Motion,Ex Parte: 6654 NW 27 AVENUE LLC V PINCUS CAPITAL LLC

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                                Filing # 90125004 E-Filed 05/24/2019 06:49:48 PM.

IN THE CIRCUIT COURT OF THE
15" JUDICIAL CIRCUIT IN AND FOR

PALM BEACH COUNTY, FLORIDA

Case No.: 50-2017-CA-013348-XXXX-MB (AD)

6654 NW 27 AVENUE LLC, a Florida limited liability company,

Plaintiff,
v.

PINCUS CAPITAL LLC, a Delaware limited liability company,
MARK BENUN, an individual, et. al.,

Defendants,

/

PLAINTIFF’S RESPONSE TO DEFENDANTS’ AMENDED
MOTION TO AMEND TO ADD A CLAIM FOR PUNITIVE DAMAGES

The Plaintiff, 6654 NW 27 AVENUE, LLC (‘6654” or the “Plaintiff”), pursuant to Florida
Statue § 786.72 and all other applicable laws, hereby responds to the Defendants’, PINCUS
CAPITAL LLC (“Pincus”) and MARK BENUN (“Benun”) (collectively, the “Defendants”),
Amended Motion to Amend to Add a Claim for Punitive Damages. For the foregoing reasons, that
Amended Motion to Add a Claim for Punitive Damages should be denied.

INTRODUCTION

1. On September 26, 2016, the Defendants, jointly and severally as borrowers,
executed and delivered a Promissory Note (the “Note) in the principal sum of $250,000 in favor
of 6654, as lender. (Complaint § 7) (Amended Counterclaim {[ 7).

2. Also on September 2016, Pincus, as mortgagor, executed a Mortgage and Security

Agreement (the “Mortgage”), securing payment of the Note to 6654. The Mortgage mortgaged the

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PILL. PALE DLAI VUUINE TT, EL, OHI. DUUN, ULLIAN, Yureti2u lg UU.to.tU VEreal property (the “Property”) located at 6654 NW 27 Avenue, Boca Raton, Florida, 33496, then
owned by and in possession of Pincus. (Complaint §] 7) (Benun Dep. 139:12-15).!

3. On November 26, 2017 (the “Maturity Date”), the Defendants failed to pay all
outstanding principal and unpaid interest due under the Note. (Complaint 10) (Benun Dep. 143:5-
22). Benun believed he would make enough money to pay the funds due by the Maturity date, but
his circumstances changed, and he was unable to do so. (Amended Counterclaim § 99).

4. On December 8, 2018, the Plaintiff filed its Verified Complaint to Foreclose
Mortgage and Enforce Note (the “Complaint”) wherein it sought enforcement of the Note and
foreclosure of the Mortgage”

5. On October 2, 2018, the Defendants filed their Proposed Answer, Affirmative
Defenses, and Amended Counterclaim (the “Amended Counterclaim”) wherein they added
Lawrence Shapiro (“Shapiro”) to the case as an additional counter-defendant. By order dated
October 11, 2018, the Amended Counterclaim was deemed filed.

6. On October 10, 2018, the Defendants filed their initial Motion to Amend to Add a
Claim for Punitive Damages (the “Motion to Amend”), wherein they sought leave of court to add
a ciaim for punttive damages against both 6654 and Shapiro. The Defendants attached their
Amended Counterclaim to their Motion to Amend.

7. 6654 and Shapiro answered the Amended Counterclaim on November 19, 2018.

8. In their Motion to Amend, the Defendants asserted several repetitive and baseless
claims for punitive damages based solely on the following allegations:

That Deana Clark (hereinafter “Clark’”), acting on behalf of 6654, and Shapiro committed
fraud, by among other things lying about the ownership of the [NJote” (Motion to Amend

1 On September 26, 2018, the Plaintiff deposed Benun (the “Benun Dep.”). On November 19, 2018, the Plaintiff filed
the Transcript of the Deposition of Mark Benun.
2 A copy of the Note and Mortgage were attached to the Complaint as Exhibits “A” and “B”, respectively.

229) and “conspiring to collect a note that is criminal loan sharking” (Motion to Amend §
32):

That Clark “intentiona[lly] inflicted emotional distress” on Benun, “along with a number
of other violations of Florida’s Collection Practices Act” (Motion to Amend { 33);

That Clark “knowingly and intentionally entered into a loan that was criminal loan sharking
and in violation of Chapter 687” (Motion to Amend 35);

That Clark “threatened Benun that if he did not pay, she would sell the loan to a gangster,”
and “then claimed to transfer the loan” and “contacted Benun’s former cell mate (sic)
implying that if Benun did not pay, she would release his personal information” (Motion
to Amend 35-36, 38);

That Clark “admitted to intentional misrepresentation and a violation of the FCCPA”
(Motion to Amend § 55); and

That Clark and Shapiro, “[engaged] in loan sharking,” “conspired to commit fraud
regarding the ownership of the loan,” and “violated a number of provisions of the FCCPA”
(Motion to Amend § 56).

9. Essentially, the Defendants sought to add a claim for punitive damages on three
grounds. First, because Clark has admitted she made a false statement to Benun that she had
transferred the loan at issue to a friend, Shapiro. Second, as a result of Clark and Shapiro’s alleged
violations of the FCCPA, including criminal loan sharking. And third, because of alleged
statements Clark or her acquaintances made to non-parties, including Benun’s former federal
prison cellmate, that Benun had failed to pay 6654 funds owed to it.

