Proulx v. Gembala

Filing 22

ORDER denying without prejudice 7 Motion to Certify Class and denying without prejudice 20 Joint MOTION for Court Hosted Mediation - Signed by District Judge Louise Wood Flanagan on 10/11/2013. (Baker, C.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
NO. 7:13-CV-131-FL
JAMES D. PROULX,
Plaintiff,
v.
JOSEPH A. GEMBALA, III,
Defendant.

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ORDER

This matter is before the court on plaintiff’s motion to certify class (DE 7), to which
defendant has not responded, and the parties’ joint motion for court hosted settlement conference
(DE 20). Plaintiff filed this putative class-action on June 21, 2013, asserting a federal claim under
the Racketeer Influenced and Corrupt Organizations Act (“RICO”) along with several state law
claims, all arising out of an alleged mortgage modification scam. This action is related to an earlierfiled putative class action, Manuel v. Malone, No. 7:10-CV-4-FL, which was filed originally against
the same defendant Joseph A. Gembala, III, and others, on January 14, 2010. In Manuel, the
plaintiffs voluntarily dismissed defendant Gembala in May 2012, leaving defendant Michael Malone
as the sole remaining defendant in that case.
In both Manuel and the present action, the material allegations supporting the individual
plaintiffs’ claims and the class action motion are substantially similar. In the Manuel action, the
court has now denied plaintiffs’ motion for class certification several times as premature, where the
court most recently has denied plaintiffs’ motion for summary judgment and is considering granting
summary judgment on plaintiffs’ claims against the sole remaining defendant in the Manual action,

Michael Malone. See Manuel v. Malone, No. 7:10-CV-4-FL, Order (October 10, 2013). In the
present action, plaintiff essentially revives the putative class action against Gembala, who previously
had been voluntarily dismissed in the Manuel matter. Plaintiff bases federal subject matter
jurisdiction, personal jurisdiction, and venue, on his assertion of a claim under RICO, 18 U.S.C. §
1965(b) and (d).
Although defendant Gembala has not responded in opposition to the motion to certify class,
defendant Gembala has filed an answer denying all material allegations of the complaint, including
the class action allegations. Accordingly, in light of the procedural posture of this case and the
overlap of factual and class-action allegations with those asserted in the Manual matter, the court
finds plaintiff’s motion to certify class to be premature. See Manuel v. Gembala, 7:10-CV-4-FL,
2011 WL 3240493 *4 (E.D.N.C. July 27, 2011). Plaintiffs’ motion to certify class therefore will be
denied without prejudice.
Moreover, where jurisdiction and venue are dependent upon plaintiff’s RICO claim against
defendant, and the court is considering granting summary judgment in favor of defendant in the
Manuel matter upon substantially similar evidence and allegations, the court also questions the
utility of a court-hosted settlement conference in advance of further proceedings in this case.
Indeed, the Alternative Dispute Resolution Rules of this court state that a “court-hosted settlement
conference shall be held after the discovery period and the ruling resolving any motions for
summary judgment unless the court specifically orders otherwise.” Local Civil Rule 101.2(b). In
this instance, the court finds no basis to order otherwise. Accordingly, the parties joint motion for
court hosted settlement conference will be denied without prejudice to renewal after the time for
discovery and ruling on any motions for summary judgment has passed. The parties, may of course,

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agree to conduct a mediated settlement conference at any time during the discovery period. Local
Civil Rule 101.1a(a).
In sum, based upon the foregoing, plaintiff’s motion to certify class (DE 7) is DENIED
without prejudice, and the parties’ motion for court hosted settlement conference (DE 20) is
DENIED without prejudice. An initial order for planning and scheduling in this case will follow.
So ordered, this the 11th day of October, 2013.

_____________________________
LOUISE W. FLANAGAN
United States District Judge

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