IN THE SUPREME COURT OF FLORIDA

LED TRUST, LLC, AND DISHI& FLOWMAN, LLC

Petitioners/Plaintiffs-below, DCA Case No.: 3D12-1728

V.

BLUE STAR PALMS, LLC,BLUE STAR BRIAR, LLC,MOSHE SCHWARTZ, individually, ASDMBRIAR PALMS, LLC, BLUE STAR BRIARPALMS, LLC, and LOUIS PEPPER,

Respondents/Defendants-below.

PETITIONERS' BRIEF ON JURISDICTION

P. Brandon Perkins, Esq.FBN: 0568635The Powell Law Firm, PA15550 McGregor Blvd. Ste. 101Fort Myers, FL 33908P. (239) 288-4974F. (877) 460-5675Pbrandon@powellappeals.comCounselfor Petitioners

Aaron Resnick, Esq.FBN: 141097Law Offices ofAaron Resnick, PA100 North Biscayne Blvd., Ste 1607Miami, FL 33132P. (305) 673-5933F. (305) 718-0647A mCounselfor Petitioners

TABLE OF CONTENTS

TABLE OF AUTHORITIES......................................................................iii

STATEMENT OF THE CASE AND FACTS...................................................1

SUMMARY OF ARGUMENT.....................................................................3

ARGUMENT..........................................................................................5

CONCLUSION........................................................................................9

CERTIFICATE OF SERVICE......................................................................9

CERTIFICATE OF COMPLIANCE...............................................................9

11

TABLE OF AUTHORITIES

Blue Star Palms v. LED Trust, LLC, 37 Fla. L.Weekly D2501(Fla. 3d DCA 2012)..............................................................3-8

Mills Dev. Corp. v. Shipp & Head, Inc., 171 So. 533 (Fla. 1936)......3-5, 8

Chiusolo v. Kennedy, 614 So. 2d 491 (Fla. 1993)..................3, 4, 5, 7, 8

111

STATEMENT OF THE CASE AND FACTS

Petitioners, LED Trust, LLC and Dishi & Flowman, LLC, are the

Plaintiffs in a circuit court action against the Blue Star entities (Blue Star

Palms, LLC and Blue Star Briar, LLC, together "Blue Star"), the corporate

parent of Blue Star, and the members/investors in Blue Star's parent

company.

The lawsuit alleged that Petitioners approach Moshe Schwartz

("Schwartz") with an opportunity to co-invest in 289 specific, unsold

condominium units currently owned by a foreclosing mortgage lender.

Pursuant to the investment structure, the parties agreed to form Blue Star to

hold legal title to the properties and that a parent company of Blue Star

would be created to reflect the parties' membership interest in the enterprise.

The lawsuit further alleged that that the defendants breached their agreement

by not filing the appropriate membership information with the State of

Florida to reflect the membership interests in Blue Star and its parent

company.

The lawsuit contained fourteen counts including claims for

declaratory and injunctive relief, the imposition of a constructive trust or

equitable lien, and for specific performance. Petitioners filed a lis pendens

1

directed to the 289 condominium units. Blue Star filed a motion seeking

dissolution of the lis pendens. The trial court denied the motion, and Blue

Star sought a Writ of Certiorari. The Third District granted the Petition for

Writ of Certiorari reasoning that a lis pendens cannot be maintained because

the lawsuit does not directly affect title to the real property because the

Petitioners are seeking damages and membership interests in the parent

company. Thereafter, Petitioners timely filed a notice to invoke this Court's

discretionary jurisdiction pursuant to a direct and express conflict with

decisions of this Court.

2

SUMMARY OF THE ARGUMENT

The opinion below directly and expressly conflicts with this Court's

opinion in Mills Dev. Corp. v. Shipp & Head, Inc., 171 So. 533 (Fla. 1936),

and Chiusolo v. Kennedy, 614 So. 2d 491 (Fla. 1993). Specifically, the

opinion below holds that real estate investors are precluded from

maintaining a lis pendens directed to the specific property that was the

subject of an investment transaction when the underlying lawsuit alleges that

the defendants failed to recognize the investors' membership interests in the

entities that were formed (as part of the overall investment structure) to hold

legal title to the investment properties. In contrast, in Mills, this Court

expressly held that investors were permitted to maintain a lis pendens

directed to the specific property that was the subject of an investment

transaction when the underlying lawsuit alleged that the defendants failed to

recognize the investors' stock interest in the entity that was formed (as part

of the overall investment structure) to hold legal title to the investment

properties. In addition, in Chiusolo, this Court recognized that an investor

can maintain a lis pendens directed to the property that was the subject of an

investment transaction--notwithstanding that legal title to the property was

held by a corporation and that the gist of the investor's lawsuit was that he

never received his stock interest in the corporation, so long as a fair nexus

3

can be established between the apparent legal or equitable ownership of the

property and the dispute embodied in the lawsuit. Because Mills and

Chiusolo would permit a lis pendens to be maintained in factual similar

circumstances as the case below, the opinion of the Third District expressly

and directly conflicts with Mills and Chiusolo.