10. On November 27, 2018, after hearing argument of counsel for both parties, the

court entered an order denying Defendants’ Motion to Amend to Add a Claim for Punitive

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evidentiary basis to support their claim for punitive damages. (Order dated November 27, 2018).
11. Presently, Benun is not paying (and has not paid) his Mortgage since October of

2017? and continues to live in the subject home, the title of which he intends to eventually transfer

3 Nor has he insured the home or paid its current taxes.to his son. (Amended Counterclaim § 2) (Benun Dep. 167:15-25; 168:1-15; 194:2-25; 195:1-6).
Indeed, the Defendants have made numerous attempts to delay this litigation and postpone court-
ordered filing deadlines, all in an effort to extend this litigation so that Benun can continue living
in the home for free and/or to leverage a favorable settlement.

12. In an order dated February 13, 2019, the court set the discovery deadline in this
case for February 20, 2019, and gave the parties until March 15, 2019 to file any other motions
which require specially set court time. (Order dated February 13, 2019).*

13. On March 7, 2019, the court entered an agreed order extending the parties’ deadline
to file any other motions which require specially set court time until April 5, 2019, and the parties’
deadline to serve responses to all then pending motions until April 15, 2019. (Agreed Order dated
March 7, 2019).

14. On April 25, 2019, the court again entered an agreed order now extending the
Defendants’ deadline to file and serve any other motions which require specially set hearing time
until May 8, 2019. The Defendants were also given until May 13, 2019 to file their responses to
the Plaintiff's pending motions. (Agreed Order dated April 25, 2019).

i5.  Aimost a week past the May 8, 2019 deadiine, on May 14, 2019, the Detendants
filed their Amended Motion to Amend to Add a Claim for Punitive Damages After the Completion
of Discovery (the “Amended Motion”) wherein they assert the same repetitive and baseless claims
for punitive damages as argued in their original Motion to Amend.

16. — Intheir Amended Motion, the Defendants believe they set forth a “new” evidentiary

basis for their claim to punitive damages. However, they do not.

4 As of the date of that order, 6654 had already filed four (4) different pending motions.
417. Specifically, the Defendants now rely on a second Affidavit by Mark Benun (the

“Benun Aff. IT”);5 deposition testimony of Deana Clark (the “Clark Dep.”), Lawrence Shapiro (the
“Shapiro Dep.”), Carlo Vaccarezza (the “Vaccarezza Dep.”), John Fiorenzi (the “Fiorenzi Dep.”),
Kevin Kurlowski (the “Kurlowski Dep.”), and Richard Murdoch (the “Murdoch Dep.”)®; and a
2019 NY Post online opinion piece addressing apartment sales in Palm Beach County.

18. However, as discussed herein, the Amended Motion does not establish any new
material facts or proffer any admissible evidence which would warrant an award of punitive
damages. Specifically, the deposition testimony given by the six aforementioned witnesses does

not give rise to any new facts or evidence that was not already before the court when it rejected
the Defendants’ initial Motion to Amend.’

19. Additionally, as discussed herein, the Defendants rely on inadmissible parol
evidence regarding the parties’ intentions in executing the Note and Mortgage, as well as their
obligations thereunder to support their claim of usury. However, as the court knows, any extrinsic
evidence which contradicts the clear and unambiguous terms on the face of those documents must

be disregarded.

> The Benun Aff. II is attached to the Amended Motion as Exhibit “B”.

© On January 28, 2019, the Defendants deposed Clark (the “Clark Dep.”). They attach excerpts of the transcript of the
Clark Dep. to the Amended Motion as Exhibit “C”. On January 29, 2019, the Defendants deposed Shapiro (the
“Shapiro Dep.”). They attach excerpts of the transcript of the Shapiro Dep. to the Amended Motion as Exhibit “D”,

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the transcript of the Vaccarezza Dep. to the Amended Motion as Exhibit “E”. On February 19,2019, the Defendants
deposed John Fiorenzi (the “Fiorenzi Dep.”), Kevin Kurlowski (the “Kurlowski Dep.”), and Richard Murdoch (the
“Murdoch Dep.”). They attach excerpts of the transcripts of the Fiorenzi Dep., the Kurlowski Dep., and the Murdoch
Dep. to the Amended Motion as Exhibits “F”, “G” and “H”, respectively.

7 Similarly, the Benun Aff. I] is essentially a lengthy reiteration of the first Benun Affidavit, which was attached to
the Defendants’ initial Motion to Amend. Moreover, the Benun Aff. II is not reliable given Benun’s propensity for
making dishonest statements and his admitted desperation to stay living in the subject home for free. The only other
piece of “new evidence” offered by the Defendants in their Amended Motion (the NY Post online opinion piece,
attached thereto as Exhibit “K”) is not only inadmissible hearsay, but nothing therein is at all relevant to the claims in
this case which involve a single family home (not an apartment), and thus should not be considered in the court’s
assessment of the Defendants’ entitlement to punitive damages.

520. ‘In essence, the Amended Motion is nothing more than another attempt to further
delay this litigation and gain leverage for negotiating a favorable settlement. Despite the additional
discovery taken, the Defendants still have not (and cannot) point to any admissible record evidence
(nor even a proffer of the same) to satisfy their burden in pleading a cause of action that would
allow for the recovery of punitive damages. As a result, the Amended Motion must be denied on
the same grounds as the initial Motion to Amend.

I LEGAL STANDARD FOR SEEKING PUNITIVE DAMAGES

21. — Torecover punitive damages, a party must prove, by clear and convincing evidence,
that the opposing party “was personally guilty of intentional misconduct or gross negligence.” Fla.
Stat. § 768.72(2). “Intentional misconduct” means that the party had actual knowledge of the
wrongfulness of the conduct and the high probability that injury or damage would result and
pursued that course of conduct nonetheless. /d. “Gross negligence” is defined as conduct that was
so reckless in wanting in care that it constituted a conscious disregard or indifference to the life,
safety, or rights of persons exposed to such conduct. Jd. To satisfy this standard, the conduct must
transcend the level of ordinary negligence and enter the realm of willful and wanton misconduct.
Estate of Despain v. Avante Group, inc., 900 So. 24 637, 640 (Fia Sth DCA 2005).

