Free Brief in Support of Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 01-cv-0275-JLK DOMINICK PAOLONI, et al., Plaintiffs, vs. DONALD I. GOLDSTEIN, et al., Defendants, and NBSA, LLC, et al., Relief Defendants. ______________________________________________________________________________ MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT AGAINST JOSEPH IERACITANO AND BLUE PAPER INC. ______________________________________________________________________________ The Plaintiffs seek summary judgment against Joseph Ieracitano ("Ieracitano") and Blue Paper Inc. ("Blue Paper") (Ieracitano and Blue Paper are hereinafter collectively referred to as the "Ieracitano Defendants") pursuant to; A. a Settlement Agreement dated January 10, 2003 between Viatical Administrators Inc., a Colorado Corporation ("VAI") on behalf of and with the authority of the Plaintiffs, Ieracitano, Blue Paper, Joseph F. Ieracitano as former Trustee of the Iglesias Family Trust and Greenspoon, Marder, Hirschfeld, Rafkin, Ross and Berger PA, as Closing Agent. (the "Settlement Agreement"); B. an Order Approving Settlement Agreement, Entry of Order and Order Vacating Preliminary Injunction as to the Ieracitano Defendants (Docket Entry #440) (the

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"Order Approving Settlement Agreement") pursuant to which this Court approved and made an Order of this Court the Settlement Agreement and; C. the Corrected Final Judgment of Foreclosure entered in the case of Viatical Administrators Inc. vs. Blue Paper Inc. et al. case number 07-CV-61517HUCK/SIMONTON, United States District Court for the Southern District of Florida (the case is hereinafter referred to as the "Florida Litigation" and such Court is hereinafter referred to as the "Florida District Court"). The Plaintiffs seek summary judgment against the Ieracitano Defendants jointly and severally, in the amount of one million four hundred thirty two thousand seven hundred forty one dollars and twenty four cents ($1,432,741.24) together with interest at the rate of 6% per annum from March 3, 2008 until the judgment is paid in full. In support of the Motion for Summary Judgment, and in addition to this Memorandum the Plaintiffs have filed the following: (a) Affidavit of Rocky K. Smith (b) Statement of Undisputed Facts (c) Exhibits in Support of Motion for Summary Judgment In accordance with Fed. R. Civ. P. 56(c), the pleadings, court orders, affidavit of Rocky K. Smith and exhibits show there is no genuine issue as to any material fact and that the Plaintiffs are entitled to judgment as a matter of law.

FACTS On May 23, 2002 Plaintiffs filed their First Supplement to Second Amended Complaint asserting for the first time claims against the Ieracitano Defendants. (Docket Entry #266). The claims against the Ieracitano Defendants included claims for relief pursuant to 18 U.S.C. §1964(c); for relief under §772.104 Fla. Stat., for negligent misrepresentation, breach of contract,

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constructive trust, equitable lien, accounting and injunctive relief. The Ieracitano Defendants appeared in this case on June 11, 2002. (Docket Entry #279). On January 10, 2003 the

Settlement Agreement was entered into between VAI on behalf of and with authority of the Plaintiffs, the Ieracitano Defendants, Joseph F. Ieracitano as former Trustee of the Iglesias Family Trust and Greenspoon, Marder, Hirschfeld, Rafkin, Ross and Berger PA as Closing Agent. (the Settlement Agreement is Exhibit A-1). On January 14, 2003 the Settlement

Agreement and each and every provision thereof was made an Order of this Court pursuant to the Order Approving Settlement Agreement. (Docket Entry #440). (The Order Approving Settlement Agreement is Exhibit A-2). The Settlement Agreement was entered into to fully and finally settle the Plaintiffs claims against the Ieracitano Defendants (Settlement Agreement pg. 7; Exhibit A-1) and to provide for repayment by the Ieracitano Defendants to the Plaintiffs of those monies improperly obtained from the Plaintiffs by the Ieracitano Defendants. In the Order Approving Settlement Agreement, this Court specifically found that the Ieracitano Defendants owe the Plaintiffs the sum of six hundred eighty two thousand five hundred dollars ($682,500.00), plus interest at the rate of eight percent (8%) per annum, compounded annually, such interest commencing March 1, 1999 and continuing until fully paid, and that the Ieracitano Defendants owed to the Plaintiffs what is defined as the "Contingent Amount" in the Settlement Agreement together with interest at the rate of eight percent (8%) per annum, compounded annually, such interest having commenced March 1, 1999 and continuing until the Contingent Amount is fully paid. (See Order Approving Settlement Agreement ¶ 1, 2, and 3; Exhibit A-3) After entry of the Order Approving Settlement Agreement, the Plaintiffs proceeded in good faith and in accordance to the Order Approving Settlement Agreement and the Settlement Agreement. In late February and early March 2007 Plaintiffs discovered the Ieracitano

