Fleetwood Services, LLC v. Ram Capital Funding, LLC

Background

Fleetwood Services, LLC sued Richmond Capital Group LLC, doing business as Ram Capital Funding, LLC, and Robert Giardina over a financing agreement. The court described Fleetwood as a small Texas business and Richmond as a New York limited liability company. Giardina was Richmond’s founder and sole managing member. Ram Capital Funding, LLC and Tsvi Reich, also known as Steve Reich, were initially defendants but were voluntarily dismissed after settling with Fleetwood.

Fleetwood’s amended complaint asserted claims for breach of contract and breach of the duty of good faith and fair dealing, money had and received, violations of Texas usury law, attorneys’ fees under the Texas usury statute, and a claim under the federal Racketeer Influenced and Corrupt Organizations Act (RICO) against Giardina. In an earlier summary-judgment ruling, the court held Giardina liable on the RICO claim. It also held that the agreement was properly characterized as a loan and that the debt was unenforceable at least in part under Texas or New York usury law. The court had not yet determined the amount of damages.

Arguments about damages

Fleetwood moved for entry of judgment against Giardina for $308,851. Its calculation treated $119,617 collected from Fleetwood’s account as actual damages, trebled that amount to $358,851 under RICO, and deducted the $50,000 settlement payment received from Ram Capital Funding, LLC and Reich.

Giardina argued that Fleetwood’s damages should be $84,001 or zero. His calculation relied on $44,667 that Fleetwood had sought for different claims in its complaint. He also argued that the $119,617 figure should be reduced by the principal and interest Fleetwood had received or paid under the financing transaction. The court rejected the argument that Fleetwood had made a binding admission limiting its RICO damages to $44,667. The complaint sought at least $119,617 in actual damages on the RICO claim.

Court’s reasoning

The court held that Fleetwood’s RICO damages could not be reduced by the interest unlawfully collected. Deducting that interest would give Giardina credit for his unlawful conduct and would leave Fleetwood worse off than it would have been without the misconduct.

The court nevertheless held that Fleetwood was not entitled to treat the entire $119,617 collected as its loss. Fleetwood had received $44,500 under the agreement. To place Fleetwood in the financial position it would have occupied without the unlawful conduct, the court calculated actual damages as $119,617 minus $44,500, or $75,117.

The court trebled the $75,117 actual-damages figure under RICO, producing $225,351. It then deducted the $50,000 settlement payment because that payment compensated Fleetwood for the same injury. The resulting award was $175,351.

Disposition

The court granted Fleetwood’s motion for entry of judgment in part. It directed the Clerk of Court to enter judgment for Fleetwood against Giardina on Count Five in the amount of $175,351. The court also dismissed Counts One, Two, Three, and Four with prejudice after Fleetwood agreed to that dismissal. The court stated that Fleetwood could apply for attorneys’ fees within 30 days after entry of judgment and directed the Clerk to close the motion.