United States District Court, D. New Jersey
Madeline Cox Arleo, United States District Judge
MATTER comes before the Court by way of Plaintiff
Thor 725 8th Avenue LLC's
(“Plaintiff”) Motion for Summary Judgment against
Defendants Shanthioa (also known as Martin) Goonetilleke
(“Martin”), Marie Goonetilleke
(“Marie”), Jennifer Goonetilleke
(“Jennifer”) and Brooke Gooetilleke
(“Brooke”),  ECF No. 64. Defendants Jennifer and
Brooke (together, the “Daughters”) cross move for
summary judgment against Plaintiff, and on their crossclaims
against Martin and Marie. ECF No. 71. For the reasons that
follow, Plaintiff's motion is granted, and the
Daughters' motion is denied.
an action to set aside the transfer of a family home to the
children of judgment debtors the day after the judgment was
is the former lessee of commercial premises owned by
Plaintiff, located at 725 8thAvenue in Manhattan,
New York. To obtain favorable lease terms, he and Marie
executed a personal guaranty in favor of Plaintiff.
Def.'s Statement of Material Facts (“SOMF”)
¶¶ 1-2, ECF No. 74.3. In 2014, Plaintiff sued
Martin and Marie in the United States District Court for the
Southern District of New York, seeking damages for breach of
the personal guaranty. Id. On October 2, 2015, that
District Court granted Plaintiff's motion for summary
judgment and awarded Plaintiff $2, 067, 288.99 in damages.
Id. ¶ 12.
October 3, 2015, Martin and Marie entered into a contract to
sell their home, a single-family residence located at 278
McCloud Drive in Fort Lee, New Jersey (the
“House”) to their Daughters. Id. ¶
The contract recited a purchase price of $440, 000, of which
$185, 000 was a “gift of equity.” Id.
¶¶ 16, 23. Marie unilaterally determined the
purchase price of the House. Id. ¶¶ 14-15.
In connection with this transfer, Jennifer applied for a
mortgage and obtained two appraisals of the House, one dated
October 22, 2015 valuing it at $730, 000, the second dated
November 20, 2015, valuing it at $670, 000. Id.
Friday, December 18, 2015, the New York District Court
entered final judgment of $2, 505, 325.73, including
attorney's fees and interest, against Martin and Marie.
Id. ¶ 21. The following Monday, December 21,
2015, the sale of the House to Jennifer and Brooke closed.
Id. ¶ 22. Martin and Marie continued to live in
the House after the transfer. Id. ¶ 28. Martin
and Marie admit that they were insolvent at the time they
sold the House to Jennifer and Brooke. Ans. ¶ 24, ECF
No. 10. Jennifer and Brooke were unaware of the New York
litigation at the time of the transfer. Pl.'s Response to
Daughters' SOMF ¶ 26, ECF No. 77. Prior to the
transfer, Jennifer made some mortgage payments on behalf of
her parents. Def's SOMF ¶ 27. Brooke also testified
that she “had known that our parents had lost all their
money. That there was nothing left.”Id.
docketed the New York District Court judgment in the Superior
Court of New Jersey on February 4, 2016. Id. ¶
30. On January 17, 2017, Plaintiff brought this fraudulent
conveyance action against all Defendants, asserting that the
transfer of the Home was fraudulent: (1) in violation of
N.J.S.A. § 25:2-25, because it was made with
“actual intent to hinder, delay or defraud”
(Count I), Compl. ¶¶ 29-33, ECF No. 1; (2) in
violation of N.J.S.A. § 25-2:27, as Plaintiff was a
present creditor at the time of the transaction (Count II),
Compl. ¶¶ 34-37; and (3) in violation of N.J.S.A.
§ 25:2-3, the general fraudulent conveyance provision
(Count III), Compl. ¶¶ 38-39. Plaintiff seeks a
judgment voiding and setting aside the transfer of the House,
a levy of execution against the House, and an award of
interest, costs and attorney's fees. Id.
¶¶ 33, 37, 39.
Defendants answered the Complaint on March 9, 2017. ECF No.
10. On August 4, 2017, the Daughters obtained separate
counsel from their parents, ECF No. 18, and on December 14,
2017, the Daughters filed eight crossclaims against their
parents, Crossclaims, ECF No. 34. On January 17, 2018, the
Daughters also brought a counterclaim against Plaintiff,
asserting a single quite title cause of action. ECF No. 42.
