IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF FLORIDA

PANAMA CITY DIVISION

BILLY G. SCHINDEWOLF, et al.

Plaintiffs,

vs.

SEYMOUR CONSTRUCTION, INC.,

et al.

Defendants.

CASE NO. 5:10-CV-00145-RS-CJK

JUDGE RICHARD SMOAK

MAGISTRATE JUDGE CHARLES J.

KAHN, JR.

PLAINTIFFS’ POST-TRIAL BRIEF

I. INTRODUCTION

Based upon the evidence and final argument presented at trial, Plaintiffs pray for an

award of compensatory and punitive damages, as well as an award of interest, attorneys fees and

costs. This brief is intended to elaborate upon some of the reasoning for this prayer.

II. PLAINTIFFS SHOULD PREVAIL ON THEIR FRAUD CLAIM AGAINST EACH

OF THE DEFENDANTS

Defendants’ fraudulent misrepresentations induced Plaintiffs to provide Defendants with

$500,000, purportedly to develop the Plaintiffs’ property in Panama City Beach, Florida. While

Defendants’ represented that the $500,000 would be used for “soft costs” in order to get the

project up and running as quickly as possible, it was established at trial that such statements were

false when made and that Defendants’ never had any intention to follow through with their

promises. Public policy prohibits one from purposely using false information to induce another

into a transaction such that profit is made from such wrongdoing. See Gilchrist Timber Co. v.
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ITT Rayonier, Inc., 696 So. 2d 334, 336-37 (Fla. 1997). Such policy considerations should apply

here.

In order to recover for fraud, Plaintiffs must prove by the greater weight of the evidence

that: (1) a false statement concerning a material fact was made; (2) the representor knew that the

statement was false; (3) the intention of the statement was to induce another to act on it; and (4)

consequent injury occurred as a result of the party acting in reliance on the statement. See Butler

v. Yusem, 44 So. 3d 102, 105 (Fla. 2010) (justifiable reliance is not required); Wadlington v.

Continental Medical Services, Inc., 907 So. 2d 631, 632 (Fla. 4th DCA 2005); Taylor Woodrow

Homes Florida, Inc. v. 4/46-A Corporation, 850 So. 2d 536, 542 (Fla. 5th DCA 2003). Plaintiffs’

have met their burden.

Defendants made false statements with regard to the purpose of the $500,000. Defendant

Seymour represented to Plaintiffs that he had “already signed up for $500,000 in soft costs,” that

he “had already written checks [to cover part of the soft costs] and will write more” within the

week. Defendant Seymour told the Plaintiffs that he “need[ed] the money now” so that he could

start developing Plaintiffs’ property. These statements constitute fraud.

First, the false statements made were material in that Plaintiffs would not have handed

over half a million dollars but for Defendants representations that they would use the money to

develop Plaintiffs’ property. See Ribak v. Centex Real Estate Corporation, 702 So. 2d 1316,

1317 (Fla. 4th DCA 1998) (holding that, for purposes of fraud, a fact is material if, but for the

misrepresentation, the aggrieved party would not have entered into the contract). Second, the

testimony at trial established that Defendants knew these statements were false at the time they

were made. The evidence showed that instead of using the $500,000 to begin work on Plaintiffs’

property as stated, Defendant Seymour intended, and subsequently used, the funds to pay himself
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and the debts of his other companies. Third, it is clear that Defendants made such statements to

induce Plaintiffs to give them $500,000 upfront. And finally, as a result of Plaintiffs acting in

reliance on Defendants’ false statements, Plaintiffs suffered the loss of their investment.

In addition, it is a general rule that a false statement of fact, to be a ground for fraud, must

be of a past or existing fact, such as the ones outlined above, and cannot be a promise to do

something in the future. See Wadlington, 907 So. 2d at 632. However, there is an exception to

this general rule. “Where the promise to perform a material matter in the future is made without

any intention of performing or made with the positive intention not to perform” a cause of action

for fraud may proceed. Id. (citing Vance v. Indian Hammock Hunt & Riding Club, Ltd., 403 So.

2d 1367, 1372 (Fla. 4th DCA 1981)). Defendants false statements promising Plaintiffs that the

project “will get up and running quickly” and “will break ground in December” qualifies under

the exception and are a basis for fraud in this action. Defendants did not ever intend to “get up

and running” or to “break ground.”

