Case 1:08-cv-22048-MGC Document 9 Entered on FLSD Docket 08/25/2008 Page 1 of 22

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

Case No.: 08-22048-CIV-COOKE/BANDSTRA

JEAN-MARC VUJASIN,
DAVY VUJASIN

Plaintiffs,

vs.

CHEF VINCENT, INC.,

VINCENT THILLOY,

Defendants.
/

VINCENT THILLOY’S MOTION TO DISMISS

FOR LACK OF SUBJECT MATTER JURISDICTION AND FOR FAILURE TO STATE
A CAUSE OF ACTION UPON WHICH RELIEF CAN BE GRANTED

Pursuant to Rules 12(b)(1) and 12(b)6) of the Federal Rules of Civil Procedure,

Defendant, Vincent Thilloy, hereby moves to dismiss Plaintiffs’ Complaint for lack of subject

matter jurisdiction and for failure to state a cause of action. 1 Counts I & II are premised on

federal securities law (the “federal claims”) and Counts III - VII are premised on state law (the

“state claims”). The federal claims fail to state a cause of action and must be dismissed. The

remaining state law claims, which would otherwise fall under this Court’s supplemental

jurisdiction if the federal claims are proper, cannot stand on their own because this case lacks

complete diversity. However, for judicial economy, and in the event the Court concludes that it

1
This action was filed against two Defendants, Vincent Thilloy (“Thilloy”), and Chef Vincent, Inc. (“Chef
Vincent”), a Florida Corporation, and the Complaint is styled accordingly. Chef Vincent was purportedly served via
its registered agent, co-defendant Thilloy. Thilloy neither owns nor operates Chef Vincent and its registered agent is
actually identified on Sunbiz as Patrick Moyal, 10796 Pines Boulevard, Suite 204, Pembroke Pines, FL 33026. In
fact, Chef Vincent is now owned and operated by Plaintiffs. See Complaint, ¶¶ 6-8. Sunbiz also identifies the
Plaintiffs, Jean-Marc Vujasin and Davy Vujasin, as the sole Officers and Directors of Chef Vincent. Thus, Plaintiffs
brought suit against a corporation that they own. This is not proper for a variety of reasons, but for purposes of this
Motion, Thilloy’s counsel represents Thilloy only and not Chef Vincent.

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has jurisdiction, Thilloy is also incorporating his Rule 12(b)(6) motion with respect to the state

claims.

Introduction

This case is about buyers’ remorse and the old cautionary tale that you should review

contracts before you sign them — nothing more, nothing less. Plaintiffs bought from Tilloy

“Chef Vincent,” a restaurant (the “Restaurant”), located within the Colony Hotel (the “Colony”)

on Miami Beach’s Ocean Drive, for $800,000. 2 Chef Vincent, Inc., the corporation that owned

and operated the Restaurant and which Plaintiffs now operate and own entirely, had (and have) a

long-term lease on real and personal property where the restaurant is located. Plaintiffs bought a

well-known and established brand, with existing clientele, goodwill, wait and kitchen staff and

time-tested menu. But Plaintiffs speak only French. By their own admission, they cannot read

or speak English and are unfamiliar with American laws and business practices. Despite this

powerful admission, they signed a contract to purchase the Restaurant (which included a merger

provision and which included and referenced the lease agreement — the “Lease” — and related

documentation) without having a single page translated into French and without consulting legal

counsel. Plaintiffs’ failure to translate the paperwork into French and their failure to consult legal

counsel is absolutely inexcusable and fatal to this entire lawsuit. 3

Memorandum of Law

I. Plaintiffs’ Federal Claims Fail to State a Cause of Action 4

2
Payment consisted of $400,000 cash and a $400,000 note that required Plaintiffs to pay $50,000 six (6)
months after the October 2007 closing (the “Closing”), plus the remaining $350,000 in full after four (4) years with
5% interest accruing two (2) years from Closing. Also, Plaintiffs signed a $44,400 note due in four (4) years
without interest to Thilloy for the full deposit he paid the Colony to lease the Restaurant space.
3
To date, Plaintiffs have not paid Thilloy the $50,000 despite repeated demands for payment, and continue
to operate the Restaurant and to profit from it. Instead of paying what they legitimately owe, Plaintiffs sued Thilloy.
4
Thilloy’s argument that Counts I and II fail to state a cause of action could also be phrased as a motion to
dismiss for lack of standing or a motion to dismiss for want of jurisdiction. As a practical matter, it is a distinction
without a difference.

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A. The Transaction at Issue Does Not Involve a “Security” Within the Meaning
of Federal Securities Law

It is axiomatic that the anti-fraud provisions of federal securities law apply only to the

purchase of “securities.” See Fin. Sec. Assurance, Inc. v. Stephens, Inc., 500 F.3d 1276, 1285

(11th Cir. 2007) (affirming a motion to dismiss federal securities claim brought by an insurer of

municipal bonds). Although technically a “security” can include a “note” or “stock,” see 15

U.S.C. § 78c(10), the anti-fraud provisions are implicated only upon the purchase of said note or

stock and only under certain circumstances, none of which are relevant here. See Stephens, 500

F.3d at 1285.

