Jonas v. Waterman, 2013 WL 6231619 (D.Mont., Dec. 2, 2013).
United States District Court, D. Montana, Missoula Division.
Edwin R. JONAS III, Plaintiff,
Ronald F. WATERMAN, Esq., Gough, Shanahan, Johnson & Waterman, a professional limited liability partnership, Defendants.
No. CV 13–16–M–DLC–JCL.
Dec. 2, 2013.
Attorneys and Law Firms
Edwin Ritter Jonas, III, La Quinta, CA, pro se.
J. Daniel Hoven, M. Christy S. McCann, Browning Kaleczyc Berry & Hoven, Helena, MT, for Defendants.
DANA L. CHRISTENSEN, Chief Judge.
*1 Pro se Plaintiff Edwin R. Jonas ("Jonas") filed suit in January 2013 alleging legal malpractice against his former attorney and his attorney's law firm. Defendants Ronald F. Waterman ("Waterman") and Gough, Shanahan, Johnson & Waterman, PLLP (collectively "Defendants") moved for summary judgment. (Doc. 42.)
United States Magistrate Judge Jeremiah C. Lynch issued findings and recommendations granting Defendants' motion in full. (Doc. 91.) Jonas timely filed objections and is entitled to de novo review of the specific findings and recommendations to which he objects. 28 U .S.C. sec. 636(b)(1). The portions of the findings and recommendations not specifically objected to will be reviewed for clear error. McDonnell Douglas Corp. v. Commodore Bus. Mach., Inc., 656 F.2d 1309, 1313 (9th Cir.1981). For the reasons stated below, the Court adopts Judge Lynch's findings and recommendations in full. The parties are familiar with the factual and procedural background of this case so it will not be repeated here.
A. Res Judicata
Jonas first objects to Judge Lynch's finding that the doctrine of res judicata applies to this action. Specifically, Jonas contends that Judge Lynch erroneously found that the Montana Supreme Court held that Jonas' suit would have been barred by res judicata. Jonas bases this objection on two arguments: (1) Judge Lynch ignored the previous decisions in the underlying litigation; and (2) the Court's finding of res judicata was merely dictum because the issue was not raised at the trial level or on appeal.
Jonas' first argument is utterly without merit. Judge Lynch clearly considered the previous decisions leading to Jonas' appeals to the Montana Supreme Court, as well as that Court's ultimate decisions. (See Doc. 91 at 10–15.) Additionally, Jonas claims Judge Lynch ignored the opinions and findings of the New Jersey decisions, which formed the basis for the Montana litigation. Again, this argument is without merit. In Jonas v. Jonas, CV 13–90–M–DWM–JCL, D. Mont. (Aug. 21, 2013), Judge Lynch thoroughly reviewed the New Jersey judgments and ultimately concluded they were final. As such, Jonas' argument that Judge Lynch ignored the previous decisions in the underlying litigation is baseless.
Jonas' second contention, that the res judicata issue was not raised at the trial or on appeal, is simply false. Disregarding the fact the Jonas fails to cite to any legal authority for the argument that the Montana Supreme Court's finding is dictum,1 a review of the record clearly shows the issue of res judicata was raised both at trial and on appeal. At the trial level, Linda Jonas raised the issue of res judicata and Waterman replied to the argument in a sur-reply brief. (Doc. 49–11.) Also, Linda thoroughly briefed the argument in her response brief to Jonas' first appeal to the Montana Supreme Court. Appellee's Response Br., Jonas v. Jonas, 249 P.3d 80 (Mont.2010) (unpublished opinion). Accordingly, Jonas' argument that the issue was never raised is simply not true.
*2 Turning to Jonas' dictum argument, the Montana Supreme Court clearly held that Jonas' suit was barred by res judicata:
All the elements of res judicata are met. It appears this issue was actually litigated. See Jonas v. Jonas, 2008 WL 239069 *1 (N.J.Super.A.D. January 30, 2008). Even if it was not, the record makes clear that [Jonas] had the opportunity to litigate this issue in New Jersey before the judgments were entered. Res judicata bars [Jonas'] claim in Montana.
Jonas v. Jonas, 249 P.3d 80, *2 (Mont.2010) (unpublished opinion).
As Judge Lynch states, the opinion expressly holds that Jonas' claim is barred by res judicata.
Finally, Jonas repeatedly urges the Court to reevaluate the Montana Supreme Court's decisions for error in application of the law to the facts of the underlying suit. Essentially, Jonas argues that the Montana Supreme Court's application of res judicata was incorrect, and that it is this Court's duty to rectify the error. It is not this Court's duty to review a state supreme court's decision for error, and it declines to do so here.
Jonas' argues that Judge Lynch erred in finding that Waterman's alleged conduct was not the cause of Jonas' damages. Jonas bases his objection on two arguments: (1) Waterman's failure to file supporting briefs foreclosed any opportunity for the trial court to rule on the merits of Jonas' defense to Linda's domestication suit; and (2) this failure resulted in the Montana Supreme Court issuing a decision based on dictum, rather than on the merits. Both of these arguments must fail.
First, although Waterman was cited by the state trial court and the Montana Supreme Court for failing to file supporting briefs, both courts heard Jonas' defense to Linda's domestication suit. As stated above, Waterman filed a responsive brief and a sur-reply in opposition to Linda's motion for a charging order. In the sur-reply, Waterman argued Jonas' defense to Linda's suit, as well as the issue of res judicata. (Doc. 49–11 at 2.) Waterman also raised Jonas' defense to Linda's suit in the opening brief to the Montana Supreme Court. Opening Br. of Appellant, Jonas v. Jonas, 249 P.3d 80 (Mont.2010) (unpublished opinion). The Court acknowledged this defense when it stated "[Jonas'] claim that the 2006 New Jersey judgements were satisfied by prejudgment transfers of money and property held in constructive trust for Linda is barred by res judicata." Jonas, 249 P.3d at *2. Thus, both the trial court and the Montana Supreme Court heard Jonas' defense to Linda's suit.
Second, Jonas' repeatedly characterizes the Montana Supreme Court's holding that his claim was barred by the doctrine of res judicata as dictum. As established above, the determination that Jonas' claim is barred by res judicata is clearly part of the Court's holding, notwithstanding the alleged procedural errors committed by Waterman. Jonas bases his legal malpractice claims on the argument that if Waterman had not committed the alleged procedural errors, the outcome of the decision would have been different. However, a plain reading of Jonas I clearly establishes that the Montana Supreme Court would have barred Jonas' suit, regardless of the alleged errors. To defeat Waterman's motion for summary judgment, Jonas must present evidence that the outcome of the underlying litigation would have been decided differently but for Waterman's alleged negligence. Labair v. Carey, 291 P.3d 1160, 1166 (Mont.2012). Jonas does not allege any conduct by Waterman that would have altered the Montana Supreme Court's decision on res judicata. Accordingly, Defendants' motion for summary judgment will be granted.
C. Rule 11 Sanctions
*3 Jonas also objects to Judge Lynch's recommendation that the Court deny his motion for Rule 11 sanctions against Waterman. Jonas fails to advance a compelling argument or cite any legal authority for rejecting Judge Lynch's recommendation. Jonas' Rule 11 motion is entirely inappropriate and unfounded. The Court will adopt Judge Lynch's findings and recommendations, and deny Jonas' motion for Rule 11 sanctions.
There being no clear error in Judge Lynch's remaining findings and recommendations, IT IS ORDERED:
1. Judge Lynch's Findings and Recommendations (Doc. 91) are ADOPTED in full.
2. Defendants' motion for summary judgment (Doc. 42) is GRANTED, and this case is DISMISSED in its entirety.
3. Plaintiff's alternative motions (Docs 70; 76) to amend the June 12, 2013, order of dismissal to either set forth the grounds necessary for an interlocutory appeal under 29 U.S.C. sec. 1292(b) or include a certification under Fed.R.Civ.P. 54(b) are DENIED as moot.
4. Plaintiff's motion for sanctions pursuant to Fed.R.Civ.P. 11 is DENIED.
5. The Clerk shall close this matter, vacate all pending deadlines, and deny all pending motions as moot.
FINDINGS & RECOMMENDATION
JEREMIAH C. LYNCH, United States Magistrate Judge.
Defendants Ronald Waterman, Esq. and Gough, Shanahan, Johnson & Waterman, PLLP, have moved for summary judgment on the legal malpractice claims advanced against them by pro se Plaintiff Edwin R. Jonas III ("Jonas"). For the reasons set forth below, their motion should be granted and this case should be dismissed in its entirety.
The events giving rise Jonas's legal malpractice claims date back to May 2006, when a New Jersey superior court entered judgments against him for unpaid child support, alimony, attorneys fees, and other obligations following his divorce from Linda Jonas ("Linda") .1 Dkt. 45–3, at 5–8. Linda subsequently sought to have those judgments enforced in Montana pursuant to the Uniform Enforcement of Foreign Judgment Act, Mont.Code Ann. secs. 25–9–501 et seq. On December 4, 2009, she filed a Notice of Filing Foreign Judgment in the Montana Twentieth Judicial District Court, Lake County, along with copies of the New Jersey judgments, which totaled $695,476.97, plus $147,205.35 in interest. Dkt. 45–3.
Jonas retained Defendants Ronald Waterman ("Waterman") and the law firm of Gough, Shanahan, Johnson & Waterman, PLLP ("Gough Shanahan") to represent him in defending against the registration and execution of the foreign judgments. Dkt. 45–2.
In December 2009, Linda filed a motion seeking to satisfy the New Jersey judgments with Jonas's interest in Blacktail Mountain Ranch Company, LLC ("Blacktail Mountain"). She sought a charging order, the appointment of a receiver, the foreclosure of Jonas's distributional interest in Blacktail Mountain, and the judicial dissolution, and winding up, of Blacktail Mountain. Jonas v. Jonas, 2013 WL 3810598 *2 (Mont. July 23, 2013) (Jonas III ). Jonas opposed the motion on the ground that Linda had already received transfers of money and property sufficient to satisfy the New Jersey judgments. Jonas III, at * *3–4.
*4 On February 1, 2010, the court issued a writ of execution against Jonas in the amount of $1,091,391.21. Jonas I, 2010 WL 4527053 *1. Two days later, on February 3, 2010, the court issued a charging order and an order for the appointment of a receiver, foreclosure of the lien, and for the dissolution of Blacktail Mountain, with the proceeds being used to satisfy the foreign judgments. Jonas I, 2010 WL 4527053 *1. The court denied Jonas's subsequent motions for reconsideration because such motions are not allowed under Montana law, and because no supporting briefs had been filed. Jonas I, 2010 WL 4527053 *2. Jonas appealed the order denying his motions for reconsideration, and the Montana Supreme Court affirmed. Jonas I, 2010 WL 4527053 *2. The Court agreed that Jonas's motions for reconsideration were procedurally improper, and also held he was barred by res judicata from relitigating his claim that the 2006 New Jersey judgments had already been satisfied. Jonas I, 2010 WL 4527053 *2.
The case was remanded and Jonas, through Waterman, filed a motion for relief from the 2006 New Jersey judgments pursuant to Mont. R. Civ. P. 60. Jonas again challenged the charging order on the ground that the New Jersey judgments had already been satisfied. The court denied the Rule 60 motion, and Jonas appealed. Jonas II, 2012 WL 1699951 *2. Once again, the Montana Supreme Court affirmed, explaining that Jonas was "precluded by the principles of res judicata from repeating his challenges to New Jersey's 2006 judgment in the courts of Montana." Jonas II, 2012 WL 169951 *2.
The case was remanded again, and Jonas moved under Rule 60 to vacate the February 3, 2010, charging and receivership orders. Dkt. 45–12, at 9–10. This time Jonas argues that the orders were entered ex parte, that the receiver was not statutorily eligible, and that the seizure and sale of Blacktail Mountain's assets violated Montana and Nevada law governing limited liability corporations. The court denied the motion based on the law of the case doctrine, and in October 2012, Jonas appealed to the Montana Supreme Court for a third time. Dkt. 45–11. Waterman filed that appeal on Jonas's behalf, but withdrew as counsel of record in February 2013. Dkt. 45–13.
On July 23, 2013, the Montana Supreme Court affirmed the district court's order denying Jonas's motion to set aside the charging order and appointment of the receiver. The Court held that because Jonas "failed to avail himself of several opportunities to challenge the charging order and appointment of receiver on the grounds he now raises," he had waived his right to do so and the charging order had become "the law of the case, binding [Jonas] thereby." Jonas III, DA 12–0620 at 9.
In the meantime, Jonas filed his pro se complaint in this case on January 23, 2013—approximately two weeks before Waterman withdrew as counsel in the state court case.2 Dkt. 1. Jonas alleges that Waterman committed legal malpractice while defending against Linda's lawsuit to domesticate and enforce the New Jersey judgments in state court. Jonas has pled state law legal malpractice claims against Waterman individually and the Gough Shanahan law firm under a respondeat superior theory of liability.3 Waterman and Gough Shanahan move for summary judgment on the ground that their alleged conduct did not cause Jonas any injury.4
II. Summary Judgment Standards
*5 Federal Rule of Civil Procedure 56(a) entitles a party to summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." A movant may satisfy this burden where the documentary evidence produced by the parties permits only one conclusion. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 251 (1986). A party moving for summary judgment who does not have the burden of persuasion at trial, must produce evidence which either: (1) negates an essential element of the non-moving party's claim, or (2) shows that the non-moving party does not have enough evidence of an essential element to ultimately carry his burden at trial. Nissan Fire & Marine Ins. Co. Ltd. v. Fritz Companies, Inc., 210 F.3d 1099, 1102 (9th Cir.2000).
