Motion to Quash Service of Subpoena 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.

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Filing # 196104169 E-Filed 04/12/2024 03:03:48 PM

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

CODY KERNS, et al., CASE NO.: 2023-020202-CA-01

Plaintiffs
v.

FXWINNING LTD., et al.,

Defendants.
_____________________________________/

OMNIBUS REPLY IN SUPPORT OF DEFENDANTS RAFAEL BRITO CUTIE,
FXWINNING, LTD., AND DAVID MERINO’S MOTIONS TO QUASH SERVICE OF
PROCESS, TO DISMISS AMENDED COMPLAINT FOR LACK OF PERSONAL
JURISDICTION, OR ALTERNATIVELY, FOR FAILURE TO STATE A CLAIM

Defendants Rafael Brito Cutie (“Brito”), FxWinning, Ltd. (“FX”), and David Merino

(“Merino”) (collectively, the “FX Defendants”), specially appearing on a limited basis by and

through the undersigned counsel for the sole purpose of challenging the efficacy of service,

jurisdiction and venue and any related hearing, hereby files this Omnibus Reply in Support of

Brito’s Motion to Quash Service of Process, to Dismiss Amended Complaint for Lack Of Personal

Jurisdiction, or Alternatively, for Failure to State a Claim [D.E. 105], FX’s Motion to Quash

Service of Process, to Dismiss Amended Complaint for Lack Of Personal Jurisdiction, or

Alternatively, for Failure to State a Claim [D.E. 106], and Merino’s Motion to Quash Service of

Process, to Dismiss Amended Complaint for Lack Of Personal Jurisdiction, or Alternatively, for

Failure to State a Claim [D.E. 107] (collectively, “FX Defendants’ Motions to Dismiss”), and in

support thereof states as follows:

2701 Ponce de Leon Blvd., Suite 202, Coral Gables, FL 33134 • Tel: 305-444-3114 • service@b2b.legal
Omnibus Reply in Support of FX Defendants’ Motions to Dismiss
Case No. 2023-020202-CA-01
Page 2 of 24

ARGUMENT

I. THE COURT’S EXERCISE OF PERSONAL JURISDICTION OVER FX
DEFENDANTS IS IMPROPER.

A. FX Defendants’ Respective Declarations Refute the Complaint’s Jurisdictional
Allegations, Shifting the Burden Back to Plaintiffs.

Plaintiffs incorrectly argue that FX failed to refute the following conclusory allegations of

the Complaint tracking the language of the Long-Arm Statute: (1) that FX “personally, or through

its agents, committed a tortious act within this state[;]” and (2) that FX “breached a contract in

Florida by failing to perform acts required by the contract to be performed in Florida.” See Resp.

at 28 (citing to D.E. 96 at ¶¶ 13(b), (d)). The Brito Declaration specifically states that “I, either

individually or on behalf of FxWinning, have never committed a tort in Florida[;]” that FX “does

not have any agents located in Florida[;]” and that FX did not accept clients from anywhere within

the United States, did not approach clients residing in the United States and that FX’s Terms and

Conditions—the contract allegedly breached—precluded clients from engaging with FX’s

services. See D.E. 106, Ex. A at ¶¶ 6-7, 19, 21. These statements refute that FX committed a

tortious act within this state and that FX breached a contract in Florida. That is, FX could not have

breached a contract in Florida where the contract that was allegedly breached in this State expressly

precluded United States residents from entering into the contract in the first place.

With respect to Merino, Plaintiffs argue that Merino did not refute the following

jurisdictional allegation: that Merino “caused injury to persons or property within this state arising

out of an act or omission made by Merino outside of this state while he was engaging in solicitation

or service activities within Florida.” Resp. at 29 (citing to D.E. 96 at ¶ 15(c). However, Merino’s

Declaration provides that he never “conducted any business for [FX] or related to the allegations

in the complaint in the State of Florida or elsewhere in the United States of America.” D.E. 107,

Ex. A at ¶ 8. While Merino did not use the terms “engag[ed] in solicitation or service activities

within Florida[,]” Merino’s affirmation above that he did not “conduct any business for FX or

related to the allegations in the complaint in the State of Florida[,]” would necessarily include

solicitation or service activities within Florida. Accordingly, Merino sufficiently refuted the

Complaint’s jurisdictional allegations pertaining to him and the Plaintiffs bear the burden of

proving their conclusory allegations.

