Court Opinion

ID: 176781
Source: CourtListenerOpinion
Date Created: 2010-10-07 14:26:22+00
Date Added: 2024-06-11T17:25:39.724983
License: Public Domain

[DO NOT PUBLISH]

                IN THE UNITED STATES COURT OF APPEALS

                         FOR THE ELEVENTH CIRCUIT            FILED
                           ________________________ U.S. COURT OF APPEALS
                                                            ELEVENTH CIRCUIT
                                 No. 09-12182                OCTOBER 7, 2010
                           ________________________             JOHN LEY
                                                                 CLERK
                    D. C. Docket No. 05-00211-CV-J-25-HTS

GENNADY IVANOVICH PUSHKO,
BRJANSKGIPLES L.L.C.,
a Russian corporation,

                                                    Plaintiffs-Counter-Defendants-
                                                                        Appellees,

                                       versus

SAMUEL KLEBENER, individually and
in his capacity as Director, President and
Secretary of Double Sams U.S.A., Inc.,
DOUBLE SAMS U.S.A., INC.,
a Florida corporation,
DOUBLE SAM, INC.,
a Florida corporation,

                                                   Defendants-Counter-Claimants-
                                                                     Appellants.

                           ________________________

                   Appeals from the United States District Court
                        for the Middle District of Florida
                         _________________________
                                (October 7, 2010)
Before EDMONDSON, HILL, and ALARCÓN,* Circuit Judges.

ALARCÓN, Circuit Judge:

       Samuel Klebener and Double Sams U.S.A., Inc. appeal from the grant of a

directed verdict against them and in favor of Gennady Ivanovich Pushko and

BrjanskGIPles L.L.C. on two separate breach of contract counterclaims. They also

appeal from the District Court’s denial of a renewed motion for judgment as a

matter of law or, in the alternative, motion for new trial following a jury verdict in

favor of Plaintiff BrjanskGIPles L.L.C. on a civil theft claim. We find no error and

affirm.

                                                I

                                               A

       This action arose out of a dispute over a business relationship forged

between Appellee Gennady Ivanovich Pushko (“Pushko”), a national and citizen of

Russia, and Appellant Samuel Klebener (“Klebener”), a national of Russia and a

naturalized citizen of the United States. Through their oral agreements and written

records, Pushko and Klebener indicated that at least one of the main objects of the

relationship was to facilitate the purchase of new equipment to modernize the

operations of Appellee BrjanskGIPles L.L.C. (“BrjanskGIPles”), a vertically-

       *
        Honorable Arthur L. Alarcón, United States Circuit Judge for the Ninth Circuit, sitting
by designation.

                                                2
integrated Russian timber and wood-processing company in which Pushko was a

shareholder. Pushko had experienced difficulty securing financing in his native

Russia because, due to the renascent economy in that country at the time, Russian

banks were charging in excess of sixteen percent interest. Pushko testified at trial

that Klebener represented that he could obtain financing at a favorable rate from

Bank of America to purchase the equipment BrjanskGIPles needed. Klebener’s

testimony did not refute this.

      In furtherance of their plan to procure the equipment for BrjanskGIPles,

Klebener and Pushko formed Double Sams U.S.A., Inc. (“DSUSA”). Pushko

purchased 500 shares of DSUSA stock for $50,000.00, and Klebener, who already

owned 100 shares in DSUSA, was to pay $50,000.00 to purchase another 400

shares. Thereafter, DSUSA and BrjanskGIPles entered into a Master Lease

Agreement (“MLA”). The MLA provides that DSUSA was to “coordinate [the]

lease” of equipment BrjanskGIPles. Under the terms of the MLA, lease payments

were to begin 30 days after the equipment was shipped to Pushko and

BrjanskGIPles. The MLA reads as follows in relevant part:

                                 4. PREPAYMENT

      Lessee [BrjanskGIPles] is agreed to pay twenty five percent (25%) of
      the total cost of the Equipment in a sum of Eight hundred thirty
      thousand USD (USD $830 000.00) as the prepayment (the
      “Prepayment”) within five business days upon signing the MLA.

                                          3
      Lessee hereby agrees that Lessor [DSUSA] shall not, by virtue of its
      entering into this Master Lease, be required to remit any payments to
      any manufacturer or other third party until Lessee accepts the
      Equipment subject to this Master Lease.

