Turk v. Morris, Manning & Martin, LLP

661 F.Supp.3d 1276

William N. TURK, et al., Plaintiffs, v. MORRIS, MANNING & MARTIN, LLP, et al., Defendants.

CIVIL ACTION NO. 1:20-cv-2815-AT

United States District Court, N.D. Georgia, Atlanta Division

Signed February 13, 2023

David R. Deary, Pro Hac Vice, Jeven R. Sloan, John William McKenzie, III, Pro Hac Vice, William Ralph Canada, Jr., Pro Hac Vice, Tyler McLean Simpson, Pro Hac Vice, Wilson Edward Wray, Jr., Pro Hac Vice, Loewinsohn Deary Simon Ray LLP, Dallas, TX, Donna Lee, Pro Hac Vice, Loewinsohn Flegle Deary Simon LLP, Dallas, TX, Edward Jon Rappaport, Saylor Law Firm LLP, Atlanta, GA, for Plaintiff William N. Turk.

David R. Deary, Pro Hac Vice, Jeven R. Sloan, William Ralph Canada, Jr., Pro Hac Vice, John William McKenzie, III, Tyler McLean Simpson, Wilson Edward Wray, Jr., Pro Hac Vice, Loewinsohn Deary Simon Ray LLP, Dallas, TX, Donna Lee, Loewinsohn Flegle Deary Simon LLP, Dallas, TX, Edward Jon Rappaport, Saylor Law Firm LLP, Atlanta, GA, for Plaintiffs Norman Radow, Carlita B. Turk.

Jennifer Peterson, John Earl Floyd, John H. Rains, IV, Bondurant Mixson & Elmore LLP, Atlanta, GA, for Defendants Morris, Manning & Martin, LLP, Timothy Pollock.

Brent David Hitson, Burr & Forman LLP, Birmingham, AL, Tala Amirfazli, Burr & Forman, LLP, Atlanta, GA, for Defendants Large & Gilbert, Inc., Conservation Pays, LLC.

Samuel Fenn Little, Jr., S. Fenn Little, Jr. P.C., Atlanta, GA, for Defendant Joseph C. Skalski.

Anthony Joseph Rollins, Gregory Keith Smith, Colin Dang DeLaney, Jason S. Bell, Smith, Gambrell & Russell, LLP, Atlanta, GA, for Defendants Atlantic Coast Conservancy, Inc., Atlantic Coast Conservatory Properties, LLC, Environmental Research and Mapping Facility, LLC, Robert D. Keller.

Dana Kristin Maine, Freeman Mathis & Gary, Atlanta, GA, Travis Martin Cashbaugh, Seyfarth Shaw LLP, Atlanta, GA, for Defendant Bennett Thrasher, LLC.

Brandon Parrish, David M. Pernini, Wargo, French & Singer LLP, Atlanta, GA, Ashley Escoe, Alston & Bird LLP, Atlanta, GA, Vernon M. Strickland, Strickland Debrow LLP, Newnan, GA, for Defendants Ornstein-Schuler Investments LLC, Ornstein-Schuler Capital Partners LLC.

Carl Edward Volz, Pro Hac Vice, Pontem Law LLC, Chicago, IL, Jill Warner, Michael E. Brooks, Brooks & Warner, LLC, Atlanta, GA, for Defendants Clay Weibel, Weibel & Associates, Inc.

Kevin James McDonough, Lauren C. Giles, Miles Hansford & Tallant, LLC, Cumming, GA, for Defendants Lucus Mason, Inc., Lucus Von Esh.

Frank Agostino, Pro Hac Vice, Jeffrey Dirmann, Pro Hac Vice, Agostino & Associates PC, Hackensack, NJ, Elizabeth M. Newton, Warren R. Hall, Jr., Hall, Arbery, Gilligan, Roberts & Shanlever, LLP, Atlanta, GA, for Defendants Blethen Mine Consultants, LLC, Marvin Blethen.

D. Michael Williams, Donald Brown, Hall Booth Smith, P.C., Atlanta, GA, William Dowdy White, Dentons U.S. LLP, Atlanta, GA, for Defendants Donald R. Sklar, Partnership Tax Solutions, Inc.

Christine L. Mast, Joseph Hall Wieseman, Hawkins Parnell & Young, LLP, Atlanta, GA, for Defendants Aaron Kowan, The Private Client Law Group.

ORDER

AMY TOTENBERG, UNITED STATES DISTRICT JUDGE

Having finally resolved Defendants' 13 Motions to Dismiss in this case, the Court once again faces a hotly contested, months long dispute over which of Plaintiffs' claims should proceed past the pleading stage.

As the Court explained in its 92-page Motion to Dismiss Order from earlier this year (MTD Order, Doc. 290),¹ Plaintiffs in this case are investors who claim they were fraudulently induced into purchasing interests in various LLCs for the purpose of engaging in Syndicated Conservation Easement transactions. Plaintiffs argue that Defendants here — a collection of various lawyers, accountants, consultants, and appraisers — fraudulently represented to Plaintiffs that the transactions were a legitimate tax savings strategy when in fact the transactions were a scam. As a consequence, Plaintiffs claimed tax deductions that they now allege were not legally supportable. And they claim that as a result of Defendants' conduct they have been subjected to intense scrutiny from the IRS and the prospect of personal tax liability.

