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Filing # 199889792 E-Filed 06/05/2024 12:22:17 PM
IN THE CIRCUIT COURT OF THE FIFTEENTH JUDICIAL CIRCUIT IN
AND FOR PALM BEACH COUNTY, FLORIDA
BETH SAFFER, etc., et al.,
Plaintiffs, Case No. 50-2023-CA-015733
V.
SANDRA KLIMAS, etc., et al.
Defendants.
/
OPPOSITION BY PLAINTIFFS TO KLIMAS, THOM, DiGENNARO, COHN
STERN AND ISRAEL'S MOTIONS TO DISMISS SECOND AMENDED COMPLAINT
Plaintiffs BETH SAFFER and ARTHUR ROBINS and LISA DEFABRITIIS
(hereinafter "Plaintiffs" or "the Class"), individually and on behalf of all others similarly
situated, hereby respectfully submit their opposition to the motions to dismiss Plaintiff's
Second Amended Complaint (sometimes "SAC") filed by Defendants SANDRA KLIMAS,
ROBERT THOM, ANTHONY DiGENNARO, CHARLES COHN, ROBERT STERN and
TIRTZAH ISRAEL (collectively "Klimas Defendants" or "Klimas" and _ hereinafter
"Motion"), and claim and allege as follows:
I PRELIMINARY STATEMENT
Other than correctly identifying three of the four juridic entities being impacted by the
malfeasance alleged in the Second Amended Complaint ("SAC"), the Klimas Defendants get
nothing right in their motion to dismiss.'
1 The Klimas Defendants correctly identify, on pages 2 and 3 of their Motion, three of the
four entities being impacted by Klimas' alleged diversion and mismanagement of assets: Klimas is a
Board member of one condominium entity known as Number 2 Condominium Association. An
adjacent condominium association called Number 1 Condominium Association is alleged to be
impacted by the Klimas Defendants’ misconduct. A third entity called the Recreation Association is
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FILED: PALM BEACH COUNTY SREY RISER RAB IZA! OPER Rb Cb Bind 737" 17 PM
Indeed, understanding at this point that they are in trouble, the Klimas Defendants make
various outlandish claims in a desperate attempt to continue stalling this litigation. The
Court's attention is respectfully invited to what is the symbol of Klimas' frivolity with
respect to Klimas' current Motion, where Klimas attacks the Plaintiffs' accounting cause of
action by arguing that "in order to establish a cause of action for accounting, a partnership
must exist." Motion, at page 26. This is simply a knowingly false statement of the law to this
Court. In actuality, the law imposes no partnership requirement whatsoever in making out a
cause of action for an accounting. See, e.g., Zaki Kulaibee Establishment v. McFliker, 771
F.3d 1301, 1311 (11th Cir. 2014) ("[t]o obtain an accounting under Florida law, then, a party
must show either (1) a sufficiently complicated transaction and an inadequate remedy at law
or (2) the existence of a fiduciary relationship.”) Plaintiffs' accounting claim is properly
pleaded and should go forward, and Klimas should be admonished to attempt to be more
careful in representing fact and law to this Court.
Klimas' substantive attacks are no different in their lack of legitimate basis. For
example, in the face of lawsuit clearly alleging Klimas' diversion or theft of more than $4
million of reserve funds and $1.5 million of assets, including, specifically, $440,909.00 in
cash — see, e.g., SAC § $3, 39, 45, 80, 97, 156, 168 — Klimas' Motion initially claims that
these factual contents are not specific enough to inform them of the nature of the cause
the master entity owning all of the common real estate utilized by all homeowners in Number |
Association and Number 2 Association. All homeowners of Number | Association and Number 2
Association have direct ownership interests in such common real estate, pursuant to land deeds
recorded some 50 years ago in the Palm Beach County Recorders Office. Klimas has neglected to
reference Delray Trails, another homeowner community abutting these associations with similar
land rights. These facts were comprehensively set forth in each of Plaintiffs' complaints in this
action and are specifically set forth, for example, in paragraphs 22, 25, 42 and 60 of the Second
Amended Complaint. The three foregoing entities besides Delray Trails are collectively known as
"Palm Greens."
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against them. But the law in this State is directly contrary to Klimas "uncertainty" claims.
Florida Courts of Appeals have regularly reversed trial court decisions to dismiss lawsuits
that were nowhere close to as specific and comprehensive as the Second Amended
Complaint is in the case at bar. See, discussion, Section IV, post.
Furthermore, with respect to the Klimas Defendants’ other bases in their motion to
dismiss, such bases are both factually and legally incorrect demonstrating that Klimas'
motion to dismiss should be denied out of hand.
Il. THERE IS NO INDISPENSABLE PARTY CLAIM
A 13th Floor Investments Is Not An Indispensable Party
The indispensable party claim is a prime example of one of Klimas' wild, unsupportable
and desperate claims. At page 8 of their Motion, the Klimas Defendants refer this Court to
the Miami-Dade County action pending against 13th Floor, Thom and Klimas which has as
its only gravaman the March 19, 2019 written contract between Plaintiffs and 13th Floor
Investments, LLC ("13th Floor case").? But then Klimas fails to apprise this Court that their
lawyers here, Kaufman Dolowich, already made a motion to transfer the 13th Floor case
from Miami-Dade County to this Court, which was denied by Hon. Judge Antonio Arzola at
a hearing held on May 21, 2023. Disturbingly, Judge Arzola denied this venue transfer
motion of Thom/Klimas some ten days prior to Klimas filing of the Motion here, yet Judge
2 A true and correct copy of the Miami-Dade County lawsuit against 13th Floor
Investments, LLC, Robert Thom and Sandra Klimas is appended hereto as Exhibit 1 for the Court's
convenience. Although this Complaint is due to be amended, the gravaman will not change thereby.
The Court's attention is invited to the exhibit to that lawsuit and paragraph 6 of the exhibit, which
clearly sets forth the substantial construction obligation of 13th Floor made for the benefit of
Plaintiffs. In connection with the adjudication of the case at bar, Plaintiffs will introduce evidence of
the Klimas Defendants’ open and notorious encouragement to 13th Floor to decide to violate its
construction obligations. Plaintiffs will introduce such evidence as further proof of the schemes set
forth in the Second Amended Complaint, not as the epicenter of the case.
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Arzola's decision is referenced nowhere in Klimas' Motion. See, Exhibit 2 hereto, Circuit
Court Order of Hon. Judge Arzola, executed on May 30, 2024.
Not only do the Klimas Defendants withhold important facts from this Court, but they
misrepresent other facts. For example, on page 8 of the Motion, Klimas states that the
above-described Miami lawsuit involves a lawsuit against "Lennar," however, no entity
named "Lennar" is a party to that lawsuit. Instead, the Miami-Dade County lawsuit — now
tuled by the Circuit Court there to be properly maintained in Miami-Dade County with any
transfer request to this Court being denied and adjudicated as wholly improper — has only
13th Floor, Thom and Klimas as party Defendants. Id.
The Klimas Defendants further misrepresent to this Court the facts alleged in the
Second Amended Complaint as they pertain to 13th Floor. To attempt to obtain a second bite
at the apple regarding their weird desire to consolidate all cases into the case at bar,’ Klimas
falsely claims at page 8 of the Motion that 13th Floor is alleged to "hold money or property
that are owed to Plaintiffs." This representation by Klimas is false. The truth is that the issue
framed in the Second Amended Complaint has nothing to do with 13th Floor "holding"
anything. Instead, the SAC has to do primarily with Klimas' ongoing fraud and violations of
fiduciary duty designed to permit the Klimas Defendants to divert millions of dollars from
the Palm Greens community to the detriment of Plaintiffs. Klimas' misconduct in assisting
13th Floor to violate its written contract with Plaintiffs is at the periphery of the Second
Amended Complaint and is an issue only insofar as it has led to what Plaintiffs allege to be
3 Defendant Becker & Poliakoff placed itself in the position of counsel of record by
recently filing a related case in West Palm Beach on behalf of the Klimas Defendants — now
pending as case number 502024CA002299 — and then, evidently believing this Court might be
predisposed in their favor, Becker & Poliakoff filed a motion to transfer that related case back to
this Court for consolidation in this very proceeding. A true and correct copy of this transfer filing
request in the related case by Defendant Becker & Poliakoff is appended hereto as Exhibit 3.
