CBD & SONS, LTD. v. SETTEDUCATI et al
Filing
89
OPINION filed. Signed by Judge Brian R. Martinotti on 6/23/2021. (jmh)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CBD & SONS, LTD.,
Plaintiff,
v.
RICHARD SETTEDUCATI, SHORE
LENDING GROUP, LLC, GMH
MORTGAGE SERVICES, LLC, CHARLES
A. LIBERTI, RAYMOND R. MILLER, SR.,
and BLUE RIBBON APPRAISALS, LLC,
Case No. 3:18-cv-04276 (BRM) (DEA)
OPINION
Defendants.
MARTINOTTI, DISTRICT JUDGE
Before this Court is the Report and Recommendation (“R&R”) of the Honorable Douglas
L. Arpert, U.S.M.J., dated September 28, 2020 (ECF No. 73), recommending that Plaintiff CBD
& Sons, Ltd’s (“Plaintiff”) Motion to Amend (ECF No. 66) be denied. Plaintiff objects to the R&R.
(ECF No. 74.) Defendants Charles A. Liberti, Raymond R. Miller, Sr., and Blue Ribbon
Appraisals, LLC (the “Blue Ribbon Defendants”) responded to Plaintiff’s objection. (ECF No. 77.)
Thereafter, with permission from the Court (see ECF No. 80), Plaintiff filed a reply in further
support of its objection to the R&R and to address Blue Ribbon Defendants’ response.
(ECF No. 82.) The Court has carefully considered the parties’ submissions and decides the matter
without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons set forth
herein and for good cause shown, the Court adopts Judge Arpert’s R&R.
I.
BACKGROUND
The Court previously summarized many of the factual allegations at issue in this matter
and the Court assumes the parties’ familiarity with those allegations. See CBD & Sons, Ltd. v.
Setteducati, Civ. A. No. 3:18-4276, 2020 WL 1527955, at *1 (D.N.J. Mar. 31, 2020). The Court,
therefore, only recounts those facts necessary to resolve the instant dispute.
On March 27, 2018, Plaintiff filed a Complaint against the Blue Ribbon Defendants, GMH
Mortgage Services, LLC, Richard Setteducati, and Shore Lending Group, LLC, alleging, among
other things, fraud, breach of fiduciary duty, unjust enrichment, breach of contract, and violation
of the New Jersey Consumer Fraud Act arising out of appraisals “performed, prepared and
completed for Plaintiff” by the Blue Ribbon Defendants. (See ECF No. 1 ¶ 1.) 1 Plaintiff also
alleges Richard Setteducati, GMH Mortgage Services, LLC, and Shore Lending Group, LLC (the
“GMH Defendants”) “knowingly engaged in a systemic, planned and calculated fraud against”
Plaintiff when they breached their fiduciary duties to Plaintiff. (Id. ¶ 2.) On June 4, 2018, the Blue
Ribbon Defendants filed a Motion to Dismiss arguing the Court lacks personal jurisdiction over
the Blue Ribbon Defendants and improper venue. (ECF No. 20.) Concurrently, the GMH
Defendants filed a Motion to Dismiss asserting a lack of subject matter jurisdiction and failure to
state a claim. (ECF No. 21.) On January 31, 2019, this Court (1) granted Blue Ribbon Defendants’
Motion to Dismiss finding the Court did not have personal jurisdiction over the Blue Ribbon
Defendants and improper venue because there was “no significant connection between the Blue
Ribbon Defendants and New Jersey”; and (2) granted in part and denied in part the GMH
1
This action was not originally filed in the District of New Jersey, but in the Eastern District of
New York (“E.D.N.Y”). (See ECF No. 69 at 7.) Blue Ribbon Defendants moved to dismiss the
action on a number of grounds, including improper venue, lack of personal jurisdiction, and statute
of limitations. (Id.) Thereafter, Plaintiff voluntarily dismissed the E.D.N.Y action. (Id.)
2
Defendants’ Motion to Dismiss. (See ECF Nos. 30–31, collectively, the “January 31 Opinion and
Order”.) As a result of the January 31 Opinion and Order, the only counts left were against the
GMH Defendants. (See ECF No. 30 at 18.)
