Chase v. LOP Capital LLC et al

Filing 253

ORDER and OPINION RULING ON REPORT AND RECOMMENDATION adopting 242 Report and Recommendation, denying 193 Motion to Compel, Motion for Contempt, Motion for Sanctions, Motion for Attorney Fees filed by Nelson S Chase. Signed by Honorable Bruce Howe Hendricks on 2/27/17. (alew, ) Modified on 2/27/2017 to edit text (alew, ).

IN THE DISTRICT COURT OF THE UNITED STATES
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
)
Civil Action No.: 2:13-162-BHH
)
Plaintiff, )
)
)
vs.
ORDER AND OPINION
)
)
LOP Capital, LLC, Strategic Lending
)
Solutions, LLC, Brian Knight, and
)
Michael Loprieno,
)
Defendants. )
______________________________ )
Nelson S. Chase, Esq.,

On January 15, 2013, this civil action was removed from state court. In
accordance with 28 U.S.C. § 636(b)(1) and Local Civil Rule 73.02 D.S.C., this matter
was referred to United States Magistrate Judge Kevin F. McDonald, for consideration of
pretrial matters. After a settlement was reached by the parties, Plaintiff filed a motion to
compel, among other things. On January 27, 2017, the Magistrate Judge prepared a
thorough Report and Recommendation (“Report”), which recommends denying Plaintiff’s
various motions. (ECF No. 242.) Plaintiff filed timely objections to the Report. (ECF No.
250.) Defendant Knight filed a “motion to reconsider order of entry of judgment”, which is
better characterized as an objection to the Report. (ECF No. 251.) For the reasons set
forth herein, the Court adopts the Report in part and directs Plaintiff to file an amended
Confession of Judgment #1 if appropriate.

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BACKGROUND AND PROCEDURAL HISTORY1
The Report sets forth in detail the relevant facts and standards of law, and the
Court incorporates them and summarizes below only in relevant part. Plaintiff
represented one or more of the defendants in several civil actions arising out of the same
operative facts and sharing a common objective; namely, obtaining satisfaction of a
deficiency judgment.  On December 17, 2012, Plaintiff filed the instant action against the
defendants in state court, which was later removed to federal court. In his second
amended complaint, Plaintiff alleged claims for breach of written contract, breach of oral
contract, fraud, fraudulent misrepresentation and conspiracy to commit fraud, and
quantum meruit. He alleged that the defendants owed him $272,431.31 in attorney’s fees
and costs. On October 14, 2013, the defendants filed their answer to Plaintiff’s second
amended complaint, alleging counterclaims against Plaintiff for legal malpractice, breach
of contract, intentional interference with prospective contractual relations, tortious
interference with existing contractual relations, and unjust enrichment. On October 16,
2014, this Court granted summary judgment to the defendants on Plaintiff’s claims for
fraud, fraudulent misrepresentation, and conspiracy to commit fraud.
The parties then engaged in mediation before Magistrate Judge McDonald on
June 4, 2015, and reached an agreement for settlement of the case. The terms of the
settlement were placed on the record, including that this Court would retain jurisdiction
over enforcing the settlement, and the Court dismissed the case. On July 8, 2015,
Plaintiff, through his attorney of record at that time, moved to compel settlement,
asserting that the defendants had not yet paid him $5,000 that was allegedly overdue.

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Unless noted, the facts are drawn from the Report.

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On January 14, 2016, this Court entered a Consent Order of dismissal finding the motion
to compel settlement moot. The Consent Order set out the terms of the parties’
settlement agreement, as quoted verbatim in the Report. The settlement agreement
provides that in the event of default, Plaintiff can enforce Confessions of Judgment
against the defendants, which serves as security for the agreed upon payments. The
agreement outlines specific steps Plaintiff must follow to enforce the Confessions of
Judgment.
On July 11, 2016, Plaintiff filed a pro se motion to compel settlement, to hold
Defendants Brian Knight (“Knight”) and Michael Loprieno (“Loprieno”) (collectively,
“Defendants”) in contempt, and for sanctions and attorney fees, claiming that Loprieno
and Knight had not made certain payments due under the settlement agreement. In his
motion, Plaintiff stated that as of July 11, 2016, he had received $14,999.63 ($5,000
down payment, 11 monthly payments of $833.33, and one monthly payment of $833.00)
from Defendants. He claimed Defendants owed him $180 for the cost of the wire
transfers. Defendants responded pro se in opposition to Plaintiff’s motion, arguing that
the additional lump sum payment was not due until August 3, 2016, and that all the
requirements of the settlement agreement had thus far been met.
On August 3, 2016, Plaintiff filed the Confessions of Judgment with the requisite
affidavit averring that he followed the steps outlined in the settlement agreement. (ECF
Nos. 197; 197-1.) At the Court’s request, Plaintiff filed a declaration on October 14, 2016,
stating that Knight had made installment payments for July, August, and September on
July 24th, August 24th, and September 23rd, respectively. These payments, due on the