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the intentional deprivation, deterioration and decay of Plaintiffs' substantial real estate and
real estate interests. That real estate is specifically identified at paragraph 42 of the Second
Amended Complaint, and the issue involving Klimas' intentional decision to cause its decay
is described this way:
Klimas' fraudulent plan has been to allow the Recreation
Facilities to deteriorate by misdirecting or seizing control of
Recreation Corporation-funds and ignoring contractual
obligations of Outside Developers, including but not limited to,
13th Floor Investments, LLC, which contractual obligations
required the Outside Developers to effect substantial upgrades
and remodeling of the Recreation Facilities. In doing this,
Klimas intended to financially benefit herself and the Outside
Developers, including, but not limited to, 13th Floor
Investments, LLC, according to proof.
Id., $43.
As the Court can plainly see, there is no allegation here — nor anywhere else in the
Second Amended Complaint — that might serve to support Klimas ridiculous claim that
Plaintiffs' claim against 13th Floor is that 13th Floor is "improperly holding money and
non-descript property." Motion, at page 8. This false allegation by Klimas is merely a
desperate attempt to bootstrap Klimas' attempt to declare 13th Floor an indispensable party.
Controlling Florida law holds that the fact that two different lawsuits have overlapping
facts or parties does not make all parties thereto indispensable to both lawsuits. Otherwise,
virtually every complex business dispute would end up with an indispensable party ruling.
One prime example of this relates to the very cases cited by Klimas in the Motion. For
example, Klimas cites the case of Demircan v. Mikhaylov, 306 So. 3d 142, 146 (Fla. Dist. Ct.
App. 2020) at page 7 of the Motion, however, that case demonstrates that the issue here is
actually whether "a complete and efficient determination of the equities and rights between
[the parties to the SAC] is possible without joining" 13th Floor. Jd. at 146. Because the SAC
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involves the scheme by Klimas to steal money and create divestment and decay regarding
Plaintiffs' real estate, the issues of 13th Floor are at the periphery. Klimas' false narrative
that 13th Floor is alleged to "hold"something owned by Plaintiffs is not enough to create
indispensable party relief just like any false statement to a tribunal is not enough to do
anything other than support an award of sanctions.*
Otherwise, Klimas cites mortgage and insurance cases where property owners and
insureds were deemed indispensable parties, as well as other completely irrelevant
authorities. See, Motion, page 7 (citing, e.g., Green Emerald Homes, LLC y. 21st Mortg.
Corp., 300 So. 3d 698 (Fla. Dist. Ct. App. 2019) and Hertz Corp. v. Piccolo, 453 So. 2d 12,
13 (Fla. 1984), both cases involving determining owners and insureds as indispensable
parties regarding lawsuits involving them or their properties). Unlike these Florida decisions,
nothing in the case at bar affects 13th Floor's rights under the contract and 13th Floor is not
alleged to be "holding" anything that Plaintiffs are seeking in the case at bar. Instead,
Plaintiffs are seeking a judgment against the Klimas Defendants so that Plaintiffs can save
their community that has existed for more than half a century and obtain recompense for the
injury resulting due to the millions of dollars Klimas has diverted.
B 13th Floor Investments LLC Is Not Even A Necessary Party
In order for a party to be indispensable, the law requires them to first be classified as a
necessary party. In order to be classified as a necessary party, that party must "have an
interest in a suit" and "ought to be made" a party. Hertz Corp. v. Piccolo, 453 So. 2d 12, 14
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Klimas does not merely, on just one occasion, make her false claim that 13th Floor is
alleged in the case at bar to "hold" something. For example, at footnote 2 of the Motion, Klimas
doubles down on the false narrative by absurdly claiming that "the extent of what money or property
held by these Outside Developers is unclear." Because any first year lawyer could easily learn that
Plaintiffs' claims involving 13th Floor are grounded in the violations by 13th Floor of its contract
with Plaintiffs (see, e.g., exhibit to Miami-Dade lawsuit, and paragraph 6 thereto, Exhibit 1 hereto),
Klimas' claims in this regard are the definition of frivolous.
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n.3 (Fla. 1984). Here, Plaintiffs do not seek damages for 13th Floor's breach of contract in
the case at bar, but instead seek remedies for Klimas' continuing diversion of assets and
intentional harming of Plaintiffs’ interests in the real estate identified in the Second
Amended Complaint. The entity known as 13th Floor has no "interest" in this dispute and
indeed there is no reason to name it as a party, because it obviously should not care one way
or the other whether the Klimas Defendants are ultimately ordered to pay money to
Plaintiffs or be subject to this Court's equitable powers.
Because it is not necessary that 13th Floor be a part of this case, 13th Floor is in turn
not an indispensable party. See, e.g., Hertz Corporation v. Piccolo, 453 So.2d 12, 14 n. 3
(Fla. 1984) ("Indispensable parties are necessary parties so essential to a suit that no final
decision can be rendered without their joinder. This is in contrast to other necessary parties,
who have an interest in a suit and ought to be made parties, but who do not have to be joined
before a final decision may be rendered").
Put another way, this Court can render a full judgment for or against the Klimas
Defendants without regard to whether or not 13th Floor is found to have technically
breached its contract with the Palm Greens entities. If 13th Floor breached the contract, this
Court could theoretically find that Klimas had nothing to do with such breaches. Or this
Court could find that Klimas failed to protect Plaintiffs' interests in the face of such a breach.
The Court could find that the issue of breach is irrelevant because of Klimas' other monetary
defalcations and mismanagement. In short, the technical issues surrounding the 13th Floor
contract are not such that "no final decision can be rendered" in the case at bar without their
adjudication in this forum, because this litigation involves wider issues including many
having nothing to do with said contract.
C. Joining 13th Floor Investment Would Triple The Size Of This Case
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Currently this is a case involving fiduciaries who have schemed to divert money and
violate fiduciary duties, the resolution of which will be rather straightforward. Although
Klimas has thus far resisted all attempts to produce documents — despite multiple document
requests Klimas has produced not a single shred of evidence — the discovery will ultimately
focus primarily on emails and accounting records. If the Court at summary judgment finds
that money was diverted and that harm to Plaintiffs was intentionally diverted, the issues at
trial will substantially narrow. But in no event is there anything in this case that is overly
complex from an intellectual or evidentiary standpoint. After all, there are only four closely
held corporations, and presumably four or five bank accounts, involved in the entirety of the
case at bar.
On the other hand, joining 13th Floor would substantially expand the expenditure of
time and resources for the Court to adjudicate the case, which is obviously what the Klimas
Defendants want because they fully support 13th Floor in its quest to save money by
violating its contract made for Plaintiffs' benefit. Indeed, with 13th Floor involved in these
proceedings through joinder, brand new issues enter the case involving huge real estate
developers and their $400 million development of new homes arising out of a 200-page land
development contract. See, Exhibit 1 and exhibit thereto. Inside of that land development
agreement and its exhibits, there are literally hundreds if not thousands of key provisions
involving easements, management rights, maintenance obligations, property turnover,
construction responsibilities, land and building permits, and construction plans and
schematics. Most if not all of these issues have nothing whatsoever to do with the case at
bar, which only concerns whether and to what extent Klimas has and continues to attempt to
harm Plaintiffs by stealing or diverting money and otherwise violating the law.
Nevertheless, in the event the Court were to dismiss this action without prejudice for failure
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to join 13th Floor — which is the only order this Court could feasibly make in the unlikely
event it were to agree that 13th Floor must be made a party, see, e.g., Fla. Dep't of Revenue
ex rel. A.L. v. S.B., 124 So. 3d 377, 378 (Fla. Dist. Ct. App. 2013) (“A dismissal for failing to
join an indispensable party should be without prejudice, unless the pleader refuses to amend
to add a party necessary for a determination on the merits") — the Court should be prepared
for substantial additional law and motion practice as a result of a wide expansion of the
issues at play.
Til. Claims Of Non-Members Of Number 2 Association Are Legally Sufficient
A Introduction
In three short paragraphs, citing no caselaw whatsoever, the Klimas Defendants attempt
to obtain dismissal against more than 1,000 members of the putative Class on the flimsy
grounds that only shareholders of Number 2 Associations can file suit sounding in fraud and
breach of fiduciary duty. Klimas' primary allegation is that "the Defendants did not and
could not have owed ... any duty" to parties who "were and are not members of Number 2
Association." Motion, page 6. This, of course, is a baseless argument. Under well
established Florida law, the question of whether one has a duty to another is not based upon
whether or not they are "members" "shareholders," but instead is based on the facts and
circumstances presented.
Furthermore, Klimas has forgotten about the fraud claims, because surely Klimas knows
enough to know that Florida law holds that a person defrauding another is not subject to
immunity on the basis that the person is not a fiduciary. Therefore surely the Class is able to
sue for being defrauded by Klimas.