4

ARGUMENT

I. THE OPINION BELOW DIRECTLY AND EXPRESSLYCONFLICTS WITH THIS COURT'S OPINIONS INMILLS AND CHIUSOLO.

In the opinion below, the Third District held that the plaintiffs could

not maintain a lis pendens over 289 specific condominium units even though

the underlying lawsuit alleged that the defendants failed to recognize the

plaintiffs' membership interests in the parent entity-that was formed

specifically to carryout the parties' objective of purchasing the 289 specific

condominium units, because the action (seeking membership interest,

constructive trust and equitable lien in the various legal entities) does not

directly affect the title to the units. In contrast, (and under strikingly similar

facts) this Court has expressly permitted a lis pendens to be maintained by

investors who alleged that individual defendants failed to issue (the

investors') stock in a corporation that was formed specifically to carryout the

parties' objective of purchasing 260 individual lots. In Mills, this Court

reasoned:

the corporation now holds lands and assets which were acquiredby it solely as the result of a preliminary joint adventure enteredupon by those who agreed to create such a corporation simplyas part of the larger scheme; the scheme itself being intended tobe merged into, and thereafter carried out under, the corporateform, and by its instrumentality.

5

Mills, 171 So. at 533.

In the opinion below, the Third District recognized the overall nature of

the transaction by noting the allegations in the Complaint included the

following:

1. Plaintiffs approached Schwartz with the opportunity to co-invest in

the purchase 289 specific condominium units. Slip Op. at 4, fn. 2.

2. Plaintiffs negotiated with Schwartz to become investors in Blue Star.

Id. at 2.

3. The Blue Star entities were to be formed to purchase the 289 specific

condominium units. Id.

4. Schwartz refused to file the appropriate membership information with

the State of Florida to reflect Plaintiffs' membership interest in Blue

Star's parent company or the membership interests in the Blue Star

entities. Id. at 3.

The conflict turns on whether an investor may maintain a lis pendens

directed at the specific real property that is the subject of an overall

investment structure when the underlying lawsuit alleges that the investor

was denied stock (or membership) interest in the entity that was formed

incident to the investment transaction. The Third District has taken the

narrow position that a lis pendens is not authorized because the underlying

6

allegations (failure to issue stock/membership interest) do not directly affect

title to the real property. This Court, in contrast, has taken a broader

approach by holding that a lis pendens is appropriate in a failure to issue

stock action if the entity was formed as part of the larger scheme to purchase

the specific real property identified in the lis pendens. Mills, 171 So. at 533.

The conflict between the Third District's narrow approach, and this

Court's broader approach to the doctrine of lis pendens is further evidenced

by this Court's opinion in Chiusolo v. Kennedy, 614 So. 2d 491 (Fla. 1993).

The facts of Chiusolo demonstrate the conflict:

The gist of the complaint in the suit was that [plaintiffj hadadvanced funds ultimately used to purchase the property and inreturn was to receive stock in the corporation that actuallyowned the property. He alleged the stock was never given tohim.

Id. at 492.

If the Third District's holding below, was applied to the facts of

Chiusolo, the lis pendens would assuredly be dissolved because "the gist" of

Chiusolo's complaint is a failure to issue stock. And, according to the Third

District, such a dispute would not directly affect the title to the real property

held by the corporation.

7

Instead of dissolving the lis pendens in Chiusolo, this Court clarified:

"the lis pendens cannot be dissolved if, in the evidentiary hearing on request

for discharge, the proponent can establish a fair nexus between the apparent

legal or equitable ownership of the property and the dispute embodied in the

lawsuit." Id. at 492. Implicit in the Court's holding is that Chiusolo's claim

for failure to issue stock may support a lis pendens because the corporation

was specifically formed for the purpose of taking legal title to the real

property at issue. In contrast, the Third District would preclude such a claim

as a matter of law by concluding that a "failure to issue stock" claim cannot

directly affect the title to the real property held by the corporation (or other

entity).

In sum, the facts below cannot be distinguished from Mills or

Chiusolo. The Third District held a lis pendens is inappropriate if the legal

title to the property at issue is held in a limited liability company and the

plaintiffs are seeking to assert their membership interests in the various

entities that were established as part of the larger scheme to purchase the real

property. In contrast, both Mills and Chiusolo have permitted a lis pendens

to be maintained under these circumstances.

Because investors, like those in Mills and Chiusolo, routinely form

corporate entities incidental to (and in furtherance of) their investment in

8

specific real property, this Court should accept jurisdiction to resolve the

conflict created by the opinion below.

