SECURED CAPITAL GROUP LLC v. PENSACOLA HERITAGE INVESTMENTS LLC et al

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF FLORIDA
PENSACOLA DIVISION
SECURED CAPITAL GROUP, LLC,
Plaintiff,
v. 	Case No. 3:25cv610-MCR-HTC
PENSACOLA HERITAGE
INVESTMENTS, LLC, et al.,
Defendants.
_______________________________/
REPORT AND RECOMMENDATION
This matter is before the Court on: (1) Plaintiff Secured Capital Group LLC’s
(“Secured Capital”) Motion to Strike Answer and Grant Default Judgment for
Perjury and Discovery Abuse, and in the Alternative, Motion for Summary Judgment
(Docs. 46, 47, & 48); and (2) Defendants Pensacola Heritage Investments LLC
(“PHI”), Pensacola Heritage Title LLC (“PHT”), and John McCorvey’s Motion for
Leave to File an Amended Answer (Docs. 54, 55). 	After reviewing the parties’
written submissions1 and the relevant law, and with the benefit of oral argument and
an evidentiary hearing held on November 20, 2025, the undersigned finds the
1 Defendants responded in opposition to the motion to strike and for default judgment (Docs. 50,
51, & 52) and Secured Capital responded in opposition to Defendants’ motion (Doc. 57) and filed
a reply in support of its motion (Doc. 58).
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severity of Defendants’ litigation misconduct warrants striking their answer, denying
leave to amend, and entering a default judgment in favor of Secured Capital.
I. 	Background and Procedural History
This action arises out of a breach of two escrow agreements Secured Capital
entered into with PHI, through its manager McCorvey, and allegations of fraud
related to those agreements. 	See Doc. 1 at 22-35. 	Under the terms of the Escrow
Agreements, PHI agreed to serve as the “Escrow Agent” and hold in escrow a total
of $3 million (the “Escrow Funds”) for Secured Capital. The purpose of the Escrow
Funds was to temporarily provide two companies—Orlando All Sports Dome LLC
(“Dome”) and The Tormenta Group, LLC (“Tormenta”)—with funding while the
companies tried to obtain permanent financing from Knight’s Lending LLC to
develop sports facilities. 	In addition, Dome and Tormenta were each required to
deposit $150,000 with PHI.
Additionally, PHI could not disburse or distribute the Escrow Funds “other
than as dictated in [the] agreement” or as authorized by Secured Capital. PHI had
an obligation to hold the Escrow Funds in escrow and return the Escrow Funds (less
any authorized disbursements) to Secured Capital at the expiration of the “Escrow
Period.” After the Escrow Period expired in February 2025, Secured Capital made
a demand for the Escrow Funds. Despite certifying in January 2025 that Defendants
were holding $1,500,000 in escrow under the Tormenta Escrow Agreement (Doc. 1
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at 38), Defendants failed to return any of the Escrow Funds under that agreement.
And 	because 	Defendants 	returned 	only 	$661,500 	under 	the 	Dome 	Escrow
Agreement, they failed to return a total of $2,488,500 of the Escrow Funds to
Secured Capital. Thus, this action ensued.
On May 9, 2025, Secured Capital filed a 10-count complaint against the
Defendants alleging, among others, claims for breach of contract, negligence, breach
of fiduciary duty, and conversion, and seeking monetary and injunctive relief. Doc.
1. On June 11, 2025, Defendants filed a joint answer which included two affirmative
defenses. First, Defendants sought a “limitation of liability” on the basis that they
moved the Escrow Funds to facilitate other projects at the “behest” of Dome,
Tormenta, and an individual named Franklin Ansah, in “good faith.” Doc. 21 at 8-
9. 	Second, 	Defendants 	claimed 	that 	Dome, 	Tormenta, 	and 	Ansah 	were
indispensable parties to the action. Id. at 9.
Defendants also filed a response in opposition to a motion for preliminary
injunctive relief. Doc. 22. After reviewing the Defendants’ response to the motion,
the Court ordered Defendants to provide additional information. Doc. 24. Namely,
the Court ordered Defendants to submit an affidavit advising the Court whether
Defendants still possessed or controlled any of the Escrow Funds, and when any
portions were dispersed or transferred. Id. at 4.
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On June 23, 2025, Defendants submitted an affidavit from McCorvey.2 Doc.
27-1 (the “McCorvey Affidavit”). In that affidavit, McCorvey stated under oath, as
follows:
On September 11, 2024, acting in my capacity as escrow agent and
pursuant to instructions received from the principals involved in the
transactions 	at 	issue—Orlando 	All 	Sports 	Dome, 	LLC 	and 	The
Tormenta Group, LLC (collectively, the “Principals”)—as well as
Franklin Ansah (whom I understood to be a representative or agent of
the Principals), I transferred the funds in PH Investments’ escrow
accounts to an account at Stifel (a brokerage and investment banking
firm) as requested by Franklin Ansah.
As of today, and as a result of the transfers described above, the escrow
accounts at issue have the following balances:
The First Bank: $85.21
PNC Bank: $15,284.95.
Doc. 27-1 at 3-4.
In reliance on the record before it, including the McCorvey Affidavit, the
Court declined to freeze all of Defendants’ assets, but did enjoin Defendants from
transferring or otherwise disbursing the remaining Escrow Funds. 	Doc. 30. 	The
Court also found the record provided a basis for accelerating discovery and requiring
a full accounting from Defendants as to the transfer and whereabouts of the Escrow
Funds. Id. at 11. Secured Capital is now before the Court seeking a default judgment
2 McCorvey is a member of PHI and PHT. Doc. 27-1 at 2.
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because it contends Defendants lied in the affidavit, fabricated a false defense, and
lied in their discovery responses.
II. 	Secured Capital is entitled to a default judgment as a sanction.
Throughout this litigation, Defendants represented to this Court and Secured
Capital 	in 	pleadings, 	a 	sworn 	document, 	and 	discovery 	responses 	that 	they
transferred the Escrow Funds, in good faith, to an account at Stifel at the direction
of Dome, Tormenta, and Ansah. 	Those representations were undisputedly false.