B The Defendants' Duty To All Plaintiffs Has Been Established
The courts do not look to anything other than all the underlying circumstances to
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determine whether a fiduciary duty is present. Indeed, if a person accepts the obligation to
act fiduciarily, then that person is obviously a fiduciary. This "facts and circumstances" test
has been enunciated throughout Florida history by numerous courts, as follows:
Fiduciary relationships are either expressly or impliedly
created. Fiduciary relationships implied in law are
premised upon the specific factual situation surrounding the
transaction and the relationship of the parties. 1d. Courts have
found a fiduciary relation implied in law when "confidence is
reposed by one party and a trust accepted by the other." Dale
v. Jennings, 90 Fla. 234, 244, 107 So. 175, 179 (1925).
Accord Harkness v. Fraser, 12 Fla. 336 (1868); Harrell v.
Branson, 344 So.2d 604, 607 (Fla. Ist DCA), cert. denied, 353
So.2d 675 (Fla. 1977).
Capital Bank v. MVB, Inc., 644 So. 2d 515, 517 (Fla. Dist. Ct. App. 1994).
The Second Amended Complaint clearly sets out an overwhelming case where a
position of "trust" was "accepted" by the Klimas Defendants toward all members of the
Class, including Lisa Defabritiis, not only by Sandra Klimas individually but by all
Defendants except Becker. Demonstrating how they have refused to even review the SAC,
the Klimas Defendants fail to even mention in their Motion that the SAC expressly alleges
that Sandra Klimas specifically accepted the role of fiduciary on behalf of all members of the
Class. Pursuant to controlling Florida law, this establishes a fiduciary duty and proves
Klimas to be wrong to even raise this issue. See, e.g., SAC, §60 (alleging that Sandra
Klimas "voluntarily represented to the entirety of the Class that she undertook the obligation
to operate fiduciarily with fidelity, trust and honesty toward all beneficiaries of the
Association, Number | Association, the Recreation Corporation ... .").
Furthermore, the circumstances described in the Second Amended Complaint insinuate
a fiduciary duty by all of the Defendants toward all members of the Class. Id.; see also, e.g.,
SAC, $150 (alleging further that the relationship between each of the three related
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companies created fiduciary duties as a matter of law). This is alleged throughout the
Second Amended Complaint and can hardly be doubted pursuant to Florida law providing
that the presence of a fiduciary duty in these situations is based on the facts and
circumstances. For this reason, the law in Florida is that claims involving the presence of a
fiduciary duty are "better addressed by a summary judgment motion, or trial, than on a
motion to dismiss" and the primary reason for this rule of law is because "of the factually
intensive nature of an implied fiduciary duty inquiry." Fixel v. Rosenthal Rosenthal, 842 So.
2d 204, 208 (Fla. Dist. Ct. App. 2003).
Despite this being a "summary judgment ... or trial" issue to the extent the Klimas
Defendants persist in raising it, Plaintiffs respectfully believe they will prevail at summary
judgment in proving that the Defendants violated their fiduciary duties to members of the
Class. The entire Palm Greens entity was acting together with respect to the once a century
change to their community arising out of the 13th Floor development agreement, and the
Klimas Defendants openly accepted fiduciary duties in carrying out their obligations during
this period. Regardless, however, of whether a trier of fact decides this issue in Plaintiffs
favor at summary judgment or trial, one thing is clear: The law in Florida does not hold as
Klimas maintains that as a matter of law at the pleading stage only "members" or
"shareholders" of one condominium association are owed fiduciary duties by managers who
are working on behalf of multiple, interconnected associations and entities managing
common land owned by thousands of Florida residents.
The challenge by Klimas to the makeup of the Class is baseless and should be rejected.
C. The Klimas Defendants Are Liable Regardless Of Duty
In asking for dismissal against dozens of Class members who have already been
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disclosed to this Court, such as Lisa Defabritiis,> the Klimas Defendants have forgotten that
they have also been sued for fraud in the first and fourth causes of action. Their discussion
about duty — wrong as it is — has nothing whatsoever to do with the affirmative
misrepresentations and fraud practiced upon the entire Class for which they are liable
regardless of the presence of a fiduciary duty.
Pursuant to Florida law, "duty" has never been an element directly or indirectly in
establishing such a fraud claim. Instead, fraud requires proof of a knowingly false statement
which resulted in consequent injury by persons acting in reliance thereon. Butler v. Yusem,
44 So.3d 102, 105 (Fla. 2010) (citing Johnson v. Davis, 480 So.2d 625, 627 (Fla. 1985)).
The Second Amended Complaint clearly sets forth these facts against each of the
Klimas Defendants throughout the first and fourth causes of action, including (a) the date
and content of the affirmative misrepresentation, (b) the documentary evidence showing that
the misrepresentations actually occurred and (c) each of the Klimas Defendants' roles in the
conspiracy to defraud. In their Motion, the Klimas Defendants do not even talk about the
detailed allegations of wrongdoing contained in some 70 paragraphs within these two causes
of action which specifically identify each of the Klimas Defendants and how it is they each
went about perfecting the fraud of divesting the Palm Greens community and all members of
the Class of money and property rights.
Furthermore, the Motion never challenges the presence of the conspiracy among the
Klimas Defendants to further the scheme, but instead makes flimsy claims seeking Plaintiffs'
production of "a specific piece of evidence which would support their conspiracy claims."
Motion, page 23. Despite the fact that Plaintiffs' attachments to the Second Amended
® There are already dozens of members of the Class residing in Number | Association who
have been identified, as this Court directed, or who have been directly injured as a direct result of
the malfeasance of the Klimas Defendants. See, Dkt. No. 197.
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Complaint already constitute significant evidence in support of their claims, there is of
course no evidentiary requirement at the pleading stage in any jurisdiction in the United
States, let alone in Florida. Therefore, Klimas request for a factual showing at this stage of
the case is simply another sign of desperation. See, e.g., Weaver v. Leon Classroom
Teachers, 680 So. 2d 478, 481 (Fla. Dist. Ct. App. 1996) ("The court must assume that all of
the facts alleged in the complaint are true and must draw all reasonable inferences in favor
of the pleader.") (citation and internal quotation marks omitted).
In short, although the question of whether the Klimas Defendants had a duty to avoid
intentionally harming their compatriots within Palm Greens has been answered, obviously,
in the affirmative under Florida law, that question has nothing to do with whether their
conspiracy, fraud and deceit alleged throughout 70 paragraphs of the SAC in the first and
fourth counts is actionable. For the Klimas Defendants to maintain that they can send false
emails, make false representations directly to the entire Class and attempt to divest the Class’
money, legal and property rights is outrageous and finds no support under Florida law.
Iv. KLIMAS' CLAIM OF NON-SPECIFICITY IS BASELESS
It is important to remember the actual words utilized in the Second Amended Complaint
to describe Klimas' misconduct, because these clear words make out a case of fraud and
malfeasance far better than the vast majority of reported Florida cases.
For example, with respect to a Second Amended Complaint clearly alleging Klimas'
"diversion or theft" of "more than $1.5 million of assets of the Association from the calendar
year 2020 to the present" (SAC, § 39), Klimas' Motion contends there is not "any level of
specificity ... of what monies were diverted or what assets were concealed." Motion, page 3,
8. Klimas continues to advance this claim even in the face of Plaintiffs’ repeated additional
allegations in the SAC that Klimas assisted over the past four years in "diverting" the
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specific sum of $440,909.00 stolen through the " preparation, processing or covering up of
phony invoices" in that amount. See, SAC, § § 45, 80, 97, 156 and 168. This allegation is
not only far beyond any Florida pleading requirement, but in actuality it would be enough
specificity to make out a conversion claim — although Plaintiffs have not yet brought a cause
of action for conversion. See, e.g., Belford Trucking Co. v. Zagar , 243 So. 2d 646 (Fla. 4th
DCA 1970) (specificity of funds requirement in conversion cases merely requires
identification of the amounts).°
Klimas' other claims of "non-specificity" are also frivolous. Plaintiffs' well-pleaded
contentions in the SAC about Klimas' attempts to deplete the assets of the Class are the
epitome of proper and specific identification. The Klimas Defendants' scheme, as alleged in
the SAC, has for example included (a) the unaccounted for depletion of $4 million in reserve
funds of her condominium association (SAC at §3) and (b) other intentional misconduct by
the Klimas Defendants designed to destroy the value and quiet enjoyment of some 100 acres
of specifically identified real property assets (SAC at § §41 through 43).
Well established Florida law holds that far less is required at the pleading stage
regarding claims of breach of fiduciary duty and malfeasance. For example, See, e.g.,
Taubenfeld v. Lasko, 324 So. 3d 529 (Fla. Dist. Ct. App. 2021) (reversing trial court's
dismissal of Fourth Amended Complaint, holding that "the trial court erred in concluding
that [Batista] failed to allege sufficient facts" in a Fourth Amended fiduciary duty lawsuit
alleging extremely vague damages to assets such as "advantageous business relationships
with venues in Miami Beach and Aventura" ) (emphasis added).