This second set of statements was material because, but for the Defendants false

representations, Plaintiffs would not have entered into the MOI or given Defendants $500,000.

It was established at trial that developing their property as soon as possible was important to the

Plaintiffs. The evidence at trial demonstrated that Defendants never had any intention to perform

the acts promised. Defendants never intended to get the project going quickly and, consequently,

knew they would not be able to break ground by December. Defendants made these statements

solely in order to induce Plaintiffs to provide Defendants with $500,000.

At trial, Defendants argued that Plaintiffs should be limited to a remedy for breach of

contract based solely upon Defendants’ failure to perform under the MOI, thereby disallowing a

remedy based on Plaintiffs’ claim of fraud. However, the law in Florida is well settled that a
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party may not contractually thwart liability for its own fraud. See Burton v. Linotype Company,

556 So. 2d 1126, 1127 (Fla. 3d DCA 1990). Fraud is an intentional tort for which compensatory

and punitive damages may be recovered. Id. at 1128. Plaintiffs have properly pled fraud, and

the greater weight of the evidence at trial proved fraud. Thus, Plaintiffs are entitled to recover

damages as a result of Defendants’ fraudulent conduct.

III. PLAINTIFFS SHOULD RECOVER NOT ONLY AGAINST SEYMOUR

CONSTRUCTION, INC. BUT ALSO AGAINST SCOTT SEYMOUR

INDIVIDUALLY

A. Defendant Seymour Required His Corporation to Commit Fraud

The evidence at trial was that Scott Seymour was the sole (or at least the primary) officer

of Seymour Construction, Inc. He made all decisions, and he certainly made all decisions

pertaining to dealings with the Schindewolfs. Any fraud caused by the company occurred

because Scott Seymour, individually, required his company, through his efforts, to commit that

fraud.

As stated in Plaintiffs’ Trial Brief, Florida law is clear that an officer, director or agent of

a corporation is directly liable for torts in which he personally participates “whether or not his

actions are by authority of the corporation or in the furtherance of the corporate business...[and]

regardless of whether liability attaches to the corporation for the tort.” Longleaf Mitigation

Development Company LLC v. Florida Mitigation Providers, LLC, 519 F. Supp. 2d 1233

(Middle Dist. Fla. 2007), quoting from Special Purpose Accounts Receivable Co-Op v. Prime

One Capital Company, LLC, 125 F. Supp. 2d 1093, 1104-05 (So. Dist. Fla. 2000). For example,

in Baron v. Osman, 39 So. 2d 449 (Fla. Dist. Ct. App. 5

th Dist. 2010), it was held that the founder

of a corporate charter bus business could be held liable individually should the trial court find

actual wrongdoing in the form of fraud, self-dealing or unjust enrichment on the part of the

founder of the corporation.
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The fraud as described in the section immediately above consisted entirely of statements

and actions on the part of Scott Seymour, and of no one else. The fraud would not have and

could not have happened in the absence of Mr. Seymour. He should not be permitted to commit

blatant fraud, and then stand behind the fiction of his corporation in order ostensibly to avoid

liability for his fraudulent conduct.

B. Piercing the Corporate Veil

In addition, Scott Seymour should be personally responsible for his conduct as directed

toward the Plaintiffs given the manner in which he dominated and controlled the corporation to

an extent that he was an alter ego of Seymour Construction, Inc.

In Gasparini v. Pordomingo, 972 So. 2d 1053, 1055 (Fla. 3d DCA 2008), it was held that

three factors must be proven in order to pierce the corporate veil: (1) the shareholder dominated

and controlled the corporation to such an extent that the corporation’s independent existence

was, in fact, nonexistent and the shareholders were in fact alter egos of the corporation; (2) the

corporate forum must have been used fraudulently or for an improper purpose; and (3) the

fraudulent or improper use of the corporate forum caused injury to claimant.

The overwhelming weight of authority in Florida is to the effect that courts will look

through the screen of a corporate entity to the individuals who compose it in cases in which the

corporation was a mere device or sham to accomplish some ulterior purpose, or is a mere

instrumentality or agent of another corporation or individual owning all or most of its stock, or

where the purpose is to evade some statute or to accomplish some fraud or illegal purpose.