CONCLUSION

Petitioners respectfully submits that this Court has jurisdiction based

on direct and express conflict and requests that this Court exercise its

jurisdiction to resolve the conflict created by the opinion below.

BYP. BRANDON PERKINSFBN: 568635

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing

has been furnished by e-mail to Adam B. Leichtling and Caitlin F.

Saladrigas, attorneys for Defendants/Respondents on this day of

November, 2012.

BY:P. BRANDON PERKINS

CERTIFICATE OF COMPLIANCE

This brief complies with font requirements; it is typed in Times New

Roman 14 point font, and is proportionately spaced type.

BY:P. BRANDON PERKINS

9

APPENDIX

Eljírb 7JBistritt Court of §ppealState of Florida, July Term, A.D. 2012

Opinion filed October 24, 2012.Not final until disposition of timely filed motion for rehearing.

No. 3D12-1728Lower Tribunal No. 11-35999

Blue Star Palms, LLC, and Blue Star Briar, LLC,Petitioners,

vs.

LED Trust, LLC, and Dishi & Flowman, LLC, Moshe Schwartz,individually, ASDM Briar Palms, LLC, Blue Star Briar Palms,

LLC,and Louis Pepper,Respondents.

A Writ of Certiorari to the Circuit Court for Miami-Dade County, LesterLanger, Judge.

Lapin & Leichtling, and Adam B. Leichtling and Caitlin F. Saladrigas, forpetitioners.

Aaron Resnick, for respondents.

Before SHEPHERD, SUAREZ and SALTER, JJ.

SALTER, J.

The petitioners, Blue Star Palms, LLC, and Blue Star Briar, LLC (together,

"Blue Star"), seek a writ of certiorari quashing a circuit court order denying their

motion to dissolve a writ of lis pendens. Finding insufficient allegations and

evidence of a nexus between (a) the plaintiffs/respondents' claims against Blue

Star and (b) the condominium units owned by Blue Star, we grant the writ and

quash the order.

Background

The respondents, LED Trust, LLC, and Dishi & Flowman, LLC, are the

plaintiffs in a circuit court action against Blue Star, the corporate parent of Blue

Star, and the members/investors in Blue Star's parent company. The respondents

negotiated to become investors in Blue Star. According to the sixty-page

"Complaint for Damages,"' Moshe Schwartz and Louis Pepper of Blue Star

promised Haim Yehezkel of LED Trust and Avi Dishi of Dishi & Flowman that

they could co-invest in Blue Star's parent company. The Blue Star entities were to

be formed to purchase 289 unsold condominium units in Broward and Collier

Counties from a foreclosing mortgage lender.

These negotiations were primarily verbal, and according to the allegations in

the complaint, it was never contemplated that Yehezkel, LED Trust, Dishi, or

While captions are not controlling, they occasionally provide a strong hint--here, for example, a hint that the action seeks money, not the imposition of a lienor injunction relating to specifically-identified condominium units.

2

Dishi & Flowman would have any ownership interest in, or lien over, the actual

condominium units themselves. Further, the negotiations never culminated in a

fully-signed Blue Star incorporation document or operating agreement in a form

that all parties agree is operative. Nevertheless, Dishi and Yehezkel understood

that they had a deal, and they alleged that the defendants breached their

agreements. Paragraph 49 of the complaint alleges:

Dishi and Yehezkel had no reason to believe that their longtime friend Schwartz would attempt to circumvent there [sic]agreement, which was ultimately done out of greed and spite, by hisattempt to contend that the operating agreement was not executedbefore he reneged on the deal and by his intentional and fraudulentactions in not filing the appropriate membership information with theState of Florida to reflect the membership interests in [Blue Star'sparent company] or the membership interests in [the Blue Starentities].

The fourteen counts in the complaint build upon these and other allegations

to assert causes of action for breach of the alleged agreements, violations of duties

under the Florida limited liability company statutes, fraud, conspiracy to commit

fraud, specific performance, and accounting. None of these theories involve

claims against the underlying condominium units. Several other counts assert

equitable claims for declaratory and injunctive relief, the imposition of a

constructive trust or equitable lien, and specific performance. A careful reading of

these allegations does not reveal, however, a discernible claim against or over the

3

condominium units as opposed to membership interests in the limited liability

companies in which the plaintiffs/respondents sought to invest.2

The petitioners filed a motion and memorandum seeking dissolution of the

lis pendens, and the trial court denied the motion. The petition for certiorari

followed.

Analysis

The pertinent part of the lis pendens statute, section 48.23(3), Florida

Statutes (2012), provides:

When the pending pleading does not show that the action isfounded on a duly recorded instrument or on a lien claimed under partI of chapter 713 or when the action no longer affects the subjectproperty, the court shall control and discharge the recorded notice oflis pendens as the court would grant and dissolve injunctions.

