United States District Court, D. New Jersey
MCNULTY, UNITED STATES DISTRICT JUDGE
matter comes before the Court on motions by all parties.
Defendant Theresa M. Ellis has moved to dismiss the
complaint; her husband, defendant Scott A. Zukowski, has
moved to be "removed" from the case. (DE 13, 14).
Both motions, brought pro se after answers were
filed, are construed by the court as motions for judgment on
the pleadings. See Fed. R. Civ. P. 12(c). The
plaintiff, Pre-Settlement Finance, LLC ("PSF"),
previously filed an identical suit in New York state court.
See Pre-Settlement Fin., LLC v. Ellis, 2017 N.Y.
Misc. LEXIS 2811 (N.Y. Sup. Ct June 23, 2017). The court in
that action granted the defendants' motion to dismiss
based on forum non conveniens grounds "conditioned on
leave to commence the action in New Jersey." Based on
that ruling, the court also denied PSF's motion for
default. The defendants' motions before this Court
contend that the New York state court's decision
effectively amounted to a decision on the merits and that the
current action is barred by res judicata and the
Rooker-Feldman abstention doctrine.
opposed the defendants' motions and cross-moved for
summary judgment. (DE 16). The basis of PSF's complaint
is as follows. In 2005, Ellis and Zukowski filed suit against
Ellis's former employer, Ethicon, Inc., claiming that
Ethicon had violated the Americans with Disabilities Act
("ADA") by failing to provide Ellis with a
reasonable accommodation for her disability related to a mild
traumatic brain injury. See Ellis v. Ethicon, Inc.,
529 Fed.Appx. 310 (3d Cir. 2013). While that action was
pending, Ellis contracted with PSF for litigation financing.
PSF advanced Ellis $29, 000 for the underlying litigation and
agreed that it would be compensated from the proceeds if
judgment was entered in favor of Ellis or if the matter
settled. Under the agreement, PSF was entitled to a return of
the principal amount of the advance plus interest, which was
calculated at a very substantial annual rate of 51.1%. In the
event that Ellis was unsuccessful in the underlying action,
however, she was not required to repay the advance and would
have "no liability whatsoever to PSF."
claims that the underlying litigation settled, and that Ellis
received settlement proceeds without paying off the amount
due on the advance in violation of their agreement. PSF's
complaint alleges breach of contract against Ellis, breach of
the covenant of good faith and fair dealing against Ellis,
conversion against Ellis and Zukowski, unjust enrichment
against Ellis and Zukowski, aiding and abetting against
Zukowski, and tortious interference with a contract against
Zukowski. (DE 1).
reasons stated below, the motions are all denied. (DE 8, 10,
Rule 12(c) Motions
Allegations of Complaint
2005, Ellis filed a complaint against Ethicon, Inc., her
former employer, alleging that Ethicon violated the ADA by
failing to accommodate her cognitive disability. See
Ellis v. Ethicon, Inc., Civ. No. 05-726(FLW), 2009 U.S.
Dist. LEXIS 106620, at *l (D.N.J. Nov. 13, 2009),
aff'd, 529 Fed.Appx. 310 (3d Cir. 2013). In
September of 2010, Ellis contacted PSF and requested
financing for her litigation. (Compl ¶ 15). At the time,
Ellis was represented by Jill Fisher, Esq. (Compl ¶ 17).
about September 23, 2010, PSF and Ellis executed a contract.
(DE 16-5). PSF agreed to advance $29, 000 to Ellis.
(Compl ¶19). The interest rate was compounded monthly at
3.5% or 51.1% annually. (DE 16-5). This was, however, a
contingent arrangement. Ellis was required to repay PSF only
if she was successful in the underlying case, and either
received a settlement or verdict. (Compl ¶20). In the
event that Ellis was unsuccessful in the litigation, she was
not required to pay any principal or interest on the loan.
agreement also contained an "Attorney
Acknowledgement," which was signed by Fisher, who was
the attorney for Ellis in the underlying litigation. (Compl
¶25). Fisher agreed to distribute any proceeds received
from the litigation to PSF, after attorney fees and any liens
which had priority over that of PSF were paid off.
(Id.; DE 16-5). Only after PSF was paid would any
remaining balance of proceeds from the litigation be paid to
Ellis. (DE 16-5). On September 28, 2010, PSF wired the $29,
000 advance to Ellis. (Compl ¶27).
employment litigation lasted some ten years. It resulted in a
jury verdict in favor of Ellis, including an award of back
pay and reinstatement to the same or similar position that
Ellis had held prior to her termination. See Ellis v.
Ethicon, Civ. No. 05-0726 (PGS) (DEA), 2014 U.S. Dist.
LEXIS 186881, at *6 (D.N.J. June 2, 2014),
aff'd, 614 Fed.Appx. 613 (3d Cir. 2015). After
the jury verdict was rendered, the parties filed a series of
motions before the trial court and appealed to the Third
Circuit. Id. Thereafter, the parties agreed to
mediate before the magistrate judge and ultimately settled
the matter on March 7, 2014. Id. The settlement
amount has been sealed. Ellis v. Ethicon, Civ. No.
05-0726 (D.N.J. May 12, 2014) (DE 232).
about May 13, 2014, PSF was notified that Ellis had replaced
Fisher with a new attorney, Patricia Barasch. PSF notified
Barasch of its interest in the litigation, (Compl
¶¶28-29). After Barasch submitted an application
for attorneys' fees (in the amount of $14, 894.14 related
to the settlement proceedings), Ellis submitted a
supplemental certification requesting that the Court also
award an additional $100, 057.52 to cover the amount due to
PSF. (Compl ¶¶32-33); Ellis v. Ethicon,
Civ. No. 05-0726 (D.N.J. May 12, 2014) (DE 246). Barasch
withdrew as counsel on August 11, 2015. (Compl ¶38).
September 9, 2015, the Court ordered that the settlement
proceeds be deposited with the Court. (Compl ¶39). The
Order directed that $14, 894.14 be distributed to Barasch and
that the remainder of die proceeds be distributed directly to
Ellis. (Compl ¶¶40-41).
the pendency of the underlying litigation, Zukowski provided
updates on the litigation to PSF. (Compl ¶¶44-5O).
On December 22, 2015, Zukowski advised PSF that Barasch, as
successor attorney, "became legally responsible for
addressing the issues of Theresa [Ellis]'s relationship
with PSF." (Compl ¶5l). PSF reached out to Barasch;
she advised PSF that the matter had been settled and that the
Court had directed that die proceeds be distributed directly
to Ellis. (Compl ¶¶52-53). Barasch indicated that
she had never received Ellis's portion of die settlement.
December 24, 2015, PSF contacted Ellis and requested that she
pay the amount due on the loan, which at that time was $262,
168.42. (Compl ¶55). Ellis has not paid the amount due,
prompting PSF to file this action.
the Court are three motions. Both defendants have separately
moved to dismiss the complaint. (DE 13, 14). Zukowski and
Ellis argue that this action is barred under the
Rooker-Feldman doctrine and principles of res