PRICASPIAN DEVELOPMENT CORPORATION et al v. MARTUCCI et al

Filing 292

OPINION. Signed by Judge Dennis M. Cavanaugh on 1/9/2014. (nr, )

NOT FOR PUBLICATION
UNITEI) STATES DISTRICT COURT
I)ISTRICT OF NEW JERSEY

Hon. Dennis M. Cavanaugh

PR! CASP1AN DEVEI OPMENT
CORPORATION. et al..

OPINION
Plaintiffs,
Civil Action No. 1 l-cv-1459 (DMC-JI3C)
V.

WILLIAM MARTUCCI, et al..
Defendants.

DENNIS M. C.AVANAUGH, U.S.I).J.
Ihis matter comes bethre the Court. upon the following Motions: i I Motion ol Plainti ITs
Pricaspian Development Corporation. Jack Grvnberg. and Grvnberg Petroleum Company

(collectively “Plaintiffs”) for Summary Judgment; ii) Cross-Motion for Summary Judgment by
Defendants Richard Schaefer. Joseph Schaefer, and Anthony Sterbens; iii) Cross-Motion for

Summary Judgment by William Martucci iv) Cross-Motion for Summary Judgment by Gary
Martueci; and v) Cross—Motion

for

Summary Judgment by Barbara Martueci, Pursuant to Fed R.

Civ. P. 7X. no oral argument was heard. After carefully considering all of’ the parties’
submissions and thr the reasons stated herein, Plaintiffs’ Motion is denied, the Motion of
Richard Schaefer. Joseph Schaefer, and Anthony Sterbens is granted in part and denied in
part, and the Motions of William Martucci, Gary Martucci, and Barbara Martucci are denied.
I.

BACKGROUND
Plaintiffs have f led an eight count Complaint against Defendants \Vil ham Martucci.

Barbara Queen. Gary Martucci, Yamel Gonzalez. Richard Schaefer, Joseph Schaefer. and
Anthony Sterbens (collectively “Individual Defendants”) and all entities named First Unity, Inc.,
all entities named E-Cash, Inc.,’ Manufacturers Marketing Group, Inc. (“MMGI”), United
Grocers Clearing House, Inc. (“UGCHI”), and P05 Systems, Inc., (tOS”) (collectively
“Company Defendants”). Plaintiffs allege that Individual Defendants and Company Defendants
engaged in a fraudulent scheme that prevented Plaintiffs from collecting on the $3,610,092.29
Colorado judgment that they received and later domesticated in New Jersey against First Unity
and E-Cash and others. Plaintiffs further assert that because Individual Defendants and Company
Defendants violated 18 U.S.C.

§ 1962(c), Plaintiffs are therefore entitled to treble damages in

this matter pursuant to 18 U.S.C.

§ 1964(d) in the amount of $10,830,276.00, jointly and

severally against Individual Defendants and Company Defendants.
Plaintiffs filed their first Motion for Summary Judgment on October 18? 2012 (ECF No.
208). Richard Schaefer, Joseph Schaefer, and Anthony Sterbens filed Motions to Dismiss on
October 19, 2013 (ECF Nos. 2 12-13). Richard Schaefer, Joseph Schaefer, and Anthony Sterbens
then filed a Cross-Motion for Summary Judgment on December 3, 2012 (ECF No. 223). Due to
the filing of the Cross-Motion for Summary Judgment, this Court terminated the Motions to
Dismiss filed by Richard Schaefer, Joseph Schaefer, and Anthony Sterbens. This Court denied
Plaintiffs’ first Motion for Summary Judgment on June 20, 2013 for failure to comply with L.
Civ. R. 56.1 (ECF No. 245).
Plaintiffs filed the instant Motion for Summary Judgment on June 25, 2013. (ECF No.

‘For purposes of this Opinion, “First Unity and E-Cash” shall collectively refrr to the multiple Defendants with the
names First Unity, Inc. and E-Cash Inc. that are incorporated in Nevada, Delaware, and New Jersey

2

24$>. William Martucci 1Ied an Opposition and Cross—Motion for Summary Judgment on July 9.
2() 13 (1CF No. 257). Gary Mariucci and Barbara Queen Illed Cross-Motions flr Summar\
Judumcnt on July 9 2013 (FCF Nos. 25859).2 Richard Schaefer. Joseph Schaelr. and Anthon\
Sterhens withdrew their tirst Cross—Motion for Summary Judgment on July 11. 201 3 (LCF No.
260). Richard Schaefer. Joseph Schaefer. and Anthony Sterbens then tiled a second CrossMotion to Dismiss and for Summary Judgment on August 5. 2013, relying on their lirst Motion
to Dismiss and Motion for Summary Judgment (ECF No, 269). As this Court already terminated
the first Motion to Dismiss filed by Richard Schaefer, Joseph Schaefer. and Anthony Sierhens
due to the subsequent filing of their first Cross—Motion lbr Summary Judgment, it