With respect to Brito, Plaintiffs are wrong in their assertion that Brito “wholly failed” to

refute the following jurisdictional allegations: (1) that Brito “either personally or through his

agents, operates, conducts, engages in, or carries on a business or business venture in this state[;]”

or (2) that Brito “caused injury to persons or property within this state arising out of an act or

omission made by Brito outside this state while he was engaging in solicitation or service activities

within Florida.” Resp. at 30 (citing to D.E. 96 at ¶¶ 17(a), (c)). Brito’s Declaration specifically

affirmed that FX does not “operate out of or within the physical, geographical, political, or legal

boundaries or area of the State of Florida[.]” See D.E. 105, Ex. A at ¶ 5. While Brito did not state

that he himself personally does not operate within the State of Florida, the allegations of the

Complaint do not allege that it is Brito’s personal business contacts with the State of Florida that

caused harm to Plaintiffs. See, e.g., Camp Illahee Investors, Inc. v. Blackman, 870 So. 2d 80, 85

(Fla. 2d DCA 2003) (“By its terms, section 48.193(1) requires connexity between the defendant’s

activities and the cause of action.”) (emphasis added). Brito’s personal activities bear no relation

to the causes of action asserted against Brito in the Complaint. In any event, Brito further affirmed

that he does not “operate out of Florida in any capacity.” D.E. 105, Ex. A at ¶ 15. Moreover, Brito

affirmed that FX “does not direct any . . . solicitations . . . to Florida[.]” Id. at ¶ 20. Accordingly,

Brito sufficiently refuted the Complaint’s jurisdictional allegations.

The Court should find that FX Defendants sufficiently refuted the Complaint’s

jurisdictional allegations against them.

B. Plaintiffs Fail to Meet Their Burden that FX’s Conduct Satisfies the Long-Arm
Statute.

1. Plaintiffs’ Causes of Action do not Arise out of FX’s Alleged Business Activity in
the State of Florida.

Plaintiffs assert that “FXWinning operated, conducted, engaged in, and carried on a

business in Florida.” Resp. at 32. “Crucially, ‘[t]here is a vast difference between the words “a

business” and the words “business venture”’ in the context of long-arm jurisdiction.” Kapila v.

RJPT, Ltd., 357 So. 3d 241, 246 (Fla. 2d DCA 2023) (citation omitted). “In particular, a business

venture may be established by showing a lesser involvement than would be required to prove a

business. Consequently, one may engage in a business venture without operating, conducting,

engaging in or carrying on a business.” Id. at 247 (alterations, quotations, and citations omitted).

“For purposes of section 48.193(1)(a)(1), to demonstrate that a nonresident defendant is carrying

on business the defendant’s activities must be considered collectively to show a general course of

business activity in the state for pecuniary benefit.” Stonepeak Partners, LP v. Tall Tower Capital,

LLC, 231 So. 3d 548, 555 (Fla. 2d DCA 2017).

In the instant case, Plaintiffs allege tenuous at best, and isolated, at worst, business activity

within the State of Florida, consisting of the fact that FX had introductory brokers in the State of

Florida, that Plaintiffs are residents of the State of Florida, that Cardenas attended an event “held

by CFT” and that a Florida resident, Bastos, assisted in the content of FX’s website. Resp. at 32.

Assuming that all of the foregoing was true, such isolated activity is insufficient to show a “general

course of business activity in the state for pecuniary benefit.” Stonepeak, 231 So. 3d at 555.

Plaintiffs fail to establish that FX’s introductory brokers were permitted to solicit known Florida

residents as clients in contravention to FX’s terms and conditions, which precluded United States

residents from using FX’s services. As alleged in Brito’s Declaration, FX’s terms and conditions

“require a certification by each prospective client confirming that his or her residence is not within

the United States.” See D.E. 106, Ex. A at ¶ 7.

Moreover, and as will be discussed more below, Plaintiffs failed to show that Kuschner

and Lopez were agents of FX; Plaintiffs’ subjective belief that Lopez and Kuschner were agents

of FX is inapposite. Finally, the Court should find that at most, Plaintiffs’ causes of action arise

out of FX’s business activity in Hong Kong, not Florida. FX “is a broker that works with financial

markets in foreign exchange trading.” Resp. at 3, ¶ 1. FX is a Hong Kong limited company with

its principal place of business in Hong Kong. See Am. Compl. at ¶ 5. That is, FX’s trading occurs

in Hong Kong, not Florida. Accordingly, the Court should find that Plaintiffs failed to establish

that FX carried on a business in this State or otherwise find that Plaintiffs’ causes of action against

FX arise of FX’s business activity in Hong Kong, not Florida.

