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Moss v. Brown

United States District Court, N.D. Alabama, Northwestern Division

September 1, 2017

JAMES WESLEY MOSS, et al., Plaintiffs,
JAMES R. BROWN, et al., Defendants.



         James Moss and Florida Pharmacy Solutions, Inc. (“FPS”) bring this action against Joseph Schilleci, Jason Tortorici, and the firm Schilleci and Tortorici, P.C. (the “Schilleci Defendants”), [1] for violations of Section 1962 (c) and (d) of the Racketeer Influenced and Corrupt Organizations Act. See doc. 1. The court has for consideration the Schilleci Defendants motion for summary judgment, doc. 81, which is ripe for review, see docs. 86, 89, and is due to be granted.


         Under Rule 56(c)(2) of the Federal Rules of Civil Procedure, summary judgment is proper “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” “Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party bears the initial burden of proving the absence of a genuine issue of material fact. Id. at 323. The burden then shifts to the nonmoving party, who is required to “go beyond the pleadings” to establish that there is a “genuine issue for trial.” Id. at 324 (citation and internal quotation marks omitted). A dispute about a material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

         The court must construe the evidence and all reasonable inferences arising from it in the light most favorable to the non-moving party. Adickes v. S. H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); see also Anderson, 477 U.S. at 255 (all justifiable inferences must be drawn in the non-moving party's favor). Any factual disputes will be resolved in the nonmoving party's favor when sufficient competent evidence supports the nonmoving party's version of the disputed facts. See Pace v. Capobianco, 283 F.3d 1275, 1276, 1278 (11th Cir. 2002) (a court is not required to resolve disputes in the nonmoving party's favor when that party's version of events is supported by insufficient evidence). However, “mere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion.” Ellis v. England, 432 F.3d 1321, 1326 (11th Cir. 2005) (per curiam) (citing Bald Mountain Park, Ltd. v. Oliver, 863 F.2d 1560, 1563 (11th Cir. 1989)). Moreover, “[a] mere ‘scintilla' of evidence supporting the opposing party's position will not suffice; there must be enough of a showing that the jury could reasonably find for that party.” Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citing Anderson, 477 U.S. at 252)).


         Moss is one of the owners of FPS, a compounding pharmacy. Doc. 82-1 at 4. In early 2015, FPS began negotiations with James Brown, Janice Brown, Edie Hand, and Robert Hubbard to buy stock in Mill City Gold (“MCG”), as part of a plan to “form a new company and to sell [pharmaceutical] pain creams in Asia.” Doc. 82-1 at 12. The conversations evolved into a potential stock exchange, and, in April of 2015, Moss began discussing with Brown (MCG's president) the sale and exchange of FPS shares for MCG shares. Doc. 82-2 at 7--8.

         The Schilleci Defendants had no involvement in the share exchange until late July, when Moss tasked the law firm with producing documents to Brown. Docs. 82-2 at 8-9, 19-20; 82-3 at 4. Moss later asked the Schilleci Defendants their opinions on certain provisions in the final agreement due to his concerns about losing control of FPS. Doc. 82-3 at 8.

         Eventually, Moss, FPS's board of directors, and MCG executed a Letter of Agreement in which FPS and MCG agreed to effectively swap their stock. Docs. 82-1 at 14; 86-9. Plaintiffs contend that the MCG shares they received were worthless. Doc. 82-3 at 25. Also, although Moss eventually received his FPS shares back, they were allegedly worth less than before the merger. Id. at 24.

         III. ANALYSIS[2]

         Plaintiffs claim that “Brown, assisted by Schilleci and Tortorici, trick[ed] Moss into signing” the Letter of Agreement. Doc. 1 at 7. Allegedly, Brown and the Schilleci and Tortorici defendants formed an “enterprise within the meaning of 18 U.S.C. § 1961 (4) . . . to formulate and to carry out . . . [a] racketeering . . . scheme . . . requiring Plaintiffs to make certain payments and [allowing the defendants to] take . . . control of FPS, in order to steal from and defraud Plaintiffs.” Doc. 1 at 16-17.

         The Schilleci Defendants raise multiple arguments in support of their motion, which the court addresses below.

         A. The Plaintiffs' Claims are Barred by the PSLRA

         Under the Private Securities Litigation Reform Act (PSLRA), absent a criminal conviction, “no person may rely upon any conduct that would have been actionable as fraud in the purchase or sale of securities to establish a [RICO] violation.” 18 U.S.C. § 1964(c). This RICO bar is applied broadly, “regardless of whether the plaintiff explicitly relied upon securities fraud as a predicate act or even had standing to pursue a securities fraud claim.” Licht v. Watson, 567 F. App'x 689, 693 (11th Cir. 2014). “[A] district court properly dismiss[es a plaintiff's] RICO claims [when a plaintiff] rel[ies] on predicate acts barred by the PSLRA.” Id. Furthermore, a plaintiff may not avoid this bar by “pleading mail fraud, wire fraud and bank fraud as predicate offenses in a civil RICO action if the conduct giving rise to those predicate offenses amounts to securities fraud.” Id. (citing Bald Eagle Area Sch. Dist. v. Keystone Fin., 189 F.3d 321, 330 (3d ...

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