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Goldsmith v. Tapper

April 06, 2000

BETTY GOLDSMITH, APPELLANT,
V.
FLORIANA TAPPER, ET AL., APPELLEES.



Before Farrell, Associate Judge, and Gallagher and King, Senior Judges.

The opinion of the court was delivered by: King, Senior Judge

Appeal from the Superior Court of the District of Columbia

(Hon. Jose M. Lopez, Trial Judge)

(Argued March 2, 2000 Decided April 6, 2000)

Betty Goldsmith seeks reversal of the trial court's grant of a directed verdict in favor of appellees, Busto, et al., *fn1 on all counts of the complaint against Busto and on a conspiracy to commit fraud claim against Floriana Tapper. Goldsmith contends that the trial court erred in directing the verdicts because she presented sufficient evidence upon which reasonable jurors could have reached a verdict in her favor on those claims. We agree. Therefore, for the reasons set forth below, we reverse.

I.

In March of 1995, Goldsmith, who was interested in purchasing a club or restaurant in the Washington, D.C. metropolitan area, learned that a restaurant named Floriana's in Northwest, Washington, D.C. was on the market. When Goldsmith visited the restaurant, she spoke to Floriana Tapper, who identified herself as the owner, and who stated that the restaurant was profitable and that she was only selling because of personal family reasons. Goldsmith told Tapper that she was interested in purchasing the restaurant with the intent to operate it as both a restaurant and jazz club. Tapper did not inform Goldsmith that live entertainment was prohibited on the premises by District of Columbia zoning regulations and the lease agreement between Tapper and the owner of the building.

Goldsmith requested that Tapper submit financial statements and tax forms for the preceding years in order to assist Goldsmith in determining whether the business was in fact profitable. In late September or early October of 1995, Goldsmith was provided with tax returns for the years 1993 and 1994. It was later determined that these tax returns were fictitious, in that they contained numbers purporting to show income from the business that did not conform to the actual returns filed. The "fake" returns had been delivered to Goldsmith by Tapper in a plain brown envelope. As discussed more fully below, identification of the person or persons responsible for the preparation of the fake tax returns controls the resolution of the issues presented in this appeal. Largely in reliance upon the information contained in the tax returns, Goldsmith decided to purchase the restaurant.

The closing on the purchase of the restaurant took place on November 1, 1995, at Luis Busto's accounting office. Luis Busto was Tapper's accountant and it is undisputed that he prepared Tapper's actual tax returns for the years preceding the sale. While there is a dispute as to the extent of his interest in Tapper's restaurant, it is undisputed that Luis Busto's name appeared on the stock transfer agreement, and that Luis Busto signed the sales agreement transferring the 950 shares of the corporation which he "possessed" to Goldsmith. At trial, Luis Busto asserted that he did not own the 950 shares.

Two months after the purchase of the business, it became apparent to Goldsmith that the income of the business was considerably less than the income reported in the tax returns provided to her prior to the sale. She became suspicious, and with some difficulty, she eventually obtained copies of the actual 1993 and 1994 tax returns from Busto & Busto. *fn2 Those returns showed actual gross receipts to be at least $300,000 less than indicated on the fake tax returns. Also, the fake tax returns showed that the compensation paid to corporate officers was significantly greater than the compensation reported on the actual returns.

Goldsmith filed this complaint against Tapper and Busto on January 24, 1996 alleging fraud, conspiracy to commit fraud, negligent misrepresentation and breach of contract. At the conclusion of plaintiff's case, defense counsel for Busto moved for a directed verdict. The trial court, while not ruling on the motion, initially indicated that the evidence against Busto was sufficient to go to the jury. However, on the following day, the trial judge granted the motion for a directed verdict on all of the claims against Busto, stating that the evidence was insufficient to show Busto was an owner of the business, that he was involved in the contract for the sale of the business, or that he was responsible for the fake tax returns or any other misrepresentations that may have been made by Tapper to induce Goldsmith to purchase the restaurant. Further, because of the grant of the motion as to Busto, the court also dismissed the conspiracy to commit fraud claim against Tapper because no other person or persons, other than Busto, had been named as a co-conspirator.

The jury reached a verdict in favor of Goldsmith against Tapper on the claims of fraud, negligent misrepresentation and breach of contract, awarding compensatory damages in the amount of $150,600, plus $50,000 in punitive damages. This appeal of the grant of Busto's directed verdict and dismissal of the conspiracy claim followed.

II.

The governing rule provides that a directed verdict may be entered if "during a trial by jury a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue." Super. Ct. Civ. R. 50 (a)(1). When considering a motion for a directed verdict, the evidence must be viewed in the light most favorable to the nonmoving party, who must be given the benefit of all reasonable inferences to be drawn from the evidence. Abebe v. Benitez, 667 A.2d 834, 836 (D.C. 1995); see Washington Metro. Area Transit Auth. v. Jones, 443 A.2d 45, 49 (D.C. 1982) (en banc); Corley v. BP Oil Corp., 402 A.2d 1258, 1263 (D.C. 1979). A directed verdict may be granted "`[o]nly where the probative facts are undisputed and where reasonable minds can draw but one inference from them.'" Aylor v. Intercounty Constr. Corp., 127 U.S. App. D.C. 151, 155, 381 F.2d ...


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