State Farm Mut. Auto. Ins. Co. v. Cordua

• Decision Date: 02 December 2011
• Docket Number: Civil Action No. 07–518.
• Citation: 834 F.Supp.2d 301
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, et al., Plaintiffs, v. Peter J. CORDUA, et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

834 F.Supp.2d 301

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, et al., Plaintiffs,

v.Peter J. CORDUA, et al., Defendants.

Civil Action No. 07–518.

United States District Court,

E.D. Pennsylvania.

Dec. 2, 2011.

Cy Goldberg, Matthew A. Moroney, Richard Michael Castagna, Goldberg, Miller & Rubin, PC, Philadelphia, PA, for Plaintiffs.

Duane David Werb, Matthew P. Austria, Werb & Sullivan, Wilmington, DE, Edward J. Murphy, Jr., Patrick G. Murphy, Kelly & Murphy LLP, Blue Bell, PA, Nialena Caravasos, Philadelphia, PA, for Defendants.

MEMORANDUM AND ORDER

TUCKER, District Judge.

Presently before the Court is Defendant Peter J. Cordua's Motion for Summary Judgment (Doc. 93), Defendants' Martin D'Amico and United Cut Rate Store, Inc., (collectively “United”) (Doc. 94) Motion for Summary Judgment, Plaintiffs' Response (Doc. 98 and 99), Defendants' Reply (Doc. 102 and 103), and Plaintiffs' Sur-reply (Doc. 109 and 110). For the reasons set forth below, the Court will dismiss Plaintiff's constructive fraud claims only. The remaining claims are now ripe for trial.

I. BACKGROUND AND PROCEDURAL HISTORY

This case stems from a civil action (hereinafter the “underlying claim”) filed by Plaintiffs State Farm Mutual Automobile Insurance Company and State Farm Fire and Casualty Company (“State Farm”) on September 20, 2002, against Ronald Nestel, Midtown Medical Center, Inc., Paul Bove, Simon Fishman, Frank Solomon, Tabor Chiropractic Center, P.C. and Physicians Practice Management Company. See State Farm Mut. Auto. Ins. Co. v. Midtown Med. Ctr., Inc., et al., No. 2:02–cv–07389 (E.D.Pa.2006). In March 2006, State Farm secured a money judgment against all of the Midtown defendants for damages for statutory insurance fraud, common law fraud, civil RICO violations, unjust enrichment, and restitution for payments based on fraudulent medical records and billing, as well as punitive damages.¹ (Compl. ¶ ¶ 9–10).

During pre-trial discovery in the Midtown Matter, State Farm obtained copies of the bank records of Ronald Nestel, Midtown Medical Center, Inc. and Physicians Practice Medical Company, Inc. revealing that checks drawn on those accounts were cashed at United Cut Rate Store, Inc., (hereinafter “United”), a check cashing agency owned by Martin D'Amico. (Compl. ¶¶ 4, 13.) Plaintiffs received copies of the checks during the first week of December 2003. Additional checks were provided in February of 2004 and on or about March 19, 2004. ( See State Farm, et. al. v. Midtown Med. Ctr., Inc., et al., No. 2:02–cv–07389 (E.D.Pa.2006), Pls.' Supplemental Resp. ¶ 12.)

During the Midtown trial, Mr. D'Amico testified that Mr. Cordua, the Midtown Defendants' accountant, was the person cashing the checks at United. Prior to this time, Plaintiffs contend that they had no reason to suspect that Defendants were involved in a fraudulent check cashing scheme with Mr. Nestel. Instead, Plaintiffs claim that they reasonably believed that Mr. Nestel was cashing the checks and keeping the money for himself given that Mr. Nestel signed the checks. (Pls.' Resp. ¶ 9; Mr. D'Amico's Trial Testimony at p. 9, February 8, 2006).

The checks were cashed at United starting as early as 1999. The parties are in dispute as to when the Defendants actually stopped cashing the checks, although both parties agree that the latest cancelled check in Plaintiffs' possession is dated August 1, 2002. (Pls.' Surreply in Opp'n to Def. Cordua's Reply Br. p. 2) (hereinafter “Pls.' Surreply”).

On February 6, 2007, Plaintiffs filed the instant action against Defendants Martin D'Amico, United Cut Rate Store Inc. (collectively “United”) and Peter J. Cordua asserting violations of the Pennsylvania Uniform Fraudulent Transfer Act (PUFTA), the New Jersey Uniform Fraudulent Transfer Act (NJUFTA), and common law claims for civil conspiracy to violate those statutes and for concerted tortious actions.² (Complaint, ¶ 21.) Specifically, Plaintiffs alleged that the Defendants aided in fraudulently transferring the assets of the Midtown defendants to prevent Plaintiffs and other creditors from executing on them. Plaintiffs also aver that Defendants and possibly others conspired together to engage in the above-referenced transfers. (Complaint, ¶ 22, 40, 46.)

