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Law360 (May 12, 2021, 8:20 PM EDT ) A Florida federal judge ruled Wednesday that Adventist Health System can collect about $1.5 million after a California-based asset management firm defaulted on a settlement agreement they reached to resolve the hospital operator's fraud suit over a failed $57.5 million deal for personal protective equipment.
U.S. District Judge Paul G. Byron entered a consent final judgment against Tomax Capital Management Inc. and its principal Yehoram Tom Efrati, finding that under the terms of the parties' March 3 settlement agreement, the defendants defaulted when they failed to make a first payment of $300,000, which was due April 12.
The judgment says Florida-based AdventHealth can recover $1.5 million, plus $10,573 in interest that accrued between March 3 and April 16, as well as attorney fees and costs incurred enforcing the agreement.
In its April 16 motion requesting entry of the consent judgment, Florida-based AdventHealth said Tomax and Efrati did not oppose its request.
"The amount of the consent judgment reflects the amounts owed to AdventHealth to make it whole for the loss it suffered at the hands of Tomax and Efrati," the motion said. "Under these circumstances, Florida's public policy favors enforcement of settlement agreements."
The health care system, which has hospitals in nine states, claimed in its May 2020 complaint that Tomax failed to deliver on a $57.5 million contract to provide 10 million 3M N95 ventilator masks to protect its hospital workers from COVID-19.
AdventHealth said that when it asked for its money to be returned from escrow, Tomax's outside counsel, California attorney Michael H. Weiss, sent $55.5 million and said the remaining $2 million was in Tomax's possession. But Tomax never returned that money despite assurance from Efrati that it would.
In his Feb. 23 order denying the defendants' motions to dismiss, Judge Byron allowed AdventHealth's claims for breach of contract, conversion, breach of fiduciary duty, civil theft and civil conspiracy to move forward and also ruled that his court had the authority to exercise personal jurisdiction over Weiss and Efrati under Florida's long-arm statute.
On March 8, the judge granted the parties' joint motion to stay the case until Oct. 12, when Tomax and Efrati's final payment to AdventHealth was due to be paid under their settlement agreement, according to filings in the federal court in Orlando, Florida.
"Tomax Capital and Mr. Efrati are pleased that the commercial dispute with Adventist Health System could be amicably resolved without further litigation," defense counsel Laurence J. Pino of Pino Nicholson PLLC told Law360 at the time.
AdventHealth's settlement with Tomax and Efrati came on the heels of a separate deal it reached with Weiss and his firm.
Representatives for the AdventHealth and the Tomax defendants did not immediately respond to requests for comment Wednesday.
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.
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.
--Editing by Peter Rozovsky.
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