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Cevdet Aksüt Oğullari Koll. Sti v. Cavusoglu

United States District Court, D. New Jersey

January 19, 2018

ROBIN A. CAVUSOGLU, et al., Defendants.


          WILLIAM J. MARTINI, U.S.D.J.

         Plaintiff Cevdet Aksüt Oğullari Koll. Sti (“Plaintiff”) brings this action against Huseyin Cavusoglu and multiple associates, including the law firm of Hinckley Allen & Snyder LLP (“Hinckley Allen”), alleging thirteen counts of New Jersey, federal and common law violations, in connection with the fraudulent importation of food products from Turkey to the United States. This matter comes before the Court on Hinckley Allen's motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. There was no oral argument. Fed.R.Civ.P. 78(b). For the reasons set forth below, Hinckley Allen's motion for summary judgment is GRANTED and all outstanding claims and cross-claims against it are DISMISSED WITH PREJUDICE.

         I. BACKGROUND

         In general, the Complaint alleges that Hinckley Allen and others conspired with Defendant Cavusoglu in operating a fraudulent enterprise that induced Turkish food suppliers to ship their goods to Defendants for sale in the United States. Plaintiff seeks to collect an unpaid debt of approximately $1.1 million in connection with its business dealings with that enterprise. The Court assumes the parties' familiarity with the facts and procedural history of this case.

         A. The Undisputed Facts of the Sunrise Settlement and Transfer

         The following facts are undisputed and specific to the portion of the case pertaining to Hinckley Allen's involvement in the alleged fraudulent scheme. The sole remaining claims against Hinckley Allen allege a violation of the New Jersey Uniform Fraudulent Transfer Act (“UFTA”), N.J.S.A. 25:2-20, civil conspiracy thereto, and a claim of accounting. These claims arise out of Hinckley Allen's participation in the settlement of a legal dispute between another defendant in this case, American Pistachio Commodities Corp. d/b/a Sunrise Commodities (“Sunrise”), and two entities owned by Cavusoglu, Celil Ithalat Ihracat (“Celil”) and CNC Trading Distribution and Warehousing, Inc. (“CNC”). See Ops., ECF Nos. 73 & 96.

         On June 22, 2012, Celil filed a lawsuit in New Jersey Superior Court, alleging that Sunrise owed it $126, 000 in connection with shipments of dried apricots. Hinckley Allen, along with local counsel, represented Celil in the litigation. See Decl. of K. Jordan-Price (“Jordan-Price Decl.”) ¶ 8, ECF No. 170-3[1]; Ex. A, ECF No. 170-4; see also Pl.'s Counter-Statement of Undisputed Material Facts (“Pl.'s Counter-Statement”) ¶ 6, ECF No. 181-1 (“Defendant's contentions are true only in the most literal, superficial and technical sense . . . .”). On November 8, 2012, the parties entered into mediation guided by a retired New Jersey judge, Thomas Olivieri of the firm Chasan Lamparello Mallon & Cappuzzo, PC. Id. ¶ 9. The parties ultimately agreed to settle the dispute for $500, 000 (the “Sunrise Settlement”), which included the amount for the apricots and an additional $374, 000 for damages sought by CNC related to packing machinery. Id. ¶ 10.

         The settlement agreement provided Sunrise with a general release from all potential future claims by any Cavusoglu entities, including HGC Commodities (“HGC”). The agreement also called for Sunrise to wire the settlement amount to Hinckley Allen's trust account (the “Sunrise Transfer”). Id., Ex. B. Hinckley Allen received a total of $98, 907.53 in legal fees for its representation of Cavusoglu in the Sunrise Settlement. Id. ¶ 13. Of the remaining amount, Hinckley Allen transferred $126, 000 to Celil and $265, 032.8 to CNC. Id. ¶ 14. These transfers form the basis of Plaintiff's remaining claims.