Dania Jai-Alai Palace, Inc. v. Sykes, 450 So. 2d 1114, 1117 (Fla. 1984) (quoting Mayer v.

Eastwood-Smith & Co., 122 Fla. 34, 42-43 (Fla. 1935)).
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The Dania Jai-Alai Palace case held that, while it is proper to use the fiction of a

corporation in order to separate the entity from its shareholders, the fiction would be ignored

where stockholders enter into a transaction in their individual interests and utilize the corporate

name merely to mislead creditors or perpetrate a fraud. In Kanov v. Bitz, M.D., 660 So. 2d 1165,

1166 (Fla. 3d DCA 1995), it was held that the critical issue in determining whether a corporate

veil will be pierced is whether the corporate entity was organized or operated for improper or

fraudulent purposes. Here, it is clear that Mr. Seymour used his corporation solely to perpetrate

this fraud. Indeed, Mr. Seymour testified that he closed down the corporation in 2010 – which

was within months of this lawsuit having been filed.

Mr. Seymour admitted at trial that he acquired the $500,000 solely to utilize as soft costs

in advancing The View project, but that, instead, he utilized $450,000 of that sum to pay his

employees over a one-year period of time. He, himself, caused this diversion of funds away

from the purpose for which the funds were intended to be utilized. Mr. Seymour, himself,

committed the fraud. Mr. Seymour should not be permitted to stand behind the fiction and veil

of a corporation he used to defraud the Plaintiffs soon before shutting down the corporation in an

attempt to avoid any liability to the Plaintiffs.

III. AN AWARD OF PUNITIVE DAMAGES SHOULD BE RENDERED AGAINST

THE DEFENDANTS

Whether an award of punitive damages should be made as against Defendants in this case

is solely within the discretion of this Court. There obviously is no requirement to make such an

award. Plaintiffs contend, however, that such an award is highly justified in this case.

Florida statutory law provides for an award of punitive damages in appropriate

circumstances. Florida Statute Section 768.72 provides in pertinent part as follows in this

regard:
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(1) In any civil action, no claim for punitive damages shall be permitted

unless there is a reasonable showing by evidence in the record or proffered by a

claimant which would provide a reasonable basis for recovery of such damages....

(2) A defendant may be held liable for punitive damages only if the trier of

fact, based on clear and convincing evidence, finds that the defendant was

personally guilty of intentional misconduct or gross negligence. As used in this

section, the term:

(a) “Intentional misconduct” means that the defendant had actual

knowledge of the wrongfulness of the conduct and the high probability

that injury or damage to the claimant would result and, despite that

knowledge, intentionally pursued that course of conduct, resulting in

injury or damage.

(b) “Gross negligence” means that the defendant’s conduct was so

reckless or wanting in care that it constituted a conscious disregard or

indifference to the life, safety, or rights of persons exposed to such

conduct.

As to liability imposed upon the employer (in this case, Seymour Construction, Inc.), punitive

damages may be imposed for the conduct of the employee if that conduct meets the criteria as set

forth immediately above and “(a) the employer...actively and knowingly participated in such

conduct; (b) the officers, directors or managers of the employer...knowingly condoned, ratified,

or consented to such conduct; or (c) the employer...engaged in conduct that constituted gross

negligence and that contributed to the loss, damages, or injuries suffered by the Plaintiff.” F.S.

768.72(3). While only one of these elements must be met in order to establish liability of the

employer for punitive damages, Plaintiffs provided substantial evidence as to all three.

Plaintiffs contend they put on very substantial evidence as to Defendants’ intentional

misconduct, as well as their gross negligence. Seymour intentionally deceived the Schindewolfs

into providing him with $500,000 he at no time believed he would use on The View project. (He

provided $50,000 to Bayne Collins solely as a ruse in order to keep Plaintiffs at bay.) He at all

times intended to use that money to pay his employees to perform work on other, unrelated
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projects. He in no fashion separated out or established a separate account for the monies

provided to him by the Schindewolfs. Once the money was gone, but after he was sued by the

Schindewolfs, he shut the company down in order to avoid his obligation to them. This and

other evidence of record more than establishes the clear and convincing evidence standard

required in order to support an award of punitive damages.