Defendants have abused the litigation process and committed fraud on the Court;
their conduct warrants entry of a default judgment and no lesser sanction shall
suffice.
“A court may impose sanctions for litigation misconduct under its inherent
power.” Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., 561 F.3d 1298, 1306
(11th Cir. 2009) (citations omitted). “The court’s inherent power derives from the
court’s need to manage its own affairs so as to achieve the orderly and expeditious
disposition of cases,” but it “must be exercised with restraint and discretion.” 	Id.
(cleaned up and citations omitted). “The key to unlocking a court’s inherent power
is a finding of bad faith.” 	Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir. 1998).
A party may demonstrate bad faith “by delaying or disrupting the litigation or
hampering enforcement of a court order.” Id. (quoting Primus Auto. Fin. Servs., Inc.
v. Batarse, 115 F.3d 644, 649 (9th Cir. 1997)).
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A. 	The Defendants acted in bad faith.
There is little doubt in the undersigned’s mind that Defendants acted in bad
faith. 	They knowingly and intentionally fabricated a defense to the allegations
against them and derailed this case through a series of lies to Secured Capital and
the Court which spanned nearly four months. They did so to delay the litigation and
to avoid a preliminary injunction. Moreover, it was only when the “gig was up” that
they finally came clean.
First, Defendants brazenly lied to the Court under oath in the McCorvey
Affidavit. As stated above, McCorvey stated he transferred the Escrow Funds to an
account at Stifel at the request of Dome, Tormenta, and Ansah. 	However, in his
October 1, 2025, deposition, McCorvey admitted those representations were false.
The Escrow Funds were not transferred to the Stifel account or transferred based on
instructions from Dome, Tormenta, or Ansah. 	McCorvey Depo., 86:13 – 87:6,
88:13-24, 90:1-9, 93:19-21, 129:14 – 130:8, 132:17 – 134:9, 136:23 – 137:1. And
McCorvey knew at the time he submitted the affidavit and signed it under oath those
representations were false.3
3 At the evidentiary hearing, Defendants’ counsel conceded the misstatements in the affidavit were
intentional. Nevertheless, when McCorvey testified, he suggested he told his former counsel that
funds related to the Dome and Tormenta projects were at Stifel and the false statement in the
affidavit about transferring the Escrow Funds to Stifel was the result of a misunderstanding
between him and counsel. However, that explanation is not credible. Regardless of any confusion
surrounding the funding for the Dome and Tormenta projects, the false statement in the affidavit
clearly indicated McCorvey had transferred the Escrow Funds to Stifel at the request of others and
McCorvey knew he had never made such a transfer. Moreover, McCorvey admitted he read the
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Thus, McCorvey fabricated evidence and committed perjury, conduct which
Defendants concede amounts to fraud on the Court. 	See Johnson v. Law Offs. of
Marshall C. Watson, PA, 348 F. App’x 447, 448 (11th Cir. 2009) (“To prove a fraud
on the court, the plaintiff must show, by clear and convincing evidence, an
unconscionable plan designed to improperly influence the court in its decision.”)
(citation omitted); Bassett v. Wal-Mart Stores E., LP, 2019 WL 4691824, at *1-2
(S.D. Fla. July 10, 2019) (noting that to constitute fraud on the court the party’s
actions must be directed to the court). Because Defendants perpetrated a fraud on
the court, they acted in bad faith and severe sanctions are warranted. 	See Qantum
Commc’ns Corp. v. Star Broad., Inc., 473 F. Supp. 2d 1249, 1269 (S.D. Fla. 2007)
(“the inherent powers doctrine is most often invoked where a party commits perjury
or destroys or doctors evidence”); Allapattah Servs., Inc. v. Exxon Corp., 372 F.
Supp. 2d 1344, 1373 (S.D. Fla. 2005) (“Bad faith exists when the court finds that a
fraud has been practiced upon it[.]”) (citation omitted); Vargas v. Peltz, 901 F. Supp.
1572, 1579 (S.D. Fla. 1995) (“Plaintiff’s intentional misconduct in presenting false
evidence in support of her claims compels dismissal of this case.”).
affidavit before it was submitted and the false Stifel story was repeated in so many filings and
discovery responses the only possible explanation is that McCorvey intentionally promoted the
story to excuse his culpability for transferring the Escrow Funds without Secured Capital’s
authorization.
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McCorvey’s affidavit was not the only instance where Defendants presented
the false Stifel story to the Court. Indeed, Defendants’ mendacity began with their
first substantive filings in this case. 	As discussed above, Defendants’ answer and
their response to the motion for injunctive relief contained versions of the Stifel
story. By raising affirmative defenses that had no factual basis, Defendants acted in
bad faith. 	See Allapattah, 372 F. Supp. 2d at 1373 (“Bad faith exists … where a
party … knowingly or recklessly raises a frivolous argument[.]”) (citation omitted).
In addition, Defendants’ misconduct permeated the discovery process. Their
responses to Secured Capital’s interrogatories and requests for admission repeatedly
indicated the Escrow Funds had been transferred to an account with Stifel. Doc. 48
at 193, 195, 198, 201-03; Doc. 48 at 210, RFA Nos. 9 & 10. Their responses also
contained false information regarding the amount of funds that were in the First Bank
account in January 2025. 	Compare Doc. 48 at 210-11, RFA No. 12 (representing
that when McCorvey sent the certification letters on January 10, 2025, “the First
Bank Escrow Account did, in fact, have more than $3 million of client funds being
held in escrow”) with McCorvey Depo., 110:21 – 111:8, 112:6 – 114:12 (admitting
the First Bank account did not contain $3 million on January 10, 2025).
Defendants also frustrated Secured Capital’s discovery efforts by: (1) giving
misleading responses regarding what records they could access; and (2) withholding
documents that were responsive to requests for production. For example, Secured
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Capital asked Defendants to “[i]dentify all receipts or other confirmations showing
deposits, withdrawals, or transfers of all or any part of the Escrow Funds” and to
produce financial records related to the transfer of the funds. Doc. 48 at 197, 207.
