In the Matter of Curriden, Case No. 05-38352/JHW (D.N.J. 6/25/2008)
| Decision Date | 25 June 2008 |
| Docket Number | Case No. 05-38352/JHW.,Adversary No. 06-1761. |
| Parties | In the matter of Gwen Curriden, Debtor. Steven R. Neuner, the Chapter 7, Trustee for Gwen Curriden, and Gwen Curriden, individually Plaintiffs, v. Innovative Mortgage Solutions LLC; Trinity Insurance, Abstract & Title Agency, LLC; Troy "Alim" Wallace; Bruce Hurdle; Jeffrey Adams, and Danette Thomas, Defendants. |
| Court | U.S. District Court — District of New Jersey |
Steven R. Neuner, Esq., Neuner and Ventura, LLP, Willow Ridge Executive Office Park Marlton, New Jersey, Counsel for the Chapter 7 Trustee.
Mark A. Rinaldi, Esq. Willow Ridge Executive Office Park Marlton, New Jersey Counsel for Gwen Curriden.
Michael A. Katz, Esq. Dempster & Haddix Centerpointe at East Gate Mt. Laurel, New Jersey, Counsel for Innovative Mortgage Solutions
Jason N. Sunkett, Esq. Walter Lacey, Esq. Sunkett & Lacey, LLC Laurelwood Professional Blvd. Cherry Hill, New Jersey, Counsel for Trinity Abstract and Danette Thomas
Keith Owen Campbell, Esq. Cherry Hill, New Jersey, Counsel for Bruce Hurdle
Stephanie Ritigstein, Esq. Jenkins & Clayman Audubon, New Jersey, Counsel for the Richardsons.
SUPPLEMENTAL OPINION
On September 6, 2007, following a three-day trial, this court issued a written decision resolving most of the plaintiffs' ten count adversary complaint. Several issues were left unresolved, including the extent of each defendant's liability to the plaintiffs. Those issues have now been briefed and are ready for final resolution. The plaintiffs were also afforded an opportunity to move to amend their complaint to conform to the evidence presented at trial, which they have done. The plaintiffs amended their complaint to include a count of aiding and abetting against each of the defendants. In addition, the plaintiffs have sought clarification and reconsideration of various issues discussed in the September 6, 2007 opinion. In response, the defendant Innovative Mortgage Solutions LLC filed a cross motion seeking additional findings of fact and conclusions of law, and moved to amend its answer to assert cross claims for indemnification and contribution.
For the reasons explained below, I conclude that both defendants Troy Wallace and Innovative Mortgage Solutions, LLC, are liable to the plaintiffs for treble damages and attorneys fees under the New Jersey Consumer Fraud Act. I conclude further that all counts filed against Danette Thomas and Trinity Insurance, Abstract and Title Agency may be dismissed. As to defendant Bruce Hurdle, I conclude that he is liable to the plaintiffs for 10% of the treble damages and for attorneys fees under the New Jersey Consumer Fraud Act. Further, Innovative's quest for indemnification from Wallace for all losses incurred, and for contribution from Hurdle to the extent of Hurdle's liability, is granted.
The plaintiffs, debtor Gwen Curriden and the Chapter 7 trustee, Steven R. Neuner, originally filed a ten count adversary complaint on April 28, 2006 alleging common law fraud, false pretenses and civil conspiracy, as well as violations of the New Jersey Consumer Fraud Act ("NJCFA" or "the Act") and the Real Estate Settlement Procedures Act ("RESPA"), against defendants Troy "Alim" Wallace, Bruce Hurdle, Jeffrey Adams, Innovative Mortgage Solutions LLC, Danette Thomas and Trinity Insurance, Abstract and Title Agency LLC. Following a trial and post-trial submissions, I issued an opinion in which I recited my findings of fact. In re Curriden, Adv. No. 06-1761, 2007 WL 2669431 (Bankr. D.N.J. Sept. 6, 2007). I will not repeat those findings, but rely on the findings herein. The conclusions reached in that first opinion are recounted below to highlight the matters left to be resolved.
In Count 1, the plaintiffs claimed damages based on common law fraud and false pretenses. I concluded that the plaintiffs had clearly established that both Hurdle and Adams "knowingly concealed material facts from Curriden, with the intent that Curriden rely on the information, with resulting damages to Curriden." Id. at *6. Accordingly, I determined that "the elements of common law fraud have been established, and [Hurdle and Adams] are each liable to the plaintiffs for damages incurred by Curriden in connection with this transaction." Id. at *7.1 The plaintiffs were not able to establish that Wallace himself specifically misrepresented or concealed any facts from Curriden, and "[a]lthough Wallace was the architect of the scheme to defraud Curriden, and orchestrated the transaction," there was no evidence to suggest that he had any "direct contact with Curriden." Id. I concluded therefore that Wallace was not liable under principles of common law fraud.2 In addition, I concluded that the plaintiffs had not established any evidence to support the causes asserted against Danette Thomas or Trinity, i.e. that they conspired against or intended to defraud Curriden.