2. FX’s Websites Do Not Confer Personal Jurisdiction.

The fact that FX’s websites were able to be viewed and interacted with from people within

the State of Florida does not show that FX was engaged in a business or business venture within

the State of Florida. For this proposition, Plaintiffs rely heavily on Renaissance Health Publishing,

LLC v. Resveratrol Partners, LLC, 982 So. 2d 739 (Fla. 4th DCA 2008). See Resp. at 36. There,

the Fourth District Court of Appeal categorized the non-resident defendant’s website as an

“interactive” website and held that the non-resident defendant was subject to personal jurisdiction

in the State of Florida under section 48.193(1)(a)(2) for committing a tortious act —not section

48.193(1)(a)(1) for carrying on a business or business venture here. Id. at 741. Importantly, there,

the causes of action sounded in trade libel, arising from the publications on the defendant’s

website, which libeled the products of the Florida plaintiff. Id. at 740. Moreover, the

passive/interactive nature of the defendant’s website was relevant to the court’s analysis of the

defendant’s minimum contacts with the State of Florida, not whether the non-resident was

engaging in a business or business venture here. Id. at 742. Further, the Fourth District qualified

its holding, stating that “[a]n interactive website which allows a defendant to enter into contracts

to sell products to Florida residents, and which involves the knowing and repeated transmission of

computer files over the [I]nternet, may support a finding of personal jurisdiction.” Id. (emphasis

added) (alterations removed and internal quotation marks omitted).

In any event, the Fourth District Court of Appeal has receded from the holding in

Renaissance. See Caiazzo v. American Royal Arts Corp., 73 So. 3d 245 (Fla. 4th DCA 2011). In

Caiazzo, the Fourth District Court of Appeal quoted with approval Hy Cite Corp. v.

Badbusinessbureau.com, L.L.C., 297 F. Supp. 2d 1154, 1160 (W.D. Wis. 2004):

[A] court cannot determine whether personal jurisdiction is
appropriate simply by deciding whether a website is “passive” or
“interactive” (assuming that websites can be readily classified into
one category or the other). Even a “passive” website may support a
finding of jurisdiction if the defendant used its website intentionally
to harm the plaintiff in the forum state. Similarly, an “interactive”
or commercial website may not be sufficient to support jurisdiction
if it is not aimed at residents in the forum state. Moreover,
regardless how interactive a website is, it cannot form the basis for
personal jurisdiction unless a nexus exists between the website
and the cause of action [for specific jurisdiction] or unless the
contacts through the website are so substantial that they may be
considered “systematic and continuous” for the purpose of general
jurisdiction.

Caiazzo, 73 So. 3d at 255 (emphasis added). See also id. (“to be clear, ‘active’ and ‘passive’ are

not talismanic jurisdictional terms; they do not provide a conclusive answer to the question of

whether Florida has jurisdiction over a person.”).

In the instant case, Plaintiffs’ causes of action do not arise out Plaintiffs’ ability to view

and interact with FX’s website while being present in the State. Indeed, both Kerns and McGinnis’s

Declarations attached to the Response are curiously silent as to whether Kerns and McGinnis

relied on the representations they saw on FX’s website in deciding to use FX’s services. See Resp.

at Ex. K ¶¶ 3-4 (merely stating that Kerns viewed the statements on FX’s website while he was a

resident of Florida); Ex. L at ¶¶ 3-4 (same). Moreover, FX’s websites were not designed to market

FX’s services to Florida residents. See Westwind Limousine, Inc. v. Shorter, 932 So. 2d 571, 575

(Fla. 5th DCA 2006) (“Here, the evidence presented by the [plaintiffs] shows nothing more than

the ‘isolated occurrence’ of a single sale to a Florida corporation. The [plaintiffs] presented no

facts that demonstrate any effort by [defendant] to market its products in Florida.”)

(Emphasis added). Accordingly, the mere fact that FX had websites that were accessible to

residents of Florida, including Kerns and McGinnis—who stop short of stating that they relied

upon anything contained on FX’s websites—is insufficient to establish that FX was engaged in a

business or business venture in this State.

3. FX Did Not Commit a Tort in the State of Florida and Plaintiffs Fail to Establish
that Kuschner and Lopez Were FX’s Agents.

The gravamen of Plaintiffs’ tort causes of action against FX depend on the existence of an

agency relationship between Kuschner and Lopez as agents of FX. To this end, the Complaint

repeatedly asserts that Kuschner and Lopez, either individually or as agents of FX, made a number

of misrepresentations underlying Plaintiffs’ tort claims against FX. Apparent authority “arises

where a principal allows or causes others to believe the agent possesses ... authority [to act for the

principal], as where the principal knowingly permits the agent to assume such authority or where

the principal by his actions or words holds the agent out as possessing it.” Jackson Hewitt, Inc. v.

Kaman, 100 So. 3d 19, 31 (Fla. 2d DCA 2011). Nowhere in the Amended Complaint nor in the

Response do Plaintiffs allege or establish that FX allowed or caused Plaintiffs to believe that FX

knowingly permitted Lopez and Kuschner the authority to act for FX. As explained by Brito during

his deposition, introductory brokers would enter into separate agreements with the clients. See

Resp., Ex. B at 61:6-9. “Apparent authority does not arise from the subjective understanding of

the person dealing with the purported agent, not from appearances created by the purported agent

himself. Instead, the words and actions of the principal must be the focus because apparent

authority only exists where the principal creates the appearance of an agency relationship.” All

Seasons Condo. Ass’n. v. Patrician Hotel, LLC, 274 So. 3d 438, 441 (Fla. 3d DCA 2019).