In response, Defendants suggested they could not identify or produce responsive
financial records because their Synovus Bank escrow account was closed, and
Renasant Bank’s acquisition of First Bank prevented them from accessing the First
Bank escrow account. Id. However, McCorvey later admitted he had not produced
all responsive documents, including handwritten notes he said he kept regarding his
financial dealings. 	See McCorvey Depo., 12:12-15 (testifying he did not turn over
to his former counsel the bank statements related to the accounts where the Escrow
Funds were deposited); 73:8 – 74:6 (testifying he keeps a record of how he uses
escrow funds through handwritten notes and notes on his computer, but he did not
turn those notes over to his former counsel); 137:12-18 (testifying he had access to
bank statements but did not have an explanation for why he did not produce those to
Secured Capital).
Defendants’ 	false 	discovery 	responses 	and 	failure 	to 	produce 	relevant
documents prejudiced Secured Capital and delayed resolution of this case. Secured
Capital was forced to obtain records from Stifel and depose Ansah to investigate the
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claim 	that 	Defendants 	had 	transferred 	the 	Escrow 	Funds 	to 	Stifel.4 Thus,
Defendants’ abuse of the discovery process also supports the determination that they
acted in bad faith. 	See Eagle Hosp. Physicians, 561 F.3d at 1306 (“A party
demonstrates bad faith by, inter alia, delaying or disrupting the litigation[.]”)
(citation omitted).
Based on the foregoing, clear and convincing evidence supports a finding that
Defendants acted in bad faith during this litigation. 	They committed perjury in
furtherance of fraud on the court, fabricated a defense, and abused the discovery
process. Thus, the Court should use its inherent power to impose sanctions on the
Defendants.
B. 	The appropriate sanction for Defendants’ bad faith conduct is a
default judgment.
Having determined that sanctions are warranted, the Court must decide on an
appropriate sanction. 	Secured Capital argues Defendants’ misconduct is severe
enough to justify striking their answer and entering a default judgment. Defendants
seek a lesser sanction, such as a fine or an award of attorney’s fees.
4 According to Secured Capital’s counsel, once Secured Capital obtained the Stifel records, it
notified Defendants’ counsel at that time, Charlie Wiggins and Reed Taylor, that the information
in the affidavit contradicted the records Secured Capital had obtained. 	Despite having that
information, former counsel failed to alert the Court to the falsity of the affidavit. According to
former counsel, by that time, they had already notified Defendants of their intent to withdraw and
were about to file the motion to withdraw; thus, they did not believe they needed to take any further
action. Counsel’s obligation to the Court and to the Defendants, however, did not end until their
motion to withdraw was granted. Thus, counsel should have notified the Court of the issues with
the affidavit.
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The undersigned agrees with Secured Capital; a sanction other than a default
judgment is insufficient. 	First, Defendants’ wrongdoing did not consist of an
isolated incident. 	They promoted the false Stifel story over several months and
during almost the entire discovery period. 	They promoted it through multiple
avenues, including their answer (Doc. 21), their response to the motion for
emergency injunctive relief (Doc. 22), McCorvey’s affidavit (Doc. 27), and their
discovery responses (Doc. 48 at 192-214). 	And they failed to produce relevant
documents to Secured Capital that would have shown that story was false. Because
Defendants knew from the outset that they had never transferred money to an
account at Stifel, they intentionally engaged in a scheme to derail these proceedings.
Furthermore, 	shortly 	before 	McCorvey’s 	deposition, 	Secured 	Capital
provided him with the records it obtained from Stifel, which showed no money had
been transferred from PHI to Stifel. 	Thus, McCorvey’s admission that the Stifel
story was false in his deposition was not driven by a voluntary decision to come
clean, but instead by the realization that the game was up. Given the seriousness of
Defendants’ pattern of misconduct, no sanction other than the imposition of a default
judgment is sufficient.5 Cf. Vargas, 901 F. Supp. at 1579 (noting dismissal is
5 The steps Defendants have taken to ameliorate the effects of their misconduct have also been
lackluster. Defendants waited until October 27—after discovery ended and after Secured Capital
filed its October 15 motion for sanctions—to provide amended discovery responses. 	And
Defendants did not seek to withdraw the false affidavit or otherwise notify the Court about it
following the October 1 deposition.
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appropriate when “a party has sentiently set in motion some unconscionable scheme
calculated to interfere with the judicial system’s ability impartially to adjudicate a
matter by improperly influencing the trier or unfairly hampering the presentation of
the opposing party’s claim or defense”) (quoting Aoude v. Mobil Oil Corp., 892 F.2d
1115, 1118 (1st Cir. 1989)).
Second, McCorvey’s testimony at his deposition and the evidentiary hearing
do not indicate Defendants would litigate this case in good faith if the Court were to
impose a sanction other than a default judgment. See Malautea v. Suzuki Motor Co.,
Ltd., 987 F.2d 1536, 1542 (11th Cir. 1993) (“[T]he severe sanction of a dismissal or
default judgment is appropriate only as a last resort, when less drastic sanctions
would not ensure compliance with the court’s orders.”). In both settings, McCorvey
gave evasive and incredible answers to straightforward questions. For example, in
response to a question at the November 20 hearing about whether he knew the
affidavit containing the Stifel story was false at the time he signed it, McCorvey
stated, “I must have, but this is a misrepresentation of what I meant,” despite
admitting just a few seconds earlier that he had read the affidavit when he signed it.
Similarly, McCorvey testified he did not think he told his former attorneys he did
not have any bank records related to transactions involving the Escrow Funds, then
gave a series of nonresponsive answers to follow-up questions. 	The undersigned
found McCorvey’s responses, many of which contradicted his own testimony as well
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as the statements made by his current and former counsel, to be contrived and not
credible.
