United States District Court, W.D. New York
DECISION AND ORDER
MICHAEL A. TELESCA, District Judge.
The Ferrari Club of America, Inc. ("Plaintiff" or "the FCA") commenced this action on October 2, 2012, seeking damages against Leon Bourdage ("Defendant" or "Bourdage") in excess of $450, 000 for breach of fiduciary duty, unjust enrichment, and conversion, based on its allegations that from 2007 to 2011. The FCA alleges that Bourdage, as a member of the FCA's Empire State Region ("ESR"), misappropriated money from two bank accounts owned by the FCA and managed by Bourdage. In essence, the FCA accuses Bourdage of using FCA-funds to pay for personal expenses unrelated to the FCA or the various events held by the FCA.
The FCA Bank Accounts
Bourdage was a member of the FCA from approximately 1988 until approximately 2010. In 2007, the ESR, comprised of FCA members living in New York State, hosted the FCA's Annual Meet. Bourdage was the Chairperson of the 2007 Annual Meet. Pursuant to the FCA's customs and practices, a separate checking account is opened for each year's Annual Meet and is kept separate from the host Region's general checking account. In April of 2007, Bourdage opened a checking account at Elmira Savings Bank for the 2007 Annual Meet (the "Annual Meet Account").
From August 29, 2007, through September 2, 2007, the Annual Meet was held in Watkins Glen and Corning, New York. Pursuant to the FCA's customs and practices, an Annual Meet bank account is required to be closed within a reasonable amount of time after the event is concluded. The FCA asserts that Bourdage did not close the Annual Meet Account following the conclusion of the 2007 Annual Meet. Bourdage counters that the FCA's Executive Director Patricia Current, agreed to allow him to keep the Annual Meet Account open to continue to develop "The Art of Ferrari" event that he allegedly created in 2001. Starting in approximately October of 2008, Bourdage used the 2007 Annual Meet Account as a personal checking account. See Deposition of Leon Bourdage ("Bourdage Dep.") at 258:18-24. The parties dispute whether the 2007 Annual Meet's finances ever were reconciled. Bourdages asserts that they were, and that all of the Event's expenses had been paid and Event income stopped at the time he began using the 2007 Annual Meet Account as a personal account. The FCA contends that 2007 Annual Meet Account never was reconciled.
In early 2009, Bourdage was appointed to be the Regional Director of the ESR. Typically, each FCA Region has a checking account that contains the Region's entire treasury, and any income and expenses for the Region are deposited into, and paid out of, that account. In early 2009, Bourdage opened a checking account at Elmira Savings Bank (the "ESR Account") to serve as the ESR's general account during his tenure as Regional Director. At that time, the ESR's previous Regional Director, Robert Coates, transferred $70, 000 to him, which Bourdage deposited into the ESR Account. The FCA asserts that while Bourdage was Regional Director, he was the only individual who ever deposited or withdrew funds from the ESR Account. Bourdage contends that the ESR Treasurer at that time, Pat Scopolleti, also deposited monies into the ESR Account.
In early 2011, at the conclusion of his two-year term as Regional Director, Bourdage was replaced by Roland Veit. As part of the transition, Bourdage provided approximately $3, 000 in cash to Veit and Ben Roter, the new treasurer.
The Outside Accountant's Review and Compilations of the Accounts
In 2012, at the request of the FCA's General Counsel, John Hurabiell, Shawn Gregory, CPA, conducted a review and compilation of the 2007 Annual Meet Account for the years 2007 through 2011. E.g., Gregory Dep. 116:5-21. Following the completion of his review, Gregory prepared a written report of his findings. See Hurabiell Dep., Exhibit ("Ex.") 15. Gregory's findings included the following irregular transactions during 2007 through 2011: (I) Bourdage wrote $95, 000-worth of checks from the 2007 Annual Meet Account, payable to himself and to his jewelry business; (ii) Bourdage withdrew approximately $112, 000 from the 2007 Annual Meet Account by writing checks payable to "Cash" or by making ATM withdrawals; (iii) Bourdage utilized the 2007 Annual Meet Account for various miscellaneous expenses, including $30, 000-worth of transactions at convenience stores, gas stations, restaurants, Wal-Mart, and Sam's Club, as well as loan payments, postage expenses, and travel expenses; (iv) Bourdage utilized the 2007 Annual meet Account for various personal expenses, including $59, 000-worth of transactions for auto repair, gifts, jewelry, private school tuition and medical expenses.
Gregory also conducted a review and compilation of the ESR Account for the years 2007 through 2010. Gregory identified a number of irregular transactions, including checks that Bourdage had written to himself or to his jewelry business and unsubstantiated cash withdrawals. Bourdage did not respond to Gregory's request for documentation in regards to the transactions identified as irregular. Following the completion of his review, Gregory prepared a written report. See Ex. 14 to Hurabiell Dep.
The Corning Enterprises Sponsorship Money
From 2006 to 2011, Corning Incorporated donated approximately $80, 000 to the FCA through its sponsorship of various events, including the 2007 Annual Meet. All of those funds were deposited into Bourdage's business account (rather than an FCA or ESR account). According to Thomas Tranter, President of Corning Enterprises, all of the funds given by Corning to Bourdage were intended to sponsor FCA events, and were in no way ...