CBD & Sons, Ltd. v. Richard Setteducati, Shore Lending Grp., LLC
| Decision Date | 31 January 2019 |
| Docket Number | Civil Action No. 3:18-cv-4276-BRM-DEA |
| Parties | CBD & SONS, LTD., Plaintiff, v. RICHARD SETTEDUCATI, SHORE LENDING GROUP, LLC, GMH MORTGAGE SERVICES, LLC, CHARLES A. LIBERTI, RAYMOND R. MILLER, SR., and BLUE RIBBON APPRAISALS, LLC, Defendants. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
Before this Court is Defendants Blue Ribbon Appraisal, LLC ("Blue Ribbon"), Charles A. Liberti ("Defendant Liberti"), and Raymond R. Miller, Sr.'s ("Defendant Miller") (collectively, the "Blue Ribbon Defendants") Motion to Dismiss Plaintiff CBD & Sons, Ltd.'s ("Plaintiff" or "CBD") Complaint for lack of personal jurisdiction and improper venue (ECF No. 20), and Defendants GMH Mortgage Services, LLC ("GMH") and Shore Lending Group, LLC's ("Shore Lending") (collectively, the "GMH Defendants") Motion to Dismiss CBD's Complaint for lack of subject matter jurisdiction and failure to state a claim (ECF No. 21). Plaintiff opposed the Blue Ribbon Defendants' Motion to Dismiss (ECF No. 26) and the GMH Defendants' Motion to Dismiss (ECF No. 27). Having reviewed the submissions filed in connection with the motions and having declined to hold oral argument pursuant to Federal Rule of Civil Procedure 78(b), for the reasons set forth below and for good cause shown, the Blue Ribbon Defendants' Motion to Dismiss (ECF No. 26) is GRANTED and the GMH Defendants' Motion to Dismiss (ECF No. 27) is GRANTED IN PART and DENIED IN PART.
On March 27, 2018, CBD filed a Complaint (the "Complaint") before this Court asserting fraud against Defendant Richard Setteducati ("Defendant Setteducati"), Shore Lending, and GMH (Count One), breach of fiduciary duty against all Defendants (Count Two), unjust enrichment against all Defendants (Count Three), breach of contract against all Defendants (Count Four), a violation of the New Jersey Consumer Fraud Act ("NJCFA") against all Defendants (Count Five), negligence against the Blue Ribbon Defendants (Count Six), and professional malpractice against the Blue Ribbon Defendants (Count Seven). (Complaint (ECF No. 1).)1
On June 4, 2018, the Blue Ribbon Defendants filed a Motion to Dismiss each cause of action asserted against them in the Complaint, arguing this Court lacks personal jurisdiction over them and venue is improper in New Jersey. (ECF No. 20.) Also on June 4, 2018, the GMH Defendants filed a Motion to Dismiss CBD's Complaint asserting a lack of subject matter jurisdiction and that the Complaint fails to state a cause of action upon which relief can be granted. (ECF No. 21.) On June 5, 2018, Defendant Setteducati filed an Answer to the Complaint. (ECF No. 22.) On June 6, 2018, CBD filed an Opposition to the Blue RibbonDefendants' Motion to Dismiss (ECF No. 26) and to the GMH Defendants' Motion to Dismiss. (ECF No. 27).
For the purposes of these Motions to Dismiss, the Court accepts the factual allegations in the Complaint as true and draws all inferences in the light most favorable to the Plaintiff. See Phillips v. Cty. of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008). Further, the Court also considers any "'document integral to or explicitly relied upon in the complaint.'" In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (quoting Shaw v. Dig. Equip. Corp., 82 F.3d 1194, 1220 (1st Cir. 1996)).
CBD is a domestic business corporation located in New York and organized under the laws of the State of New York. (ECF No. 1 ¶ 4.) CBD is solely owned by Chana Daskal ("Daskal"), its President and lone shareholder. (ECF No. 1 ¶ 17.) Defendant Setteducati is a resident of Manasquan, New Jersey. (ECF No. 1 ¶ 5.) Shore Lending is a New Jersey corporation headquartered in Manasquan, New Jersey, and GMH is a Delaware corporation also headquartered in Manasquan, New Jersey (ECF No. 1 ¶¶ 6, 7.) Defendant Setteducati worked as a broker for both Shore Lending and GMH. (ECF No. 1 ¶¶ 8, 40.) Blue Ribbon is a Connecticut corporation headquartered in West Hartford, Connecticut which has been serving "appraisal needs for nationwide lenders and investors since 1990." (ECF No. 1 ¶ 11; ECF No. 26 at 2.) Defendant Liberti is a resident of West Haven, Connecticut and Defendant Miller is a resident of Milford, Connecticut. (ECF No. 1 ¶¶ 9-10.) Both Defendants Liberti and Miller are professional, licensed appraisers and both are employees and agents of Blue Ribbon. (ECF No. 1 ¶¶ 12, 68.)