© The reason Plaintiffs have not yet sued for conversion is because, as the SAC repeatedly
claims, Klimas and her co-conspirators have been able to avoid disclosing where the diverted
monies have been transferred to by resisting dozens of requests by her principals for access to
records to perform a basic forensic audit. See, e.g., SAC, § § 40, 41, 78 and 83.
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In a jurisdiction applying the federal standard in long holding that "allegations of
conclusions of fact, being pleadings of ultimate fact, are sufficient, and a complaint alleging
such should not be dismissed," Warner v. Florida Jai Alai, Inc., 235 So. 2d 294, 297 (Fla.
1970), the Klimas Defendants cannot escape having to answer what are serious claims of
quasi-criminal wrongdoing — involving diversions of more than $5 million and involving
interference and malfeasance regarding acreages of specifically identified property — by
saying they are uninformed of "the nature of the cause" against them. See, Rubenstein v.
Primedica Healthcare, 755 So. 2d 746, 749 (Fla. Dist. Ct. App. 2000) (“if a pleading
informs the defendant of the nature of the cause against him, the pleading is sufficient”), and
discussion, Section IX, post.
v. THIS IS NOT A DERIVATIVE ACTION
Klimas claims that only shareholders of Number 2 Association may sue in the case at
bar and therefore the case at bar must be brought derivatively. Their theory then continues
that Plaintiffs have failed to satisfy the condition precedent to filing a shareholder derivative
action. Klimas' claim is baseless.
A More Than Half Of The Class Are Not Condo 2 Shareholders
Klimas recognizes that only a portion of the Class might be shareholders of Number 2
Association and Klimas fully acknowledges that the Class is made up of others, including
the Recreation Association, Number 1 Association and hundreds of homeowners owning
property in places other than Number 2 Association. See, e.g., Motion, page 9 (Klimas
admitting that the Class includes "past and present Members of the Number 1
Association[].") Indeed, an entirely different condominium association called Delray Trails
is also a part of the Class and is already participating in this action, and none of Delray
Trails' residents have anything to do with Klimas' condominium association. All of these
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Class members had no ability to bring a shareholders derivative claim — they are not
shareholders of Number 2 Association — and therefore they could not possibly have
complied with any conditions precedent. See, e.g., Kaplus v. First Continental Corp., 711
So. 2d 108, 111 (Fla. Dist. Ct. App. 1998) (discussing derivative suit “requirement that
plaintiff must have been a 'shareholder at time of complained of transaction") (citation
omitted).
Accordingly, this case cannot possibly be dismissed pursuant to the pre-suit notification
requirement of Fla. Stat. §§ 718.303(1) and 617.07401, because at least half of all members
of the Class have no ownership inside of Number 2 Association yet they have been and
continued to be devastated by Klimas' theft and malfeasance affecting their real estate
holdings. The presence of these Class members is properly advanced not only by the
presence of Lisa Defabritiis as lead plaintiff (Ms. Defabritiis is not a shareholder of Number
2 Association) but also by the allegations in paragraph 25 of the Second Amended
Complaint (alleging Class members associated with Number | Association and Delray
Trails, neither of which are shareholders of Klimas' condominium association).
B Even Condo 2 Shareholders Must Sue Directly, Not Derivatively
More importantly, the law is well settled that this matter does not even constitute a
derivative action as to the actual shareholders or members of Number 2 Association. There
are three reasons for this reality, each of which is more compelling than the last.
First, derivative actions are brought only for injuries sustained by the corporation. The
Klimas Defendants are gleefully claiming that Number 2 Association has not suffered, and
cannot possibly suffer, any injury whatsoever. The Second Amended Complaint makes out a
claim that Klimas' acts have directly injured landholdings of all members of the Class
regardless of whether or not those members are shareholders of Number 2 Association. In
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2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500
Florida, such circumstances involving direct injuries to persons other than the corporation
are to be brought directly, not derivatively. See, e.g., Salit v. Ruden, McClosky, Smith, 742
So. 2d 381, 389 (Fla. Dist. Ct. App. 1999) (“In this injurious falsehood count, appellants
seek compensation for damage to their personal property interests as shareholders. They do
not seek to obtain some benefit that would inure to the corporation. The case was properly
brought as a direct claim.”)
Underscoring the holding in Salit that direct injury to property interests, even property
interests "as shareholders," is to be brought directly and not derivatively, the undisputed
facts of this case are that each member of the Class holds a unique and direct real estate
interest in the all-important land and real estate that is majority owned by the Recreation
Association. This direct real estate interest was conveyed and recorded on December 14,
1973 as Parcel Record 2249 in Palm Beach County, Florida, and it has been reaffirmed
repeatedly thereafter. See, Dkt. No. 35 (Request for Judicial Notice of Palm Beach land
records). Florida law is clear that such direct interests of condominium owners are properly
brought as class action lawsuits. See, e.g., Rogers & Ford Const. Corp. v. Carlandia Corp. ,
626 So.2d 1350, 1354 (Fla. 1993) (approving of non-derivative class action litigation
regarding "actions with respect to common areas or common elements of condominiums").
As if confirming their claim to be baseless, each and every case cited by Klimas
supporting the "only shareholder derivative" argument deals with garden variety claims
brought only by shareholders of the derivative corporation for injuries mainly suffered by
the corporation. See, e.g., Motion at page 10, citing Leppert v. Lakebreeze Homeowners, 500
So. 2d 250, 251 (Fla. Dist. Ct. App. 1987) (lawsuit brought by a single "member of the
Lakebreeze Homeowners Association”); Citizens National Bank of St Petersburg v. Peters,
175 So. 2d 54, 56 (Fla. 2d DCA 1965) (lawsuit brought by an individual shareholder
17
PAYTON & ASSOCIATES, LLC
2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500
because of corporation’s actions); Jezzi Family Ltd. P'ship v. Edgewater Beach Owners
Ass'n, Inc., 254 So. 3d 584, 585 (Fla. Dist. Ct. App. 2018) (single “owner of a
condominium in the Edgewater Beach Condominiums" brought suit against the corporation
itself). (Emphasis added in each.) In contrast, the Class in the case at bar seeks redress for
damages "to property . interests," Salit, 742 So. 2d at 389 on behalf of persons the
majority of which are neither shareholders nor members of Number 2 Association. This
case is indeed not derivative in nature and no court has ever held otherwise.
Accordingly, the Defendants cannot force compliance with pre-suit requirements or
obtain dismissal on the untrue grounds that the members of the Class in this action are
"shareholders" of Number 2 Association who intend to obtain redress for something other
than injuries to their "property ... interests." /d. Such grounds are untrue and cannot form a
basis for relief.
VI. THE CLASS IS PROPERLY CONSTITUTED
Understanding that their shareholder derivative arguments do not work, the Klimas
Defendants then turn to the flip side of arguing that the Class is too large and lacks standing.
In support of these claims, Klimas cites no statute and no judicial or decisional authority of
any kind: asking this Court to dismiss this case against a well-defined Class based upon no
legal authority whatsoever. It goes without saying that these claims are also clearly without
merit pursuant to well established law Klimas failed to find.
A Standing
Indeed, unlike Klimas' unsupported discussion of standing, Plaintiffs believe direct
reference to United States Supreme Court and Florida Supreme Court authority is now
required to demonstrate the United States and Florida Constitutional rights held by all
members of the Class in this case. The Class in this matter believes that Klimas' fraud, theft
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PAYTON & ASSOCIATES, LLC
2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500
and mismanagement ring has already divested them of significant property interests and
ultimately is going to bury them. They believe that they will ultimately lose all or
substantial parts of real estate and surrounding interests that they have enjoyed for half a
century. They wish to avoid losing such interests not only as a financial matter but as a quiet
enjoyment and lifestyle matter. The Class is made up largely of retirees in their senior years
who deserve to be free from Klimas' shenanigans and have a right to seek redress before this
Court to protect themselves.
The highest courts in the land have repeatedly articulated that these kinds of interests
are what seeking redress in American courtrooms is all about. The initial concept of
standing emanates from the United States Constitution, Article III, which requires a
"plaintiff seeking compensatory relief [to establish] that he/she (1) suffered an injury in fact,
(2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to
be redressed by a favorable judicial decision." Town of Chester v. Laroe Estates, Inc., 137 8.