Here, the Amended Complaint is devoid of allegations, and the Response is devoid of

evidence establishing, any words or actions of FX creating the appearance of an agency

relationship between FX as principal on the one hand, and Lopez and Kuschner as FX’s agents on

the other. The same holds true for Israel Yvenson. Accordingly, the Court should find that Lopez

and Kuschner’s alleged misrepresentations to Plaintiffs are insufficient to subject FX to personal

jurisdiction within the State of Florida; FX did not commit a tort in the State of Florida.

Nor can the alleged “Website Misrepresentations” form the basis of Plaintiffs’ tort claims

because Plaintiffs fail to establish that Plaintiffs relied on the representations on FX’s website in

contracting with FX to use FX’s services. See Resp. at Ex. K ¶¶ 3-4 (merely stating that Kerns

viewed the statements on FX’s website while he was a resident of Florida; Ex. L at ¶¶ 3-4 (same).

4. No Evidence Supports that FX was Engaged in Solicitation Activities in the State.

Plaintiffs’ assertion that the Court has personal jurisdiction under Section

48.193(1)(a)(6)(a), Florida Statutes, is wrong. That Section provides that the Court can exercise

personal jurisdiction over a nonresident defendant where the defendant “caus[ed] injury to persons

within this state arising out of an act or omission by the defendant outside this state, if, at or about

the time of the injury . . . [t]he defendant was engaged in solicitation or service activities within

this state[.]” Fla. Stat. 48.193(1)(a)(6)(a) (emphasis added). Again, the mere fact that FX’s

websites were accessible to Kerns and McGinnis does not support that FX was engaged in

solicitation or service activities in the State. Indeed, FX’s Terms and Conditions expressly

prohibited U.S. residents from using FX’s services. Moreover, there is no evidence proffered by

Plaintiffs establishing that FX was engaged in solicitation or service activities in this State “at or

about the time” of Plaintiffs’ alleged injuries. Accordingly, the Court should find that

48.193(1)(a)(6)(a) does not support the Court’s exercise of personal jurisdiction over FX.

5. FX Did not Breach a Contract Required to be Performed in Florida and Mere
Nonpayment of Money is Insufficient to Confer Personal Jurisdiction over a
Nonresident Defendant.

“Breaching a contract in this state by failing to perform acts required by the contract to

be performed in this state” subjects a nonresident defendant to specific jurisdiction under the

Long-Arm statute. See Fla. Stat. §48.193(1)(a)(7) (emphasis added). Here, Plaintiffs cite to no

provision in FX’s Terms and Conditions that expressly impose a contractual obligation on FX to

be performed in the State of Florida. Instead, Plaintiffs argue that under FX’s Terms and

Conditions, “[i]f the Customer gives an instruction to withdraw funds from the Trading Account,

[FX] will pay the specified amount on the same day the withdrawal request was made, or the next

business day if the Customer’s request is received outside normal operating hours.” Resp. at 39.

This provision is absolutely silent as to where performance was to occur and certainly does not

provide that payment was to be made in the State of Florida. The fact that Plaintiffs allegedly

resided in the State of Florida does not convert FX’s payment obligation on a withdrawal request

by a customer, into a contractual obligation “required by the contract to be performed in this state.”

Fla. Stat. § 48.193(1)(a)(7). See also Gilbert v. Herne, 544 So. 2d 226, 227 (Fla. 3d DCA 1989)

(finding that nonresident defendant failed to perform acts required by the contract to be performed

in this state where the nonresident defendant “expressly promised to send payments to [the

plaintiff] in Florida, or wherever else she designated.”) (Emphasis added). See also Banco

Inversion, S.A. v. Celtic Corp., S.A., 907 So. 2d 704, 716-17 (Fla. 3d DCA) (Farmer, J., dissenting)

(“The breach of contract provision in Florida law is limited to contracts specifically requiring

performance in Florida. . . . Nothing in the written agreement (or for that matter in any oral

agreement) requires Celtic to do anything in Florida. . . . Payment of [plaintiff’s] commission for

marketing of the bonds could take place anywhere in the world. . . . Even if Banco were to make

the commission payment directly, it could simply place funds in an account maintained by Celtic

anywhere in the world. . . . the essential point is that no contract performance was required in

express terms to be done in Florida.”) (emphasis in original).