A “stock,” within the meaning of Rule 10(b)-5, characteristically “grants the right to

receive dividends contingent upon an apportionment of profits; is negotiable; grants the ability to

be pledged or hypothecated; confers voting rights in proportion to the number of shares owned;

and has the capacity to appreciate in value.” Id. (internal citations omitted). A “note,” within the

meaning of Rule 10(b)-5, characteristically is where “the buyer is interested primarily in the

profit the note is expected to generate, it is an instrument in which there is common trading for

speculation or investment, the investing public reasonably expects the instrument to be a note,

and no other regulatory scheme significantly reduces the risk of the instrument.” Id. (internal

citations omitted). This transaction involves merely the sale of an entire business where the

purchase vehicle is a stock transfer.

According to the Complaint, which is not exactly a model of clarity, federal securities

law is implicated because “the Stock Purchase Agreement involves the purchase and sale of

securities within the meaning of the Federal securities laws….” See Complaint, ¶ 39. The

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“securities” identified in the Stock Purchase Agreement, attached as Exhibit 5 to the Complaint,

are merely the outstanding shares (all of them) in Chef Vincent, Inc.5

As Plaintiffs concede, they purchased an entire business that they now own and

successfully operate. They did not purchase an interest in a business or the right to collect

dividends. Nor did they merely purchase “an instrument.” Plaintiffs are free to label the

transaction as the purchase of securities but, as the Eleventh Circuit has cautioned, “although

most instruments bearing a traditional title [such as stock, share, security, etc.] are likely to be

covered by the definition of a security [as defined in 15 U.S.C. § 78c(10)], the label is not of

itself sufficient to invoke the coverage of the Act.” Stephens, 500 F.3d at 1287 (internal citations

omitted). “Rather, the ‘economic realities’ of the instrument actually conveyed ultimately

govern whether [it] is a security.” Id.

Under the “economic realities” test, when the sole owner of a small business sells the

entire business to a buyer, federal securities law is not implicated. See, e.g., King v. Winkler, 673

F.2d 342, 346 (11th Cir. 1982); Frederiksen v. Poloway, 637 F.2d 1147 (7th Cir. 1981); Bula v.

Mansfield, 1977 WL 1073 (D. Colo. 1977). In King, the Eleventh Circuit correctly affirmed

dismissal of a federal securities lawsuit for lack of subject matter jurisdiction because the

transaction concerned the sale of an entire business from a seller to a buyer. There, the court first

noted that “the facts reflect a typical sale of a one-owner business by transfer of the stock in a

corporation.” Id. at 343. The transaction was structured such that the seller sold all of his shares

in the corporation to the purchasers, and the purchasers then assumed “full control of the

management and operation” of the business. Id. The purchasers, after acquiring the business,

5
Plaintiffs call the “Agreement for Purchase and Sale of Assets” a “Stock Purchase Agreement,” which
implies that this transaction was a traditional “stock” transfer. This purposefully deceptive misnomer does not
change the fact that this was merely one party buying all of the assets of another company to acquire an entire
business via a 100% stock transfer. A rose by any other name is still a rose. But for purposes of this Motion,
Thilloy will play along and call the asset sale a “Stock Purchase Agreement.”

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sued the seller under federal securities law (and state common law). The district court dismissed

for want of jurisdiction. The Eleventh Circuit affirmed and concluded:

The purchasers were buying and the seller was selling a business. The stock was
the vehicle for transfer. The purchasers’ expectation of profit would come from
their own efforts, not those of others. This was not a security transaction or
investment contract intended to be covered by the Federal Securities Act.

Id. at 346.

Similarly, in Frederiksen, the Seventh Circuit affirmed dismissal of a federal securities

lawsuit brought by the purchaser of a boat storage company. 637 F.2d at 1154. There, the court

correctly held that “securities laws do not apply when the goal of a purchaser is not investment

but is a desire to use or consume the item purchased.” Id. at 1150. Furthermore, “the stock of

[the company] merely was passed incidentally as an indicia of ownership of the business assets

sold to [the purchaser.]” Id. at 1151-52. In applying the “economic realities” test, the court

ultimately concluded that the sale of an entire boat storage company from one company to

another where the purchasing company was going to operate the business is not a security.

Finally, and most analogously, the district court in Bula v. Mansfield, 1977 WL 1073 (D.

Colo. 1977) correctly dismissed for want of jurisdiction a Rule 10(b) claim brought by the

prospective purchaser of 100% of stock in a company that owned a restaurant. The district court

held that “An option to buy 100% of the stock of Harkis, Ltd. is, in reality, an option to buy The

Restaurant. This case involves a bulk sale, not a security transaction, and belongs in state court.”

Id.

This case is absolutely no different than King, Frederiksen, and Bula. Here, Plaintiffs

purchased an entire business that they now own and operate. Federal securities law is not

implicated and, accordingly, this Court must dismiss Counts I and II.

B. Count I -- SEC Rule 10(b)-5 is Not Sufficiently Plead

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To state a claim for securities fraud under SEC Rule 10(b)-5, the plaintiff must

specifically allege the following: “(1) a misstatement or omission, (2) of a material fact, (3) made

with scienter, (4) on which plaintiff relied, (5) that proximately caused his injury.” Ziemba v.

Cascade Int’l, Inc., 256 F.3d 1194, 1202 (11th Cir. 2001). Claims under Rule 10(b)-5 are

subject to the heightened pleading requirements found in Rule 9(b) of the Federal Rules of Civil

Procedure pertaining to fraud. Id. at 1202.

“Rule 9(b) is satisfied if the complaint sets forth:

(1) precisely what statements were made in what documents or oral

representations or what omissions were made, and
(2) the time and place of each such statement and the person responsible for
making (or, in the case of omissions, not making) same, and
(3) the content of such statements and the manner in which they mislead the
plaintiff, and
(4) what the defendants obtained as a consequence of the fraud.”