22. The procedure for seeking punitive damages requires two steps. First, the party
must properly plead a claim that “allows for punitive damages under [Florida] law.” Henn v.
Sandler, 589 So. 2d 1334, 1335-36 (Fla. 4th DCA 1991). The pleader must allege ultimate facts
that, if true, would entitle it to punitive damages. See Fla. R. Civ. P 1.110(b)(2). Merely using
conclusory labels like “reckless” or “gross negligence” to describe alleged conduct is not enough

to satisfy this standard. See John Hancock-Gannon Joint Venture II v. McNully, 800 So. 2d 294,

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271-70 (id. 9G VUA cuuiy UCCCUNE PunIVe GamMages Cali Wiiere ule party wadCucG Wiiat iSbasically unsatisfactory work as being reckless”); T.W.M. v. AM. Med. Sys., Inc., 886 F. Supp. 842,
845 (N.D. Fla 1995) (holding that conclusory allegations that a defendant acted maliciously did
not support a punitive damages claim.)

23. The second step is to make a reasonable “showing by evidence in the record or
proffered by the claimant which would provide a reasonable basis for recovery of such damages.”
Fla. Stat. § 768.72(1). The party seeking punitive damages must present “an evidentiary basis in
support of” its claim. Espirto Santo Bank v. Rego, 990 So. 2d 1088, 1091 (Fla. 3d DCA 2007).
Mere allegations are not enough. /d. This requirement creates a “substantive legal right [for] parties
not to be subjected to punitive damage claims” “until the requisite showing under the statue has
been made to the trial court.” Despain, 900 So. 2d at 641.

24. Florida Statute § 768.72(1) requires the trial court to act as a gatekeeper and
precludes a claim for punitive damages where there is no reasonable evidentiary basis for recovery.
Bistline v. Rogers, 215 So. 3d 607 (Fla. 4d DCA 2017). Moreover, the trial court must adequately
consider whether record or proffered evidence is sufficient to establish a reasonable evidentiary
basis under Florida Statute § 768.72, for recovery of such damages. Fla. Hosp. Med. Servs., LLC
vy, Newshoime 2018 WL 4211757 (Fla. 4d DCA 2018). Simpiy accepting the piaintifts’ allegations
as true is not enough to allow plaintiffs to amend their complaint to add a claim for punitive
damages. Id.

25. — Punitive damages are reserved for particular types of behavior which go beyond
mere intentional acts. Weinstein Design Group, Inc. v. Fielder, 884 So. 2d 990 (Fla. 4d DCA
2004). In fact, as the Florida Supreme Court noted, the character of negligence necessary to sustain

a conviction for manslaughter is the same as that required to sustain a recovery for punitive

damanas Amavinnn Orr cnt FA On x Dasy AOQ On IA QEO (Ta 1004) lanating White Canetu atin
Gahages. american Cyanainia Co. ¥. ROY, 4960 SS. 24.659 Wi. 1906) (Guoung rrniie ConsivuciionCo., Inc. v. Dupont, 455 So. 2d 1026 (Fla. 1984)). Punitive damages are limited to truly culpable
behavior in order to emphasize that such damages, reserved to those kinds of cases where private
injury partake of public wrongs, are assessed in a dramatically different manner than compensatory
damages. Id.

26. Finally, the character of negligence necessary to sustain an award of punitive
damages must be of a gross and flagrant character, evincing reckless disregard of human life, or
of the safety of persons exposed to its dangerous effects, or there is that entire want of care which
would raise the presumption of a conscious indifference to consequences, or which shows
wantonness or recklessness, or a grossly careless disregard of the safety and welfare of the public,
or that reckless indifference to the rights of others which is equivalent to an intentional violation
of them. See American Cyanamid Co.

I. INADMISSIBLE PAROL EVIDENCE

27. — Under Florida law, courts may not consider parol evidence when interpreting a
contract, unless the contract language contains a latent ambiguity. Jn re Brewer, 500 B.R. 130
(Bankr. M.D. Fla. 2013). A latent ambiguity of the kind sufficient to allow a court to consider
paroi evidence in interpreting a contract exists when the contract ianguage empioyed ts clear and
intelligible and suggests a single meaning, but some extrinsic fact or extraneous evidence creates
necessity for interpretation or choice among two or more possible meanings. Jd.; See also Duval
Motors Co. v. Rogers, 73 So. 3d. 261 (Fla. 4th DCA 2011).

28. | The Amended Motion is grounded in the Defendants’ unsubstantiated claim that
the loan 6654 made to them is usurious. (Amended Motion { 4-6; 31-33;39-40, et seq.). In fact,

the usury claim forms the foundation of each cause of action asserted in the Amended

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COUNT Calin, ad Wius Wie Weenualis CouUcTenL Ww29. For instance, regarding the fraud claim, the Defendants assert that Benun suffered
damages (an essential element of a claim of fraud) because he made “payments [that] were illegal
usury and must be refunded.” (Amended Motion { 68). Regarding the FCCPA violations claim,
the Defendants state that Clark enforced an illegitimate debt because “the debt is criminal usury
and not enforceable.” (Amended Motion {| 72-73). Thus, if the Defendants’ cannot establish that
the loan was usurious, they cannot establish the essential elements of any other cause of action
either.

30. — Inthis case, the loan documents clearly establish that the sale price of the home was
$270,000.00, with a mortgage of $250,000.00. (See Note and Mortgage). Notwithstanding those
facts, Benun wants this court to believe that “[t]he deal [he] agreed to was as follows: [] a purchase
price of $175,000 ([with] $20,000 down)...[The parties] also agreed that if [Benun] did not pay
$155,000 shortly after closing, 14 months later [he] would owe $250,000 (plus whatever fake
interest payments [the parties] invented to make the interest look lower.” (Benun Aff. II. ] 6-7).