In the majority opinion, the court in Banco Inversion concluded that the nonresident

defendant breached a contract required to be performed in the State of Florida because the

nonresident defendant performed services in Florida. Id. at 708. The court recognized that

“although failure to make payment, alone, is not sufficient to bring a breach of contract claim

within the ambit [the Long-Arm Statute], the failure to make payment, taken together with other

facts, here, of services performed in the state and which could reasonably be anticipated to be

performed in this state, is sufficient to prove that the defendant breached a contract in Florida by

‘failing to perform acts required by the contract to be performed in this state.’” Id. (Emphasis

added).

In the instant case, Plaintiffs do not cite to—and cannot cite to—any express terms in FX’s

Terms and Conditions that expressly require payment to be made in Florida on the request of a

withdrawal. Indeed, “payment of [Plaintiffs’ funds] . . . could take place anywhere in the world. .

. . Even if [FX] were to make the [withdrawal] payment directly, it could simply place funds in an

account maintained by [Kerns, Kerns Capital, and/or McGinnis] anywhere in the world. . . . the

essential point is that no contract performance was required in express terms to be done in Florida.”

Id. at 717 (Farmer, J., dissenting). Moreover, Plaintiffs failed to provide “other facts” such as FX’s

obligation to perform services in Florida. Id. at 708. The Amended Complaint concedes the

contrary: “Defendant, FxWinning, is a Hong Kong limited company, which . . . operates as a

‘decentralized’ company with no principal place of business.” See Am. Compl. at ¶ 3. Indeed,

FX specifically stated in its declaration that FX does not operate out of the United States, no less

Florida, has never had employees operating out of Florida, and has never had an office in Florida.

See D.E. 106, Ex. A at ¶¶ 5,9, 15-17. It follows, therefore, that the services contemplated to be

contractually performed by FX, trading in foreign currency on behalf of its clients, does not occur

within the United States; performance occurs overseas and Plaintiffs fail to establish anything to

the contrary, whether alleged in the Amended Complaint or in their Response to the Motion to

Dismiss. Accordingly, the Court should find that Plaintiffs failed to meet their initial burden of

pleading that FX breached a contract required to be performed in this state.

Moreover, Florida courts “do not believe that the mere failure to pay money in Florida,

standing alone, would suffice to obtain jurisdiction over a nonresident defendant.” Venetian Salami

Co v. Parthenais, 554 So. 2d 499, 503 (Fla. 1989). That is, “there were no services to be performed

under this contract in Florida[;]” the services—the use of FX’s platform to trade in foreign

currency—were to be performed in Hong Kong, FX’s principal place of business. Group One

Enterprises, Inc. v. Publisher’s Representative, Inc., 899 So. 2d 402, 403 (Fla. 4th DCA 2005).

“This is, accordingly, one of those cases in which there was a ‘mere failure to pay money in

Florida,’ and no personal jurisdiction over the non-resident.” Id. (quoting Venetian Salami, 554

So. 2d at 503). Moreover, for the reasons explained below, even if the Court were to find that FX

breached a contract required to be performed in this State, FX lacks sufficient minimum contacts

with the State of Florida to be haled into court here for the reasons stated in FX’s Motion to Quash.

See D.E. 106 at 11-17.

Finally, Kerns Capital is “a British Virgin Islands Corporation with its principal place of

business in Tortola, British Virgin Islands.” See Am. Compl. at ¶ 3. To the extent the Court finds

that personal jurisdiction is proper because FX breached a contract required to be performed in

Florida, the Court should dismiss Kerns Capital’s causes of action against FX, inasmuch as Kerns

Capital does not reside here and there is no contract that FX was required to perform in the State

of Florida as to Kerns Capital.

C. Plaintiffs Fail to Meet their Burden to Establish that Merino’s Activities Satisfy the
Long-Arm Statute.

1. Merino is Not Operating, Conducting, Engaged In, or Carrying on a Business in
Florida.

Plaintiffs assert that Merino was engaged in a business in Florida by virtue of having stayed

in Florida for a few months in 2022, was an FX introductory broker, having communicated with

Kerns, and meeting Kerns, Lopez and Kuschner at Lopez’s apartment. See Resp. at 39-40. Even

taking the foregoing as true, Plaintiffs fail to connect their causes of action to Merino’s alleged

business activity in Florida. Merino is not alleged to have been Plaintiffs’ introductory broker to

FX. As such, Plaintiffs’ claims do not arise out of Merino’s alleged business in Florida.

Plaintiffs also attempt to cast Merino as Bastos’s partner. See Resp. at 9 ¶ 36. In support of

this assertion, Plaintiffs rely on the testimony of Israel Yvenson, who merely testified that he

“believe[d] [Merino] was [Basto’s] partner.” Resp., Ex. N at 17:12-14. Other than Israel Yvenson’s

inadmissible hearsay testimony on information and belief, there is no evidence to support that

Merino and Bastos were partners. Moreover, this allegation was not pled in the Complaint.

