HSBC Bank USA, National Association v. Resh et al

Filing 676

MEMORANDUM OPINION AND ORDER granting Third Party Plaintiffs Ron Resh and Valarie Reynolds-Resh's 530 MOTION for Summary Judgment and awarding judgment in their favor against Brosnac in the amount of $16,432,938. Signed by Judge Robert C. Chambers on 4/4/2016. (cc: attys; any unrepresented parties) (mkw)

IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION

HSBC BANK USA,
NATIONAL ASSOCIATION,
Plaintiff,
v.

CIVIL ACTION NO. 3:12-cv-00668

RON RESH and
VALARIE REYNOLDS-RESH,
Defendants; Counter Claimants;
and Third Party Plaintiffs,
v.
REALTY CONCEPTS, LTD,

Cross Claimant,
and
ANDREW BROSNAC,
Third Party Defendant and Cross Defendant.

MEMORANDUM OPINION AND ORDER
Pending before the Court is Third Party Plaintiffs Ron Resh and Valarie Reynolds-Resh’s
(“the Reshes”) Motion for Summary Judgment Against [Third Party Defendant] Andrew Brosnac
(“Brosnac”). ECF No. 530. For the reasons set forth below, the Court GRANTS Third Party
Plaintiffs’ Motion (ECF No. 530) and awards judgment in their favor against Brosnac in the
amount of $16,432,938.
I.

Legal Standard

To obtain summary judgment, the moving party must show that there is no genuine issue
as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R.
Civ. P. 56(a). In considering a motion for summary judgment, the Court will not “weigh the
evidence and determine the truth of the matter.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
249 (1986). Instead, the Court will draw any permissible inference from the underlying facts in
the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 587–88 (1986).
Although the Court will view all underlying facts and inferences in the light most favorable
to the nonmoving party, the nonmoving party nonetheless must offer some “concrete evidence
from which a reasonable juror could return a verdict in his favor.” Anderson, 477 U.S. at 256.
Summary judgment is appropriate when the nonmoving party has the burden of proof on an
essential element of his or her case and does not make, after adequate time for discovery, a showing
sufficient to establish that element. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). The
nonmoving party must satisfy this burden of proof by offering more than a mere “scintilla of
evidence” in support of his position. Anderson, 477 U.S. at 252.
“‘[W]here the moving party has the burden—the plaintiff on a claim for relief or the
defendant on an affirmative defense—his showing must be sufficient for the court to hold that no
reasonable trier of fact could find other than for the moving party.’” Proctor v. Prince George’s
Hosp. Ctr., 32 F. Supp. 2d 820, 822 (D. Md. 1998) (quoting Calderone v. United States, 799 F.2d
254, 259 (6th Cir. 1986)). “Thus, if the movant bears the burden of proof on an issue, . . . he must
establish beyond peradventure all of the essential elements of the claim or defense to warrant
judgment in his favor.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986).
II.

Discussion

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The facts of this case are detailed in the Court’s Memorandum Opinions and Orders entered
on February 8, 2016 (ECF No. 649) and on February 12, 2016 (ECF No. 660). The Court adds the
following additional facts pertinent to the Reshes’ claims against Brosnac. In general, Brosnac’s
participation in this litigation has been limited to the following instances: he filed an Answer, pro
se, on September 18, 2014, generally denying the Reshes’ Complaint and he was deposed. He has
filed no response to the instant motion. Nevertheless, finding no genuine issue of material fact
remains, the Court grants the Third Party Plaintiffs’ Motion.
As more fully explained in the earlier opinions, Brosnac was retained by the Reshes as a
broker and consultant, guiding them in the purchase of commercial real estate for investment
purposes. As such, he became the conduit for information and documents between the Reshes and
other parties to the transactions (i.e. the bank, Samuel Pearson (“Pearson”), Spaar and related
companies, and other parties to this suit which played roles in the transactions).
As a result of his role in the Resh transactions and others, Brosnac was the target of a
subsequent Superseding Indictment in the United States District Court for the Middle District of
Pennsylvania, to which he entered a guilty plea as to Count One of the Indictment in 2014. ECF
No. 531, at 8; ECF No. 530, Exs. 5, 6. The Superseding Indictment, in summary, alleged that
Brosnac led a fraudulent scheme involving the Reshes’ transactions and a number of other similar
transactions (also involving Pearson) throughout the country with other investors. ECF No. 530,
Exs. 5, 6. The Superseding Indictment specifically identifies the Reshes’ West Virginia Jiffy Lube
transactions among the Overt Acts carried out by Brosnac and Pearson intended to defraud the
Reshes and others. Id. Ultimately, the sentencing court ordered Brosnac to pay restitution to the
Reshes, although the total amount was well below what investors lost as a result of the scheme.