         B. The Parties' Motions

         1. Hinckley Allen's Summary Judgment Motion and Plaintiff's Opposition and Cross-Motion

         Hinckley Allen now moves for summary judgment against Plaintiff, arguing first that the Sunrise Transfer was not a transfer of an asset of a “debtor” as defined by the UFTA. See Br. of Def. in Supp. of Mot. for Summ. J. (“Def.'s Br.”) 6-7, ECF No. 170-1. According to Hinckley Allen, the debtor vis-à-vis Plaintiff is HGC, which “did not transfer anything to anyone as part of the Sunrise Settlement.” Id. at 7. Hinckley Allen next argues that it was not a “transferee” under the UFTA because it was the escrow agent of the Sunrise Transfer and it, therefore, never had dominion over the transferred asset. See id. at 7-8. Moreover, the money it received was for the reasonably equivalent value of its legal fees and, therefore, was not fraudulent. Id. at 8. Hinckley Allen further argues that the Court must dismiss Plaintiff's civil conspiracy claim because there is no actionable underlying tort to support it. Id. at 9. Finally, it argues that Plaintiff's claim for accounting fails because there is no fiduciary relationship between it and Plaintiff, the Sunrise Settlement was not a complicated transaction and discovery has closed. Id. at 9-10.

         Plaintiff opposes and cross-moves for summary judgment against Hinckley Allen. Plaintiff first argues that a debtor's lawyer can be liable for conspiracy to violate the UFTA under established New Jersey Supreme Court precedent. See Pl.'s Am. Br. in Opp'n to Def.'s Mot. for Summ. J. (“Pl.'s Opp'n”) 9-11, ECF No. 181. Plaintiff points to this Court's “finding” in its opinion addressing Hinckley Allen's motion to dismiss as factual support from the record that Hinckley Allen plausibly knew of HGC's obligation to Plaintiff at the time of the Sunrise Settlement. See id. at 10-11. Plaintiff next argues that it has proven that the Sunrise Transfer was fraudulent because CNC had been dissolved for five years at the time of the Transfer and because Celil qualified as an “insider” under the UFTA. See id. at 16. Moreover, Plaintiff argues that Hinckley Allen's status as an escrow agent for the Transfer does not immunize it from liability because the UFTA does not protect bad-faith transferees. See id. at 18. Finally, Plaintiff argues that it has also proven its civil conspiracy claim because Hinckley Allen “had actual knowledge of the illegality and unlawfulness of the transfers it facilitated and effectuated . . . .” Id. at 20.

         Hinckley Allen responds, submitting first that the facts it asserts in its Statement of Uncontested Material Facts (“Statement”) are undisputed pursuant to Local Civil Rule 56.1 because Plaintiff failed to file a responsive statement. See Reply Br. of Def. in Further Supp. of Mot. for Summ. J. (“Def.'s Reply”) 3, ECF No. 183. It further argues that Plaintiff may not rely on the Court's previous opinion addressing the motion to dismiss or its allegations related to its dismissed RICO claims to defeat summary judgment. See id. at 4-5. Finally, it contends that Plaintiff's theory that the Sunrise Settlement was a guise to cover Sunrise's actual debt to HGC lacks economic sense and defies the contradictory evidence in the record. See id. at 6-8.

         2. Plaintiff's Motion to Strike the Jordan-Price Declaration

         Plaintiff also moves to strike the Declaration of Kelley A. Jordan-Price, an attorney at Hinckley Allen who represented Cavusoglu and HGC in prior litigation against Plaintiff and in the Sunrise Settlement negotiations. See Pl.'s Opp'n at 20-21; Jordan-Price Decl. ¶¶ 1-2, 6-8. Plaintiff argues that the facts asserted in the Declaration constitute “(i) inadmissible hearsay and/or (ii) lack foundation or are made without any personal knowledge.” Pl.'s Opp'n at 20. Plaintiff points to its Counter-Statement, where it argues that the Court should strike paragraphs 7-11 of the Declaration because Ms. Jordan-Price cannot testify as to Sunrise's view of the legal dispute that led to the Settlement, the nature and reason for Sunrise's payment and the allocations set forth in the settlement agreement because these topics constitute inadmissible hearsay. See Pl.'s Counter-Statement ¶ 11. Plaintiff further contends that Ms. Jordan-Price cannot testify about a CNC invoice because it is inadmissible hearsay and Hinckley Allen should have otherwise produced any such invoice during discovery. Id.

         Hinckley Allen responds that Ms. Jordan-Price has personal knowledge of her representation of Cavusoglu during the Sunrise Settlement negotiations and Plaintiff's objections thereto are meritless. See Def.'s Reply at 5-6. Specifically, she has personal knowledge of the nature of the dispute between Cavusoglu's entities and Sunrise, including Sunrise's positions as communicated to her during discussions, which Hinckley Allen is not offering for the truth or merits of the underlying dispute. See id. at 6. She also has personal knowledge of the subject matter of the dispute, the documents exchanged between the parties and the final terms of the Sunrise Settlement. See id.

         II. ...

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