Defendants generally deny the allegations set forth in Plaintiffs' Complaint. Defendant D'Amico claims that he did not engage in illegal conduct, but, rather, he operated his business as a licensed check cashier and collected appropriate and allowable fees in compliance with the Pennsylvania Check Cashier Licensing Act, 63 P.S. § 2301 et seq. (Def. United's Answer ¶ 25.) Defendant Cordua claims that his relationship with Mr. Nestel was that of a bailor/bailee only. Cordua denies that the check funds were divided between him and any other parties. The Defendants collectively deny having the intent to defraud State Farm or any other creditors. (Def. Cordua's Answer ¶ 25.)

II. LEGAL STANDARD

Summary judgment is appropriate where the movant establishes that “there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Levy v. Sterling Holding Co., LLC, 544 F.3d 493, 501 (3d Cir.2008). The threshold inquiry is whether there are “any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (noting that no triable issue exists unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict in its favor); see also Dee v. Borough of Dunmore, 549 F.3d 225, 229 (3d Cir.2008). The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the non-moving party to carry its burden of proof. See Celotex, 477 U.S. at 327, 106 S.Ct. 2548 (1986).

Once the movant has carried its burden under Rule 56, “its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.” Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007) (citation omitted). Under Rule 56(e), the opponent must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. See Marten v. Godwin, 499 F.3d 290, 295 (3d Cir.2007). “If the opposing party does not so respond, summary judgment should, if appropriate, be entered against that party.” Fed.R.Civ.P. 56(e)(2).

At the summary judgment stage, the court's function is not to weigh the evidence and determine the truth of the matter, but rather to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. at 249, 106 S.Ct. 2505;Jiminez v. All American Rathskeller, Inc., 503 F.3d 247, 253 (3d Cir.2007). In doing so, the court must construe the facts and inferences in the light most favorable to the non-movant. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (U.S.Pa.1986);Horsehead Indus., Inc. v. Paramount Commc'ns, Inc., 258 F.3d 132, 140 (3d Cir.2001). The court must award summary judgment on all claims unless the non-movant shows through affidavits or admissible evidence that an issue of material fact remains. See e.g., Love v. Rancocas Hosp., 270 F.Supp.2d 576, 579 (D.N.J.2003).

III. DISCUSSION

1. Defendants' Argument that Plaintiffs' Claims Are Untimely³

Defendants argue that the Court should dismiss Plaintiffs' claims on statute of limitations grounds. Specifically Defendants argue that Plaintiffs' claims are untimely since: (1) PUFTA and NJUFTA require claims for “constructive” fraud to be filed within four years after the transfer was made, and Plaintiffs' suit was filed more than four years after the checks were cashed; (2) PUFTA and NJUFTA require claims based on “actual intent” to defraud to be filed within four years after the transfer, or, if later, within one year after the transfer was or could reasonably have been discovered, and Plaintiffs' suit was filed more than one year after Plaintiffs obtained copies of the cancelled checks; (3) Plaintiffs' state law tort claims must be filed within two years, and Plaintiff's suit was filed more than two years after the checks were cashed; and (4) Plaintiffs' tort claims are unsupported since they are based on barred statutory claims. (Doc. 93, 94). The Court will address these arguments in turn.

a) Plaintiffs' PUFTA Claims

Under the Pennsylvania Uniform Fraudulent Transfer Act (PUFTA) ⁴, a party may file a claim alleging actual and/or constructive fraud. 12 Pa.C.S. §§ 5101– 5110; see also Kaliner v. MDC Sys. Corp., LLC, 2011 WL 203872, 2011 U.S. Dist. LEXIS 5377 (E.D.Pa. Jan. 19, 2011); U.S. v. Rocky Mountain Holdings, Inc., 782 F.Supp.2d 106, at 118–19 (E.D.Pa.2011). A claim for “actual fraud” may be asserted irrespective of whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation with “actual intent to hinder, delay, or defraud any creditor of the debtor.” 12 Pa.C.S. § 5104(a)(1). Similarly, a party may assert a claim for constructive fraud if the debtor made the transfer “without receiving a reasonably equivalent value in exchange for the transfer” and the debtor was insolvent at the time of the transfer or became insolvent as a result of the transfer. ⁵12 Pa.C.S. §§ 5104(a)(2).

i. Plaintiffs' Constructive Fraud Claims

In their motion for summary judgment, Defendants argue that based on the plain language of PUFTA, Plaintiffs' constructive fraud claims are time-barred since the latest transfer (referring to the cashing of checks at United) occurred on August 1, 2002. In opposition, Plaintiffs contend that their...