On August 19, 2019, Plaintiff filed a Motion for Certification of Appealability seeking
leave to appeal the Court’s January 31 Opinion and Order. (ECF No. 46.) On March 31, 2020, the
Court granted Plaintiff’s Motion for Certification, making the January 31 Opinion and Order, as it
related to the Blue Ribbon Defendants, a final order (“March 31 Order”). (See ECF No. 50 at 2,
“ORDERED that this Court’s Order dated January 31, 2019 dismissing this action as to the Blue
Ribbon Defendants is hereby CERTIFIED as a final judgment to allow an immediate appeal of the
Court’s determination that it lacked personal jurisdiction and that venue was improper” as to the
Blue Ribbon Defendants.) On April 29, 2020, Plaintiff filed a Notice of Appeal. (ECF No. 52.) On
June 12, 2020, Plaintiff filed a Motion to Amend/Correct the Verified Complaint (“Motion to
Amend”) to add the previously dismissed Blue Ribbon Defendants as parties to this action.
(ECF No. 66.) Plaintiff added new factual allegations against the Blue Ribbon Defendants, as well
as a fraud claim. (ECF No. 67 at 29.) 2 In support of the Motion to Amend, Plaintiff wrote:
It is clear that there has been no delay, undue or otherwise, in []
brin[g]ing this Motion. The Verified Complaint in this case was
filed on March 27, 2018. Both the GMH Defendants and the Blue
Ribbon Defendants filed their own Motion to Dismiss the Verified
Complaint on June 4, 2018. See Blue Ribbon Defendants’ Motion
to Dismiss, ECF Nos. 20–20-11; see also GMH Defendants’ Motion
to Dismiss, ECF Nos. 21–21-13. The Court did not decide the
Motions to Dismiss until January 31, 2019, when it granted the Blue
Ribbon Defendants’ motion in its entirety and dismissed the Blue
Ribbon Defendants from this action . . . .
(Id. at 18.)
2
ECF No. 67 is Plaintiff’s Memorandum of Law in Support of its Motion to Amend. (See ECF
No. 67.)
3
Plaintiff further argued,
This Motion is being filed only two months after the Court’s most
recent decision, within the time frame allowed by the Court and
before any discovery has even taken place in this case. See High 5
Games, LLC v. Marks, 2018 WL 2134038, at *4 (D.N.J. May 9,
2018) (motion to amend granted and not considered unduly delayed
when it “was b[r]ought relatively quickly . . . following Judge
Vazquez giving Plaintiff express permission to file the current
motion”). Therefore, it is clear that there has been no delay in
bringing this Motion and certainly no undue delay which would
cause the Defendants any prejudice . . . .
(Id. at 19.)
Similarly, there is no bad faith or dilatory tactics present here. CBD
is merely trying to hold all the Defendants responsible for their
actions in one court, in order to preserve time and resources, and to
promote judicial efficiency, which is a proper reason to grant a
motion to amend. There is no denying that CBD has lawful claims
against the Blue Ribbon Defendants and should be able to lodge
those claims against them in the most efficient way possible. In High
5 Games, LLC v. Marks, the court stated, “[j]udicial efficiency and
effective case management are matters that can be considered in
deciding whether amendment should be allowed.” . . . .
(Id. at 20–21.)
Here, the proposed Verified Amended Complaint adds new factual
allegations to support CBD’s original claims and only adds one new
cause of action. The new cause of action, fraud against the Blue
Ribbon Defendants, is properly asserted and is certainly not a
frivolous addition. The new cause of action flows from the same
previously asserted facts and claims, and is well grounded in fact
and pleaded appropriately. It is not a futile claim and the Defendants
will not be able to show otherwise. Accordingly, since it is clear that
it would not be futile to allow the Verified Amended Complaint to
be filed, this Motion must be granted.
(Id. at 29–30.)
On September 17, 2020, Judge Arpert held oral argument on the Motion to Amend. (See
ECF No. 72.) On September 28, 2020, Judge Arpert issued the R&R and recommended Plaintiff’s
Motion to Amend be denied. (ECF No. 73.) In the R&R, Judge Arpert wrote:
4
The Court’s Order [ECF No. 50] entered March 31, 2020, makes the
dismissal Order [ECF No. 31] a final order as to the Blue Ribbon
Defendants. As such, the Court should construe this Motion as a
motion for relief under Rules 59 and 60. Plaintiff’s Motion is not
timely under Rule 59(e). Pursuant to Rule 6(b)(2), the Court cannot
extend the deadline provided under Rule 59(e). Thus, Plaintiff
cannot obtain relief pursuant to Rule 59.
