PALLADINO et al v. UNITED STATES OF AMERICA et al
Filing
71
OPINION. Signed by Judge Esther Salas on 9/30/14. (gmd, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
_______________________________________
SANDRA PALLADINO, et al.,
:
:
Plaintiffs,
:
: Civil Action No. 13-1812 (ES)
v.
:
:
Opinion
THE UNITED STATES OF AMERICA, et al., :
:
Defendants.
:
_______________________________________
:
SALAS, DISTRICT JUDGE
Pending before this Court is Defendant United States of America’s motion for summary
judgment. (D.E. No. 46). The Court has jurisdiction over this case based on 28 U.S.C. § 1346(b).
For the following reasons, Defendant’s motion is GRANTED.
I. FACTUAL BACKGROUND1
On March 28, 2011, Plaintiff Sandra Palladino (“Plaintiff”) tripped and fell over a metal
signpost stub on a sidewalk adjacent to a commercial property. (D.E. No. 49, Plaintiff’s Brief in
Opposition to Defendant’s Motion for Summary Judgment (“Pl. Br.”) at 1–2).2 The ownership of
this property and the identity of the entity that owed Plaintiff a duty of care are issues contested in
this litigation. But neither issue rises to the level of being a “genuine dispute as to any material
fact.” Fed. R. Civ. P. 56(a).
1
Except for those in dispute, the facts the Court considers are either stated by Plaintiff in her brief opposing
the instant motion, (D.E. No. 49), or admitted by Plaintiff in her Response to Defendant's Statement of Material Facts,
(D.E. No. 48). Defendant's Statement of Material Facts relies heavily on the Declaration of Thomas G. Morris, Director
of the Office of Liquidation at the Small Business Administration, (D.E. No. 46), and its accompanying exhibits.
2
Plaintiffs erroneously title the brief opposing the instant motion for summary judgment as opposing a
motion to dismiss.
1
In 1989, pursuant to Section 301(d) of the Small Business Investment Act of 1958, 15
U.S.C. § 681(d), the United States Small Business Administration (the “SBA”) licensed Trusty
Capital, Inc., (“Trusty”) to provide funding to small businesses. (See D.E. No. 46, Defendant’s
Brief in Support of its Motion for Summary Judgment (“Def. Br.”), at 3). In October 2006, the
United States filed a complaint, in the District Court for the Southern District of New York (the
“Receivership Court”), against Trusty for “violat[ing] the terms of its small business investment
company license.” (D.E. No. 46, Defendant’s Statement of Undisputed Material Facts (“Def. Stat.
Mat. Facts”), ¶ 1). The Receivership Court took jurisdiction of Trusty and all of its property and
appointed the SBA receiver for Trusty (the “Receivership”), (see Def. Stat. Mat. Facts ¶ 2), “for
the purpose of identifying, marshaling, and liquidating the assets of Trusty for the benefit of the
estate.” (Id. ¶ 2).
As Receiver, the SBA cleared title to the commercial property at issue—property which
had previously been foreclosed—in a Superior Court of New Jersey action. (See id. ¶ 3). Even
with a clear title, the SBA could not sell the property at issue, and it subsequently entered into a
settlement agreement with Yung Duk Hahn, the president of Trusty. (See id. ¶ 4). This agreement
culminated in an order by the Receivership Court, which terminated the Receivership. (See D.E.
No. 46, Declaration of Thomas Morris (“Morris Dec.”), Ex. 5b). The Receivership Court
“unconditionally transferred” control of Trusty and all of its assets back to Trusty, and “discharged
[the SBA] as Receiver.” (See Morris Dec. Ex. 5b ¶¶ 4, 7).
II. LEGAL STANDARD
A court shall grant summary judgment, pursuant to Fed. R. Civ. P. 56(a), “if the movant
shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” On a summary judgment motion, the moving party must first show that no
2
genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The
burden then shifts to the non-moving party to present evidence that a genuine issue of material fact
compels a trial. See id. at 324. In presenting that evidence, the non-moving party must cite to
specific facts in the records that establish a genuine issue of material fact, not merely “some
metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986). Therefore, the non-moving party may not rest its opposition upon the
mere allegations or denials in its pleadings. See Celotex, 477 U.S. at 322 n.3 (quoting Fed. R. Civ.
P. 56(e)). The Court must, however, consider all facts and their reasonable inferences in the light
most favorable to the non-moving party. See Pa. Coal Ass’n v. Babbitt, 63 F.3d 231, 236 (3d Cir.
1995). That is, “[t]he evidence of the non-movant is to be believed, and all justifiable inferences
are to be drawn in [her] favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
III. ANALYSIS
Actions against [a] receiver are in law actions against the receivership
or the funds in the hands of the receiver, and [its] . . . misfeasances,
negligences, and liabilities are official, and not personal, and
judgments against [it] as receiver are payable only from the funds in
[its] hands.
McNulta v. Lochridge, 141 U.S. 327, 332 (1891). “This statement of course means only that torts
of a receiver are in principle compensable out of the assets of the estate in receivership . . . .”
Reading Co. v. Brown, 391 U.S. 471, 478 n.7 (1968). The statement does not mean that “an action
against the receiver personally . . . would never lie under any circumstances. See In re VistaCare
Grp., LLC, 678 F.3d 218, 228 n.7 (3d Cir. 2012).
The record indicates that the only relevant relationship between the SBA and the
commercial property at issue was that arising from the order by the Receivership Court, which
appointed the SBA Receiver of Trusty and of the property.