Once the moving party has satisfied its burden, the non-moving party must go beyond the pleadings and designate by affidavits, depositions, answers to interrogatories, or admissions on file, "specific facts showing that there is a genuine issue for trial." Celotex Corp. v. Cattrett, 477 U.S. 317, 324 (1986). A party opposing summary judgment must identify evidence establishing that a dispute as to a particular material fact is genuine. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The opponent "must do more than simply show that there is some metaphysical doubt as to the material facts." Id.
"In considering a motion for summary judgment, the court may not weigh the evidence or make credibility determinations, and is required to draw all inferences in a light most favorable to the non-moving party." Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir.1997), abrogated on other grounds as noted in Shakur v. Schriro, 514 F.3d 878, 884–85 (9th Cir.2008).
The Montana Supreme Court has "consistently set forth the elements of a legal malpractice claim as follows: (1) the attorney owed the plaintiff a duty of care; (2) the attorney breached this duty by failure to use reasonable care and skill; (3) the plaintiff suffered an injury; and (4) the attorney's conduct was the proximate cause of the injury." Labair v. Carey, 291 P.3d 1160, 1164 (Mont.2012). "[A]n attorney's negligence is the cause of the plaintiff's injury if there is an uninterrupted chain of events from the negligent act to the injury." Labair, 291 P.3d at 1164. Under this standard, "proof of causation is satisfied by proof that the attorney's negligent conduct was a cause-in-fact of the damage alleged, i.e., that the injury would not have occurred 'but for' that conduct." Labair, 291 P.3d at 1164.
Here, Jonas claims that Waterman committed legal malpractice while defending against Linda's underlying lawsuit to domesticate and enforce the New Jersey judgments in Montana. In particular, he alleges that when Waterman moved for reconsideration of the February 3, 2010, charging order, he breached his duty of care by failing to file supporting briefs. Dkt. 1, at 4. Jonas also accuses Waterman of: (1) not moving promptly to vacate the charging order; (2) failing to include the include the charging and receivership orders in the notice of appeal; (3) not accurately advising him as to the holding in Jonas I and failing to properly analyze the holding in Jonas I while briefing the appeal in Jonas II; (4) not insisting that Linda, her attorney, and the court-appointed receiver comply with Montana's receivership statutes, (5) withdrawing a motion to stay; and (6) otherwise failing to adhere to the applicable standard of care. Dkt. 1, at 5–6. Jonas alleges it was because of Waterman's shortcomings that Linda prevailed in state court and was able to proceed with the acquisition and sale of Blacktail Mountain's assets, thereby causing him financial and emotional damages. Dkt. 1, at 7.
*6 Waterman argues that Jonas's legal malpractice claim fails as a matter of law because he cannot establish the requisite causal link between the conduct he complains of and the damages alleged. Where, as here, a legal malpractice claim stems from underlying litigation and places the merits of that litigation directly at issue, the "suit within a suit" approach to analyzing causation applies. See Richards v. Knuchel, 115 P.3d 189, 192–93 (Mont.2005). The appropriate inquiry in such a case is "what the outcome for the plaintiff would have been in the underlying case if it had been [litigated] properly." Labair, 291 P.3d at 1166. See also Richards, 115 P.3d at 192–93. If the undisputed evidence establishes that the outcome of the state court case would have been the same, and Linda would have prevailed in her efforts to enforce the New Jersey judgments regardless of Waterman's alleged negligence, then Waterman's conduct cannot have caused Jonas any damages.
Jonas's primary complaint is that he lost in front of the Montana Supreme Court in Jonas I because Waterman made various procedural mistakes. According to Jonas, those mistakes included not filing supporting briefs, not moving promptly to vacate the charging order, and failing to include the charging and receivership orders in the notice of appeal. Dkt. 1, at 4–5. Notwithstanding Jonas's argument to the contrary, it is clear upon reading Jonas I that the Court would have reached the same result regardless of Waterman's mistakes.
At issue in Jonas I was whether the district court had abused its discretion by denying Jonas's motions for reconsideration of the February 3, 2010, charging order based on Jonas's failure to file any supporting briefs and because there is no such thing as a motion for reconsideration under Montana law. Jonas I, 2010 WL 4527053 *2. The Montana Supreme Court affirmed, and agreed that "[m]otions for reconsideration do not exist under Montana law." Jonas I, 2010 WL 4527053 *2. The Court also noted it was not the first time that Jonas had "failed to support a motion with a brief." Jonas I, 2010 WL 4527053 *2.
While the Court thus affirmed on procedural grounds, it also affirmed on independent and alternative res judicata grounds. It went on to address Jonas's claim that the 2006 New Jersey judgments had already been "satisfied by prejudgment transfers of money and property" and so should not have been enforced in Montana. Jonas I, 2010 WL 4527053 *2. The Court concluded that Jonas was barred by the doctrine of res judicata from relitigating that issue and thereby challenging the validity of New Jersey judgments. Jonas I, 2010 WL 4527053 *2. This alternative holding had nothing to do with any procedural errors on Waterman's part, which means that Jonas would have lost on res judicata grounds regardless of Waterman's procedural mistakes.
Jonas is nonetheless adamant that the Court's res judicata discussion was nothing more than dicta and insists that Waterman's mistakes caused the adverse outcome in Jonas I. But the fact that Jonas disagrees with the Court's holding does not make it dicta. Jonas's position is flatly contradicted by the text of the decision. The Court expressly held that "[r]es judicata bars [Jonas's] claims in Montana." Jonas I, 2010 WL 4527053 *2. The Court confirmed as much in Jonas II, when it explained that it had denied the "appeal and petition for reconsideration" in Jonas I "on the basis of res judicata." Jonas II, 2012 WL 1699951 *2. It is clear that the Montana Supreme Court rejected Jonas's challenge in Jonas I on res judicata grounds, and that it would have reached the same result even if Waterman had not made any procedural mistakes.
*7 The same can be said of the Court's decision in Jonas II The question on that appeal was whether the district court had abused its discretion by denying Jonas's Rule 60 motion seeking relief from the New Jersey judgments based on res judicata and law of the case. Jonas II, 2012 WL 1699951 *1. The Court affirmed, unequivocally holding that Jonas was "precluded by principles of res judicata from repeating his challenges to New Jersey's 2006 Judgment in the courts of Montana. We refuse to indulge him further." Jonas II, 2012 WL 1699951 *2.
The real thrust of Jonas's argument in responding to the motion for summary judgment is that the holding in Jonas II was erroneous, and that Waterman should somehow be held responsible for that adverse outcome. But Jonas does not point to any evidence that Waterman's allegedly deficient representation caused the Court to rule as it did.
The closest Jonas comes to articulating a theory by which Waterman could be held responsible for the adverse outcome in Jonas II is to allege in his complaint that Waterman failed to point out while briefing the appeal in Jonas II that the res judicata discussion in Jonas I was mere dicta. Dkt. 1, at 5. Jonas apparently claims this somehow led to what he characterizes as the erroneous holding in Jonas II As discussed above, however, the res judicata discussion in Jonas I was not dicta. Jonas cannot be heard to complain that Waterman was somehow negligent by not making an untenable argument on appeal in Jonas II None of the other conduct alleged in the complaint has anything even arguably to do with the Court's ruling in Jonas II.
Jonas simply believes the Court was wrong when it held that he is barred by principles of res judicata from challenging the New Jersey judgments here in Montana. Jonas is so vehement on this point that most of his summary judgment response brief is devoted to explaining why believes Jonas II was wrongly decided. When Jonas filed his summary judgment response brief, the Montana Supreme Court had not yet ruled on his most recent appeal challenging the charging and receivership orders. Jonas explained that he had raised the issue of res judicata again in his reply brief, thereby giving the Montana Supreme Court "the opportunity to correct their mistakes" in Jonas II Dkt. 49, at 15. Jonas stated he was "patiently await[ing]" the Court's decision reversing itself on the res judicata issue. Dkt. 49, at 15.
The Court has since issued its decision, but it did not do as Jonas had hoped. The Court affirmed the district court's order denying Jonas's motion to set aside the charging order and appointment of the receiver on the ground that they have become the law of the case. Until Jonas's third appeal, his efforts to set aside the charging order were based on his argument that the New Jersey judgments had already been satisfied, and so should not be enforced in Montana. In Jonas III, however, he argued that the charging order and order of receivership were entered ex parte, that the receiver was not statutorily eligible, and that the seizure and sale of Blacktail Mountain's assets violated Montana and Nevada law governing limited liability corporations. The Court held that Jonas was precluded by the law of the case doctrine from making those arguments. Notwithstanding Jonas's invitation, the Court did not revisit the res judicata issue it decided in Jonas I and Jonas II.
*8 In both of those decisions, the Court made clear that Jonas was barred by principles of res judicata from challenging the validity of the New Jersey judgments, thereby allowing Linda to enforce those judgments and proceed with the acquisition and sale of Blacktail Mountain's assets under authority of the charging and receivership orders. It is not this Court's role to review the Jonas decisions and consider whether the Montana Supreme Court's application of the res judicata doctrine was correct.
The appropriate question here is not whether the Montana Supreme Court correctly decided that Jonas was barred by principles of res judicata from challenging the New Jersey judgments, but whether that outcome might have been different had Waterman not engaged in the conduct that Jonas claims was negligent. Jonas has not come forward with any evidence suggesting that, but for Waterman's alleged negligence, he might have obtained a different result. Jonas's efforts to set aside the charging order were based on his argument that the New Jersey judgments had already been satisfied and so should not be enforced in Montana. The Montana Supreme Court rejected that argument based on principles of res judicata-a legal doctrine that is completely unrelated to any of Waterman's allegedly negligent conduct. The undisputed evidence thus establishes that the outcome would have been the same, and Linda would have prevailed in her efforts to enforce the New Jersey judgments regardless of Waterman's alleged negligence.
Because the undisputed facts establish that Waterman's conduct did not cause the damages Jonas alleges, Waterman is entitled to summary judgment on Jonas's legal malpractice claim. This means that Jonas's legal malpractice claim against Gough Shanahan, which is premised solely on a theory of respondeat superior liability, also fails as a matter of law.
There is one final matter that must be addressed. Jonas has filed a motion for Rule 11 sanctions against Waterman and defense counsel J. Daniel Hoven and Christy McCann. Dkt. 80. Jonas argues they "knew or should have known" that the New Jersey judgments were not final and not on the merits, and that the doctrine of res judicata was thus inapplicable. Jonas maintains Waterman and his defense counsel should be subject to Rule 11 sanctions for knowingly filing a frivolous summary judgment motion. As discussed above, however, the motion was far from frivolous. Jonas is the one who has filed a frivolous motion—asking the Court to impose Rule 11 sanctions against counsel for pursuing a perfectly legitimate summary judgment motion. It would be an abuse of discretion to impose Rule 11 sanctions under the circumstances, and Jonas's motion is denied accordingly.
For the reasons set forth above,
IT IS RECOMMENDED that (1) Defendants' motion for summary judgment be GRANTED, and; (2) Plaintiff's alternative motions to amend the June 12, 2013, order of dismissal to either set forth the grounds necessary for an interlocutory appeal under 29 U.S.C. sec. 1292(b) or include a certification under Fed.R.Civ.P. 54(b) be DENIED as moot. Finally,
*9 IT IS ORDERED that Jonas's motion for sanctions pursuant to Fed.R.Civ.P. 11 is DENIED.
This is not the only argument for which Jonas fails to cite to legal authority. Jonas fails to cite to any legal authority for any of his objections to Judge Lynch's findings and recommendations.
Current defense counsel Christy McCann filed a declaration in support of the motion for summary judgment and attached what she attests are "true and correct" copies of several state court orders and filings, along with two documents confirming Waterman's attorney-client relationship with Jonas. Dkt. 45. Jonas argues that the Court should not consider any of the documents attached to McCann's declaration because she does not have personal knowledge of the facts set forth in those documents. But McCann does not claim to have personal knowledge of the underlying facts. She has simply attested to the accuracy of the copies attached to her declaration, which is entirely appropriate. Jonas's argument to the contrary is without merit.
Jonas's complaint also identified Blacktail Mountain as a plaintiff and named the judge who presided over the state court action, Charles B. McNeil, as a defendant. Dkt. 1. The Court has since dismissed Blacktail Mountain because it was not represented by an attorney, and dismissed Judge McNeil based on the doctrine of judicial immunity. Dkt. 53. Jonas has filed alternative motions to amend that order of dismissal to either set forth the grounds necessary for an interlocutory appeal under 28 U.S.C. sec. 1292(b) or include a certification under Fed.R.Civ.P. 54(b). Dkts. 70 & 76. But because Waterman's motion for summary judgment should be granted for the reasons set forth below, thereby disposing of Jonas's remaining claims, there is no need for interlocutory relief and Jonas's alternative motions should be denied accordingly. In the event presiding Judge Dana L. Christensen denies Waterman's motion for summary judgment, it should be noted that Judge McNeil consents to Jonas's Rule 54(b) motion. Because there would be no just reason to delay an appeal of the Court's order dismissing Judge McNeil if Jonas's remaining claims survive, it would then be appropriate to grant Jonas's motion for Rule 54(b) certification to the extent it relates to Judge McNeil's dismissal.