Id. Furthermore, the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), 15 U.S.C.

§ 78u-4(b), “expressly requires plaintiffs alleging violations of § 10(b) to state with particularity

facts giving rise to a strong inference that the defendant acted with the required state of mind.”

Id. at 1202, n5 (emphasis added).

Unlike a typical Rule 12(b)(6) motion to dismiss, where the Court must draw all

reasonable inferences in favor of the plaintiff, and thus against dismissal, under the PSLRA, the

Court is obligated to look at the entire complaint and draw all reasonable inferences, even and

especially those that favor dismissal. See Metzler Inv. GMBH v. Corinthian Colleges, Inc., ---

F.3d ---; 2008 WL 2853402, *7 (9th Cir. July 25, 2008) (affirming dismissal of 10(b)-5 action

where the allegations, taken as a whole, did not create a strong inference of wrongdoing). The

facts alleged by the Plaintiffs in their Complaint are plead generally and are utterly devoid of

allegations sufficient to avoid dismissal. Moreover, the Court, in drawing all reasonable

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inferences, should conclude that there is no basis for Plaintiffs’ scandalous allegations that

Thilloy somehow defrauded them.

1. The Factual Allegations Do Not Support the Claim

The relevant allegations, paraphrased for brevity, are that Plaintiffs wanted to own “a

business” in the United States for visa purposes. Complaint ¶ 17. Plaintiffs were/are successful

restaurateurs from Paris. Id. at ¶¶ 6-7. They retained a real estate agent Laurent Benzaquen

(“Benzaquen”), Benzaquen, to assist them in finding a business. Id. at ¶ 17. Benzaquen informed

Plaintiffs (which were his clients) that Restaurant was available, even though it was not officially

listed as “for sale.” Id. at ¶¶ 16-17. Plaintiffs speak only French and were unfamiliar with U.S.

business practices. Id. at ¶ 17. Plaintiffs “heavily depended upon, trusted and relied upon”

Benzaquen and Thilloy. 6 Id. Benzaquen initially conveyed a $1,000,000 and then an $800,000

offer to sell Chef Vincent. Id. at ¶¶ 18-19. Plaintiffs wanted to review Chef Vincent’s financial

statements but did not because Benzaquen (not Tilloy) told them “that it does not work that way

here.” Id. at ¶ 18. During a site visit, Plaintiffs asked Thilloy what equipment and inventory

was included in the purchase price, to which Thilloy provided Plaintiffs with a list of equipment

that Thilloy leased but did not own. Id. at ¶¶ 20-21. Thilloy offered to replace the kitchen

equipment. Id. at ¶ 22. Plaintiffs purchased Chef Vincent for $800,000 via stock transfer. Id. at

¶ 23. Plaintiffs paid Thilloy $400,000 in cash and they executed a promissory note in Thilloy’s

favor in the amount of $400,000. Id. Benzaquen “steered” Plaintiffs to attorney Dennis Bedard

6
This admission alone is fatal to the Rule 10(b)-5 claim. Plaintiffs admit that they heavily relied upon
Thilloy because of the language barrier and lack of familiarity with American law and custom. This “reliance” is
unreasonable given Plaintiffs’ obligation to know what they are signing. It is categorically unreasonable for the
buyer of a business who does not speak English to rely upon the seller of the business (i.e., his adversary) to ensure
that they buyer is getting a good deal. Plaintiffs’ blanket assertions to the contrary do not change this. See
Complaint ¶ 44 (“Plaintiffs’ reliance – upon the misstatements and omissions by the Defendants, and this deceptive
conduct – was reasonable under the circumstances.”).

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for the closing, which occurred in October 2007. Id. at ¶ 24. 7 Plaintiffs discovered that “they

had been scammed by their French comrade and his accomplices” 8 in January 2008. Id. at ¶ 36.

2. The Expressed Language of the Contract Defeats any Reasonable

Reliance Allegation

Even assuming that Plaintiffs’ allegations of fraud are true, which they are not, Plaintiffs’

securities claims fail because the Stock Purchase Agreement contains a merger provision and

because the lease agreement and all other relevant documentation was incorporated by reference

into the Stock Purchase Agreement and was provided to Plaintiffs prior to execution. 9 The Stock

Purchase Agreement’s merger provision states: “This agreement constitutes the entire contract of

the parties and that there are no representations, warranties, covenants, promises, assurances or

undertakings other than those expressly set forth in this agreement. This agreement supersedes

any prior understandings or agreements, whether written or oral, between the parties. Parol

evidence will not be used in any way to attack, modify, clarify or interpret this agreement.” See

Exhibit 5, ¶ 21 of the Complaint. Thus, the executed agreement constituted the entire agreement

between the parties and any purported statement or promise made prior to execution that was not

included in or is inconsistent with the Stock Purchase Agreement became inactionable. See, e.g,

Hazara Enterprises, Inc. v. Motiva Enterprises, LLC, 126 F. Supp. 2d 1365, 1374 (S.D. Fla.