      Lessee is agreed to wire transfer funds as the Prepayment to the
      following account: [details of DSUSA account at Bank of America
      omitted]

                                   5. DELIVERY

      Lessee hereby assumes the full expense of transportation and in-
      transit insurance to Lessee’s premises and installation thereat of the
      Equipment. The Equipment referenced in the Schedule A shall be
      delivered to the Lessee’s principal place of business specified above
      within ninety (90) business days upon receiving the Prepayment.

The MLA also required BrjanskGIPles to provide DSUSA with an insurance

deposit in the amount of $51,170.00. BrjanskGIPles never made the $51,170.00

insurance deposit.

      Pushko testified at trial that Klebener communicated to him that the

$830,000.00 would only be needed for a few days, to show the bank that DSUSA

was eligible for the financing, after which the $830,000.00 would be returned to

BrjanskGIPles. Klebener testified at trial that he had not agreed to return the

$830,000.00 after a few days. Additionally, under the terms of the MLA, neither

Klebener nor DSUSA was obliged to obtain a loan.

      In order to obtain the $830,000.00, BrjanskGIPles received a short-term loan

from a Russian bank, secured by Pushko’s business assets, at a 16.5% interest rate.

                                          4
On November 4, 2004, BrjanskGIPles wired the $830,000.00 to DSUSA. The

$830,000.00, minus a wire-transfer fee, was deposited in a DSUSA account with

Bank of America.

      Within a few days of wiring the $830,000.00, Pushko began contacting

Klebener about the return of the funds. When no funds had been returned a week

after the wiring of the $830,000.00, Pushko insisted on the return of the money. A

few days later, Pushko received from Klebener a Notice of Termination, dated

November 15, 2004. It provided that

      [i]n accordance with BrjanskGIPles, LLC request to terminate MLA
      No 517-1/04 due to BrjanskGIPles, LLC organizational structure
      changes, this is to inform you that your request of November 5th to
      terminate MLA No 517-1/04 is approved, and the balance of your
      payment is transferred to your requested account and is subject to
      investment in the Russian market.

Pushko directed BrjanskGIPles’s director to sign and return the Notice of

Termination. That was done, and Pushko sent Klebener instructions for wiring the

$830,000.00 to BrjanskGIPles. On November 17, 2004, Klebener indicated in an

electronic mail message that a “money wire” would be sent not later than

November 19, 2004. Klebener also forwarded to Pushko what appeared to be a

November 17, 2004 electronic mail message from John Johnston, a Bank of

America customer service representative. The November 17, 2007 e-mail

indicated that Johnson had received instructions for the bank to transfer the “full

                                           5
prepayment” to BrjanskGIPles and that the transfer would be made as soon as the

request was translated into English, signed by all parties, and returned to Bank of

America. The $830,000.00 was never returned to BrjanskGIPles. Checks admitted

into evidence at trial demonstrated that Klebener used funds from the DSUSA

account for personal purchases and expenses.

      On March 8, 2005, Pushko and BrjanskGIPles initiated this litigation against

Klebener and DSUSA and others, asserting claims for fraud, conversion, breach of

contract, breach of the duty of good faith and fair dealing, and unjust enrichment.

At the same time, Pushko and BrjanskGIPles served a written demand at

Klebener’s home and principal place of business for $830,000.00 for compensation

resulting from the alleged civil theft of that amount of money belonging to Pushko

and BrjanskGIPles. Pushko and BrjanskGIPles received no response to the written

demand. As a result, they amended their complaint to add a claim for civil theft

(Count III). Answering Pushko and BrjanskGIPles’s Third Amended Complaint,

Klebener and DSUSA asserted several affirmative defenses and ten counterclaims.

In their amended answers and affirmative defenses, Klebener and DSUSA admitted

that they received the civil theft demand letter and asserted as their first affirmative

defense that Klebener and DSUSA properly retained the $830,000.00 from

BrjanskGIPles.

                                            6
      A jury trial commenced on September 15, 2008. Over the course of the two-

week trial, the parties presented evidence regarding the creation and termination of

the MLA. At the close of the evidence, both sides moved for a directed verdict as

to each of the remaining claims against them. The District Court granted Klebener

and DSUSA’s motion for a directed verdict as to Counts I and IV of the complaint.

It also granted Pushko and BrjanskGIPles’s motion for a directed verdict on

Counts I, II and V of the countercomplaint. Only BrjanskGIPles’s civil theft claim

(Count III of the plaintiffs’ complaint) against Klebener and DSUSA remained for

consideration by the jury.