Ct. 1645, 1650 (2017) (citations and internal quotation marks omitted). It would be hubris
to claim that Klimas' theft, mismanagement and assistance with Outside Developers in
violating multi-million land contracts made for the benefit of the Class have not created "an
injury in fact." Jd. And absurd would be the description if one would attempt to argue that
the Klimas Defendants’ conduct alleged in the Second Amended Complaint is not "fairly
traceable" directly to the "injury in fact." Jd. Lastly, it is obvious that a favorable outcome in
this case will obtain "redress[]" for the Class as a result. Jd. All members of the Class have
A
Preview
Filing # 199889792 E-Filed 06/05/2024 12:22:17 PM IN THE CIRCUIT COURT OF THE FIFTEENTH JUDICIAL CIRCUIT IN AND FOR PALM BEACH COUNTY, FLORIDA BETH SAFFER, etc., et al., Plaintiffs, Case No. 50-2023-CA-015733 V. SANDRA KLIMAS, etc., et al. Defendants. / OPPOSITION BY PLAINTIFFS TO KLIMAS, THOM, DiGENNARO, COHN STERN AND ISRAEL'S MOTIONS TO DISMISS SECOND AMENDED COMPLAINT Plaintiffs BETH SAFFER and ARTHUR ROBINS and LISA DEFABRITIIS (hereinafter "Plaintiffs" or "the Class"), individually and on behalf of all others similarly situated, hereby respectfully submit their opposition to the motions to dismiss Plaintiff's Second Amended Complaint (sometimes "SAC") filed by Defendants SANDRA KLIMAS, ROBERT THOM, ANTHONY DiGENNARO, CHARLES COHN, ROBERT STERN and TIRTZAH ISRAEL (collectively "Klimas Defendants" or "Klimas" and _ hereinafter "Motion"), and claim and allege as follows: I PRELIMINARY STATEMENT Other than correctly identifying three of the four juridic entities being impacted by the malfeasance alleged in the Second Amended Complaint ("SAC"), the Klimas Defendants get nothing right in their motion to dismiss.' 1 The Klimas Defendants correctly identify, on pages 2 and 3 of their Motion, three of the four entities being impacted by Klimas' alleged diversion and mismanagement of assets: Klimas is a Board member of one condominium entity known as Number 2 Condominium Association. An adjacent condominium association called Number 1 Condominium Association is alleged to be impacted by the Klimas Defendants’ misconduct. A third entity called the Recreation Association is 4 PAYTON & ASSOCIATES, LLC FILED: PALM BEACH COUNTY SREY RISER RAB IZA! OPER Rb Cb Bind 737" 17 PM Indeed, understanding at this point that they are in trouble, the Klimas Defendants make various outlandish claims in a desperate attempt to continue stalling this litigation. The Court's attention is respectfully invited to what is the symbol of Klimas' frivolity with respect to Klimas' current Motion, where Klimas attacks the Plaintiffs' accounting cause of action by arguing that "in order to establish a cause of action for accounting, a partnership must exist." Motion, at page 26. This is simply a knowingly false statement of the law to this Court. In actuality, the law imposes no partnership requirement whatsoever in making out a cause of action for an accounting. See, e.g., Zaki Kulaibee Establishment v. McFliker, 771 F.3d 1301, 1311 (11th Cir. 2014) ("[t]o obtain an accounting under Florida law, then, a party must show either (1) a sufficiently complicated transaction and an inadequate remedy at law or (2) the existence of a fiduciary relationship.”) Plaintiffs' accounting claim is properly pleaded and should go forward, and Klimas should be admonished to attempt to be more careful in representing fact and law to this Court. Klimas' substantive attacks are no different in their lack of legitimate basis. For example, in the face of lawsuit clearly alleging Klimas' diversion or theft of more than $4 million of reserve funds and $1.5 million of assets, including, specifically, $440,909.00 in cash — see, e.g., SAC § $3, 39, 45, 80, 97, 156, 168 — Klimas' Motion initially claims that these factual contents are not specific enough to inform them of the nature of the cause the master entity owning all of the common real estate utilized by all homeowners in Number | Association and Number 2 Association. All homeowners of Number | Association and Number 2 Association have direct ownership interests in such common real estate, pursuant to land deeds recorded some 50 years ago in the Palm Beach County Recorders Office. Klimas has neglected to reference Delray Trails, another homeowner community abutting these associations with similar land rights. These facts were comprehensively set forth in each of Plaintiffs' complaints in this action and are specifically set forth, for example, in paragraphs 22, 25, 42 and 60 of the Second Amended Complaint. The three foregoing entities besides Delray Trails are collectively known as "Palm Greens." 2 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 against them. But the law in this State is directly contrary to Klimas "uncertainty" claims. Florida Courts of Appeals have regularly reversed trial court decisions to dismiss lawsuits that were nowhere close to as specific and comprehensive as the Second Amended Complaint is in the case at bar. See, discussion, Section IV, post. Furthermore, with respect to the Klimas Defendants’ other bases in their motion to dismiss, such bases are both factually and legally incorrect demonstrating that Klimas' motion to dismiss should be denied out of hand. Il. THERE IS NO INDISPENSABLE PARTY CLAIM A 13th Floor Investments Is Not An Indispensable Party The indispensable party claim is a prime example of one of Klimas' wild, unsupportable and desperate claims. At page 8 of their Motion, the Klimas Defendants refer this Court to the Miami-Dade County action pending against 13th Floor, Thom and Klimas which has as its only gravaman the March 19, 2019 written contract between Plaintiffs and 13th Floor Investments, LLC ("13th Floor case").? But then Klimas fails to apprise this Court that their lawyers here, Kaufman Dolowich, already made a motion to transfer the 13th Floor case from Miami-Dade County to this Court, which was denied by Hon. Judge Antonio Arzola at a hearing held on May 21, 2023. Disturbingly, Judge Arzola denied this venue transfer motion of Thom/Klimas some ten days prior to Klimas filing of the Motion here, yet Judge 2 A true and correct copy of the Miami-Dade County lawsuit against 13th Floor Investments, LLC, Robert Thom and Sandra Klimas is appended hereto as Exhibit 1 for the Court's convenience. Although this Complaint is due to be amended, the gravaman will not change thereby. The Court's attention is invited to the exhibit to that lawsuit and paragraph 6 of the exhibit, which clearly sets forth the substantial construction obligation of 13th Floor made for the benefit of Plaintiffs. In connection with the adjudication of the case at bar, Plaintiffs will introduce evidence of the Klimas Defendants’ open and notorious encouragement to 13th Floor to decide to violate its construction obligations. Plaintiffs will introduce such evidence as further proof of the schemes set forth in the Second Amended Complaint, not as the epicenter of the case. 3 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 Arzola's decision is referenced nowhere in Klimas' Motion. See, Exhibit 2 hereto, Circuit Court Order of Hon. Judge Arzola, executed on May 30, 2024. Not only do the Klimas Defendants withhold important facts from this Court, but they misrepresent other facts. For example, on page 8 of the Motion, Klimas states that the above-described Miami lawsuit involves a lawsuit against "Lennar," however, no entity named "Lennar" is a party to that lawsuit. Instead, the Miami-Dade County lawsuit — now tuled by the Circuit Court there to be properly maintained in Miami-Dade County with any transfer request to this Court being denied and adjudicated as wholly improper — has only 13th Floor, Thom and Klimas as party Defendants. Id. The Klimas Defendants further misrepresent to this Court the facts alleged in the Second Amended Complaint as they pertain to 13th Floor. To attempt to obtain a second bite at the apple regarding their weird desire to consolidate all cases into the case at bar,’ Klimas falsely claims at page 8 of the Motion that 13th Floor is alleged to "hold money or property that are owed to Plaintiffs." This representation by Klimas is false. The truth is that the issue framed in the Second Amended Complaint has nothing to do with 13th Floor "holding" anything. Instead, the SAC has to do primarily with Klimas' ongoing fraud and violations of fiduciary duty designed to permit the Klimas Defendants to divert millions of dollars from the Palm Greens community to the detriment of Plaintiffs. Klimas' misconduct in assisting 13th Floor to violate its written contract with Plaintiffs is at the periphery of the Second Amended Complaint and is an issue only insofar as it has led to what Plaintiffs allege to be 3 Defendant Becker & Poliakoff placed itself in the position of counsel of record by recently filing a related case in West Palm Beach on behalf of the Klimas Defendants — now pending as case number 502024CA002299 — and then, evidently believing this Court might be predisposed in their favor, Becker & Poliakoff filed a motion to transfer that related case back to this Court for consolidation in this very proceeding. A true and correct copy of this transfer filing request in the related case by Defendant Becker & Poliakoff is appended hereto as Exhibit 3. 