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RP Family, Inc. v. Commonwealth Land Title Insurance Co.

United States District Court, E.D. New York

April 1, 2014

RP FAMILY, INC., Plaintiff
v.
COMMONWEALTH LAND TITLE INSURANCE COMPANY, a division of Fidelity National Title Group, Inc., Defendants. COMMONWEALTH LAND TITLE INSURANCE COMPANY, a division of Fidelity National Title Group, Inc., Third-Party Plaintiff,
v.
PACIFIC TITLE, INC., WARREN SUSSMAN, JAMES SAMUEL, 263 EDGE GROVE, LLC, VITO GRIPPO, JOSEPH V. ROMANELLI, JOHN PEERLESS, JANDEVAR LLC, VANICK HOLDINGS CORP., VANICK PROPERTY MANAGEMENT, LLC, VANICK EQUITIES, LLC, and JOHN DOE d/b/a MORGAN FINANCIAL, Third-Party Defendants. WARREN SUSSMAN and PACIFIC TITLE Fourth-Party Plaintiffs,
v.
EXECUTIVE SETTLEMENT SERVICES, LTD., EXECUTIVE SETTLEMENT SERVICES I LLC, EXECUTIVE SETTLEMENT SERVICES LLC, and DAVID CEMMENNO, Fourth-Party Defendants.

MEMORANDUM AND ORDER

DORA L. IRIZARRY, District Judge.

RP Family, Inc. ("Plaintiff" or "RP Family") brought this action against Commonwealth Land Title Insurance Company ("Defendant" or "Commonwealth"), claiming breach of contract and other state law claims arising out of Defendant's alleged failure to satisfy its obligations under Plaintiff's title insurance policy. Commonwealth brought a third-party complaint against Pacific Title, Inc. ("Pacific"), Warren Sussman ("Sussman"), and others, seeking indemnification. Plaintiff RP Family moves for summary judgment against Commonwealth, pursuant to Rule 56 of the Federal Rules of Civil Procedure. Defendant Commonwealth cross-moves for summary judgment, seeking dismissal of RP Family's claims against it. Third-party Defendants Pacific and Sussman also seek summary judgment dismissing Commonwealth's claim for indemnification. For the reasons set forth below, each motion is denied in its entirety.

BACKGROUND

I. Local Rule 56.1

Pursuant to Local Civil Rule 56.1(a), all parties included in their motions for summary judgment "a separate, short and concise statement, in numbered paragraphs, of the material facts as to which the moving party contends there is no genuine issue to be tried." However, RP Family's response to Commonwealth's motion fails to comply with Local Rule 56.1(b), which requires that papers opposing a motion for summary judgment include a "correspondingly numbered paragraph responding to each numbered paragraph in the statement of the moving party...." RP Family disregarded this requirement entirely and provided no counterstatement of facts in response to Commonwealth's motion. Therefore, the Court deems "[e]ach numbered paragraph in the statement of material facts set forth in [Commonwealth's 56.1] statement... admitted for purposes of the motion." Local Rule 56.1(c).

Nevertheless, the Court "does not blindly accept [Commonwealth's] 56.1 Statement at face value, as allegations are not deemed true simply by virtue of their assertion in the Local Rule 56.1 statement." Suares v. Cityscape Tours, Inc., 2014 WL 969661, at *2 (S.D.N.Y. Mar. 12, 2014) (quoting Holtz v. Rockefeller & Co., Inc., 258 F.3d 62, 73 (2d Cir. 2001)). The Court has disregarded any allegations in each parties' 56.1 Statement that are actually legal conclusions, allegations that are not accompanied by citation to admissible evidence, and allegations that are not supported by the cited evidence. See Great Am. E & S Ins. Co. v. Hartford Fire Ins. Co., 2012 WL 3186086, at *9 (S.D.N.Y. Aug. 3, 2012), as amended (Aug. 9, 2012); F.T.C. v. Med. Billers Network, Inc., 543 F.Supp.2d 283, 302 (S.D.N.Y. 2008). The facts as summarized below are undisputed except where otherwise noted.

II. Factual Background

In early September 2008, Dariusz Mruczynski ("Mruczynski") entered the office of World Wide Alliance, a marketing company located in Staten Island, where he met Paul Sukholinskiy ("Sukholinskiy"), who worked at the company, and William Martin ("Martin"), who happened to be in the office. (Commonwealth's 56.1 Stmnt ¶¶ 43, 45, Doc. Entry No. 141; Fiveson Aff., Ex. A at 10, 16, Doc. Entry No. 137-1.) Sukholinskiy and Mruczynski had never met before. ( Id. ¶ 44.) Mruczynski told Sukholinskiy and Martin that he wanted to refinance a residential property located at 263 Edgegrove Avenue, Staten Island, New York (the "Property") in order to raise money to finish construction on a house he was building in Pennsylvania and to avoid foreclosure of another property he owned in Pennsylvania. ( Id. ¶¶ 6, 43, 46-48.) Mruczynski stated that he needed to raise $200, 000 to $300, 000. ( Id. ¶¶ 47.)

On September 17, 2008, Sukholinskiy ordered an appraisal of the Property, which indicated that it was worth $725, 000. ( Id. ¶¶ 29, 50-51.) On September 24, 2008, RP Family was incorporated under the laws of the state of New Jersey by Sukholinskiy and Leslie Benita Martin ("Leslie Martin"), William Martin's mother. ( Id. ¶¶ 1-3, 4, 52-53.) Sukholinskiy and Leslie Martin owned 5% and 95% of RP Family, respectively. ( Id. ¶¶ 3, 5, 53.) RP Family's shareholder agreement is identical to the shareholder agreement used by Bielsko, a company owned by Mruczynski. ( Id. ¶¶ 54.)