In May 2013, Jonas initiated a related action in this Court against Linda, her attorneys in the Montana state court action, the court-appointed receiver, and several agents of the receiver. Edwin Jonas v. Linda Jonas et al., CV–13–90–M–DLC–JCL (Dkt.1). There are several pending motions in that case that are address in an Order and Findings & Recommendation entered contemporaneously with those entered here.
Waterman and Gough Shanahan also move for summary judgment as to Blacktail Mountain's legal malpractice claims on the ground that they did not owe the entity a duty of care. This portion of the summary judgment motion is moot in light of the fact that Blacktail Mountain has been dismissed and is no longer a party to this action.
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In re Jonas, 2012 WL 2994724 (Bkrtcy.D.Mont., Slip Copy, July 23, 2012). http://goo.gl/06dz1
United States Bankruptcy Court, D. Montana.
In re Edwin Ritter JONAS, III, Debtor.
July 23, 2012.
MEMORANDUM OF DECISION
RALPH B. KIRSCHER, United States Bankruptcy Judge.
*1 At Butte in said District this 23rd day of July, 2012.
The above captioned Chapter 11 case was dismissed by Memorandum of Decision (Docket No. 312) and Orders entered on July 17, 2012 (Dkt. 313, 314 & 315), along with Adversary Proceeding Nos. 10–00031 and 10–00104, pursuant to a Stipulation (Dkt.198) the Debtor had entered into with the U.S. Trustee and Trustee while the case was pending in Chapter 7. The Debtor filed a motion for stay pending appeal (Dkt.319) and a motion for expedited hearing. Debtor's former spouse Linda Jonas ("Linda") filed an objection, and a hearing on Debtor's motion for stay was held at Missoula on July 23, 2012. Debtor Edwin Ritter Jonas, III ("Jonas" or "Debtor") appeared and testified, represented by attorney Edward A. Murphy ("Murphy") of Missoula. Linda was represented by attorney Quentin H. Rhoades of Missoula. Attorney Ronald F. Waterman ("Waterman") appeared representing several Creditors. The Court heard argument of counsel, then took Debtor's motion under advisement. After review of the record, Debtor's motion for stay pending appeal will be denied for the reasons set forth below.
Murphy stated at the hearing that the Debtor is not offering a supersedeas bond. Therefore, Debtor as the moving party seeking a stay pending appeal must satisfy the requirements of F.R.B.P. Rule 8005.FN1 In the case of Martinson v. Towe (In re Towe), 14 Mont. B.R. 1, 2–3 (Bankr.D. Mont 1994), this Court set forth the standards for evaluating motions filed under Rule 8005:
FN1. Rule 8005 reads in pertinent part:
A motion for a stay of the judgment, order, or decree of a bankruptcy judge, for approval of a supersedeas bond, or for other relief pending appeal must ordinarily be presented to the bankruptcy judge in the first instance. Notwithstanding Rule 7062 but subject to the power of the district court and the bankruptcy appellate panel reserved hereinafter, the bankruptcy judge may suspend or order the continuation of other proceedings in the case under the Code or make any other appropriate order during the pendency of an appeal on such terms as will protect the rights of all parties in interest. A motion for such relief, or for modification or termination of relief granted by a bankruptcy judge, may be made to the district court or the bankruptcy appellate panel, but the motion shall show why the relief, modification, or termination was not obtained from the bankruptcy judge.
Rule 8005 provides that a bankruptcy judge "may suspend or order the continuation of other proceedings in the case under the Code or make any other appropriate order during the pendency of an appeal on such terms as will protect the rights of all parties in interest." This Court has explained in construing Rule 8005:
Such rule incorporates the practice with respect to automatic availability of a stay pending appeal upon approval of a supersedeas bond. The purpose of the bond is to indemnify the party who was successful in the Bankruptcy Court against loss caused by an attempt to reverse the decision upon appeal. In re Theatre Holding Corp., 22 B.R. 884, 885 (Bankr.S.D.N.Y.1982). See, also, In re Swift Air Lines, Inc., 21 B.R. 12 (9th Cir. BAP1982). With the posting of sufficient supersedeas bond, under the above authorities, the standard for granting the stay becomes unimportant.
In the instant case, Debtor has not filed or offered a supersedeas bond. Therefore, Debtor must satisfy the same tests required for the granting of an injunction:
A party seeking relief under Rule 8005 must show (1) that he will suffer irreparable harm unless the stay is granted; (2) a likelihood of success on the merits of the appeal; (3) that the other parties will suffer no substantial harm if the stay is granted; and (4) that the public interest will not be harmed if the stay is granted. In Matter of Baldwin United Group, 45 B.R. 385, 11 C.B.C. 1195 (Bankr.S.D.Ohio 1984). The same tests apply for granting of an injunction. See, Regents of University of California v. ABC, Inc., 747 F.2d 515 (9th Cir.1984)....
*2 In re Klopp, 14 Mont. B.R. 334, 335 (Bankr.D.Mont.1995); Hoeger v. Teigen (In re Teigen), 9 Mont. B.R. 523, 523–25 (Bankr .D.Mont.1991).
Metro North State Bank v. Barrick Group, Inc. (In re Barrick Group, Inc.), 99 B.R. 513, 515 (Bankr.Conn.1989), notes that several courts have held that an appellant must clearly establish all four injunction factors. Id., citing Baldwin United Group, supra, and John P. Maguire & Co., Inc. v. Sapir ( In re Candor Diamond Corp.), 26 B.R. 844, 847 (Bankr.S.D.N.Y.1983). However, the Court in Barrick Group goes on to state that "the more authoritative and better approach is that the four factors should be used as guides. See Hilton [ v. Braunskill ], supra, 481 U.S. [770,] 777, 107 S.Ct. [2113,] 2119, [95 L.Ed.2d 724 (1987) ] ("[The] stay factors contemplate individualized judgments in each case, the formula cannot be reduced to a set of rigid rules."); In re Marine Pollution Service, supra, 89 B.R. at 345; In re Roth American, Inc., supra, 90 B.R. [94,] 95 [ (Bankr.M.D.Pa.1988) ]. This reading of the Rule 8005 is consistent with its plain language ." Id. The Supreme Court in Hilton discussed Fed. Rule App. Proc. 8(a) from which the first, second and fourth sentences of Rule 8005 were adopted. One controlling principle is that issuance of a stay pending appeal, like a preliminary injunction, rests with the sound discretion of the trial court. Hartigan v. Pine Lake Village Apartment Co., (In re Pine Lake Village Apartment Co., 21 B.R. 395 (S.D.N.Y.1982); Regents of Univ. of Cal. v. American Broad. Companies, Inc., 747 F.2d 511, 515 (9th Cir.1984).
Debtor's motion argues that the first three factors weigh in favor of granting him a stay pending appeal, but that there is no public interest factor in the case that will be harmed. However, at the hearing Murphy changed Debtor's position on the fourth factor and argued that the public interest weighs in favor of granting a stay pending appeal in order to force Linda into giving an accounting of funds which she received in trust, and credit those payments against her filed Proof of Claim in order to promote the public interest that parties deal with courts fairly and honestly. Jonas testified that he has never been given his day in court to prove offsets he argues should be given against Linda's claim. He testified that Linda is a liar, a thief, and embezzler, that Linda's attorneys admitted that she received payments, and that he will lose his home if no stay is granted pending his appeal. Waterman argued that a stay should be granted because the Creditors FN2 have no other forum to litigate their objection to Linda's claim, and that this Court promised that an accounting of transfers to Linda would be done.
FN2. Waterman's "Creditors" are: John Bloomquist, Gough, Shanahan, Johnson & Waterman, RLK Hydro, Inc., Roderick V. Hannah and Sandra Hochman.
Linda objects that all 4 factors weigh against a stay, that Jonas' arguments, including payments to Linda, were considered by the New Jersey courts and rejected, and that Jonas' arguments have been rejected by courts in Florida and Montana in addition to New Jersey.
*3 The first factor that Jonas must prove is that he will suffer irreparable harm if the stay is not granted. Jonas argues that Linda's counsel and a receiver appointed under a charging order in state court have taken steps to take control of his 50% interest in Blacktail Mountain Ranch Co. LLC, and he will lose the faith of his customer base as well as his ability to conduct business if the receiver takes control, as well as lose his home. The testimony at the hearing was disputed as to whether Jonas owns 100% of the LLC or 50%, as he listed in his Schedules. The respective interests in the LLC are a matter for the Montana state courts, and a holder of another interest in the LLC who was not a party to Linda's state court action against Jonas would have recourse in the state court to protect her interest under basic due process principles. As far as Jonas' interest, the Court finds that he has failed his burden to show that he will suffer irreparable harm if the stay is not granted.
First, Jonas' testimony establishes that the LLC's cattle are loose, having escaped the fence on leased land where he placed them, and are wandering in the mountains and across highways. Linda seeks to have the receiver placed into possession of the LLC in order to protect the LLC assets. Jonas has admitted in his testimony that he failed to keep control of the LLC's cattle. The LLC's cattle appear to be in more harm under his control than they would be under a receiver's control.
Second, this estate does not include real property interests. Debtor listed no real property, and the LLC owns the real property where the Debtor lives. Thus, any sale of the real property must await a determination of the LLC ownership interests in state court. Debtor has failed to show that he would suffer irreparable injury absent a stay pending his appeal. Also, in the event Debtor prevails in his appeal and becomes entitled to an accounting of payments to Linda by the appellate court, the Debtor would have the ability to seek a money judgment from Linda for any loss, including theoretically recovery for loss of prospective economic advantage for loss of his business opportunities.
Finally, even with this decision Jonas has the right and ability under Rule 8005 to request a stay pending appeal from the appellate court, in this instance the United States District Court for the District of Montana. For those reasons the Court finds that the Debtor has failed to prove that he will suffer irreparable harm if his motion for stay pending appeal is not granted.
The second factor which Debtor must prove is a likelihood of success on the merits. Murphy argued that this Court dismissed this case while the case was held in abeyance, and deprived the Debtor of the opportunity to propose a plan and disclosure statement which he otherwise would have filed. The relevant background facts and procedural history of this case are set forth in this Court's Memorandum, Dkt. 312, at pages 7 and 8.
*4 After Linda filed her motion to dismiss and Debtor filed his motion for extension of time to file a plan and disclosure statement, the parties agreed FN3 at hearing on November 10, 2011, to stay all proceedings "until the Debtor's New Jersey Appeal was decided." Dkt. 312, p. 8; Dkt. 268. The Court stayed all matters until the decision in New Jersey was decided by a final decision, and directed Murphy to report when the appeal was final. Murphy reported that the appeal was final and Debtor lost on April 30, 2012. There was no other reason the Court stayed these proceedings.
FN3. Jonas testified that he never agreed to a stay, but his attorney did agree in open court.
With Debtor's New Jersey appeal final, the Court set a status hearing on May 10, 2012, at which the parties appeared represented by counsel. The Court entered an Order on May 11, 2012, granting the parties time to file briefs "on all the above-listed pending contested matters and adversary proceedings ... after which the matters will be deemed fully submitted, taken under advisement and a decision rendered." Dkt. 297. Thus, the reason for the stay of all pending matters, i.e., a final decision on Debtor's appeal in New Jersey, expired and the Court held a hearing and thereafter granted the parties time to file briefs "on all ... pending matters."
The Court dismissed this case based upon the Stipulation (Dkt.198), pursuant to the Court's equitable power to enforce summarily an agreement to settle a case before it. Dkt. 312, p. 16; Doi v. Halekulani, 276 F.3d 1131, 1138 (9th Cir.2002); Callie v. Near, 829 F.2d 888, 890 (9th Cir.1987). Debtor lost his appeal in New Jersey. After a hearing the parties were granted time to file briefs on all pending matters, and the Court dismissed this case under the Stipulation.
Debtor's argument that he has not had his day in court is discussed in Dkt. 312, at pages 17–19. Debtor had numerous chances to present his claims for an accounting in the New Jersey courts, but he engaged in tactics which resulted in adverse decisions and judgments against him in New Jersey, and in Montana. This Court declined to review Debtor's adverse New Jersey divorce decisions under the Rooker–Feldman doctrine FN4, as discussed in Carmona v. Carmona, 603 F.3d 1041, 1050 (9th Cir.2010), Noel v. Hall, 341 F.3d 1148, 1155 (9th Cir.2003), and based upon the "domestic relations exception" to federal court diversity jurisdiction. Marshall v. Marshall, 547 U.S. 293, 298, 307–08, 126 S.Ct. 1735, 1741, 1746, 164 L.Ed.2d 480 (2006), citing Ankenbrandt v. Richards, 504 U.S. 689, 112 S.Ct. 2206, 119 L.Ed.2d 468 (1992). After review of Debtor's motion and this Court's Memorandum, this Court finds that Debtor failed to show a likelihood of success on the merits to justify a stay pending appeal. The Debtor is not entitled to this Court's review of, and interference with, the New Jersey divorce decisions.
FN4. The Rooker–Feldman doctrine takes its name from two Supreme Court cases: Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923) and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983).