4 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 the intentional deprivation, deterioration and decay of Plaintiffs' substantial real estate and real estate interests. That real estate is specifically identified at paragraph 42 of the Second Amended Complaint, and the issue involving Klimas' intentional decision to cause its decay is described this way: Klimas' fraudulent plan has been to allow the Recreation Facilities to deteriorate by misdirecting or seizing control of Recreation Corporation-funds and ignoring contractual obligations of Outside Developers, including but not limited to, 13th Floor Investments, LLC, which contractual obligations required the Outside Developers to effect substantial upgrades and remodeling of the Recreation Facilities. In doing this, Klimas intended to financially benefit herself and the Outside Developers, including, but not limited to, 13th Floor Investments, LLC, according to proof. Id., $43. As the Court can plainly see, there is no allegation here — nor anywhere else in the Second Amended Complaint — that might serve to support Klimas ridiculous claim that Plaintiffs' claim against 13th Floor is that 13th Floor is "improperly holding money and non-descript property." Motion, at page 8. This false allegation by Klimas is merely a desperate attempt to bootstrap Klimas' attempt to declare 13th Floor an indispensable party. Controlling Florida law holds that the fact that two different lawsuits have overlapping facts or parties does not make all parties thereto indispensable to both lawsuits. Otherwise, virtually every complex business dispute would end up with an indispensable party ruling. One prime example of this relates to the very cases cited by Klimas in the Motion. For example, Klimas cites the case of Demircan v. Mikhaylov, 306 So. 3d 142, 146 (Fla. Dist. Ct. App. 2020) at page 7 of the Motion, however, that case demonstrates that the issue here is actually whether "a complete and efficient determination of the equities and rights between [the parties to the SAC] is possible without joining" 13th Floor. Jd. at 146. Because the SAC 5 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 involves the scheme by Klimas to steal money and create divestment and decay regarding Plaintiffs' real estate, the issues of 13th Floor are at the periphery. Klimas' false narrative that 13th Floor is alleged to "hold"something owned by Plaintiffs is not enough to create indispensable party relief just like any false statement to a tribunal is not enough to do anything other than support an award of sanctions.* Otherwise, Klimas cites mortgage and insurance cases where property owners and insureds were deemed indispensable parties, as well as other completely irrelevant authorities. See, Motion, page 7 (citing, e.g., Green Emerald Homes, LLC y. 21st Mortg. Corp., 300 So. 3d 698 (Fla. Dist. Ct. App. 2019) and Hertz Corp. v. Piccolo, 453 So. 2d 12, 13 (Fla. 1984), both cases involving determining owners and insureds as indispensable parties regarding lawsuits involving them or their properties). Unlike these Florida decisions, nothing in the case at bar affects 13th Floor's rights under the contract and 13th Floor is not alleged to be "holding" anything that Plaintiffs are seeking in the case at bar. Instead, Plaintiffs are seeking a judgment against the Klimas Defendants so that Plaintiffs can save their community that has existed for more than half a century and obtain recompense for the injury resulting due to the millions of dollars Klimas has diverted. B 13th Floor Investments LLC Is Not Even A Necessary Party In order for a party to be indispensable, the law requires them to first be classified as a necessary party. In order to be classified as a necessary party, that party must "have an interest in a suit" and "ought to be made" a party. Hertz Corp. v. Piccolo, 453 So. 2d 12, 14 4 Klimas does not merely, on just one occasion, make her false claim that 13th Floor is alleged in the case at bar to "hold" something. For example, at footnote 2 of the Motion, Klimas doubles down on the false narrative by absurdly claiming that "the extent of what money or property held by these Outside Developers is unclear." Because any first year lawyer could easily learn that Plaintiffs' claims involving 13th Floor are grounded in the violations by 13th Floor of its contract with Plaintiffs (see, e.g., exhibit to Miami-Dade lawsuit, and paragraph 6 thereto, Exhibit 1 hereto), Klimas' claims in this regard are the definition of frivolous. 6 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 n.3 (Fla. 1984). Here, Plaintiffs do not seek damages for 13th Floor's breach of contract in the case at bar, but instead seek remedies for Klimas' continuing diversion of assets and intentional harming of Plaintiffs’ interests in the real estate identified in the Second Amended Complaint. The entity known as 13th Floor has no "interest" in this dispute and indeed there is no reason to name it as a party, because it obviously should not care one way or the other whether the Klimas Defendants are ultimately ordered to pay money to Plaintiffs or be subject to this Court's equitable powers. Because it is not necessary that 13th Floor be a part of this case, 13th Floor is in turn not an indispensable party. See, e.g., Hertz Corporation v. Piccolo, 453 So.2d 12, 14 n. 3 (Fla. 1984) ("Indispensable parties are necessary parties so essential to a suit that no final decision can be rendered without their joinder. This is in contrast to other necessary parties, who have an interest in a suit and ought to be made parties, but who do not have to be joined before a final decision may be rendered"). Put another way, this Court can render a full judgment for or against the Klimas Defendants without regard to whether or not 13th Floor is found to have technically breached its contract with the Palm Greens entities. If 13th Floor breached the contract, this Court could theoretically find that Klimas had nothing to do with such breaches. Or this Court could find that Klimas failed to protect Plaintiffs' interests in the face of such a breach. The Court could find that the issue of breach is irrelevant because of Klimas' other monetary defalcations and mismanagement. In short, the technical issues surrounding the 13th Floor contract are not such that "no final decision can be rendered" in the case at bar without their adjudication in this forum, because this litigation involves wider issues including many having nothing to do with said contract. C. Joining 13th Floor Investment Would Triple The Size Of This Case 7 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 Currently this is a case involving fiduciaries who have schemed to divert money and violate fiduciary duties, the resolution of which will be rather straightforward. Although Klimas has thus far resisted all attempts to produce documents — despite multiple document requests Klimas has produced not a single shred of evidence — the discovery will ultimately focus primarily on emails and accounting records. If the Court at summary judgment finds that money was diverted and that harm to Plaintiffs was intentionally diverted, the issues at trial will substantially narrow. But in no event is there anything in this case that is overly complex from an intellectual or evidentiary standpoint. After all, there are only four closely held corporations, and presumably four or five bank accounts, involved in the entirety of the case at bar. On the other hand, joining 13th Floor would substantially expand the expenditure of time and resources for the Court to adjudicate the case, which is obviously what the Klimas Defendants want because they fully support 13th Floor in its quest to save money by violating its contract made for Plaintiffs' benefit. Indeed, with 13th Floor involved in these proceedings through joinder, brand new issues enter the case involving huge real estate developers and their $400 million development of new homes arising out of a 200-page land development contract. See, Exhibit 1 and exhibit thereto. Inside of that land development agreement and its exhibits, there are literally hundreds if not thousands of key provisions involving easements, management rights, maintenance obligations, property turnover, construction responsibilities, land and building permits, and construction plans and schematics. Most if not all of these issues have nothing whatsoever to do with the case at bar, which only concerns whether and to what extent Klimas has and continues to attempt to harm Plaintiffs by stealing or diverting money and otherwise violating the law. Nevertheless, in the event the Court were to dismiss this action without prejudice for failure 8 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 to join 13th Floor — which is the only order this Court could feasibly make in the unlikely event it were to agree that 13th Floor must be made a party, see, e.g., Fla. Dep't of Revenue ex rel. A.L. v. S.B., 124 So. 3d 377, 378 (Fla. Dist. Ct. App. 2013) (“A dismissal for failing to join an indispensable party should be without prejudice, unless the pleader refuses to amend to add a party necessary for a determination on the merits") — the Court should be prepared for substantial additional law and motion practice as a result of a wide expansion of the issues at play. Til. Claims Of Non-Members Of Number 2 Association Are Legally Sufficient A Introduction In three short paragraphs, citing no caselaw whatsoever, the Klimas Defendants attempt to obtain dismissal against more than 1,000 members of the putative Class on the flimsy grounds that only shareholders of Number 2 Associations can file suit sounding in fraud and breach of fiduciary duty. Klimas' primary allegation is that "the Defendants did not and could not have owed ... any duty" to parties who "were and are not members of Number 2 Association." Motion, page 6. This, of course, is a baseless argument. Under well established Florida law, the question of whether one has a duty to another is not based upon whether or not they are "members" "shareholders," but instead is based on the facts and circumstances presented. Furthermore, Klimas has forgotten about the fraud claims, because surely Klimas knows enough to know that Florida law holds that a person defrauding another is not subject to immunity on the basis that the person is not a fiduciary. Therefore surely the Class is able to sue for being defrauded by Klimas. B The Defendants' Duty To All Plaintiffs Has Been Established The courts do not look to anything other than all the underlying circumstances to 9 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 determine whether a fiduciary duty is present. Indeed, if a person accepts the obligation to act fiduciarily, then that person is obviously a fiduciary. This "facts and circumstances" test has been enunciated throughout Florida history by numerous courts, as follows: Fiduciary relationships are either expressly or impliedly created. Fiduciary relationships implied in law are premised upon the specific factual situation surrounding the transaction and the relationship of the parties. 