Mantis Transp. v. Kenner

• Decision Date: 09 September 2014
• Docket Number: No. 13–CV–6546 SJFSIL.,13–CV–6546 SJFSIL.
• Citation: 45 F.Supp.3d 229
• Parties: MANTIS TRANSPORTATION, Alfred J. Manti, Plaintiffs, v. Patricia KENNER, CT Lines d/b/a Campus Coach, General Electric, Citi Capital, Defendants.
• Court: U.S. District Court — Eastern District of New York

45 F.Supp.3d 229

MANTIS TRANSPORTATION, Alfred J. Manti, Plaintiffs

v.Patricia KENNER, CT Lines d/b/a Campus Coach, General Electric, Citi Capital, Defendants.

No. 13–CV–6546 SJFSIL.

United States District Court, E.D. New York.

Signed Sept. 9, 2014.

Mantis Transportation, Staten Island, NY, pro se.

Alfred J. Manti, Staten Island, NY, pro se.

Adam Todd Newman, Law Office of Adam T. Newman, PC, Merrick, NY, Sarah E. O'Connell, David Barry Schwartz, Fulbright & Jaworski LLP, New York, NY, for Defendants.

ORDER

FEUERSTEIN, District Judge.

On November 26, 2013, plaintiffs Alfred J. Manti (“Manti”) and Mantis Transportation (a/k/a Manti's Transportation, Inc.) (“MTI”) commenced the instant action (the “Instant Action”)¹ against Patricia Kenner (“Kenner”), CT Lines d/b/a Campus Coach (“CT Lines”), General Electric and CitiCapital.² Now before the Court are the motion to dismiss filed by CT Lines and Kenner (the “CT Lines/Kenner MTD”) [Docket Entry No. 14], and the GECC MTD, both of which are brought pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure (“Rule 12(b)(1) ” and “Rule 12(b)(6),” respectively), the motion for sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure (“Rule 11 ”) filed by CT Lines and Kenner (the “CT Lines/Kenner Sanctions Motion”) [Docket Entry No. 15], and Deborah Manti's motion to intervene (“Motion to Intervene”) [Docket Entry No. 33]. For the reasons that follow, the GECC MTD, the CT Lines/Kenner MTD, and the CT Lines/Kenner Sanctions Motion are granted, and the Motion to Intervene is denied as moot.

I. Background³

A. Parties

MTI is a New York corporation which, until June 1998, was engaged in the business of providing commuter bus service in the New York City area. (Manti II, 2008 WL 977192, at *1 (E.D.N.Y. Apr. 9, 2008) ). Manti is the president and sole shareholder of MTI. (Id. ). At the time of the relevant transactions underlying the Instant Action, Associates Commercial Corporation (“Associates”) provided commercial financing services to prospective purchasers of buses.⁴ (Id. ). CT Lines is a New York corporation in the business of operating and selling buses. (Aff. of Adam N. Newman in Supp. of CT Lines/Kenner MTD (“Newman Aff.”), Ex. B (Compl., Manti State Action) [Docket Entry No. 14–2], ¶ 4). Kenner is an officer of CT Lines. (Id. ¶ 6).

B. Factual Background

In November 1997, MTI purchased a fleet of buses from a third-party vendor, which was financed by a loan from Associates pursuant to a security agreement dated March 31, 1998. (Manti II, 2008 WL 977192, at *1 ). Following the purchase, Manti discovered that the buses were defective and unusable, but his repeated demands that the third-party vendor repair the buses went unheeded. (Id. ). In June 1998, Manti contacted Lawrence Shute (“Shute”), an Associate's branch manager, to notify him that due to the unusable buses, MTI was unable to make timely payments on the various security agreements between MTI and Associates. (Id. ). MTI returned the fleet of buses to the third-party vendor. (Id. ). Without the buses or a new loan from Associates, MTI ceased operations. (Id. ).

On November 18, 1999, approximately fifteen (15) months after MTI returned the buses to the third-party vendor, Associates agreed to provide MTI with a new loan and to refinance MTI's existing debt, and MTI and Associates executed the following agreements: (i) a modification agreement governing the refinancing of MTI's existing debt (“Modification Agreement”); (ii) a security agreement governing a new loan to finance the purchase of two (2) buses, serial numbers S15322 (the “1980 Crusa Bus”) and 1M89CM8A78P036640 (the “1981 MCI Bus”), from CT Lines (the “November 18, 1999 Security Agreement”) (Manti Ex. G); and (iii) a general release (the “Release”) (Decl. of Sarah E. O'Connell in Supp. of GECC MTD (“O'Connell Decl.”), Ex. 2 (Release) [Docket Entry No. 26–3] ). (Manti I, 2002 WL 369807, at *1 (E.D.N.Y. Mar. 8, 2002) ).

Pursuant to the November 18, 1999 Security Agreement, MTI agreed to pay Associates one hundred eighty thousand four hundred sixty dollars and thirty-two cents ($180,460.32) in monthly installments beginning on January 2, 2000, and Associates agreed to disburse one hundred thirty-three thousand sixty-six dollars ($133,066.00) to CT Lines. (Manti Ex. G). The Release provided that it was executed in consideration for, inter alia, the November 18, 1999 Security Agreement and MTI's performance of all of its obligations thereunder. (O'Connell Decl., Ex. 2). The Release states, inter alia:

[MTI] does hereby release and discharge [Associates and its] ... successors in interest ... of and from any and all manners of action, causes of action, suits, debts, obligations, liabilities, claims, and/or demands whatsoever, whether at law or in equity, known or unknown, which [MTI] now has, can have, ever had ... for or by reason of any cause, matter or thing whatsoever including, without limitation, the execution, delivery and performance of the Existing Security Agreements.

