Discussion

Firestone Building Products Company, LLC v. Ramos, Not Reported in Fed. Supp. (2017)

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2017 WL 4326692 Only the Westlaw citation is currently available.

United States District Court, S.D. Florida.

FIRESTONE BUILDING PRODUCTS COMPANY, LLC, Plaintiff,

v. Antero RAMOS, Defendant.

CASE NO. 15-60946-CIV-ZLOCH |

Signed 06/19/2017

Attorneys and Law Firms

Christina Therese Mastrucci, Christopher Martin Lomax, Paul Courtney Huck, Jr., Jones Day, Miami, FL, for Plaintiff.

Christopher H. Brown, Rene Suarez, Brown Suarez Rios & Weinberg PA, Naples, FL, Raul Morales, Raul Morales, Esq., Coral Gables, FL, Brian Lee Tannebaum, Bast Amron, Miami, FL, for Defendant.

Antero Ramos, Weston, FL, pro se.

ORDER

WILLIAM J. ZLOCH, Sr. United States District Judge

*1 THIS MATTER came before the Court for a jury trial on May 15, 2017. At the close of evidence, Plaintiff Firestone Building Products Company, LLC (“Firestone”) ore tenus moved for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(a). The Court has carefully considered said Motion, the entire court file and is otherwise fully advised in the premises. As the Motion is due to be granted, the Court hereby makes the following findings of fact and conclusions of law.

FINDINGS OF FACT

1. Ramos is the former manager of Firestone’s Latin America division. Firestone sued Ramos, alleging that Ramos conspired with Firestone employees and other persons in Brazil to manipulate Firestone’s books and records, including booking fictitious sales only later to

reverse them, preparing fake invoices, and otherwise overstating Firestone’s financial performance in Brazil in order to receive larger performance bonuses.

2. On August 26, 2015, Firestone filed its First Amended Complaint asserting six causes of action against Ramos: fraud (Count 1), conspiracy to commit fraud (Count 2), conversion (Count 3), unjust enrichment (Count 4), breach of fiduciary duty (Count 5), and constructive trust (Count 6).

3. On June 8, 2016, Ramos filed his Answer to the First Amended Complaint. Ramos’s Answer does not assert any affirmative defenses or counterclaims.

4. On February 27, 2017, the Court entered its Order granting in part and denying in part Firestone’s motion for summary judgment. The Court granted summary judgment in Firestone’s favor as to liability on Counts 1 (fraud), 2 (conspiracy to commit fraud), and 5 (breach of fiduciary duty). The Court denied the remainder of Firestone’s motion for summary judgment.

5. Regarding Ramos’s liability to Firestone on Firestone’s claims of fraud, conspiracy to commit fraud, and breach of fiduciary duty, the Court held:

The facts admitted by Defendant establish his liability for both civil conspiracy and fraud. Specifically, Defendant entered into an agreement with several employees in Plaintiff’s Brazil office, whom he supervised, directing them to manipulate or fabricate invoice, inventory, and sales report records. Defendant’s submission of those manipulated and fabricated records constitutes false statements of material fact, as well as overt acts in pursuance of the conspiracy. Defendant knew that these records were false and intended that they would induce Plaintiff to compensate Defendant for overstated or false financial performance, as evidenced by his communications with the employees he supervised. Plaintiff relied on these manipulated and fabricated records and suffered injury in numerous ways, including payment of unwarranted bonuses, wasted inventory, damage to Plaintiff’s business reputation, and expenses associated with remedying the harm done by Defendant’s fraudulent acts. Plaintiff is therefore entitled to summary judgment in its favor on Counts 1 and 2 of the Amended Complaint.

Firestone Building Products Company, LLC v. Ramos, Not Reported in Fed. Supp. (2017)

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Plaintiff is likewise entitled to summary judgment in its favor on its claim for breach of fiduciary duty. ...

