In the matter of Curriden, Case No. 05-38352/JHW (Bankr.N.J. 9/6/2007)
| Decision Date | 06 September 2007 |
| Docket Number | Adversary No. 06-1762.,Case No. 05-38352/JHW.,Case No. 06-10658/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 In the matter of Vincent T. Richardson and Cynthia L. Richardson Debtors Steven R. Neuner, the Chapter 7 Trustee for Gwen Curriden, and Gwen Curriden, individually Plaintiffs v. Vincent T. Richardson and Cynthia L. Richardson Defendants |
| Court | U.S. Bankruptcy 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 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.
In these two administratively consolidated adversary proceedings, the Chapter 7 trustee and the debtor, Gwen Curriden, assert that the defendants conspired to defraud the debtor of her proper share of the proceeds from the prepetition sale of her home. The plaintiffs seek to avoid the various alleged fraudulent transfers made from the sale proceeds and to recover punitive and other statutory damages for the benefit of the bankruptcy estate. As to the Richardsons, the trustee also seeks a determination that the debt due to the Curriden estate is nondischargeable. The various defendants dispute the existence of a conspiracy and maintain that there was nothing fraudulent in their involvement in the sale and closing on the debtor's home.
This matter involves two separate bankruptcy petitions: one filed by the plaintiff, Gwen Curriden, and one filed by the defendants Vincent and Cynthia Richardson. Gwen Curriden filed a voluntary petition under Chapter 7 of the Bankruptcy Code on September 2, 2005. She listed no real property and scheduled $86,025.33 in unsecured debt. In her Statement of Financial Affairs, the debtor disclosed that she sold her previous residence at 326 East High Street, Clayton, New Jersey to Vincent Richardson on December 31, 2004, and received $5,000.00 back from the sale proceeds.
Steven R. Neuner was appointed the Chapter 7 trustee on September 7, 2005. At the debtor's meeting of creditors,1 the trustee questioned the circumstances surrounding the debtor's
prepetition sale of her home to Vincent Richardson, and continued his investigation following his examination of the debtor.
In the interim, on February 1, 2006, Vincent T. and Cynthia L. Richardson filed their own petition for relief under Chapter 13 of the Bankruptcy Code. The Richardsons' Statement of Financial Affairs disclosed that they sold the Clayton property to a third party in November 2005, and that they received $1,300.00 in net proceeds. The Chapter 7 trustee for the Curriden bankruptcy estate filed a proof of claim in the Richardsons' case, and objected to the Richardsons' proposed Chapter 13 plan.2
On April 28, 2006, the Chapter 7 trustee filed adversary complaints in both the Curriden and the Richardson cases. In the Curriden case, the trustee filed a ten-count complaint, Adversary Case No. 06-1761, against defendants Innovative Mortgage Solutions, LLC; Trinity Insurance, Abstract & Title Company, LLC; Troy "Alim" Wallace; Bruce Hurdle; Jeffrey Adams and Danette Thomas. The complaint alleges common law fraud, conspiracy, RESPA and New Jersey Consumer Fraud Act violations, and seeks to avoid fraudulent transfers under 11 U.S.C. § 548 and applicable state law. The Richardson complaint, Adversary Case No. 06-1762, is a three-count complaint alleging violations of RESPA and the New Jersey Consumer Fraud Act against Vincent and Cynthia Richardson. It also seeks a determination of nondischargeability under 11 U.S.C. §§ 523(a)(2)(A), 523(a)(4) and 1328(a)(2). The Richardsons' answer includes
cross claims for damages against and indemnification from the other defendants. The two adversary proceedings were procedurally consolidated on June 7, 2006.
The trial was held on February 21, February 22 and March 1, 2007. Testimony was presented by Gwen Curriden, Cynthia Richardson, William Rogers (the owner of Innovative Mortgage Solutions) and Danette Thomas (the closing agent). By consent of the parties, the transcript of Bruce Hurdle's deposition was also entered into evidence.