      The jury returned a special verdict for BrjanskGIPles, finding that both

Klebener and DSUSA had acted with “criminal intent; that is with the intent to

deprive [BrjanskGIPles], either temporarily or permanently of a right to . . . or a

benefit from” property of BrjanskGIPles that the Klebener and DSUSA had

“obtained or used or attempted to obtain or use.” The jury found that

BrjanskGIPles was entitled to $830,000.00 of damages. Pursuant to Florida's civil

theft statute, the District Court tripled the damages and entered a final judgment of

$2,490,000.00 in favor of BrjanskGIPles. Klebener and DSUSA filed a renewed

motion for judgment as a matter of law or, in the alternative, for a new trial. The

District Court denied that motion. Klebener and DSUSA filed a timely notice of

                                           7
appeal. The District Court had subject matter jurisdiction pursuant to 28 U.S.C. §

1332. This Court has jurisdiction to review the District Court’s final order

pursuant to 28 U.S.C. § 1291.

                                         II

                                          A

       Klebener and DSUSA appeal from the grant of a directed verdict in favor of

Pushko and BrjanskGIPles on Klebener and DSUSA’s counterclaims for breach of

the MLA and breach of the parties’ agreement to terminate the MLA (Counts I and

II of the countercomplaint) and from the District Court’s denial of Klebener and

DSUSA’s request for a directed verdict on Pushko and BrjanskGIPles civil fraud

claim. This Court reviews a trial court’s ruling on a motion for judgment as a

matter of law pursuant to Rule 50(a) of the Federal Rule of Civil Procedure de

novo. Perera v. U.S. Fidelity and Guar. Co., 544 F.3d 1271, 1274 n.1 (11th Cir.

2008). In Carter v. City of Miami, 870 F.2d 578 (11th Cir. 1989), this Court wrote

that

       we consider all the evidence, and the inferences drawn therefrom, in
       the light most favorable to the nonmoving 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 was properly granted. Conversely, if there is substantial
       evidence opposed to the motion such that reasonable people, in the
       exercise of impartial judgment, might reach differing conclusions,

                                          8
      then such a motion was due to be denied and the case was properly
      submitted to the jury.

Id. at 581 (footnotes omitted); see also Fed. R. Civ. P. 50(a)(1) (a court may grant

a motion for judgment as a matter of law against a party “[i]f 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”).

      Klebener and DSUSA’s first argument is that the District Court erred in

granting Pushko and BrjanskGIPles’s request for a directed verdict on Klebener

and DSUSA’s breach of contract counterclaims (Counts I and II of the

countercomplaint). Ruling from the bench, the District Court noted that it thought

the language of the MLA was ambiguous. The District Court also found that there

was insufficient evidence of damage, that Klebener and DSUSA’s damages

evidence was too speculative, and that there was “no evidence that the defendant

either had the equipment or could afford the equipment, or otherwise, could get the

equipment.” Regarding Klebener and DSUSA’s counterclaim for breach of the

termination agreement, the District Court similarly ruled that there was no

evidence of damage as a result of that conduct. The District Court also noted that

it was troubled by the fact that the termination agreement purported to preclude

Pushko and BrjanskGIPles from bringing suit.

                                           9
      Klebener and DSUSA argue that the District Court erred in granting entering

a directed verdict in favor of Pushko and BrjanskGIPles’s on the breach of contract

counterclaims because the evidence presented at trial gave rise to a genuine issue

of disputed material fact regarding formation of the parties’ agreements and

whether they were breached. We disagree. The District Court correctly concluded

that Klebener and DSUSA failed to demonstrate that they were damaged as a result

of the alleged breaches. See Born v. Goldstein, 450 So. 2d 262, 264 (Fla. Dist. Ct.

App. 1984) (“Proof of lost profits is generally derived from proof of income and

expenses for a reasonable period of time prior to the breach. Where the evidence

only pertains to gross receipts or fails to establish expenses with specificity, an

award of damages will be reversed.” (citations omitted)).

      Klebener and DSUSA also argue that the District Court erred in denying

their request for a directed verdict on Pushko and BrjanskGIPles’s civil fraud claim

because the March 8, 2005 civil theft demand letter did not strictly comply with the

requirements of Section 772.11 of the Florida Statutes.2 First, Klebener and

      2
          Section 772.11 provides as follows:

      . . . Before filing an action for damages under this section, the person claiming
      injury must make a written demand for $200 or the treble damage amount of the
      person liable for damages under this section. If the person to whom a written
      demand is made complies with such demand within 30 days after receipt of the
      demand, that person shall be given a written release from further civil liability for
      the specific act of theft or exploitation by the person making the written demand.

