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Freestream Aircraft USA Ltd. v. Chowdry

United States District Court, S.D. Florida

May 31, 2018

FREESTREAM AIRCRAFT USA LTD., Plaintiff,
v.
RONNI CHOWDRY; ATLAS AVIATION LLC; ATLAS SALES AND LEASING, LLC; and ATLAS LUXURY JETS LLC, Defendants.

          ORDER DENYING THE PARTIES' CROSS-MOTIONS FOR SUMMARY JUDGMENT [DES 167, 172');">172]

          WILLIAM MATTHEWMAN UNITED STATES MAGISTRATE JUDGE

         THIS CAUSE is before the Court upon Defendants, Ronni Chowdry, Atlas Aviation LLC ("Atlas Aviation"), Atlas Aviation Sales & Leasing, LLC ("Atlas Sales"), and Atlas Luxury Jets, LLC's ("Atlas Luxury") (collectively, "Defendants") Motion for Summary Judgment [DE 167] and Plaintiff, Freestream Aircraft USA Ltd.'s ("Plaintiff), Motion for Summary Judgment or Partial Summary Judgment [DE 172');">172]. The parties have filed Statements of Material Fact and evidence to support their motions and have responded and replied to each motion for summary judgment. See DEs 168, 169, 170, 171, 173, 174, 183, 184, 185, 186, 187');">187');">187');">187');">187');">187');">187');">187');">187');">187');">187');">187');">187');">187');">187');">187, 188, 189, 191, 199, 201');">201, and 202. The matters are now ripe for review. The Court has carefully considered the filings and attachments thereto, as well as the entire docket in this case.

         I. BACKGROUND

         Plaintiff is a for-profit corporation founded in 2007. [DE 173-1, p. 1, ¶l; DE 188-1, p. 1, ¶l]. Rebecca Posoli-Cilli is the president and chief operations officer of Plaintiff. Id.

         Defendant Atlas Aviation, LLC ("Atlas Aviation"), was a limited liability corporation incorporated in 2006. [DE 173-1, p. 1 ¶2; DE 188-1, p. 1, ¶2]. Atlas Aviation was wound up in 201');">2013. Id. Atlas Aviation Sales & Leasing, LLC ("Atlas Sales") is a limited liability corporation incorporated in 201');">2013. [DE 173-1, p. 1, ¶3; DE 188-1, p. 1, ¶3]. Atlas Sales was not conducting business as of early 201');">2016, and it has been dormant since then. Id. Atlas Luxury Jets, LLC ("Atlas Luxury"), is a limited liability company incorporated in April 201');">2016. [DE 173-1, p. 1, ¶4; DE 188-1, p. 1, ¶4]. Atlas Luxury does business in Florida. Id. Ronni Chowdry is the sole or controlling shareholder of the corporate defendants and has or had a managing role in the corporate defendants. [DE 173-1, p. 2, ¶5; DE 188-1, p. 1, ¶5]. Posoli-Cilli met Chowdry in 2008, but they had no contact again until early 201');">2013 when Posoli-Cilli contacted Chowdry to request advice on a transaction. Id.

         In the summer of 201');">2013, Plaintiff earned a referral fee in the amount of $2, 580, 950.00 from Tyrus Wings, Ltd. ("Tyrus") for Plaintiffs role in the sale of an aircraft. [DE 173-1, p. 2, ¶6; DE 188-1, pp. 1-2, ¶6]. Chowdry and Atlas Aviation had nothing to do with the 201');">2013 transaction. [DE 173-1, p. 2, ¶7; DE 188-1, p. 2, ¶7]. In July of 201');">2013, Posoli-Cilli and Chowdry met in Boca Raton and discussed the Tyrus referral fee. [DE 173-1, p. 2, ¶8; DE 188-1, p. 2, ¶8]. Chowdry volunteered to accept Plaintiffs referral fee into Atlas Aviation's PNC bank account and make transfers in accord with Plaintiffs instructions. Id. The parties do not agree as to how much discretion Chowdry had to use the funds. Id.

