United States District Court, D. New Jersey
FIRST AMERICAN TITLE INSURACE COMPANY, assignee and successor in interest by assignment from PNC BANK NATIONAL ASSOCIATION, Plaintiff,
DAVID SADEK, ETTY SADEK, et al., Defendants.
me are cross-motions for summary judgment by plaintiff First
American Title Insurance Company ("First American")
and defendant David Sadek, who has filed in bankruptcy. This
action arises from a nearly seven year dispute over the sale
of a house in Teaneck, New Jersey in 2006 and the use of the
proceeds thereafter. First American, standing as assignee of
all the rights, interests, and claims held by PNC Bank
National Association ("PNC"), sues David Sadek and
Etty Sadek for those proceeds, as well as interest, costs,
and other relief. First American moves for summary judgment
on its claims for fraud (Count II) and conversion (Count V),
as well as a determination barring the discharge in
bankruptcy of such a judgment against the Sadeks. David Sadek
moves for summary judgment on the same two counts. For the
reasons set forth in this opinion, I will deny both
sides' motions for summary judgment on Count II (Fraud)
and dischargeability, but will grant First American's
motion for summary judgment as to Count V (Conversion).
Summary of Facts
Sadek was the primary shareholder, President, and CEO of
First Financial Equities ("FFE"), a mortgage
banking firm located in Englewood, New Jersey. (PI. R. 56.1
Statement, Def. R. 56.1 Statement ¶¶ 4, 8.) FFE
originated mortgage loans and sold them on the secondary
market. (Id. ¶ 6.) FFE used Winthrop Abstract
of New Jersey, LLC ("Winthrop-NJ") to perform the
title searches for a significant amount of loans.
(Id. ¶¶ 14, 20.) Ms. Sadek and Rachel
Sadek, Mr. Sadek's mother, both held positions at
Winthrop-NJ, and Mr. Sadek received a share of revenue from
its New York counterpart, Winthrop Abstract, LLC
("Winthrop Abstract"). (Id. ¶¶
16, 18-19.) In addition, Mr. Sadek controlled FFE and, in
2005, he used FFE to extend and fund more than 30 loans to
himself, approximately $15 million in total. (Id.
¶¶ 9, 10.) He admitted that if he wanted a personal
loan from FFE, he was able to obtain it. (Id. ¶
October 2005, the Sadeks owned a single family home, where
they resided, at 374 Winthrop Road in Teaneck, New Jersey.
[Id. ¶¶ 21, 23.) At that time, there were
two recorded mortgages encumbering the property, one held by
Summit Bank and one held by Chevy Chase Bank, FSB.
(Id. ¶¶ 24-26). Mr. Sadek applied for
another loan in the amount of $792, 000 from FFE in order to
refinance the loans on that property. (Id.
¶¶ 28, 32.) The title search for the refinance was
performed by Winthrop Abstract. (Id. ¶ 29.) Mr.
Sadek signed the promissory note on October 31 and does not
dispute that mortgage was "[p]repared by [him]."
(Id. ¶¶ 33-34.) That loan was then sold by
FFE to National City Bank ("National City");
however, the mortgage held by National City went unrecorded.
(Id. ¶ 37, 40.)
March 2, 2006, the Sadeks sold their home to Daniel and
Tsipora Gurell, a little over four months after the refinance
on the property had closed. (¶ 41, 43.) Mr. Sadek did
not disclose to PNC or National City the sale of the
property. (¶ 49.) The proceeds of the sale, totaling
$588, 806.22, were deposited into the Sadeks' bank
account, instead of being used to pay off the outstanding
loan with National City. (¶¶ 53, 56.) Mr. Sadek
does not dispute that these amounts were due and owing. He
entered into a Consent Judgment with PNC for the amount of
the loan plus interest that had accrued, which resolved Count
I (Breach of Contract) of the Second Amended Complaint.
[Id. ¶¶ 65-67; 2AC ¶ 36 et
much is in dispute between Mr. Sadek and First American, what
is disputed can be boiled down to a few core issues. First,
Mr. Sadek disputes that it was his or FFE's obligation to
record the mortgage for the refinancing loan with National
City. (Def. R. 56.1 Stmt. ¶ 36.) Second, Mr. Sadek
disputes that he knowingly failed to disclose the
existence of the loan or the mortgage to the Gurells.