Moreover, 	in 	response 	to 	a 	question 	from 	Secured 	Capital’s 	counsel,
McCorvey testified unequivocally that no funds were transferred to PHT. However,
records from PNC Bank show that $87,442.86 was transferred from PHI to PHT in
December 2024. Doc. 47 at 42. McCorvey also testified at both his deposition and
the hearing that he had received “very little” compensation from PHI. 	But the
“accounting” Defendants produced in response to the motion for sanctions classifies
over $600,000 as being “payments to, or for, John McCorvey.” Doc. 52-1. When
questioned about this discrepancy, McCorvey suggested the accounting, which was
prepared by his current counsel, may be incorrect. However, bank records confirm
money from PHI’s escrow accounts was withdrawn by McCorvey or transferred to
“personal” accounts. See e.g., Doc. 47 at 42 (showing that $31,000 was transferred
in December 2024 from PHI’s PNC Bank account to another PNC Bank account
McCorvey used for personal expenditures and a bar/restaurant he operated); Doc.
52-2 (showing that between June 2024 and September 2024, $165,000 was
transferred from PHI’s Synovus account to McCorvey’s “personal use mostly”
Synovus account); Doc. 52-3 (showing that between August 2024 and April 2025,
$106,300 was transferred from PHI’s First Bank account to another account “used
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for rent/utilities and to pay John [McCorvey]”). 	McCorvey’s testimony to the
contrary is not credible.
Despite knowing Defendants were potentially facing sanctions, McCorvey
continued to exhibit a lack of candor with the Court and continued to try to spin the
narrative in his favor. 	The undersigned finds no lesser sanction than a default
judgment will prevent Defendants from continuing to mislead Secured Capital and
the Court. See Chemtall, Inc. v. Citi-Chem, Inc., 992 F. Supp. 1390, 1409 (S.D. Ga.
1998) (“‘Ultimate sanction’ cases ultimately rest upon the conviction that no lesser
sanction will prevent the offending litigant from continuing to lie or distort the truth
so pervasively that it ‘prevent[s] the opposing party from fairly presenting his case
or defense.’”) (quoting Nichols v. Klein Tools, Inc., 949 F.2d 1047, 1048 (8th Cir.
1991)).
Third, McCorvey has not complied with the preliminary injunction the Court
imposed on July 9, 2025. 	That order: (1) noted McCorvey’s affidavit “lists the
current escrow account balances, as of June 23, 2025, as $85.21 in The First Bank
account and $15,284.95 in the PNC Bank account” and (2) stated “Defendants are
hereby enjoined from transferring, appropriating, or disbursing the Escrow Funds
that remain within their control and possession, except at the sole discretion and
instruction of Plaintiff Secured Capital[.]” Doc. 30. However, McCorvey testified
at his deposition that PHI only had about $1,000 as of October 1. McCorvey Depo.,
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30:18-20. And at the hearing, he testified that the PNC Bank account only had about
$5,000 in it as of November 20.
Thus, Defendants have willfully disregarded court orders. 	That conduct
supports imposition of a default judgment rather than lesser sanctions. 	See Adolph
Coors Co. v. Movement Against Racism & the Klan, 777 F.2d 1538, 1542-43 (11th
Cir. 1985) (noting willful or bad faith disregard of court orders justifies entry of a
default judgment).
Finally, although McCorvey attempted to place some of the blame on his
former and current counsel for “misunderstanding,” the undersigned finds that it was
McCorvey 	who 	led 	his 	counsel 	astray 	and 	counsel, 	unfortunately, 	assumed
McCorvey would tell them the truth.6 See Hornady v. Outokumpu Stainless USA,
LLC, 118 F.4th 1367, 1378 (11th Cir. 2024) (“The harsh sanction of default
judgment is appropriate here where [a party] itself is culpable.”); cf. Betty K
Agencies, Ltd. v. M/V MONADA, 432 F.3d 1333, 1338 (11th Cir. 2005) (“[T]he harsh
sanction of dismissal with prejudice is thought to be more appropriate in a case
where a party, as distinct from counsel, is culpable.”) (citation omitted).
6 The January 2025 Certification Letters (Doc. 1 at 38; Doc. 29-3 at 2) should have led counsel to
question McCorvey’s claim about transferring the escrow funds to Stifel in September 2024.
Counsel should have performed a more thorough investigation into the Stifel story before
presenting it to the Court and Secured Capital or, at the very least, before withdrawing their
representation. See Bernal v. All Am. Inv. Realty, Inc., 479 F. Supp. 2d 1291, 1326-27 (S.D. Fla.
2007) (noting “Rule 11 imposes an affirmative duty on attorneys to conduct a reasonable inquiry
into the validity of a pleading before it is signed” and “[b]lind reliance on the client is seldom a
sufficient inquiry”) (citations omitted).
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Because McCorvey lied under oath about a central issue in the case, withheld
discovery, and fabricated a defense, the undersigned finds default judgment is the
only appropriate sanction. See Qantum Commc’ns Corp. v. Star Broad., Inc, 290 F.
App’x 324, 324-25 (11th Cir. 2008) (“The factual findings by the district court that
Hale lied under oath about a central issue in the case, withheld discovery about that
issue in bad faith, and filed a bankruptcy petition in a bad-faith effort to delay the
proceedings were not clearly erroneous and amply support the sanction.”).
III. 	The allegations in the complaint are sufficient to support a default
judgment.7
Before entering a default judgment, the Court must confirm the allegations in
the complaint state a viable claim for relief.8 See Eagle Hosp. Physicians, 561 F.3d
at 1307 (reviewing whether the well-pled factual allegations stated a claim when the
district court ordered a default judgment pursuant to its inherent power to impose
sanctions). All well-pleaded allegations of fact are deemed admitted upon entry of
default. 	See Nishimatsu Constr. Co., Ltd. v. Houston Nat’l Bank, 515 F.2d 1200,
1206 (5th Cir. 1975); Hartsfield v. Express Shipping & Towing, Inc., 2008 WL
508396, at *2 (M.D. Fla. Feb. 21, 2008) (“A defendant whose answer is stricken as
a sanction … admits all well-pleaded allegations of the complaint as to liability for
7 Because the undersigned finds the allegations are sufficient to support a default judgment on all
claims, the undersigned did not address the alternative request for summary judgment.
8 A court must also ensure it has jurisdiction before it enters a default judgment. 	The Court
previously determined diversity jurisdiction exists. Doc. 30 at 1 n.1.