On or about August 10, 2001, Daskal was involved in a helicopter crash near Las Vegas, Nevada which killed her husband and four others and left her with severe injuries requiringconstant care. (ECF No. 1 ¶¶ 18-23.) Specifically, Daskal suffered grave disfigurement, a broken back, and amputation of both of her legs. (ECF No. 1 ¶ 22.) After the accident, Gary Escandon ("Escandon") was appointed Daskal's legal representative and given Power of Attorney. (ECF No. 1 ¶ 24.) In 2007, Escandon formed and incorporated CBD, appointing Daskal President and sole shareholder and himself as Vice President. (ECF No. 1 ¶¶ 24-27.) The purpose of CBD was to "assist Daskal in managing her money and affairs" in hopes to "invest in real estate ventures" to support Daskal and her two sons in the long-term. (ECF No. 1 ¶ 26.)
Escandon breached his fiduciary duty to Daskal and CBD through various schemes, including a fraudulent loan, perpetrated with Defendant Setteducati, an acquaintance of his. (ECF No. 1 ¶¶ 28, 33-35.) Defendant Setteducati, a mortgage broker, owed approximately $75,000 to Escandon on a pre-existing debt, and to settle that debt, the two formulated a plan to obtain money from CBD through a real estate deal that would allow Defendant Setteducati to reimburse Escandon. (ECF No. 1 ¶¶ 36-37, 40-41, 48; Bennett Affidavit (ECF No. 26-1 ¶¶ 10, 13).) At the time of the alleged scheme between Defendant Setteducati and Escandon, Defendant Setteducati was employed by Shore Lending and GMH. (ECF No. 1 ¶ 34.)
Escandon and Defendant Setteducati conspired to create a loan using property owned by Paul Edwards ("Edwards"), a Connecticut resident who had previously done business with Defendant Setteducati. (ECF No. 1 ¶¶ 39-43.) Defendant Setteducati knew Edwards owned property located at 9-11 Colony Street and 13-17 Colony Street in Meridien, Connecticut (the "Colony Street Properties") and also knew Edwards needed a loan and could use the Colony Street Properties as collateral. (ECF No. 1 ¶ 44.) In or about 2006, the City of Meridien had conveyed the Colony Street Properties to Edwards for nominal consideration "as part of its initiative to rehabilitate the area's business district." (ECF No. 1 ¶ 45.)
Defendant Setteducati engaged the Blue Ribbon Defendants to conduct an appraisal of the Colony Street Properties in preparation to extend a loan to Edwards on behalf of CBD (the "Edwards Loan"). Prior to the extension of the Edwards Loan, Blue Ribbon conducted two separate appraisals of the Colony Street Properties, one in 2011 and one in 2012.
Blue Ribbon's 2011 appraisal of the Colony Street Properties (the "2011 Appraisal") is dated May 28, 2011, addressed to Shore Lending, care of GMH, at 2517 Highway 35, Manasquan, New Jersey, and notes the appraisal is being conducted "to estimate market value for financing purposes." (ECF No. 1-1, Ex. A at 1-2.) The 2011 Appraisal determined the actual assessed value of the Colony Street Properties to be $644,180. (ECF No. 1-1, Ex. A at 1-2.) In arriving at this valuation, the 2011 Appraisal used the full value of the apparently occupied comparable properties ("comparables"), averaging out after adjustments to $32/square foot with no discount for the vacancies on the Colony Street Properties. (ECF No. 1-1, Ex. A at 28-30.) Ultimately, the 2011 Appraisal concluded the Colony Street Properties have an as-is fee simple market value of $780,000. (ECF No. 1-1, Ex. A at 3.)
On April 28, 2012, approximately eleven months after the 2011 Appraisal, Blue Ribbon completed a second appraisal of the Colony Street Properties (the "2012 Appraisal"). (ECF No. 1-2, Ex. B.) As with the 2011 Appraisal, the 2012 Appraisal is also addressed to Shore Lending and GMH at the same Manasquan address. (ECF No. 1-2, Ex. B at 1-3.) After making adjustments using different comparables, Blue Ribbon priced the Colony Street Properties at $56/square foot and concluded the Colony Street Properties have an as-is fee simple market value of $900,000. (ECF No. 1-2, Ex. B at 1-10, 24-30.) Both the 2011 Appraisal and the 2012Appraisal were conducted by Defendants Liberti and Miller, working on behalf of Blue Ribbon. (ECF No. 1-1, Ex. A at 1-3; ECF No. 1-2, Ex. B at 1-3.)
On or about June 6, 2012, relying on the 2011 and 2012 Appraisals, Escandon and Defendant Setteducati extended the Edwards Loan in the amount of $750,000, which was secured and collateralized by a mortgage on the Colony Street Properties, had an annual interest rate of 15%, and was to mature in twelve months. (ECF No. 1 ¶¶ 58-62.)2 Thereafter, Defendant Setteducati paid his commission on the Edwards Loan to Escandon to settle his pre-existing debt. (ECF No. 1 ¶ 61.)
Edwards defaulted on the loan "almost immediately." (ECF No. 1 ¶ 63.) CBD alleges the Blue Ribbon Defendants' appraisals of the Colony Street Properties were negligent at best and professional malpractice at worst. (ECF No. 1 ¶ 70.) CBD further alleges Defendant Setteducati "deliberately misrepresented the value of the Colony Street Properties to Escandon and CBD, knowing that the appraisals would be relied upon in the decision to make the loan to Edwards." (ECF No. 1 ¶ 72.)
On June 28, 2013, Blue Ribbon conducted a third appraisal of the Colony Street Properties, which had an "effective date" of July 28, 2014 (the "2014 Appraisal"). (ECF No. 1-3...
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