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15th of the month, appear to have been made within the ten-day grace period as
provided in the settlement agreement. Plaintiff, however, asserted that the July payment
was not made within the grace period, and that Knight was therefore in default, rendering
the balance of the monthly payments due. With respect to Loprieno, Plaintiff stated that
he never paid the $10,000 lump sum. Shortly thereafter, Plaintiff filed a supplemental
brief, restating the claims made in his declaration and arguing that Defendants
committed fraud through the transfer of worthless stock. (ECF No. 229 at 2–3.)
Specifically, Plaintiff argued that the settlement agreement hinged on a transfer of stock
worth $15,000 from Knight to Loprieno, which would be partial security for $15,000 of
Loprieno’s obligation for the lump sum payments. (Id. at 3.) Plaintiff claimed that the
stock transferred to Loprieno was worthless and evidenced Defendants’ attempt to
commit fraud. (Id. at 3–5.)
On December 20, 2016, Plaintiff filed two motions to compel discovery from
Defendants. In the first motion, Plaintiff asserted that Knight has not made the monthly
payments for November or December 2016 and requested that the Court order Knight to
comply with a discovery order. In the second motion, Plaintiff stated that Loprieno has
not made any payments and requested the Court order Loprieno to comply with a
discovery order. On January 26, 2017, Knight filed a response to Plaintiff’s first motion to
compel discovery, asserting that Plaintiff breached the settlement agreement by filing the
motion to compel against him when he was, in fact, in compliance with the settlement
agreement. (ECF No. 244 at 4–5.)

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On January 27, 2017, the Magistrate Judge issued a thorough Report
recommending that the Court deny Plaintiff’s motions. The Magistrate Judge found that
both Defendants defaulted under the terms of the settlement agreement as set out in the
Consent Order. Citing that agreement, Magistrate Judge McDonald found that the proper
remedy for the default was to enter judgment against both Defendants jointly and
severally in the amount of $30,000 in accordance with Confession of Judgment #1 and
against Loprieno in the amount of $30,000 in accordance with Confession of Judgment
#2.  The Court has reviewed the objections to the Report, but finds them to be largely
without merit. Therefore, it will enter judgment accordingly, making a brief modification to
the Report.
STANDARD OF REVIEW
The Magistrate Judge makes only a recommendation to this Court. The
recommendation has no presumptive weight. The responsibility for making a final
determination remains with this Court. Mathews v. Weber, 423 U.S. 261, 270 (1976).
The Court is charged with making a de novo determination of any portions of the Report
to which a specific objection is made. The Court may accept, reject, or modify, in whole
or in part, the recommendation made by the Magistrate Judge or may recommit the
matter to the Magistrate Judge with instructions. See 28 U.S.C. § 636(b)(1). The Court
need not conduct a de novo review when a party makes only “general and conclusory
objections that do not direct the court to a specific error in the magistrate’s proposed
findings and recommendations.” Orpiano v. Johnson, 687 F.2d 44, 47 (4th Cir. 1982). In
the absence of a timely filed, specific objection, the Magistrate Judge’s conclusions are