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purposes of default judgment.”). 	“The requisite factual showing for a default
judgment is similar to the factual showing necessary to survive a motion to dismiss
for failure to state a claim.” Graveling v. Castle Mortg. Co., 631 F. App’x 690, 698
(11th Cir. 2015) (citation omitted). 	“Conceptually, then, a motion for default
judgment is like a reverse motion to dismiss for failure to state a claim.” Surtain v.
Hamlin Terrace Found., 789 F.3d 1239, 1245 (11th Cir. 2015). As discussed further
below, the undersigned finds the allegations in the complaint are sufficient to state a
claim for relief on all causes of action.
A. 	Breach of Contract
In Count 1, Secured Capital alleges a breach of contract claim against PHI.
To state a breach of contract claim under Florida law, a plaintiff must plead: “(1) the
existence of a contract; (2) a material breach of that contract; and (3) damages
resulting from the breach.” Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1272 (11th
Cir. 2009). 	The allegations in the complaint are sufficient to state a breach of
contract claim against PHI because Secured Capital alleges: (1) it entered into the
Dome and Tormenta escrow agreements with PHI; (2) it deposited $3 million with
PHI pursuant to the agreements; (3) PHI breached the agreements by failing to return
the total amount of funds due to Secured Capital at the conclusion of the escrow
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period; and (4) due to the breach, PHI still owes Secured Capital $2,488,500. Thus,
Secured Capital is entitled to a default judgment on its breach of contract claim.
B. 	Breach of Fiduciary Duty
In Count 2, Secured Capital alleges a breach of fiduciary duty claim against
PHI and McCorvey. 	Under Florida law, “[t]he elements of a claim for breach of
fiduciary duty are: the existence of a fiduciary duty, and the breach of that duty such
that it is the proximate cause of the plaintiff’s damages.” Gracey v. Eaker, 837 So.
2d 348, 353 (Fla. 2002). 	“An escrow agent ‘has a fiduciary duty to exercise
reasonable skill and ordinary diligence in holding and delivering possession of the
escrowed property.’” 	All Purpose Title, LLC v. Knobloch, 397 So. 3d 85, 88 (Fla.
4th DCA 2024) (quoting Fla. Bar v. Marrero, 157 So. 3d 1020, 1024 (Fla. 2015)).
Secured Capital’s factual allegations are sufficient to support a breach of
fiduciary duty claim against PHI and McCorvey. Secured Capital alleges PHI and
McCorvey owed fiduciary duties to Secured Capital because PHI was the escrow
agent under the Dome and Tormenta agreements, and McCorvey controls PHI and
was responsible for discharging PHI’s escrow-related obligations. 	See Knobloch,
397 So. 3d at 89 (stating an escrow agent owes a fiduciary duty to the parties to the
escrow transaction); White-Wilson Med. Ctr. v. Dayta Consultants, Inc., 486 So. 2d
659, 661 (Fla. 1st DCA 1986) (“Individual officers and agents of a corporation are
personally liable where they have committed a tort even if such acts are performed
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within the scope of their employment or as corporate officers or agents.”) (citation
omitted). 	Secured Capital also alleges PHI and McCorvey misappropriated the
Escrow Funds and concealed the transfer of the funds from PHI’s escrow account.
These allegations are sufficient to state a breach of fiduciary duty claim against PHI
and McCorvey; accordingly, Secured Capital is entitled to a default judgment on
Count 2. See Oginsky v. Paragon Props. of Costa Rica LLC, 784 F. Supp. 2d 1353,
1376 (S.D. Fla. May 16, 2011) (“Handling of escrowed funds in a manner contrary
to the escrow agreement is a breach of an escrow holder’s fiduciary duties.”)
(collecting cases); Vallina v. Mansiana Ocean Residences LLC, 2011 WL 11674441,
at *5 (S.D. Fla. June 17, 2011) (an escrow agent “has a duty to disclose to a principal
all material facts relevant to its agency”) (citations omitted).
C. 	Negligence
In Count 3, Secured Capital alleges PHI and McCorvey are liable for
negligence. “To establish negligence under Florida law, a plaintiff must prove four
elements: (1) a duty of care owed by the defendant to the plaintiff, (2) the defendant’s
breach of that duty, (3) causation, and (4) damages suffered by the plaintiff.” Eason
v. United States, 771 F. Supp. 3d 1263, 1282 (M.D. Fla. Mar. 24, 2025) (citing
Resnick v. AvMed, Inc., 693 F.3d 1317, 1325 (11th Cir. 2012)). The complaint states
a negligence claim against PHI and McCorvey because it alleges they owed legal
duties to Secured Capital under the escrow agreements and they breached those
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duties by failing to maintain and return the Escrow Funds, which resulted in Secured
Capital losing $2,488,500. Thus, Secured Capital is entitled to a default judgment
on its negligence claim.
D. 	Fraud
In Count 4, Secured Capital alleges all three Defendants are liable for
fraudulent inducement.9 To prove fraudulent inducement under Florida law, “a
plaintiff must show that: ‘(1) a false statement was made regarding a material fact;
(2) the individual who made the statement knew or should have known that it was
false; (3) the maker intended that the other party rely on the statement; and (4) the
other party relied on the false statement to its detriment.’” Oginsky, 784 F. Supp. 2d
at 1368 (quoting Taylor Woodrow Homes Fla., Inc. v. 4/46-A Corp., 850 So. 2d 536,
542 (Fla. 5th DCA 2003)).
Here, 	the 	complaint 	states 	a 	fraudulent 	inducement 	claim 	against 	the
Defendants because it alleges: (1) before entering the Dome and Tormenta escrow
agreements, the Defendants represented that PHI was a legitimate escrow agent, that
PHI intended to hold the funds deposited by Secured Capital in escrow for the benefit
of Secured Capital and others, and that the funds would be returned at the expiration
of the escrow period; (2) Secured Capital relied on those representations to enter the
9 Count 4 also references fraudulent concealment, but that theory of fraud does not need to be
addressed since the complaint states a claim for fraudulent inducement.
