Metcoff v. Parrella (In re Parrella), CASE NO. 18-51613 (JAM)

CourtUnited States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — District of Connecticut
Writing for the CourtJulie A. Manning, Chief United States Bankruptcy Judge
Citation622 B.R. 559
Parties IN RE: Michael J. PARRELLA and Karen Kimble-Parrella, Debtors. Jerrold Metcoff and David Wilson, Plaintiffs, v. Michael Parrella, Defendant.
Decision Date28 October 2020
Docket NumberCASE NO. 18-51613 (JAM),ADV. PRO. NO. 19-5008 (JAM)

622 B.R. 559

IN RE: Michael J. PARRELLA and Karen Kimble-Parrella, Debtors.

Jerrold Metcoff and David Wilson, Plaintiffs,
v.
Michael Parrella, Defendant.

CASE NO. 18-51613 (JAM)
ADV. PRO.
NO. 19-5008 (JAM)

United States Bankruptcy Court, D. Connecticut.

Signed October 28, 2020


622 B.R. 561

Michael Berman, Suzanne Gilleese, Berman and Sable LLC, 100 Pearl Street, 4th Floor, Hartford, CT 06103, Attorneys for the Plaintiffs

Gary J. Greene, Greene Law, P.C., 11 Talcott Notch Road, Farmington, CT 06032, Attorney for the Defendant

MEMORANDUM OF DECISION AND ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

Julie A. Manning, Chief United States Bankruptcy Judge

I. BACKGROUND

On March 15, 2019, Jarrold Metcoff and David Wilson (the "Plaintiffs") commenced this adversary proceeding against Michael Parrella (the "Defendant") by filing a two-count complaint (the "Complaint"). The Complaint seeks a determination that a prepetition state court judgment entered in favor of the Plaintiffs against the Defendant is nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(A). Before the Court is the Plaintiffs' Motion for Summary Judgment on both counts of the Complaint. ECF No. 23. For the reasons that follow, the Motion for Summary Judgment is granted.

II. JURISDICTION

The United States District Court for the District of Connecticut has jurisdiction over the instant proceeding pursuant to 28 U.S.C. § 1334(b). The Bankruptcy Court derives its authority to hear and determine this matter pursuant to 28 U.S.C. §§ 157(a) and (b)(1) and the District Court's General Order of Reference dated September 21, 1984. This is a "core proceeding" pursuant to 28 U.S.C. § 157(b)(2)(I).

III. UNDISPUTED FACTS

Rule 56(a)(1) of the Local Rules of Civil Procedure of the United States District Court for the District of Connecticut1 requires that a party moving for summary judgment file a Local Rule 56(a)(1) Statement of Undisputed Material Facts. See D. Conn. L. R. 56(a)(1). Local Rule 56(a)(2) requires that a party opposing a motion for summary judgment file a Local Rule 52(a)(2) Statement of Facts in Opposition to Summary Judgment. See D. Conn. L. R. 56(a)(2). Each material fact set forth in a movant's Statement of Undisputed Material Facts and supported by the evidence "will be deemed to be admitted (solely for

622 B.R. 562

the purposes of the motion) unless such fact is controverted by the Local Rule 56(a)(2) Statement required to be filed and served by the opposing party in accordance with this Local Rule..." See D. Conn. L. R. 56(a)(1); see also Parris v. Delaney (In re Delaney) , 504 B.R. 738, 746-747 (Bankr. D. Conn. 2014). Here, the Plaintiffs filed the Local Rule 56(a)(1) Statement of Undisputed Material Facts along with the Motion for Summary Judgment (the "Plaintiffs' Rule 56(a)(1) Statement"). The Defendant, however, has not responded to the Motion for Summary Judgment and has failed to file a Local Rule 56(a)(2) Statement of Facts in Opposition to Summary Judgment. Therefore, the material facts set forth in the Plaintiffs' Rule 56(a)(1) Statement supported by the evidence are deemed admitted.

The Court finds the following undisputed facts:2

1. The Plaintiffs are principals of a company known as Midcore Software Inc. ("Midcore"), which develops and markets computer software.

2. The Defendant is the chief executive officer of NCT Group, Inc. ("NCT Group").

3. On August 29, 2000, the Plaintiffs and the Defendant (on behalf of NCT Group) executed a merger agreement for Midcore to be acquired by NCT Group (the "Merger Agreement").

4. Under the terms of the Merger Agreement, Midcore would become NCT Midcore and the Plaintiffs would be entitled to receive NCT Group stock and certain royalties generated from the sale of Midcore products.

5. On April 10, 2014, the Plaintiffs commenced a civil action in Connecticut Superior Court, Metcoff v. NCT Group, Inc. et al , CV-04- 0184701-S (the "State Court Action"), by filing a 19-count complaint against NCT Group, the Defendant, and other entities. Complaint at ¶ 39. In the State Court Action, the Plaintiffs brought claims against the Defendant in his individual capacity, as well as against other entities including NCT Group and NCT Midcore, for damages related the Merger Agreement. In particular, the Plaintiffs alleged that they did not receive the stock or royalties promised under the Merger Agreement and that the Defendant made false representations to the Plaintiffs as part of the merger transaction. The Plaintiffs' claims brought in the State Court Action against the Defendant in his individual capacity included a claim for intentional misrepresentation and a claim for violation of the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110a et seq. , ("CUTPA").

6. On May 19, 2004, the Defendant appeared in the State Court Action through counsel.

7. On June 21, 2006, the Plaintiffs filed a Second Substitute Complaint in the State Court Action. Complaint at ¶ 41. The Second Substitute Complaint continued to assert the intentional misrepresentation and CUTPA claims against the Defendant in his individual capacity.