\\

ill consider

onh their second Cross—Motion for Summary Judgment in this Opinion. For the remainder of
this Opinion. William Martucci, Richard Schaefer, Joseph SchaeIr. and Anthony Sterhcns v ill
be refirred to as the “Moving Defendants.’
IL

STAN1)ARD OF REVIEW

Pursuant to Fed. R. Civ. P. 56(c). summary judgment must be granted “if the pleadings.
any.
depositions. answers to inlerrogatories. and admissions on file, together with the affidavits, if
show there is no genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” The moving party “bears the initial responsibility of inlhnning the
district court of the basis for its motion, and identifying those portions of the [the recordj which it
believes demonstrate the absence of a genuine issue of material fact.” ç1ptex orp.iCatrett, 477
U.S. 317, 323 (1 986). A genuine issue of material fact exists only if sufticient evidence is presented

also do not
2 Fhese \Iotions comain no case law and make no retrence to speci lc counts in the complaint. Fhe
Accordingly, both of these Mottons
incorporate the more thorough Cross—Motions submitted by other Defendants,
are denied.

3

favoring the nonmoving party for a jury to return a verdict for that party. Anderson v. Liberti
477 U.S. 242. 248 (1986). ‘Thus. to withstand a properI supported motion for
that
summary judgment. the nonmoving party must identify specific facts and aftirmative evidence
conti dict thosc olicied h thc mo ing pait

Rec1Root1ianchimg 1LC\\Jjputht\

256-57).
Northshore, LLC, 877 F. Supp. 2d 140, 147 (D.N.J, 2012) (citing Anderson, 477 U.S. at
mere
In do so, “La] party opposing summary judgment must do more than just rest upon
260 F.3d
allegations, general denials. or vague statements.” Id. (citing Saldana v. Kmart Corp.
could not lead a
228. 232 (3d Cir, 2001)). Accordingly. “{w]here the record taken as a whole
rational trier of fact to find tbr the non—moving party. there is no genuine

issue

for trial.

Matsushita Elec. InduC ov. Zenith Radio Corp., 475 u.S. 574, 587 (1986).
Ill.

IMSCUSSION
A. Count One: Plaintiffs’ Piercing the Corporate Veil
T conceal
Plaintiffs assert that William Martucci utilized POS. MMGI. and UGCH to

William Martucci
money converted from First Unity and E—Cash. Plaintiffs further assert that
utilized POS

for

his iersonal spending needs, As a result, Plaintiffs argue that this Court should

the
pierce the corporate veils of POS, MMGI and UGCHI and allow Plaintiffs to treat
es William
corporations assets as the assets of William Martucci. Because this count onlv involv
s it in their
Martucci, Richard Schaeftr, .Joseph Schaefer, and Anthony Sterhens do not addres
(:ross—Motioi for Summary Judgment.
In New

Jersey,

two elements must be present in order to pierce the corporate veil. “First,

the
there must be such a unity of interest and ownership that the separate personalities of
e that
corporation and. the individual no longer exist. Second the circumstances must indicat
4

adherence to the fiction of separate corporate existence would sanction a fi’aud or promote
injustice.’ State Capital Title & Abstract Co. v. Pappas Bus. Servs.. LLC. 646 F.Supp.2d 668.
679 (D.N.J. 2009) (quoting The Mall at IV Group Properties. LLC v. Roberts, No. 02—4692.
dinary
2005 WI. 3338369, at *3 (D.N.J. Dec. 8. 2005)). Piercing the corporate veil is an extraor
measure and will only he permitted where the elements have been adequately pled. Sec jist
*6 (D,NJ,
Worldwide Trading GMBII v. MV Auto Banner, No. 10-2326,2011 WL 5414307, at