                                                10
DSUSA contend that the demand notice was inadequate because it was addressed

only to “Samuel Klebener” and not to DSUSA. Second, Klebener and DSUSA

argue that the demand notice sought $830,000.000, but the evidence at trial

demonstrated that the proper amount was $826,966.00, which was the amount

deposited after Bank of America deducted its wire transfer fee from the

$830,000.00.

       In ruling on Klebener and DSUSA’s renewed motion for judgment as a

matter of law, the District Court concluded that Klebener and DSUSA’s argument

had no merit. The District Court based this determination on Klebener and

DSUSA’s admissions that Klebener’s home address was DSUSA’s principal place

of business; that Klebener was sued in both his individual capacity and his capacity

as director, president, and secretary of DSUSA; and that both Klebener and

DSUSA had received the demand letter. Accordingly, the District Court concluded

as follows:

              Even assuming that the demand letter, as worded, failed to
       comply with the Florida civil theft statute as to DSUSA, . . .
       Defendants . . . waived their objections as to any possible defects in
       the demand letter by failing to allege them as affirmative defenses in
       their answer, by failing to deny with specificity and particularity that
       the conditions precedent to the bringing of a civil theft claim had been
       complied with, by failing to seek the dismissal of their claim in their

Fla. Stat. § 772.11 (2002).

                                          11
      April 28, 2005 motion to dismiss, and by failing to assert such defects
      in their subsequent motion to dismiss.

Mar. 31, 2009 Order at 5-6; see Ingersoll v. Hoffman, 589 So.2d 223, 224 (Fla.

1991) (holding that “the failure to comply with the prelitigation notice

requirements of section 768.57 may be excused by a showing of estoppel or

waiver”). We agree. Similarly, the District Court did not err in determining that

the demand notice correctly sought $830,000.00, the amount of Pushko and

BrjanskGIPles’s actual loss. See Fla. Stat. § 722.11 (2002) (providing for “a cause

of action for threefold the actual damages sustained”).

                                           B

      Klebener and DSUSA allege that the District Court committed other errors

in denying their renewed motion for judgment as a matter of law or, in the

alternative, for a new trial. We review the District Court’s denial of a motion for a

new trial for an abuse of discretion. Action Marine, Inc. v. Continental Carbon

Inc., 481 F.3d 1302, 1309 (11th Cir. 2007). “Deference to the District Court is

particularly appropriate where a new trial is denied and the jury's verdict is left

undisturbed, as in this case.” Id. (internal quotations and citations omitted). This

Court also reviews ruling on the admission of evidence for an abuse of discretion,

Millennium Partners, L.P. v. Colmar Storage, LLC, 494 F.3d 1293, 1301 (11th Cir.

2007), and “evidentiary rulings are overturned only when the moving party

                                           12
establishes that the ruling resulted in a substantial prejudicial effect.” Brough v.

Imperial Sterling Ltd., 297 F.3d 1172, 1179 (11th Cir. 2002). “For evidence and

argument to which no objection has been raised, this court reviews for plain error.”

Id.

       Klebener and DSUSA contend that the District Court erred in denying their

motion for a new trial by permitting improper closing argument about how

Klebener spent the $830,000.00 that was deposited into DSUSA’s account, that

other investors lost money to Klebener, and matters excluded from evidence. In

ruling on these contentions, the District Court noted that Klebener and DSUSA had

failed to object at trial, or in their Rule 50(a) motion, that documentary evidence of

Klebener’s use of the funds from the DSUSA account had been admitted into

evidence.3 The District Court properly instructed that argument by counsel was not

evidence. See Brough, 297 F.3d at 1179-80 (finding that “the arguments of

counsel, although improper, [did] not rise to the level of plain error because they

did not seriously affect the fairness, integrity, or public reputation of the

proceeding”).

       3
         The Court notes that Klebener’s attempts to intimate that counsel for Pushko and
BrjanskGIPles repeatedly and improperly attempted to question witnesses in the presence of the
jury about Klebener’s use of $830,000.000, Appellants’ Principal Br. at 29-30, are not supported
by the record.