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reviewed only for clear error. See Diamond v. Colonial Life & Accident Ins. Co., 416 F.3d
310, 315 (4th Cir. 2005).
DISCUSSION
Plaintiff’s objections briefly rehash the same arguments made in his various briefs.
(ECF No. 250.) He claims that the Report fails to consider Defendants’ alleged fraud in
transferring worthless stock and argues that such fraud warrants additional remedies.
(Id. at 2–5.) Specifically, Plaintiff seeks the following modifications to the Report:
1. Find the Defendant in Contempt and award Damages/ Sanctions for not
obeying the June 4, 2015 Agreement Order in the amount of $10,000
against Knight and Loprieno jointly and severally.
2. Order Knight to pay Plaintiff the balance of the periodic monthly
payments due under the remainder of the Agreement[.]
3. Order Knight to pay the Plaintiff an additional $30,000 as judgement [sic]
indicates and as was agreed to by parties.
4. Modify Knight[’]s obligation to pay the Plaintiff $30,000, as agreed in the
settlement, along with Loprieno’s $30,000 jointly and severally with
Defendant Loprieno $10,000. Within 10 days and $20,000 no later than
June 4, 2017. The Balance of the other $30,000 by June 4, 2017 for the
fraud and for failure to provide the security required by the Court under the
Agreement dated June 4, 2015.
5. The Appointment of a receiver, as provided by FRCP 66, for Knight and
Loprieno, with a power to collect the amount of Damages Awarded in favor
of the Plaintiff. . . .
6. Enter a permanent injunction against all assets of Knight and /or
Loprieno until the full amount of the Judgement [sic] plus the awarded
sanctions/ contempt and the fees for the appointed Receiver.
(ECF No. 250 at 5–6.)
Knight objects that the Report wrongly found that he defaulted under the
settlement agreement. Specifically, he claims that the Magistrate Judge failed to

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consider his argument that Plaintiff breached the settlement agreement, thereby ending
Knight’s obligation to continue making monthly payments to Plaintiff. According to Knight,
he did not default under the agreement because he made timely monthly payments to
Plaintiff until the point that Plaintiff breached the settlement agreement by filing the
motion to compel. Knight asks that the Court
return the parties to the state they occupied before the breach by the
Plaintiff, compel the Plaintiff to hold Confession of Judgment #1 as
collateral for that payment, allow the Defendant to make the remaining
payments starting the month of this order and continuing on for the
remaining six months, and compel the Plaintiff to honor the agreement and
discontinue his excessive motion practice or reopening of the case.
(ECF No. 251 at 9.)
In his thorough Report, the Magistrate Judge skillfully parsed through the
complicated record in this case and thoughtfully summarized the parties’ positions both
before and after the Court issued the Consent Order of dismissal. It is clear that the
Magistrate Judge considered the entire record before him, including Knight’s assertions
of breach and Plaintiff’s assertions of fraud through the “worthless” stock transfers. The
Court agrees with the Magistrate Judge’s conclusions that Defendants defaulted and that
the settlement agreement provides the appropriate remedy for default. The Court further
agrees with the Magistrate Judge that Plaintiff’s allegations of fraud do not entitle him to
any additional remedies under the settlement agreement. However, the Court makes a
brief modification to the Magistrate Judge’s recommendation, as discussed below.
As an initial matter, the Magistrate Judge correctly found that both Defendants
defaulted under the terms of the settlement agreement. Specifically, Knight did not make

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the monthly payments in November and December 2016,2 and Loprieno has not made
any lump sum payments. While Knight asserts that his obligation to make payments
ceased once Plaintiff filed the motion to compel, such an understanding is not evident
from the terms of the settlement agreement. Based on the record, the Court cannot find
that Knight was entitled to stop making the monthly payments until he had fulfilled his
obligations under the settlement agreement. Because it does not appear that Knight has
made any payments since October 2016, Knight is in default. As the Magistrate Judge
correctly noted, the settlement agreement expressly provides for specific remedies if
Knight and Loprieno default on their payments, through the enforcement of the
Confessions of Judgment. Plaintiff’s allegations of fraud do not entitle him to any
additional remedies under the settlement agreement.
With respect to a default of the monthly payments, the settlement agreement
provides:
Should any Installment Payment not be paid within ten days after the date
on which it is due the plaintiff is authorized to file Confession of Judgment
#1, provided that the plaintiff must simultaneously file with the confession
an affidavit which: (1) specifies which term or terms of this agreement have
been breached, and (2) affirms that no later than five days prior to filing the
Confession with the Court[,] the plaintiff delivered a notice and opportunity
to cure to the defendants as follows:
Michael Loprieno, 319 Dee Ct., Bloomingdale, IL 60108
Brian Knight, 8 Tregonwell Ct., Algonquin, IL 60 I 02
with mandatory copies via email to:
[e-mail]
[e-mail], and
[e-mail]
(ECF No. 191 at 2.) Further, in the event Loprieno defaults on the lump sum payments,
the settlement agreement states:

2
The record indicates that Knight has not made any monthly payments in 2017.

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Should either of the lump sum payments be missed, the plaintiff is
authorized to file Confession of Judgment #2 provided that the plaintiff
must simultaneously file with the confession an affidavit which (1) specifies
which term or terms of this agreement have been breached and (2) affirms
that no later than five days prior to filing the Confession with the court, the
plaintiff delivered a notice and opportunity to cure to the defendants as
follows:
Michael Loprieno, 319 Dee Ct., Bloomingdale, IL 60108
Brian Knight, 8 Tregonwell Ct., Algonquin, IL 60 I 02
with mandatory copies via email to:
[e-mail]
[e-mail], and
[e-mail]
(ECF No. 191 at 3.)
Per the terms of the settlement agreement, the proper remedy for Defendants’
respective defaults would be to enforce the Confessions of Judgment. However, the
Court finds that Plaintiff has not satisfied the terms of Confession of Judgment #1.
Plaintiff most recently filed an amended affidavit regarding both Confessions of
Judgment on August 3, 2016. (ECF No. 197-1.) With respect to Knight, the affidavit
states that he is “more than 10 calendar days in making payments required under the
settlement agreement.” (Id. at 2.) The affidavit further states that Knight defaulted under
the agreement by failing to provide proof of transfer of stock to Loprieno. (Id. at 2–3.)
At the time Plaintiff filed the amended affidavit (ECF No. 197-1), Knight was not in
default. Specifically, at that point, Knight had made all of his monthly payments within the
grace period. While Plaintiff claims Knight defaulted by failing to transfer stock to
Loprieno, the Court cannot find that such an allegation constitutes default under the
terms of the settlement agreement. Thus, at the time Plaintiff gave Knight the requisite
opportunity to cure his default, there was no actual missing or late payment for Knight to

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cure. While Knight has since defaulted under the agreement by failing to make monthly
payments after October 2016, Plaintiff never filed an affidavit averring to this specific
default and stating that he provided Knight a notice and opportunity to cure the default.
Accordingly, Plaintiff has not complied with the proper steps for enforcing Confession of
Judgment #1 as noted in the settlement agreement, and the Court cannot enforce it as a
remedy for default. Should Plaintiff wish to enforce Confession of Judgment #1 moving
forward, he must follow the terms of the settlement agreement and file the requisite
affidavit.
However, the Court finds that Confession of Judgment #2 is enforceable against
Loprieno. As Plaintiff’s amended affidavit correctly avers, Loprieno defaulted under the
settlement agreement by failing to make the lump sum payment of $10,000 within the
requisite time period. Plaintiff afforded Loprieno notice of and an opportunity to cure this
default, which Loprieno did not do. Accordingly, Plaintiff has complied with the terms of
the settlement agreement in enforcing Confession of Judgment #2.
CONCLUSION
After careful consideration of the relevant motions, responses, and objections, the
Court finds that the parties’ objections are largely without merit and adopts the Report in
part. Accordingly, Plaintiff’s motion to compel and for contempt, sanctions, and attorney’s
fees (ECF No. 193) is DENIED. The proper remedy for the default of Knight and
Loprieno is provided for in the settlement agreement. The Court therefore enters
judgment against Loprieno in the amount of $30,000 in accordance with Confession of
Judgment #2. Should Plaintiff wish to enforce Confession of Judgment #1 against

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Loprieno and Knight, Plaintiff can follow the steps outlined in the settlement agreement;
specifically, by filing the requisite affidavit and allowing Knight the opportunity to cure his
default..
IT IS SO ORDERED.
/s/Bruce Howe Hendricks
United States District Judge
Greenville, South Carolina
February 27, 2017

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