Waterman argued at the hearing that his Creditors have no other forum to seek an accounting from Linda, and that this Court stated that the Debtor was entitled to an accounting. This Court addressed this argument in its Memorandum, Dkt. 312 at pages 20–22. In sum, the Creditors filed their objection to Linda's Proof of Claim. The objection was set for a hearing. Waterman appeared at the hearing for the Creditors and offered no evidence. This Court overruled the Creditors' objection to Linda's claim under the authority of Litton Loan Servicing, LP v. Garvida (In re Garvida), 347 B.R. 697, 706–07 (9th Cir. BAP2006), because the objecting parties failed to satisfy their burden of going forward and switch the burden of proof to the creditor, Linda. It is inaccurate to state that this Court did not give the Creditors due process to prove their objection to Linda's claim. They had notice and a hearing and an opportunity to offer evidence. They offered no evidence, so their objection to Linda's claim was overruled after a hearing.
*5 The third element Debtor must prove is that the other parties will suffer no substantial harm if the stay is granted. The Debtor's testimony that the LLC's cattle are wandering loose, by itself, defeats Debtor's argument relative to this third element. Rather, it appears to the Court that Linda will suffer substantial harm if the stay is granted and the receiver does not take control of the LLC's cattle.
The fourth factor Debtor must prove is that the public interest will not be harmed if the stay is granted. The Court finds that the Debtor has failed to prove the fourth factor. The record of the divorce case underlying Debtor's bankruptcy case calls for the Debtor and Linda to finalize their dispute. This case has burdened the parties and this Court since February 19, 2010, when Jonas filed his petition. The case was converted when Jonas failed to perform his reporting requirements, and he was allowed to reconvert to chapter 11 only under the strict conditions of the Stipulation (Dkt.198), which Jonas failed to perform. Instead Jonas requested still more time to relitigate his divorce into its third decade. The Court finds that the public interest will be harmed if the Debtor is able to stay and further delay the results of his New Jersey divorce or, as he requests, to use the bankruptcy court to revisit final decisions by the New Jersey courts.
All four factors weigh against granting the Debtor's motion for stay pending appeal.
IT IS ORDERED a separate Order shall be entered denying Debtor's motion for stay pending appeal (Dkt.319).
= = = = = = = = = =
In re Jonas, 2011 WL 2604834 (Bkrtcy.D.Mont., Slip Copy, June 30, 2011).
United States Bankruptcy Court,
In re Edwin Ritter JONAS, III, Debtor.
Edwin Ritter Jonas, III, Plaintiff.
Linda B Jonas, Defendant.
Bankruptcy No. 10–60248–7.
Adversary No. 10–00031.
June 30, 2011.
Edward A. Murphy, Murphy Law Offices, PLLC, Missoula, MT, for Plaintiff.
Quentin M. Rhoades, Sullivan, Tabaracci & Rhoades, Missoula, MT, for Defendant.
MEMORANDUM OF DECISION
RALPH B. KIRSCHER, Bankruptcy Judge.
*1 Pending in this adversary proceeding is the Defendant Linda B. Jonas' ("Linda") motion to dismiss (Docket No. 67) on the grounds that her former spouse, the Plaintiff/Debtor Edwin Ritter Jonas III ("Edwin" or "Debtor"), lacks standing. Edwin filed an objection asserting that he has standing because he commenced the adversary proceeding when the case was under Chapter 11. A hearing on the motion was held at Missoula on May 19, 2011. Linda was represented by attorney Quentin M. Rhoades ("Rhoades") of Missoula. Edwin was represented by attorney Edward A. Murphy ("Murphy") of Missoula. No testimony or exhibits were admitted. Argument of counsel was heard, after which the Court took the matter under advisement. After review of the motion, Edwin's response, the record and applicable law, this matter is ready for decision. For the reasons set forth below Linda's motion to dismiss will be denied without prejudice.
This Court has jurisdiction of this adversary proceeding under 28 U.S.C. sec. 1334(b), as it is related to the above-captioned Chapter 7 bankruptcy case. This adversary proceeding includes claims for relief which are core proceedings under 28 U.S.C. sec. 157(b)(2).
FACTS & PROCEDURAL HISTORY
Edwin filed a Chapter 11 petition on February 19, 2010, and filed his Schedules on March 7, 2010. He listed assets with a total value in the amount of $1,423,510.54, and liabilities in the total amount of $2,189,459.23. He listed no real property on Schedule A. On Schedule B Edwin listed a half interest in an entity named "Balcktail [sic] Mountain Ranch Co. LLC" with a value of $5,000; and he listed a chose in action against Linda for misappropriation of a trust fund with a value of $1,350,000. Schedule E lists Linda as having a priority claim for alimony, which Edwin listed as disputed and in the amount of $1,091,391.21.
Rhoades filed Linda's Proof of Claim, and filed an Amended Proof of Claim No. 1 on March 24, 2010. Linda asserts a claim in the total amount of $1,091,391.21. Amended Claim 1 asserts that her claim is fully secured based on the Charging Order by property with a value which she values in the amount of $2,250,000. In addition, the box is checked at item 5 asserting that the claim is entitled to priority as a "Domestic support obligation under 11 U.S.C. sec. 507(a)(1)(A) or (a)(1)(B)." Attached to Amended Claim 1 are the Notice of Filing Foreign Judgment in the Montana Twentieth Judicial District Court, Lake County, Cause No. DV–09–388, orders from the Superior Court of New Jersey, Chancery Division, Family Part, Camden County, Docket No. FM–04–259–89, and the writ of execution issued by Rhoades in DV–09–388, addressed to the sheriff of Lake County, Montana.
Edwin filed the complaint initiating this adversary proceeding against Linda on March 30, 2010. The complaint avers six claims for relief. Count I seeks to avoid a Charging Order issued by the Montana Twentieth Judicial District Court, Lake County, in Cause No. DV–09–388 on February 3, 2010, on the judgment entered by the Superior Court of the State of New Jersey in the parties' divorce case, as a preferential transfer under 11 U.S.C. sec. 547(b). Count II seeks a determination of the validity and extent of the lien allegedly created by the Charging Order, and requests that Linda's claim be deemed wholly unsecured. Count III is an objection to Linda's Proof of Claim, and seeks an accounting and offsets against her claim, and seeks damages, for breach of trust and conversion of his money, and alleges that her claim is false, fraudulent, and overstated. Count IV seeks damages against Linda for filing a false claim. Count V seeks damages against Linda for filing the New Jersey judgment in Montana, which Edwin alleges was filed by fraud and an abuse of process.
*2 Linda filed her answer denying all the material allegations and requesting costs and attorney fees. Linda filed a motion to dismiss Counts III, IV and V of the complaint on April 20, 2010. Edwin objected, and after a hearing the Court entered a memorandum of decision (Docket No. 31) and Order (Dkt.32) on August 12, 2010, granting the motion and dismissing Counts III, IV and V for lack of subject matter jurisdiction under FED. R. CIV. P. 12(b)(1), based upon both the Rooker–FeldmanFN1 doctrine and the "domestic relations exception" to federal court diversity jurisdiction.
FN1. The Rooker–Feldman doctrine takes its name from two Supreme Court cases: Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923) and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983).
On June 11, 2010, this Court granted the U.S. Trustee's motion to convert Edwin's case to a case under Chapter 7 based on Edwin's admission that he failed to provide required information and reports to the U.S. Trustee. Edwin amended his Schedules on June 11, 2010, increasing the value of his interest in Blacktail Mountain Ranch to $58,000.
Richard J. Samson was added to the case as Chapter 7 Trustee. The meeting of creditors was scheduled to be held pursuant to 11 U.S.C. sec. 341(a) on July 21, 2010, but was continued.
Edwin filed a motion to vacate the decision dismissing Counts III, IV and V, because he states he has returned to the Superior Court in New Jersey to set aside the judgment against him and request an accounting. Linda objected and that matter was heard on December 14, 2010. On December 15, 2010, the Court entered an Order (Dkt.65) holding Edwin's motion to vacate in abeyance and directing Edwin to file status reports of his New Jersey appeal. The trial setting scheduled in this cause on May 5, 2011, was vacated, and the Court stated that it would reset the trial and unexpired deadlines by future order.
In the main case, Edwin filed a motion to vacate the Order converting the case to Chapter 7, but after several delays he withdrew the motion on February 8, 2011.
The Trustee Samson filed an Application to employ Linda's attorney Rhoades and his law firm on February 3, 2011, for the purpose of representing the estate in Adversary Proceeding No. 10–00104 ("Adv. No. 10–104") in which the Trustee seeks a determination that the estate owns or holds 100 percent (100%) ownership interest in Blacktail Mountain Ranch Co., LLC. The application states that Linda's interests coincide with the interests of the estate in Adv. No. 10–104. The application was approved and Rhoades was employed on a contingency fee basis to represent the estate FN2.
FN2. The trial in Adv. No. 10–104 is scheduled to commence on November 21, 2011.
Linda filed the instant motion to dismiss on March 3, 2011, on the grounds that Edwin lacks standing to continue prosecuting this proceeding. Linda filed a brief which cites FED.R.CIV.P. 17 (applicable under F.R.B.P. 7017), and 11 U.S.C. sec. 522(h), but cites no case law. Linda argues that Edwin lacks standing, even though the Trustee has not attempted to avoid the Charging Order as a preference, because Edwin has not claimed an exemption in the property subject to the Charging Order, which Linda identifies as Blacktail Mountain Ranch, LLC.
*3 Edwin objected and filed a brief in opposition, which also lacks any citation to case law. Edwin argues that he was the proper party to commence this adversary proceeding because he was a debtor in possession under Chapter 11 at the time. He also claims standing because his objection to Linda's Proof of Claim involves an alleged alimony obligation which is nondischargeable in Chapter 7.
On May 31, 2011, Edwin filed a status report (Dkt.80) stating that briefs have been filed in New Jersey, that Edwin would file a reply brief within a week in the New Jersey Appellate Division of the Superior Court, and Murphy estimated that the decision on appeal would be within 10 to 12 months.FN3
FN3. The parties continue to file briefs regarding Edwin's motion to vacate. Edwin's latest brief, Dkt. 81, concludes by stating that the accounting which he seeks should be had in this adversary proceeding. The motion to dismiss remains in abeyance until a final decision is entered in New Jersey.
On June 24, 2011, the Court entered an Order in Case No. 10–60248–7, establishing bid procedures for the sale of the Debtor's membership interest in Blacktail Mountain Ranch Co., LLC, by "open cry auction" to be held on July 11, 2011.
Rule 17(a)(1) provides that, in general: "An action must be prosecuted in the name of the real party in interest." Linda does not dispute that Edwin had standing at the time he filed the complaint commencing this adversary proceeding, but she moves to dismiss for lack of standing after the case was converted to Chapter 7. Linda recognizes that the Debtor may avoid a preference under sec. 547, but only if he could have exempted the property under sec. 522(g)(1), and if "the trustee does not attempt to avoid such transfer." Linda argues that Edwin never claimed the property known as Blacktail Mountain Ranch Co., LLC, as exempt, and that only the Trustee can bring this action FN4.
FN4. The Court wonders what would happen if the Trustee decided to pursue this adversary proceeding. The Trustee has employed the Defendant's attorney Rhoades on a contingency fee basis to represent the estate in Adv. 10–104. If the Trustee decided to prosecute this proceeding, he would have to employ a different attorney because of the obvious conflict.
This Court has held in abeyance Edwin's motion to vacate the dismissal of Counts III, IV and V until he has a final decision from the New Jersey courts regarding his request for an accounting. Since the decision in New Jersey will weigh on whether Edwin can make a showing sufficient to grant his motion to vacate dismissal of Counts III, IV and V, it seems premature to decide to dismiss the rest of this adversary proceeding. While the Trustee is without doubt a real party in interest, as Edwin notes the Trustee Samson "has simply watched the proceedings."
The Bankruptcy Appellate Panel ("BAP") for the Ninth Circuit discussed standing in In re Stoll, 252 B.R. 492, 495–96 (9th Cir. BAP2000):
A dismissal for lack of standing is a subspecies of dismissal for failure to state a claim under Fed.R.Civ.P. 12(b)(6). In re Saylor, 178 B.R. 209, 215 (9th Cir.BAP1995), aff'd, 108 F.3d 219 (9th Cir.1997). When considering a motion to dismiss for failure to state a claim, a court must take as true all allegations of material fact and construe them in light most favorable to the nonmoving party. Parks School of Business v. Symington, 51 F.3d 1480 (9th Cir.1995). A claim should be dismissed "only if it appears to a certainty that [the plaintiff] would be entitled to no relief under any state of facts that could be proved." NL Industries, Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir.1986). "To have standing a party must assert its own legal rights and interests and cannot rest its claim to relief on the legal rights or interest of third parties." In re Cogar, 210 B.R. 803, 808 n. 7 (9th Cir.BAP1997).
*4 While a third party hired by a bankruptcy trustee may owe a fiduciary duty to the estate, see, e.g., In re Taxman, 49 F.3d 310, 314 (7th Cir.1995), it does not necessarily follow that Debtor and individual creditors have standing to pursue redress for a violation of that duty. A trustee is the legal representative of the bankruptcy estate and as such has the capacity to sue and be sued. sec. 323. See also In re Joseph, 208 B.R. 55, 60 (9th Cir. BAP1997). Only a trustee may pursue a cause of action belonging to the bankruptcy estate. Griffin v. Allstate Ins. Co., 920 F.Supp. 127, 130 (C.D.Cal.1996); Bostanian v. Liberty Savings Bank, 52 Cal.App.4th 1075, 61 Cal.Rprt.2d 68, 72 (1997).