Rule 60 provides a party relief from a final order or judgment. Here,
Plaintiff sought certification of the Court’s Order [ECF No. 31] as
final yet now seeks relief from the finality of that Order. Plaintiff
cannot seek to be relieved from a final judgment which it moved to
certify as final. Further, Plaintiff does not show extraordinary
circumstances warranting relief under Rule 60. The parties have not
engaged in discovery such that new information became available
to Plaintiff that was not available before the Court’s Orders [ECF
Nos. 31 and 50] were entered. Plaintiff has not claimed mistake or
inadvertence in omitting the new factual allegations and claim from
its original Complaint. Most importantly, Judge Martinotti has
already considered the information presented in the proposed VAC
and rejected its sufficiency to establish personal jurisdiction over the
Blue Ribbon Defendants. Plaintiff thus also completely ignored
Judge Martinotti’s finding concerning venue.
Plaintiff brings new allegations of fraud against the Blue Ribbon
Defendants but does not relate such claims to any argument under
Rule 60. Subsections (b)(4) and (b)(5) of Rule 60 are inapplicable.
Lastly, the Court construes a potential argument by Plaintiff under
Rule 60(b)(6) that the other reasons that justify relief relate to its
arguments under Rule 15. Even still, the Court finds that such
reasons do not constitute extraordinary circumstances justifying
relief from the Order which Plaintiff sought to make final . . . .
(Id. at 9–10.)
The Blue Ribbon Defendants were dismissed from this action in an
Order now certified as final. It is clearly prejudicial to Defendants
to allow Plaintiff to be relieved from a judgment it sought to make
final only to attempt to add back the same Defendants which were
dismissed from this action on facts already considered and rejected
by the Court as insufficient to establish personal jurisdiction over
them. For this reason, Plaintiff’s amendment is likely futile since the
amendment likely fails to assert factual allegations that would
overcome the deficiencies in the original Complaint. Finally,
regardless of the fraud claim’s viability, Plaintiff offers no
explanation as to why it now seeks to bring[] this claim three years
5
after litigation was commenced. Plaintiff asserted fraud claims
against all other Defendants in this action and could have asserted
such a claim against the Blue Ribbon Defendants much earlier in the
course of this litigation.
(Id. at 11.)
On October 12, 2020, Plaintiff filed an objection to the R&R. (ECF No. 74.) On October
26, 2020, the Blue Ribbon Defendants filed a response to Plaintiff’s objection. (ECF No. 77.) On
October 26, 2020, Plaintiff requested permission from the Court to file a reply to the Blue Ribbon
Defendants’ response citing the need to address “material misstatements of the facts and law” in
the response. (ECF No. 78.) On October 28, 2020, the Court granted Plaintiff’s request (ECF No.
80), and on November 9, 2020, Plaintiff filed a reply (ECF No. 82).
II.
LEGAL STANDARD
Here, the applicable standard of review is complicated by the procedural posture of this
matter. Specifically, because the Court previously dismissed all counts of the Complaint against
the Blue Ribbon Defendants, and certified the dismissal by final order, Judge Arpert’s denial of
Plaintiff’s Motion to Amend may have resulted in a complete dismissal of Plaintiff’s claims with
prejudice. See Defalco v. Rutgers Univ. Police Dep’t, Civ. A. No. 156607, 2019 WL 2591031, at
*3 (D.N.J. June 25, 2019). The Blue Ribbon Defendants advocate for a clear error standard (see
ECF No. 77 at 8) and Plaintiff argues a de novo review is necessary (see ECF No. 74 at 6).
Local Civil Rule 72.1(c)(2) requires an objecting party to “serve on all parties written
objections which shall specifically identify the portions of the proposed . . . recommendations or
report to which objection is made and the basis of such objection.” L.Civ.R. 72.1(c)(2) (emphasis
added). The same rule requires the Court to “make a de novo determination of those portions to
which objection is made” and the Court “may accept, reject, or modify, in whole or in part, the
findings or recommendations made by the Magistrate Judge.” Id.; accord 28 U.S.C. § 636(b)(1);
6
Fed. R. Civ. P. 72(b)(3). The Advisory Committee Notes to Federal Rule of Civil Procedure 72
states, “[w]hen no timely objection is filed, the court need only satisfy itself that there is no clear
error on the face of the record in order to accept the recommendation.” Fed. R. Civ. P. 72
(emphasis added).