* * *

In the event legal proceedings are instituted to enforce or sue the breach of this Agreement, the prevailing party therein shall be entitled to recover its reasonable attorney's fees and costs of suit in such proceeding.

* * *

The parties hereto warrant and represent that they have carefully read this Agreement, know the contents hereof, have been advised by counsel, and that the same is being signed of their own free will.

(Id. ¶¶ 2, 5, 6).

In compliance with the November 18, 1999 Security Agreement, Associates provided the additional financing to MTI, by disbursing one hundred thirty-three thousand sixty-six dollars ($133,066.00) to CT Lines (the “November 1999 Transaction”), and modified the terms of plaintiff's previous loans as required by the Modification Agreement. (Manti I, 2002 WL 369807, at *2 ). On August 21, 2000, MTI and Associates rolled MTI's debt over into two (2) new security agreements (the “August 21, 2000 Security Agreements”). (Id. )

C. The Prior Actions

1. Manti I

October 17, 2000, MTI commenced the Manti I action against Associates in the Supreme Court of the State of New York, Kings County, alleging breach of contract, fraud, unjust enrichment, and tortious interference with prospective business advantage.⁵ (Manti I, 2002 WL 369807, at *1 ). On November 14, 2000, Associates removed the case to this Court pursuant to 28 U.S.C. §§ 1441 and 1446 based on diversity jurisdiction. (Id. at *2; Notice of Removal, Manti I (E.D.N.Y. Nov. 14, 2000), ECF. No. 1). On November 29, 2000, Associates filed its answer, raising the Release as a complete affirmative defense to MTI's claims, and asserting counterclaims for: (i) breach of the August 21, 2000 Security Agreements in the total amount of one million two hundred ninety-six thousand five hundred ninety-one dollars and thirty-one cents ($1,296,591.31), plus interest and consequential damages, and (ii) breach of the Release. (Manti I, 2002 WL 369807, at *2 ; Answer, Manti I (E.D.N.Y. Nov. 29, 2000), ECF No. 4). On January 22, 2001, MTI responded to Associate's counterclaims, asserting, inter alia, that “[p]laintiff's signatures on certain of the documents were obtained by fraud, duress, and/or mistake.” (Reply to Countercls., Manti I (E.D.N.Y. Jan. 22, 2001), ECF No. 6).⁶

On May 7, 2001, Associates moved for summary judgment. (Summ. J. Mot., Manti I (E.D.N.Y. May 7, 2001), ECF No. 16). On May 25, 2001, Associates moved for sanctions pursuant to Rule 11. (Rule 11 Mot., Manti I (E.D.N.Y. May 22, 2001), ECF No. 22). On June 4, 2001, MTI opposed Associates' motions, and cross-moved pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure to withdraw the complaint without prejudice on the ground that MTI intended to file a bankruptcy petition. (Manti I, 2002 WL 369807, at *3 ). On June 21, 2001, MTI advised the Court by letter that it would not be filing for bankruptcy, but did not withdraw the Rule 41(a)(2) motion. (Id. )

On March 8, 2002, the Judge Block Manti I Order was issued, granting Associates' motion for summary judgment, denying Associates' Rule 11 motion for sanctions, and denying MTI's Rule 41(a)(2) motion to withdraw the complaint without prejudice.⁷ (Id. ). Specifically, Judge Block rejected MTI's contention that it should not be bound by the Release, the terms of which “clearly bar any and all claims [MTI] may have had against [Associates].” (Id. ). Judge Block held that “[i]n light of Manti's admission that he signed the release, the clear and unambiguous language of the release, and [MTI's] failure to put forth cognizable facts to make out a fraud, duress or misrepresentation defense, ... the [R]elease is effective and bars all of [MTI's] claims.” (Id. ). Judge Block concluded that “[w]hile the [R]elease does not include an explicit covenant not to sue, the inclusion of the prospective language regarding the entitlement to attorney's fees and costs creates and implied covenant not to sue,” which MTI breached by commencing Manti I. (Id. at *4). Judge Block held that Associates was entitled to an award of attorney's fees and costs on its counterclaim for MTI's breach of the Release. (Id. at *5).

With respect to MTI's breach of the August 21, 2000 Security Agreements, Judge Block noted that “Manti admits that he signed [the August 21, 2000] Security Agreements,” and that MTI failed to dispute that was in default or challenge the amount that Associates claimed it was due under the August 21, 2000 Security Agreements. (Id. at *4). Accordingly, Judge Block awarded Associates the total amount sought—one million two hundred ninety-six thousand five hundred ninety-one dollars and thirty-one cents ($1,296,591.31)—plus nine percent (.09) per annum from the dates of the default. (Id. at **4, 5). Judge Block instructed MTI and Associates “to attempt to reach an agreement on the dates of default [of the August 21, 2000 Security Agreements] and the amount of [Associate's] attorney's fees and...