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Dome and Tormenta escrow agreements and deposit the Escrow Funds; and (3) those
representations were false, as Defendants intended to misappropriate the funds and
not return them to Secured Capital. Doc. 1 at ¶¶ 13, 15, 17, 53-56. Thus, Secured
Capital is entitled to a default judgment on Count 4. See Mejia v. Jurich, 781 So. 2d
1175, 1177 (Fla. 3d DCA 2001) (“[I]f the plaintiff can demonstrate that the person
promising future action does so with no intention of performing or with a positive
intention 	not 	to 	perform, 	such 	a 	promise 	may 	also 	constitute 	a 	fraudulent
misrepresentation.”) (citations omitted).
E. 	Conversion
In Count 5, Secured Capital claims all three Defendants are liable for
conversion. 	“‘[C]onversion is an unauthorized act which deprives another of his
property permanently or for an indefinite time.’” Nat’l Union Fire Ins. Co. of Pa. v.
Carib Aviation, Inc., 759 F.2d 873, 878 (11th Cir. 1985) (quoting Senfeld v. Bank of
Nova Scotia Trust Co. (Cayman), 450 So. 2d 1157, 1160-61 (Fla. 3d DCA 1984)).
“In order to establish a claim for conversion of money under Florida law, a plaintiff
must demonstrate, by a preponderance of the evidence: (1) specific and identifiable
money; (2) possession or an immediate right to possess that money; (3) an
unauthorized act which deprives plaintiff of that money; and (4) a demand for return
of the money and a refusal to do so.” United States v. Bailey, 288 F. Supp. 2d 1261,
1264 (M.D. Fla. Oct. 22, 2003).
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When a conversion claim is premised on the conversion of money, the money
must be capable of identification. 	See Belford Trucking Co. v. Zagar, 243 So. 2d
646, 648 (Fla. 4th DCA 1970). 	“[T]here must be an obligation to keep intact or
deliver the specific money in question, so that such money can be identified. 	Id.
“Money is capable of identification where it is delivered at one time, by one act and
in one mass, or where the deposit is special and the identical money is to be kept for
the party making the deposit, or where the wrongful possession of such property is
obtained.” 	Tambourine Comercio Internacional SA v. Solowsky, 312 F. App’x 263,
272 (11th Cir. 2009) (quoting Belford Trucking Co., 243 So. 2d at 648). 	“An
example is where a specific sum of money is to be held in constructive trust until the
occurrence of a specified event.” Belford Trucking Co., 243 So. 2d at 648.
Here, Secured Capital alleges (1) “Plaintiff transferred $1,500,000.00 per
agreement, or $3,000,000.00 total (the ‘Escrow Deposits’), to Defendant as deposits
to be held in an account in escrow. 	Dome and Tormenta also each transferred
$150,000.00 to Defendant (the ‘Escrow Fee Deposits’, together with the Escrow
Deposits, the ‘Escrow Funds’), which were to be distributed pursuant to the
respective Escrow Agreements”; (2) “The Escrow Agreements provide that after
expiration of the escrow period, and upon written notice by Plaintiff, Defendant shall
disburse the Escrow Funds to Plaintiff”; (3) “Plaintiff has sole discretion to direct
the disbursement of the Escrow Funds under the Escrow Agreements”; and (4)
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“Pursuant to Section 4 of the Escrow Agreements, Plaintiff, through its counsel,
made a written demand to Defendants for return of the Escrow Funds[.]” Doc. 1 at
¶¶ 18, 19, 21, 26.
The funds at issue are the “Escrow Funds,” which Secured Capital, Dome,
and Tormenta allegedly delivered to Defendant. 	Defendants had the obligation to
keep the money intact other than as expressly instructed by Secured Capital.
Moreover, according to the Escrow Agreements, attached as 	exhibits to the
complaint, the Funds were “to be held in escrow.” See Doc. 1 at 22. And, while the
Escrow Agreements allowed PHI, as the Escrow Agent, to commingle the funds – it
could only do so with “escrow funds of others.” Id. at 22-23. Indeed, in the January
2025 certification, McCorvey, as the Managing Member of PHI, certified that the
funds being held in the First Bank account ending in 1491, are being held “in [an]
escrow account” and the account “was created solely for the purposes of holding
escrow funds.” 	Doc. 1 at 38. 	Those allegations are sufficient to show that the
Escrow Funds were specifically identifiable. 	See In re Mouttet, 493 B.R. 640, 662
(Bankr. S.D. Fla. May 16, 2013), aff’d in part, rev’d in part on other grounds, 2020
WL 5993925 (S.D. Fla. Oct. 9, 2020) (“Money cannot be converted unless the
money is a specifically identifiable fund such as an escrow account, a bag of gold
coins, or the like.”); Masvidal v. Ochoa, 505 So.2d 555, 556 (Fla. 3d DCA 1987)
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(civil theft and conversion can be asserted when a party embezzles funds from an
escrow account).
F. 	Aiding and Abetting
In Count 6, Secured Capital asserts PHT and McCorvey are liable for aiding
and abetting fraud, conversion, and breach of fiduciary duty. 	Doc. 1 at ¶¶ 64-67.
“The elements necessary to sustain a claim for aiding and abetting under Florida law
are: ‘(1) an underlying violation on the part of the primary wrongdoer; (2) knowledge
of the underlying violation by the alleged aider and abettor; and (3) the rendering of
substantial assistance in committing the wrongdoing by the alleged aider and
abettor.’” David v. Gen. Dynamics Info. Tech., Inc., 2025 WL 1951850, at *6 (M.D.
Fla. July 15, 2025) (alteration adopted) (quoting Lesti v. Wells Fargo Bank, N.A., 960
F. Supp. 2d 1311, 1321 (M.D. Fla. Mar. 19, 2013)).
As set forth above, the undersigned finds Secured Capital’s allegations
support a fraud, conversion, and breach of fiduciary duty claim. This finding extends
to the aiding and abetting claim, as Secured Capital alleges PHT and McCorvey had
knowledge of the putative fraud – namely, that there was no intent for PHI to keep
the Escrow Funds and Defendants nonetheless allowed or substantially assisted in
causing Secured Capital to be induced into having PHI serve an as Escrow Agent,
which allowed PHI to convert the Escrow Funds.