In November 2008, Sukholinskiy, Martin, and Mruczynski held a second meeting. ( Id. ¶ 55.) At this meeting, Mruczynski offered to sell the Property for $250, 000. ( Id. ) Sukholinskiy contacted Trustar Funding, LLC ("Trustar"), a hard money lender, to obtain financing to purchase the Property from Mruczynski. ( Id. ¶ 57.) Trustar denied RP Family's application for a $250, 000 loan, but offered to lend RP Family $100, 000 plus closing costs. ( Id. ¶ 59.) Mruczynski then agreed to lower the sale price of the Property to $100, 000, despite the Property's $725, 000 appraisal value. ( Id. ¶ 60-62.) Sukholinskiy testified that Mruczynski represented that he could not seek financing from a commercial bank because he had poor credit and needed money quickly. ( Id. ¶¶ 48, 58.)

On December 8, 2008, RP Family signed a contract with Mruczynski's company, Bielsko, in which RP Family agreed to purchase the Property from Bielsko for $100, 100 with a down payment of $100. ( Id. ¶ 6, 63; RP Family's 56.1 Stmnt ¶¶ 43, 45 Doc. Entry No. 146.) The closing date in the contract is listed as December 16, 2008. (Commonwealth's 56.1 Stmnt ¶ 64.) In connection with its motion, Commonwealth also provided two partially completed Real Property Transfer Reports: one report lists the date of sale as December 16, 2008 and the sale price as $100, 000; the other report lists the date of sale as December 30, 2008 and the sale price as $0. ( Id. ¶ 74; Fiveson Aff., Ex. C, Doc. Entry No. 137-3.)

At some point in December 2008, Trustar employee Brian Stark ("Stark") requested that Sussman act as Trustar's closing attorney in connection with RP Family's purchase of the Property, which Sussman understood was scheduled to close on December 30, 2008. (Sussman's 56.1 Stmnt ¶¶ 1, 4, Doc. Entry No. 151.) Sussman's company, Pacific, [1] had been hired to conduct a title search of the Property, secure the mortgage loan, prepare a title report, and issue a loan title insurance policy to Trustar on behalf of Commonwealth. ( Id. ¶ 2; Commonwealth's 56.1 Stmnt ¶¶ 18, 87, 90; RP Family's 56.1 Stmnt ¶ 5.)

On December 16, 2008, Bielsko executed a deed conveying the Property to James Samuel ("Samuel"). (Commonwealth's 56.1 Stmnt ¶¶ 7, 21, 26, 65.) Bielsko sold the Property to Samuel for $720, 000, and Samuel executed a mortgage against the Property in the amount of $432, 000 (the "Samuel Mortgage"). ( Id. ¶¶ 27, 65.) An agent of Commonwealth issued a title insurance policy to Samuel. (RP Family's 56.1 Stmnt ¶ 8.) Although the HUD-1 Statement signed by Samuel indicated that Samuel paid $318, 172.36, Samuel testified that he did not contribute any money towards the purchase price other than the amount borrowed. (Commonwealth's 56.1 Stmnt ¶¶ 69-70.) Samuel also admitted that he falsely stated on his loan application that he would reside in the Property following the closing. ( Id. ¶ 71.) Samuel understood that he would be paid $20, 000 at closing and that the mortgage would be repaid by Vito Grippo, who Samuel testified "orchestrated the deal." ( Id. ¶ 72; Fiveson Aff., Ex. J at 40, Doc. Entry No. 137-10.)

The closing of the sale of the Property from Bielsko to RP Family took place on December 30, 2008 at Pacific's office in Brooklyn, New York. (Commonwealth's 56.1 Stmnt ¶¶ 30, 84, 91.) In attendance were: Mruczunski; Bielko's attorney, Boris Nikham; Leslie Martin; RP Family's attorney, David Reich; Gere, representing Pacific; and Sussman. (Sussman's 56.1 Stmnt ¶ 13.)

On the day of the closing, Sussman received a letter addressed to Pacific via email from Lance P. Vanzant ("Vanzant") containing escrow instructions from Emerald Isle Lending Company ("Emerald") (the "Vanzant Letter"). (Sussman's 56.1 Stmnt ¶¶ 5-6.) According to the Vanzant Letter, loan funds of approximately $115, 000 would be wired into Sussman's attorney trust account once Pacific was "unconditionally and irrevocably committed" to issue a title insurance policy to Emerald. ( Id. ¶¶ 7, 9.) The Vanzant Letter also indicated that Trustar would assign its interest in the RP Family mortgage loan to Emerald. ( Id. ¶ 8.) Until he received the Vanzant Letter, Sussman was unaware of any involvement by Emerald in the transaction between Bielsko and RP Family. ( Id. ¶ 10.) Sussman signed and returned the Vanzant Letter. ( Id. ¶ 11.)

To fund the purchase, RP Family borrowed $115, 571 from Trustar and Emerald, representing the purchase price of $100, 000 and $15, 571 in closing costs. (Commonwealth's 56.1 Stmnt ¶¶ 33-34, 76, 89.) In exchange, RP Family gave Trustar a note in the amount of the loan, guaranteed by Leslie Martin (the "Note"). ( Id. ¶¶ 11-12, 33, 35, 56, 75.) The Note provided that RP Family would make six monthly payments of $1, 444.64, with the remaining principal and interest due on June 30, 2009. ( Id. ¶ 75.) Based on representations from her son, Leslie Martin understood ...


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