2000) (granting summary judgment on fraud claim and holding “It is deemed unreasonable as a

matter of law to rely upon oral statements, even if falsely made, where a written contract
7
Attorney Bedard was the closing agent and had a duty to both Buyer and Seller to ensure that the closing
occurred as the contract required. There is no allegation that Plaintiffs consulted an attorney for any reason prior to
signing the purchase agreement. Plaintiffs, who by their own admissions, are experienced restaurateurs in France
but know nothing about American law or custom and do not read or speak English perhaps should have consulted
legal counsel before spending $800,000. Their failure to do so cannot be blamed on Thilloy. See, e.g., Rivero v.
Rivero, 963 So. 2d 934, 938 (Fla. 3d DCA 2007) (noting that a party’s inability to read or speak English and his
failure to seek proper legal counsel is absolutely inexcusable and will not prevent enforcement of an otherwise
enforceable contract).
8
Plaintiffs fail to identify Thilloy’s “accomplices.” No “accomplices” were sued.
9
The Agreement, attached as Exhibit 5 to the Complaint, references and incorporates the Lease Agreement
between Chef Vincent, Inc. and the Colony Hotel/landlord. See Complaint, Exhibit 5, ¶E1 “…together with any
rights to the Lease Agreement, wholly or partially described in Exhibit A….” and ¶12 “Lease Agreement.”

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subsequently executed does not contain the alleged representations.”); Eclipse Med., Inc. v. Am.

Hydro-Surgical Instruments, Inc., 262 F. Supp. 2d 1334, 1342 (S.D. Fla. 1999) (“…Florida

courts have made clear that no action for fraud in the inducement will lie where the alleged fraud

contradicts the subsequent written contract. First and foremost, this District has clearly held that

reliance on fraudulent representations is unreasonable as a matter of law where the alleged

misrepresentations contradict the express terms of the ensuing written agreement . . . Indeed,

fraudulent inducement claims will fail even where the subsequent contract simply says nothing

about the allegedly false promise.”) (internal citations omitted).

The Stock Purchase Agreement expressly referenced and incorporated the Lease

Agreement between Chef Vincent, Inc. and the Colony Hotel (the landlord). Paragraph E.1

states that:

….Seller agrees to sell and Buyer agrees to buy . . . all of the outstanding shares
of the company, including but not limited to all goodwill, equipment, stock in
trade, receivables incurred following closing, licenses, fixtures, furnishings,
equipment and machinery located at the premises or used in connection with the
operation of the business, together with any rights to the Lease Agreement,
wholly or partially described in Exhibit A….

See Exhibit 5, ¶ E.1. The Lease Agreement, attached as Exhibit 1 to the Complaint and attached

as an Exhibit to Exhibit 5, expressly states that the Colony Hotel is leasing to Chef Vincent (i)

the real property where the restaurant will operate and (ii) “the personal property located at the

Leased Premises to be set forth in a list of inventory to be agreed upon between the parties with

seven (7) days from the date hereof and which will be subsequently attached to this lease as

Exhibit “B” (the “Personalty”).” See Lease Agreement, Article 1. The list of personalty,

attached as Exhibit B to the Lease Agreement, is the list of inventory Thilloy provided to

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Plaintiffs upon their request. The Lease Agreement is crystal clear that Chef Vincent is leasing,

not buying, the restaurant’s inventory. 10

Additionally, Paragraph 12 of the Stock Purchase Agreement states:

Lease Agreement. This agreement is contingent upon Buyer’s ability to obtain an

existing lease to the premises and an assignment of the right to exercise any and
all options contained in the original lease between landlord and Seller. Seller 11
has a complete copy of the existing lease agreement prior to the execution of this
agreement and it is fully aware of its contents. If buyer is unable to obtain an
assignment of the existing lease and Seller is not fully released from the lease
agreement, this agreement shall be voidable by Buyer.

See Exhibit 5, ¶ 12. Plaintiffs did in fact secure an assignment of the lease and Thilloy (who

allegedly defrauded Plaintiffs) personally guaranteed that Plaintiffs would comply with the lease

terms. The Stock Purchase Agreement executed by Plaintiffs unequivocally states that the

Plaintiffs were purchasing Chef Vincent’s leasehold interest, which included both real and

personal property. Plaintiffs cannot now claim that they were duped.

Courts assume that signatories to a contract (especially ones between sophisticated

parties 12 concerning substantial sums of money) know what they are signing. See, e.g., Romero,

963 So. 2d at 938 (“The rule that one who signs a contract is presumed to know its contents has

been applied even to contracts of illiterate persons on the ground that if such persons are unable

to read, they are negligent if they fail to have the contract read to them. If a person cannot read

the instrument, it is as much his duty to procure some reliable person to read and explain it to

10
Further, in Count V of the Complaint, “Common Law Fraud,” Plaintiffs allege that Thilloy fraudulently
and by misrepresentation told them that he was selling them the Liquor License. Thilloy did not say any such thing.
But if he had, Plaintiffs only had to read the Lease (or find someone who could translate it for them) because ¶12.2
of the Lease specifically states that: “Liquor License. Lessor owns the existing liquor license which Lessee may use
in connection with his restaurant….” Thilloy moves to dismiss Count-V later in this Motion.
11
This is a scrivener’s error; it should be “Buyer.” As a practical matter this error makes no difference
because Plaintiffs never read the agreement anyway.
12
Although Plaintiffs may have been unable to speak or read English and lacked knowledge of American
business practice, Plaintiffs concede that they were successful restaurateurs in their native France. Clearly they are
sophisticated enough to know that their lack of sophistication in the English language and American law warrants
consulting an attorney prior to signing an $800,000 contract in a language they cannot read.

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him, before he signs it, as it would be to read it before he signed it if he were able to do so.”).

