Betty Smith v. Marcus & Millichap, Incorporated
Citation106 F.4th 1091
Date Filed2024-06-28
Docket22-11951
Cited12 times
StatusPublished
Full Opinion (html_with_citations)
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[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-11951
____________________
BETTY M. SMITH,
as personal representative of the
estate of Shirley T. Cox,
JUDITH A. BALLEW,
Attorney-in-Fact of John E. Ballew,
MARK F. LAPP,
as personal representative of the
estate of Roger J. Lapp,
PlaintiďŹs-Appellants,
versus
MARCUS & MILLICHAP, INCORPORATED,
Defendant,
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2 Opinion of the Court 22-11951
MICHAEL BOKOR,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Middle District of Florida
D.C. Docket No. 8:18-cv-00381-WFJ-AAS
____________________
Before BRANCH, LUCK, and TJOFLAT, Circuit Judges.
TJOFLAT, Circuit Judge:
This appeal arises from a putative class action filed on behalf
of Florida skilled nursing facility residents and their estates seeking
to recover nearly a billion dollars of payments. 1 The Residents al-
leged that these facilities were improperly licensed under Florida
law and therefore any services they rendered were âunbillable.â
Rather than suing the facilities, the facilitiesâ owners, or the facili-
tiesâ license-holders, the Residents sued Michael Bokorâthe pur-
ported owner of the nursing facilitiesâ management companyâand
1 For brevity we refer to putative class action members as âthe Residents.â
The named plaintiff-appellants are: (1) Betty M. Smith, as personal representa-
tive of the Estate of Shirley T. Cox; (2) Judith A. Ballew, attorney-in-fact of
John E. Ballew; and (3) Mark F. Lapp, as personal representative of the Estate
of Roger J. Lapp. Shirley T. Cox, John E. Ballew, and Roger J. Lapp were all
short-term residents of the nursing homes.
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22-11951 Opinion of the Court 3
Marcus & Millichap, Inc.2 (MMI)âa marketing companyâboth of
whom the Residents claim played a role in fraudulently obtaining
the licenses.
After adopting the Magistrate Judgeâs Report and Recom-
mendation (R&R), the District Court dismissed the Residentsâ first
amended complaint with prejudice. It also rejected the Residentsâ
objection to the Magistrate Judgeâs order denying their motion for
leave to file a second amended complaint. The Residents argue
that the District Court erred. As to the dismissal of their first
amended complaint, the Residents argue that the District Court
misunderstood Bokorâs role and misinterpreted case law and stat-
utory authority applicable to the case. As to their motion to
amend, the Residents argue that the District Court abused its dis-
cretion because their proposed amendments were not futile.
After careful review, and with the benefit of oral argument,
we conclude that the Residents waived several objections to the
Magistrate Judgeâs R&R, which the District Court adopted when
granting Bokorâs motion to dismiss. Particularly, the Residents
failed to object to the Magistrate Judgeâs recommendation that the
circumstances warranted abstention under the Colorado River doc-
trine. Likewise, the Residents waived the right to challenge the
denial of their motion to amend because their objection to the
Magistrate Judgeâs order was untimely. We therefore vacate the
judgment of the District Court and remand with instructions to
2 The Residents voluntarily dismissed their claims against MMI with prejudice
during this appeal.
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4 Opinion of the Court 22-11951
stay the Residentsâ claims under the Colorado River abstention doc-
trine.
I. Background
The Residents were clients at twenty-two short-term skilled
nursing facilities in Florida. According to the first amended com-
plaint, 3 operational control of these facilities was dispersed among
three entities. The first owned the land and buildings, the second
held the operating licenses, and the third managed the facilities.
The Residents allege that these facilities improperly obtained li-
censes from the Agency for Health Care Administration (AHCA)
by omitting from their license applications that the facilities were
operated by two management companiesâfirst Southern SNF
Management, Inc. and then Reliant Health Care Services, Inc.
Such information is required under Florida law. See Fla. Stat.
§ 408.806(1)(e) (2023).
Bokor owns SNF and Reliant. The Residents asserted that
Bokor submitted the license applications for the facilities. And
MMI was the commercial broker that marketed and sold the facili-
ties to several non-party landlords, despite knowing that the facili-
ties were improperly licensed.