Both adversary complaints arise from the events surrounding Gwen Curriden's sale of her home to Vincent Richardson on New Year's Eve, December 31, 2004. The plaintiffs paint a picture of the debtor as scared, confused and desperately trying to sell her home under the threat of foreclosure. She relied upon the assistance of a co-worker, defendant Jeffrey Adams, and his connections to help her sell her home. Although the settlement sheet indicated that she would receive over $41,000 from the sale, the debtor signed over all but $5,000 of the proceeds to various parties connected to the sale process for finder's fees and other costs. Vincent Richardson, the buyer, received over $26,000. The plaintiffs allege that the various defendants conspired to defraud the debtor. The defendants contend that they were merely trying to help the distressed debtor to sell her home, and that the finder's fees were reasonable and disclosed. They claim that there was no conspiracy and no fraudulent transfers.
The story begins several months prior to the sale of Ms. Curriden's home. Ms. Curriden credibly testified that during 2004, she was struggling both financially and emotionally. She was separated from her husband, who had recently stopped making child support payments. She was employed at Sam's Club, but she was not able to make ends meet and had fallen behind on most of her bills. Sometime in August 2004, she was served with a Complaint in Foreclosure filed by Wells Fargo Bank. By the fall of 2004, she was about a year behind on her home mortgage. She explains that she was suffering from depression and did not know what to do.
As her financial problems mounted, Ms. Curriden confided in a co-worker at Sam's Club, Jeffrey Adams, regarding the potential foreclosure on her home. Adams suggested that he may be able to help because he "had an interest in"3 or "was connected somehow"4 to a mortgage broker. Curriden trusted Adams, and accepted his help.
Sometime in October or November 2004, Adams brought defendant Bruce Hurdle and Harry Green to see Curriden's house. Adams and Hurdle mentioned to Curriden that they were somehow connected to Innovative Mortgage, a mortgage broker, but the connection was unclear. Curriden "just assumed that [Green] was connected with Bruce Hurdle and [she] understood them [both] to be connected to Innovative Mortgages."5 She stated that she "trusted Jeffrey and
Bruce and they offered to help and [she] didn't know what to do or how to do it."6
Hurdle told Curriden that "[h]e thought he could sell it [the house]."7 Hurdle was not a licensed realtor or mortgage broker, but had been a teacher who was just starting his involvement with the mortgage solicitation business. Hurdle's brother, Brooke Hurdle, managed the operations of Innovative Mortgage in Audubon, New Jersey. In November and December 2004, Bruce Hurdle spent some of his time with defendant Troy "Alim" Wallace at Wallace's Cherry Hill business location. Wallace worked for Innovative Mortgage as a mortgage solicitor at the time. Green was Wallace's father-in-law. Curriden testified that Green asked her to sign a paper stating that she would agree to receive only $5,000 from the sale of the house, but she declined to do so. At the time, she expected to realize more from the sale, since she had lived in the house for the last twelve years and she assumed that there would be more equity in the property. Nevertheless, Curriden agreed to cooperate with Adams and Hurdle to try to sell her house.
Thereafter, in late November or early December 2004, Hurdle brought Vincent and Cynthia Richardson to view Curriden's home. Cynthia Richardson was a close family friend of Wallace, whom she knew since she was a child. Wallace introduced Cynthia to the transaction, proposing to her that she purchase the property as a "bridge deal", meaning that she and/or her husband would buy the property, would obtain cash at the settlement table (Wallace promised Cynthia that she would receive $40,000), and would then be able to resell the property for a
profit. Curriden, who was meeting the Richardsons for the first time when they came to see her house, assumed that the Richardsons contemplated buying the house to live there. Curriden and the Richardsons did not discuss the sale price for the house. Following the visit, the Richardsons agreed with Wallace to buy the house for $125,000, believing that they would not be required to pay any costs involved in the transaction, that they would receive $40,000 at the closing, and that they would receive title to and possession of the property.
On December 18, 2004, Cynthia Richardson, on behalf of her husband, executed an Application Disclosure with Innovative Mortgage Solutions to obtain a loan to purchase Curriden's home.8 Wallace handled the mortgage application process for the Richardsons. Bruce Hurdle, who was not officially employed at Innovative until June 2005,...
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