Di Loreto v. Costigan
| Decision Date | 19 February 2009 |
| Docket Number | Civil Action No. 08-989.,Civil Action No. 08-990. |
| Citation | 600 F.Supp.2d 671 |
| Parties | Jeanne S. Di LORETO, Plaintiff, v. William F. COSTIGAN; Eric R. DiNallo; Mark J. Peters; and Andrew J. Lorin, Defendants. Jeanne S. Di Loreto, Plaintiff, v. Insurance Department of the State of New York; William F. Costigan; Eric R. DiNallo; Mark J. Peters; and Andrew J. Lorin, Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Clifford E. Haines, Haines & Associates, Philadelphia, PA, for Plaintiff.
William F. Constigan, c/o Dornbush Schaeffer Strongin & Venaglia, LLP, New York, PA, pro se.
Aaron E. Moore, Arthur W. Lefco, Marshall Dennehey Warner Coleman & Goggin, Philadelphia, PA, Elizabeth A. Forman, Jane R. Goldberg, Office of the
Attorney General, New York, NY, for Defendants.
Presently before this Court are three motions to dismiss filed by: (1) Defendant State of New York Insurance Department ("NYSID"); (2) Defendant Costigan; and (3) Defendants Di Nallo, Peters, and Lorin ("NYSID Defendants"). For the reasons discussed below, Defendants' Motions to Dismiss are granted.
These filings are the latest salvos in a long-running legal dispute arising from the Insurance Department of New York's liquidation of Nassau Insurance Company ("Nassau") in 1984. (Compl. ¶ 32.) Since that time, the parties have been involved in near-constant litigation culminating in a $20,000,000 jury verdict against Plaintiff, Jeanne Di Loreto, and her husband.1 The NYSID Liquidator's efforts to enforce that judgment in Pennsylvania are the basis for the present dispute.
Founded in 1965, Nassau was owned by Plaintiff and her husband, Richard Di Loreto. (Id. ¶ 23.) In 1976, the Di Loretos formed Ardra Insurance Company ("Ardra"), a Bermuda corporation, to provide "reinsurance coverage to Nassau." (Id. at ¶ 26.) Plaintiff served as President of Ardra, a position her counsel deems to have been "ceremonial ... in that she held the office without performing any real or substantive responsibilities." (Id. at ¶ 27.) As President of Ardra, Plaintiff signed key several documents relating to its operation.2 An April 1985, Summons and Complaint issued by James P. Corcoran as NYSID Superintendent and Liquidator of Nassau indicated that Mrs. Di Loreto was the 100% beneficial owner of Tiber Holding Corporation ("Tiber"), Ardra's ultimate parent. .)
In 1985, acting as Liquidator of Nassau (Liquidator), the NYSID Superintendent brought suit seeking, among other things "recovery of reinsurance proceeds due to Nassau under certain reinsurance agreements between Nassau and Ardra Insurance Company, Ltd.; [and] damages for the costs and disbursement of recovering the reinsurance proceed due to Nassau under the Reinsurance Agreements." (Id. at 1-2.) On April 18, 2002, New York Supreme Court Judge Schlessinger entered a jury verdict against both "DiLoreto Defendants in the amount of $20,507,456.86." Serio v. Ardra Ins. Co., 304 A.D.2d 362, 362, 761 N.Y.S.2d 1 (N.Y.App.Div.2003). The Appellate Division affirmed Judge Schlessinger's decision noting that "[t]he verdict was not against the weight of the evidence" and "contrary to defendant-appellant's claim, the evidence provided ample support for the jury's finding that the transactions at issue [between Ardra and Nassau] ... were unfair and inequitable to Nassau [and] ... the proof showed that the Di Loretos, through their control of Ardra, deprived it of the funds needed to meet its reinsurance obligations." Id. at 363, 761 N.Y.S.2d 1. Given that transactions paid by Nassau "were immediately transferred to other Di Loreto-owned entities, the jury was entitled to consider the sequential transfers as part of an integrated transaction designed to benefit Di Loreto entities by effectively denying Ardra's insured the coverage for which it had contracted and paid." Id. Plaintiff's subsequent appeal to New York's highest court was "dismissed," as was Plaintiff's second motion for leave to appeal. Serio v. Ardra Ins. Co. Ltd., 100 N.Y.2d 576, 764 N.Y.S.2d 385, 796 N.E.2d 477 (N.Y.2003); Serio v. Ardra Ins. Co. Ltd., 100 N.Y.2d 516, 769 N.Y.S.2d 202, 801 N.E.2d 423 (N.Y.2003). In 2002, the Liquidator sought to transfer its judgment to Pennsylvania, where the Di Loretos reside. (Compl. ¶¶ 14, 86, 1, 3.) The Liquidator did not attempt to execute on its judgment in Pennsylvania until 2007. (Id. at ¶¶ 15, 87.)