31. | Thus, the Defendants conclude that “the principle and interest listed in the
paperwork was a sham and for the purpose of hiding the illegal criminal usury as Plaintiff is
friendiy with mobsters and weii aware that the iaw does not permit interest in excess of 25%.”
(Amended Motion 4 6).

32. However, to accept any of Benun’s assertions as to the “true deal”, the court would
have to admit into evidence what is clearly parol evidence offered by Benun solely for the purpose

of altering the terms of the written documents. This it cannot do.33. Importantly, the Defendants have not offered any admissible evidence’ to support
their conclusory statement that the loan was usurious. As the Defendants acknowledge, “[o]n
paper, the deal [read] as follows. A purchase price of $270,000, with a debt of $250,000 because
it applied the $20,000 down.” (Amended Motion 4 5). Because the terms of the Note and Mortgage
are not ambiguous, the court cannot look beyond those documents to determine the parties’
intentions or obligations thereunder. As a result, any affidavit testimony by Benun that the “deal
[he] agreed to” is anything other than what is evidenced on the face of the Note and the Mortgage,

is inadmissible?

34. For instance, there is no dispute that the rate of interest stated in the Note and
Mortgage is not, on its face, unlawful or usurious. (Amended Motion § 5-6). Nor is there an illegal
rate of interest referenced anywhere in any of the other documents signed at the loan closing. See

the Agreement and the Addendum (defined below).

35. At the time 6654 sold the Property to Benun, it and the Defendants agreed upon the
purchase price for the Property, the principal amount to be financed, the rate of interest thereon
and confirmed all of those amounts in at least four clear and unambiguous documents signed by
Benun. Not oniy do each of these essential documents confirm those amounts, but they aiso
provide that the terms of the agreement and all obligations thereunder cannot be varied by the

parties absent a subsequent written agreement expressly confirming that fact. Agreement at { P.

8 Parol evidence would not be considered admissible evidence. See Wheeler v. Wheeler, Erwin & Fountain P.A, 964
So. 2d 745 (Fla. Ist DCA 2007) (finding that that the trial court erred in considering inadmissible parol evidence in
the form of testimony, when that testimony contradicted and thus altered the terms of an unambiguous agreement.)

° As the Defendants state in their Amended Motion, the only proof of the usurious loan is Benun’s unsubstantiated
and self-serving affidavit testimony “wherein he swears that the purchase price is a sham.” (Amended Motion § 40).
However, the parol evidence rule exists to prevent parties like Benun from attempting to avoid their obligations under
clearly written agreements. Otherwise, there would be nothing to prevent Benun from maintaining that the terms of
his agreement with 6654 are whatever he wants them to be. Stated otherwise, what is to prevent Benun from alleging
that the agreement was for any amount he wants on any terms he claims them to be?

1036.

First, the Mortgage expressly provides that, “[n]othing herein contained, the Note

secured hereby or any instrument or transaction related thereto, shall be construed or so operate as

to require Mortgagor...to pay interest in an amount or at a rate great than the maximum allowed

by law.” Mortgage § 3.10.

37.

Second, the Note, which expressly provided that the amount to be financed would

be $250,000.00, with an interest rate of 6.00%, (See Note), states that:

38.

Anything herein to the contrary withstanding, the obligations of the Maker under
this Note shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt of any such payment by Payee would be contrary
to provisions of law applicable to the Payee limiting the maximum rate of interest

which may be charged or collected by the Payee. Id.

Third, the Residential Contract (the “Agreement”)!° executed by 6654, as seller,

and Pincus, as buyer, which expressly provided that the purchase price for the Property would be

$270,000.00, with $250,000.00 of that amount to be financed, contains an integration clause,

stating:

And

39.

This Contract contains the full and complete understanding and agreement of Buyer
and Seller with respect to the transaction contemplated by this Contract and no prior
agreements or representations shall be binding upon Buyer or Seller unless included
in this Contract. No modification to or change in this Contract shall be valid or
binding upon Buyer or Seiier uniess in writing and executed by the parties intended
to be bound by it. Agreement § P.

Finally, the Addendum to the Agreement (the “Addendum”)!! further provides:

This Agreement, together with this Addendum, amends and restates in its entirety
all prior agreements, contracts, amendments, addenda and understandings, whether
oral or written with respect to the purchase sale of the Property. Agreement § D.

The Purchase Price shall be paid, in part, by Buyer, including Mark Benun,
individually, executing a promissory note in the amount of two Hundred Fifty

10 A copy of the Agreement was attached to the Plaintiffs Motion for Attorney’s Fees and Costs as Sanctions dated
December 11, 2018.
1! A copy of the Addendum was attached to the Plaintiff's Motion for Attorney’s Fees and Costs as Sanctions dated
December 11, 2018.

1Thousand Dollars ($250,000.00) (the “Note”), in the form attached hereto as
Exhibit “A”. The Note shall be due and payable on the fourteenth ( 14") month

anniversary of the Closing Date, and shall bear interest at six percent (6. 00% per
annum), and payable based on a thirty (30) year amortization. The Note shall be
secured by a first mortgage lean on the Property (the “Mortgage”) in the form
attached hereto as Exhibit “B”. The Note shall be personally guaranteed by Mark
Benun. Jd. at § 3.

40. Notwithstanding the foregoing, Benun still claims the existence of some “alternate
agreement” allegedly entered into between the parties. (Benun Dep. 80: 7-25; 81:1-25; 82:1-12;
87:1-25; 88: 1-15). According to Benun, his intentions when he “made the deal (which includes
buried/hidden illegal usurious interest)” were to “comply with [the terms of those agreements and]
pay the illegal usurious amount.” (Benun Aff. II 3). Benun also alleges that the parties made
“several deals” and “verbal agreements” with the “intent to avoid [usury laws]” and “inflate the
purchase price” by disguising the usurious interest in paperwork that “did not reflect the true deal.”
(Benun Aff. 5-11, 39). However, none of Benun’s testimony about the parties’ intentions or
alternate agreements should be admissible to vary the unambiguous terms of the documents at
issue in this case.