(Id. ¶ 44.) Third, Mr. Sadek disputes his
attendance at and personal knowledge of the closing, his
awareness that there were outstanding loans or unrecorded
mortgages on the property, his knowledge that the funds
should have been paid out to National City, and the
allegation that he continued (or had FFE continue) to pay the
loan for another two and a half years following the closing
of the sale of the property. (Id. ¶¶
Standard of Review
Rule of Civil Procedure 56(a) provides that the court should
grant summary judgment "if die movant shows that there
is no genuine dispute as to any material fact and that the
movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986); Krescholtek v. S.
Stevedoring Co., 223 F.3d 202, 204 (3d Cir. 2000). In
deciding a motion for summary judgment, a court must construe
all facts and inferences in the light most favorable to the
nonmoving party. See Hayes v. Harvey, 874 F.3d 98,
103 (3d Cir. 2017). The moving party bears the burden of
establishing that no genuine issue of material fact remains.
See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986). "[W]ith respect to an issue on which the
nonmoving party bears the burden of proof... the burden on
the moving party may be discharged by 'showing'-that
is, pointing out to the district court-that there is an
absence of evidence supporting the non-moving party's
case." Celotex, 477 U.S. at 325.
the moving party has met that threshold burden, the
non-moving party "must do more than simply show that
there is some metaphysical doubt as to the material
facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 586 (1986). The opposing
party must present actual evidence that creates a genuine
issue as to a material fact for trial. Anderson, 477
U.S. at 248; see also Fed. R. Civ. P. 56(c) (setting
forth types of evidence on which nonmoving party must rely to
support its assertion that genuine issues of material fact
exist). "[Unsupported allegations . . . and pleadings
are insufficient to repel summary judgment." Schoch
v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir.
1990); see also Gleason v. Norwest Mortg., Inc., 243
F.3d 130, 138 (3d Cir. 2001) ("A nonmoving party has
created a genuine issue of material fact if it has provided
sufficient evidence to allow a jury to find in its favor at
trial."). If the nonmoving party has failed "to
make a showing sufficient to establish the existence of an
element essential to that party's cases, and on which
that party will bear the burden of proof at trial, . . .
there can be 'no genuine issue of material fact, '
since a complete failure of proof concerning an essential
element of the nonmoving party's case necessarily renders
all other facts immaterial." Katz v. Aetna Cas.
& Sur. Co., 972 F.2d 53, 55 (3d Cir. 1992)
(quoting Celotex, 477 U.S. at 322-23).
deciding a 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 fact finder. Big
Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358,
1363 (3d Cir. 1992). Additionally, when parties file
cross-motions for summary judgment, the governing standard
"does not change." Clevenger v. First Option
Health Plan of N.J., 208 F.Supp.2d 463, 468-69 (D.N.J.
2002) (citing Weissman v. U.S.P.S., 19 F.Supp.2d 254
(D.N.J. 1998)). The court must consider the motions
independently, in accordance with the principles outlined
above. Goldwell of N.J., Inc. v. KPSS, Inc., 622
F.Supp.2d 168, 184 (D.N.J. 2009); Williams v.
Philadelphia Housing Auth., 834 F.Supp.2d 794,
797 (E.D. Pa. 1993), affd, 27 F.3d 560 (3d Cir.
1994). That one of the cross-motions is denied does not imply
that the other must be granted. For each motion, "the
court construes the facts and draws inferences in favor of
the party against whom the motion under consideration is
made" but does not "weigh the evidence or make
credibility determination" because "these tasks are
left for the fact-finder." Pichler v. UNITE,
542 F.3d 380, 386 (3d Cir. 2008) (internal quotation and
if a party fails to address the other parly's properly
supported assertion of fact, the court may consider
"grant[ing] summary judgment if the motion and
supporting materials-including the facts considered
undisputed-show that the movant is entitled to it... ."
Fed.R.Civ.P. 56(e). Local Civil Rule 56.1(a) deems a
movant's statement of material facts undisputed where a
party does not respond or file a counterstatement. L. Civ. R.
56(a). A failure to dispute a party's statement of
material facts, however, "is not alone a sufficient
basis for an entry of a summary judgment." See
Anchorage Assocs. v. Virgin Islands Bd. of Tax Review,
922 F.2d 168, 175 (3d Cir. 1990).