Accordingly, the Court should disregard Plaintiffs’ arguments in their response attempting to

impute Bastos’s activity in Florida to Merino. See Resp. at 40.

As for Merino’s alleged principal/agent relationships with Kuschner and Lopez, there is no

evidence suggesting that Lopez and Kuschner acted as Merino’s agents. Plaintiffs may very well

have subjectively believed that Kuschner and Lopez acted as Merino’s agents, but such a belief is

inapposite; it is “the words and actions of the principal [that] must be the focus because apparent

authority only exists where the principal creates the appearance of an agency relationship.” All

Seasons Condo. Ass’n. v. Patrician Hotel, LLC, 274 So. 3d 438, 441 (Fla. 3d DCA 2019). Nowhere

in the Amended Complaint nor in the Response do Plaintiffs sufficiently allege, nor sufficiently

establish, words and actions by Merino creating the appearance of an agency relationship with

Lopez and Kuschner. Accordingly, the Court should find deficient Plaintiffs’ attempts to impute

Kuschner’s and Lopez’s activities in the State of Florida onto Merino; the nexus simply is not

there. Merino was not engaged in nor carried out a business in the State of Florida from which

Plaintiffs’ causes of action arise and which are related to Plaintiffs’ claims.

2. Merino did Not Personally Commit a Tortious Act Within This State.

Again, Plaintiffs attempt to impute representations made by Kuschner and Lopez to Merino on

the false assumption that Kuschner and Lopez were Merino’s agents. Resp. at 41. No evidence or

testimony by Kuschner, Lopez, or Merino, is proffered by Plaintiffs to show that Kuschner and

Lopez were at all times acting as Merino’s agent; Plaintiffs’ subjective belief to the contrary is

irrelevant. Misrepresentations #1 through #4, #10, and #11, forming the basis of the tort claims

asserted against Merino, are alleged to have been made by either Lopez or Kuschner. Accordingly,

these representations are insufficient for purposes of specific jurisdiction over Merino; Merino did

not make these representations to Plaintiffs.

As for the so-called “Website Misrepresentations,” again, Plaintiffs stop short of stating

that they relied on these representations in investing in FX; Plaintiffs very specifically state that

they merely viewed them. Indeed, the “Kuschner-Kerns Website Misrepresentation” were likewise

made by Kuschner. See Am. Compl. at ¶ 39.

Finally, Plaintiffs argue that Merino’s alleged laundering of his ill-gotten gains from that

tortious conduct through Pribabe also constitutes tortious conduct in the State of Florida[,]” Resp.

at 41, n. 16, is improper inasmuch as the pleaded torts against Merino do not involve this alleged

conduct, Pribabe is not a party to the instant action, and, importantly, there is no evidence of

Merino laundering or otherwise using Plaintiffs’ funds—no less “ill-gotten” funds. Accordingly,

the Court should find that Plaintiffs failed to meet their burden of showing that Merino committed

a tort in the State of Florida.

3. Merino is Not Subject to General Jurisdiction within the State of Florida.

Section 48.193(2), Florida Statutes, provides that “[a] defendant who is engaged in

substantial and not isolated activity within this state, whether such activity is wholly interstate,

intrastate, or otherwise, is subject to the jurisdiction of the courts of this state, whether or not the

claim arises from that activity.” Florida courts have held “substantial and not isolated” to mean

“continuous and systematic general business contact[s]” with the State of Florida. See, e.g.,

Caiazzo v. American Royal Arts Corp., 73 So. 3d 245, 250 (Fla. 4th DCA 2011); Woods v. Nova

Cos. Belize Ltd.., 739 So. 2d 617, 620 (Fla. 4th DCA 1999); Am. Overseas Marine Corp. v.

Patterson, 632 So. 2d 1124, 1128 (Fla. 1st DCA 1994). “The continuous and systematic general

business contacts sufficient to confer general jurisdiction present a much higher threshold than

those contacts necessary to support specific jurisdiction under section 48.193(1).” Trs. Of

Columbia Univ. v. Ocean World, S.A., 12 So. 3d 788, 792 (Fla. 4th DCA 2009) (emphasis added).

“This is because ‘jurisdiction under section 48.193(1) does not require that a lawsuit’s cause of

action arise from activity within Florida, or that there be any connection between the claim and

the defendant’s Florida activities.’” Caiazzo, 73 So. 3d at 259.

It is axiomatic that the contacts necessary to confer general jurisdiction “must be so

extensive to be tantamount to [a defendant] being constructively present in the state to such a

degree that it would be fundamentally fair to require it to answer in [the forum state’s court’s in

any litigation arising out of any transaction or occurrence taking place anywhere in the world.”