G. 	Conspiracy
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In Count 7, Secured Capital alleges all Defendants are liable for conspiracy to
commit fraud, conversion, and breach of fiduciary duty. 	Doc. 1 at ¶¶ 68-72. 	To
establish a civil conspiracy claim under Florida law, a plaintiff must show: (1) “an
agreement between two or more parties,” (2) “to do an unlawful act or to do a lawful
act by unlawful means,” (3) “the doing of some overt act in pursuance of the
conspiracy,” and (4) “damage to plaintiff as a result of the acts done under the
conspiracy.” 	ECB USA, Inc. v. Savencia Cheese USA, LLC, 148 F.4th 1332, 1347
(11th Cir. 2025) (quoting Raimi v. Furlong, 702 So. 2d 1273, 1284 (Fla. 3d DCA
1997)).
The allegations in the complaint are sufficient to state a claim for conspiracy.
Considered as a whole, they tell a story of three Defendants, operating together and
in concert with one another, to induce Secured Capital to enter into Escrow
Agreements with PHI, knowing that PHI had no intent to return the Escrow Funds
as required. 	See Cordell Consultant, Inc. Money Purchase Plan & Trust v. Abbott,
561 F. App’x 882, 886 (11th Cir. 2014) (“Each coconspirator need not act to further
a conspiracy; each ‘need only know of the scheme and assist in it in some way to be
held responsible for all of the acts of his coconspirators.’”) (citation omitted).
IV. 	Damages and Injunctive Relief
“Although a defaulted defendant admits well-pleaded allegations of liability,
allegations relating to the amount of damages are not admitted by virtue of default.
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Rather, the Court determines the amount and character of damages to be awarded.”
Miller v. Paradise of Port Richey, Inc., 75 F. Supp. 2d 1342, 1346 (M.D. Fla. Nov.
9, 1999) (citation omitted). “The plaintiff has the burden of proving the amount of
damages to be awarded.” Wallace v. The Kiwi Grp., Inc., 247 F.R.D. 679, 681 (M.D.
Fla. Jan. 3, 2008). A hearing, however, is not required on the issue of damages if
sufficient evidence is submitted to support the claimed damages. See Giovanno v.
Fabec, 804 F.3d 1361, 1366 (11th Cir. 2015). As discussed below, the undersigned
finds Secured Capital has not shown that it is entitled to injunctive relief. However,
Secured 	Capital 	has 	presented 	evidence 	sufficient 	to 	support 	an 	award 	of
compensatory damages and the Court will need to hold a hearing on punitive
damages and attorneys’ fees and costs.
A. 	Injunctive Relief
Secured Capital seeks a permanent injunction enjoining Defendants from: (1)
transferring or conveying the escrow funds; (2) transferring assets out of any of their
financial accounts; and (3) acting as escrow agents in the future. Doc. 46 at 2. “To
obtain a permanent injunction, a plaintiff must show (1) that he has suffered an
irreparable injury; (2) that his remedies at law are inadequate; (3) that the balance of
hardships weighs in his favor; and (4) that a permanent injunction would not disserve
the public interest.” 	Barrett v. Walker Cnty. Sch. Dist., 872 F.3d 1209, 1229 (11th
Cir. 2017) (citation omitted). 	However, Secured Capital’s motion does not satisfy
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these elements. Secured Capital has not shown that a monetary judgment for the lost
Escrow Funds as well as any punitive damages is not an adequate remedy at law.
See Voda v. Cordis Corp., 536 F.3d 1311, 1329 (Fed. Cir. 2008) (affirming the district
court’s denial of Voda’s request for a permanent injunction where the district court
decided “monetary damages were adequate to compensate Voda”); Powell v. Home
Depot U.S.A., Inc., 2009 WL 3855174, at *16 (S.D. Fla. Nov. 17, 2009) (“Because
monetary damage is adequate to compensate Plaintiff’s loss,” the plaintiff was not
entitled to a preliminary injunction.).
B. 	Compensatory and Punitive Damages
Secured Capital has met its burden of establishing it is entitled to $2,488,500
in compensatory damages. In their deposition, Defendants admitted Secured Capital
transferred $3 million to them under the Dome and Tormenta escrow agreements but
they failed to return and still owe Secured Capital a total of $2,488,500 under the
agreements. McCorvey Depo., 57:25 – 58:3, 74:12 – 75:11, 76:7-10, 116:1-5.
In addition to compensatory damages, Secured Capital also seeks punitive
damages. Although “[t]he general rule in Florida states that punitive damages are
not awarded for breach of contract claims[,] … where the acts constituting a breach
of contract also amount to a cause of action in tort there may be a recovery of
exemplary damages upon proper allegations and proof. The underlying tort cause
of action must be based on some sort of intentional wrong, willful or wanton
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misconduct, or culpable negligence, the extent of which amounts to an independent
tort.” 	HGI Assocs., Inc. v. Wetmore Printing Co., 427 F.3d 867, 876-77 (11th Cir.
2005) (citations and quotation marks omitted).
Here, the allegations in the complaint indicate Defendants induced Secured
Capital to enter into the escrow agreements by falsely representing that PHI intended
to hold Secured Capital’s funds in escrow and then return the funds at the expiration
of the escrow period. In addition, the allegations demonstrate PHI and McCorvey
intentionally breached their fiduciary duties by misappropriating the escrow funds
and not disclosing the escrow funds had been disbursed. 	Those allegations are
sufficient to show that Secured Capital is entitled to punitive damages on its claims.
See e.g., id. at 877 (explaining Florida law “allows an award of punitive damages
for fraudulent inducement despite additional claims for breach of contract”); Wells
Fargo Bank, N.A. v. Gopher, 397 So. 3d 1033, 1034 (Fla. 4th DCA 2024) (explaining
punitive damages are available for a breach of a fiduciary duty claim when a plaintiff
proffers “evidence of fraud, malice, or other misconduct that would justify punitive
damages”).
