Court Opinion

ID: 3095055
Source: CourtListenerOpinion
Date Created: 2015-10-16 04:26:46.441383+00
Date Added: 2024-06-11T09:33:05.604710
License: Public Domain

Case: 13-10436         Document: 00512675289            Page: 1      Date Filed: 06/24/2014

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                                    United States Court of Appeals
                                                                                             Fifth Circuit

                                                                                           FILED
                                          No. 13-10436                                 June 24, 2014
                                                                                      Lyle W. Cayce
TRANSFIRST HOLDINGS, INCORPORATED;                                                         Clerk
TRANSFIRST MERCHANT SERVICES, INCORPORATED;
PAYMENT RESOURCES INTERNATIONAL, L.L.C.,

                                                      Plaintiffs-Appellees
v.

DOMINIC J. MAGLIARDITI;
DII INVESTMENTS, INCORPORATED,

                                                      Defendants-Appellants

                    Appeals from the United States District Court
                         for the Northern District of Texas
                              USDC No. 3:06-CV-2303

Before SMITH, WIENER and PRADO, Circuit Judges.
PER CURIAM:*
       Following a bench trial, the district court held Defendants-Appellants
Dominic J. Magliarditi (“Magliarditi”) and DII Investments, Inc. (“DII”)
(together, “Appellants”) 1 liable for, inter alia, fraud by non-disclosure under
Texas law and entered judgment for Plaintiffs-Appellees on that claim. On

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
       1 Other individual and corporate defendants were held liable for fraud, but those parties have
not challenged the district court’s judgment in this appeal.
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                                           No. 13-30691
appeal, Appellants challenge the district court’s (1) holding of fraud, (2)
determination that Magliarditi is personally liable for damages attributable to
corporate defendant SSF Holdings, LLC (“SSF”), and (3) reliance on evidence
adduced by Plaintiffs-Appellees’ expert witness as to damages.                                 Having
reviewed the record on appeal, including the parties’ briefs, the applicable law,
and the district court’s extensive January 19, 2010 findings of fact and
conclusions of law and the March 8, 2011 order amending its findings of fact
and conclusions of law, we AFFIRM for the following reasons:
                  1.    The district court correctly determined that Plaintiffs-
        Appellees       detrimentally        relied     on     Appellants’       fraudulent       non-
        disclosures. 2 Rule 52(a) of the Federal Rules of Civil Procedure “exacts
        neither punctilious detail nor slavish tracing of the claims issue by issue
        and witness by witness.” 3 Consequently, “[i]f a trial judge fails to make
        a specific finding on a particular fact, the reviewing court may assume
        that the court impliedly made a finding consistent with its general
        holding so long as the implied finding is supported by the evidence.” 4 As
        the district court’s factual findings of reliance are amply supported by

        2 United Teacher Assocs. Ins. Co. v. Union Labor Life Ins. Co., 414 F.3d 558, 567-58 (5th Cir.
2005) (“Courts in Texas have consistently held that fraud by nondisclosure or concealment requires
proof of all of the elements of fraud by affirmative misrepresentation, including fraudulent intent, with
the exception that the misrepresentation element can be proven by the nondisclosure or concealment
of a material fact in light of a duty to disclose.”); Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d
171, 181 (Tex. 1997) (“The [respondents] assert that the jury’s verdict must be sustained because
reliance is not an element of a claim for fraud by non-disclosure. We disagree. Reliance is an element
of fraud. Fraud by non-disclosure is simply a subcategory of fraud because, where a party has a duty
to disclose, the non-disclosure may be as misleading as a positive misrepresentation of facts.” (internal
citations omitted)).

        3Century Marine Inc. v. United States, 153 F.3d 225, 231 (5th Cir. 1998) (quoting Burma
Navigation Corp. v. Reliant Seahorse M/V, 99 F.3d 652, 656 (5th Cir. 1996)).

        4   Id.

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                                           No. 13-30691
        substantial evidence, they are not clearly erroneous. 5 The district court
        thus did not err in holding Appellants liable for fraud.
                2.      The     district    court      explicitly    found      that    Magliarditi
       purposefully used SSF and DII to perpetuate his fraud. A court may
       pierce a corporate veil via the “sham to perpetrate a fraud” doctrine—
       which is not a separate cause of action—“‘if recognizing the separate
       corporate existence would bring about an inequitable result.’” 6
        Following the Texas courts’ “flexible fact-specific approach focusing on
        equity,” the district court properly concluded that recognizing the
        corporate existence of SSF and DII separate from Magliarditi would
        produce an inequitable result. 7 The district court thus did not err in
        holding Magliarditi personally liable for damages attributed to SSF.
                3.      The district court adopted a portion of Plaintiffs-Appellees’
        expert witness’s testimony to determine lost-profit damages. As the
        witness provided a sound basis for his assumptions and explained how
        he relied on them to reach his estimate of Plaintiffs-Appellees’ lost
        profits, his testimony was not “the mere ipse dixit of a credentialed
        witness.” 8 The district court’s factual findings regarding damages are

        5Delahoussaye v. Performance Energy Servs., L.L.C., 734 F.3d 389, 392 (5th Cir. 2013) (“To
reverse for clear error, this court must have ‘a definite and firm conviction that a mistake has been
committed.’” (quoting Canal Barge Co., Inc. v. Torco Oil Co., 220 F.3d 370, 375 (5th Cir. 2000))); Arete
Partners, L.P. v. Gunnerman, 594 F.3d 390, 394 (5th Cir. 2010).

        6Bollore S.A. v. Imp. Warehouse, Inc., 448 F.3d 317, 326 (5th Cir. 2006) (quoting Castleberry
v. Branscum, 721 S.W.2d 270, 272-73 (Tex. 1986)).

        7Permian Petroleum Co. v. Petroleos Mexicanos, 934 F.2d 635, 644 (5th Cir. 1991) (citing
Castleberry, 721 S.W.2d at 273).

        8Ellis v. United States, 673 F.3d 367, 373 (5th Cir. 2012) (quoting Jelinek v. Casas, 328 S.W.3d
526, 536 (Tex. 2010)); see also Guile v. United States, 422 F.3d 221, 227 (5th Cir. 2005).

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                                          No. 13-30691
       supported by substantial evidence, and thus they are not clearly
       erroneous. 9
The district court’s third amended final judgment is, in all respects,
AFFIRMED.

       9 French v. Allstate Indem. Co., 637 F.3d 571, 577 (5th Cir. 2011); see also Ellis, 673 F.3d at
373; Guile, 422 F.3d at 227.

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