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Strassman v. Essential Images

United States District Court, D. New Jersey

March 9, 2018

JORDAN STRASSMAN, in his capacity as trustee of the Robert H. Strassman Revocable Trust and in his individual capacity, and THE ROBERT H. STRASSMAN REVOCABLE TRUST, Plaintiffs,
v.
ESSENTIAL IMAGES, d/b/a Essential Images Fine Art and Antique Appraisal Service, JOHN W. ROCKAFELLOW, and SALLY ROCKAFELLOW, Defendants.

          OPINION

          KEVIN MCNULTY, UNITED STATES DISTRICT JUDGE.

         Plaintiffs Jordan Strassman and the Robert H. Strassman Revocable Trust allege that they engaged defendants Essential Images, John W. Rockafellow, and Sally Rockafellow, to appraise and sell personal and Trust property. Plaintiffs claim that defendants have failed to provide an accounting of sales and have not forwarded sale proceeds. Plaintiffs first brought an action in the Superior Court of New Jersey, where the Judge dismissed all claims by the Trust for lack of personal jurisdiction and all of Strassman's personal claims for failure to state a claim. Plaintiffs then filed this federal court action.

         Now before the court is defendants' motion to dismiss the complaint on grounds of collateral estoppel[1] and failure to state a claim.

         I. BACKGROUND[2]

         A. Factual History

         Plaintiff Jordan Strassman ("Strassman"), a New Jersey resident, is the trustee of the Robert H. Strassman Revocable Trust ("Trust"), whose situs is in Virginia. (Compl. ¶¶ 9-10). Strassman contacted defendant Essential Images, a "fine arts and antique appraisal service" based in Littlestown, Pennsylvania and Washington, D.C., to sell Trust assets as well as his personal property. (Compl. ¶¶ 11, 22-23). Strassman had several phone conversations with John W. Rockafellow ("Rockafellow"), a Pennsylvania resident who owns or works for Essential Images. (Compl. ¶¶ 12, 23). Sally Rockafellow, too, is a Pennsylvania resident who owns or works for Essential Images. (Compl. ¶ 13).

         On October 8, 2012, Rockafellow traveled to Virginia to review and inventory the Trust property. (Compl. ¶ 24). Rockafellow valued the property and stated prices that he could sell items for. (Compl. ¶ 24). On October 23, 2012, Strassman retained Essential Images to complete the appraisal of Trust property. (Compl. ¶¶ 24-25). Pursuant to the agreement, Essential Images would keep a twenty percent commission on the total sale. (Compl. ¶ 27). Essential Images would send the Trust sale proceeds within ten days and communicate sales and inventory information to Strassman. (Compl. ¶ 27). If any items were not sold within 120 days, they would be returned to the Trust within seven working days thereafter. (Compl. ¶ 27).

         Rockafellow took items from the Trust's Virginia property to Pennsylvania and Washington, D.C. for sale. (Compl. ¶¶ 33-34). Strassman alleges that Rockafellow took possession of items that were not part of die agreement and failed to inventory certain items. (Compl. ¶¶ 28-31). At that time, Rockafellow represented that he had sold several items. (Compl. ¶ 37). Rockafellow also provided Strassman with a detailed receipt that showed each item sold, the value of each sale, the total dollar volume for the day, Essential Images' commission, and the net amount due to the Trust. (Compl. ¶ 37).

         After the Virginia transactions, Strassman agreed that Rockafellow would travel to New Jersey to appraise and sell the personal property of Strassman and his parents. (Compl. ¶¶ 35-36). On December 18, 2012, representatives of Essential Images came to New Jersey to Strassman's parents' residence, Strassman's storage unit, and Strassman's residence to collect personal property for sale. (Compl. ¶ 36). Strassman asked Rockafellow whether they needed to form a separate agreement or contract. (Compl. ¶ 36). Rockafellow said, "You are covered by the original contract. You signed it personally." (Compl. ¶ 36).

         Later, Rockafellow told Strassman he had sent an email that listed the items sold. (Compl. ¶ 39). Strassman had not received the email and verified his email address. (Compl. ¶ 39). Rockafellow forwarded a "test" email, which Strassman confirmed receiving. (Compl. ¶ 39). Strassman still did not receive an accounting of die items sold. (Compl. ¶ 39). Rockafellow explained that his computer system was not working. (Compl. ¶ 39).

         On April 29, 2013, Strassman sent Rockafellow an email that stated, "I still have not received any of the e-mails" and therefore "have no idea what has or has not been sold so far." (Compl. ¶ 39). Rockafellow responded that everything had been sold except for the camera equipment and the trailer. (Compl. ¶ 40). Rockafellow then stated, "I have the trailer sold ... I have buyers for most of the other pieces from the house ... I am working on finalizing the sale of the garage equipment." (Compl. ¶ 41). In June 2013, Rockafellow sent an email to Strassman that stated, "The sale that I'm having with your camera equipment is on the weekend starting on the 28th ... I've had a lot of interest so far and believe it will all sell." (Compl. ¶ 42).

         Strassman continued to request that Rockafellow send him checks from the sale proceeds. (Compl. ¶ 43). Rockafellow left a voicemail in July 2013 stating that someone from Essential Images would send him a check as soon as possible. (Compl. ¶ 43). In September 2013, Rockafellow sent Strassman an email that stated, "I am working on your estate and will get a check out to you sometime this week." (Compl. ¶ 43). Rockafellow also told Strassman by phone that he would send a check immediately. (Compl. ¶ 43).