8. Specifically, Count Thirteen of the Second Substitute Complaint asserted a claim for intentional misrepresentation against the Defendant (and other entities), in which the Plaintiffs alleged the following against the Defendant:

a. The Defendant individually executed the Merger Agreement on behalf of NCT Group with respect to the proposed merger of Midcore with and
622 B.R. 563
into NCT Midcore as the surviving corporation;

b. Through the warranties and representations set forth in paragraph 9(b) of the Merger Agreement, NCT Group, through the Defendant, represented and warranted that upon the merger, NCT Midcore would operate like Midcore and would continue the business of Midcore;

c. The Defendant's representations as to NCT Midcore's business were false and/or misleading statements of material facts and were made by the Defendant for the purpose of inducing the Plaintiffs to act on the warranties and representations;

d. The Defendant knew that the representations and warranties as to NCT Midcore's business were false and/or misleading;

e. The Plaintiffs reasonably and justifiably relied to their detriment on these representations and warranties.

9. Count Twenty-Four of the Second Substitute Complaint asserted a claim for a violation of CUTPA against the Defendant (and other entities), in which the Plaintiffs alleged the following against the Defendant:

a. The Defendant's course of conduct occurred in the conduct of trade or commerce as defined in CUTPA, and in his primary business, trade or commerce;

b. By his conduct, the Defendant engaged in an unfair, deceptive, immoral, oppressive and/or unscrupulous practice in the conduct of his primary business, trade or commerce, that was not incidental to his primary business, trade or commerce;

c. As a result of the Defendant's unfair, deceptive, immoral, oppressive and/or unscrupulous conduct, the Plaintiffs suffered ascertainable losses of money or property.

10. In March 2010, the Plaintiffs' claims in the Second Substitute Complaint were tried before a jury.

11. The Defendant was represented by counsel at the trial and he appeared and testified at the trial.

12. On April 21, 2010, the jury reached a verdict in favor of Plaintiffs and against the Defendant on Count Thirteen for intentional misrepresentation regarding continuing the Plaintiffs' business after the merger, and on Count Twenty-Four for violations of CUTPA through intentional misrepresentation regarding continuing the Plaintiffs' business after the merger (the "Verdict"). See Exhibit O in support of the Motion for Summary Judgment.

13. The Verdict also contained an award of punitive damages against the Defendant with respect to Count Thirteen. See id.

14. On April 21, 2010, the Superior Court accepted and recorded the Verdict.

15. In July and August 2010, the Superior Court held a post-trial proceeding on the issue of awarding punitive damages and attorney's fees under CUTPA and punitive damages under common law against the Defendant and in favor of the Plaintiffs.

16. On February 17, 2011, the Superior Court issued a Memorandum of Decision and Judgment on the Verdict and on the Second Substitute Complaint (the "State Court Judgment"). See Exhibits P and Q in support of the Motion for Summary Judgment.

17. The State Court Judgment entered judgment against the Defendant as follows:

622 B.R. 564
a. On Count Thirteen, intentional misrepresentation: Judgment enters in favor of plaintiff Jerrold M. Metcoff, for $113,855.00, plus $8,544.50 for punitive damages and in favor of plaintiff David B. Wilson for $143,434.00, plus $8,544.50 for punitive damages, and against the defendants, Michael J. Parrella, Sr. and others;

b. On Count Twenty-Four, violation of the Connecticut Unfair Trade Practices Act: Judgment enters in favor of the plaintiff Jerrold M. Metcoff for $113,855.00, plus $270,000.00 for
...

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2 practice notes
  • Options Unlimited, Inc. v. McCann (In re McCann), CASE NO. 18-51319 (JAM)
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — District of Connecticut
    • August 31, 2021
    ...(4) the plaintiff reasonably relied on the misrepresentation; and (5) the plaintiff suffered pecuniary harm as a result. In re Parrella , 622 B.R. 559, 566-67 (Bankr. D. Conn. 2020) ; Thompson , 511 B.R. at 26-27 ; Suffield Development Associates, Ltd. Partnership v. National Loan Investors......
  • Options Unlimited, Inc. v. McCann (In re McCann), 18-51319 (JAM)
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — District of Connecticut
    • August 31, 2021
    ...(4) the plaintiff reasonably relied on the misrepresentation; and (5) the plaintiff suffered pecuniary harm as a result. In re Parrella, 622 B.R. 559, 566-67 (Bankr. D. Conn. 2020); Thompson, 511 B.R. at 26-27; Suffield Development Associates, Ltd. Partnership v. National Loan Investors, L.......
2 cases
  • Options Unlimited, Inc. v. McCann (In re McCann), CASE NO. 18-51319 (JAM)
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — District of Connecticut
    • August 31, 2021
    ...(4) the plaintiff reasonably relied on the misrepresentation; and (5) the plaintiff suffered pecuniary harm as a result. In re Parrella , 622 B.R. 559, 566-67 (Bankr. D. Conn. 2020) ; Thompson , 511 B.R. at 26-27 ; Suffield Development Associates, Ltd. Partnership v. National Loan Investors......
  • Options Unlimited, Inc. v. McCann (In re McCann), 18-51319 (JAM)
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — District of Connecticut
    • August 31, 2021
    ...(4) the plaintiff reasonably relied on the misrepresentation; and (5) the plaintiff suffered pecuniary harm as a result. In re Parrella, 622 B.R. 559, 566-67 (Bankr. D. Conn. 2020); Thompson, 511 B.R. at 26-27; Suffield Development Associates, Ltd. Partnership v. National Loan Investors, L.......

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