*2 It is undisputed that Defendant served as general manger of Plaintiff’s Latin America Division, which gave him “authority to transact business on behalf of [Plaintiff] in Latin America and the Caribbean, including Brazil.” “That is, Defendant had the authority to negotiate with customers on [Plaintiff]’s behalf, to bind [Plaintiff] to contracts, to perform contracts on [Plaintiff]’s behalf, to issue invoices to customers and to make adjustments to [Plaintiff]’s inventory.” As such an agent, Defendant owed a fiduciary duty to Plaintiff, which he breached by participating in a scheme to overstate his division’s financial performance in order to obtain unmerited remuneration. Having been harmed by that breach, Plaintiff prevails as a matter of law on its breach of fiduciary duty claim.

DE 66.

6. Firestone subsequently dismissed Counts III, IV, and VI of the First Amended Complaint (DE 17) pursuant to Federal Rule of Civil Procedure 41, and this matter proceeded to jury trial on the only remaining issue—what amount of damages, if any, were caused by Ramos’s fraud, conspiracy to commit fraud, and breach of fiduciary duty.

7. The Court commenced a jury trial on May 16, 2017. Firestone called a single witness, Troy Geuther (“Geuther”). Geuther is Firestone’s Vice President of International Operations, and Firestone’s Latin American division reports to him. Firestone also introduced a number of exhibits into evidence. Ramos cross-examined Geuther, but he did not call any witnesses (including himself), nor did he introduce any documents or other information into evidence.

8. At trial, Firestone identified three categories of damages that it was seeking compensation for: (1) repayment of part of a retention/performance bonus paid to Ramos in March 2014; (2) recovery of amounts paid to Ernst & Young to determine the extent of Ramos’s fraud and to correct Firestone’s books and records; and (3) recovery of the value of excess inventory Firestone was left with as a result of Ramos’s scheme and that Firestone had to scrap because it was damaged or had passed its expiration date.

(a) Retention/Performance Bonus

9. On July 21, 2011, Firestone informed Ramos that he would be eligible to receive the following retention/ performance bonuses: (a) $40,000 paid by the end of month, February 2012; (b) $40,000 paid by the end of month, February 2013; and (c) $40,000 paid by the end of month, February 2014. Receipt was conditioned on, among other things, Ramos meeting the terms of a separate Agreement to Repay Bonus Payments.

10. Ramos signed the Agreement to Repay Bonus Payments on November 13, 2011. Pl. Ex. No. 5. Under its terms, Ramos agreed that if he resigned or was terminated for willful misconduct within twelve months of receiving any of those retention/performance bonuses, he would repay the bonus in certain prorated amounts. Id. Relevant to Firestone’s damages claim, the Agreement to Repay Bonus Payments requires Ramos to repay 25% of a bonus payment if he was terminated for willful misconduct within more than nine but no more than twelve months of receiving the payment. Id.

11. Geuther testified that Ramos’s fraudulent activity was discovered in early 2015, that Ramos was put on suspension, and that Ramos was terminated for his misconduct in February 2015. On February 11, 2015, Firestone sent Ramos a letter informing him that, following a financial investigation regarding misrepresentation of sales revenue, his employment with Firestone was terminated effective February 13, 2015. Pl. Ex. No. 7.

12. As evidenced by his pay stubs admitted into evidence, Ramos received the third performance/bonus payment of $40,000 on March 14, 2014. Under the terms of the Agreement to Repay Bonus Payments, Ramos was required to repay Firestone 25% of that bonus payment (i.e., $10,000) because Ramos was terminated for willful misconduct more than nine but less than twelve months after receiving the bonus. Geuther testified that Ramos has not repaid Firestone any monies.

*3 13. Ramos did not present any evidence, whether by way of testimony or documentary evidence, relating to the bonus payment, nor did he cross-examine Geuther regarding the bonus payment.

Firestone Building Products Company, LLC v. Ramos, Not Reported in Fed. Supp. (2017)

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(b) Ernst & Young Invoices

14. Geuther testified that as Firestone discovered the extent of Ramos’s fraudulent activities, it took steps to reconcile the false sales invoices with actual sales in Brazil. Geuther testified that the scope of the fraud was so extensive that Firestone had to hire Ernst & Young to audit Firestone’s books and records, and that, as part of this audit, Ernst & Young had to look at both Firestone’s sales and inventory processes. Ernst & Young is not Firestone’s regular auditor, and Geuther testified that the only reason Ernst & Young was retained was to determine the extent of the fraud perpetrated by Ramos and his co-conspirators and to correct Firestone’s books and records based on that investigation.

