Appeals court affirms judgment in 'Ivy Screens' fraud litigation

By Karen Kidd | Nov 24, 2018

Morguefile

SACRAMENTO — A California appeals court upheld an almost-$900,000 award against a man who claimed to investors that he had developed an idea for a fake ivy landscaping screen even though the product already existed on the market.

In its 28-page opinion issued Nov. 19, a California Third District Court of Appeal three-judge panel affirmed an earlier lower court decision over fraud and other allegations in litigation over so-called "Ivy Screens."

Justice Louis Mauro wrote the opinion in which Justice Vance W. Raye and Justice Ronald B. Robie concurred.

The decision is unpublished, which means it is not to be cited or used as precedent in future cases.


California Third District Court of Appeal Justice Louis Mauro  

The litigation concerns whether Jerry Ponzo failed to disclose material facts and engaged in damaging conduct during the dissolution of Enviro-Building Systems, Inc. (EBS), owned by Ponzo and his wife, Tracy Dillon, according to the background portion of the appeals court's opinion. EBS does business as Back Yard Dream, or Ivy Screen. Dissolution negotiations with investors Ronald Miller and Brenda Crum allegedly broke down and litigation ensued after Ponzo demanded cash and concessions.

Ponzo had attempted to patent Ivy Screens, described at trial "as a galvanized wire product and a process using that wire product," which was "essentially the same" as a product already being sold by the unrelated company Greenscreen, the appeals court opinion said.

"Ponzo represented that he invented the galvanized wire product, but he did not," the opinion said. "In fact, the process using the wire product was a common one. Moreover, Ponzo shared his idea with others without a nondisclosure agreement, and thus his idea was unprotected and out in the public before Miller and Crum invested in EBS."

Claims and cross claims that followed included Miller and Crum's fraud allegations against Ponzo.  

After a bench trial, the trial court found against all parties in most of their various causes of action, but ruled in favor of Miller and Crum against Ponzo, Dillon and Ivy Screen in the fraud allegations. Miller and Crum were awarded more than $723,000 to recoup their investment plus interest and an amount that had been paid to EBS creditors.

The trial court, which "found Ponzo's conduct reprehensible," also concluded that punitive damages were warranted against Ponzo, Dillon and Ivy Screen, to which those three objected and asked for specific findings. The trial court overruled those objections and adopted a tentative ruling, clarifying that neither side sustained their respective burdens of proof.

"The trial court awarded Miller and Crum $10,000 each in punitive damages against Ivy Screen, $25,000 each in punitive damages against Dillon, and $50,000 each in punitive damages against Ponzo," the appeals court opinion said. "Judgment was entered in favor of Miller and Crum and against Ponzo, Dillon and Ivy Screen."

In their appeal, Ponzo, Dillon and Ivy Screen claimed they had not received a fair trial and that, among other issues, the trial court had failed to assess the relevance of witness credibility in the disposal of EBS assets. The three claimed the trial court had erred in its proceedings and evidence admission and challenged the judgment over breach of fiduciary duty and fraud claims, in addition to challenging the compensatory and punitive damages awards.

"In addition, Ponzo, Dillon and Ivy Screen claim there was a poisonous atmosphere against them in the trial court," the appeals court opinion said.

The appeals court was not impressed with Ponzo, Dillon and Ivy Screens various arguments, including over the monetary award from the trial court.

"Considering the evidence, the guideposts and Ponzo, Dillon and Ivy Screen's ability to pay, we conclude the punitive damages award is not unconstitutionally excessive," the appeals court's opinion said.

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