“Motions to amend are usually considered non-dispositive motions.” Thomas v. Ford
Motor Co., 137 F. Supp. 2d 575, 579 (D.N.J. 2001). The Federal Magistrates Act of 1968 (“FMA”)
provides that a District Court reviewing a Magistrate Judge’s decision on a non-dispositive motion
may reverse a Magistrate Judge’s determination only if it is “clearly erroneous or contrary to law.”
Id. (citing 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a); L.Civ.R. 72.1(c)(1)). When a Magistrate
Judge’s decision on a non-dispositive motion reaches legal conclusions, those legal conclusions
are subject to a de novo review. Id. “The FMA requires a District Court to review a Magistrate
Judge's report and recommendation de novo.” Id. (citing 28 U.S.C. § 636(b)(1)(B); Fed. R. Civ. P.
72(b); L.Civ.R. 72.1(c)(2)).
In Kenny v. United States, the Third Circuit stated it had not previously resolved the precise
issue of “whether a motion to amend that in practice results in dismissal is a dispositive motion.”
489 F. App’x 628, 630 n.2 (3d Cir. 2012). The Kenny court did not resolve the issue because
resolution was unnecessary for the Third Circuit to reach its final decision. Id. More recently, in
Patel v. Meridian Health Systems, Inc., the Third Circuit held that a Magistrate Judge’s denial of
a motion to amend was non-dispositive. 666 F. App’x 133, 135–36 (3d Cir. 2016). The Third
Circuit cited the FMA and the fact that a motion to amend is not among the FMA’s list of eight
motions specifically excluded from the authority of a magistrate judge. Id.
When a plaintiff files a timely objection, the district court “shall make a de novo
determination of those portions of the report or specified proposed findings or recommendations
7
to which objection is made.” 28 U.S.C. § 636(b)(1). Where the objection is “not timely . . . or not
specific[,]” a de novo determination is not required. Goney v. Clark, 749 F.2d 5, 6–7 (3d Cir. 1984)
(citations omitted) (concluding that the “plaintiff’s objections lacked the specificity necessary to
trigger de novo review”); accord Brown v. Astrue, 649 F.3d 193, 195 (3d Cir. 2011). Where the
party’s objections are general, a complete de novo determination would undermine the efficiency
the magistrate system was meant to contribute to the judicial process. Goney, 749 F.2d at 7.
The Third Circuit has advised that while the FMA “may not require, in the absence of
objections, the district court to review the magistrate’s report before accepting it, . . . the better
practice is for the district judge to afford some level of review to dispositive legal issues raised by
the report.” Henderson v. Carlson, 812 F.2d 874, 878 (3d Cir. 1987). “The authority—and the
responsibility—to make an informed, final determination . . . remains with the judge.” Id. (quoting
Mathews v. Weber, 423 U.S. 261, 271 (1976)); see Defalco, 2019 WL 2591031, at *3–4.
Because the Court finds Plaintiff’s objection to the R&R timely and not devoid of the
necessary specificity to trigger a de novo review, and because Judge Arpert’s R&R may have the
effect of dismissing Plaintiff’s claims against the Blue Ribbon Defendants with prejudice, the
Court reviews the R&R de novo.
III.
DECISION
In objecting to the R&R, Plaintiff repeats the same arguments made in support of the
Motion to Amend. (See generally ECF No. 74.) Plaintiff argues “[f]irst and foremost,” Plaintiff’s
“Motion to Amend was brought timely, contrary to what the Magistrate Judge writes in the Report
and Recommendation.” (ECF No. 74 at 7.) Plaintiff contends because of the “COVID-19
pandemic, the District Court of New Jersey issued a Standing Order extending the time for the
filing of motions. This Court has already affirmed that Standing Order 20-04 extended the deadline
8
for filing a Rule 59 motion,” therefore, Plaintiff’s “filing of the Motion to Amend on June 12,
2020, was timely.” (Id.) 3 Plaintiff also argues the Blue Ribbon Defendants “will not be prejudiced
by the filing of the Verified Amended Complaint,” because there was “no undue delay in bringing
the Motion, and the proposed amendments are not brought in bad faith or with dilatory tactics, and
are certainly not futile.” (Id. at 12.)