3
(See Morris Dec. Ex. 1 ¶ 1
(Receivership Court’s order appointing the SBA Receiver); Morris Dec. Ex. 2 (naming, on the last
recorded deed for property at issue, “THE U.S. SMALL BUSINESS ADMINISTRATION, AS
RECEIVER FOR TRUSTY CAPITAL, INC.” (emphasis added)).
The Receivership Court, however, subsequently terminated that receivership, ordering that
“[c]ontrol of Trusty shall be unconditionally transferred and returned to its shareholder and former
manager” and that the “SBA is discharged as Receiver.” (See Morris Dec. Ex. 5b ¶¶ 4, 7). Thus,
if “[a]ctions against the receiver are in law actions against the receivership or the funds in the
hands of the receiver,” no action can lie against the SBA, because the receivership has been
terminated and none of Trusty’s funds remain in the SBA’s hands. See McNulta, 141 U.S. at 332.
It is uncontested that the Plaintiff’s claim of negligence arose after the Receivership
Court terminated the Receivership. Despite the Receivership Court’s order terminating the
Receivership, Plaintiff alleges that “Defendant attempted but failed to deliver its quitclaim deed to
[Trusty]” and that “[i]n the absence of proof of delivery in fact, the property interest never
transferred [back to Trusty].” (See Pl. Br. at 6). Plaintiff, however, does not “cit[e] to particular
parts of materials in the record” and neither “show[s] that the materials cited [by Defendant] do
not establish the absence . . . of a genuine dispute, [n]or that [Defendant] cannot produce admissible
evidence to support the fact” at issue. See Fed. R. Civ. P. 56(c)(1)(A).
To the contrary, Exhibit 7 of the Morris Declaration, a letter mailed from
the SBA to Trusty dated May 5, 2010, states:
Enclosed please find the deed to the Jersey City Property transferred
back from the Receiver for Trusty Capital, Inc. [ ] It is your
responsibility to record the original deed.
4
(Morris Dec. Ex. 7). The letter provides a Certified Mail number and states “RETURN RECEIPT
REQUESTED.” (See id.). The fact that there is no “Postal Service ‘green card’ evidencing
delivery” in the record, (see Pl. Br at 6), is inapposite. Plaintiff cites no contrary evidence
suggesting that Trusty never received the deed. If Trusty had never received the deed, Plaintiff
could have placed that fact in the record. And, regardless of whether “Defendant or the grantee
ever recorded the deed,” (see id.), “[t]he law is well settled that an unrecorded deed . . . is perfectly
efficacious in passing title from grantor to grantee . . . .” Siligato v. State, 268 N.J. Super. 21, 28
(App. Div. 1993) (citations omitted).
Finally, even if there were a technical problem with
the transfer of the deed, the Receivership Court’s order would bar Plaintiff’s claim. When the
Receivership Court terminated the receivership, it stated that the
SBA is discharged as Receiver, and the SBA, its employees, officers,
agents, contractors, attorneys, and any other person who acted on
behalf of the Receiver, are hereby discharged and released of any and
all claims, obligations, and liabilities, arising from or relating to the
activities, conduct, management and operation of Trusty and the
Trusty receivership estate upon notification and entry of this Final
Order.
(Morris Dec. Ex. 5b ¶ 7). Nothing in this language, or elsewhere in the Receivership Court’s order,
suggests that the discharge does not also apply to claims of negligence. (See id. (The “SBA is . . .
discharged and released of any and all claims.”)). Thus, to the extent Plaintiff’s claim of
negligence against the SBA is a “claim[] . . . arising from or relating to the activities, conduct,
management and operation of . . . the Trusty receivership estate,” it is barred by the Receivership
Court’s order.
Plaintiff contends that the Receivership Court’s order “erroneously discharged Defendant
from its obligations before Defendant attempted to mail the quitclaim deed for the property on
May 5, 2010.” (D.E. No. 48, Plaintiff’s Response to Defendant’s Statement of Undisputed
5
Material Facts, ¶ 6). But Plaintiff does not cite any legal authority—or make any citation to the
record—in support of this proposition. To be clear, it is the non-moving party’s burden to cite to
specific facts in the record that establish a genuine issue of material fact, not merely “some
metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., 475 U.S. at 586.
Plaintiff has not “by her own affidavits, or by the depositions, answers to interrogatories,
and admissions on file, designate[d] specific facts showing that there is a genuine issue for trial.”
See Celotex, 477 U.S. at 324. Thus, even if “[t]he evidence of [Plaintiff] is to be believed, and all
justifiable inferences are to be drawn in [her] favor,” Anderson, 477 U.S. at 255, the Court must
grant summary judgment in favor of Defendant.3
Moreover, the Court enters summary judgment in favor of the SBA because the SBA was
terminated as Receiver prior to the date of Plaintiff’s injury, (see Morris Dec. Ex. 5b ¶ 4), and the
Receivership Court’s order clearly bars claims of the kind currently being brought by Plaintiff,
(see id. ¶ 7).
IV. CONCLUSION
For the above reasons, the Court GRANTS Defendant’s motion for summary judgment.
An appropriate order shall accompany this opinion.
/s/Esther Salas
Esther Salas, U.S.D.J.
3
Because the Court decides the motion on its merits, it does not address Defendant's procedural argument
that, because “Plaintiff's Certification of Counsel does not meet [the] requirement [in Fed. R. Civ. P. 56(e)],” the
“Statement of Material Facts submitted by Defendant should be deemed undisputed.” (See D.E. No. 52, Defendant's
Reply to Plaintiff's Brief in Opposition, at 3).
6
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