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American Business Lending Group, Inc v. Aaron P.

February 14, 2011


The opinion of the court was delivered by: Susan D. Wigenton, U.S.D.J.



Before the Court is the defendants Shainis & Peltzman, Chartered ("Shainis & Peltzman") and Aaron P. Shainis, Esq. ("Mr. Shainis") (collectively "Defendants" or "Shainis-defendants") motion to dismiss plaintiff American Business Lending Group, Inc.‟s ("ABLE Group" or "Plaintiff") Verified Second Amended Complaint in lieu of an answer pursuant to Federal Rule of Civil procedure 12(b)(2) ("Motion").

The Court, having considered the parties‟ submissions, and having heard oral argument on February 9, 2011, issues this opinion. For the reasons discussed below, the Court grants Defendants‟ Motion.

Background and Procedural History

Plaintiff ABLE Group is a Delaware corporation with its principle place of business in Morris County, New Jersey. (Am. Compl. ¶ 2.) ABLE Group is owned and controlled by Seth Bershadsky, who is a resident of New Jersey. (Id.) ABLE Group filed a legal malpractice and negligence action against Defendants, claiming that "[a]s a direct and proximate result of the Defendants‟ acts and omissions, ABLE Group suffered injury and damages." (Am. Compl. ¶ 33; Def.‟s Br. 1.)

Defendants represent C. Elvin Feltner ("Feltner") and Television Capital Corporation ("TCC") in connection with its sale of assets and with matters pending before the Federal Communications Commissions ("FCC"). Defendants represented TCC in sale of interests in TCC of Gainesville (located in Florida) and TCC of Mobile (located in Alabama).*fn1

In 2005, TCC and its principle were named as defendants in an action brought by Plaintiff in Superior Court in Morris County ("New Jersey Litigation").*fn2 Following numerous adjournments in the action, on May 5, 2008, the New Jersey Superior Court entered restraints against Feltner, TCC Mobile and their agents from "dissipating or encumbering their assets." (Am. Compl. ¶¶ 13-14.) The proceeds from the sale of certain TCC entities were to be transferred to an attorney trust account that was managed by Defendants. (Am. Compl. ¶¶ 14-15.) Defendants held funds exceeding $2.0 million in trust in connection with the pending action involving TCC Mobile in the New Jersey Litigation. (Pl.‟s Br. 2; Am. Compl. ¶¶ 6(b), 17.)

Plaintiff states that Defendants exchanged emails with ABLE Group‟s counsel-of-record in the New Jersey Litigation related to the settlement, sent and received letters in connection with the representation of TCC Mobile, and engaged in "telephonic communications with the ABLE Group‟s counsel-of-record and others involved in the New Jersey Litigation as participants on behalf of Feltner and [TCC Mobile], but without making an appearance as counsel-of-record in the New Jersey Litigation." (Am. Compl. ¶ 6(g)-(i).) Specifically, there are two documents that Plaintiff claims Defendants were involved in drafting and negotiating between ABLE Group and other parties in the New Jersey Litigation: the "Agreement for the Distribution of Proceeds" and the "Creditor Group Settlement Agreement." (Pl.‟s Br. 2, 7; Am. Compl. ¶ 6(f).) According to these documents, both dated August 8, 2008, funds were to be distributed to a group of eight creditors with claims against Feltner and TCC entities, including ABLE Group ("Creditor Group").*fn3

Pursuant to the Feltner Settlement Agreement, also dated August 8, 2008, ABLE Group had a first priority claim and security interest in "all monies and property of the [TCC] entities," and according to Plaintiff, "including the funds being held in the Defendants‟ attorney trust account." (Am. Compl. ¶¶ 21, 23; Ex. B, Feltner Settlement Agreement ¶ 2.) The Feltner Settlement Agreement also provided that ABLE Group was to be paid $100,000 for claims against Feltner and/or TCC Mobile "upon the first occurrence of either of the following two events: (i) the date upon which there is a sale, transference and/or encumbrance of any other [FCC] Construction Permit in which [TCC Mobile] has any claim of right and/or ownership interest . . . . ; or (ii) July 28, 2009. . . ." (Am. Compl., ¶ 16; Id., Ex. B, Feltner Settlement Agreement ¶ 2.)*fn4

The Creditor Group Settlement Agreement was amended on August 12, 2008 to include the following language to modify footnote 5 on page 2 of the Creditor Group Settlement Agreement:*fn5 "ABLE, by separate written agreement dated August 8, 2008, shall be paid $300,000 now and the balance of $100,000 (plus 12% interest) on or before July 29, 2009." (Am. Compl., Ex. E.)

ABLE Group requested payment as of July 29, 2009. (Am. Compl., ¶ 26.) Sometime thereafter, Defendants advised ABLE Group that funds were not available in the attorney trust account to pay ABLE Group at that time. (Id. at ¶ 27.) On August 18, 2009, defendant Shainis & Peltzman was ordered to provide an accounting of its attorney trust account disbursements. (Id. at ¶ 28.) On October 5, 2009, upon an Order to Show Cause filed by ABLE Group and third party defendant Seth Bershadsky, the Superior Court entered an order for a judgment of $100,000 plus interest at 12% per annum against TCC and Feltner jointly and severally. (Am. Compl., Ex. F.)

Plaintiff claims that in connection with the New Jersey Litigation, Defendants made unauthorized disbursements of $98,456.26, including $7,401.10 to Defendants themselves, $81,055.16 to Feltner ("although the parties‟ agreements made no provision for any funds to be paid to Feltner") and $80,000 to Bruce Fox (although Mr. Fox was allegedly only entitled to $70,000) from the trust account. (Am. Compl. ¶¶ 22-23, 28.) Plaintiff also claims that in addition to email and telephone communications, Defendants also prepared accounting records and a declaration for submission to the New Jersey Superior Court. (Am. Compl. ¶ 6(d)-(e); Pl.‟s Opp‟n 1.)

On May 11, 2010, Plaintiff filed its initial Complaint against Defendants in this Court. On July 5, 2010, Plaintiff submitted the first Verified Amended Complaint. On July 28, 2010, Plaintiff filed a Verified Second Amended Complaint ("Amended Complaint"). On August 12, 2010, Defendants submitted their motion to dismiss pursuant to Federal ...

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