Cibao v. Lama

• Decision Date: 24 February 2011
• Docket Number: 09–12587.,Nos. 09–11153,s. 09–11153
• Citation: 633 F.3d 1330
• Parties: MOLINOS VALLE DEL CIBAO, C. por A., a corporation of the Dominican Republic, Plaintiff–Appellant,v.Oscar R. LAMA, Carlos Lama–Seliman, Oscar Lama–Seliman, individuals residing in the state of Florida, Defendants–Appellees.Molinos Valle Del Cibao, C. por A., a corporation of the Dominican Republic, Plaintiff–Appellee,v.Oscar R. Lama, Carlos Lama–Seliman, Oscar Lama–Seliman, individuals residing in the state of Florida, Defendants–Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

633 F.3d 1330

84 Fed. R. Evid. Serv. 985

22 Fla. L. Weekly Fed. C 1821

MOLINOS VALLE DEL CIBAO, C. por A., a corporation of the Dominican Republic, Plaintiff–Appellant,

v.Oscar R. LAMA, Carlos Lama–Seliman, Oscar Lama–Seliman, individuals residing in the state of Florida, Defendants–Appellees.Molinos Valle Del Cibao, C. por A., a corporation of the Dominican Republic, Plaintiff–Appellee,

v.Oscar R. Lama, Carlos Lama–Seliman, Oscar Lama–Seliman, individuals residing in the state of Florida, Defendants–Appellants.

Nos. 09–11153

09–12587.

United States Court of Appeals, Eleventh Circuit.

Feb. 24, 2011.

Alvin Bruce Davis, Raul B. Manon, Squire, Sanders & Dempsey, LLP, Miami, FL, for Appellants.Jorge Alejandro Mestre, Ana Cristina Munoz, Rivero, Mestre & Castro, Coral Gables, FL, for Appellees.Appeals from the United States District Court for the Southern District of Florida.Before TJOFLAT and COX, Circuit Judges, and KORMAN,^* District Judge.TJOFLAT, Circuit Judge:

This case stems from a foreign currency exchange agreement. The plaintiff, a foreign corporation, bought United States dollars from the defendants, three individuals—two of whom it turns out are citizens of the Dominican Republic—in exchange for Dominican pesos. The plaintiff paid and the defendants did not; the plaintiffs sued. What was otherwise a simple state law breach of contract action became much more complicated by inartful lawyering and the allure of treble damages.

The defendants challenged subject matter jurisdiction at late junctures—on the eve of trial for one theory, on appeal for another—regarding issues they could have foreseen when they received the complaint over three years ago. The plaintiff, after being fully compensated under its breach of contract theory, contests the district court's dismissal of its statutory worthless check claim, Fla. Stat. § 68.065. Under both claims the plaintiff would receive the same compensatory damages; the dismissed claim, however, would provide prevailing plaintiffs with treble damages.

This opinion is organized as follows. Part I lays out the facts of the case and its procedural history. Part II discusses the three issues related to subject matter jurisdiction, and concludes that we have jurisdiction to hear the merits arguments regarding one defendant. Part III addresses the plaintiff's two arguments regarding piercing the corporate veil—a necessary component for the worthless check claim. Part IV addresses the remaining defendant's two arguments: that the district court erroneously admitted communications made during settlement negotiations; and that there was insufficient evidence to show that the currency broker who negotiated the contract was the defendant's agent. Part V concludes.

I.

A.

This case stems from a Foreign Currency Exchange Agreement (“the Contract”) between the plaintiff, Molinos Valle Del Cibao, C. por A. (“Molinos”), and the three defendants (collectively, the “Lamas”), Oscar R. Lama (“Oscar Sr.”) and his two sons, Carlos Lama Seliman (“Carlos”) and Oscar Lama Seliman (“Oscar Jr.”). Molinos is a Dominican corporation. The Lamas themselves reside in Florida. Facts brought forward in supplemental briefing to this court show that Oscar Sr. is a dual citizen of the United States and the Dominican Republic, but that Carlos and Oscar Jr. are Dominican citizens working in the United States on non-immigrant worker visas.

Molinos operates a flour mill, selling flour to the Dominican market, for which it receives Dominican pesos. Its suppliers, however, are often American companies; Molinos must pay their bills in United States dollars. To get the best exchange rate for its pesos, Molinos often hires currency brokers to find and contract with sellers of United States dollars.

In June 2004, Molinos needed to exchange approximately 28 million pesos for United States dollars to pay its suppliers. It hired a currency broker named Marcia Gabriela Bonnelly to find the best rate. To that end, she contacted Juan Mejia, another currency broker. One of Mejia's clients, the Lama family, was looking to sell United States dollars. Mejia contacted one of the Lamas, Carlos, who approved the Contract: 28 million Dominican Pesos for $636,596.00.