Neither a language barrier nor a general lack of understanding is or has ever been a defense to

enforcing an otherwise enforceable contract. Id.

Plaintiffs claim they thought they were purchasing Thilloy’s inventory of restaurant

equipment. 13 Even assuming, arguendo, that Thilloy stated that he owned and had title to the

restaurant’s inventory (which he never said), that statement runs counter to the expressed

language of the Stock Purchase Agreement and incorporated lease agreement. Thus, to the

extent Thilloy said one thing but the contract said something else, the contract wins because of

the merger provision.

An essential element of any claim brought under Rule 10(b)-5 is reasonable reliance on

the misstatement or omission. See Gochnauer v. A.G. Edwards & Sons, Inc., 810 F. 2d 1042,

1047 (11th Cir. 1987) (affirming summary judgment because investor had no evidence of

reasonable reliance). The Eleventh Circuit “requires ‘reasonable reliance’ upon the material

misrepresentations, a test of subjective reliance tempered by the requirement of ‘due diligence’

on the part of the plaintiff . . . Not only must an individual actually rely on the information

provided, this reliance must be ‘justifiable,’ i.e., with the exercise of reasonable diligence one

still could not have discovered the truth behind the fraudulent omission or misrepresentation.”

Id. (emphasis added). Here, Plaintiffs cannot seriously allege that they reasonably relied upon

their business adversary. Even if Plaintiffs did rely on Thilloy, this was both unwise and

unreasonable.

Most importantly, Plaintiffs have not even alleged due diligence. To the contrary,

Plaintiffs concede that they did not engage in any due diligence – they made no effort to consult

13
Plaintiffs also make a not so subtle suggestion that they though they were purchasing real estate. See
Complaint ¶ 16. The Complaint fails to clearly state what assets Plaintiffs thought they were purchasing.

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an attorney or to translate the documents into a language they could read. Put simply, Plaintiffs

claim they thought they were purchasing Chef Vincent’s inventory, when in reality they were

merely buying the lease of the inventory. Reading the contract would have avoided any

misunderstanding.

3. This Lawsuit is a Result of Plaintiffs’ Own Errors and Omissions, and

Must be Dismissed

These allegations, standing alone, do not rise to the level of fraud necessary to bring a

federal securities lawsuit. Plaintiffs retained their own real estate agent to assist them in finding

and buying a business. They were experienced in the restaurant business, but they did not review

Chef Vincent’s financials. They admit that they accepted their real estate agent’s comment that

“it doesn’t work that way here.” They do not even allege that they asked Thilloy for Chef

Vincent’s financials (after all, they sued Thilloy, not Benzaquen). They do not, because they

cannot, allege that Thilloy refused to show them Chef Vincent financials. When asked about

equipment, Thilloy provided Plaintiffs with an inventory list. Plaintiffs did not retain an

attorney. Most telling, Plaintiffs signed documents written in English despite their admission

that they had absolutely no idea what those documents said. 14

There is absolutely no allegation and no inference that Thilloy acted with scienter or with

any malice. To the contrary, Thilloy provided Plaintiffs with all documentation prior to the time

of closing and even personally guaranteed the lease assignment (which he was under no

contractual obligation to do) to help Plaintiffs make their business a success. 15 Plaintiffs knew,

actually or constructively, exactly what they were purchasing at the time of closing and cannot

now complain that they do not speak English.

14
All relevant documents were attached as Exhibits to Plaintiffs’ Complaint. Not a single document was
translated into French.
15
Yet another of Thilloy’s countless actions showing good faith and deference to the Plaintiffs.

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C. Count II – Controlling Person Liability Fails for the Same Reason Count I
Fails

In addition to suing Thilloy for securities fraud directly under Rule 10(b)-5, Plaintiffs

have sued him for being a “controlling person” of an entity that violated Rule 10(b)-5, in

violation of Section 20(a) of the 1934 Exchange Act. See 15 U.S.C. § 78t(a). “Under Section

20(a) of the Exchange Act, to state a claim for controlling person liability against a defendant, it

must be alleged that the defendant had (1) the power to control the general affairs of the entity

primarily liable for the Section 10(b) or Rule 10b-5 violation at the time of the violation, and (2)

the power to control or influence the specific policy that resulted in the primary violation under

Section 10(b) or Rule 10b-5.” Marrari v. Med. Staffing Network Holdings, Inc., 395 F. Supp. 2d

1169, 1189 (S.D. Fla. 2005). It is clear that a claim for controlling person liability under Section

20(a) is predicated upon an underlying violation of Rule 10(b)-5. Id. Accordingly, Count II of

the Complaint fails for two reasons.

First, as indicated more fully above, there is no valid claim under Rule 10(b)-5.

Plaintiffs’ failure to state a claim under Rule 10(b)-5 is fatal to their claim under Section 20(a)

and Count II must be dismissed automatically by operation of law. See Id. at 1190 (“…to the

extent that the Section 20(a) Count rests upon violations of Section 10(b) or Rule 10b-5 that have

been dismissed . . . the Court must also dismiss the Section 20(a) Count.). Second, Section

20(a) is designed to hold certain persons personally liable for violating Rule 10(b)-5 when those

persons are said to control an entity that violates Rule 10(b)-5. Here, Plaintiffs are not alleging

than an entity violated Rule 10(b)-5, so their claim that Thilloy was the controlling person of a

mysterious entity cannot stand as a matter of law. 16 There is no allegation that Chef Vincent,

16
Plaintiffs also sued Chef Vincent, Inc. “only in its corporate structure prior to its sale to Plaintiffs.” See
Complaint ¶ 8 (emphasis added). This allegation is novel, confusing and, although creative, meritless. Chef

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Inc., committed securities fraud and, more importantly, Chef Vincent, Inc., is owned by the

Plaintiffs. Thilloy is unaware of any law permitting the owners of a small, closely-held company

to sue the company for securities fraud.