Much like the plaintiffs in a parallel case recently decided by this Court, Lechter v. Aprio, LLP, 565 F. Supp. 3d 1279 (N.D. Ga. 2021), Plaintiffs here raised both state and federal RICO claims and state common law claims based on Defendants' alleged misrepresentations and omissions in connection with Syndicated Conservation Easement transactions, which led to Plaintiffs claiming deductions on their personal tax returns. At the outset of the MTD Order, the Court described this case as a "fraternal twin case" to Lechter, noting that the cases were "similar in many ways, but by no means identical." (MTD Order at 2.) Though the Court recognized that the plaintiffs in the two cases presented a similar story, the Court explained, "this story involves a different set of facts, and in some respects the Court reaches different conclusions of law as well." (Id.) Most saliently for present purposes, though the Court declined to hold that the plaintiffs' claims were time barred in Lechter, in this case the Court found that Plaintiffs' common law and Federal RICO claims were barred by the applicable statutes of limitations.

Plaintiffs now seek to revisit that component of the Court's decision in this case, and, alternatively, they request an opportunity to cure the deficiencies identified by the Court through amending their Complaint. Currently pending before the Court are Plaintiffs' Motion for Reconsideration [Doc. 293], Plaintiffs' Motion for Leave to File Third Amended Complaint [Doc. 294], and Defendants' Motion for Leave to File Supplemental Brief [Doc. 337].

I. Background

Plaintiffs filed their original Complaint in this matter on July 3, 2020. (Compl., Doc. 1.) The Complaint was 165 pages long and included 364 paragraphs of allegations. Approximately two months later, the Court set a briefing schedule for Defendants' Motions to Dismiss. (Doc. 111.) Under the Court's briefing schedule, Defendants' Motions were due by November 9, 2020, Plaintiffs' Responses were due by December 22, 2020, and Defendants' Replies were due by January 18, 2021. (Id. at 1-2.) The 31 Defendants who were then included in the case proceeded to file 14 separate Motions to Dismiss. (See Docs. 139, 157, 160, 161, 162, 164, 170, 171, 172, 173, 174, 175, 178, 186.)

After Defendants filed their Motions to Dismiss, the Court held a status conference on December 2, 2020 in which it granted Plaintiffs leave to file an Amended Complaint, thereby mooting Defendants' 14 Motions to Dismiss. (See Minute Entry, Doc. 190.) Plaintiffs filed their First Amended Complaint on January 8, 2021. (First Am. Compl., Doc. 200.) The First Amended Complaint was 266 pages and 472 paragraphs — a significant increase from the original Complaint. The following month, the Court set a briefing schedule for Defendants' next round of Motions to Dismiss. (See Doc. 212.) Under the Court's Scheduling Order, Defendants were directed to file one consolidated Motion to Dismiss not to exceed 50 pages, along with an executive summary not to exceed 3 pages; each set of Defendants was also permitted to file an individual Motion not to exceed 15 pages. (Id. at 1-2.) Plaintiffs were permitted to file one 50-page consolidated Response, along with an executive summary not to exceed 3 pages, and additional 15-page Responses to any of Defendants' individual Motions. (Id. at 2-3.) For their Replies, Defendants were permitted to file a consolidated brief not to exceed 20 pages and individual briefs of no more than 8 pages. (Id. at 3.)

On February 19, 2021, Plaintiffs filed an unopposed Motion for Leave to File a Second Amended Complaint to correct a factual error that had been identified by the OSI Defendants in a sentence of the First Amended Complaint. (Doc. 216.) The Court granted Plaintiffs' request for leave, and Plaintiffs filed their Second Amended Complaint ("SAC") on February 24, 2021. (SAC, Doc. 218.) Like the First Amended Complaint, the SAC spanned 266 pages and 472 paragraphs. Defendants then proceeded to file their Motions to Dismiss, which included one consolidated Motion and twelve individual Motions. (See Docs. 223, 229, 231, 233, 234, 236, 237, 238, 240, 242, 244, 248, 249.) The parties completed the briefing in June 2021, just under three months after Defendants filed their Joint Motion to Dismiss. (See Docs. 223, 279.)

On March 24, 2022, the Court issued an Order resolving Defendants' Motions to Dismiss. (See MTD Order.)² In the MTD Order, the Court dismissed 10 of the 12 Counts³ in the SAC and eliminated 9 of the 21 Defendants from the case.⁴ As a result of the MTD Order, only two Counts remain against the following sets of Defendants:

Count III

Georgia RICO against the OSI Defendants, the Weibel Defendants, and the Blethen Defendants

Count IV

Conspiracy to violate Georgia RICO against the MMM Defendants, the OSI Defendants, the Weibel Defendants, the ACC Defendants, the Blethen Defendants, and Bennett Thrasher

(MTD Order at 91.)

The Court dismissed the majority of Plaintiffs' claims - namely, Plaintiffs' Federal RICO claims and their state common law claims - on the ground that they were barred by the applicable statutes of limitations. The Court addressed the statutes of limitations in detail in the MTD Order. (See id. at 37-48.) As the Court explained, the relevant statute of limitations was five years for Plaintiffs' Georgia RICO claims and no more than four years for Plaintiffs' Federal RICO claims and each of their common law claims. (Id. at 37). Significantly, the named Plaintiffs had all purchased their interests in the LLCs at issue between 2013 and 2015, but they did not file suit until 2020. (Id.). Therefore, if the statute of limitations for each claim began to run at the time Plaintiffs had purchased their shares, as Defendants had argued in their Motions to Dismiss, then Plaintiffs' Federal RICO and...