management, Inc. Plaintiff
Kerns, Cody Plaintiff
Kuschner, Julian Defendant
Levine David M Attorney for the Plaintiff
Lopez, Jonathan Defendant
Merino, David Defendant
WFTMB Holdings LLC Plaintiff
Fausto Sanchez Attorneys for Plaintiffs
Lauren Allen Attorneys for Plaintiffs
Ryan Todd Attorney
Elaine Kussurelis Attorney
Grant Smith Attorneys for Defendants
Jocelyne Macelloni Attorneys for Defendants
Jo-Jean Figueira Attorney
Spencer Thompson Attorney
Matthew Akiba Attorney
Michael Sontag Attorney
Zachary Dickens Attorneys for Defendants

For full print and download access, please subscribe at https://www.trellis.law/.

Motion,Ex Parte: CODY KERNS ET AL VS FXWINNING, LTD. ET AL

Preview

Related Topics

Case Info

Parties