The Residents alleged that all services provided by these fa-
cilities were performed by improperly licensed or unlicensed enti-
ties. Because of this, the Residents believe that the facilities had no
right to collect payments from residents or reimbursement from
3 The first amended complaint is the operative complaint.
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22-11951 Opinion of the Court 5
Medicaid and Medicare. And, âas a result of the [licensing]
schemes,â the Residents âwere injured by being deceived into suf-
fering substandard levels of care.â
On January 5, 2018, the named Residents filed a class action
in the Florida Circuit Court for the Thirteenth Judicial Circuit seek-
ing damages. Shortly after, Bokor removed the case to federal
court and moved to dismiss. The Residents then moved to remand
to state court. They argued that the case fell within the local con-
troversy exception to the Class Action Fairness Act (CAFA),
28 U.S.C. § 1332(d)(4). After the District Court granted the Resi-
dentsâ motion, Bokor sought discretionary review and a direct ap-
peal to our Court. We denied Bokorâs application for discretionary
review under 28 U.S.C. § 1453(c)(1), but we permitted his direct
appeal under 28 U.S.C. § 1291 to proceed.
On direct appeal, we reversed the District Courtâs remand
order. We held that the Residents failed to satisfy CAFAâs local
controversy or discretionary exceptions. Smith v. Marcus & Mil-
lichap, Inc. (Smith I), 991 F.3d 1145, 1161â63 (11th Cir. 2021). Fol-
lowing Smith I, the Residents moved to amend the complaint for
the first time. And the District Court granted the Residentsâ mo-
tion. Beyond swapping Florida Racketeer Influenced and Corrupt
Organizations (RICO) Act claims for federal RICO claims, the first
amended complaint largely mirrored the original complaint. Rele-
vant here, the first amended complaint raised two counts against
Bokor:
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6 Opinion of the Court 22-11951
⢠Count II alleged that the facilities and management compa-
nies owed a fiduciary duty to residents and breached those
duties by operating unlawfully without properly obtained
and valid licenses. It also alleged that Bokor aided and abet-
ted the breach of fiduciary duties by preparing and submit-
ting materially false license applications.
⢠Count IV alleged that Bokor agreed to engage in a pattern
of criminal activity in violation the RICO Act, 18 U.S.C.
§ 1962(d), by submitting the false license applications.
Bokor moved to dismiss the first amended complaint argu-
ing, among other things, that the District Court should abstain
from hearing the case under the Colorado River abstention doctrine.
The Residents requested three extensions to respond to Bokorâs
motion, all of which the District Court granted. Rather than re-
spond, the Residents moved for leave to file a second amended
complaint. Bokor opposed the motion.
On September 16, 2021, the Magistrate Judge agreed with
Bokor and denied the Residentsâ motion to amend. The Magistrate
Judge found that the proposed second amended complaint was fu-
tile and did not address any issues raised in Bokorâs motion to dis-
miss. The Magistrate Judge also noted that the only substantive
change in the proposed second amended complaint was a new con-
spiracy count against Bokor, similar to the count already asserted
against MMI.
The Magistrate Judge further reasoned that the Residentsâ
motion was untimely. Not only was the motion filed at the last
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22-11951 Opinion of the Court 7
minute that their response to Bokorâs motion was due, the Resi-
dents also provided no explanation why the conspiracy claim
against Bokor could not have been added to the first amended com-
plaint. Last, the Magistrate Judge concluded that allowing the
amendment would prejudice Bokor. Allowing the amendment
would require Bokor to move for dismissal a third time when the
Residents had âonly re-organized and re-numbered paragraphsâ in
the complaint. The Residents did not object to the Magistrate
Judgeâs order within fourteen days under Federal Rule of Civil Pro-
cedure 72(a) and 28 U.S.C. § 636(b)(1).