                                               13
      Klebener and DSUSA further argue that the District Court abused its

discretion by permitting an undisclosed witness to testify and by allowing two lay

witnesses to render expert opinions. The District Court ruled that it would not

address those arguments because Klebener and DSUSA had failed to raise them in

their Rule 50(a) motion. Mar. 31, 2009 Order at 10. The District Court also found

that “no miscarriage of justice resulted” from the admission of the challenged

testimony. The record indicates that Pushko and BrjanskGIPles provided ample

notice of their intention to call a corporate representative of Bank of America to

testify that the November 17, 2004 electronic mail message from John Johnston

was not, in fact, from a Bank of America customer service representative.

Additionally, the record demonstrates that the District Court considered Bank of

America employee Kevin Holzendorf’s experience in making initial determinations

about whether loans should be submitted to underwriting, and it considered the

reliability of Holzendorf’s conclusions. The District Court also determined that the

evidence was relevant. Finally, the record demonstrates that attorney John Ball

was competent to testify about the legal effect of the documents he created for

Klebener and DSUSA when he was engaged to perform corporate legal work for

Klebener, Pushko, and DSUSA. The District Court did not abuse its discretion in

admitting the challenged testimony.

                                          14
                                           C

      Klebener and DSUSA identify two additional grounds for determining that

the District Court erred in entering judgment against either Klebener in his

individual capacity or both Klebener and DSUSA. Their first argument is that the

District Court erred in entering judgment against Klebener in his individual

capacity. This argument proceeds from two premises: that Pushko and

BrjanskGIPles were required to pursue a shareholder’s derivative claim against

Klebener, and that the evidence at trial demonstrated that the majority of the

$830,000.00 was used consistent with the terms of DSUSA’s shareholder

agreement, which provided that Klebener was solely responsible for the

management of all DSUSA business activities in the United States. Klebener and

DSUSA also argue that the District Court improperly pierced the corporate veil in

order to hold Klebener responsible in his individual capacity. Ruling on these

challenges as they were raised in Appellants’ renewed motion, the District Court

explained

             The Court notes that Defendants have already admitted that
      Klebener was sued in his individual capacity and in his capacity as a
      director president, and secretary of DSUSA. (See Dkt. 191). The
      Court also notes that civil theft is an intentional tort. (See Dkt. 291).
      Further, even assuming that Klebener never obtained the money that
      was the subject of the civil theft count, he still could be liable for
      using or attempting to obtain or use the money. (See id.)

                                          15
              Considering the evidence in the light most favorable to
      Plaintiff, the Court finds Defendants’ arguments unpersuasive, as the
      evidence demonstrated that Klebener directly participated in the theft.
      See Aboujaoude v. Poinciana Dev. Co. II, 509 F. Supp. 2d 1266, 1277
      (S.D. Fla. 2007) (“If, however, a director or officer commits or
      participates in the commission of a tort, whether or not it is also by or
      for the corporation, he is liable to third persons injured thereby, and it
      does not matter what liability attaches to the corporation for the
      tort.”); Wadlington v. Continental Medical Services, Inc., 907 So. 2d
      631, 633 (Fla. Dist. Ct. App. 2005) (stating that “individual officers
      and agents of a corporation may be held personally liable for their
      tortious acts, even if such acts were committed within the scope of
      their employment or as corporate officers”) (internal quotation marks
      omitted).

Mar. 31, 2009 Order at 9. We agree with the District Court’s analysis of this

contention.

      Klebener and DSUSA also argue that BrjanskGIPles failed to state a claim

for civil theft because the claim was based on, and was not independent of, a

breach of contract claim. Appellants’ Principal Br. at 53 (citing Florida case law

for the proposition that a civil theft clam based on a contract must “go beyond” and

“be independent from” a breach of contract and concluding that the District Court

erred because “Appellees’ claim was founded on an agreement and could have

been discharged by the payment of money.”). The District Court declined to

address this argument because it had not been raised in Klebener and DSUSA’s

Rule 50(a) motion. Mar. 31, 2009 Order at 9-10. The record indicates that

Klebener and DSUSA raised this defense for the first time after the trial had ended.

                                          16
Klebener and DSUSA forfeited this defense by failing to raise it at or before trial.

See Arbaugh v. Y&H Corp., 546 U.S. 500, 507 (2006) (“[T]he objection that a

complaint ‘fail[s] to state a claim upon which relief can be granted,’ Rule 12(b)(6),

may not be asserted post-trial. Under Rule 12(h)(2), that objection endures up to,

but not beyond, trial on the merits[.]” (quoting Kontrick v. Ryan, 540 U.S. 443, 459

(2004))).

                                  CONCLUSION

      For all of the above reasons, the judgment of the District Court is

AFFIRMED.

                                          17