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Boudle v. CMI Network

November 6, 2007

ANGE BOUDLE, PLAINTIFF,
v.
THE CMI NETWORK, INC., CLEARSKY MARKETING, AND ORDER INC., CMI FINANCIAL NETWORK, LLC, CHERNETT WASSERMAN YARGER & PASTERNAK, LLC, STEVEN L. WASSERMAN, JOEL PENTZ, HUGH T. GRINNON, FRANCIS X. MURPHY, FRANCIS X. MURPHY, III, PETER WRIGHT, NICHOLAS F. RUSSO, JAMES P. LAKE, WILLIAM WOLFE AND JONATHON GRINNON, DEFENDANTS.



The opinion of the court was delivered by: Sifton, Senior Judge.

MEMORANDUM OPINION

On August 2, 2006, plaintiff Ange Boudle filed a complaint ("Complaint") in the Circuit Court for Pinellas County, Florida, against three groups of defendants:

1. The CMI Network, Inc. ("CMI"), Clearsky Marketing, Inc. ("Clearsky"), and CMI Financial Network, LLC ("Financial") (collectively the "CMI-related business entities");

2. Individuals believed to be officers and/or directors of the CMI-related business entities: Hugh T. Grinnon ("HT Grinnon"); Jonathon Grinnon; Francis X. Murphy, Jr. ("Murphy, Jr."); Francis X. Murphy, III ("Murphy, III"); Peter Wright ("Wright"); Nicholas F. Russo ("Russo"); James P. Lake ("Lake"); and William Wolfe ("Wolfe").

3. The law firm and the two individual attorneys who represented the CMI-related business entities in the transactions with Boudle: Chernett Wasserman Yarger & Pasternak, LLC ("CWYP"); Steven L. Wasserman, Esq., ("Wasserman"); and Joel Pentz, Esq. ("Pentz"), (collectively, "Chernett Wasserman Defendants").

Plaintiff sought damages for claims of breach of contract, fraudulent misrepresentation, negligent misrepresentation, breach of fiduciary duty, aiding and abetting fraud, and unjust enrichment. Plaintiff also sought an accounting. The Chernett Wasserman Defendants timely removed this case on May 1, 2007 to the Federal District Court for the Middle District of Florida. The Chernett Wasserman Defendants then filed a motion to transfer the case to the Eastern District of New York, due to the pendency here of bankruptcy cases filed by defendants HT Grinnon, Jonathan Grinnon, CMI and Clearsky. On April 11, 2007 and May 11, 2007, plaintiff and the Chernett Wasserman Defendants, respectively, commenced adversary proceedings in the bankruptcy court. The Middle District of Florida District Court granted the transfer motion on July 3, 2007. Now before this court are plaintiff's motion to withdraw the references to the bankruptcy court of the adversary proceedings or, in the alternative, to remand to Florida state court. For the reasons set forth below, plaintiff's motion to withdraw the references is granted for the limited purpose of determining liability for fraud and damages, and its motion to remand is denied.

Background

The following facts are derived from plaintiff's Complaint and the complaints in the four adversary proceedings.*fn1

Plaintiff is a resident of Pasco County, Florida. CMI and Clearsky are New York corporations. Financial is an Ohio for profit limited liability company. CWYP, the law firm, is an Ohio limited liability company, which represented CMI. Wasserman and Pentz are residents of Ohio. HT Grinnon is a resident of New York and Jonathan Grinnon is a resident of New Jersey. Murphy, Jr. and Murphy III are residents of Pennsylvania. Wright, Russo, Lake and Wolfe are residents of Florida.

CMI Transaction

On October 7, 2005, plaintiff loaned CMI $530,000. The loan was evidenced by a promissory note ("CMI Note"). As part of the loan transaction, CMI and plaintiff entered into an Assignment & Security Agreement ("Security Agreement"). Plaintiff and CMI also executed a Loan Agreement ("CMI Loan Agreement").

Pursuant to the CMI Security Agreement and the CMI Loan Agreement, the CMI Note was to be secured by the accounts receivable from two agreements between CMI and Honeywell Security and Custom Electronics and Honeywell ACCESS Systems (collectively, "Honeywell") as "Applicable Accounts Receivable," as well as by general accounts receivable, and all money due from Honeywell to CMI Network under any other agreement (collectively, the "CMI Collateral"). The CMI Security and Loan Agreements are alleged to have represented that none of the CMI Collateral was subject to any lien or encumbrance as of the date of the CMI Note. The CMI Security Agreement also established an escrow account with Defendant Financial as the escrow agent. Repayment of the CMI Note was fully and unconditionally guaranteed ("CMI Guaranty") by HT Grinnon and Jonathan Grinnon (collectively, "Grinnons").

It is alleged that at the time of the execution of the CMI Note and Security Agreement, the CMI Collateral had been pledged to secure other indebtedness ("CMI Prior Pledges"). Documents for at least one of the CMI Prior Pledges were prepared by the Chernett Wasserman Defendants, who also prepared the CMI Note and Security Agreement. None of the defendants informed plaintiff of the CMI Prior Pledges.

Plaintiff alleges that Financial was formed by CWYP on August 23, 2005, in Ohio, to hold and disburse receivables payments; and that on the same date CMI directed Honeywell to make all payments to Financial to the attention of defendant Wasserman at CWYP.*fn2 On October 17, 2005, defendant Wasserman caused a UCC-1 Financing Statement to be filed in New York in favor of plaintiff. He also caused, on the same date, the filing of an additional UCC-1 Financing Statement in favor of one of the CMI Prior Pledge beneficiaries. And on January 9, 2006, he filed a third UCC-1 Financing Statement in New York State for the benefit of another entity, pledging the same CMI Collateral as was pledged to plaintiff. A fourth UCC-1 Financing Statement was filed in New York pledging the same CMI ...


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