In her order denying the Residentsâ motion to amend, the
Magistrate Judge also ordered the Residents to respond to Bokorâs
motion to dismiss. Once briefing was complete, the Magistrate
Judge held a two-hour hearing and allowed post-argument submis-
sions. Finally, on January 24, 2022, the Magistrate Judge issued an
R&R recommending that the District Court grant Bokorâs motion
to dismiss. The Magistrate Judge based her recommendation on
five independent bases: (1) lack of standing, (2) failure to state a
claim, (3) the primary administrative jurisdiction doctrine,4 (4) res
4 The primary administrative jurisdiction doctrine is âa doctrine specifically
applicable to claims properly cognizable in court that contain some issue
within the special competence of an administrative agency. It requires the
court to enable a âreferralâ to the agency, staying further proceedings so as to
give the parties reasonable opportunity to seek an administrative ruling.â
Reiter v. Cooper, 507 U.S. 258, 268 (1993).
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8 Opinion of the Court 22-11951
judicata (as to Lapp), and (5) Colorado River abstention. 5
On March 7, 2022, following several extensions, the Resi-
dents objected to the R&R. The Residentsâ objections focused on
the R&Râs rejection of their void ab initio license theory. They also
objected to the R&Râs conclusion that the Residents lacked stand-
ing to recover allegedly improper claims submitted to Medicare
and Medicaid and the R&Râs conclusion that the Residents failed
to allege proximate causation for their RICO claims. Last, the Res-
idents objected to the Magistrate Judgeâs earlier denial of their mo-
tion to amend. The Residents did not object to the R&Râs other
findings, including the recommendation of Colorado River absten-
tion.
After another hearing, the District Court accepted and
adopted the R&R in full. The Residents timely appealed.
II. Legal Standards
Generally, â[w]e review a district courtâs ruling on a motion
to dismiss for lack of subject matter jurisdiction under Federal Rule
of Civil Procedure 12(b)(1) de novo.â Myrick v. Fulton County,
69 F.4th 1277, 1294 (11th Cir. 2023). âLikewise, we [generally] re-
view a district courtâs grant of a motion to dismiss for failure to
5 âColorado River abstention allows a federal court to stay a case only âwhen
federal and state proceedings involve substantially the same parties and sub-
stantially the same issues.ââ Taveras v. Bank of Am., N.A., 89 F.4th 1279, 1286
(11th Cir. 2024) (quoting Ambrosia Coal & Constr. Co. v. PagĂŠs Morales,
368 F.3d 1320, 1330 (11th Cir. 2004)). See generally Colo. River Water Conserva-
tion Dist. v. United States, 424 U.S. 800 (1976).
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22-11951 Opinion of the Court 9
state a claim under Federal Rule of Civil Procedure 12(b)(6) de
novo.â Id. âWe accept the factual allegations in the complaint as
true and construe them in the light most favorable to the plaintiff.â
Id.
That said, a party who fails to object to a magistrate judgeâs
findings or recommendations in an R&R âwaives the right to chal-
lenge on appeal the district courtâs order based on unobjected-to
factual and legal conclusions if the party was informed of the time
period for objecting and the consequences on appeal for failing to
object.â 11th Cir. R. 3-1. If necessary, we can review the unob-
jected-to findings and conclusions of the magistrate judge for âplain
error or manifest injustice.â Resol. Tr. Corp. v. Hallmark Builders,
Inc., 996 F.2d 1144, 1149 (11th Cir. 1993) (per curiam).
âAlthough we ordinarily review district court orders deny-
ing leave to amend a complaint for abuse of discretion, we review
such decisions de novo when âthe denial is based on a legal determi-
nation that amendment would be futile.ââ Taveras v. Bank of Am.,
N.A., 89 F.4th 1279, 1285 (11th Cir. 2024) (first citing Andrx Pharms.,
Inc. v. Elan Corp., 421 F.3d 1227, 1236 (11th Cir. 2005); and then
quoting Gonzalez v. City of Deerfield Beach, 549 F.3d 1331, 1332â33
(11th Cir. 2008)). But âwhere a party fails to timely challenge a
magistrate[ judgeâs] nondispositive order before the district court,
the party waive[s] his right to appeal those orders in this Court.â
Smith v. Sch. Bd. Of Orange Cnty., 487 F.3d 1361, 1365 (11th Cir.
2007) (per curiam).
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10 Opinion of the Court 22-11951
III. Discussion
The Residents challenge both the District Courtâs dismissal
of their first amended complaint and the District Courtâs denial of
their motion to amend. We first address the District Courtâs order
on Bokorâs motion to dismiss and explain why the Residents
waived any objection to the District Courtâs conclusion on Colorado
River abstention. We then explain why the Residents waived their
challenge to the District Courtâs denial of their motion to amend.