* * *
Debtor's position with regard to the bankruptcy estate is analogous to that of a beneficiary of a trust. Under general principles of trust law, a beneficiary of a trust generally lacks standing to sue third parties on behalf of the trust. Wolf v. Mitchell, Silberberg & Knupp, 76 Cal.App.4th 1030, 90 Cal.Rptr.2d 792 (1999).
252 B.R. at 495–96.
Unlike the debtor in Stoll, Edwin as the Debtor in this Chapter 7 case has asserted in dismissed Count III (Objection to Linda's Proof of Claim) an injury peculiar and personal to himself. See Stoll, 252 B.R. at 496. Linda's Amended Claim 1 asserts priority status as a domestic support obligation, which could be excepted from the Debtor's discharge under 11 U.S.C. sec. 523(a)(5). Edwin had standing to pursue his Count III objecting to Linda's Proof of Claim while the case was in Chapter 11. After conversion, because of the nondischargeable characteristic of Linda's claim Edwin retained a potential injury peculiar and personal to himself, as distinguished from the creditors and the estate. Since dismissal of Count III is not yet final because of Edwin's motion to vacate, the Court does not deem it appropriate to grant Linda's motion to dismiss for lack of standing at this time.
A leading commentator states:
Because they do not function as representatives of the bankruptcy estate, chapter 7 debtors generally lack standing to pursue the avoidance and recovery of preferential transfers. Under the provisions of section 522(h), however, individual chapter 7 debtors are entitled to avoid certain types of "preferential transfers" in order to protect their exemption rights in the property so transferred if the trustee does not seek avoid those transfers. The exercise of this power is generally restricted to instances in which the debtor did not voluntarily transfer or conceal the property at issue.
5 COLLIER ON BANKRUPTCY, para. 547.11[a] (16th ed.2010).
Taking as true all allegations of material fact and construe them in light most favorable to the nonmoving party, Stoll, 252 B.R. at 495, no indication exists in the record that the Debtor voluntarily transferred or concealed property at issue, so Edwin is not prohibited from exercising an avoidance power for that reason.
*5 The complaint and Count I aver the elements of sec. 547(b) to avoid the Charging Order as a preference, which this Court takes as true and construes against Linda. Stoll, 252 B.R. at 495. Before this Court dismisses this adversary proceeding, the Trustee Samson will be required to appear and state on the record his reasons for not seeking to avoid the Charging Order as a preference and leaving Linda with a secured and priority claim. The claims register in Case No. 10–60248–7 lists a total of $1,923,803.14 in nine (9) proofs of claim, including $457,680.12 in unsecured nonpriority claims. Linda's claim is the largest claim filed.
Debtor's Amended Schedule C does not list a claim of exemption in Blacktail Mountain Ranch Co., LLC, which weighs against a finding that the Debtor has standing. However, the BAP in Stoll discussed at footnote 4 an exception to a debtor's lack of standing:
Ordinarily, a debtor does not have standing to challenge actions affecting the size of the estate, because the debtor has no pecuniary interest in the property of the estate. See In re Thompson, 965 F.2d 1136, 1144 (1st Cir.1992). There is an exception. When as in this case an estate will have a surplus that will be returned to the debtor after all of the creditors have been paid in full, the debtor has an economic interest in the estate that is similar to that held by the creditors who will be paid from the estate. Under those circumstances, the debtor would have standing to complaint about the actions of third parties hired by the trustee if the creditors of the bankruptcy estate would have standing. See, e.g., In re Mark Bell Furniture Warehouse, Inc., 992 F.2d 7, 10 (1st Cir.1993).
252 B.R. at 495, n. 4.
No evidence exists in the record at this point whether this estate will have a surplus, or indeed whether it will have any assets to distribute to creditors. That lack of evidence is construed against Linda. Stoll, 252 B.R. at 496. The Trustee has hired Linda's attorney to represent the estate in Adv. No. 10–104, and has not sought to avoid Linda's lien from the Charging Order as a preference. Those circumstances are similar to those discussed in footnote 4 of Stoll where the debtor, and the other creditors, might have standing to complain about the Trustee's failure to act.
In sum, this Court concludes that Linda's motion to dismiss is premature, and the Court declines to grant dismissal for lack of standing until the Trustee explains his failure to pursue this adversary proceeding to avoid Linda's lien as a preference, particularly in light of the conflict arising from the Trustee's hiring of Defendant's counsel.
IT IS ORDERED a separate Order will be entered in conformity with the above denying Linda's motion to dismiss, without prejudice.
= = = = = = = = = = =
Jonas v. Gold, 2014 WL 4854484 (D.N.J., Sept. 30, 2014).
United States District Court, D. New Jersey.
Edwin R. JONAS, III and Blacktail Mountain Ranch Co., L.L.C., Plaintiffs,
Nancy D. GOLD, Esq., Linda B. Jonas, Charney, Charney & Karapousis, P.A., Adler, Sacharow, Gold, Taylor, Keyser and Hanger, Defendants.
Civil Action No. 13–2949.
Signed Sept. 30, 2014.
JOSEPH H. RODRIGUEZ, District Judge.
*1 In 1990, Plaintiff Edwin R. Jonas, III (“Jonas”) and pro se Defendant Linda B. Jonas (“Linda”) divorced. Since that time, there has been a significant amount of litigation in multiple state and federal courts all over the United States. Here, Plaintiffs, Jonas and Blacktail Mountain Ranch, of which Jonas is a managing member, allege that Defendants Linda Jonas, Linda's New Jersey counsel Nancy D. Gold, Esquire, (“Gold”), and the law firms of Charny, Charny, & Karapousis, P.A. (“Charny”) and Adler, Sacharow, Gold, Taylor, Keyser and Hanger, a Professional Corporation (“Adler”)1 violated New Jersey Common Law and Plaintiffs' civil rights under 42 U.S.C. § 1983 when Defendants fraudulently obtained a judgment in the Jonases' divorce proceedings.
Presently before the Court are several dispositive motions filed separately by the parties in this action seeking summary judgment and dismissal of the Amended Complaint. Defendant Linda Jonas moves for dismissal2 of the Amended Complaint, although she does not identify the Rule under which she moves, and for Edwin Jonas and Blacktail Mountain Ranch to be declared vexatious litigants.3 See Dkt. No. 10. Defendant Nancy Gold moves for dismissal pursuant to Fed.R.Civ.P. 12(b)(1) & (6). See Dkt. No. 33. Defendant Charny moves for summary judgment pursuant to Fed.R.Civ.P. 56. See Dkt. No. 34. Plaintiffs move to Strike Declarations of John Slimm, Esq. and Frank Orbach, Esq. and demand a hearing under Fed.R.Evid. 201(e). See Dkt. No. 38. Plaintiffs also move for summary judgment and filed a Cross Motion for Summary Judgment against Defendants on Liability. See Dkt. No. 42.
The Court has considered the extensive briefing, a multitude of supplemental letters, and the arguments advanced at the hearing in this matter on July 29, 2014. For the reasons that follow, Defendants Gold's, Linda's, and Charny's motions are granted and Plaintiffs' motions are denied.
The history of this case spans over twenty five years and includes litigation in the Superior Court of New Jersey Chancery Division and Appellate Division, the Supreme Court of New Jersey, the Florida trial and appellate courts, the Montana trial and appellate courts, the Supreme Court of Montana, the United States District Court for the District of Montana, the United States Court of Appeals for the Ninth Circuit, the United States Bankruptcy Court for the District of Montana, the United States Supreme Court and the United States Tax Court.
At the heart of these matters is Edwin Jonas' continuous challenges to and collateral attacks of several post judgment orders issued by the Family Part of Superior Court of New Jersey regarding his divorce from Linda. The exhausting history of the dissolution of the Jonases' marriage is littered with a series of child custody and alimony battles. At the end of the day, Linda Jonas was awarded custody and Edwin Jonas was ordered to pay alimony and child support .4 Because Jonas repeatedly failed to comply with court-ordered obligations, several measures were imposed by Superior Court Judge Robert Page, including the establishment of a constructive trust. Linda Jonas was a trustee of the trust and the trust account was held by the Adler firm and Nancy Gold. Gold represented Linda during the divorce proceedings in the Superior Court of New Jersey, Chancery Division, Family Part, Camden County Vicinage, Cause No. FM–04–259–89. In May 2006, the New Jersey Superior Court entered a judgment against Jonas for unpaid child support, alimony, attorney's fees and other obligations. Since that time, Linda has moved to domesticate the New Jersey Order in Florida and Montana.
*2 At every step of the way, Linda's attempts to enforce the New Jersey order have been met with virulent resistance from Jonas, who not only continues to sue Linda, but also sued the attorneys who have represented her in the various litigations, his own counsel, and the Montana state court judge who presided over the civil domestication action brought by Linda in that state.5 See Jonas v. Waterman, 13–CV–16, 2013 WL 2962766 (D. Mont. June 12, 2013). And Jonas has earned a reputation for filing frivolous complaints. Recently, the District of Montana imposed sanctions upon and admonished Jonas for his repeated abuse of the court. See, Jonas v. Jonas, 13–CV–90, 2014 WL 389138, *3 (D.Mont. Aug. 7, 2014) (Ordering the clerk to distribute the court's order to the disciplinary boards of the bar examiners of the states of Maine, New Jersey, and Pennsylvania.) Several courts have refused to give Jonas' claims any consideration, having addressed Jonas' claims in summary fashion. See, id., citing (Jonas v. Gold, 58 So.3d 396 (Fla. 4th Dist.App.2011); Jonas v. Fid. Nat. Title Ins. Co. of Pennsylvania, 44 So.3d 596 (Fla. 4th Dist.App.2010); Jonas v. Jonas, 773 So.2d 1163 (Fla. 4th Dist.App.2000); Jonas v. Jonas, 40 A.3d 733 (N.J.2012); Jonas v. Jonas, 950 A.2d 905 (N.J.2008); Jonas v. Jonas, 758 A.2d 649 (N.J.2000); see also Jonas v. Jonas, 2011 WL 6820244 at *2 (N.J.Super.App.Div.2011) (“Given the posture of the case, defendant's claims of error lack sufficient merit to warrant discussion in a written opinion.”); Jonas v. Jonas, 2008 WL 239069, *2 (N.J.Sup.Ct.App.Div. Dec. 29, 2008) (“This is the fifth time this case has come before us since the parties' 1998 divorce.”)).
For these reasons, the Court will not recount the protracted history of this case in great detail. Plaintiff's arguments here are frivolous and warrant little, if any, discussion in light of the arguments that support dismissal of the Amended Complaint. In short, Plaintiffs continue to claim that several New Jersey judgments culminating in the May 4, 2006 judgment were fraudulently obtained and that “the validity of the Montana judgment [ordering dissolution of Blacktail Mountain Ranch] is based on the assumption that certain judgments used in reaching that judgment were final judgments when in fact they were not final judgment[s] under New Jersey law.” See Plaintiff's Brief in Support, 4. Plaintiffs allege that the finality of the New Jersey Judgment is an issue in the present case. Id. The Court disagrees.6
There are seven counts in the Amended Complaint. Count I is entitled “Legal Malpractice v. Nancy D. Gold” and alleges claims of legal malpractice, fraud and negligence. Counts II and III separately allege a breach of fiduciary duty against Linda and Gold, respectively. Count IV alleges fraud and conspiracy to commit fraud against both Linda and Gold. Count V alleges conversion, misappropriation, and embezzlement against all Defendants. Count VI is a claim of Legal Malpractice against Charny and Adler. Finally, Count VII, alleges a violation of 42 U.S.C. § 1983 against Linda and Gold.
II. Applicable Standards
*3 There are three standards of review at play in the present matter. Federal Rule of Civil Procedure 12 governs a court's decision to dismiss a claim based on the pleadings. See Fed.R.Civ.P. 12. More specifically, Federal Rule of Civil Procedure 12(b)(1) governs a court's decision to dismiss a claim for “lack of subject matter jurisdiction” and Federal Rule of Civil Procedure 12(b)(6) governs a court's decision to dismiss a claim for failure to state a claim upon which relief can be granted. See Fed.R.Civ.P. 12(b)(1); Fed.R.Civ.P. 12(b)(6). Federal Rule of Civil Procedure 56 governs the court's consideration of whether summary judgment is warranted. See Fed.R.Civ.P. 56.
A. Federal Rule of Civil Procedure 12(b)(1)
Federal Rule of Civil Procedure 12(b)(1) permits a court to dismiss a case for lack of subject matter jurisdiction. A defendant may contest subject matter jurisdiction by attacking the face of the complaint (i.e., a facial attack) or by attacking “the existence of subject matter jurisdiction in fact, quite apart from any pleadings” (i.e., a factual attack). Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977); Schwartz v. Medicare, 832 F.Supp. 782, 787 (D.N.J.1993); Donio v. United States, 746 F.Supp. 500, 504 (D.N.J.1990). A facial attack “contest[s] the sufficiency of the pleadings.” Common Cause of Pa. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir.2009) (citation omitted). On a facial attack, the court must read the complaint in the light most favorable to the plaintiff and consider the allegations of the complaint as true. Mortensen, 549 F.2d at 891.