1d. Courts have found a fiduciary relation implied in law when "confidence is reposed by one party and a trust accepted by the other." Dale v. Jennings, 90 Fla. 234, 244, 107 So. 175, 179 (1925). Accord Harkness v. Fraser, 12 Fla. 336 (1868); Harrell v. Branson, 344 So.2d 604, 607 (Fla. Ist DCA), cert. denied, 353 So.2d 675 (Fla. 1977). Capital Bank v. MVB, Inc., 644 So. 2d 515, 517 (Fla. Dist. Ct. App. 1994). The Second Amended Complaint clearly sets out an overwhelming case where a position of "trust" was "accepted" by the Klimas Defendants toward all members of the Class, including Lisa Defabritiis, not only by Sandra Klimas individually but by all Defendants except Becker. Demonstrating how they have refused to even review the SAC, the Klimas Defendants fail to even mention in their Motion that the SAC expressly alleges that Sandra Klimas specifically accepted the role of fiduciary on behalf of all members of the Class. Pursuant to controlling Florida law, this establishes a fiduciary duty and proves Klimas to be wrong to even raise this issue. See, e.g., SAC, §60 (alleging that Sandra Klimas "voluntarily represented to the entirety of the Class that she undertook the obligation to operate fiduciarily with fidelity, trust and honesty toward all beneficiaries of the Association, Number | Association, the Recreation Corporation ... ."). Furthermore, the circumstances described in the Second Amended Complaint insinuate a fiduciary duty by all of the Defendants toward all members of the Class. Id.; see also, e.g., SAC, $150 (alleging further that the relationship between each of the three related 10 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 companies created fiduciary duties as a matter of law). This is alleged throughout the Second Amended Complaint and can hardly be doubted pursuant to Florida law providing that the presence of a fiduciary duty in these situations is based on the facts and circumstances. For this reason, the law in Florida is that claims involving the presence of a fiduciary duty are "better addressed by a summary judgment motion, or trial, than on a motion to dismiss" and the primary reason for this rule of law is because "of the factually intensive nature of an implied fiduciary duty inquiry." Fixel v. Rosenthal Rosenthal, 842 So. 2d 204, 208 (Fla. Dist. Ct. App. 2003). Despite this being a "summary judgment ... or trial" issue to the extent the Klimas Defendants persist in raising it, Plaintiffs respectfully believe they will prevail at summary judgment in proving that the Defendants violated their fiduciary duties to members of the Class. The entire Palm Greens entity was acting together with respect to the once a century change to their community arising out of the 13th Floor development agreement, and the Klimas Defendants openly accepted fiduciary duties in carrying out their obligations during this period. Regardless, however, of whether a trier of fact decides this issue in Plaintiffs favor at summary judgment or trial, one thing is clear: The law in Florida does not hold as Klimas maintains that as a matter of law at the pleading stage only "members" or "shareholders" of one condominium association are owed fiduciary duties by managers who are working on behalf of multiple, interconnected associations and entities managing common land owned by thousands of Florida residents. The challenge by Klimas to the makeup of the Class is baseless and should be rejected. C. The Klimas Defendants Are Liable Regardless Of Duty In asking for dismissal against dozens of Class members who have already been 11 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 disclosed to this Court, such as Lisa Defabritiis,> the Klimas Defendants have forgotten that they have also been sued for fraud in the first and fourth causes of action. Their discussion about duty — wrong as it is — has nothing whatsoever to do with the affirmative misrepresentations and fraud practiced upon the entire Class for which they are liable regardless of the presence of a fiduciary duty. Pursuant to Florida law, "duty" has never been an element directly or indirectly in establishing such a fraud claim. Instead, fraud requires proof of a knowingly false statement which resulted in consequent injury by persons acting in reliance thereon. Butler v. Yusem, 44 So.3d 102, 105 (Fla. 2010) (citing Johnson v. Davis, 480 So.2d 625, 627 (Fla. 1985)). The Second Amended Complaint clearly sets forth these facts against each of the Klimas Defendants throughout the first and fourth causes of action, including (a) the date and content of the affirmative misrepresentation, (b) the documentary evidence showing that the misrepresentations actually occurred and (c) each of the Klimas Defendants' roles in the conspiracy to defraud. In their Motion, the Klimas Defendants do not even talk about the detailed allegations of wrongdoing contained in some 70 paragraphs within these two causes of action which specifically identify each of the Klimas Defendants and how it is they each went about perfecting the fraud of divesting the Palm Greens community and all members of the Class of money and property rights. Furthermore, the Motion never challenges the presence of the conspiracy among the Klimas Defendants to further the scheme, but instead makes flimsy claims seeking Plaintiffs' production of "a specific piece of evidence which would support their conspiracy claims." Motion, page 23. Despite the fact that Plaintiffs' attachments to the Second Amended ® There are already dozens of members of the Class residing in Number | Association who have been identified, as this Court directed, or who have been directly injured as a direct result of the malfeasance of the Klimas Defendants. See, Dkt. No. 197. 12 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 Complaint already constitute significant evidence in support of their claims, there is of course no evidentiary requirement at the pleading stage in any jurisdiction in the United States, let alone in Florida. Therefore, Klimas request for a factual showing at this stage of the case is simply another sign of desperation. See, e.g., Weaver v. Leon Classroom Teachers, 680 So. 2d 478, 481 (Fla. Dist. Ct. App. 1996) ("The court must assume that all of the facts alleged in the complaint are true and must draw all reasonable inferences in favor of the pleader.") (citation and internal quotation marks omitted). In short, although the question of whether the Klimas Defendants had a duty to avoid intentionally harming their compatriots within Palm Greens has been answered, obviously, in the affirmative under Florida law, that question has nothing to do with whether their conspiracy, fraud and deceit alleged throughout 70 paragraphs of the SAC in the first and fourth counts is actionable. For the Klimas Defendants to maintain that they can send false emails, make false representations directly to the entire Class and attempt to divest the Class’ money, legal and property rights is outrageous and finds no support under Florida law. Iv. KLIMAS' CLAIM OF NON-SPECIFICITY IS BASELESS It is important to remember the actual words utilized in the Second Amended Complaint to describe Klimas' misconduct, because these clear words make out a case of fraud and malfeasance far better than the vast majority of reported Florida cases. For example, with respect to a Second Amended Complaint clearly alleging Klimas' "diversion or theft" of "more than $1.5 million of assets of the Association from the calendar year 2020 to the present" (SAC, § 39), Klimas' Motion contends there is not "any level of specificity ... of what monies were diverted or what assets were concealed." Motion, page 3, 8. Klimas continues to advance this claim even in the face of Plaintiffs’ repeated additional allegations in the SAC that Klimas assisted over the past four years in "diverting" the 13 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 specific sum of $440,909.00 stolen through the " preparation, processing or covering up of phony invoices" in that amount. See, SAC, § § 45, 80, 97, 156 and 168. This allegation is not only far beyond any Florida pleading requirement, but in actuality it would be enough specificity to make out a conversion claim — although Plaintiffs have not yet brought a cause of action for conversion. See, e.g., Belford Trucking Co. v. Zagar , 243 So. 2d 646 (Fla. 4th DCA 1970) (specificity of funds requirement in conversion cases merely requires identification of the amounts).° Klimas' other claims of "non-specificity" are also frivolous. Plaintiffs' well-pleaded contentions in the SAC about Klimas' attempts to deplete the assets of the Class are the epitome of proper and specific identification. The Klimas Defendants' scheme, as alleged in the SAC, has for example included (a) the unaccounted for depletion of $4 million in reserve funds of her condominium association (SAC at §3) and (b) other intentional misconduct by the Klimas Defendants designed to destroy the value and quiet enjoyment of some 100 acres of specifically identified real property assets (SAC at § §41 through 43). Well established Florida law holds that far less is required at the pleading stage regarding claims of breach of fiduciary duty and malfeasance. For example, See, e.g., Taubenfeld v. Lasko, 324 So. 3d 529 (Fla. Dist. Ct. App. 2021) (reversing trial court's dismissal of Fourth Amended Complaint, holding that "the trial court erred in concluding that [Batista] failed to allege sufficient facts" in a Fourth Amended fiduciary duty lawsuit alleging extremely vague damages to assets such as "advantageous business relationships with venues in Miami Beach and Aventura" ) (emphasis added). © The reason Plaintiffs have not yet sued for conversion is because, as the SAC repeatedly claims, Klimas and her co-conspirators have been able to avoid disclosing where the diverted monies have been transferred to by resisting dozens of requests by her principals for access to records to perform a basic forensic audit. See, e.g., SAC, § § 40, 41, 78 and 83. 