Bay Promo, LLC v. Alaniz
| Docket Number | Civil Action 20-12050-RGS |
| Decision Date | 27 November 2023 |
| Parties | BAY PROMO, LLC v. ARELY NICOLLE MONCADA ALANIZ |
| Court | U.S. District Court — District of Massachusetts |
FINDINGS OF FACT, RULINGS OF LAW, AND ORDER AFTER A BENCH TRIAL
Bay Promo sued Arely Nicolle Moncada Alaniz, a former contract employee, in the Eastern District of New York in September of 2020, alleging claims of breach of contract, unjust enrichment, violations of Florida's antisurveillance statute, Fla. Stat. § 934.10, and misappropriation of trade secrets. Bay Promo subsequently moved for a change of venue, and the case was transferred to this district in November of 2020. In her answer to the Complaint, Moncada asserted four counterclaims: breach of contract, violation of Fla. Stat. § 686.201, quantum meruit, and unjust enrichment.[1]After Bay Promo made several dishonest representations to the court regarding the health of one of its principals - including filing a forged doctor's note - the court convened a show cause hearing to permit Bay Promo to explain why sanctions should not be imposed. Bay Promo's attorney attended the hearing without live or remote witnesses. After hearing the parties' arguments, the court dismissed Bay Promo's affirmative claims with prejudice. Dkt. # 84.
A two-day bench trial was convened on July 31-August 1, 2023 to hear Moncada's counterclaims. The single issue at trial was whether Bay Promo owed Moncada commissions for sales and attempted sales of personal protective equipment (PPE) on behalf of Bay Promo in March and April of 2020. Based on the credible testimony and exhibits offered at trial, the court makes the following findings and rulings.
1. Plaintiff Arely Nicolle Moncada Alaniz is a resident of Massachusetts.
2. Defendant Bay Promo, LLC, is a Florida limited liability company with a principal place of business in Tampa, Florida. Humberto Arguello, Jr. and Thisal Jayasuriya are the principals of Bay Promo.
3. On March 23, 2020, Arguello recruited Moncada as a “sales distribut[ion] officer” (effectively an account representative) who would “provide to [Bay Promo] duties as needed” for a term of one month. Ex. 10 ¶¶ 1, 10; Day 2 Tr. at 80. Moncada at the time was an undergraduate student at Emerson College who was acquainted with Arguello through family connections in her native Nicaragua. As defined in her contract, Moncada agreed to perform “duties as are customarily performed by an employee in a similar position, ” and “other and unrelated services and duties as may be assigned to [her] from time to time.” Ex. 10 ¶ 2. Moncada was not however, authorized to “enter into any contracts or commitments for or on behalf of [Bay Promo] without first obtaining the express written consent of [Bay Promo].” Id. ¶ 9. The parties memorialized Moncada's employment in a written commission agreement (Commission Agreement) effective on March 21, 2020.
4. Under the Commission Agreement, Bay Promo promised to pay Moncada a commission “based on 6% of gross sales of [$]3, 640, 000.00 USD . . . at the conclu[s]ion of each project.”[2] Id. ¶ 3. As for subsequent projects, the Agreement stated that the “commission rate will be determined by Humberto Arguello CEO [on a] project by project basis.” Id. The Commission Agreement did not define “project.”
5. Moncada did not price sales items or draft purchase orders or invoices; instead, when she received a purchase order from a client, she would forward the order to Arguello and/or Margina Arguello (Humberto's mother), who would draft the invoice. Day 1 Tr. At 83, 86-87.
6. Moncada was never formally terminated. However, she lost access to Bay Promo's “portal” some three weeks after entering the Commission Agreement, on or about April 12, 2020, and she lost access to her Bay Promo email on or about April 15, 2020. Id. at 120.
7. In March of 2020, Lee Parrish and his son started a company, Denim & More, PC, to fabricate t-shirts and denim products. Day 1 Tr. at 18. Soon after the Parrishes formed the company, a friend of New York Senator Chuck Schumer contacted Lee Parrish to ask whether Denim & More was able to supply protective face masks to New York City. Id. at 19. Parrish reached out to a business friend, Scott Vaughn, and on March 21, 2020, Vaughn introduced Parrish to Moncada via email. Id. at 24; Ex. 2 at 11-12.
8. After an initial discussion, Parrish emailed Moncada to order “500, 000 units per week of the KN95 and surgical masks [at a] $1.40 and [$0].34 price commitment” (New York Order). Ex. 2 at 9. Parrish sent Moncada a draft purchase order on behalf of Denim & More that stipulated that Bay Promo would deliver to New York lots of 500, 000 FDA-approved KN95 masks and 500, 000 FDA-approved surgical face masks on April 1, April 8, April 15, and April 22, 2020. Id. at 54-55. The total price for the purchase order was $3.48 million. Id.