15. Firestone introduced into evidence four invoices from Ernst & Young: (a) an October 8, 2015 invoice of $57,258.00 for services rendered from July 31, 2015 through September 30, 2015; (b) a November 9, 2015 invoice of $30,277.25 for services rendered from September 28, 2015 through October 30, 2015; (c) a December 1, 2015 invoice of $24,498.88 for services rendered from November 3, 2015 through November 30, 2015; and (d) a January 20, 2016 invoice of $21,158.11 for services rendered from December 1, 2015 through December 18, 2015. Pl. Ex. No. 1. The invoices total $133,192.24. Id.

16. The invoices are addressed to Jennifer Bowman, Firestone’s Vice-President of Finance. Geuther testified that these invoices reflect Ernst & Young’s work for examining and assessing the scope of Ramos’s fraudulent scheme. He further testified that Firestone paid the invoices.

17. Ramos did not present any evidence, whether by way of testimony or documentary evidence, nor did he elicit any testimony from Geuther during cross-examination, that contradicted or otherwise qualified the evidence introduced by Firestone that Ernst & Young was engaged as a result of Ramos’s fraud, that the invoices reflect Ernst & Young’s work for Firestone in that engagement, that Ernst & Young billed the amounts listed on the invoices, that the total amount billed was $133,192.24, and that Firestone paid the invoices.

(c) Excess Inventory

18. Geuther testified regarding how the software system used by Firestone’s Brazilian operations matched invoices for Brazilian sales with inventory orders for material shipped from the United States. Specifically, when a sales invoice was generated in Brazil, the software system required that a matching inventory delivery order be generated. That inventory delivery order initiated the process by which Firestone materials manufactured in the United States were delivered to Brazil in order to satisfy the sale reflected in the matching sales invoice. Because the software system could not distinguish between an actual invoice and a fraudulent invoice created as part of Ramos’s scheme, Firestone shipped and delivered inventory to Brazil in response to the fraudulent invoices created by Ramos’s scheme. This resulted in the accumulation of excess inventory in Brazil that had been shipped from the United States to satisfy what were later discovered to be non-existent sales. Ramos directed that this excess inventory be stored in a remote warehouse that was under his control and/or supervision.

*4 19. Geuther further testified that after Firestone discovered Ramos’s fraud, it sent experts to that warehouse to determine what amount of inventory was in excess of what was needed to satisfy actual sales made to Brazilian customers. Firestone introduced into evidence a November 11, 2015 memorandum addressed to the senior management at Firestone stating that the Brazilian inventory balance was $4.6 million while the inventory should have been $825,000, resulting in an excess inventory of $3,775,000. Pl. Ex. No. 8. Geuther testified that this excess inventory resulted from Ramos’s fraudulent scheme of generating false sales invoices. On cross-examination, Geuther further testified that all of the excess inventory had been purchased while Ramos was in charge of Firestone’s Latin American operations.

20. Of that excess inventory, $298,036.28 was either damaged or had expired. The authors of the memorandum sought permission to scrap the expired and damaged goods, and Geuther testified that Firestone in fact disposed of those goods.

21. Ramos did not present any evidence, whether by way of testimony or documentary evidence, nor did he elicit any testimony from Geuther during cross-examination,

Firestone Building Products Company, LLC v. Ramos, Not Reported in Fed. Supp. (2017)

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that contradicted or otherwise qualified the evidence introduced by Firestone that Ramos’s scheme resulted in a buildup of excess inventory in Brazil that was unrelated to actual sales, that some of that excess inventory had to be scrapped because it was damaged or had expired, that the excess inventory that had to be scrapped had a value of $298,036.28, and that Firestone in fact disposed of that excess inventory.