         After months of not receiving checks, Strassman sent a written demand for payment, (Compl. ¶ 44). Essential Images has represented that almost all of the items were sold and that Strassman should have received an accounting for those sales. (Compl. ¶ 45). Strassman has still not received an accounting of the property transferred to defendants or checks for the sales of the property. (Compl. ¶¶ 46-47). Essential Images and Rockafellow have failed to communicate with Strassman about the status of the property. (Compl. ¶ 47).

         B. New Jersey Superior Court Action

         On June 2, 2016, plaintiffs filed an action in the Superior Court of New Jersey, asserting claims against Essential Images, John W. Rockafellow, and Sally Rockafellow. (Def. Ex. B). The complaint included eight counts under New Jersey law for alleged violations of the New Jersey Consumer Fraud Act, breach of contract, violations of good faith and fair dealing, misrepresentation, common law fraud, promissory estoppel, conversion, conspiracy to commit a tort, and aiding the commission of a tort. (Def. Ex. B).

         On September 30, 2016, Judge Camille M. Kenny of the Superior Court of New Jersey dismissed plaintiffs' complaint, with prejudice, as to all claims by the Robert H. Strassman Revocable Trust. (Def. Ex. C). At the motion hearing, Judge Kenny stated that New Jersey courts did not have personal jurisdiction over the claims arising from the Trust. (Pl. Ex. A).

         Judge Kenny dismissed Strassman's personal claims against defendants without prejudice; she would have permitted Strassman to submit a new complaint to pursue causes of action on his own behalf. (Def. Ex. C). Plaintiffs filed a motion for reconsideration, which was denied by Judge Kenny on November 18, 2016. (Def. Ex. D).

         C. Filing in Federal Court

         On June 12, 2017, Strassman and die Trust filed this action in federal court against Essential Images, John W. Rockafellow, and Sally Rockafellow. (Compl.). The complaint alleges thirty counts under New Jersey, Pennsylvania, Virginia, and Washington, D.C. law.

         Under New Jersey law, plaintiffs allege violations of the New Jersey Consumer Fraud Act, breach of contract, violation of good faith and fair dealing, misrepresentation, common law fraud, promissory estoppel, conversion, breach of quasi-contract, breach of fiduciary duty, conspiracy to commit a tort, and aiding die commission of a tort. (Compl. ¶¶ 48-98). Under Pennsylvania law, plaintiffs allege violations of the Pennsylvania Unfair Trade Practice and Consumer Protection Law, breach of contract, unjust enrichment, breach of fiduciary duty, common law fraud, conversion, and conspiracy. (Compl. ¶¶ 99-127). Under Virginia law, plaintiffs allege violations of the Virginia Consumer Protection Act, breach of contract, common law fraud, negligent misrepresentation, conversion, and breach of quasi-contract. (Compl. ¶¶ 128-155). Under Washington, D.C. law, plaintiffs allege breach of contract, violation of good faith and fair dealing, negligent misrepresentation, common law fraud, unjust enrichment, breach of fiduciary duty, and violations of the District of Columbia Consumer Protection Procedures Act. (Compl. ¶¶ 156-88).

         Defendants have moved to dismiss this action on the grounds of collateral estoppel. They argue that the New Jersey Superior Court's dismissal bars plaintiffs from relitigating the issue of personal jurisdiction. In the alternative, defendants claim that this complaint does not fulfill basic pleading requirements because it fails to differentiate Strassman's individual claims from those asserted on behalf of the Trust. (Def. Br. 1-2, 6-13). Plaintiffs argue in the alternative that if collateral estoppel prevents them from relitigating the issue of personal jurisdiction, the action should be transferred to an appropriate venue. (Pl. Br. 22-23).

         II. LEGAL STANDARD

         Issue preclusion "prevents parties from relitigating an issue that has already been actually litigated." Peloro v. United States, 488 F.3d 163, 174 (3d Cir. 2007). "[T]he principle is simply that later courts should honor the first actual decision of a matter that has been actually litigated." 18 Wright & Miller, Federal Practice & Procedure § 4416 (3d ed. 2016). This doctrine ensures that "once an issue is actually and necessarily determined by a court of competent jurisdiction, that determination is conclusive in subsequent suits based on a different cause of action involving a party to the prior litigation." Montana v. United States, 440 U.S. 147, 153 (1979); see Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979); Burlington N. R.R. v. Hyundai Merchant Marine Co., 63 F.3d 1227, 1232 (3d Cir. 1995).

         A district court sitting in diversity applies the collateral estoppel rules of the state in which it sits. Nationwide Mut. Fire Ins. Co. v. George V. Hamilton, Inc., 571 F.3d 299, 310 (3d Cir. 2009) (citing Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508 (2001)). In New Jersey,

Collateral estoppel, which is also known as issue preclusion, prohibits relitigation of issues if its five essential elements are met. Those elements are that (1) the issue to be precluded is identical to the issue decided in the prior proceeding; (2) the issue was actually litigated in the prior proceeding; (3) the court in the prior proceeding issued a final judgment on die merits; (4) the determination of the issue was essential to the prior judgment; and (5) the party against whom die doctrine is asserted was a party to or in privity with a party to the earlier proceeding.

Allen v. V & A Bros., Inc., 26 A.3d 430, 444 (N.J. 2011) (citations omitted).

         The underlying principles of issue preclusion include securing peace for the parties and promoting the court's efficient resolution of claims. See Allen v. McCurry, 449 U.S. 90, 94 (1980). Thus issue preclusion is concerned with "the defendant's interest in avoiding the burdens of twice defending a suit, " and also "the avoidance of unnecessary judicial waste." Arizona v. California,530 U.S. 392, 412-13 (2000) (citing United States v. Sioux Nation of Indians, 448 U.S. 371, 432 (1980) (Rehnquist, J., dissenting)). ...


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