41. In sum, it is undisputed that the Mortgage, Note, Agreement, and Addendum do
not, on their face, state an amount greater than the maximum rate of interest aliowed by law.
(Benun Aff. § 11, 39) (Amended Motion { 5-6). Additionally, the documents are not latently
ambiguous as nothing about the terms of the agreements requires additional qualifying language
to make them clear, See Jenkins v. Eckerd Corp., 913 So. 2d 43 (Fla. 1st DCA 2005); and there is
no extrinsic fact or extraneous evidence that creates a necessity for interpretation or choice among

two or more possible meanings, See Thompson v. Watts, 111 So. 3d 986 (Fla Ist DCA 2013),

Toussaint v. Toussaint, 107 So. 3d 474 (Fla. Ist 2013). As a result, the court must disregard any

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12of the Note, Mortgage, Agreement, and Addendum.!? And, without Benun’s testimony, there is
nothing to suggest that the loan is usurious.

42. On top of that, even if the court could consider testimony about the parties’
intentions with respect to their execution of the Note, Mortgage, Agreement, and Addendum, it
would still be without any consequence as a verbal agreement made before the Mortgage and Note
were executed was superseded by the execution of those two written documents, as well as by the
integration clause in the Agreement and the Addendum, also signed after the date of the supposed
“alternate agreement.” >

43. In the unlikely event the court is inclined to consider Benun’s parol evidence, none
of his claims still withstand judicial scrutiny for the reasons that follow.

I. CRIMINAL LOAN SHARKING

44. The requirements needed to establish that a transaction is usurious are: the
existence of a loan, either express or implied; an understanding that money must be repaid; a
greater rate of interest than is allowed by law is paid or agreed to be paid by the borrower in

consideration of the loan; and an intent to charge an usurious rate. Jersey Palm-Gross, Inc. v.

Paper, 639 So. 2d 4) (canceling a usurious loan when the document stated

an illegally high rate of interest on its face.) “Criminal usury” involves any loan amount with a
rate of interest greater than 25% but not in access of 45%. Id.

45. Four elements of a criminally “usurious transaction” are: an express or implied

loan; an understanding between the parties that the money lent shall be returned; a greater rate of

» Specifically, the court should disregard the references to the parties’ intentions or alternate agreements in paragraphs
3-12, 14, and 39 of the Benun Aff. II.

13 In the event Benun tries to change his story and maintain that this “alternate agreement” was made with Clark after
the Agreement, the Addendum and the loan documents were executed, any such verbal agreement made a/ter the
Mortgage and Note were executed would lack consideration and were not memorialized in writing, thus unenforceable
for those reasons as well.

13interest than is allowed by law to be paid or agreed to be paid for such loan; and a corrupt intent to
take more than the legal rate for use of money loan. Plantation Village Ltd. Partnership of Sanibel
v. Aycock, 617 So. 2d. 729 (Fla. 2d DCA 1993).

46. Usury is a creature of statute and thus usury violations are statutorily governed and
give rise only to such penalties and relief statutorily contained or provided. Other damages, be they
compensatory or punitive, are not recognized or permitted. Moretto v. Sussman, 274 So. 2d 259
(Fla. 4d DCA 1973). Stated otherwise, punitive damages are not implicated by a defensive plea of
usury. Cerrito v. Kovitch, 423 So. 2d 1008 (Fla. 4d DCA 1982). Based on these holdings, that
should be the end of the argument for adding punitive damages to a usury case.

47. — Moreover, not only can one not recover punitive damages for an alleged usurious
transaction, but the Defendants in this case have not (and cannot) even state a cause of action for
criminal loan sharking based upon an allegedly usurious loan.

48. As established above, the Note and Mortgage, on their face, are not usurious. And,
because the terms of the Note and Mortgage are unambiguous, the court cannot consider any
extrinsic evidence in determining the intent or obligations of the parties thereunder.

49. in their Amended Motion, the Defendants point to an excerpt trom the deposition
testimony of Richard Murdoch, Clark’s attorney at the time the Defendants executed the Mortgage
and Note,'4 wherein Murdoch agrees that he was “told by [Clark that the purchase price] was
agreed to by the buyer” and that he did not “do any independent market analysis to determine
whether [the purchase price] was fair or accurate.” (Amended Motion § 34). Along the same lines,
the Defendants also state that “[there] is proof that no one would ever pay [$270,000.00] and the
house is worth nothing close to that, and probably worth only around $100,000.” (Amended

14 Mr. Murdoch prepared all the loan documents at issue in this case. (See Murdoch Dep. 7:1-25; 8:1-20; 15:13-15;
16:6-9). The transcript of the Murdoch Dep. was filed on May 23, 2019, and is incorporated herein by this reference.

14Motion { 32). Benun also testifies that the “house is worth maybe $100,000.00.” (Benun Aff. IL. ¥
15).15

50. | However, as a matter of common sense, fairness and equity, a purchaser of real
property cannot agree to pay a specific purchase price for the property, execute a note and
mortgage for a purchase money loan, take title to the property, live in it for over a year, and then,
when he becomes unable to pay the mortgage as it comes due, complain that the purchase price
was not a genuine purchase price because the home is worth an amount less than what he agreed
to pay for it. A home is worth whatever a buyer is willing to pay for it. In this case, that value was
$270,000.

51. And, even if the actual rate of interest on the Note and Mortgage exceeded the
maximum rate allowed by law, which they clearly do not, the Plaintiff did not have the corrupt
intent required for a claim of usury to take more than the maximum rate allowed by law. (Clark
Aff. § 6-7).'° Because 6654 did not have the corrupt intent required for a claim of usury, there
could not possibly be a viable usury claim, and certainly no entitlement to punitive damages.