A. Motion to Dismiss
The Residents challenge the District Courtâs order granting
Bokorâs motion to dismiss mainly on standing and merits-based
grounds. Bokor argues that we should affirm the District Courtâs
order because the Residents waived their right to challenge most
of the District Courtâs reasons for dismissal. That includes the Dis-
trict Courtâs dismissal of Lappâs claims on res judicata grounds and
other class membersâ claims under Colorado River abstention and
the primary administrative jurisdiction doctrine. We agree with
Bokor. And we do not find it necessary or appropriate to reach the
legal issues the Residents raise because they waived arguments
against the other reasons in the R&R that the District Court
adopted.
To begin, because Bokor raises both standing and abstention
concerns, and because we have an independent obligation to en-
sure standing exists, we must determine whether we may decide
this appeal on Colorado River abstention grounds without confirm-
ing the existence of constitutional standing. See FW/PBS, Inc. v.
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City of Dallas, 493 U.S. 215, 231 (1990). As the Supreme Court has
explained, âa federal court has leeway âto choose among threshold
grounds for denying audience to a case on the merits.ââ Sinochem
Intâl Co. v. Malaysia Intâl Shipping Corp., 549 U.S. 422, 431 (2007)
(quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 585 (1999)).
Of course, that leeway âis not unbounded.â Fla. Wildlife Fedân Inc.
v. U.S. Army Corps of Engârs, 859 F.3d 1306, 1324 (11th Cir. 2017)
(Tjoflat, J., specially concurring). Deciding between threshold non-
merits grounds requires inquiry into a ânon-exhaustive and
case-specific set of considerations,â including âconvenience, fair-
ness, the interests served by structural principles such as federalism
and comity, and judicial economy and efficiency.â Id.; see also Sino-
chem, 549 U.S. at 432. Here, these considerations favor deciding
this appeal on Colorado River abstention grounds.6 This is so
6 The Residents also failed to object to the Magistrate Judgeâs res judicata anal-
ysis. Whether res judicata is truly a ânon-merits ground for dismissalâ and
thus a threshold issue is debatable. Compare Finneman v. Laidlaw, 57 F.4th 605,
608 & n.2 (8th Cir. 2023) (declining to address res judicata because the plaintiffs
lacked standing), with Envât Conservation Org. v. City of Dallas, 529 F.3d 519, 525
(5th Cir. 2008) (recognizing that a federal court may have leeway to dismiss
on res judicata grounds before determining standing, but concluding that the
court had no such leeway because âthe res judicata analysis [was] no less bur-
densome than the standing inquiryâ). We need not resolve that debate here
because, as discussed above, the Residents waived any argument against Colo-
rado River abstention.
Additionally, the Residents failed to object to the Magistrate Judgeâs pri-
mary administrative jurisdiction doctrine analysis. And their initial appellate
brief contains no argument on the primary administrative jurisdiction doctrine
issue. We could just as easily affirm on this basis instead. Butâgiven the
Magistrate Judgeâs finding that the Residentsâ counsel has already âbrought
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because, as described below, the Residents waived this issue both
before the District Court and on appeal.
Under Eleventh Circuit Rule 3-1,
[a] party failing to object to a magistrate judgeâs find-
ings or recommendations contained in a report and
recommendation in accordance with the provisions
of 28 U.S.C. § 636(b)(1) waives the right to challenge
on appeal the district courtâs order based on unob-
jected-to factual and legal conclusions if the party was
informed of the time period for objecting and the con-
sequences on appeal for failing to object.
Thatâs what happened here.
Nowhere in the Residentsâ objection to the R&R did they
adequately challenge the Magistrate Judgeâs Colorado River analy-
sisâdespite being warned âof all of the consequences that would
attach to [their] failure to object.â Harrigan v. Metro Dade Police
Depât Station #4, 977 F.3d 1185, 1191 (11th Cir. 2020). At best, they
make a vague argument that the R&R âmischaracteriz[ed] . . .
other lawsuits which [the Residents] may have filed in state courts
in Florida.â That objection failed to âclearly advise the [D]istrict
[C]ourt and pinpoint specific findings that the [Residents] disa-
gree[d] with.â United States v. Schultz, 565 F.3d 1353, 1360 (11th Cir.