Under a factual attack, a court is not confined to the pleadings but may weigh and consider evidence outside the pleadings, including affidavits, depositions, and exhibits to satisfy itself that it has jurisdiction. Id.; Gould Elecs., Inc. v. United States, 220 F.3d 169, 178 (3d Cir.2000); Gotha v. United States, 115 F.3d 176, 179 (3d Cir.1997) (stating that court can consider affidavits, depositions, and testimony to resolve factual issues bearing on jurisdiction). This is because on a factual motion to dismiss for lack of subject matter jurisdiction, the court's very power to hear the case is at issue. Mortensen, 549 F.2d at 891; Gotha, 115 F.3d at 179. Moreover, on a factual attack, no presumptive truthfulness attaches to a plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of the jurisdictional claim. Mortensen, 549 F.2d at 891.
Regardless of which approach is used, a plaintiff has the burden of proving that jurisdiction exists. Lightfoot v. United States, 564 F.3d 625, 627 (3d Cir.2009) (citing Carpet Grp. Int'l v. Oriental Rug Importers Ass'n, 227 F.3d 62, 69 (3d Cir.2000)); Mortensen, 549 F.2d at 891. “The court may dismiss the complaint only if it appears to a certainty that the plaintiff will not be able to assert a colorable claim of subject matter jurisdiction.” Iwanowa v. Ford Motor Co., 67 F.Supp.2d 424, 438 (D.N.J.1999) (citations omitted).
*4 If the court finds that it lacks subject matter jurisdiction, it must dismiss the action under Rule 12(h)(3). See Fed.R.Civ.P. 12(h)(3) (“If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”).
B. Federal Rule of Civil Procedure 12(b)(6)
Federal Rule of Civil Procedure 12(b)(6) allows a defendant to move for dismissal of a complaint based on “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A complaint should be dismissed pursuant to Rule 12(b)(6) if the alleged facts, taken as true, fail to state a claim. Fed.R.Civ.P. 12(b)(6). When deciding a motion to dismiss pursuant to Rule 12(b)(6), ordinarily only the allegations in the complaint, matters of public record, orders, and exhibits attached to the complaint, are taken into consideration.7 See Chester County Intermediate Unit v. Pa. Blue Shield, 896 F.2d 808, 812 (3d Cir.1990). It is not necessary for the plaintiff to plead evidence. Bogosian v. Gulf Oil Corp., 561 F.2d 434, 446 (3d Cir.1977). The question before the Court is not whether the plaintiff will ultimately prevail. Watson v. Abington Twp., 478 F.3d 144, 150 (2007). Instead, the Court simply asks whether the plaintiff has articulated “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
“A claim has facial plausibility8 when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). “Where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 129 S.Ct. at 1950.
The Court need not accept “ ‘unsupported conclusions and unwarranted inferences,’ “ Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir.2007) (citation omitted), however, and “[l]egal conclusions made in the guise of factual allegations ... are given no presumption of truthfulness.” Wyeth v. Ranbaxy Labs., Ltd., 448 F.Supp.2d 607, 609 (D.N.J.2006) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)); see also Kanter v. Barella, 489 F.3d 170, 177 (3d Cir.2007) (quoting Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir.2005) (“[A] court need not credit either ‘bald assertions' or ‘legal conclusions' in a complaint when deciding a motion to dismiss.”)). Accord Iqbal, 129 S.Ct. at 1950 (finding that pleadings that are no more than conclusions are not entitled to the assumption of truth).
Although “detailed factual allegations” are not necessary, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). See also Iqbal, 129 S.Ct. at 1949 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”).
*5 Thus, a motion to dismiss should be granted unless the plaintiff's factual allegations are “enough to raise a right to relief above the speculative level on the assumption that all of the complaint's allegations are true (even if doubtful in fact).” Twombly, 550 U.S. at 556 (internal citations omitted). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘shown'-‘that the pleader is entitled to relief.’ “ Iqbal, 129 S.Ct. at 1950 (quoting Fed.R.Civ.P. 8(a)(2)).
C. Summary Judgment Pursuant to Federal Rule of Civil Procedure 56.
A court will grant a motion for summary judgment if there is no genuine issue of material fact and if, viewing the facts in the light most favorable to the non-moving party, the moving party is entitled to judgment as a matter of law. Pearson v. Component Tech. Corp., 247 F.3d 471, 482 n. 1 (3d Cir.2001) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)); accord Fed.R.Civ.P. 56(c). Thus, this Court will enter summary judgment only when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c).
An issue is “genuine” if supported by evidence such that a reasonable jury could return a verdict in the nonmoving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is “material” if, under the governing substantive law, a dispute about the fact might affect the outcome of the suit. Id. In determining whether a genuine issue of material fact exists, the court must view the facts and all reasonable inferences drawn from those facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
Initially, the moving party has the burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met this burden, the nonmoving party must identify, by affidavits or otherwise, specific facts showing that there is a genuine issue for trial. Id.; Maidenbaum v. Bally's Park Place, Inc., 870 F.Supp. 1254, 1258 (D.N.J.1994). Thus, to withstand a properly supported motion for summary judgment, the nonmoving party must identify specific facts and affirmative evidence that contradict those offered by the moving party. Andersen, 477 U.S. at 256–57. Indeed, the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex, 477 U.S. at 322.
*6 In deciding the merits of a party's motion for summary judgment, the court's role is not to evaluate the evidence and decide the truth of the matter, but to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249. Credibility determinations are the province of the finder of fact. Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir.1992).
D. Judicial Notice
Under any of these standards of review, a court may take judicial notice of “a fact that is not subject to reasonable dispute because it ... can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b). Rules 12(b)(1) and 56 permit evidence outside of the Complaint. Even under a Rule 12(b)(6) posture, where the Court is limited to the allegations plead on the face of the complaint, a court may consider judicially noticeable facts without converting a motion to dismiss into a motion for summary judgment. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 323, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) (noting courts “ordinarily examine ... matters of which [they] may take judicial notice” when ruling on Rule 12(b)(6) motions to dismiss); Beverly Enters., Inc. v. Trump, 182 F.3d 183, 190 n. 3 (3d Cir.1999) (holding that a court may consider “matters of public record” on a motion to dismiss without converting the motion to one for summary judgment).
It follows that a court may take judicial notice of the existence of another court's opinion. See Southern Cross Overseas Agencies, Inc. v. Kwong Shipping Group Ltd., 181 F.3d 410, 426 (3d Cir.1999) (A court may take judicial notice of another court's opinions “not for the truth of the facts recited therein, but for the existence of the opinion, which is not subject to reasonable dispute over its authenticity.”) (citations omitted). Likewise, a court may take judicial notice of the record from a previous court proceeding between the parties. See Oneida Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414, 416 n. 3 (3d Cir.1988).
Consideration of “matters of public record” and “documents incorporated into the complaint by reference” are matters of which a court may take judicial notice. Tellabs, Inc., 551 U.S. at 322, 127 S.Ct. 2499. Here, Jonas specifically mentions the orders of the New Jersey Superior Court related to his divorce from Linda and the related domestication litigation before the courts in Florida, Montana, and New Jersey. See, Am. Compl. ¶¶ 36–39, 42. He also specifically mentions the United States Bankruptcy Court and the United States Tax Court proceedings. See id. at ¶¶ 22, 32, 36, 48. As a result, the Court takes judicial notice of Jonas' pleadings in those actions, as well as the opinions and orders of the courts. Tellabs, Inc., 551 U.S. at 322, 127 S.Ct. 2499. Moreover, given that the complaints filed by Jonas in the various state court actions are averments that he himself prepared and submits to a court, these pleadings “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b).9
*7 For the reasons that follow, Defendants' motions are granted. The Court does not have jurisdiction over Plaintiffs' claims pursuant to the Rooker–Feldman doctrine. In addition, the state law claims and constitutional claims are time-barred. Even if the claims were subject to review by this Court, they fail to state a claim upon which relief can be granted. As a result, summary judgment is granted as to Defendant Charny and the Amended Complaint is dismissed as to Defendants Linda and Gold.10 Plaintiffs' motion for summary judgment is dismissed as moot.
The Court will address the various motions of the Defendants as to each count in the Amended Complaint.
A. Counts I and VI
Defendant Gold's motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and(6) is granted as to Count I of the Amended Complaint. For the same reasons, Charny's motion for summary judgment as to Count VI is granted.
Count I, entitled “Legal Malpractice v. Nancy D. Gold,” alleges claims of legal malpractice, fraud, and negligence and is dismissed. For the same reasons, summary judgment is granted in favor of Charny as to Count VI, entitled “Legal Malpractice v. Charny.”
First, the claim is barred by the Rooker–Feldman doctrine because it is essentially an appeal from New Jersey Superior Court Judge Page's 2006 Order. Jonas' claims here are on their face an appeal from the Superior Court of New Jersey's decision. “Under the Rooker—Feldman doctrine, a district court is precluded from entertaining an action, that is, the federal court lacks subject matter jurisdiction, if the relief requested effectively would reverse a state court decision or void its ruling.” Taliaferro v.. Darby Twp. Zoning Bd., 458 F.3d 181, 192 (3d Cir.2006) (citations omitted). There are four requirements that must be met for the Rooker—Feldman doctrine to apply: “(1) the federal plaintiff lost in state court; (2) the plaintiff complain[s] of injuries caused by [the] state-court judgments; (3) those judgments were rendered before the federal suit was filed; and (4) the plaintiff is inviting the district court to review and reject the state judgments.” B.S. v. Somerset Cnty., 704 F.3d 250, 259–60 (3d Cir.2013) (quoting Great W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159 (3d Cir.2010)). As such, application of the Rooker—Feldman doctrine is necessarily limited to “cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005).
The Third Circuit explains the Rooker–Feldman doctrine as barring federal district courts from hearing cases under two circumstances: “ ‘first, if the federal claim was actually litigated in state-court prior to the filing of the federal action or, second, if the federal claim is inextricably intertwined with the state adjudication, meaning that federal relief can only be predicated upon a conviction that the state-court was wrong.’ “ In re Knapper, 407 F.3d at 580 (emphasis added) (quoting Walker v. Horn, 385 F.3d 321, 329 (3d Cir.2004); Parkview Assoc. P'ship v.. City of Lebanon, 225 F.3d 321, 325 (3d Cir.2000).
*8 “[A] federal action is inextricably intertwined with a state adjudication, and thus barred in federal court under Feldman, ‘[w]here federal relief can only be predicated upon a conviction that the state court was wrong.’ “ Id. (quoting Centifanti v.. Nix, 865 F.2d 1422, 1430 (3d Cir.1989) (quoting Pennzoil Co. v.. Texaco Inc., 481 U.S. 1, 25, 107 S.Ct. 1519, 95 L.Ed.2d 1 (1987) (Marshall, J., concurring)). See also Exxon Mobil, 544 U.S. at 293, 125 S.Ct. 1517 (“In parallel litigation, a federal court may be bound to recognize the claim- and issue-preclusive effects of a state-court judgment,” but the federal court is divested of jurisdiction under Rooker–Feldman only where it is asked to redress injuries caused by an unfavorable state-court judgment.). Importantly, if a plaintiff's claim in federal court is inextricably intertwined with a previous state court adjudication, the district court lacks jurisdiction over the claim even if it was not raised in the state court. Id. at 327, 125 S.Ct. 1517.
Here, the district court is invited to review and reject Judge Page's dismissal of Jonas' claims of misappropriation of the constructive trust under the fugitive disentitlement doctrine.
Regardless of whether Plaintiff's allegations were “actually litigated”—and in this case the claims were not litigated because of Jonas' failure to appear before the court and failure to comply with Judge Page's previous orders. Jonas v. Jonas, 2008 WL 239069, *2 (N.J.Sup.Ct.App.Div. Dec. 29, 2008). The Court finds that Jonas is a state-court loser, complaining of an injury caused by Judge Page's dismissal of his claims under the fugitive disentitlement act. The claims dismissed by the Superior Court include his allegation that the constructive trust was mishandled and seek an accounting of the activity of the trust. All of Plaintiffs' claims in the Amended Complaint center on the constructive trust account handled by Gold and Linda. Plaintiffs, therefore, ask this Court to review and reject the state court judgments. In particular, the Court finds that the ultimate relief sought by Plaintiff in this matter is the same relief he sought and lost in the Superior Court of New Jersey. At a minimum, it is inextricably intertwined.
In this regard, the Court rejects Plaintiffs' attempt to characterize his claims as sounding in tort. Jonas invites this Court to take an action that would negate the New Jersey Superior Court's admonition of his conduct and permit Jonas proceed with his attack against the management of the constructive trust without subjecting himself to the jurisdiction of the New Jersey Superior Court. Such a review is proscribed by Rooker–Feldman.11 Walker, 385 F.3d at 330.
The Court finds that the present Amended Complaint is “inextricably intertwined” with issues resolved by the New Jersey Superior Court and this Court is without jurisdiction to resolve Jonas' claims under the Rooker—Feldman doctrine. As a result, pursuant to the Rooker—Feldman abstention doctrine, this Court lacks subject matter jurisdiction over the Plaintiff's claims and dismisses them as to Defendant Gold pursuant to Fed.R.Civ.P. 12(b)(1) and grants summary judgment pursuant to Fed.R.Civ.P. 56 in favor of Defendant Charny.