9. While Parrish and Moncada were finalizing the terms of the New York Order, Parrish asked Moncada to forward to him the FDA certification approvals for the factories at which the masks were being manufactured. Id. at 13. Many customers, including New York City, required factories to be FDA certified before placing orders. Day 1 Tr. at 31; see also Day 2 Tr. at 30. Moncada sent Parrish the FDA certifications the same day. See Ex. 3. The certifications she provided were for Shanghai Dasheng Health Products Manufacture Co., Ltd.; Xiantao Sanda Industrial Co., Ltd.; San Huei United Company Ltd.; Hangzhou Clongene Biotech Co., Ltd.; and Xianoheng Zooboo Sports Goods Co., Ltd. (all Chinese companies).[3]Id. Parrish also required that the contract state that Bay Promo would “be responsible for the delivery on time with payment.” Ex. 2 at 48.
10. On March 22, Moncada sent Parrish a contract and revised purchase order on behalf of Bay Promo. Id. at 68-74. The contract stated that Denim & More would pay “50% of the invoice . . . before the production starts, ” and the remaining 50% “before delivery.” Id. at 68.
11. Moncada sent Parrish a final contract and purchase order the same day. Id. at 79-86. Before the parties signed the contract and purchase order, the price per mask increased by 4 cents, bringing the final cost of the order to $3.64 million. Parrish signed the contract the same day, id. at 93, and Denim & More wired the 50% deposit to Bay Promo on March 24, 2020, Ex. 4.
12. Bay Promo did not timely deliver the New York Order; the first delivery arrived several weeks late. Day 1 Tr. at 39; Day 2 Tr. at 31. When the masks were finally delivered, New York City rejected them because they had not originated from any of the factories for which Bay Promo had provided FDA certifications. Day 1 Tr. at 39-40, 55; Day 2 Tr. at 33. Believing that Denim & More had breached its contract, New York City refused to pay Denim & More the outstanding balance on the order and then sued Denim & More for a refund of the deposit. Id. at 37; Day 2 Tr. at 38. Denim & More in turn refused to make any further payments to Bay Promo. See Day 1 Tr. at 37.
13. While putting the finishing touches on the New York Order, on March 23, 2020, Parrish forwarded an email to Arguello and Moncada from a potential purchaser of KN95 and surgical masks in Kansas City (Contour Order). See Ex. 2 at 113.
14. Arguello sent Parrish a draft invoice for the Contour Order on March 24 and copied Moncada - whom he identified as the “account rep” -on the email. Id. at 131. Parrish responded by modifying the quantity of the order, causing Arguello to send a revised invoice reflecting the modifications, which Parrish accepted. Id. at 154. In sending the revised invoice, Arguello did not copy Moncada. Id.
15. On March 27, Parrish's assistant sent Moncada and Arguello a second purchase order from Kansas City. Id. at 183. Moncada asked Margina Arguello to add this additional order to the original Contour Order. Id. at 184. Margina Arguello sent a revised invoice to Parrish for $503, 960, which listed Moncada and Arguello as the salespeople. Id. at 187. Parrish signed the invoice the same day. Id. at 191. Parrish paid Bay Promo for the Contour Order on May 6, 2020. See Ex. 4 at 1, 4.
16. In late March of 2020, Jeffrey Cravens, the owner of an apparel company called Cravens Group LLC, contacted Parrish to ask whether he had access to any PPE suppliers. Ex. 9 at 7. Parrish recommended Bay Promo.
17. Cravens submitted his first order to Bay Promo through Parrish on March 26, 2020 (Wells Fargo Order). Id. at 8; Ex. 2 at 201. Moncada sent Parrish an invoice for $370, 500 for the Wells Fargo Order on March 28, 2020. Ex. 2 at 202; Ex. 5 at 15.
18. Cravens submitted seven additional orders to Bay Promo: one on April 2 for $362, 000;[4]one on April 13 for $230, 050; two on April 14 for $430, 000 and $5, 101, 200, respectively; one on April 16 for $1.92 million; one on April 23 for $720, 000; and one on May 8 for $1, 291, 680. Ex. 5 at 12, 17-24.
The record includes no communications from Cravens or Parrish to Moncada placing these orders.
19. Moncada spoke with Arguello on March 24 about receiving a commission for the Contour Order, and he directed her to Jayasuriya. Day 1 Tr. at 88, 90-91. That evening, Moncada emailed Arguello stating that she intended to instruct Jayasuriya to draft a commission agreement with her for the Contour Order, which would include a commission of 6% of the total price of the order “to be paid at the conclu[s]ion of [the] project.”[5]See Ex. 12; Day 1 Tr. at 88. Arguello did not respond to this email. Ex. 12. Moncada then asked Jayasuriya to draft a commission agreement for the...
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