52. All in all, Florida law does not allow the recovery of punitive damages in

the Defendants

connection with a ciaim for usury. But even if such damages were recoverabi

cannot point towards any record or proffered evidence that the Plaintiffs conduct was so egregious
as to merit an award of those damages. Consequently, the Defendants should not be granted leave

to amend to claim punitive damages based on the same.

15 Despite this assertion, which Benun makes several times throughout his Amended Motion, there is no record
evidence or even proffered testimony (expert or otherwise) anywhere in this case concerning the value of the subject
home.

16 The Affidavit of Deana Clark (the “Clark Aff”) was attached to the Plaintiff's Response to the Defendants’ Motion
to Amend as Exhibit “C”.

15II. FRAUD

53. The elements that must be established to prove a claim of fraud are: (1) a false
statement concerning a material fact; (2) the representor’s knowledge that the representation is
false; (3) an intention that the representation induce another to act on it; and (4) consequent injury
by the party acting in reliance on the representation. Townsend v. Morton, 36 So. 3d 865 (Fla. 5th
DCA 2010).

54. Granting leave to amend a claim for punitive damages based on fraud is appropriate
only when a reasonable evidentiary basis has been submitted in support of the fraud claim. Espirito
Santo Bank v. Rego, 990 So. 2d. 1088 (Fla. 3d DCA 2007) (finding that a bank customer was not
entitled to amend his complaint to include a claim for punitive damages absent an evidentiary basis
in support of his fraud claim.) Mere allegations of fraud are not enough. Jd. Moreover, punitive
damages cannot be awarded absent competent, sufficient and substantial evidence to establish
fraud. S.M.S. Corp v. Karamanlakis, 237 So. 2d 186 (Fla. 3d DCA).

55. Incases of alleged fraud, a party seeking to obtain punitive damages must give the
court an evidentiary basis for their claim, See Cypress Aviation, Inc, v. Bollea, 826. So. 2d 1091
(Fia. 2d DCA 2002), keeping in mind that not every faise representation constitutes fraud on which
a claim for relief can be based. Kent v. Sullivan, 793 So. 2d 2001 (Fla. 5th DCA 2001) (rejecting
a claim of fraud where a false statement did not result in damage.)

56. In the present case, the Defendants have failed to state a claim for fraud as they
have not and cannot provide record or proffered evidence necessary to satisfy the materiality
element, the justifiable reliance element, or the damage element of the claim. As a result, because

the Defendants cannot even support a basic fraud claim in their case, they certainly cannot sustain

tha muah higher hurdan nanaccary ta aland antitflamant ta aunitive damacaa
ure Tuc gner CurUen HeCeSsary vw pivau Cuuuciieie w pulluve Gamages.

1657. In their Amended Motion, the Defendants claim that Clark “has admitted fraud”
(Amended Motion § 15, 17, 46, 48, et. seq.) because she acknowledged that she falsely stated the
loan was transferred to Shapiro, who “claimed he owned the loan and cashed the checks.”
(Amended Motion ] 53). However, one’s admission that she has lied to another is not tantamount
to an admission that a fraud has been committed.

58.  Confusingly, the Defendants are careful to point out that “there is not a single email
or text to verify [this story]” and that “when asking all the witnesses involved in this scheme why
this was done, no one could come up with a reasonable answer.” (Amended Motion 57-58). That
is because there was no scheme or contrived plan at all.

59. Instead, Clark admits that she advised Benun that the loan had been transferred to
Shapiro (Amended Motion 51-52; Clark Aff. { 12-14; Shapiro Aff. { 7-9; Benun Aff. II { 28) !”,
and while a “reasonable answer” as to why Clark and Shapiro represented that Shapiro owned the
loan would not be necessary to refute the Defendants’ claim of fraud against the Plaintiff, it bears
repeating that the deposition transcripts attached to the Defendants’ Amended Motion only
reiterate that Clark and Shapiro’s sole motivation in misrepresenting the ownership of the loan was
so that Ciark could avoid Benun’s non-stop, sexually suggestive texts and emails. (Clark Aff. jj
12-14; Clark. Dep. 36:22-25; 37:1; Shapiro Dep. 35:16-25; 36:1-3; Fiorenzi Dep. 4:22-25; 5:1-3,
15-25; 6:1-25; 7:1-11).

60. As the Defendants learned from the depositions they’ ve taken in this case, Shapiro
represented that he owned the loan as a favor, (Amended Motion {] 62; Shapiro Aff. { 7-9), and
“Tthe] same story was repeated by many of the witnesses [including] John Fiorenzi.” (Amended
Motion { 60).

'7 The Affidavit of Lawrence Shapiro (the “Shapiro Aff.”) was attached to the Plaintiff's Motion for 57.105 Fees as
to Certain Counterclaims and Defenses, filed January 7, 2018.

1761. | The Defendants go on to state that “[several of the witnesses] ... suggest that it was
done to protect Ms. Clark, but Ms. Clark knows we have evidence that she is not at all afraid of
Mr. Benun.” (Amended Motion { 62).

62. But whether or not Clark was “afraid” of Benun is not, and has never been, the issue
before the court. The only relevant question with regard to the claim of fraud is whether Clark’s
statement to Benun, that she transferred the loan to Shapiro, was a false statement concerning a
material fact that Benun acted in reliance on and suffered damages as a result of. See Townsend
v. Morton, 36 So. 3d 865 (Fla. Sth DCA).

Materiality

63. As stated above, the first essential element in any claim of fraudulent
misrepresentation is competent, substantial evidence that a false statement concerning a material
fact was made. Nagel v. Cronebaugh, 786 So. 2d 436 (Fla. Sth DCA 2001). Regarding this
materiality element, the Defendants have failed to explain how Clark’s statement that she
transferred the loan to a friend, Shapiro (even if false when made), was material to the loan or his
failure to have paid the obligation due thereunder.