2009) (per curiam). Because the Residents did ânot lodg[e] specific
objections to the [M]agistrate [J]udgeâs reasoning in h[er] R&R
nearly thirty [substantially similar] cases in seven counties throughout Flor-
idaâ against Bokorâwe conclude that the above considerations caution
against burdening AHCA in addition to the Florida state courts.
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aboutâ Colorado River abstention, they have waived any argument
against it. See Club Madonna Inc. v. City of Miami Beach,
42 F.4th 1231, 1259 (11th Cir. 2022).
True, we can review waived objections âfor plain error if
necessary in the interests of justice.â 11th Cir. R. 3-1. But review
for plain error ârarely applies in civil cases.â Ledford v. Peeples,
657 F.3d 1222, 1258 (11th Cir. 2011). âEven when it does, we re-
quire a greater showing of error than in criminal appeals.â Evans v.
Ga. Regâl Hosp., 850 F.3d 1248, 1257 (11th Cir. 2017), abrogated on
other grounds by Bostock v. Clayton County, 590 U.S. 644 (2020). That
ârare exception doesnât apply here because [the Residents] didnât
argue in [their] initial brief that reviewing [their] waived objections
was necessary and in the interests of justice.â Smith v. Dewberry,
No. 21-10607, 2022 WL 1948947, at *2 (11th Cir. June 6, 2022)
(Luck, J., concurring in part and dissenting in part).
Whatâs more, the Residentsâ initial appellate brief contains
no discussion about Colorado River abstention. At oral argument,
the Residentsâ counsel all but admitted this and tried to explain that
this argument was âsubsumedâ in the initial brief. But we require
parties to raise arguments plainly and prominently. See Sapuppo v.
Allstate Floridian Ins. Co., 739 F.3d 678, 681 (11th Cir. 2014). And
the Residentsâ attempt to resurrect any argument against Colorado
River abstention in their reply brief comes too late. See id. at 683.
In sum, there is no sign that the interests of justice would be
served by conducting a plain-error review of the dismissal. We
therefore decline to review the District Courtâs decision to dismiss
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14 Opinion of the Court 22-11951
the Residentsâ first amended complaint on Colorado River absten-
tion grounds.
B. Motion to Amend
The Residents also argue that the District Courtâs adoption
of the Magistrate Judgeâs order denying their motion to amend was
âhighly prejudicial and was improper as a matter of law.â They
contend that the second amended complaint was the first pleading
designed for federal court requirements because the case was orig-
inally filed in state court. In response, Bokor explains that the Res-
identsâ objection was untimely and that the proposed second
amended complaint was futile as it made only inconsequential
changes. We agree with Bokor that the Residentsâ objection came
too late.
Under Federal Rule of Civil Procedure 72(a), â[a] party may
serve and file objections to the order within 14 days after being
served with a copy. A party may not assign as error a defect in the
order not timely objected to.â We have read Rule 72 to mean that
âwhere a party fails to timely challenge a magistrateâs nondisposi-
tive order before the district court, the party waived his right to
appeal those orders in this Court.â Smith, 487 F.3d at 1365.
The Magistrate Judgeâs September 16, 2021, order denying
the Residentsâ motion to amend was a nondispositive pretrial rul-
ing. Under Rule 72(a), the Residents had to object by September
30, 2021. Butâas the Residentsâ counsel conceded at oral argu-
mentâthey did not. Instead, they waited 173 days and objected at
the tail-end of their objection to the Magistrate Judgeâs R&R on
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22-11951 Opinion of the Court 15
Bokorâs motion to dismiss. Because the Residents did not timely
object to the Magistrate Judgeâs order, they have waived this issue.
IV. Conclusion
As to the District Courtâs adoption of the R&R and dismissal
of the Residentsâ complaint, we hold that the Residents waived any
objections to the Magistrate Judgeâs reasoning in her R&R about
Colorado River abstention. We therefore VACATE the judgment
of the District Court and REMAND with instructions to stay the
Residentsâ claims under the Colorado River abstention doctrine.
As to the District Courtâs denial of the Residentsâ motion to
amend, we hold that the Residents failed to timely object to the
Magistrate Judgeâs order. We therefore AFFIRM on that basis.