CONCLUSIONS OF LAW

Federal Rule of Civil Procedure 50 provides in relevant part:

(a) Judgment as a Matter of Law.

(1) In General. If a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue, the court may:

(A) resolve the issue against the party; and

(B) grant a motion for judgment as a matter of law against the party on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue.

Fed. R. Civ. P. 50. When considering a Rule 50 motion, the Court:

considers all the evidence and the inferences drawn therefrom in the light most favorable to the non- moving party. If the facts and inferences point overwhelmingly in favor of one party, such that reasonable people could not arrive at a contrary verdict, then the [motion] should be granted.... A mere scintilla of evidence does not create a jury question. Rather, there must be a substantial conflict in evidence to support a jury question.

United States v. One Parcel of Real Estate at 298 N.W. 45th St., Boca Raton, Fla., 804 F. Supp. 319, 323

(S.D. Fla. 1992) (granting plaintiff’s motion for directed verdict); see also Carruthers v. BSA Adver., Inc., 357 F.3d 1213, 1215 (11th Cir. 2004) (standard for consideration of Rule 50(a) motion for judgment as a matter of law; affirming district court’s grant of motion).

This case arises under the Court’s diversity jurisdiction, and the Court therefore applies Florida law to the determination of damages. Hessen for Use & Benefit of Allstate Ins. Co. v. Jaguar Cars, Inc., 915 F.2d 641, 645 (11th Cir. 1990); see also Global Quest, LLC v. Horizon Yachts, Inc., 849 F.3d 1022, 1027 (11th Cir. 2017) (federal court sitting in diversity applies substantive law of forum state). “The normal measure of damages in a tort case is compensatory.” Torres v. Sarasota Cnty Pub. Hosp. Bd., 961 So.2d 340, 345 (Fla. 2d DCA 2007) (quotation and citation omitted). Compensatory damages are meant “to restore the injured party to the position it would have been had the wrong not been committed.” Laney v. Am. Equity Inv. Life Ins. Co., 243 F. Supp. 2d 1347, 1354 (M.D. Fla. 2003) (applying Florida law to claims of fraud, negligent misrepresentation, and breach of fiduciary duty). Thus, a plaintiff who proves fraud is entitled to recover “full compensation for the effect of the fraud.” Minnoty v. Baudo, 42 So.3d 824, 835 (Fla. 4th DCA 2010). A plaintiff who proves civil conspiracy is entitled to recover damages resulting from the underlying civil wrong (in this case fraud). See Phillip Morris USA, Inc. v. Russo, 175 So.3d 681, 686 n.9 (Fla. 2015). Finally, a plaintiff who proves breach of fiduciary duty is entitled to recover damages “ ‘flowing from the breach.’ ” Resnick v. AvMed, Inc., 693 F.3d 1317, 1325 (11th Cir. 2012) (quoting Crusselle v. Mong, 59 So.3d 1178, 1181 (Fla. 5th DCA 2011)).

*5 As discussed above, Firestone introduced uncontroverted evidence (both testimonial and documentary) that it suffered damages resulting from Ramos’s scheme in the amount of $441,228.52. These damages are compensatory damages that Firestone is entitled to recover under Florida law. The jury was not presented with contrary evidence, and certainly not evidence sufficient to create a substantial conflict to support a jury question. When considering all of the evidence and inferences drawn from them in the light most favorable to Ramos, the facts and inferences point overwhelmingly in favor of Firestone such that reasonable people could not arrive at a contrary verdict.

Firestone Building Products Company, LLC v. Ramos, Not Reported in Fed. Supp. (2017)

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The Court therefore concludes that Firestone is entitled to judgment as a matter of law that it suffered $441,228.52 in damages as a result of Ramos’s scheme

Accordingly, after due consideration, it is

ORDERED AND ADJUDGED as follows:

1. Plaintiff Firestone Building Products Company, LLC’s ore tenus Motion For Judgment As A Matter Of Law be and the same is hereby GRANTED; and

2. Final judgment will issue by separate Order.

DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County, Florida, this 19th day of June, 2017.

All Citations

Not Reported in Fed. Supp., 2017 WL 4326692

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