J.D. Pharmaceutical Distributors, Inc. v. Save-On Drugs & Cosmetics Corp.

• Decision Date: 06 February 1990
• Docket Number: SAVE-ON,Nos. 86-5675,s. 86-5675
• Citation: 893 F.2d 1201
• Parties: J.D. PHARMACEUTICAL DISTRIBUTORS, INC., a New York corporation, Plaintiff-Appellee, v.DRUGS & COSMETICS CORP., a Puerto Rico corporation; Farmedics, Inc., a Florida corporation; Save-On Drugs & Cosmetics, Inc., a Florida corporation; Save-On Drugs of Coral Springs, Inc., a Florida corporation, Defendants, Farmedics of California, Inc., a California Corporation; Martin Thuna; Sonia Thuna, Defendants-Appellants. to 86-5777 and 87-5403.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1201

893 F.2d 1201

15 Fed.R.Serv.3d 1207

J.D. PHARMACEUTICAL DISTRIBUTORS, INC., a New York

corporation, Plaintiff-Appellee, v. SAVE-ON DRUGS & COSMETICS CORP., a Puerto Rico corporation;

Farmedics, Inc., a Florida corporation; Save-On Drugs &

Cosmetics, Inc., a Florida corporation; Save-On Drugs of

Coral Springs, Inc., a Florida corporation, Defendants,

Farmedics of California, Inc., a California Corporation;

Martin Thuna; Sonia Thuna, Defendants-Appellants.

Nos. 86-5675 to 86-5777 and 87-5403.

United States Court of Appeals, Eleventh Circuit.

Feb. 6, 1990.

James D. Keegan, Coral Gables, Fla., William J. Genego, Santa Monica, Cal., Ron R. Goldie, Michael J. Plonsher, Pacific Palisades, Cal., for Martin & Sonia Thuna & Farmedics of Cal. in No. 86-5675.

Michael Gregory Nearing, Bailey, Dawes & Hunt, Miami, Fla., for plaintiff-appellee.

Michael T. Kenney, Santa Ana, Cal., Michael J. Plonsker, Law Offices of Michael J. Plonsker, Pacific Palisades, Cal., James D. Keegan, Coral Gables, Fla., for Martin & Sonia Thuna & Farmedics in No. 87-5403.

Appeals from the United States District Court for the Southern District of Florida.

Before VANCE ^*, Circuit Judge, RONEY, Senior Circuit Judge, and EVANS ^**, District Judge.

ORINDA D. EVANS, District Judge:

These related appeals are before the court on a variety of claims of error stemming from the district court's grant of summary judgment in favor of J.D. Pharmaceutical Distributors, Inc. and the subsequent entry of final judgment on September 10, 1986. Summary judgment was granted after the defendants failed to respond to requests for admission which basically sought admissions that the material averments of the complaint were true, and that all defendants owed plaintiff $195,679.80, plus interest. The motion for summary judgment recited as its basis defendants' failure to respond to the requests for admission, as did the district court's order granting summary judgment.

The appellants herein are Martin Thuna, Sonia Thuna and Farmedics of California, Inc. For the reasons stated herein, the judgment against Martin Thuna is affirmed; the judgment against Sonia Thuna is reversed, and the appeal of Farmedics of California, Inc. is dismissed with direction to the district court to vacate the judgment.

J.D. Pharmaceutical is a wholesaler which sold pharmaceutical products to the defendant corporations, which are owned and controlled by the individual defendants Martin and Sonia Thuna. J.D. Pharmaceutical alleged in its complaint that the corporate defendants and the Thunas had accrued an open account debt of $195,679.80 as a result of these sales, and that a portion of this debt was represented by unpaid promissory notes in the aggregate face amount of $36,300.54. The complaint asserted that the individual defendants were liable for the debts of the corporations on a piercing-the-corporate veil theory; Martin Thuna additionally was claimed to be liable on the promissory notes as an endorser.

The complaint was filed in July, 1981. At that time, the following corporations were named as defendants: Save-On Drugs & Cosmetics, Inc., a Florida corporation; Farmedics, Inc., a Florida corporation; Save-On Drugs & Cosmetics Corp., a Puerto Rico corporation; Save-On Drugs of Oriole, Inc., a Florida corporation; Save-On Drugs of Coral Springs, Inc., a Florida corporation.

As of July, 1981, the Thunas maintained residences in Florida and in Puerto Rico. They conducted business in Puerto Rico through Save-On Drugs & Cosmetics Corp., as well as through other Puerto Rican companies. They conducted business in Florida through the referenced Florida corporations.

Shortly after J.D. Pharmaceutical's complaint was filed, the Thunas left their Florida residence. At that time, they purchased a residence in Hidden Hills, California at 24954 Jim Bridger Road. The residence was purchased in the name of both Martin and Sonia Thuna, who at all times have been husband and wife. However, the Thunas continued to conduct business in Puerto Rico, at least into 1984. See United States v. Thuna, 786 F.2d 437 (1st Cir.), cert. denied, 479 U.S. 825, 107 S.Ct. 100, 93 L.Ed.2d 50 (1986).