         On July 22, 201');">2013, Posoli-Cilli sent Chowdry an email instructing him to prepare a W-9 showing that money was being paid to Atlas Aviation as a "consulting fee, " that $1, 290, 475 was were to be wired to White Mountain Jets, LLC, that $160, 000 was to be wired to Plaintiff, and that the remainder of the funds would be "discussed later." [DE 168-1, p. 1, ¶l; DE 183, p. 1, ¶1]. Posoli-Cilli instructed Tyrus to transfer the fee into the corporate PNC bank account of Atlas Aviation. [DE 173-1, p. 2, ¶9; DE 188-1, p. 2, ¶9]. Tyrus then had $2, 580, 950 transferred from its corporate SunTrust Bank account into Atlas Aviation's corporate PNC Bank account. Id. Chowdry confirmed receipt of the transfer on July 26, 201');">2013. A/.; DE 168-1, p. 1, ¶2; DE 183, p. 1, ¶2]. Chowdry made the two transfers as directed. [DE 173-1, p. 3, ¶l 1; DE 188-1, p. 2, ¶ll]. This left $1, 130, 475 of the money in Atlas Aviation's bank account. [DE 173-1, p. 3, ¶12; DE 188-1, p. 2, ¶12; DE 168-1, p. 6, ¶12; DE 183, p. 2, ¶6].

         Within one week, Chowdry caused substantially all of the remaining $1, 130, 475 to be transferred from the Atlas Aviation corporate PNC Bank account into the Atlas Sales corporate PNC Bank account. [DE 173-1, p. 3, ¶13; DE 188-1, p. 2, ¶13]. This occurred in at least two separate transactions-one in the amount of $130, 355 on July 31, 201');">2013, and one in the amount of $1, 000, 000 on August 1, 201');">2013. Id. Chowdry was the only person with authority to make withdrawals from the Atlas Sales account, and he had spent the $1, 130, 475 by January 30, 201');">2014, on numerous personal and business expenses. [DE 173-1, pp. 3-4, ¶104; DE 188-1, p. 2, ¶14]. On January 30, 201');">2014, Posoli-Cilli instructed Chowdry to return the $1, 130, 475. [DE 173-1, p. 4, ¶15; DE 188-1, pp. 2-3, ¶15]. Chowdry stated in a January 30, 201');">2014 email that he could not return the money right away. [DE 173-1, p. 4, ¶16; DE 188-1, p. 3, ¶16]. Posoli-Cilli then sent numerous emails, text messages, voicemails, and phone calls to Chowdry and Atlas Sales' vice president and general counsel, S. Steven Karalekas, demanding that they return the money. [DE 173-1, p. 4, ¶17; DE 188-1, p. 3, ¶17].

         In February 201');">2014, Plaintiff retained counsel to help recover the money. [DE 173-1, p. 4, ¶18; DE 188-1, p. 3, ¶18]. Plaintiffs counsel contacted Karlekas on March 6, 201');">2014, and demanded that the money be returned. Id. On February 10, 201');">2014, Karalekas sent Plaintiff and its counsel a letter that itemized and accounted for the money. [DE 173-1, pp. 4-5, ¶19; DE 188-1, p. 3, ¶19]. Karalekas promised that the balance of the funds would be returned to Plaintiff by March 13, 201');">2014. Id. The letter was prepared at Chowdry's request and with his authority. [DE 173-1, p. 5, ¶20; DE 188-1, p. 3, ¶20]. On March 6, 201');">2014, Plaintiff responded to Karalekas and Chowdry through Plaintiffs counsel via email. [DE 173-1, p. 5, ¶21; DE 188-1, p. 3, ¶21]. Plaintiffs counsel provided the wire transfer information and a completed IRS form W-9. Id. Plaintiffs counsel also asked for confirmation that payment in the amount of $1, 130, 475 be made no later than March 13, 201');">2014. [DE 173-1, p. 5, ¶21; DE 188-1, p. 3, ¶21]. On March 13, 201');">2014, Chowdry sent an email to Posoli-Cilli in response to a request for payment and informed her that the funds had been used towards an aircraft transaction and that he would need time to secure replacement funds in the event that the transaction did not close. [DE 168-1, p. 2, ¶7; DE 183, p. 2, ¶7].