14 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 In a jurisdiction applying the federal standard in long holding that "allegations of conclusions of fact, being pleadings of ultimate fact, are sufficient, and a complaint alleging such should not be dismissed," Warner v. Florida Jai Alai, Inc., 235 So. 2d 294, 297 (Fla. 1970), the Klimas Defendants cannot escape having to answer what are serious claims of quasi-criminal wrongdoing — involving diversions of more than $5 million and involving interference and malfeasance regarding acreages of specifically identified property — by saying they are uninformed of "the nature of the cause" against them. See, Rubenstein v. Primedica Healthcare, 755 So. 2d 746, 749 (Fla. Dist. Ct. App. 2000) (“if a pleading informs the defendant of the nature of the cause against him, the pleading is sufficient”), and discussion, Section IX, post. v. THIS IS NOT A DERIVATIVE ACTION Klimas claims that only shareholders of Number 2 Association may sue in the case at bar and therefore the case at bar must be brought derivatively. Their theory then continues that Plaintiffs have failed to satisfy the condition precedent to filing a shareholder derivative action. Klimas' claim is baseless. A More Than Half Of The Class Are Not Condo 2 Shareholders Klimas recognizes that only a portion of the Class might be shareholders of Number 2 Association and Klimas fully acknowledges that the Class is made up of others, including the Recreation Association, Number 1 Association and hundreds of homeowners owning property in places other than Number 2 Association. See, e.g., Motion, page 9 (Klimas admitting that the Class includes "past and present Members of the Number 1 Association[].") Indeed, an entirely different condominium association called Delray Trails is also a part of the Class and is already participating in this action, and none of Delray Trails' residents have anything to do with Klimas' condominium association. All of these 15 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 Class members had no ability to bring a shareholders derivative claim — they are not shareholders of Number 2 Association — and therefore they could not possibly have complied with any conditions precedent. See, e.g., Kaplus v. First Continental Corp., 711 So. 2d 108, 111 (Fla. Dist. Ct. App. 1998) (discussing derivative suit “requirement that plaintiff must have been a 'shareholder at time of complained of transaction") (citation omitted). Accordingly, this case cannot possibly be dismissed pursuant to the pre-suit notification requirement of Fla. Stat. §§ 718.303(1) and 617.07401, because at least half of all members of the Class have no ownership inside of Number 2 Association yet they have been and continued to be devastated by Klimas' theft and malfeasance affecting their real estate holdings. The presence of these Class members is properly advanced not only by the presence of Lisa Defabritiis as lead plaintiff (Ms. Defabritiis is not a shareholder of Number 2 Association) but also by the allegations in paragraph 25 of the Second Amended Complaint (alleging Class members associated with Number | Association and Delray Trails, neither of which are shareholders of Klimas' condominium association). B Even Condo 2 Shareholders Must Sue Directly, Not Derivatively More importantly, the law is well settled that this matter does not even constitute a derivative action as to the actual shareholders or members of Number 2 Association. There are three reasons for this reality, each of which is more compelling than the last. First, derivative actions are brought only for injuries sustained by the corporation. The Klimas Defendants are gleefully claiming that Number 2 Association has not suffered, and cannot possibly suffer, any injury whatsoever. The Second Amended Complaint makes out a claim that Klimas' acts have directly injured landholdings of all members of the Class regardless of whether or not those members are shareholders of Number 2 Association. In 16 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 Florida, such circumstances involving direct injuries to persons other than the corporation are to be brought directly, not derivatively. See, e.g., Salit v. Ruden, McClosky, Smith, 742 So. 2d 381, 389 (Fla. Dist. Ct. App. 1999) (“In this injurious falsehood count, appellants seek compensation for damage to their personal property interests as shareholders. They do not seek to obtain some benefit that would inure to the corporation. The case was properly brought as a direct claim.”) Underscoring the holding in Salit that direct injury to property interests, even property interests "as shareholders," is to be brought directly and not derivatively, the undisputed facts of this case are that each member of the Class holds a unique and direct real estate interest in the all-important land and real estate that is majority owned by the Recreation Association. This direct real estate interest was conveyed and recorded on December 14, 1973 as Parcel Record 2249 in Palm Beach County, Florida, and it has been reaffirmed repeatedly thereafter. See, Dkt. No. 35 (Request for Judicial Notice of Palm Beach land records). Florida law is clear that such direct interests of condominium owners are properly brought as class action lawsuits. See, e.g., Rogers & Ford Const. Corp. v. Carlandia Corp. , 626 So.2d 1350, 1354 (Fla. 1993) (approving of non-derivative class action litigation regarding "actions with respect to common areas or common elements of condominiums"). As if confirming their claim to be baseless, each and every case cited by Klimas supporting the "only shareholder derivative" argument deals with garden variety claims brought only by shareholders of the derivative corporation for injuries mainly suffered by the corporation. See, e.g., Motion at page 10, citing Leppert v. Lakebreeze Homeowners, 500 So. 2d 250, 251 (Fla. Dist. Ct. App. 1987) (lawsuit brought by a single "member of the Lakebreeze Homeowners Association”); Citizens National Bank of St Petersburg v. Peters, 175 So. 2d 54, 56 (Fla. 2d DCA 1965) (lawsuit brought by an individual shareholder 17 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 because of corporation’s actions); Jezzi Family Ltd. P'ship v. Edgewater Beach Owners Ass'n, Inc., 254 So. 3d 584, 585 (Fla. Dist. Ct. App. 2018) (single “owner of a condominium in the Edgewater Beach Condominiums" brought suit against the corporation itself). (Emphasis added in each.) In contrast, the Class in the case at bar seeks redress for damages "to property . interests," Salit, 742 So. 2d at 389 on behalf of persons the majority of which are neither shareholders nor members of Number 2 Association. This case is indeed not derivative in nature and no court has ever held otherwise. Accordingly, the Defendants cannot force compliance with pre-suit requirements or obtain dismissal on the untrue grounds that the members of the Class in this action are "shareholders" of Number 2 Association who intend to obtain redress for something other than injuries to their "property ... interests." /d. Such grounds are untrue and cannot form a basis for relief. VI. THE CLASS IS PROPERLY CONSTITUTED Understanding that their shareholder derivative arguments do not work, the Klimas Defendants then turn to the flip side of arguing that the Class is too large and lacks standing. In support of these claims, Klimas cites no statute and no judicial or decisional authority of any kind: asking this Court to dismiss this case against a well-defined Class based upon no legal authority whatsoever. It goes without saying that these claims are also clearly without merit pursuant to well established law Klimas failed to find. A Standing Indeed, unlike Klimas' unsupported discussion of standing, Plaintiffs believe direct reference to United States Supreme Court and Florida Supreme Court authority is now required to demonstrate the United States and Florida Constitutional rights held by all members of the Class in this case. The Class in this matter believes that Klimas' fraud, theft 18 PAYTON & ASSOCIATES, LLC 2 S. Biscayne Boulevard, Suite 2200, Miami, FL 33131 Tel. 305—372-3500 and mismanagement ring has already divested them of significant property interests and ultimately is going to bury them. They believe that they will ultimately lose all or substantial parts of real estate and surrounding interests that they have enjoyed for half a century. They wish to avoid losing such interests not only as a financial matter but as a quiet enjoyment and lifestyle matter. The Class is made up largely of retirees in their senior years who deserve to be free from Klimas' shenanigans and have a right to seek redress before this Court to protect themselves. The highest courts in the land have repeatedly articulated that these kinds of interests are what seeking redress in American courtrooms is all about. The initial concept of standing emanates from the United States Constitution, Article III, which requires a "plaintiff seeking compensatory relief [to establish] that he/she (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Town of Chester v. Laroe Estates, Inc., 137 8. Ct. 1645, 1650 (2017) (citations and internal quotation marks omitted). It would be hubris to claim that Klimas' theft, mismanagement and assistance with Outside Developers in violating multi-million land contracts made for the benefit of the Class have not created "an injury in fact." Jd. And absurd would be the description if one would attempt to argue that the Klimas Defendants’ conduct alleged in the Second Amended Complaint is not "fairly traceable" directly to the "injury in fact." Jd. Lastly, it is obvious that a favorable outcome in this case will obtain "redress[]" for the Class as a result. Jd. All members of the Class have A