When the Thunas moved to California, they purportedly formed a new business entity, Farmedics of California, Inc. ¹ According to an affidavit of Martin Thuna and apparent corporate documents appended thereto (filed in support of Martin and Sonia's motion for partial summary judgment), the Florida corporations including Farmedics, Inc. were merged into Farmedics of California, Inc., which assumed all obligations of the Florida corporations. According to Thuna's affidavit, the California corporation then took the name Farmedics, Inc.

Between July of 1981 and October of 1982, J.D. Pharmaceutical made repetitive Sonia Thuna through counsel also filed motions to quash service of process. The initial motion to quash argued that Martin Thuna had not been authorized to accept service on her behalf. Then, a private process server left a summons and complaint for Sonia Thuna with a Spanish speaking woman at the Thunas' home in Hidden Hills. An amended motion to quash argued that service was defective because the individual did not speak English and had not been authorized to accept process. No contention was made in either motion that Sonia Thuna did not receive the complaint and summons. Ultimately, a private process server made a pretextual business appointment to meet with Ms. Thuna. The summons and complaint were served on the person who appeared for the appointment, though she refused to identify herself by name.

efforts to effect service on the Thunas and their corporations in Puerto Rico, Florida and California. It is obvious from the record that the Defendants were attempting to evade process and delay the proceedings. For example, on July 11, 1982, Farmedics, Inc. through counsel asserted in a motion to quash service of process that one Heriberto Gonzalez had never been a director of that corporation and was not authorized to accept service of process on its behalf. However, a report dated January, 1982 from the Office of the Secretary of State of the State of Florida, responding to the motion, indicated that Mr. Gonzalez was a director of Farmedics, Inc. Also, Martin Thuna's affidavit filed in support of a subsequent motion for partial summary judgment, stated Mr. Gonzalez was a director of Farmedics, Inc. ²

In October, 1982, an answer was filed by counsel on behalf of all defendants, except Save-On Drugs of Coral Springs, Inc. which was never served with process.

The discovery and motions phase of the case was prolonged and fitful. In March, 1985, Martin G. Thuna was convicted in the U.S. District Court for the District of Puerto Rico of possession and interstate transportation of stolen goods; he received an eight-year sentence. United States v. Martin G. Thuna, 786 F.2d at 440. The defendants obtained a number of continuances from the district court on account of Thuna's criminal case.

In October, 1985, J.D. Pharmaceutical's counsel notified the district court that the case had been settled. The district court dismissed the case sua sponte; however, a dispute arose as to whether the defendants had agreed to pay interest on the account debt as part of the settlement. According to Martin Thuna, he did not agree to pay interest. The dispute was not resolved and the case was reinstated.

Shortly after that, counsel for defendants moved to withdraw. The motion stated that only Martin Thuna had knowledge of the facts, and that Mr. Thuna "refuses to call the undersigned regarding this matter, although it is often promised that he will." The motion also recited "irreconcilable differences" between defense counsel and Thuna concerning the handling of the case and nonpayment of fee as bases for withdrawing. ³ Martin Thuna filed a motion opposing the request to withdraw.

                He disputed counsel's statement that he had failed to return telephone calls, and asserted that counsel's withdrawing would place an undue burden on Defendants.  Alternatively, he asked for thirty days within which to obtain new counsel.  On February 11, 1986, the district court entered an order deferring ruling on counsel's motion for leave to withdraw, indicating that Thuna would have thirty days to substitute defense counsel; 4  if no defense counsel were substituted, Thuna could proceed pro se.    On that same date, the trial court placed the case on a trial calendar beginning September 2, 1986.  On March 18, 1986, the court granted defense counsel's motion for leave to withdraw.  The order stated that Thuna would be allowed to proceed pro se;  he could appoint substitute counsel within ten days.  This order was served by mail on Thuna at the Terminal Island Correctional Institute in San Pedro, California, where he was incarcerated
                

On March 25, 1986, Martin Thuna was transferred from the Terminal Island Correctional Institute to a prison in the U.S. District of Puerto Rico to await trial in a second criminal case. He did not notify the district court or plaintiff's counsel of his change of address.

On May 29, 1986, plaintiff served requests for admission which sought admissions as to all material averments of the complaint. Service was made by mail on Martin Thuna at the Terminal Island Correctional Institute in California. Service was made by mail on Sonia Thuna, but not at her residence address as had been provided in interrogatory answers. Rather, the requests were sent to her at two previous business addresses of Farmedics, Inc. One of the addresses previously had been indicated in interrogatory answers to be the correct address of Farmedics, Inc. Ms. Thuna was president of Farmedics, Inc. at the time the requests for admission were mailed, but the record contains no evidence that she personally received the requests for admission. In fact, the record appears to reflect that the requests were returned to plaintiff's counsel by...