Knauss v. Dwek

Decision Date22 October 2003
Docket NumberCivil Action No. 01-3662(MLC).
Citation289 F.Supp.2d 546
PartiesWinston KNAUSS, Plaintiff, v. Solomon DWEK, Defendant.
CourtU.S. District Court — District of New Jersey

Kevin E. Hoffman and Thomas F. Verrastro, Kent & McBride, P.C., Wood-bridge, NJ, for Plaintiff.

Frank Peretore, Peretore & Peretore, P.C., Sparta, NJ, for Defendant.

MEMORANDUM OPINION

COOPER, District Judge.

This is an action under 46 U.S.C. §§ 31303, et seq. ("Ship Mortgage Act"), for a deficiency judgment. The plaintiff, Winston Knauss ("Knauss"), moves for summary judgment against the defendant, Solomon Dwek ("Dwek"), for payment of a deficiency judgment of $950,000 along with interest and costs. Dwek opposes the motion, and cross-moves for summary judgment dismissing the complaint on the sole ground that Knauss did not give him notice of the sale of the ship that secured his debt to Knauss. The motion and the cross motion will both be denied. The Court holds that Knauss is legally entitled to seek a deficiency judgment against Dwek because Knauss was not required to provide Dwek with notice of the sale of the ship by either the parties' agreement or the governing law. The Court further holds that genuine issues of material fact exist as to whether Knauss is equitably estopped by his conduct toward Dwek from collecting a deficiency judgment.

BACKGROUND

Camelot Casino Cruises, Inc. ("Camelot") purchased from Knauss in December 1998 a vessel named the "Sir Winston" a/k/a "Excalibur," later known as the "Canaveral Star" ("the Ship"). (Knauss Aff. at ¶ 2.) As part of the transaction, Dwek executed a First Preferred Ship's Mortgage ("the Mortgage") on the vessel, securing Camelot's obligation on the repayment of a debt of $950,000. (Id.; Dwek Aff., Ex. A.) Dwek signed the Mortgage twice, once as "Vice President of Camelot Casino Cruises, Inc." and once as "Personal Guarantor." (Id.) In conjunction with this Mortgage, Dwek in his personal capacity also executed a promissory note ("the Note") for $950,000, in favor of Knauss. (Knauss Aff. at ¶ 2.)

Camelot defaulted on the Mortgage in mid-1999. (Id. at ¶ 5.) Camelot filed for bankruptcy protection in November 1999 in the Middle District of Florida, at which time Camelot moved for permission to sell the Ship outside the ordinary course of business. (Id. at ¶ 6.) The motion was granted, and the Ship was sold to Bernie Weintraub as trustee of the Space Coast Cruises Revocable Trust ("Weintraub") in April 2000. (Id. at ¶¶ 6-8.) Weintraub executed three documents as part of this transaction: an "Assumption of First Preferred Ship's Mortgage," wherein Weintraub assumed all obligations held by Camelot; a Second Preferred Mortgage; and a promissory note in favor of Knauss for $950,000. (Id. at ¶ 8; Knauss Sub., Ex. 3.) At the time of this transaction, Dwek sought to be released from his personal liability as guarantor under the Mortgage and the Note, but Knauss refused to release him.1 (Knauss Aff. at ¶ 10.)

Weintraub subsequently defaulted, and in response Knauss instituted an in rem foreclosure action against the Ship in the United States District Court for the Southern District of Florida ("District Court"), seeking, inter alia, an interlocutory sale of the Ship pursuant to 46 U.S.C. § 31325(b)(1) and 28 U.S.C. § 2004. (Id. at ¶ 12.) In November 2001 the District Court ordered that the Ship be offered for private sale for 90 days, and that if no acceptable offer was made during that time, that the Ship be sold at an auction conducted by the United States Marshal's Service. (Knauss Sub., Ex. 13.) Dwek maintains that he or his counsel received notice of the in rem action, and of the order that the Ship be sold. (Dwek Aff. at ¶¶ 10-11.)

Knauss received one offer to purchase the Ship for $1.5 million. (Knauss Aff. at ¶ 18.) Dwek's counsel received notice of this offer. (Id. at ¶ 19; Dwek Aff. at ¶ 11.) This offer was withdrawn, however. (Knauss Aff. at ¶ 20.) Dwek alleges that neither he nor his counsel were informed that this sale did not go through. (Dwek Aff. at ¶ 13.) At the end of the 90-day period for private sales, the Ship was sold at a United States Marshal's Public Auction on February 12, 2002, for $645,000. (Knauss Aff. at ¶ 25.) Dwek asserts that he was not given notice of this sale. (Dwek Aff. at ¶ 15.) The purchaser, Mustafa Kilic, subsequently moved to confirm the sale. (Knauss Aff. at ¶ 26.) Dwek objected on the grounds that the price was "grossly inadequate" and that he was prepared to bid substantially higher. (Knauss Sub., Ex. 20.) After a hearing, the District Court rejected Dwek's objection and granted the motion to confirm the sale. (Id., Ex. 23.)

