Tomax Seeks To Duck Blame Over Failed $57M PPE Deal

By Kevin Penton
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Law360 (October 13, 2020, 9:57 PM EDT) -- A capital management firm on Tuesday urged a Florida federal court to toss most of the claims it faces in litigation over a soured $57.5 million deal to buy protective face masks, arguing that a law firm should be the target for the suit's fraud claims.

Adventist Health System Sunbelt Healthcare Corp. has failed to establish that Tomax Capital Management Inc. conspired to defraud the company, according to the management firm's summary judgment motion, which blames attorney Michael H. Weiss and his namesake firm for allegedly taking approximately $2 million from an escrow fund that was part of the personal protective equipment agreement for N95 ventilator masks.

"Plaintiff cannot establish any unauthorized act on behalf of Tomax which deprived plaintiff of any part of the escrowed funds," reads the motion, which argues that a breach of contract claim should be the remaining claim against the management firm.

The Middle District of Florida also lacks jurisdiction over Tomax principal Yehoram Tom Efrati, as all the dealings that AdventHealth had with him were in his capacity as the management firm's CEO, according to Tuesday's motion.

"Plaintiff fails to establish why the corporate activities [Efrati] carried out on behalf of Tomax subject him to personal liability," the motion reads.

The health care system, which has hospitals in nine states, alleged in its May 28 complaint that when Tomax failed to deliver on an April 8 contract to provide 10 million 3M N95 ventilator masks to protect its workers during the coronavirus pandemic, it asked for the money in escrow to be returned. According to the suit, Weiss sent just $55.5 million and told AdventHealth the remaining $2 million was in Tomax's possession. AdventHealth contends Tomax and Efrati conspired with Weiss and his firm, Michael H. Weiss PC, to keep the $2 million.

AdventHealth told the court in August that it has sufficiently pled that each of the four defendants agreed to commit an unlawful act, performed some overt act to further the conspiracy, and that it was damaged as a result. AdventHealth has also argued that Florida lies at the heart of the allegations and is where it experienced the $2 million loss.

"Performance of the contract was in Florida, delivery was to occur at AdventHealth in Florida, the defendants' misrepresentations were made in Florida, relied on in Florida, and caused injury to AdventHealth in Florida," the company said in an August filing.

Weiss urged the court in July to toss the claims against him, arguing that he can't be sued individually for signing the deal because he was acting in his capacity as his law firm's president and that the firm was the party in the escrow agreement, not him.

"The complaint alleges no facts demonstrating that Weiss is the alter ego of the law firm or that there is any basis to pierce the corporate veil and hold him personally liable for acts he took on its behalf," Weiss said in his motion.

Counsel for the parties could not be reached for comment on Tuesday.

AdventHealth is represented by Mayanne Downs, Jason A. Zimmerman and Joshua Bachman of GrayRobinson PA.

Tomax and Efrati are represented by Laurence J. Pino and Sean M. Southard of Pino Nicholson PLLC.

Weiss and his firm are represented by David R. Keller of Keller Landsberg PA.

The case is Adventist Health System Sunbelt Healthcare Corp. v. Michael H. Weiss PC et al., case number 6:20-cv-00877, in the U.S. District Court for the Middle District of Florida.

--Additional reporting by Carolina Bolado, Rosie Manins and Nathan Hale. Editing by Michael Watanabe.

For a reprint of this article, please contact reprints@law360.com.

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