BINVERSIE et al v. DONOFRIO et al

Filing 26

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE J. WILLIAM DITTER, JR ON 10/20/17. 10/20/17 ENTERED AND COPIES E-MAILED.(kw, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

RANDALL R. BINVERSIE, et al.

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v.
DOMINICK DONOFRIO, et al.

CIVIL ACTION

NO. 16-5635

MEMORANDUM
DITTER, J.

October 20, 2017

This matter is now before me on Plaintiffs’ petition for punitive damages. The
question is whether they should be awarded and if so, how much. I will explain in this
memo my answers.
First, a brief review of the facts.
For the sake of simplicity, I shall refer to the plaintiffs simply as Binversie and the
defendants as Donofrio. And I will summarize rather than particularize. Starting in late
January of 2013, Binversie and Donofrio entered into a written agreement under the terms
of which Donofrio’s company, Windstar, would act as Binversie’s agent in the search for
a business investment. Over the next sixteen months, Binversie paid Donofrio $570,400
in consulting fees. In early 2014, Donofrio told Binversie that a Philadelphia retail oil
business, the Tioga Fuel Company and its related holdings, could be purchased for
$1,850,567.
This was a lie - the actual price was $750,567.
Donofrio told Binversie that to avoid the need to pay a broker’s commission, he
would have his company, Windstar, make the purchase from the Tioga owners. Windstar
would then convey the Tioga holdings to Binversie. Actually, Donofrio’s purpose was
not to avoid a broker’s commission but to conceal from Binversie the amount paid to the

Tioga owners. It worked. Windstar paid $750,567 and then turned around and sold to
Binversie for $2,050,567, a secret markup of $1,300,000. As part of his payment to
Windstar, Binversie executed a mortgage for $1,250,000. Although this mortgage has
been cancelled, Binversie paid Windstar $136,262 prior to the cancellation.
Throughout the time of the negotiations with the Tioga owners, Binversie paid
Donofrio $246,850 to act as his agent and in his best interest. Binversie also paid
Donofrio’s attorney $39,287 for services relating to the Tioga transaction. In addition,
while Donofrio controlled Tioga’s bank account, he paid himself $87,625.
In summary, while purporting to act as Binversie’s agent, Donofrio purchased a
business and then resold it to Binversie having made a secret markup of more than a
million dollars.
During their relationship, Binversie paid Donofrio consulting, agency, and
attorney’s fees, totaling $1,042,399, and Donofrio took $87,625 from Tioga.
Binversie brought suit against Donofrio. Although Donofrio had ample notice of
the suit and ample time to respond, there was no defense and eventually default judgment
was entered against Donofrio voiding the $1,250,000 promissory note, security agreement
and mortgage from Tioga Fuel Company to Windstar Financial Services. Donofrio has
not responded to the Court in spite of being copied on the order of default judgment as
well as briefing and oral argument on the issue of punitive damages. With those facts in
mind, I make the following findings:
1.

First and foremost there was fraud, evil as Eve’s apple and as neatly hidden

and accomplished as Houdini’s best. Well-planned, well-executed, and deliberate,
it involved large sums of money, before, after, and during the main event.
2

Donofrio was Binversie’s agent and therefore owed Binversie the highest

duty of care and loyalty. As Binversie’s agent, Donofrio was obligated to put
Binversie’s interests above his own.

3.

The fact that Donofrio was Binversie’s fiduciary makes Donofrio’s multi-

frauds that much more egregious.
4.

Although I do not know what Donofrio did during the period from late

January 2013 to May 2014 in seeking an investment opportunity for Binversie, I do
know that Donofrio made no suitable finding and for his unsuccessful effort was
paid $570,400, an average of more than $35,000 a month,
5.

Although I do not know what was involved in the negotiations with Tioga, I

do know that Binversie paid Donofrio $246,450 for his efforts and an additional
$39,287 to Donofrio for his attorney’s services in connection with the Tioga
acquisition.
6.

Although I do not know what Donofrio purportedly did for Binversie while

Donofrio controlled Tioga’s bank account, I do know that Donofrio paid himself
$87,625 from that account.
7.

Quite apart from the law’s requirements of a fiduciary and whether he knew

of them or not, Binversie could have justifiably relied on Donofrio to provide loyal
service by reason of these payments alone. Instead he got fraud and an overcharge
of $1,300,000 .
8.

I know nothing about Donofrio’s assets, resources, holdings, or obligations,

financial or otherwise.
9.

An award requiring Donofrio to pay punitive damages is appropriate.

Punitive damages are designed to punish and deter. As previously stated,
Donofrio’s conduct was intentional, unlawful, evil, outrageous, and egregious.
10.

I conclude that Donofrio should return to Binversie, the following payments

made by Binversie to Donofrio while Donofrio was acting as Binversie’s agent and
am ordering that he shall do so:

For difference between purported price and real price

$50,000

(After cancellation of $1,250,000 note)
For consulting fees paid from January 2013 to May 2014

$570,400

For consulting fees paid for negotiations with Tioga

$246,450

For attorney’s fees
For mortgage payments on now cancelled note
For payments to Donofrio from the Tioga bank account

$39,287
$136,262
$87,625

$1,130,024
11.

In addition, I conclude that in view of Donofrio’s unlawful, evil, deliberate, and

outrageous conduct, Donofrio should pay to Binversie the additional sum of $2,500,000 as
punitive damages and am ordering that he shall do so.
12.

In reaching these conclusions, I have kept in mind the provisions of the default

judgment and its consequences.
An appropriate order follows.