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In addition to the facts established by Brosnac’s guilty plea to the Superseding Indictment,
the Reshes, through discovery and documents in support of their Motion, further establish
Brosnac’s role and conduct in the scheme. The Court has noted in prior opinions that some
documents and other critical information were made known to the Reshes; therefore, as previously
indicated the Reshes are liable to Plaintiff HSBC Bank and their claims against other parties have
been dismissed. However, the unrefuted evidence also demonstrates that Brosnac misrepresented
and withheld material information from the Reshes as part of this scheme. For instance, Brosnac
knew, but withheld, that Pearson was using the Resh transaction essentially to fund his acquisition
of a number of other Jiffy Lubes, thus inflating their value and the rent to be paid. Brosnac also
withheld important documents concerning the appraisals, the denial of credit by an earlier
financing source, Peanut Oil’s financial statements, and the full nature of the “double escrow”
structure. As a result of Brosnac’s fraudulent conduct, the Reshes were induced to invest their
funds in the West Virginia properties, the success of which depended on Pearson’s ability to pay
rents greatly in excess of the market value.
1. Analysis
As the Reshes indicate in their memorandum in support of their Motion for Summary
Judgment, if facts have been previously litigated in a prior action, and those same facts were
necessary for the determination of the first case, a party can be collaterally estopped from
“relitigating an identical issue with the same party or his privy.” Parklane Hosiery Co. v. Shore,
439 U.S. 322, 326 (1979). Specifically, “[a] party seeking to rely on the doctrine of collateral
estoppel is obliged to establish five elements: (1) that the issue sought to be precluded is identical
to one previously litigated; (2) that the issue was factually determined in the prior proceeding; (3)
that the issues’ determination was a critical and necessary part of the decision of the prior

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proceeding; (4) that the prior judgment is final and valid; and (5) that the party against whom
collateral estoppel is asserted had a full and fair opportunity to litigate the issues in the previous
forum.” Collins v. Pond Creek Mining Co., 468 F.3d 213, 217 (4th Cir. 2006) (internal citations
omitted). Furthermore, as applicable to the case here, “[t]he doctrine of collateral estoppel may
apply to issues litigated in a criminal case which a party seeks to relitigate in a subsequent civil
proceeding. . . . In some instances, the criminal conviction may be a plea agreement: a defendant
is precluded from retrying issues necessary to his plea agreement in a later civil suit.” United States
v. Wright, 839 F.2d 193, 196 (4th Cir. 1987).
As such, and in accordance with this precedent, the Court finds that Brosnac is precluded
from relitigating the facts determined in the Superseding Indictment. ECF No. 530, Exs. 5, 6. The
Reshes’ provide the following analysis regarding this issue:
Relating to the five elements of collateral estoppel discussed above,
Brosnac’s guilty plea meets the requirements for preclusion of the issues of material
fact in this matter. . . . [T]he elements of each civil claim[] . . . . [are identical to]
the issues that were in dispute in Brosnac’s prior criminal case in regards to the
necessary facts. Further, the Middle District of Pennsylvania determined the factual
basis to convict on these facts were sufficient and accepted Brosnac’s plea. The
charge of conspiracy which Brosnac pled to requires an agreement between two or
more persons, followed by an overt act, making it necessary to determine Brosnac’s
agreement with Pearson, the purpose of the agreement, and the conduct comprising
the overt acts, which under the Indictment specifically included the transaction
regarding the West Virginia Properties. . . . Brosnac has waived a direct appeal and
failed to file a timely appeal, has not requested or been granted habeas corpus relief,
and therefore his conviction is valid and final. Finally, at the time Brosnac entered
into the plea he was being given a full and fair opportunity to litigate these issues,
having been provided with publicly-funded counsel and all necessary incentive to
present a defense given the severity of the criminal penalties; instead Brosnac chose
to waive that right and admit his guilt. Accordingly, as the issues are identical to
those in the criminal case, the court in that matter determined the evidence
sufficient to convict on the facts, the facts were necessary for the conviction,
Brosnac had no further right to appeal and the conviction is valid and final, and
Brosnac had an opportunity to fully litigate the fact, the elements set forth in Collins
for issue preclusion are met and Brosnac is collaterally estopped from relitigating
those facts here.

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ECF No. 531, at 13–14. The Court agrees. Therefore, both Brosnac’s guilty plea to Count One of
the Superseding Indictment and the unrefuted evidence provided by the Reshes’ in their Motion
for Summary Judgment (discussed infra) establish Brosnac’s liability under each of the Reshes’
claims, including their Racketeer Influenced and Corrupt Organizations Act (“RICO”) claim.
Because no issue of material fact remains, the Court GRANTS Third Party Plaintiffs’ Motion for
Summary Judgment. ECF No. 530.
2. Damages
On the issues of damages, the Court FINDS that the Reshes’ damages are the amount of
the judgment obtained by Plaintiff HSBC Bank against the Reshes, $4,125,000, and the down
payment made by them in the amount of $1,244,654, together with their closing costs of $107,992,
totaling $5,477,646. The Court denies the Reshes’ other damage claims as too speculative. Because
they prevail on the RICO claim, the Reshes are entitled to treble damages, amounting to a total of
$16,432,938.
III.

Conclusion

For the foregoing reasons, Third Party Plaintiffs Ron Resh and Valarie Reynolds-Resh’s
Motion for Summary Judgment Against Andrew Brosnac (ECF No. 530) is GRANTED.
The Court DIRECTS the Clerk to send a copy of this written Opinion and Order to counsel
of record and any unrepresented parties.

ENTER:

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April 4, 2016