In his R&R, Judge Arpert addressed these same arguments. According to Judge Arpert,
because the Court’s March 31 Order made the January 31, 2020 Opinion and Order entered against
the Blue Ribbon Defendants a final order, the Motion to Amend should be construed as a motion
for relief under Rules 59 and 60. (ECF No. 73 at 9–10.) Judge Arpert concluded Plaintiff’s Motion
to Amend was “not timely under Rule 59(e),” which provides that the time to move “is short—28
days from entry of the judgment, with no possibility of an extension.” (Id. at 3) (emphasis added)
(citing Banister v. Davis, 140 S. Ct. 1698, 1703(2020)). 4 Therefore, while the 28-day period for
filing expired on April 28, 2020, Plaintiff did not file the Motion to Amend until June 12, 2020 –
seventy-three days after the March 31 Order. (Id. at 10.) Critically, Judge Arpert also found,
Plaintiff cannot seek to be relieved from a final judgment which it
moved to certify as final . . . . Plaintiff does not show extraordinary
circumstances warranting relief under Rule 60. The parties have not
engaged in discovery such that new information became available
to Plaintiff that was not available before the Court’s Orders [ECF
Nos. 31 and 50] were entered. Plaintiff has not claimed mistake or
inadvertence in omitting the new factual allegations and claim[s]
from its original Complaint. Most importantly, Judge Martinotti
3
To be sure, Plaintiff maintains that its Motion to Amend was timely filed under Rule 59(e). (See
ECF No. 70 at 4.) The Court’s March 31 Order started the 28-day clock under Rule 59(e). Plaintiff
argues that the Rule 59(e) deadline, therefore, was April 28, 2020. (Id. at 5.) However, Plaintiff
contends that Standing Order 2020-04 extended that deadline to June 12, 2020. Plaintiff filed the
Motion to Amend on June 12, 2020, and argues the motion was timely filed. (Id.)
4
Judge Arpert acknowledged that while “Rule 6(b) generally governs when the Court may, for
good cause shown, grant an extension,” “Rule 6(b)(2) specifically provides that ‘[a] court must
not extend the time to act under Rules 50(b) and (d), 52(b), 59(b), (d), and (e), and 60(b).’ Fed. R.
Civ. P. 6(b)(2).” (ECF No. 73 at 3.)
9
has already considered the information presented in the proposed
VAC and rejected its sufficiency to establish personal jurisdiction
over the Blue Ribbon Defendants. Plaintiff thus also completely
ignored Judge Martinotti’s finding concerning venue.
(Id. at 10) (emphasis added).
Indeed, according to Judge Arpert, even if the Motion to Amend were deemed timely,
Plaintiff still is not entitled to the amendment because Plaintiff fails to identify any new evidence
or arguments which were learned of by Plaintiff after the entry of judgment of the March 31 Order
which would permit the Court to alter or amend the judgment Plaintiff previously demanded. (See
generally ECF No. 66.) Additionally, Judge Arpert concluded the amendment would prejudice the
Blue Ribbon Defendants who were dismissed from this action by final order: according to Judge
Arpert, it would be “clearly prejudicial,” to allow Plaintiff “to be relieved from judgment it sought
to make final only to attempt to add back the same Defendants which were dismissed from this
action on facts already considered and rejected by the Court as insufficient to establish personal
jurisdiction over them.” (ECF No. 73 at 11.) Further, Plaintiff’s amendment is futile because “the
amendment likely fails to assert factual allegations that would overcome the deficiencies in the
original Complaint.” (Id.) Finally,
(Id.)
regardless of the fraud claim’s viability, Plaintiff offers no
explanation as to why it now seeks to bring[] this claim three years
after litigation was commenced. Plaintiff asserted fraud claims
against all other Defendants in this action and could have asserted
such a claim against the Blue Ribbon Defendants much earlier in the
course of this litigation.
Viewing the Motion to Amend overall, Judge Arpert concluded “Plaintiff’s amendment is
untimely, unfairly prejudicial to the Blue Ribbon Defendants, and likely futile,” further finding
that “Plaintiff unduly delayed asserting a claim for fraud after three years of litigation.” (Id. at 12.)
10
This Court’s de novo review leads the Court to the same conclusion as Judge Arpert, specifically,
the Motion to Amend is untimely, unfairly prejudicial, futile, and unduly delayed.
IV.
CONCLUSION
For the reasons set forth above, this Court hereby adopts the R&R as to its findings of fact
and conclusions of law. An appropriate order follows.
Dated: June 23, 2021
/s/ Brian R. Martinotti
BRIAN R. MARTINOTTI
UNITED STATES DISTRICT JUDGE
11
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