d
Nov. 4. 2011) (‘[Plarroting of the alter—ego factors alone is insufficient to satisfy the require
pleading standards”).
g
The Third Circuit has listed a number of factors for courts to consider \\hen decidin
ing:
whether to pierce the corporate veil, including undercapitalization and the follou
ncy
failure to observe corporate lbrmalities, non—payment of dividends, the insolve
the
of the debtor corporation at the time, siphoning of funds of the corporation b
s or directors, absence of
dominant stockholder, non-functioning of other officer
the
corporate records, and the fact that the corporation is merely a facade for
operations of the dominant stockholder or stockholders.
Cii’. 1 984)
\pJell Inc. v. Fedn of Tel. Workers of Pennsylvania. 736 R2d 879. $86 (3d
681. 686-87 (4th
(quoting DeWitt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co., 540 F.2d
Cir. 1976)).
ci utilized
This Court finds that material issues of fact exist as to whether William Martuc
veil should be
P05, MMG1. and UGCJ IT for his ersonal use and thus whether the corporate
not even
pierced. The very short section of Plaintiffs’ brief that deals with this claim does
ci has also made
address the Third Circuit factors for piercing the corporate veil. William Martuc
picrcing the
no reference to these factors, This district is hesitant to grant summary judgment on
enough evidence
corporate veil claims, and neither Plaintiffs nor William Martucci have set forth
Envtl. Mgp.
to prevail on summary judgment. New Jersey Dept of Envtl. Prot. v. Gloucester

pierce the
$çfv_ Inc., 800 F. Supp. 1210. 1220 (D.N.J. 1992) (“[A] consideration ofwhether to
to
corporate veil invo’ves complex issues oHaw and fact which are not readily amenable
\Villiam
summary judgment.”). Accordingly, Plaintiffs’ I’vlotion br Summary Judgment and
Comphiint.
Iviartucci’s Cross-N4otion for Summary Judgment are denied for count one ofthe
B, Coullt Two: Plaintiff’s Tortious Interference with Economic Advantage Claim
sly
Plaintiffs allege that Individual Defendants and Company Defendants have tortiou
ling the assets of
interfered with Plaintiffs’ economic interest by concealing or assisting in concea
ctive economic
First Unity and h—Cash. To state a claim for tortious interference with prospe
ic advantage
advantage, a plaintiff must plead that “it had a reasonable expectation of econom
it suffered losses
that was lost as a direct result ol defendants malicious interPrence, and that
2001). Malice in this
thereby.” Lamorte Burns & Co.. inc. v. Walters, 770 A.2d 11 58, 11 70 (N.J.
context means “harm

.

.

.

inflicted intentionally and without justification or excuse.” Id.

summary judgment.
Here. Plaintiffs have not set forth adequate evidence to prevail on
t the assets of First
While Plaintiffs argue that “Defendants engaged in a scheme to conver

money” (Pl.’s Mm. at
Unity/F-Cash and conceal the assets by engaging in transfers to hide the
surrounding the
9), they have not met their burden of showing that there are no issues of fact

malice. This Court
t
above elements. For example. Plaintiffs have not established the elemen of
g I)fendants, While
also finds that it is inappropriate to grant summary judgment for the Movin
ry judgment should
Richard Schaefer, Joseph Schaefer. and Anthony Sterbens assert that summa
ce of a business
be granted in their favor because Plaintiffs have not alleged the existen

of Plaintiffs’ claim,
relationship with First Unity and F—Cash, such a relationship is not the basis
ants have interfered
Rather, Plaintiffs claim that Individual Defendants and Company Defend
6

with Plaintiffs’ ability to collect on the Colorado judgment. Further, while Richard Schaefer.
.Toseph Schaefer, and Anthony Sterhens argue that Plaintiffs have not suffered any damages. an
also
inability to collect on a judgment can clearly cause damage. William Martucci’s Motion is
unpersuasive, as he mostly complains of procedural issues in the Colorado action, Accordingly.
all Motions for Summary Judgment are denied for count two of the Complaint.
C. Count Three: Plaintiffs Conspiracy to Conceal Assets Claim
Plaintiffs assert that Individual Defendants and Company Defendants conspired to
of
transfer and conceal assets of First Unity and E-Cash. MMGT. and UGCHI for the purpose
nder New
avoiding, hindering and delaying Plaintiffs’ recovery of their Colorado judgment. I T
in
Jersey law, a civil conspiracy is defined as a ‘combination of two or more sos acting
concert to commit an unlawful act, or to

commit a

lawful act by unlawful means. the J)1’icipal

upon
element of which is an agreement between the parties to inflict a wrong against or an ifliur

876 A.2d 253.
another, and an overt act that results in damage.” Banco Popular N. Am. v. Gandi,
conspirac\ to
263 (N.J. 2005) Although Plaintiffs state in their Motion that the Complaint alleges
commit money laundering, count three of the Complaint is void of an\ refrenee to mone
assets.
laundering. Rather, count three appears to allege conspiracy to ll’audulentl com e
ore.
discussed below, material issues of fact exist as to the fraudulent conveyance claim. Theref
all Motions for Summary Judgment are denied for count three of the Complaint.
1). Count Four: Fraudulent Conveyance
Unity and
Plaintiffs contend that William Martucci fraudulently conveyed the assets of First
Transfer \ct
F—Cash to himself and others in violation of the New Jersey Uniform Fraudulent
linudulent s
(“LFTA”). [nder the U ETA “[a I transfli’ made or obligation incurred by a debtor is

7

to a creditor

.