Crowe v. Paragon Relocation Resources, Inc., 605 F. Supp. 1113, 1123 (M.D. Fla. 2007) (applying

Florida law and interpreting Section 48.193(2), Florida Statutes). See also Taylor v. Gutierrez, 129

So. 3d 415 (Fla. 3d DCA 2013) (finding entering in an employment agreement in Florida, with

Florida based companies, attending annual conventions in Florida, making presentations at those

annual conventions, receiving certifications at the conventions, vacationing in Florida, owning two

bank accounts in Florida, and embarking and disembarking from Florida ports for work did not

constitute the requisite substantial, and not isolated activity required to establish personal

jurisdiction over a non-resident defendant).

Stated differently, “the requirement of continuous and systematic general business contacts

must be so extensive and pervasive, in that a significant portion of the defendant’s business

operations or revenue are derived from established commercial relationships in the state.” Banco

de los Trabajadores, 237 So. 3d at 1134. Such contacts must be so “continuous and systematic”

as to render the non-resident defendant “essentially at home in the forum State.” Id. (quoting

Daimler AG v. Bauman, 571 U.S. 117, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014) (emphasis added).

Recently, Florida courts have found that general jurisdiction must be based on current (not

exclusively past) substantial and not isolated activity within Florida. See Murphy v. Murphy, 342

So. 3d 799, 804-05 (Fla. 1st DCA 2022) (citing Heineken v. Heineken, 683 So. 2d 194, 196 (Fla.

1st DCA 1996) (concluding that “limited past contacts” like a defendant’s possession of a Florida

driver’s license and a Florida voter registration card, were not substantial and were not isolated

activities within the state sufficient to satisfy general jurisdiction.)).

In the instant case, Plaintiffs assert that Merino is a resident of Florida. Resp. at 42.

However, the Amended Complaint fails to allege that Merino is a Florida resident; the Amended

Complaint alleges that Merino “resides in Spain[.]” See Am. Compl. at ¶ 8. By failing to initially

plead that Merino is a resident of Florida, Plaintiffs failed to meet their initial burden under

Venetian Salami.

To the extent the Court entertains Plaintiffs’ untimely argument that Merino is a Florida

resident because he listed himself as a registered agent, the Court should find that Plaintiffs

misstate the authority relied upon for the proposition that merely listing oneself as registered agent

equates to being a resident of Florida. Indeed, in Spoffard v. Beta LP/Alpha Trust, 2023 WL

3778252 (S.D. Fla. May 2, 2023), the court stated that “[t]he mere fact, however, that [defendant]

is a registered agent of a Florida LLC does nothing to establish that he is a citizen of Florida. .

. . alleging that ‘as the registered agent, plaintiff must necessarily reside in the State of Florida’

fails to establish domicile of plaintiff because ‘an allegation concerning residency does not equate

to citizenship necessary for diversity jurisdiction.”) (quoting Troshe Serv. Ctrs., LLC v. Scottsdale

Ins. Co., Case No. 6:16–cv–665–Orl–28DAB, 2016 WL 10932509, at *2 (M.D. Fla. May 12,

2016) (emphasis added). In any event, Spofford, had nothing to do with establishing personal

jurisdiction over a nonresident defendant; rather, the issue in Spofford was whether the plaintiff

was a citizen of Florida for purposes of diversity jurisdiction and is, therefore, inapposite. Id. at

*4.

In the unreported Middle District of Florida case cited by Plaintiffs, Sanshuk v. Guzman,

the court found personal jurisdiction where not only did the nonresident list himself as a registered

agent of a Florida LLC, but he also used a Florida driver’s license when signing verified answers

to charging orders against a number of Florida LLCs and had a Florida address. 2018 WL 8584152

at * 3 (M.D. Fla. June 13, 2018). “All of these facts point to the conclusion that Defendant Guzman

is a Florida resident and, therefore, amenable to jurisdiction in Florida courts.” Id. (Emphasis

added). Moreover, Sanshuk bears a very different procedural posture from the instant case,

inasmuch as the proceedings there did not concern a lawsuit but rather, a motion to compel

discovery responses in aid of execution following the plaintiff’s certification of a judgment that

was entered against the defendant in Ohio. Id. at * 1. That is, Plaintiffs cite to no Florida authority

for the proposition that merely registering oneself as a registered agent of a Florida company is

tantamount to being a resident of Florida. 1

When taking the remainder of Merino’s alleged substantial and not isolated activity in the

State of Florida, such activities are insufficient for the Court to exercise general jurisdiction over

Merino. In Rautenberg v. Falz, the plaintiff went beyond what is alleged by Plaintiffs here, and

asserted that general jurisdiction was proper over an individual defendant that was an agent and/or

employee of a corporation authorized to do business in the State of Florida. 193 So. 3d 924, 921

(Fla. 2d DCA 2016). The Second District Court of Appeal disagreed, holding that the Plaintiff

failed to “allege that [the individual defendant] conducted substantial business activities in Florida.