A. Actions Subsequent to the New York Proceedings
As Plaintiff notes, for five years, no efforts were made to enforce the New York judgment. But this changed when the Liquidator sought to execute judgment against Plaintiff, and filed an involuntary bankruptcy petition in the Eastern District of Pennsylvania. The Liquidator initiated both actions as a result of Plaintiff's legal malpractice action against the law firm of Pepper Hamilton. (Id. ¶ 88.) Trying to "secure a favorable resolution of the Pepper claim," Plaintiff's counsel "sought the assistance of the defendants in prosecuting the Pepper claim." (Id. ¶ 90.) Instead, the Liquidator "initiated the execution on judgment and attempted to have the sheriff of Chester County sell her home, and seize all of the furniture and other contents of her home." (Id. ¶¶ 92, 93.) Plaintiff filed a motion in the Chester County Court of Common Pleas to "thwart his [the Liquidator's] attempts to collect against Jeanne Di Loreto," and the Chester County Court of Common Pleas stayed the sheriff's sale. (Id. ¶¶ 94, 95.) Agreement was reached that no action would be taken "until such time as the lawsuit against Pepper Hamilton was resolved," but settlement was delayed due to "Pepper Hamilton's fear that the garnishment filed by the Defendants although improper, prevented them from transferring any money to the Di Loretos in compliance with a settlement agreement." (Id. ¶¶ 94, 95, & 97.) Pepper Hamilton filed an "Emergency Motion to Set Aside Writ of Execution," which was scheduled for hearing. (Id. ¶¶ 99, 100.) But the day before the hearing, the Liquidator filed an Involuntary Bankruptcy Petition against Plaintiff "forcing a stay of the Pepper claim." (Id. ¶ 101.) The involuntary bankruptcy was later dismissed for improper service.
Responding to Defendants' actions, Plaintiff filed two Complaints in Pennsylvania state courts. The first Complaint, filed in the Court of Common Pleas of Philadelphia County (the "Philadelphia Suit" or "Phila. Compl."), named William F. Costigan, Eric R. Di Nallo, Mark G. Peters, and Andrew J. Lorin as defendants. The second suit, filed in the Court of Common Pleas of Chester County (the "Chester Suit" or "Chester Compl."), named the same four defendants and added the NYSID.3 Defendants Lorin, Peters, and Di Nallo filed Notices of Removal in both suits, asserting both federal question and diversity jurisdiction, and later Defendant Costigan filed a Motion to Remove. Plaintiff sought to remand both matters to the state courts, which this Court denied on August 29, 2008. (Doc. No. 29.)
The Complaints4 seek "to prevent the execution of ... a judgment obtained against her by the New York State Insurance Department's Liquidation Bureau ... as the judgment was obtained in violation of Plaintiff Jeanne Di Loreto's due process rights." (Compl. 1.) Despite this, Plaintiff avers that she "is not challenging the substance of the underlying litigation but rather, the insufficient process that Plaintiff was forced to endure as a result of the New York Judgment."5 (Pl.'s Resp. to Mot. to Dismiss 10.) Rather, she asserts that due process prevents Pennsylvania courts from honoring the judgment since "[t]he Liquidator brought a lawsuit against Plaintiff with virtually no evidence, that was rendered by a constitutionally defective jury, which was defended by a negligent attorney who was representing both Di Loretos, and a manipulative prosecutor which so tainted the judicial proceedings." (Id.) Given these infirmities, Plaintiff seeks a declaratory injunction barring enforcement of the New York judgment as well as compensatory and punitive damages. (Compl. 3.) In support of her request, Plaintiff alleges five claims: (1) violation of due process (Id. ¶¶ 110-126); (2) equal protection violation (Id. ¶¶ 127-133); (3) abuse of process (Id. ¶¶ 134-140); (4) intentional infliction of emotional distress (Id. ¶¶ 141-148) and (5) declaratory injunction (Id. ¶¶ 149-151).
The purpose of a Fed.R.Civ.P. 12(b)(6) motion is to test the legal sufficiency of a complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir.1993). Under Rule 12(b)(6), a defendant bears the burden of demonstrating that plaintiff has not stated a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). When considering such a motion to dismiss, the court must "accept as true allegations in the complaint and all reasonable inferences that can be drawn therefrom, and view them in the light most favorable to the nonmoving party." Rocks v. City of Phila., 868 F.2d 644, 645 (3d Cir.1989). Notably, though, the court will not accept unsupported conclusions, unwarranted inferences, or sweeping legal conclusions cast in the form of factual allegations. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.1997). The question before the court is not whether the plaintiff will ultimately prevail. See Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984). Rather, the court should only grant a 12(b)(6) motion if "it appears beyond a reasonable doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Carino v. Stefan, 376 F.3d...
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