*9 In addition, Counts I and VI of the Amended Complaint also fail to state a claim upon which relief can be granted because Gold and Charny did not represent Edwin Jonas and because Jonas fails to allege facts that would trigger the extraordinary circumstance of permitting a non-client to sue an adversary's attorney. The necessary elements of a claim for legal malpractice are: (1) the existence of an attorney-client relationship creating a duty of care upon the attorney; (2) the breach of such duty; and (3) proximate causation. Albright v. Burns, 206 N.J.Super. 625, 632, 503 A.2d 386 (N.J.Super.App.Div.1986).
Here, Plaintiffs attempt to sue Linda's attorneys. The determination of whether Gold and her firms owed Jonas a duty is a question of law. Petrillo v. Bachenberg, 139 N.J. 472, 479, 655 A.2d 1354 (1995); Wang v. Allstate Ins. Co., 125 N.J. 2, 15, 592 A.2d 527 (1991) (“The question of whether a duty exists is a matter of law properly decided by the court, not the jury, and is largely a matter of fairness or policy.”). See also Taylor v. Cutler, 157 N.J. 525, 724 A.2d 793 (1999). Only in limited circumstances will a lawyer owe a non-client a duty of care; none of those circumstances are present here. See Barsotti v. Merced, 346 N.J.Super. 504 (N.J.App.Div.2002). Moreover, New Jersey courts are reluctant to permit a non-client to sue his adversary's attorney. LoBiondo v. Schwartz, 199 N.J. 62, 100 (2009) (“Our reluctance to permit nonclients to institute litigation against attorneys who are performing their duties is grounded on our concern that such a cause of action will not serve its legitimate purpose of creating a remedy for a nonclient who has been wrongfully pursued, but instead will become a weapon used to chill the entirely appropriate zealous advocacy on which our system of justice depends.”).
In addition, Plaintiffs fail to supply the Court with the requisite affidavit of merit in support of their claims for legal malpractice, negligence, and fraud against attorney Gold or Charny. In Nuveen Municipal Trust v. Withumsmith Brown P.C., the Third Circuit held that claims against a professional asserting fraud and aiding and abetting fraud required proof of a deviation from the professional standards of care under New Jersey law. Nuveen Municipal Trust v. Withumsmith Brown P.C., 752 F.3d 600 (3d Cir.2014). Specifically, the Court found that New Jersey's Affidavit of Merit Statute, N.J. Stat. Ann. § 2A:53A–26–29, required an affidavit of merit from “an independent professional attesting” to claims “seeking money damages for fraud, negligent misrepresentation, and malpractice, allegedly committed by two professional [law] firms.” Id. at 601. Here, Jonas alleges claims similar to those considered in Nuveen. Under New Jersey law, the lack of an affidavit of merit is fatal to these claims. Id. Summary judgment is granted in favor of Defendant Charny and the claim is dismissed as to Defendant Gold pursuant to Fed. R. 12(b)(6).
*10 Plaintiffs' claims of fraud and conspiracy to commit fraud against Gold and Charny are also dismissed as time-barred. The New Jersey judgments were entered against Jonas in May 2006. The statute of limitations has passed for Plaintiffs' state law claims and 42 U.S.C. § 1983 claim. See City v. Bridgewater Twp. Police Dep't, 892 F.2d 23, 25 (3d Cir.1989) (in New Jersey statute of limitations is two years for tort); N.J.S.A. 2A: 14–2 (two years for tort); see also N.J.S.A. 2A: 14–1 (“[e]very action at law for trespass to real property, for any tortious injury to real or personal property, for taking, detaining, or converting personal property, for replevin of goods or chattels, for any tortious injury to the rights of another not stated in sections 2A:14–2 and 2A:14–3 of this Title, or for recovery upon a contractual claim or liability, express or implied, not under seal, or upon an account other than one which concerns the trade or merchandise between merchant and merchant, their factors, agents and servants, shall be commenced within 6 years next after the cause of any such action shall have accrued.”). Jonas filed the instant Complaint on May 10, 2013.
Plaintiffs argue that the Doctrine of Fraudulent Concealment tolls the limitations period in this case because the fraud was concealed until April 23, 2008, when Plaintiffs claim Gold divulged the fraud during a proceeding on the record before the United States Tax Court. See, Plaintiffs' Letter brief, August 14, 2014 [Dkt. 89]. The Court rejects this argument. As noted by Defendant Charney in their supplemental submission of August 19, 2014, Edwin filed an action in the Circuit Court for the 15th Judicial Circuit in and for Palm Beach County, Florida under Case No. CA020057808AH in the matter of Edwin R. Jonas, III v. Linda B. Jonas, individually and as trustee of constructive trust; Nancy D. Gold, individually; and Adler, Sacharow, Gold, Taylor, Keyser & Hagner, P.C. See, Def. Charny Letter Brief, August 19, 2014, Ex. A [Dkt. No. 91]. The Palm Beach County action was served on December 8, 2004. Id. The Second Amended Complaint (Revised) of Edwin Jonas in Palm Beach County, Florida alleges that Jonas learned of the “extrinsic fraud” of Gold in connection with the trust assets “recently and after the judgments were domesticated” in Florida. See id., Ex. A., Palm Beach County Second Amended Complaint, ¶ 7. The allegations made in the Florida action demonstrate knowledge by Plaintiffs as early as December 8, 2004.12
As here, the Palm Beach County Complaint alleges breach of fiduciary duty and negligence related to the constructive trust, and the administration of the constructive trust against Gold and Linda. The Court finds that Jonas had, at the very least, the requisite awareness of the alleged fraud by Defendants Gold and Charny well before 2008. See, Lapka v. Porter Hayden Co., 162 N.J. 545 (2000). Jonas alleged similar claims in his cross motion before the New Jersey Superior Court and the Palm Beach County Court. As a result, Plaintiffs' arguments that they were precluded from filing sooner because the fraud was concealed are unavailing; Jonas' New Jersey cross motion and the Palm Beach County Complaint both demonstrate sufficient awareness of the alleged mishandling of the constructive trust.13 Plaintiffs' claims in this regard are time barred.
B. Counts II and III
*11 Plaintiffs' claims of breach of fiduciary duty against Linda (Count II) and Gold (Count III) are dismissed as time-barred and for the same reasons set forth as to Counts I and II under Rooker–Feldman.
“A claim for breach of fiduciary duty, which has a six year statute of limitations, commences to run at the point the plaintiff has actual or constructive knowledge of the breach.” Fleming Cos. v. Thriftway Medford Lakes, 913 F.Supp. 837 (D.N.J.1995) (citing Zola v. Gordon, 685 F.Supp. 354, 374 (S.D.N.Y.1988)). “A plaintiff has actual or constructive knowledge of a cause of action for breach of fiduciary duty when the plaintiff learns, or reasonably should learn, of the existence of the state of facts which may equate in law with the cause of action.” Id. (citing Burd v. New Jersey Tel. Co., 76 N.J. 284, 386 A.2d 1310, 1314 (1978)). Plaintiffs' claim of fiduciary duty is time-barred for the same reasons set forth infra. with respect to Counts I and II.
Plaintiffs' claim is barred under Rooker–Feldman because it is inextricably intertwined with the divorce proceeding. Attorney Gold's actions in the divorce proceedings, with respect to the constructive trust created by the New Jersey Superior Court, are related to the state action. Likewise, Linda's usage of the funds from the constructive trust are inextricably intertwined with the Superior Court action. In addition, for the reasons expressed herein, Plaintiffs claims are barred by the Domestic Relations Exception to federal subject matter jurisdiction. See, infra., p. 13, n. 10. Plaintiffs also fail to state a claim upon which relief can be granted. As a result, Gold's and Linda's motions to dismiss are granted.
C. Counts IV & V
Plaintiffs' claims in Count IV alleges fraud and conspiracy to commit fraud against Linda and Gold. Count V alleges conversion, misappropriation, and embezzlement against all Defendants. These claims are dismissed as time-barred and pursuant to the Rooker–Feldman doctrine for the same reasons set forth herein as to Counts I and II. In addition, Plaintiffs claims are barred by the Domestic Relations Exception to federal subject matter jurisdiction.
D. Count VII
Plaintiffs' claims in Count VII allege a violation of 42 U.S.C. § 1983 by Defendants Gold, Adler, and Charny. Plaintiffs' claims against Gold and Chary under 42 U.S.C. § 1983 are dismissed because neither Gold nor Chasrny are state actors under § 1983 and because, as previously discussed infra., the claims are time barred.
To state a cognizable claim under Section 1983, Plaintiffs must allege a deprivation of a constitutional right and that the constitutional deprivation was caused by a person acting under the color of state law. Phillips v. County of Allegheny, 515 F.3d 224, 235 (3d Cir.2008) (citing Kneipp v. Tedder, 95 F.3d 1199, 1204 (3d Cir.1996)). Here, Plaintiffs must demonstrate two essential elements under Section 1983:(1) that the Plaintiffs were deprived of a right or privilege secured by the Constitution or laws of the United States and (2) that Plaintiffs were deprived of their rights by a person acting under the color of state law. Williams v. Borough of West Chester, Pa, 891 F.2d 458, 464 (3d Cir.1989). Even if Plaintiffs could satisfy the first element, Plaintiffs' cannot demonstrate that they were deprived of their rights by a person acting under the color of state law.
*12 The management of a trust account does not necessarily turn a private attorney into a State actor. See Greening v. Moran, 739 F.Supp. 1244 (D.Ariz.1990) (citing National Collegiate Athletic Association v. Tarkanian, 488 U.S. 179, 109 S.Ct. 454, 102 L.Ed.2d 469 (1988). Although some courts have found that public defender attorneys are state actors when handling administrative functions such as hiring and firing, the reach of § 1983 does not extend to acts made as attorneys on behalf of a defendant. Polk County v. Dodson, 454 U.S. 312, 325 (1981). As a result, Gold and Charny are not a state actors under 42 U.S.C. § 1983. See Tarkanian, 488 U.S. 179, 109 S.Ct. 454.
In addition, the statute of limitations has passed for Jonas' constitutional claims against Gold and Charny pursuant to 42 U.S.C. § 1983. See Wallace v. Kato, 549 U.S. 384, 387 (2007) (explaining that in a § 1983 claim, the Statute of Limitations is that for personal-injury torts); Cito v. Bridgewater Twp. Police Dept., 892 F.2d 23, 25 (3d Cir.1989) (in New Jersey, the Statute of Limitations is two years for a tort); N.J.S.A. 2A:14–2 (two years for tort). The Superior Court Orders of which Plaintiffs complain were entered, according to Plaintiffs' Amended Complaint, on January 12, 1996. See Am. Compl., Count III. Similar claims were made by Jonas in connection with the divorce on August 29, 1996, March 19, 1999, and May, 2006; namely, that Ms. Gold acted in conspiracy with Linda, and made false representations to Judge Page. See id., at Count IV. Under any of these time-lines, Jonas' claims under 42 U.S.C. § 1983 are time-barred and this claim is dismissed pursuant to Fed. R. Civ. 12(b)(1) and (6) and summary judgment is granted in favor of Charny.
E. Linda's Cross Motion for Plaintiffs Edwin R. Jonas and Blacktail Mountain Ranch to be declared vexatious litigants.
Linda seeks to have Jonas declared a “vexatious litigant” and asks that Jonas be enjoined from filing future litigation in this Court. The Third Circuit cautions that an injunction against a vexatious litigant “should not be imposed by a court without prior notice and some occasion to respond.” Gagliardi v. McWilliams, 834 F.2d 81, 83 (3d Cir.1987). Generally, courts are reluctant to curtail a litigant's right to pursue future litigation. However, when a litigant abuses the courts, especially for the purpose of harassing a party, the Court may impose an injunction. Such an injunction may be imposed pursuant to the All Writs Act, 28 U.S.C. § 1651 (1982), or pursuant to Federal Rule 11 under the clause for sanctions permitting “other appropriate relief which the court deems just and proper.” Gagliardi, 834 F.2d at 83.
Jonas has already been declared vexatious in other jurisdictions and ordered to pay Linda's costs and attorneys' fees. See Jonas v.. Jonas, 13–CV–90, 2014 WL 3891328 (D.Mont. Aug. 7, 2014); Jonas v. Jonas, 371 Mont. 113, 120, 308 P.3d 33 (Mont.2013) (“We accordingly conclude that Edwin's appeal is vexatious and was filed for the purposes of delay [ ... ] we conclude that the costs and fees assessed should be solely levied against Edwin [and] remand for a determination and assessment of costs and attorney fees reasonably incurred on appeal.”)
*13 Jonas' history of abusive litigation is not only well documented, but also troubling. “[A] continuous pattern of groundless and vexatious litigation can, at some point, support an order against further filings of complaints without the permission of the court.” In Re Oliver, 682 F.2d 443, 446 (3d Cir.1982). However, “such an [injunctive] order is an extreme remedy and should be used only in exigent circumstances[.]” Id. at 445. Given that Jonas was not permitted an opportunity to fully oppose the motion at the hearing, at this time, the motion is denied without prejudice.