64. | When defining materiaiity for purposes of fraud, the Fiorida Supreme Court has
stated that the concealed fact must affect the value of the property or cause loss to the purchaser.
Id. See also Pryor v. Oak Ridge Development Corp., 97 Fla. 1085 (1928). In Pryor, the court found
that a misrepresentation was not material because it did not affect the value of the purchased land
at issue. Here too, Clark’s statement that the loan was transferred to Shapiro (even if false) could
not possibly have been material to him because it did not affect Benun’s payment obligations in

the least.

1865. Prior to Clark’s representation, Benun had already obligated himself to pay the
loan. As discussed above, Clark and Benun agreed upon the purchase price for the Property, the
principal amount to be financed, and the rate of interest thereon. Those amounts are all confirmed
in at least four documents signed by Benun.'® And, Benun was represented by counsel throughout
all of the negotiations regarding the sale and purchase of the Property, as well as the final closing
of the entire transaction. (Clark Aff. 4 6).

66. Benun agreed to pay a specific purchase price for the Property, executed the Note
and Mortgage for his purchase money loan, took title to the Property, and has lived in it now for
over two years. Benun’s payment obligations did not change in any respect when Clark notified
him that the loan had been transferred to Shapiro. Shapiro acted only as a repository by allowing
Benun to send his interest-only payment checks payable to Shapiro at his P.O. Box (Shapiro Aff.
q 10).

67. Thus, Clark’s statement that she had transferred ownership of the loan to Shapiro
could not, as a matter of law, be material in any respect. Benun’s obligation to pay the loan was
not changed in any fashion.

Justifiabie Reiiance

68. As noted, another element is justifiable reliance. Without justifiable reliance, there
can be no actionable fraud. Hillcrest Pacific Corp. v. Yamamura, 727 So. 2d 1053 (Fla. 4th DCA
1999). Regarding this justifiable reliance element, the Defendants fail to explain how Clark’s
statement that the loan was transferred to Shapiro induced them to act in any way other than that

which they were already contractually obligated?

18 Again, those four documents are the Note, the Mortgage, the Agreement, and the Addendum.

1969. To be clear, the Defendants were already contractually obligated to make certain

payments under the Note and Mortgage when Clark stated that the loan had been transferred to
Shapiro. Clark’s statement that the loan was transferred was of no consequence and did not alter
the Defendants’ payment obligations under the already-existing agreements. In fact, Benun agreed
to as much in his deposition:

You were making payments under the promissory note, right?
Right.

The note called for payments of $1,498.88 every month.
Right.

And you were making those payments timely almost, right?

I don’t remember.

At some point you were told Larry Shapiro was the person to make the
payments to, right?

Right.

So you started making them to Larry Shapiro?

Right.

POR ORFOPOPA

(Benun Dep. 181:13-25, 182:1).

And,

You paid 14 payments of 1,498 bucks, right?

Right.

Does it matter who it was paid to? It was all the same money, right?
Right.

Van naid 1A nawmante af C1 AOR riaht?

1Ou pala a payiieins Or yi, 70, Tiga:

Right.

PO RORL

(Benun Dep. 186:7-13).
And.

2

Is there any financial impact to you that’s different whether you [paid] it to
Larry [Shapiro] or Deana [Clark]?
No.

(Rennn Den. 187:5-7)

(Benun Den 1879-7).

70. There were no changes whatsoever in Benun’s payment obligations under the

terms of the Mortgage and the Note as a result of Clark’s statement that she transferred the loan to

Shapiro, other than to whom the payments were made. Benun was still obligated to pay 6654 for

a period of fourteen (14) months. He made the first of those payments believing 6654 owned his

20loan. Then, after Clark’s representation that Shapiro owned the loan, he made the remainder of
those payments to Shapiro. (Benun Aff. II {] 27-28). Nowhere has 6654 asserted that the
Defendants failed to make any of the required monthly payments under the loan. Instead, 6654
maintains only that the Defendants failed to pay the balance due at the maturity date of the loan.'°

What the Defendants fail to establish is how their decision not to pay the loan when it became due

can be traced to any kind of detrimental reliance by Benun on anything said to him by Clark.
Damages

71. The final element in a fraud claim is a consequent injury by the party acting in
reliance on the representation. In the present case, the Defendants cannot point to any injury or
damage they incurred as a result of Clark’s statement that she transferred the loan. Once again,
Benun’s deposition testimony confirms this fact:

Q: Do you feel that you’ ve incurred any damages as a result of Deana lying to
you about selling the loan?
Of course.
What damage do you believe you’ve incurred?
We haven’t gotten to it yet.
Then how do you know you’ve incurred damage?
On multiple fronts there’s damage.
What is it?
That's between me and my iawyer to work out.
(Benun Dep. 190:1-9).

POPOPOP

And,

[What damages have you encountered as a result of Deana misrepresenting
to you that she had sold the loan.

Deana gave a false assignment on the mortgage.

Right. What damage has that caused you?

A lot of damage.

Tell me. Are you talking like emotional?

Yeah.

Anything else besides emotional damage?

Mental.

PROPOPFOR 2

1 The Defendants do not dispute this fact. See Amended Counterclaim, Affirmative Defenses § 1,3; General
Allegations 17; 93. See also Benun Dep. 181:12-15; 182:1.

21Anything else? Any out-of-pocket damage? Do you know what that means?
Yeah.

What out-of-pocket damage?

I spent about — I don’t know—a lot of money in psychiatry.

Anything else? And that’s from Deana telling you that she sold the loan you
went to see a psychiatrist?

Yeah.

Anything else that you spent money on?

Lawyers costs.

Legal fees?

Legal fees.

That’s it?

That’s it.

POPO POR OPFOR

(Benun Dep. 190:17-25, 191:1-16).