However, the Court must hold a hearing to determine the appropriate amount
of punitive damages. See Jenkins v. Clerk of Ct., U.S. Dist. Ct., S. Dist. of Fla., 150
F. App’x 988, 989-90 (11th Cir. 2005) (“Punitive damages are not a certain or
ascertainable sum, and cannot be entered without a hearing.”); Adolph Coors Co.,
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777 F.2d at 1543-44 (holding “a judgment of default awarding cash damages could
not properly be entered ‘without a hearing unless the amount claimed is a liquidated
sum or one capable of mathematical calculation’”) (quoting United Artists Corp. v.
Freeman, 605 F.2d 854, 857 (5th Cir. 1979)).
C. 	Attorney’s Fees
In Count 9, Secured Capital requests attorney’s fees. Although “the so-called
‘American Rule’ prohibits fee shifting in most cases,” a court “may assess attorney’s
fees when a party has ‘acted in bad faith, vexatiously, wantonly, or for oppressive
reasons.’” Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991) (citations omitted).
“[I]f a court finds ‘that fraud has been practiced upon it, or that the very temple of
justice has been defiled,’ it may assess attorney’s fees against the responsible party,
as it may when a party ‘shows bad faith by delaying or disrupting the litigation or
by hampering enforcement of a court order.’” Id. at 46 (citations omitted).
As described at length, Defendants acted in bad faith during this litigation by
committing fraud on the court and fabricating a defense that disrupted this litigation.
Thus, the undersigned finds Secured Capital should be awarded its reasonable
attorney’s fees as part of the sanctions against Defendants. See Qantum, 473 F. Supp.
2d at 1277 (concluding both a default judgment and an award of reasonable
attorney’s 	fees 	and 	costs 	was 	an 	appropriate 	sanction 	for 	the 	defendants’
misconduct).
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V. 	Defendants’ Motion for Leave to File Amended Answer
Finally, Defendants filed a motion to amend their answer, asserting: (1) an
“amendment is necessary to conform to the facts that have been discovered in this
matter since September 30, 2025,” the date Defendants retained their current
attorney; and (2) “[s]everal of Plaintiff’s allegations which were previously denied
by the Defendants have been admitted in the proposed, Joint Amended Answer.”
Doc. 54 at 1-2.
Under Rule 15, a court should freely give a party leave to amend a pleading
when justice so requires. Fed. R. Civ. P. 15(a)(2). However, a motion to amend may
be denied: “(1) where there has been undue delay, bad faith, dilatory motive, or
repeated failure to cure deficiencies by amendments previously allowed; (2) where
allowing amendment would cause undue prejudice to the opposing party; or (3)
where amendment would be futile.” 	Bryant v. Dupree, 252 F.3d 1161, 1163 (11th
Cir. 2001) (citation omitted). 	Here, leave should be denied because, as discussed
above, Defendants acted in bad faith. Additionally, there has been undue delay and
amendment would cause undue prejudice to Secured Capital.
This case was placed on an accelerated discovery schedule based on Secured
Capital’s allegations regarding the loss of the Escrow Funds and discovery ended on
October 1, 2025. Doc. 30. Despite acknowledging the deadline to amend pleadings
was September 1, 2025 (Doc. 36 at 2), Defendants’ motion does not mention or try
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to argue they have shown good cause to modify the scheduling order. 	See AMG
Trade & Distrib., LLC v. Nissan N. Am., Inc., 813 F. App’x 403, 408 (11th Cir. 2020)
(“When a plaintiff seeks leave to amend its complaint after the time required by the
district court’s scheduling order, the plaintiff ‘must first demonstrate good cause
under Rule 16(b) before we will consider whether amendment is proper under Rule
15(a).’”) (quoting Sosa v. Airprint Sys., Inc., 133 F.3d 1417, 1419 (11th Cir. 1998)).
In addition, the defenses Defendants raise in the proposed amended answer are not
based on newly discovered evidence. Thus, Defendants’ delay in seeking to amend
their answer justifies denying their motion.
Second, the Defendants’ attempt to amend their answer stems from their bad
faith actions during this litigation. 	As previously mentioned, the defenses in
Defendants’ original answer were based on the Stifel story. Now that McCorvey’s
October 1 deposition has established that the Stifel story was false, Defendants are
attempting to reset this case with a new set of defenses. Allowing them to do so
would excuse their bad faith conduct.
Finally, allowing Defendants to amend their answer would cause undue
prejudice to Secured Capital. 	Secured Capital would be required to expend
additional time and resources addressing the Defendants’ new defenses. In addition,
Secured Capital would either have to challenge those defenses without the benefit
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of discovery, or the Court would have to delay this case further by reopening
discovery. Based on the foregoing, Defendants’ motion to amend should be denied.
Accordingly, it is RECOMMENDED:
1. 	That Secured Capital’s Motion to Strike Answer and Grant Default
Judgment for Perjury and Discovery Abuse, and in the Alternative, Motion for
Summary Judgment (Docs. 46, 47, & 48) be GRANTED to the extent that:
(a) 	Defendants’ answer (Doc. 21) should be stricken;
(b) 	an appropriate sanction for Defendants’ litigation misconduct is to enter
default judgment on all of Secured Capital’s claims;
(c) 	Secured Capital is entitled to $2,488,500 in compensatory damages;
(d) 	the 	matter 	be 	remanded 	to 	the 	undersigned 	to 	conduct 	further
proceedings, including a hearing, to determine the amount of punitive
damages, as well as reasonable attorney’s fees and costs, that Secured
Capital should be awarded.
2. 	That Defendants’ Motion for Leave to File Amended Answer (Docs. 54
& 55) be DENIED.
At Pensacola, Florida, this 12 th day of December, 2025.
/s/ Hope Thai Cannon
HOPE THAI CANNON
UNITED STATES MAGISTRATE JUDGE
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NOTICE TO THE PARTIES
Objections to these proposed findings and recommendations must be filed within
fourteen (14) days of the date of the Report and Recommendation. Any different
deadline that may appear on the electronic docket is for the court’s internal use only
and does not control. An objecting party must serve a copy of its objections upon
all other parties. A party who fails to object to the magistrate judge’s findings or
recommendations contained in a report and recommendation waives the right to
challenge on appeal the district court’s order based on the unobjected-to factual and
legal conclusions. See 11th Cir. Rule 3-1.
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