.

.

if the debtor made the transfer or incurred the obligation [w]ith actual intent to

hinder, delay, or defraud any creditor ofthe debtor.” N.J.S.A.

§

25:2-25. The UFTA sets forth a

a transfer:
nunber otfactors that courts may consider vhen determining the intent behind
I h. ti anstei 01 obligation as to in insidci I 21 1 hc. dLhtoI i u ind
transfer
posSeSSion or control ()f the property transflrred after the transfer: 3] The
or
or obligation was disclosed or concealed; [4j Before the traiistir vas made
ned with suit: [5 IThe
obligation was incurred. the debtor had been sued or threate
tiansfel was 01 substantially all the debtor’s assets [61 Fhe debtoi absondLd
eration
The debtor removed or concealed assets; [8jT he value of the consid
asset
received by the debtor was reasonably equivalent to the value of the
The debtor was insolvent
transferred or the amount of the obligation incurred; [9]
tion was
or became insolvent shortly after the transfer was made or the obliga
ntial debt
incurred: [10] The transfer occurred shortly before or shortly after a substa
business to
was incurred: and [11] The debtor transferred the essential assets of the
a lienor who transferred the assets to an insider of the debtor.

I \\

N I SA

lhethci

[1 I

25 2-26

1 hese tactois aic known as badges at liaud

in

Ic.

Noijgi

c

“cast suspicion on the
l3.R. 709. 732 (Bankr. D.N.J. 2009). The existence of one badge cai
Dist. LLXTS 48614. at
transft’ror’s intent.” Truong v. Kartzman, No. 06-5511. 2007 U.S.
(I) N 1 Tul

2007) (citing Gil hms

\

*

11

Nat I WestminstLl )3gl. 732 \ 2d 482 490 (N I

may he entered for a
1999)). “Where several badges are established, summary judgment
06-480. 2010 WL 2179181. at
plaintiff.” Merrill Lynch Bus. Fin. Servs., Inc. v. Kupperman. No.
*5 (D1\ I May 28 2010) att’d 441 1 App\ 938 (3d

(ii

2011)

liuoag 20071 S

in one transaction
Disi, LEXI S 486 1 4 at 11— 1 2 (stating that the finding of several badges
‘

“generally provides conclusive evidence of an actual intent to defraud”),
is disputed
Here, the UFTA claim involves several disputed issues of fact. First. it
Also, while PlaintilTs argue
whether the Moving Defendants were ‘transferees” under the UFTA.
as discussed
that William Martucci is an insider because he controlled E-Cash and First Unity,
and William Martucci
above, this is disputed. Further, while Plaintiffs assert that Barbara Queen
8

this is a lie.
“act as ifthey arc husband and wife” (Ph’s Mot. at 13). William Martucci claims that
aint
As such, all Motions for Summary Judgment are denied for count four ofthe Comp1
E. Count Six: Unjust Enrichment
been
Plaintiffs assert that Defendants and Company Defendants in this matter have
t consideration”
unj ustlv enriched by receiving money converted from First Unity/E-Cash withou
, this Court
(P1’s Mot. at 17). As William Martucci does not address this Count in his Motion
er, .Joseph Schaefer.
will only address Plaintiffs Motion and the Cross—Motion of Richard Schaef
and Anthony Sterbens.
defendant
io state a claim lbr unjust enrichment, “a plaintiff must show both that
be unjust,” \7RG
received a beneilt and that retention of that benefit without payment would
x (KN Realty Coip 641 A 2d 519 526 (N 1 1994)

‘\

plaintiff must also shov ‘th

it it

or conlerred a benefit on
expected remuneration from the defendant at the time it performed
. its contractual rights.”
defendant and that the failure of remuneration enriched defendant beyond
Id.
ants engaged in a
Here, Plaintiffs claim that Individual Defendants and Company Defend
Such an allegation does
scheme to prevent Plaintiffs from collecting on the Colorado judgment.
conferred upon
not give rise to an unjust enrichment claim, as the alleged benefit was not
Arlandson v. ljgrjz
Individual l)efendants and Company Defendants directly by Plaintiff’. $ge
imti Ii must conici a Pcne I U
MotmCyip_ 792 F Supp 2d 691 711 (D N J 2011) ( Since a p1

Plaintiffs do not address count live in their
3 Count five is very similar to count four, but is based on common law.
n count five in his Motion. While Richard
Motion for Summary Judgment. William Martucci also fails to mentio
in their Motion to Dismiss, they did not niaIe
Schaefer, Joseph Schaefer, and Anthony Sterbens addressed this count
Judgment. As such, this Court will not rule on count five at this
reference to it in their Cross—Motion For Summary
time.