Daughters allege that their maternal grandmother wanted to
provide them with financial assistance, including a desire to
“set aside money for wedding dowries.”
Crossclaims ¶¶ 4-6. Beginning in 2003, and until
her death in 2008, they allege that she regularly sent Martin
money for that purpose. Id. ¶¶ 7, 9. She
allegedly sent more than $1.1 million in total. Id.
¶ 8. Rather than set the money aside, the Daughters
allege that “Martin and/or Marie withdrew the funds and
utilized them for their own purposes.” Id.
against their parents, Jennifer and Brooke assert crossclaims
of (1) wasting another's property or inheritance
(Crossclaim I), id. ¶¶ 31-34; (2)
negligence (Crossclaim II), id. ¶¶ 35-38;
(3) common law fraud (Crossclaim III), id.
¶¶ 39-43; (4) common law conversion (Crossclaim
IV), id. ¶¶ 44-48; (5) breach of contract
(Crossclaim V), id. ¶¶ 49-52; (6) breach
of fiduciary duty (Crossclaim VI), id.
¶¶53-59; (7) estoppel (Crossclaim VII),
id. ¶¶ 60-64; and (8) a claim for
indemnification and contribution under the New Jersey Joint
Tortfeasors Contribution Act, N.J.S.A. § 2A:53A, et
seq. (Crossclaim VIII), id. ¶¶ 65-66.
The Daughters seek compensatory and punitive damages,
interest, costs and attorney's fees.
and Marie answered the crossclaims on March 19, 2018, largely
admitting the factual allegations against them, although
Marie denied that she withdrew any of the grandmother's
funds. Ans. to Crossclaims ¶¶ 1-5, ECF No. 48.
Martin admitted all allegations in Crossclaims I, II, IV, and
VI, Marie admitted all allegations in Crossclaims II and VI.
Id. ¶¶ 6-9, 15-18, 24-28.
filed its motion for summary judgment on February 15, 2019,
seeking judgment on all counts of its Complaint. ECF No. 64.
The Daughters sought summary judgment on their crossclaims
and counterclaim the same day. ECF No. 71. As against their
parents, the Daughters only seek judgment on Crossclaims I,
II, IV and VI against Martin, and on Crossclaims II and VI
against Marie. Def. Mem. at 6, ECF No. 71.1.
to Federal Rule of Civil Procedure 56(c), a motion for
summary judgment will be granted if the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with available affidavits, show that there is
no genuine dispute as to any material fact and that the
moving party is entitled to judgment as a matter of law.
See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986). “[S]ummary judgment may be granted only if
there exists no genuine issue of material fact that would
permit a reasonable jury to find for the nonmoving
party.” Miller v. Ind. Hosp., 843 F.2d 139,
143 (3d Cir. 1988). All facts and inferences must be
construed in the light most favorable to the non-moving
party. Peters v. Del. River Port Auth., 16 F.3d
1346, 1349 (3d Cir. 1994).
The Daughters' Procedural Arguments
Daughters present two procedural arguments in opposition to
Plaintiff's motion for summary judgment. First, they
argue that Bank of America (the “Mortgagee”), the
holder of the note on Jennifer's mortgage on the House,
is a necessary party to this action and Plaintiff's
failure to join it should result in dismissal under Federal
Rule of Civil Procedure 19. Second, they argue that
Plaintiff's failure to file a notice of lis
pendens concerning the House should also result in
dismissal. The Court disagrees as to both points.
Mortgagee is not a necessary party to the suit, as this
action cannot impair its superior interests in the House.
Under Federal Rule of Civil Procedure 19(a)(1), a person who
is subject to service of process and whose presence would not
deprive the court of subject matter jurisdiction “must
be joined as a party” if either the court could not
accord complete relief among the existing parties in their
absence, or if
that person claims an interest relating to the subject of the
action and is so situated that disposing of the action in the
person's absence may . . . as a practical matter impair
or impede the person's ability to protect the interest.
Fed. R. Civ. P. 19(a)(1)(B)(i). Consideration of a Rule 19
motion is a two-step inquiry, requiring the Court to first
determine whether a party is necessary under the relevant
provision of Rule 19, and then to determine whether joinder
is feasible. Gen. Refractories Co. v. First State Ins.
Co., 500 F.3d 306, 312 (3d Cir. 2007). In a diversity
action, “the question of whether a party is necessary
or indispensable is a question of federal law, ” but
determined by reference to the interests of the parties under
state law. Huber v. Taylor, 532 F.3d 237, 247 ...