DISCUSSION
I. Summary Judgment Standard

A court may grant a motion for summary judgment

if the pleadings, depositions, answers to interrogatories, and admissions on file together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Fed.R.Civ.P. 56(c). The summary judgment movant must show initially that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant has met that initial burden, the nonmovant must present evidence establishing that a genuine issue of material fact exists, making it necessary to resolve the difference at trial. Id. at 324, 106 S.Ct. 2548; Jersey Cent. Power & Light Co. v. Lacey Twp., 772 F.2d 1103, 1109 (3d Cir. 1985). The nonmovant, rather than rely on mere allegations, must present actual evidence raising a genuine issue of material fact. Anderson v. Liberty Lobby, 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

A court must view the evidence in the light most favorable to the nonmovant when deciding a summary judgment motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The judge's role at the summary judgment stage is not to weigh evidence, but to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249, 106 S.Ct. 2505. "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Id. at 247-48, 106 S.Ct. 2505. A fact is material only if it might affect the action's outcome under governing law. Id. at 248, 106 S.Ct. 2505. "[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. (citations omitted).

II. Applicable Law

The Court must determine at the outset what law to apply here. "In general, we respect the choice of law that parties agree upon to resolve their private disputes." Gen. Elec. Co. v. Deutz Ag, 270 F.3d 144, 155 (3d Cir.2001). This action arises out of a private agreement entered into by Knauss and Dwek. The Mortgage states, in pertinent part,

6. GOVERNING LAW: The parties have chosen Federal Law ... to cover all of the provisions of this Mortgage. ... If there are gaps in Federal Law ... the law of the STATE OF FLORIDA shall govern this Mortgage.

(Dwek Aff., Ex. A at ¶ 6.) The parties have not contested the validity of the Mortgage generally, or of this clause in particular. Thus, the Court will honor the parties' intentions as expressed in the Mortgage and apply federal law, and, where necessary, Florida law.

III. The Deficiency Judgment
a. Dwek's Liability

The first issue the Court must address, provided applicable law permits a deficiency judgment, is whether Dwek is actually liable for the remainder of the debt secured by the Ship. Knauss asserts that Dwek was liable as a guarantor when the Mortgage was signed, and that his liability was not relinquished. (Knauss Sup. Br. at 6-7.) Dwek responds that "numerous factual questions abound regarding" his continued liability and the nature of his supposed liability, precluding summary judgment. (Dwek Opp. Br. at 14-19.) Because Knauss meets his burden of showing initially that there is no genuine issue of material fact, Celotex, 477 U.S. at 323, 106 S.Ct. 2548, and Dwek fails to present actual evidence to rebut Knauss's prima facie showing, Anderson, 477 U.S. at 249, 106 S.Ct. 2505, the Court finds that Dwek is liable for the remainder of the debt under the Mortgage.

Knauss demonstrates that Dwek was initially liable on the debt, via the Mortgage and the Note. (Knauss Sub., Exs. 1-2.) He further shows that Dwek was not released from liability by the Weintraub transaction, via the documents effecting the sale of the Ship to Weintraub and the correspondence between Knauss's and Dwek's attorneys. (Id., Exs. 3-5.) Dwek does not contest the authenticity of these documents. Thus, Knauss has satisfied his initial burden of producing actual evidence that there is no genuine issue of material fact concerning Dwek's continued liability.

Dwek fails to rebut Knauss's showing. First, Dwek claims there are numerous unanswered questions of fact surrounding the Weintraub transaction. (Dwek Opp. Br. at 14.) However, he fails to substantiate his claims with any evidence, and provides the Court with nothing more than a litany of rhetorical questions. (Id.) This showing does not rise to the level of actual evidence required to oppose a motion for summary judgment. See Anderson, 477 U.S. at 249, 106 S.Ct. 2505. Second, Dwek asserts that if he is indeed still a guarantor, it is not clear whether he is liable under a "guaranty of collection" or under a "guaranty of payment." (Dwek Opp. Br. at 15-16.) Again, however, Dwek does not produce any actual evidence to substantiate this claim — he merely states conclusorily that this "dispute" raises issues that preclude summary...

To continue reading

Request your trial
80 cases
  • Wolff v. Tzanides (In re Tzanides), Case No. 16–11410 (RG)
    • United States
    • U.S. Bankruptcy Court — District of New Jersey
    • August 28, 2017
    ...dispute of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Knauss v. Dwek , 289 F.Supp.2d 546, 549 (D.N.J. 2003). Once the movant meets its burden, the burden shifts to the nonmoving party, who must present evidence establishing that a......
  • In re G-I Holdings, Inc., Case No.: 01-30135 (RG)
    • United States
    • U.S. Bankruptcy Court — District of New Jersey
    • September 9, 2016
    ...that there is no genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986); Knauss v. Dwek, 289 F. Supp. 2d 546, 549 (D.N.J. 2003). Once the movant meets its burden, the burden shifts to the nonmoving party, who must present evidence establishing that a genuine......
  • Bond v. Nat'l Fin. Servs. (In re U.S. Mortg. Corp.)
    • United States
    • U.S. Bankruptcy Court — District of New Jersey
    • April 23, 2013
    ...of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L. Ed. 2d 265 (1986)); Knauss v. Dwek (Cooper, J.), 289 F. Supp. 2d 546, 549 (D.N.J. 2003); Wanland and Assocs. Inc. v. Nortel Networks Ltd. (In re NorVergence, Inc.) (Gambardella, J.), 384 B.R. 315, 370 (B......
  • In re G–I Holdings, Inc.
    • United States
    • U.S. Bankruptcy Court — District of New Jersey
    • August 13, 2012
    ...issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Knauss v. Dwek, 289 F.Supp.2d 546, 549 (D.N.J.2003). The burden then shifts to the nonmoving party, who must present evidence establishing a genuine issue of material fact exists,......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT