A lawsuit filed by member Frank Calmes against the Boca Raton, Fla., club claiming that poor management caused more than $17 million in losses and decimated property values has been dismissed. The judge found that Calmes’ case did not establish jurisdiction under the Class Action Fairness Act, nor that the matter invokes federal questions.
A Florida federal judge on Monday dismissed litigation accusing Boca West Country Club in Boca Raton, Fla., and its leadership of mismanagement that caused more than $17 million in losses and decimated property values, holding that the property owner leading the proposed class action failed to show that the court had jurisdiction, Law360 reported.
U.S. District Judge Robin L. Rosenberg dismissed Frank Calmes’ suit accusing Boca West Country Club Inc., two board members and its general counsel of poor management that tanked property values and required an increase in membership dues. The judge concluded that the property owner didn’t demonstrate that the action involves enough money or sufficiently diverse parties to establish jurisdiction under the Class Action Fairness Act, nor did he show that the matter invokes federal questions, Law360 reported.
“Plaintiff alleges insufficient facts for the court to conclude that it has subject-matter jurisdiction under CAFA or federal question jurisdiction,” Judge Rosenberg said, giving Calmes until October 24 to amend his claims.
Calmes first filed suit in May against Boca West, board members Jerold Glassman and Philip Kupperman, and general counsel Larry Corman, accusing them of a number of acts of mismanagement, including bungling the sale of club property and increasing dues, Law360 reported.
The property owner alleged that when the club sold a parcel of vacant land to Akoya Associates LLC, it failed to include a standard “time of the essence” provision in its sales contract, resulting in a five-year building delay. Because of the delays, the club lost $9 million in yearly dues and $8.4 million in initiation fees, the suit claimed, Law360 reported.
Leading up to the sale, Glassman and Kupperman supported the deal, breaching their fiduciary duties to residents at the club, the suit said. Given their “vast experience and expertise,” the residents trusted Glassman and Kupperman’s opinion on the sale, the suit said.
Yet, Calmes alleged, the Akoya deal ultimately led to millions in losses, which management tried to cover up by increasing membership dues, decreasing refunds and increasing fees. In the process, property values were decimated, with properties decreasing by an average of $120,000 per unit, Law360 reported.
The club and its management moved to toss the action in June, contending that an amended complaint offered shortly after Calmes filed suit was “so deficiently pled it leaves the defendants guessing as to what specific actions give rise to plaintiff’s claims, if any.”
The property owner fought back the next month, saying the filing clearly alleges facts showing that the country club and its officers engaged in a number of improper practices that benefited them while hurting Calmes and the proposed class. The defendants then shot back with sanctions requests, arguing that Calmes’ counsel should have known that the claims are objectively frivolous and given up on the action instead of offering an amended complaint that doubled down on the baseless allegations, Law360 reported.
However, the judge denied the motion in a matter of days, saying the dismissal bid should be decided first. Judge Rosenberg saying that she needn’t reach the defendants’ arguments because the court lacks jurisdiction. For one, the judge said, the court can’t conclude based on the facts alleged that the amount in controversy is more than $5 million, as required by CAFA, Law360 reported.
Calmes alleges that the mismanagement led to a loss of more than $17 million, but it’s Boca West that lost that money, not the property owner and the proposed class, Judge Rosenberg said. Plus, the judge noted, the property owner doesn’t explain how he calculated the per-unit value decrease, Law360 reported.
The property owner also failed to establish minimal diversity under CAFA, since every party is a Florida citizen, the judge held. Calmes claims that some class members are citizens of other states, but doesn’t offer any proof, Law360 reported.
A court can still have federal-question jurisdiction if a court lacks subject-matter jurisdiction under CAFA, but that’s not the case here, the judge said. After all, Judge Rosenberg held, Calmes raises a federal Declaratory Judgment Act claim, but that statute doesn’t confer jurisdiction on its own, and the property owner seems to be bringing his racketeering allegations under state law, Law360 reported.
Representatives for the parties didn’t immediately return Law360’s requests for comment Monday.