II. Plaintiffs’ State Law Claims Cannot Stand Without the Federal Securities Claims

If the Court dismisses Plaintiffs’ federal securities claims, then this Court can retain

jurisdiction over their state law claims only if Plaintiffs establish diversity jurisdiction pursuant

to 28 U.S.C. § 1332. 17 As the Court is aware, diversity jurisdiction requires complete diversity

of the parties and the party seeking to invoke the Court’s jurisdiction, the Plaintiffs here, have the

burden of proving that jurisdiction is proper. See Rolling Greens MHP, L.P. v. Comcast SCH

Holdings LLC, 374 F. 3d 1020, 1022 (11th Cir. 2004) (“The burden of pleading diversity of

citizenship is upon the party invoking federal jurisdiction, and if jurisdiction is properly

challenged, that party also bears the burden of proof.”).

Here, Plaintiffs allege that they both are French citizens who have “addresses” in France.

See Complaint ¶¶ 6-7. But Thilloy, who also maintains French citizenship, is a citizen of Miami

Beach, domiciled in Florida for purpose of diversity jurisdiction. Plaintiffs admit they “were

interested in owning a business in the United States that would permit them and their family

members to reside in the United States for a limited time and purpose” on investor visas. See

Complaint ¶ 17. In fact, Plaintiffs now live in the United States and they operate Chef Vincent in

Miami Beach. Thilloy has learned that Plaintiff Jean Marc Vujasin lives with his wife at 650

West Avenue on Miami Beach and Plaintiff Davy Vujasin lives at 90 Alton Road on Miami

Beach. Thus, it appears that both Plaintiffs (although it only takes one to defeat diversity) are

Vincent, Inc. is owned and operated by Plaintiffs. See Complaint ¶¶ 23-25. Plaintiffs have literally sued
themselves!
17
If the Court concludes that it has federal question jurisdiction, then Plaintiffs’ state law claims are proper
under this Court’s supplemental jurisdiction. 28 U.S.C. § 1367. The state law claims are nevertheless subject to
dismissal pursuant to Rule 12(b)(6).

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now domiciled in Florida, and were domiciled in Florida when they filed their Complaint. This

fact, if true, divests this Court of subject matter jurisdiction over Plaintiffs’ state law claims.

Should the Court dismiss Plaintiffs’ federal securities count, which it should, Thilloy

requests that this Court hold the case in abeyance while he takes limited jurisdictional discovery.

See Brady v. Chrysler Group, 2008 WL 1957988 (S.D. Fla. May 5, 2008) (ordering jurisdictional

discovery on defendant’s citizenship); Calixto v. BASF Constr. Chems., LLC, 2008 WL 1840717,

*2 (S.D. Fla. Apr. 22, 2008) (ordering, sua sponte, jurisdictional discovery to determine whether

the court had diversity jurisdiction). Allowing Thilloy to take limited discovery preserves

precious judicial resources and ensures that this Court is not presiding over a case over which it

has no authority. Considering that the jurisdictional issue can be revisited at any time, even on

appeal, it would be most unfortunate if, at some point months or years down the road, this case

had to be dismissed on jurisdictional grounds.

III. Plaintiffs’ State Claims All Fail to State a Cause of Action

A. Count III — Plaintiffs’ Cannot State a Claim Pursuant to Florida’s Blue Sky
Laws (Florida Securities and Investor Protection Act, Fla. Stat. § 517.301)

Plaintiffs’ claim that Thilloy violated Florida’s securities law also fails because (i) the

transaction at issue did not involve a “security” within the meaning of Fla. Stat., § 517.301, (ii)

the transaction at issue was exempt from § 517.301 (even assuming the transaction involved

security) and (iii) Plaintiffs’ cannot in good faith allege that they “reasonably relied” on Thilloy.

First, the Florida statute defines and interprets a “security” in the same exact manner as

federal securities laws do. See, e.g., Brown v. Rairigh, 363 So. 2d. 590, 592 (Fla. 4th DCA

1978) (noting that a “security” under Chapter 517 is determined by applying SEC v. W.J.

Howrey, Co., 328 U.S. 293 (1946) and its federal progeny). If there is no “security” under

federal law, then there is no “security” under Florida law. Id.

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Case 1:08-cv-22048-MGC Document 9 Entered on FLSD Docket 08/25/2008 Page 16 of 22

Second, §517.301(2)(a) expressly exempts transactions involving “[t]he purchase of a

business opportunity, business enterprise, or real property through a person licensed under

chapter 475 ….” Plaintiffs concede that they engaged Benzaquen, a licensed (under Chapter

475) real estate agent operating under Barclay’s Real Estate. See Complaint ¶¶ 16-17.