Molinos completed its side of the Contract; it drafted checks worth 28 million pesos and gave them to Bonnelly, who passed them on to Mejia.¹ The checks were not, however, made payable to any member of the Lamas family; they were payable to other individuals and another corporation controlled by the Lamas. Mejia testified at trial that this arrangement was normal for his transactions on behalf of the Lamas. The family often needed instant liquidity and therefore often requested that checks be made payable to their messengers, who would then cash the checks on their trip back to the Lamas' office. The checks were honored and the Lamas received their pesos.

In return, Molinos received a series of checks totaling $636,596.00. These checks were drawn from the accounts of two Dominican corporations, Chipstek, S.A. (“Chipstek”) and Expertek, S.A. (“Expertek”), and signed by either Carlos or Oscar Jr. in their capacities as directors of Chipstek and Expertek. Both Chipstek and Expertek are wholly-owned subsidiaries of Globaltek, S.A. (“Globaltek”).² Globaltek is owned by ORLS International Holdings, which is in turn owned by L&S Corporation; members of the Lama family, including Oscar Sr., Carlos, and Oscar Jr., own L&S Corporation. The Lamas—Oscar Sr., Carlos, and Oscar Jr.—are board members of Chipstek and Expertek, but do not own these entities directly.

Although Chipstek and Expertek wrote these checks, Molinos's trial testimony suggests that these corporations were not parties to the Contract. Bonnelly was familiar with the Lamas but had never before done business with these entities. Rather, she testified that the Lamas had a good reputation—“they were responsible morally also and solvent”—in the business community and she had consummated similar currency agreements with the Lamas on behalf of roughly ten to twelve of her other clients. Molinos's General Manager, Ruben Reynoso, who approved the deal on Molinos's behalf, likewise believed that the Lamas were Molinos's contractual counter-party; he had never heard of Chipstek or Expertek. The Lamas' reputation played a role in his approval of the Contract.

This trust was misplaced; the checks bounced. Molinos's bank informed Molinos that the accounts on which the checks were drawn either were overdrawn or had been closed.

Wanting to resolve this issue, Molinos's representatives met with the Lamas on several occasions between August and October 2004. At one of these meetings, Oscar Sr. acknowledged that his family, himself included, was responsible for the sum of the bounced checks.³ Carlos also acknowledged that his family—he, Oscar Sr., and Oscar Jr.—was responsible for the debt. At the conclusion of the October 2004 meeting, Carlos signed a settlement agreement acknowledging personal liability for part of the debt and signed a corresponding promissory note.⁴ The parties met again in 2006 to discuss the debt, which the Lamas had not yet paid. Oscar Sr. attended that meeting and did not deny his personal liability under the Contract.

Molinos never received its money. Its suppliers, however, still required payment. Several of its checks to these suppliers also bounced; they were issued in reliance on the availability of funds under the Contract. To cover its costs, Molinos had to borrow money, incurring interest.

B.

Molinos brought this suit against the Lamas in November 2007 in the United States District Court for the Southern District of Florida.⁵ The amended complaint contained six counts.⁶ Count I alleged that the Lamas breached the Contract. Counts II and III alleged fraud and negligent misrepresentation, but were dismissed at the pleading stage and are not challenged here. Count IV alleged a worthless check claim under Fla. Stat. § 68.065 and sought liability directly against the Lamas under the theory that because Chipstek and Expertek, the entities that issued the worthless checks, were the alter egos of the Lamas, the court should pierce the corporate veil. This count is notable because it carries with it the possibility of treble damages. Fla. Stat. § 68.065(1).⁷ Count V alleged a violation of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”), Fla. Stat. § 501.204(1). Count VI alleged unjust enrichment, an alternative theory if the court did not find an express contract to sustain Count I.

Regarding jurisdiction, Molinos cited diversity jurisdiction under 28 U.S.C. § 1332(a). Molinos alleged that it was a Dominican citizen and that the Lamas were “residents of Florida.” The Lamas did not contest diversity jurisdiction; their answer acknowledged that they were “domiciled” in Florida.

Over the next months, the Lamas several times moved the court to dismiss the case. They moved to dismiss the amended complaint on February 7, 2008 for failure to state a claim for relief under Federal Rule of Civil Procedure 12(b)(6).⁸ The court granted this motion in part and dismissed Counts II and III, but denied the rest of the motion. On August 25, 2008, the Lamas moved for judgment on the pleadings under Rule 12(c); the court denied this motion. The Lamas also moved for summary judgment under Rule 56 on all claims on August 26, 2008; this motion was also denied.

The Lamas filed a motion in limine on October 3, 2008. Pertinent to this appeal, the motion sought to exclude the promissory note signed by Carlos and any statements made during the purported settlement discussions during 2004 and 2006. The district court denied the motion. It held that, because the Lamas never denied either the validity or the amount of Molinos's claim during those negotiations, the negotiations were not covered by Federal Rule of Evidence 408. At trial, the court instructed the jury that the evidence was not being...