         Chowdry and Posoli-Cilli corresponded from approximately June 7, 201');">2014 to June 20, 201');">2014, regarding the money. [DE 168-1, p. 2, ¶¶8-9; DE 183, pp. 3-4, ¶¶8-9]. On July 7, 201');">2014, Posoli-Cilli sent an email to Chowdry asking for a status update on the payment of the money. [DE 168-1, p. 2, ¶10; DE 183, p. 4, ¶10]. Chowdry responded that he was attempting to close on a transaction to return funds to Plaintiff, that there was no closing date yet, and that the money could be paid from that closing. Id. Chowdry sent another email to Posoli-Cilli on September 11, 201');">2014, informing her that he was hoping for the aircraft transaction to close soon so that the resulting money could be paid to Plaintiff. [DE 168-1, pp. 2-3, ¶11; DE 183, p. 5, ¶11]. Chowdry and Posoli-Cilli sent each other additional correspondence about the pending aircraft transaction on October 10, 201');">2014, December 5, 201');">2014, January 14, 201');">2015, and January 20, 201');">2015. [DE 168-1, p. 3, ¶¶12-15; DE 183, p. 5, ¶¶12-15].

         The parties dispute whether the money is due at this time and how much money Chowdry and/or his companies owe Plaintiff. [DE 173-1, p. 5, ¶¶22-23; DE 188-1, p. 3, ¶¶22-23]. None of the money has been returned to Plaintiff. [DE 173-1, p. 6, ¶24; DE 188-1, pp. 3-4, ¶24]. On January 8, 201');">2016, Plaintiff made a formal demand to Chowdry under Florida's civil theft statute for the return of its money. [DE 173-1, p. 6, ¶28; DE 188-1, p. 4, ¶28].

         From July 31, 201');">2013, to January 27, 201');">2014, Chowdry caused over 30 transfers ranging from $10, 000 to $1, 000, 000 to be made from Atlas Aviation's and Atlas Sales' corporate accounts. [DE 173-1, p. 7, ¶30; DE 188-1, p. 4, ¶30]. Between January and November of 201');">2016, Chowdry received at least $741, 638.64 from Atlas Sales' accounts. [DE 173-1, p. 7, ¶31; DE 188-1, p. 4, ¶31]. He wrote himself a check in the amount of $541, 338.64 from Atlas Sales' account for "Business Expense Reimbursement 201');">2015." Id. He also made transfers from his personal account into the Atlas Sales account in the total amount of at least $556, 600. Id. Chowdry opened Atlas Sales shortly before he closed Atlas Aviation, and he opened Atlas Luxury shortly before he stopped conducting business as Atlas Aviation. [DE 173-1, p. 7, ¶32; DE 188-1, p. 4, ¶32]. Atlas Aviation, Atlas Sales, and Atlas Luxury all have or had the same address. Id. Neither Atlas Sales nor Atlas Luxury had or have any employees, computers, office equipment, or other assets. [DE 173-1, p. 7, ¶33; DE 188-1, p. 4, ¶33].

         From July to October of 201');">2013, Chowdry made numerous cash withdrawals from the Atlas Sales corporate account in a total amount over $70, 000. [DE 173-1, p. 8, ¶34; DE 188-1, p. 4, ¶34]. He has no documentation or recollection as to how the funds were spent. Id. Chowdry wrote numerous checks from Atlas Sales' corporate bank account to cover personal expenses, including rent and legal fees. [DE 173-1, p. 8, ¶35; DE 188-1, p. 4, ¶35]. From July to December of 201');">2013, Chowdry made repeated ATM cash withdrawals from the Atlas Sales corporate PNC Bank account for personal expenses, including child care and tips for service providers, and used corporate accounts to pay for personal credit bills, clothing, and utilities. [DE 173-1, p. 8, ¶36; DE 188-1, p. 4, ¶36]. Chowdry frequently used his American Express credit card, which was paid for by Karalekas, to cover many of Chowdry's expenses. [DE 173-1, p. 8, ¶37; DE 188-1, p. 5, ¶37]. The Atlas Sales corporate account is thinly capitalized, and Chowdry occasionally puts in cash from other accounts. [DE 173-1, pp. 8-9, ¶38; DE 188-1, p. 5, ¶38]. The credit card debt for the Atlas Sales corporate account is paid monthly by loans from Karalekas mostly. Id.