Third, the elements for a cause of action under § 517.301 are identical to those for

Plaintiffs’ Rule 10(b)-5 claim. See Gochnauer v. A.G. Edwards & Sons, Inc., 810 F.2d 1042,

1046 (11th Cir.1987) (stating that the elements of a cause of action under Fla.Stat., § 517.301 are

identical to those required by Section 10(b), except that the scienter requirement is relaxed in the

former instance); First Union Brokerage v. Milos, 717 F.Supp. 1519, 1524 (S.D. Fla. 1989)

(same). As indicated above, any assertion that Plaintiffs reasonably relied on Thilloy is absurd in

light of Plaintiffs’ admission that they did not consult legal counsel, retained their own real estate

agent, do not understand American law and business practices and cannot read English. For

these three reasons, Count III fails as a matter of law.

B. Count IV — Plaintiffs’ Breach of Contract Claim Fails Because of the

Merger Provision

Plaintiffs awkwardly allege that Thilloy breached the Stock Purchase Agreement by

breaching the “representations and warranties” set forth in allegations recited in the Complaint.

The “representations and warranties” are nothing more than statements that Thilloy allegedly

told Plaintiffs prior to executing the Agreement. First, Plaintiffs are not actually alleging that the

Stock Purchase Agreement was breached; they are alleging that Thilloy breached various pre-

contractual representations and warranties. This is not a “breach of contract” count; it appears to

be a fraud in the inducement claim. As plead it is entirely improper.

Second, and more importantly, the merger provision in the Stock Purchase Agreement

precludes any claim based upon “representations and warranties” made prior to execution.

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Case 1:08-cv-22048-MGC Document 9 Entered on FLSD Docket 08/25/2008 Page 17 of 22

Thilloy’s obligations under the Stock Purchase Agreement are limited to those expressly

included in the Stock Purchase Agreement. Plaintiffs’ misplaced claims are the very reason

contracts contain merger clauses. See generally, pp. 9-13, supra. The language in the Stock

Purchase Agreement, including the Lease Agreement which was expressly incorporated and

referenced by the Stock Purchase Agreement, speaks for itself. 18 See generally Rose v. M/V

“Gulf Stream Falcon,” 186 F.3d 1345, 1350 (11th Cir.1999) (the “best evidence of the intent of

the parties and, thus, the plain meaning of that language controls.”; American Med. Int'l, Inc. v.

Scheller, 462 So.2d 1, 7 (Fla. 4th D.C.A.1984) (stating that where a contract is clear and

unambiguous and does not involve any absurdities or contradictions, it is the best evidence of the

intent to the parties, and its meaning and legal effect are questions of law for determination by

the court alone). Plaintiffs’ scandalous allegations of fraud and breach directly contradict the

plain language of the Agreement, but as the Court knows, the Agreement controls.

C. Count V — Common Law Fraud

Plaintiffs’ count for “common law fraud” fail for reasons explicated above. First, the

merger provision contained within the Stock Purchase Agreement precludes any claim for

fraudulent inducement. Plaintiffs specifically reference three “misrepresentations” – (i) that

Chef Vincent had a “value” of $800,000, (ii) the “omission” that Chef Vincent did not have title

to the restaurant’s inventory and the liquor license and (iii) Thilloy’s promise to replace the

kitchen equipment.

These assertions are beyond incredible. Thilloy is not alleged to have represented that

Chef Vincent had a “value” of $800,000, he merely offered to sell it to Plaintiffs for that amount.

Plaintiffs obviously agreed that $800,000 was fair value because they purchased it. The “lease”

18
See Complaint Exhibit 5, ¶¶ E.1 and 12 (referencing the Lease Agreement).

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Case 1:08-cv-22048-MGC Document 9 Entered on FLSD Docket 08/25/2008 Page 18 of 22

of the restaurant’s inventory and liquor license 19 was expressly stated in the Stock Purchase

Agreement and incorporated documents. The Stock Purchase Agreement made no reference to

replacing the kitchen equipment.

As indicated above, all of Plaintiffs’ claims sounding in fraud fail as a matter of law

because of the merger provision. Furthermore, any assertion that Plaintiffs reasonably relied

upon Thilloy fail because of Plaintiffs’ admission that they did not review the contract prior to

signing it. Again, simply reading the contract would have avoided this entire lawsuit. Finally,

even if Plaintiffs have a viable fraud claim, which they do not, they have utterly failed to plead it

with particularity, as required by Rule 9.1 of the Federal Rules of Civil Procedure. Accordingly,

Count V fails as a matter of law.

D. Count VI — Civil Theft Under Fla. Stat. §§ 812.014 & 772.11

Plaintiffs allege that Thilloy “stole” $400,000.00 (the down payment) and another

$400,000.00 (the amount due under the promissory note) in violation of Florida’s civil theft

statute. This argument is silly. First, the parties are in privity. Entering into a contract is not a

crime. See Rosenthal Toyota, Inc. v. Thorpe, 824 F.2d 897, 902 (11th Cir.1987) (noting that

Florida’s civil theft statute’s treble damage remedy is not available to parties in privity) (citing

Rosen v. Marlin, 486 So.2d 623, 624 (Fla. 3d DCA). Second, there is no allegation that Thilloy

acted with “felonious intent.” See Lewis v. Heartsong, Inc., 559 So.2d 453, 454 (Fla. 1st DCA

1990) (civil theft requires a showing of “felonious intent”). Third, and most importantly,

because of the contract, Thilloy was rightfully in possession of the $400,000 down payment.

Again, Count VI is really another baseless fraud in the inducement claim that fails for the

reasons stated above. Accordingly, Plaintiffs’ count for civil theft fails as a matter of law.