1
In any event Merino testified at his deposition that the signatures purporting to be his evidencing
that Merino registered himself as the registered agent of Florida entities are not his. See, e.g., Resp.,
Ex. A at 31:19-22.

Nor does it allege any alter ego or piercing the corporate veil theory to make [the individual

defendant] responsible for the activities of [the company].” Id. (further reasoning that the

complaint did not “even allege that [the individual defendant] was the person performing [the

corporation’s] substantial business activities in Florida); see also Qualley v. Int’l Air Servc. Co.,

595 So. 2d 194, 196 (Fla. 3d DCA 1992) (“presence of a subsidiary corporation within Florida is

not enough, without more, to subject a non-Florida parent corporation to long-arm jurisdiction

within this state. The rule is otherwise where, for example, the alter ego test can be met or where

the non-Florida parent company independently satisfies the test for jurisdiction under Florida’s

long-arm statutes, but those situations are not present here.”) (internal citations omitted).

That is, mere ownership of the Pribabe, even when taken as true, is insufficient to confer

general jurisdiction over Merino.

Nor is owning real estate in Florida sufficient to confer general jurisdiction. See Nichols v.

Paulucci, 652 So. 2d 389, 392 n. 5 (Fla. 5th DCA 1995) (“By itself, ownership of property is

insufficient to subject a nonresident defendant to the jurisdiction of the courts of this state, unless

the cause of action arose out of such ownership.”); Meraki Investments, Ltd. v. Unit 1805 Inc., 319

So. 3d 718, 721 (Fla. 3d DCA 2021) (“The mere ownership of two condominium units is, without

more, insufficient to confer general jurisdiction.”). In any event, the Fuentes Declaration negates

that Merino owns these properties, inasmuch as the Lofty Condo contract listed Pribabe LLC as

the Buyer, and as to the other two condominiums, Plaintiffs failed to establish that closings

occurred on these condominiums—merely that Merino allegedly paid for the initial deposits on

these condominiums. That is, title has not passed to Merino as to the Aria and Waldorf

Condominiums.

The remaining alleged activity of Merino, such as purchasing things while visiting Florida,

are not substantial and not isolated activity within the State of Florida as to render Merino

substantially at home in the State of Florida. To hold otherwise would open the floodgates and

allow for any non-resident who merely buys something in Florida, to be subject to the Court’s

general jurisdiction; this is, by definition, isolated activity and insufficient to confer general

jurisdiction. Accordingly, the Court should find that Plaintiffs failed to establish a basis for general

jurisdiction over Merino.

4. Conspiracy is Not a Proper Basis to Impute Personal Jurisdiction to Merino and
Brito.

Plaintiffs have failed to establish any conspiracy between Merino, Brito, Lopez, Kuschner,

and Bastos. Moreover, the alleged overt acts, which constitute Lopez’s and Kuschner’s

representations to Plaintiffs are inseparable from the alleged conspiracy itself. See, e.g., McElrath

v. ABN AMRO Mortg. Grp., Inc., No. 11-62216-Civ, 2012 WL 463893 at *6 (S.D. Fla. Feb. 13,

2012) (holding that the plaintiffs failed to allege an overt act, as while the plaintiffs pled that one

defendant obtained notes and mortgages in furtherance of a conspiracy to commit fraud, the

obtaining of the notes and mortgages did not suffice to allege an overt act separate from the

conspiracy itself); see also Parisi v. Kingston, 314 So. 3d 656, 661 (Fla. 3d DCA 2021) (holding

that to subject nonresident defendants to personal jurisdiction on the basis of a conspiracy, the

“claim for civil conspiracy must contain clear, positive and specific allegations; general allegations

of conspiracy are nor sufficient. And, where, the conspiracy allegations are deficient, the trial court

must dismiss the complaint against a nonresident defendant for lack of personal jurisdiction.”)

(internal citations omitted); NHB Advisors, Inc. v. Czyzyk, 95 So. 3d 444, 448 (Fla. 4th DCA 2012)

(“[A] court will decline to apply the co-conspirator theory to extend jurisdiction over nonresidents

if the plaintiff fails to plead with specificity any facts supporting the existence of the conspiracy

and provides nothing more than vague and conclusory allegations regarding a conspiracy involving

the defendants.”).

As has been exhausted in this Reply, Julian and Kuschner are neither agents of Merino nor

FX. However, to the extent the Court is inclined to find that Julian and Kuschner are FX’s agents,

the Court should find that Plaintiffs’ claims for conspiracy are barred by the intra-corporate

conspiracy doctrine, which provides that “neither an agent nor an employee can conspire with his

or her corporate principal or employer.” Richard Bertram, Inc. v. Sterl

Case Info

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

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Document Filed Date

April 12, 2024

Case Filing Date

July 24, 2023

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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

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

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