         Karalekas repeatedly made a series of large loans to Atlas Sales and Atlas Luxury. [DE 173-1, p. 9, ¶40; DE 188-1, p. 5, ¶40]. The loans were repaid to Karalekas from the Atlas Sales account, and Karalekas signed the checks to repay those loans. [DE 173-1, p. 9, ¶41; DE 188-1, p. 5, ¶41]. Karalekas was repaid nearly $1, 000, 000 from November 201');">2015 to January 201');">2016. [DE 173-1, p. 9, ¶42; DE 188-1, p. 5, ¶42]. Karalekas loaned money to Atlas Luxury, which currently owes him about $200, 000. [DE 173-1, p. 9, ¶43; DE 188-1, p. 5, ¶43]. Atlas Luxury has no papers documenting that loan. Id. Atlas Luxury also repeatedly made significant loans to Chowdry. [DE 173-1, p. 9, ¶44; DE 188-1, p. 5, ¶44]. Atlas Luxury is thinly capitalized. [DE 173-1, p. 9, ¶45; DE 188-1, p. 5, ¶45].

         In connection with filing a 201');">2013 tax return, Tyrus submitted the information gathered from a W-9 that it had issued to Atlas Aviation to the IRS, representing that Tyrus paid Atlas Aviation a consulting fee in the amount of $2, 580, 950. [DE 168-1, p. 2, ¶5; DE 183, p. 2, ¶5].

         Atlas Aviation did not file a tax return in 201');">2013, and there is no evidence in the record that it ever filed a tax return. [DE 173-1, p. 10, ¶46; DE 188-1, p. 5, ¶46]. Atlas Sales filed a tax return in 201');">2014, but did not file a tax return in 201');">2013, 201');">2015, or 201');">2016. [DE 173-1, p. 10, ¶47; DE 188-1, p. 5, ¶47]. Atlas Sales' 201');">2014 tax return shows that it lost $126, 268 and earned no income. Id. Atlas Luxury has not filed a tax return or an extension. [DE 173-1, p. 10, ¶48; DE 188-1, p. 5, ¶48]. Chowdry filed a tax return in 201');">2014, but not in 201');">2013, 201');">2015, or 201');">2016. [DE 173-1, p. 10, ¶49; DE 188-1, p. 5, ¶49].

         At Posoli-Cilli's February 5, 201');">2018 deposition, she testified that she had not seen any checks written from Chowdry's personal account to Atlas Luxury. [DE 168-1, p. 4, ¶¶24(a); DE 183, p. 7, ¶24(a)]. Posoli-Cilli could not identify any documents showing a direct transfer of funds from Atlas Sales to Atlas Luxury, could not identify any documents showing a direct transfer of the Tyrus funds to Atlas Luxury, could not identify any documents showing that Atlas Luxury directly withdrew funds from Atlas Sales' bank account, could not identify any documents showing that Atlas Luxury benefited from the money that was initially transferred by Tyrus, and could not identify any documents showing a direct transfer of any Tyrus funds to Atlas Luxury. [DE 168-1, pp. 4-5, ¶¶24(f-k); DE 183, pp. 7-9, ¶24(f-k)].

         II. DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [DE 1671

         A. Motion

         Defendants filed their Motion for Summary Judgment [DE 167] and Statement of Material Facts [DE 168-1] on March 15, 201');">2018. In Defendants' motion, they first argue that Plaintiff has failed to state causes of action for civil theft and conversion because an express contract existed as a matter of fact and because the funds were not sufficiently identifiable. [DE 167, pp. 9-14]. Defendants next contend that Plaintiff cannot pierce the corporate veil to obtain a judgment against Atlas Luxury and that Plaintiff has a complete lack of evidence to support its claims against Atlas Luxury. Id. at pp. 15-19.