As to the amount of punitive damages, while entitlement to punitive damages must be

proven by clear and convincing evidence, only a “greater weight of the evidence” burden of

proof applies as to a determination of the amount of damages. F.S. Section 768.725. Florida law

provides that an award of punitive damages may not exceed the greater of: (1) three times the

amount of compensatory damages...; or (2) the sum of $500,000. F.S. Section 768.73(1). As

Plaintiffs have requested a compensatory damage award of $450,000 (plus interest at the

statutory rate), and as three times that amount is $1,350,000, the statute appears clear (absent

reference to other sections of the statute not believed to be relevant for purposes of the current

case), that this Court may not award damages exceeding $1,350,000.

Plaintiffs rely upon the sound discretion of this Court, of course, not only to determine

whether punitive damages are appropriate, but what the amount of punitive damages should be in

accord with F.S. Section 768.73. If punitive damages are awarded, though, Plaintiffs request an

award, also, of attorneys fees in accordance with F.S. Section 768.73(3). Finally in this regard,

Plaintiffs request that any punitive damages award and/or award of attorneys fees be adjudged

against both Defendants, jointly and severally.

It is to be noted that punitive damages may be awarded not just on the basis of Plaintiffs’

fraud claim, but may also be awarded based upon Plaintiffs’ claim for conversion – as long as all

of the elements of F.S. Sections 768.72 and 768.73 are met. The outright theft by Defendants of
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monies from Plaintiffs certainly justifies an award of punitive damages even if this Court were

for some reason to find fraud was not proven. For further guidance as to when punitive damages

are properly awarded, see Wayne Frier Home Center of Pensacola, Inc. v. Cadlerock Joint

Venture, LP, 16 So. 3d 1006, 1008 (Fla. 1st DCA 2009).

IV. CONCLUSION

Plaintiffs were able to prove at trial that Defendant Seymour has engaged in a pattern of

deceptive and fraudulent conduct as toward Plaintiffs for nearly four years. Not only did he fail

to provide even one iota of tangible evidence or testimonial proof from other witnesses, but he

lied repeatedly to this Court – and was caught doing so. His unconscionable conduct was

exacerbated by (1) asking the Ohio Federal Court to move the case to Panama City so that he

might call witnesses in Northwest Florida, and then failing to call even one such witness; and (2)

requiring Plaintiffs to move this Court for an order compelling production of evidence (or for

that matter, compelling Defendants to comply even with their initial disclosure obligations)

during discovery. It might be noted that Defendants failed to comply with nearly every deadline

established by this Court (for example, Defendants’ Proposed Findings of Fact and Conclusions

of Law were filed six days late), and they failed even to appear at the commencement of trial on

time. Defendants throughout have shown disdain not only toward these Plaintiffs, but also

toward the Court and its processes.

For all of these reasons, Plaintiffs pray for an award of compensatory damages in the

amount of $450,000, plus interest, and also for an award of punitive damages in an amount to be

determined by the Court, plus attorneys fees. In the event attorneys fees are awarded, Plaintiffs

request the opportunity to provide evidence as to the reasonable and necessary fees incurred by

Plaintiffs in regard to this case.
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Respectfully submitted,

/s/ Ronald S. Kopp

Ronald S. Kopp (Fla. Bar #0004950)

rkopp@ralaw.com

Roetzel & Andress, LPA

222 South Main Street

Akron, Ohio 44308

Telephone: 330.376.2700

Facsimile: 330.376.4577

Of Counsel:

Paul W. Lombardi (Ohio Bar #0079179)

plombardi@ralaw.com

Roetzel & Andress, LPA

222 South Main Street

Akron, Ohio 44308

Telephone: 330.376.2700

Facsimile: 330.376.4577

Clayton W. Crevasse (Fla. Bar No. 0309621)

ccrevasse@ralaw.com

Roetzel & Andress, LPA

2320 First Street, Suite 1000

Fort Myers Florida 33901

Phone: (239) 338-4208

Fax: (239) 337-0970

Attorneys for Plaintiffs

CERTIFICATE OF SERVICE

I hereby certify that on this 29th day of April, 2011, the foregoing Plaintiffs’ Post-Trial

Brief was filed electronically. Notice of this filing was sent to counsel of record through the

Court’s electronic filing system. Access to this document also can be obtained through the

Court’s electronic system.

/s/ Ronald S. Kopp

Ronald S. Kopp

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