For the reasons stated herein, and those set forth on the record during the hearing in this matter on July 29, 2014, Defendant Linda Jonas' motion to dismiss is granted, Defendant Gold's motion to dismiss is granted, and Defendant Charny's motion for summary judgment is granted. Plaintiffs' motions to strike and for summary judgment are denied.
An appropriate Order shall issue.
There is no proof that service was made as to Defendant Adler. In Defendant Gold's Answer, she denies that the Adler firm continues to exist. See, Answer, [Dkt. No. 20], ¶ 5. Given that service was not made in the requisite time, Defendant Adler is dismissed from the action, without prejudice. Fed.R.Civ.P. 4(j).
Because Linda is a pro se party, the Court must construe her submissions broadly. See Haines v. Kerner, 404 U.S. 519, 520–21, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972); see also United States v. Day, 969 F.2d 39, 42 (3d Cir.1992). Given that she did not identify the standard under which she moves for dismissal, the Court will construe her motion under Federal Rules of Civil Procedure 12(b)(1) and (6).
Reference to Blacktail Mountain Ranch is implicit in the Court's references and rulings as to Jonas, as the Plaintiffs are in privity. The Amended Complaint identifies Jonas as the managing member of Blacktail Mountain Ranch. As a result, the Court finds that Jonas and Blacktail Mountain Ranch are in privity for purposes of collateral estoppel and res judicata. Specifically, Plaintiffs satisfy the second, third, and fifth categories for privity identified by the Supreme Court in Taylor v. Sturgell, 553 U.S. 880, 895–96, 128 S.Ct. 299, 2173–74 (2009).
In 2006, Judge Page addressed a motion filed by Linda to enforce Jonas' obligations to pay alimony and medical expenses for their children. Specifically, Linda Jonas moved for payment of alimony, entry of judgment against Jonas for alimony arrears, entry of judgment against defendant for unpaid medical insurance costs and his share of unreimbursed medical and dental care for the children, and for counsel fees. Jonas filed opposition and cross motions to terminate his alimony obligation, compel an accounting of all monies paid to plaintiff from a constructive trust imposed by the court on January 12, 1996, and to appoint a receiver. Jonas asked that Linda's motions also be denied based on unclean hands. Judge Page granted relief in favor of Linda and dismissed Jonas' cross motion pursuant to the fugitive disentitlement doctrine. Jonas had failed to appear or otherwise comply with Judge Page's previous orders. As a result, the court dismissed Jonas' motions until he posted a “sufficient security bond to cover outstanding judgments and his commitment to personally appear in New Jersey before this court at the court's earliest convenience.” Jonas v. Jonas, FM–04–259–89, May 4, 2006. In addition, the court ordered the issuance of a warrant for Jonas' arrest for his non-appearance in court. Id. The Appellate Division affirmed, noting that Jonas' “defiance is especially egregious in light of the fact that he was an attorney-at-law of this State and was suspended in this State and others for his willful evasion of court orders.” Jonas v. Jonas, 2008 WL 239069, *2 (N.J.Sup.Ct.App.Div. Dec. 29, 2008) (“We affirm Judge Page's reasoned and tempered application of the doctrine, and we also apply it to defendant's appeal.”).
In February, 2010, the Montana Supreme Court affirmed a judgment that issued a writ of execution against Jonas in the amount of $1,091,391.21. The Court also affirmed the issuance of a charging order and an order for the appointment of a receiver, foreclosure of the lien, and for the dissolution of the Blacktail Mountain Ranch. The proceeds generated by dissolving the Ranch were ordered to be applied as satisfaction against the New Jersey judgment. See, Jonas v. Jonas, 359 Mont. 443, 249 P.3d 80 (Mont.2010).
The issue of the finality of the 2006 New Jersey order has been decided by the Montana District Court in its opinion adopting the Findings and Recommendations of the Magistrate Judge Jeremiah C. Lynch. Jonas v. Jonas, 13–CV–90, 2014 WL 978099 (D.Mont. March 12, 2014). It is arguable that this Court is collaterally estopped from revisiting that ruling. Raytech Corp. v. White, 54 F.3d 187, 190 (3d Cir.1995). Collateral estoppel applies where: “(1) the identical issue was previously adjudicated; (2) the issue was actually litigated; (3) the previous determination was necessary to the decision; and (4) the party being precluded from re-litigating the issue was fully represented in the prior action.” Id. (citing United Indus. Workers v. Gov't of the Virgin Islands, 987 F.2d 162, 169 (3d Cir.1993)).
In addition, the New Jersey Appellate Court affirmed Judge Page's Order and the decision is final. Jonas v. Jonas, 2008 WL 239069, *2 (N.J.Sup.Ct.App.Div. Dec. 29, 2008). This Court has no reason to revisit this issue. The Doctrine of collateral estoppel precludes this court from considering this issue de novo. Even if this Court were to consider the merits of Jonas' argument, this Court agrees with the well-reasoned opinion of the District Court of Montana regarding the finality of the order. See Jonas v. Jonas, 13–CV–90, 2014 WL 978099 (D.Mont. March 12, 2014).
“Although a district court may not consider matters extraneous to the pleadings, a document integral to or explicitly relied upon in the complaint may be considered without converting the motion to dismiss into one for summary judgment.” U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir.2002) (internal quotation marks and citations omitted) (emphasis deleted).
This plausibility standard requires more than a mere possibility that unlawful conduct has occurred. “When a complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between possibility and plausibility of ‘entitlement to relief.’ ‘ “ Id.
The Court rejects Jonas' claim that a hearing under Federal Rule of Evidence 201(e) requires a formal hearing before a court can take judicial notice in all circumstances. As the District of Montana held, “[t]he Sixth and the Tenth Circuit, however, have held the opposite: “Federal Rule of Evidence 201(e) does not require ‘under all circumstances, a formal hearing.’ “ Amadasu v.. The Christ Hosp., 514 F.3d 504, 507–08 (6th Cir.2008) (quoting Am. Stores Co. v. Commr. of Internal Revenue, 170 F.3d 1267, 1271 (10th Cir.1999)).” Additionally, Jonas had the opportunity to be heard at the hearing before this Court on July 29, 2014. Plaintiffs' First Motion to Strike Declarations of John Slimm, Esq. and Frank Orbach, Esq. Demand for Hearing under Fed.R.Evid. 201(e) and Memo of Law in Support Thereof  is denied.
The Court also finds that the Amended Complaint is barred by the Domestic Relations Exception to Federal Jurisdiction. See Ankenbrandt v. Richards, 504 U.S. 689, 704, 112 S.Ct. 2206, 119 L.Ed.2d 468 (1992) (holding domestic relations exception precludes subject matter jurisdiction over diversity cases involving the issuance of divorce, alimony, or child custody decrees); Matusow v. Trans–County Title Agency, LLC, 545 F.3d 241, 245 (3d Cir.2008) (Holding that jurisdictional bar does not extend to tort matters that arise out of and are outside the divorce proceeding.). Here, Plaintiffs argue that the claims in the Amended Complaint are not a challenge to the divorce decree; they are separate tort claims. The Court disagrees. While Plaintiffs plead claims that sound in tort, at the heart of Plaintiffs' Amended Complaint is Jonas' attempt to be relieved from the New Jersey Superior Court's order compelling him to pay child support and alimony, which are barred from review by this Court. See, e.g., Zirkind v. State of New York, 07–CV–5602, 2007 WL 4300258, *2 n. 3 (D.N.J. Dec. 5, 2007) (citing Galtieri v. Kane, No. 03–2994, slip op. at 3 (3d Cir. March 4, 2004) (stating that a federal court has no jurisdiction over a domestic relations matter even when the complaint is drafted to “sound in tort ... or contract ... or even under the federal constitution.”) (citations omitted)).
Jonas absconded and failed to appear before Judge Page or otherwise demonstrate any intent to comply with the Orders of that court. As a result, Judge Page applied the fugitive disentitlement doctrine, pursuant to Matsumoto v. Matsumoto, 171 N.J. 110 (2002), which bars a fugitive, such as Jonas, from seeking relief in the very court whose jurisdiction he evades. The upshot was that Jonas' cross motion to terminate his alimony obligation, to compel an accounting of all monies paid to Linda from the constructive trust, and to appoint a receiver was dismissed without prejudice. Judge Page's Order was affirmed by the New Jersey Appellate Division on January 30, 2008. Jonas v. Jonas, 2008 WL 239069 (N .J.Super. App. Div. Jan. 30, 2008). Jonas remains free to revisit the Superior Court's order and have his motions heard upon satisfaction of the conditions precedent in Judge Page's order.
The Court takes judicial notice of the Palm Beach County complaint. Jonas specifically mentions, in Paragraphs 36–39 of the Amended Complaint, Linda's attempts at domestication of the New Jersey Order in Florida. Thus, Jonas' litigation in Florida is relied upon on the face of the Amended Complaint. In addition, Jonas' Palm Beach County complaint is attached as an exhibit in support of summary judgment on the August 19, 2014 letter brief of Defendant Charny. See, Ex. A, [Dkt. No. 91].
The Court rejects Plaintiffs' argument that the statute of limitations should be equitably tolled under the doctrine of fraudulent concealment. Equitable tolling is an extraordinary remedy that is applied “when a plaintiff has ‘been prevented from filing in a timely manner due to sufficiently inequitable circumstances.’ “ Santos v. United States, 559 F.3d 189, 197 (3d Cir.2009) (quoting Seitzinger v. Reading Hosp. & Med. Ctr., 165 F.3d 236, 240 (3d Cir.1999)). The remedy applies: “(1) where the defendant has actively misled the plaintiff respecting the plaintiff's cause of action; (2) where the plaintiff in some extraordinary way has been prevented from asserting his or her rights; or (3) where the plaintiff has timely asserted his or her rights mistakenly in the wrong forum.” Id. (citing Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1387 (3d Cir.1994)).
Plaintiffs are not entitled to application of the doctrine under the circumstances of this case because they cannot show “that the defendants' conduct prevented him ‘from recognizing the validity of [her] claim within the limitations period.’ “ Kliesh v. Select Portfolio Servicing, Inc., 419 Fed. App'x 268, 271 (3d Cir.2011) (quoting Mathews v. Kidder, Peabody & Co., 260 F.3d 239, 256 (3d Cir.2001)) (alteration in original). To the contrary, Plaintiffs' vast litigation history in courts of multiple states and various jurisdictions demonstrates that they have taken every opportunity to seek relief from the New Jersey Superior Court orders under every possible theory. Plaintiffs' averments in the New Jersey Superior Court and in the Florida and Montana courts, and in the United States Tax Court and Bankruptcy courts leaves little doubt that Plaintiffs' chief complaint from the time that the New Jersey Superior Court ordered that Jonas place security into a constructive trust has been fraud, misappropriation, and negligence on behalf of Linda and her attorneys. Such notice does not warrant the limited application of equitable tolling.
by Jay Adkisson
2020.04.30 ... Charging Order Denied For Lack Of Proof Of The Debtor's Interest In Dhillon
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LAW REVIEW ARTICLES
by Jay Adkisson
For more on the historical background of Charging Orders and contemporary issues involving the same, see Jay Adkisson's article, Charging Orders: The Peculiar Mechanism, 61 South Dakota Law Review 440 (2016). Available at SSRN: https://ssrn.com/abstract=2928487
Analysis of Uniform Limited Liability Company Act Sections re Charging Orders
The Uniform Acts re Charging Orders and Transferable Interests (without Jay's comments):
Effect of Bankruptcy On The Debtor-Member's LLC Interest here
Collected Court Opinions On Charging Orders here and below
Appeal - Issues relating to the appeal of a charging order
Bankruptcy - Treatment of the debtor/member's interest in bankruptcy
Compliance - Issues for the LLC and non-debtor members in complying with a charging order
Conflicts-Of-Law - Determining which state's laws apply to a charging order dispute
Creditor Rights Restrictions - Limitations on creditors' management and informational rights
Distributions - Creditors rights to distributive payments
Economic Rights - Limitation of charging order and foreclosure to debtor's economic rights
Exclusivity - The charging order as the sole remedy available to creditors and exceptions
Exemptions - Available state and federal protections that may apply to charging orders
Foreclosure - Liquidation by judicial sale of the debtor's right to distributions
Foreign Entities - Charging orders against out-of-state entities
Information Rights - Creditors' ability to access information about the LLC
Intra-Member Disputes - Where one member obtains a charging order against another
Jurisdiction - Issues relating to the court's authority over out-of-state debtors and LLCs
Lien - The lien effect of a charging order and priority issues
Management & Voting Rights - Rights of creditor after charging order issued
Order Form Generally - Most issues to the form of the charging order
Order Form Future Interests - How the charging order affects subsequently-acquired interests
Prejudgment Relief - Freezing the interest and distributions pending judgment
Procedure - The procedure for obtaining a charging order and ancillary provisions
Receiver - The role of the receiver in charging order proceedings
Repurchase/Redemption Rights - Third-parties' ability to purchase the charged interest
Single-Member LLCs - Enforcing the judgment against an LLC with a sole member
Taxes - Tax issues relating to charging orders for all involved parties
Unknown Interest - Where the debtor's interest, if any, has not been ascertained
Voidable Transactions/Fraudulent Transfers - Issues relating to avoidable transfers of interests
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Additional Court Opinions About charging orders (unsorted)
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