         In support of their motion, Defendants filed their Compelled Responses to Plaintiffs First Set of Interrogatories No. 8 &amp. 9 [DE 167-1]; a July 22, 201');">2013 email from Posoli-Cilli to Chowdry [DE 168-2]; a copy of the wire transfer information from Tyrus to Atlas Aviation [168-3]; email correspondence between Geoff Andrews of Tyrus, Karalekas, and Posoli-Cilli from July 24 and 25, 201');">2013 with a W-9 attached [DE 168-4]; email correspondence between Geoff Andrews of Tyrus and defense counsel from December 201');">2017 [DE 168-5]; Atlas Aviation's PNC Bank statements from May 24, 201');">2013 through December 31, 201');">2013 [DE 168-6]; Atlas Luxury's PNC Bank statements from September 7, 201');">2016 through February 1, 201');">2018 [DE 168-7]; documentation regarding Atlas Aviation's revocation [DE 168-8]; excerpts from the November 1, 201');">2017 deposition of Posoli-Cilli (Plaintiffs 30(b)(6) representative) [DE 169-1]; excerpts from the January 5, 201');">2018 deposition of Posoli-Cilli (Plaintiffs 30(b)(6) representative) [DE 170-1]; the Declaration of Ronni Chowdry [DE 171-1]; email correspondence from Posoli-Cilli to Chowdry dated July 22, 201');">2013 [DE 171-2]; email correspondence from Chowdry to Posoli-Cilli dated March 13, 201');">2014 [DE 171-3]; email correspondence between Chowdry and Posoli-Cilli dated July 7, 201');">2014 [DE 171-4; 171-6]; email correspondence between Posoli-Cilli and Karalekas dated June 201');">2014 [DE 171-5]; email correspondence from Chowdry to Posoli-Cilli dated September 11, 201');">2014 [DE 171-7]; email correspondence from Chowdry to Posoli-Cilli dated October 10, 201');">2014 [DE 171-8]; email correspondence between Chowdry and Posoli-Cilli dated January 201');">2015 [DE 171-9]; email correspondence between Chowdry and Posoli-Cilli dated November and December 201');">2015 [DE 171-10]; and email correspondence between Chowdry and Posoli-Cilli dated January 20, 201');">2015 [DE 171-11].

         B. Response

         Plaintiff filed a Response [DE 186] in opposition to Defendants' Motion for Summary Judgment, a Response [DE 183] to Defendants' Statement of Material Facts, a Supplemental Declaration of Carl E. Goldfarb, Esq. [DE 184] with exhibits attached to oppose Defendants' Motion for Summary Judgment, and a Declaration of Rebecca Posoli-Cilli [DE 185]. Plaintiff first asserts that no contract exists between the parties, as the evidence does not establish the elements of a contract, so any defense to Plaintiffs civil theft and conversion claims based on the existence of a contract is unavailing. [DE 168, pp. 2-10]. Plaintiff next argues that the funds at issue are identifiable, so Defendants' argument that summary judgment should be granted in favor of Defendants as to Plaintiffs conversion and civil theft causes of action is meritless. Id. at pp. 10-12. Finally, Plaintiff contends that Defendants' Motion for Summary Judgment should also be denied to the extent it seeks summary judgment on Plaintiffs veil piercing claim as to Atlas Luxury. [DE 186, pp. 13-15]. Plaintiff maintains that Defendants have not addressed the fact that Plaintiffs injuries are ongoing or that Chowdry's use of Atlas Luxury to continue to avoid payment is a proximate cause of Plaintiff s injuries. Id. at p. 14.

         C. Reply

         Defendants filed a Reply [DE 199], in which they first argue that Defendants were authorized to use the funds in question by Plaintiff. Id. at p. 4. Defendants next contend that the undisputed material facts establish that the parties had an agreement regarding the funds in question. Id. at pp. 4-6. Defendants finally argue that Plaintiff has not presented sufficient evidence to rebut Defendants' arguments as to Atlas Luxury Jets and piercing the corporate veil. Id. at pp. 7-8.

         III. PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT ...


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