72. It should go without saying that “psychiatric costs” and “legal fees” spent
defending 6654’s foreclosure action are not cognizable damages in a fraud case. Thus, if Benun
has not suffered even one dollar in recognizable compensatory damages, how can he be seeking
to secure punitive damages for the same claim?

73. The Defendants also claim that Benun suffered damages because he “made
payments every month.” (Amended Motion { 68). Specifically, “Benun alleges that the payments
were illegal usury and must be refunded per [Chapter] 687, and therefore (at a minimum) all
payments made are what he is entitled to in damages as part of a continuing fraudulent scheme.”
Id. However, this argument fails in at least two respects.

74. First, Benun had already obligated himself to pay the loan, so how does his making

monthly payments, even if sent to Shapiro rather than Clark, possibly qualify as damages?

75. — Seediid, a8 discussed above, the Defendants have moi offered any admissible
evidence to prove that the loan was usurious. Because the Note and Mortgage are unambiguous,
the court cannot look outside of those documents to determine the intent or obligations of the

parties thereunder. Thus, any testimony by Benun (which is the only evidence suggestive of usury

in this case) must be disregarded, following which the usury claim must fail.

2276. The Defendants do not point to anything outside of Benun’s payments on the
allegedly usurious loan to establish the damages element in their fraud claim. Thus, if they cannot
establish that the loan was usurious, the Defendants also cannot establish the damage element of a
cause of action for fraud.”

77. In sum, contrary to the Defendants’ assertion, Clark’s acknowledgement that she
lied about transferring the loan (Motion to Amend § 18; Amended Motion 15, 17, 46, 48, et. seq.)
is not tantamount to an admission of fraud. (Motion to Amend { 29-20; Amended Motion 15, 17,
46, 48, et. seq.). And, even if Clark’s acknowledgement that she lied about transferring the loan
was enough to establish a claim for fraud (which it is not), it still would not be egregious enough
to merit an award of punitive damages.

78. As aresult of all of the foregoing, the Defendants have not plead facts sufficient to
establish a claim for fraud and, as such, an entitlement to punitive damages based on the same.

IV. FCCPA VIOLATIONS
79. The Defendants again seek to add a claim for punitive damages based on allegations

that the Plaintiff violated the FCCPA in three ways. First, by accepting Benun’s payments on the

aliegediy usurious ioan when she knew that the ioan was tilegai. (Amended Motion 4 72
Second, by threatening force or violence should Benun not pay the loan. (Amended Motion § 75).
And third, by disclosing the debt to a third party. (Amended Motion 80).

80. The three sections of the Fla. Stat. § 559.72 which the Defendants rely on are Fla.

Stat. §§ 559.72(2), (5) and (9) which, in relevant part, provide that:

In collecting consumer debts, no person shall:

20 In fact, the Defendants’ claim that the usurious loan supports their fraud claim, which in turn supports their request
for punitive damages, begs the question: If Florida law does not recognize an award of punitive damages for a usury
violation (See Moretto v. Sussman, infra.), then how can such damages be awarded in a fraud case where the only
fraudulent act alleged is the making of the usurious loan? Clearly, the court should reject such a bootstrapped
argument.

23(2) Use or threaten force or violence.
(5) Disclose to a person other than the debtor or her or his family information

affecting the debtor’s reputation, whether or not for credit worthiness, with
knowledge or reason to know the other person does not have a legitimate
business need for the information or that the information is false.

(9) Claim, attempt, or threaten to enforce a debt when such a person knows that
the debt is not legitimate, or assert the existence of some other legal right
when such person knows the right does not exist.

81. In their Amended Motion, the Defendants address the FCCPA violation claims in
the following order: Fla. Stat. § 559.72 (9), (2) and, finally (5). Thus, the arguments that follow
address those statutes accordingly.

Fila. Stat. § 559.72 (9)

82. As stated above, Fla. Stat. § 559.72(9) provides that in collecting consumer debts,
no person shall “claim, attempt, or threaten to enforce a debt when such person knows that the debt
is not legitimate or assert the existence of some other legal right when such person knows that the
right does not exist.”

83. To establish a violation of Fla. Stat. § 559.72(9), the claimant must show that a
legal right that did not exist was asserted and that the person had actual knowledge that the right
did not exist. Cabrera v. Haim’s Motors, Inc., 288 Fl Supp. 3d 1315 (S.D. Fla. 2017). A claimant
must allege knowledge by the person attempting to collect the debt that the debt was illegitimate.
See Schauer v. Morse Operations, Inc., 5 So. 3d 2, 6 (Fla. Sth DCA 2009); Martorella v. Deutsche

Bank Nat’l Trust Co., 161 F. Supp. 3d 1209, 1226 (S.D. Fla. 2015). See also Fox v. Barnett

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agency to a debtor on a promissory note in which the agency indicated that the debtor might be

additionally liable for attorney’s fees did not constitute an “unlawful threat” within the meaning

of Fla. Stat. § 559.72(9)).

2484. Here, the Defendants allege the Plaintiff attempted to “enforce a debt when [the
Plaintiff knew] the debt [was] not legitimate,” (Amended Motion 72), by relying solely on the
conclusory claim that the loan was usurious and therefore, not enforceable. (Amended Motion {
73). As the Defendants put it, the Plaintiff violated the FCCPA by accepting payments from Benun
on the usurious loan. Jd.

85. However, as discussed above, the Defendants cannot (and certainly have yet to)
prove that the loan at issue was usurious. As a result, the Defendants cannot simply state that an
attempt to collect what appears to be an otherwise valid Note and Mortgage is in any way an
“attempt[] to enforce a debt” which was “criminal usury and not enforceable” in violation of the
FCCPA.

86. As of this moment, the debt is legitimate and enforceable, and no attempt to collect
an enforceable debt can be deemed a violation of the FCCPA.

Fla. Stat. § 559.72(2)

87. As st