Facts

This case arose from an alleged embezzlement scheme whereby defendants Alvyster and Loida Rivera were accused of stealing at least $360,000 from plaintiffs. Plaintiff Innovative Delivery Systems Inc. ("Innovative"), a furniture delivery business, maintained merchant accounts with defendant Bank of America. An associated business called IDS North had maintained a merchant account there also, but plaintiffs closed down IDS North in 2003. Plaintiffs alleged that they subsequently instructed Bank of America to close the IDS North bank account.

Plaintiffs contended that, in 2006, Alvyster Rivera (Innovative's bookkeeper) discovered that Bank of America had never closed the IDS North account. Rivera began stealing customer payment checks from Innovative and depositing them in the long-dormant IDS North account. Rivera then used that money for his own purposes. Rivera performed hundreds of transactions involving the IDS North account, all at the merchant window of Bank of America's Chino branch.

According to plaintiffs' counsel, Bank of America conceded that it kept the dormant IDS North account open, its merchant tellers deposited Innovative's checks into the IDS North account, its merchant tellers allowed Rivera to withdraw cash and pay his personal expenses from the IDS North account, and nobody at the Bank contacted plaintiffs about what was going on.

Plaintiffs contended that Rivera was paying his home mortgages, his credit cards and his department store bills automatically out of the IDS North account. He installed a swimming pool and a golf putting green in his yard, bought a second home, and sent at least $100,000 to relatives overseas, though his annual salary was only about $34,000.

The alleged embezzlement was finally discovered in 2008 by Innovative's president, Howard Dell. Rivera was arrested and served time in prison. Meanwhile, the embezzlement left Innovative unable to compete with its rivals and, as a result, it lost long-time customers and a substantial amount of business.

Plaintiffs sued Alvyster Rivera, Loida Rivera, and Bank of America.

PLAINTIFF'S CONTENTIONS:
Plaintiffs alleged that defendant Alvyster Rivera stole checks from Innovative and brought them to Bank of America and that Loida Rivera helped conceal the embezzlement. Plaintiffs contended that defendants, either intentionally or negligently, kept the IDS North account open, kept IDS North account statements from plaintiffs, and deposited checks made payable to plaintiffs into the IDS North account. Plaintiffs contended that this allowed Rivera to withdraw money and make household payments from the IDS North account. Plaintiff further contended that Bank of America failed to alert plaintiffs about these transactions.

Plaintiffs contended that defendants were all liable for negligence, conversion, interference with contract, and interference with economic relations; that Rivera was also liable for fraud and breach of fiduciary duty; and, that Bank of America was also liable for negligent employment. Plaintiffs also contended that both Riveras fraudulently transferred assets.

DEFENDANT'S CONTENTIONS:
Alvyster Rivera admitted embezzling $360,000 from Innovative, but denied that his wife was involved.

Loida Rivera contended that she knew nothing of any wrongdoing.

Bank of America offered various defenses including lack of standing and contributory negligence.

Loida Rivera and Bank of America cross-sued each other for indemnity, but the cross-claims were dismissed at the time of trial.

Settlement Discussions

Defendant Bank of America made a statutory CCP 998 offer of $200,000 prior to trial, which plaintiffs did not accept.

Damages

According to defense counsel, plaintiffs sought approximately $8.5 million in damages.

Result

The jury found for plaintiffs against all three defendants, in amounts totaling $1.1 million in compensatory damages. The jury also awarded $1.0 million in punitive damages. The awards against each defendant were as follows: Against defendant Bank of America, Innovative Delivery Systems Inc. was awarded $600,000 in compensatory damages. Against defendant Alvyster Rivera, Innovative Delivery Systems Inc. was $360,000 in compensatory damages and $720,000 in punitive damages. Against Loida Rivera, Innovative Delivery Services Inc. was awarded $140,000 in compensatory damages amd $280,000 in punitive damages. The jury also found in favor of plaintiff Howard Dell as against Alvyster Rivera and Loida Rivera, but awarded Dell no damages. The jury also found that plaintiff Innovative Delivery Systems, Inc. was responsible for 20 percent of the harm it incurred (contributory negligence), so the compensatory damages award against Bank of America was reduced from $600,000 to a net $480,000, the compensatory award against Alvyster Rivera was reduced from $360,000 to a net $288,000, and the compensatory damages award against Loida Rivera was reduced from $140,000 to a net $112,000. The punitive damages awards were not affected.

Other Information

Bank of America has filed a post-trial motion to remove consequential damages. FILING DATE: May 8, 2008.

Deliberation

two days

Length

14 days