9

on the defendant to support an unjust enrichment claim, this element has been interpreted

by

nship with

New Jersey courts as a requirement that the plaintiff allege a sufficiently direct relatio

ingly.
the defendant to support the claim.” (internal quotations and citation omitted)). Accord
er,

Richard Schaef
Plaintiffs’ Motion for Summary Judgment is denied and the Cross-Motion of
Joseph Schaefer, and Anthony Sterbens for Summary Judgment is granted for count

six of the

Complaint.
F. Counts Seven and Eight: Violation of 18 U.S.C. 1962(c)-(d)
members of
Plaintiffs assert that Individual Defendants and Company Defendants were
of racketeering
an enterprise or were associated with an enterprise that engaged in a pattern
ent. As
activity to conceal money in order to prevent Plaintiffs from satisfying their judgm
William Martucci does not address this Count in his Motion, this Court

will only address

Schaefer,
Plaintiffs’ Motion and the Cross-Motion of Richard Schaefer, Joseph

and Anthony

Sterbens.
ss or

RICO authorizes the filing of a lawsuit by “[a]ny person injured in his busine
property by reason of a violation of section 1962.” 18 U.S.C.

§ 1964(c). Section
ted with any

1962(c) provides that it is “unlawful for any person employed by or associa

enterprise engaged in, or the activities of which affect, interstate commerce,
participate, directly or indirectly, in the conduct of such enterprise’s affairs

to conduct or

through a pattern of

es a cause of action
racketeering activity or collection of unlawful debt.” Section 1962(d) provid
against persons who conspired to violate the substantive provisions of(a), (b),
To state a claim under 18 U.S.C.

or (c).

§ 1964(c) and (d), Plaintiffs must show that two

simply the same ‘person’
separate entities exist: “(1) a ‘person’; and (2) an ‘enterprise’ that is not
10

158, 161
reftrred to by a di1flrent name.” Cedric Kusimer Promotions, Ltd. v. King, 533 U.S.
enterprise is an
(2()O ), 10 prove the existence ofan enterprise. Plaintiffs must show: “1 ) that the
ns; (2) that
ongoing organization with some sort of framework for making or carrymg out decisio
separate and
the various associates function as a continuing unit; and (3) that the enterprise [isi
apait horn thL pattcrn ot activity in which

it

engages

United States v Pclullo 964 1 2d 193

entities and illegitimate
211 (3d Cir. 1992>. The definition of ‘enterprise” includes ‘both legal

.
associations-in-thct.” Rusello v. United States, 464 U.S. 15. 24 (1983)
ual Defendants
While Plaintiffs argue in their Motion for Summary Judgment that Individ
e in order to prevent
and Company Defendants participated in a money laundering schem
er. .Joseph Schaefer. and
Plaintiffs from collecting on the Colorado judgment. Richard Schaef
uished between the RICO person
Anthony Sterbens correctly argue that Plaintiffs have not disting
material fact regarding this
and the RICO enterprise. Plaintiffs have set forth no issue of
had established the existence of an
necessary element in their Motion. Further, even if Plaintiffs
as to whether this enterprise had an
enterprise, they have not set forth any issue of material fact
McCullough
indcpendent puipose apart Irom its allegcd cnrninal actions gg

/immci inc

must show ‘ihat [the] alleged
382 F, Appx 225, 231 (3d Cir. 2010) (stating that the plaintiffs
[the d]efendants alleged
enterprise had [a] structure or existence separate and apart from
.Judgment is denied and the
criminal conduct’), Accordingly, Plaintiffs’ Motion for Summary
y Sterhens for Summary
Cross—Motion of Richard Schaefer, Joseph Schaefer, and Anthon
aint.
Judgment is granted for counts seven and eight of the Compl
IV.

CONCLUSION
For the foregoing reasons, Plaintiffs’

Motion is denicd and

the Moving Defendants’

riate Order accompanies this Opinion.
Motion is granted in part and denied in part. An approp

Cavanaugh. U.
Date:

January, 2014

Original:

Clerk

cc:

All Counsel o[Record
Hon. James B. Clark. U.S.M.J.
File

12