19
See Complaint Exhibit 1, ¶12.2 (“Liquor License. Lessor owns the existing liquor license which Lessee
may use in connection with his restaurant….”). Lessor is the Colony Hotel.

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Case 1:08-cv-22048-MGC Document 9 Entered on FLSD Docket 08/25/2008 Page 19 of 22

E. Count-VII — Declaratory Judgment

Finally, Plaintiffs’ claim for declaratory judgment with respect to Thilloy’s security

deposit held by the Colony Hotel (the landlord) is utterly confusing and is not a “bona-fide”

dispute between the parties. As conceded by the Plaintiffs, “Section E(3) of the Stock Purchase

Agreement states that ‘Seller agrees that Buyer will re-imburse him for the security deposit

($44,000) held by landlord for years from the date of closing. See Complaint, ¶ 77. They then

assert, rather enigmatically, that: “However, the buyers, Plaintiffs, no where [sic] agreed to

reimburse Defendant Thilloy $44,400 for a security deposit and it is of no relevance to Plaintiffs

that the ‘Seller’ may have agreed to such reimbursement when the Buyer did not.” See

Complaint, ¶ 78. Plaintiffs agreed to Section E(3) when they executed the Stock Purchase

Agreement. The Agreement clearly indicates that Thilloy’s security deposit would remain with

the landlord and the Plaintiffs would reimburse Thilloy for the deposit. (The alternative would

have been for Thilloy to recover his deposit from the landlord and for Plaintiffs to file their own

security deposit – the procedure contemplated in the Agreement is easier). There is no bona-fide

dispute and, accordingly, Count VII must be dismissed.

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Case 1:08-cv-22048-MGC Document 9 Entered on FLSD Docket 08/25/2008 Page 20 of 22

Conclusion

For the reasons stated above, the Complaint should be dismissed with prejudice 20 for lack

of subject matter jurisdiction. Plaintiffs’ federal securities claims fail as a matter of law and their

state law claims cannot remain in this Court for want of diversity jurisdiction. In the alternative,

Thilloy requests that this Court hold this case in abeyance while the parties engage in limited

jurisdictional discovery. Should the Court not grant jurisdictional discovery, Thilloy requests

that this Court nevertheless dismiss all of the state law claims for failure to state a cause of

action. This Court should also award Thilloy attorneys’ fees and costs.

Respectfully submitted,

___/s/ Matthew Sarelson____

Matthew Seth Sarelson, Esq.
Fla. Bar No. 888281
SARELSON, P.A.
1401 Brickell Avenue, Suite 510
Miami, Florida 33131
305-379-0305
800-421-9954 (fax)
msarelson@sarelson.com
Counsel for Vincent Thilloy

Gilbert K. Squires, Esq.

Fla. Bar No. 584185
GILBERT K. SQUIRES, P.L.
767 Arthur Godfrey Road
Miami Beach, Florida 33140
305-538-2344
305-402-0388 (fax)
gilbertsquires@gilbertsquires.com
Counsel for Vincent Thilloy

20
Dismissal with prejudice is warranted because any amended pleading would be futile and subject to
dismissal for the exact same reasons stated in this Motion.

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Case 1:08-cv-22048-MGC Document 9 Entered on FLSD Docket 08/25/2008 Page 21 of 22

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on August 25, 2008, I electronically filed the foregoing

document with the Clerk of the Court using CM/ECF. I also certify that the forgoing document is

being served this day on all counsel of record or pro se parties identified on the attached Service

List in the manner specified, either via transmission of Notices of Electronic Filing generated by

CM/ECF or in some other authorized manner for those counsel or parties who are not authorized

to receive electronically Notices of Electronic Filing.

___/s/ Matthew Sarelson_________

Matthew Seth Sarelson, Esq.

Certification of Pre-Filing Conference Pursuant to Local Rule 7.1A.3

Although Local Rule 7.1A.3 does not require a Pre-Filing conference for this Motion

Gilbert K. Squires, Esq., Thilloy’s attorney, certifies that he has engaged in an electronic mail

communication with Plaintiffs’ counsel, Scott A. Burr, Esq., on Thursday, August 21st, 2008,

regarding this Motion. Mr. Burr, although satisfied with the nature and form of Plaintiffs’

Complaint, did not object to counsel for Thilloy filing this motion.

/s/ Gilbert Squires_____

Gilbert Squires, Esq.

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Case 1:08-cv-22048-MGC Document 9 Entered on FLSD Docket 08/25/2008 Page 22 of 22

SERVICE LIST
CASE NO.: 08-22048-CIV-COOKE/BANDSTRA

Scott A. Burr, Esquire Matthew Seth Sarelson, Esquire

Email: scottaburr@bellsouth.net Fla. Bar No. 888281
SCOTT A. BURR, P.A. SARELSON, P.A.
407 Lincoln Road, Penthouse S.E. 1401 Brickell Avenue, Suite 510
Miami Beach, Florida 33140 Miami, Florida 33131
Tel: 305-534-4757 305-379-0305
Fax: 305-538-5504 800-421-9954 (fax)
Attorney for Plaintiffs Jean Marc and Davy msarelson@sarelson.com
Vujasin Counsel for Vincent Thilloy

Gilbert K. Squires, Esquire

Fla. Bar No. 584185
GILBERT K. SQUIRES, P.L.
767 Arthur Godfrey Road
Miami Beach, Florida 33140
305-538-2344
305-402-0388 (fax)
gilbertsquires@gilbertsquires.com
Counsel for Vincent Thilloy

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