A petition for writ of certiorari is the appropriate procedure to challenge the

denial of a motion to discharge a notice of lis pendens. See, e.g., MCZ/Centrum

2 The complaint is noticeably vague on any allegation that any funds wereadvanced by the plaintiffs and used by Blue Star to buy the condominium units.The unjust enrichment count, for example, alleges that Schwartz and a corporatemember ofBlue Star

received the direct and substantial benefits from Dishi & Floman,LLC and LED Trust, LLC including the fact that the deal was broughtto them by Dishi & Floman, LLC and LED Trust, LLC, which theyrequested from Dishi & Floman LLC and LED Trust, LLC, hadknowledge of and voluntarily accepted and retained the benefits theyrequested and received directly from Plaintiff, and have refused tocompensate Dishi & Floman, LLC and LED Trust, LLC despitedemand for payment.

Whatever a nexus with specific Florida real estate may be, this is not it.

4

Flamingo I, LLC v. AIMCO/Bethesda Holdings, Inc., 988 So. 2d 89, 89 (Fla. 3d

DCA 2008). "A court must dissolve a lis pendens that is based on an unrecorded

document unless the proponent 'establish[es] a fair nexus between the apparent

legal or equitable ownership of the property and the dispute embodied in the

lawsuit.'" Conseco Servs., LLC. v. Cuneo, 904 So. 2d 438, 439 (Fla. 3d DCA

2005) (quoting Chiusolo v. Kennedy, 614 So. 2d 491, 492 (Fla. 1993)). A "fair

nexus" requires a "good faith, viable claim." Eg, India Am. Trading, Co., Inc. v.

White, 896 So. 2d 859, 860 (Fla. 3d DCA 2005).

"A complaint which will not support a claim against the specific property at

issue cannot provide a basis for tying it up by a filing of notice of lis pendens."

Lake Placid Holding Co. v. Paparone, 414 So. 2d 564, 566 (Fla. 2d DCA 1982);

accord Ness Racquet Club, LLC v. Renzi Holdings, Inc., 959 So. 2d 758, 761 (Fla.

3d DCA 2007) ("It is well settled that in the absence of a duly recorded instrument,

when there is no 'direct claim cognizable under the law against or upon the . . .

property burdened by the lis pendens,' 'no lis pendens may be asserted under any

conditions against the realty . . . .'" (quoting Sunrise Point, Inc. v. Foss, 373 So.

2d 438, 439 (Fla. 3d DCA 1979))). When a plaintiff can be afforded complete

relief on a claim without reference to the title to the real property, a lis pendens

cannot be maintained. Beefy King Int'l Co. v. Veigle, 464 F.2d 1102, 1104 (5th

5

Cir. 1972)("Under the Florida cases a lis pendens is proper only when the required

relief might specifically affect the property in question.").

Here, pursuant to the parties' alleged contract, legal title to the condominium

units would be held by the Blue Star entities, with any ownership interest in the

properties two levels removed (as membership interests in the parent company).

As in Powerline Development Corp. v. Assor, 458 So. 2d 305, 306 (Fla. 3d DCA

1984), where the plaintiff alleged fraudulent transactions involving interests in a

corporation, the respondents here have brought an action seeking to have their

alleged membership interests in Blue Star recognized. While the respondents point

to their claims for constructive trust and equitable lien to maintain the lis pendens,

they have failed to show that the allegations are connected to the title of the

condominium units held by Blue Star. The claims seeking a constructive trust and

equitable lien request the court to enforce a lien and a constructive trust against the

subsidiaries, not the specific condominium units. Accordingly, this lawsuit for

damages and membership interests in the parent company does not directly affect

the real estate, and a lis pendens cannot be maintained. See Ness Racquet Club,

LLC, 959 So. 2d at 761; DeGuzman v. Balsini, 930 So. 2d 752, 755 (Fla. 5th DCA

2006) ("When the primary purpose of a lawsuit is to recover money damages and

the action does not directly affect the title to or the right of possession of real

property, the filing of a notice of lis pendens is not authorized."); Powerline Dev.

6

Corp., 458 So. 2d at 306; Sunrise Point, Inc., 373 So. 2d at 439; see also Beefy

King Int'l Co., 464 F.2d at 1104; Frank v. Ocean 4660, LLC, No. 11-62004-CIV,

2011 WL 5082137 (S.D. Fla. Oct. 26, 2011).

Conclusion

As proponents of the lis pendens, the plaintiffs/respondents failed to

"establish a fair nexus between the apparent legal or equitable ownership of the

property and the dispute embodied in the lawsuit." Chiusolo v. Kennedy, 614 So.

2d 491, 492 (Fla. 1993). That being so, the motion to dissolve the lis pendens

should have been granted.

Petition granted; order ofMay 31, 2012, quashed.

7