In Count 2, the plaintiffs claimed the existence of a conspiracy to defraud Ms. Curriden. I concluded that there was "no question that the plaintiffs have established that Adams, Hurdle and Wallace acted in concert to inflict a wrong against and injury upon the debtor, which caused her damage." Id. at *8. "The unlawful agreement was the scheme to pay illegal kickbacks to Adams, Hurdle and Richardson, and to deprive the debtor of the equity in her home." Id. I determined further that Innovative was vicariously liable for any compensatory damages attributed to Wallace, which would include any compensatory damages based upon conspiracy grounds. With respect to Thomas and Trinity, I concluded that there was no evidence to support a claim that they had participated in or were a part of that conspiracy. In reaching this conclusion, I noted that while the plaintiffs had not pled a cause of action based on the tort of aiding and abetting, they argued in their submissions that the actions of Thomas and Trinity constituted such tortious conduct. I therefore invited the plaintiffs to move to amend their complaint to reflect this cause of action to the extent that they believed that the matter had already been tried. The plaintiffs have since amended their complaint to assert a cause of action for aiding and abetting against not only Thomas and Trinity, but also against each of the other defendants jointly and severally.3
As to the plaintiffs' allegations of RESPA violations in Count 3, I determined that Hurdle, Adams and Wallace were each guilty of violating the statutory provisions of the Real Estate Settlement Procedures Act. However, because these violations afforded the same recovery opportunities and overlapped with the same elements and issues addressed under the NJCFA, I did not reduce to judgment the separate damages chargeable against the defendants under RESPA. The liability of Innovative, Thomas or Trinity under RESPA, if any, was not addressed.
The plaintiffs alleged in Count 4 that Hurdle, Adams and Wallace violated the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. I concluded that the "unlawful agreement and scheme between the three defendants to pay illegal kickbacks to Adams, Hurdle and Richardson, and to deprive the debtor of the equity in her home, constitute[d] not only the affirmative acts of deception and fraud proscribed by the Act, but also the `knowing, concealment, suppression or omission of any material fact with intent that others rely upon such concealment, suppression, or omission.'" Id. at *9 (quoting N.J.S.A. 56:8-2). Each of the three defendants was found to have violated the NJCFA. I left unresolved the extent of each defendant's individual liability in light of questions regarding joint and several liability and the impact of the New Jersey Comparative Negligence Act. I determined that Innovative was vicariously liable for the compensatory damages related to Wallace's actions, but that Innovative's liability did not extend to the treble damages afforded under the statute. The question of counsel fees was not addressed. Finally, I concluded that insufficient proofs had been presented to establish that Trinity and Thomas committed any violations of the NJCFA.
Counts 5 through 10 were not addressed. Counts 5 through 8 classified the kickbacks and other improper payments made to the defendants as "constructively fraudulent transfers". The plaintiffs sought to avoid those transfers pursuant to 11 U.S.C. § 548(a)(1)(B) () and/or N.J.S.A. 25:2-25(b) () and 25:2-27(a) () and to receive a money judgment and/or attachment and injunctive relief under state law. In Count 9, the plaintiffs characterized the kickbacks and monies paid as "intentionally fraudulent transfers" and sought to avoid the transfers pursuant to 11 U.S.C. § 548(a)(1)(A) and N.J.S.A. 25:2-25(a). Finally in Count 10, the plaintiffs sought to disallow any administrative expense claims by the defendants until the earlier sought judgments were satisfied. Counts 5 through 10 were not prosecuted by the plaintiffs, overlap with the other counts, and may be dismissed here.
Following the issuance of the opinion, the plaintiffs moved for reconsideration and clarification of the decision with respect to the nature and extent of Innovative's liability. Specifically, plaintiffs question Innovative's liability under RESPA and its responsibility for counsel fees under the NJCFA. As well, the plaintiffs seek to extend Innovative's vicarious liability to include treble and/or punitive damages under both the NJCFA and RESPA. Innovative opposed that relief. In a cross motion filed on October 15, 2007, Innovative sought additional findings of fact and conclusions of law, asking the court to conclude that Innovative was not vicariously liable for Wallace's actions.
In addition, the parties have now briefed the aiding...
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