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Defendants had committed material breaches of the Settlement Agreement. For such material breaches, the Plaintiffs sought relief from this Court including modification of the Settlement Agreement. The specific relief sought by the Plaintiffs is fully set forth in the Statement of Undisputed Facts and in an effort to avoid repetitive statements is not again fully set forth herein. On April 11, 2007 a hearing upon the relief motions was held. Ieracitano participated

telephonically in the hearing. On Aril 11, 2007 this court found the Ieracitano Defendants in contempt for material violation of the Order Approving Settlement Agreement. (Docket Entry #930) and entered a preliminary injunction against the Ieracitano Defendants (Docket Entry #927). On April 18, 2007 this Court entered the written Order Modifying Settlement Agreement and Related Orders (the "Order Modifying the Settlement Agreement") (Docket Entry #933) pursuant to which this Court made certain modifications to the Settlement Agreement and in addition; (a) Ordered that Plaintiffs have and possess an equitable purchase money mortgage lien in the amount of six hundred eighty two thousand five hundred dollars ($682,500.00) plus interest at the rate of eight percent (8%) per annum, compounded annually, from March 1, 1999 until paid, such lien arising March 1, 1999; (b) Ordered that Plaintiffs possess an equitable lien in the amount of the "Contingent Amounts" as defined in the Order Approving Settlement Agreement with interest at the rate of eight percent (8%) per annum, compounded annually, from March 1, 1999 until fully paid, such lien arising March 1, 1999.

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Effective October 12, 2007, the Plaintiffs assigned to VAI the equitable liens granted to them by this Court in the Order Modifying Settlement Agreement. The reason for such

assignment was the intention to institute litigation in the Florida District Court to foreclose the equitable liens and, with respect to any recoveries deriving from such action, VAI was the real party in interest. (See Affidavit of Rocky K. Smith, ¶ 10 for a full statement of the bases for assignment of the equitable liens to VAI). On October 24, 2007, VAI instituted the Florida Litigation in the Florida District Court by filing a Complaint for Foreclosure of Lien and Other Relief. (Florida Litigation, Docket Entry #1; Exhibit A-3) In the Florida Litigation VAI sought foreclosure of the equitable liens and a determination that its equitable liens were first priority liens upon the subject property. The Ieracitano Defendants were Defendants in the Florida Litigation however, failed to appear and defaults were entered against them. (Florida Litigation, Docket Entry #38) Also named as a Defendant in the Florida Litigation was BankUnited FSB. ("BankUnited") On or about January 28, 2003, BankUnited had made a construction loan to Blue Paper for purpose of constructing townhomes upon the subject property. (hereinafter the "Blue Paper Property") In exchange for such loan, BankUnited received a construction loan mortgage upon the same property as VAI's equitable liens. In the Florida Litigation,

BankUnited counterclaimed for foreclosure of its construction loan mortgage and a determination that its construction loan mortgage was superior VAI's equitable liens. The trial of the Florida Litigation occurred to the court on February 21, 2008. (See trial transcript; Exhibit A-4) In its bench ruling at conclusion of the trial, the Florida District Court determined that both BankUnited and VAI possessed valid liens and encumbrances upon the Blue Paper Property however, the construction loan mortgage of BankUnited was superior to the equitable liens of VAI. (see transcript of trial pg. 164 ll.15 to pg. 177 line 17; Exhibit A-4) On

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March 3, 2008, the Florida District Court entered the written Corrected Final Judgment of Foreclosure in which the Florida District Court Ordered the following: a. BankUnited FSB was owed the total sum of five million eight hundred thirty eight thousand two hundred fifty eight dollars and sixty eight cents ($5,838,258.68) and holds a lien superior to any other claims including the equitable liens of VAI. (Corrected Final Judgment of Foreclosure, Exhibit A5, ¶ 1 and 2) b. VAI possessed equitable liens and is owed the amount of one million four hundred thirty two thousand seven hundred forty one dollars and twenty four cents ($1,432,741.24). This amount consists of principle of seven hundred nineteen thousand three hundred thirteen dollars and sixty eight cents ($719,313.68); interest in the amount of four hundred thirty one thousand seven hundred forty three dollars and eighteen cents ($431,743.18) and attorneys fees of two hundred eighty one thousand six hundred eighty four dollars and forty eight cents ($281,684.48). Further, such equitable liens are subordinate to the construction loan mortgage of BankUnited however superior to all other liens or claims in the Blue Paper Property. (Corrected Final Judgment of Foreclosure, Exhibit A-5, ¶ 3) c. The Blue Paper Property be sold by the United States Marshall to the highest bidder at public sale on April 22, 2008 in Ft. Lauderdale Florida. (Corrected Final Judgment of Foreclosure, Exhibit A-5, ¶ 5) The property was sold as ordered by the Florida District Court on April 22, 2008. BankUnited utilized $100,000 of its credit bid and acquired the Blue Paper Property. BankUnited

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has received a United States Marshall's Deed for the Blue Paper Property and is now the lawful owner with all other liens and encumbrances including VAI's equitable liens extinguished. (Florida Litigation, Docket Entry #93) VAI did not bid at the public sale in an effort to protect its second position as determined by the Florida District Court for reason that VAI did not think the Blue Paper Property to be worth the amount determined to be owed to BankUnited of five million eight hundred thirty eight thousand two hundred fifty eight dollars and sixty eight cents ($5,838,258.68), much less the combination of what the Florida District Court determined was owed to BankUnited and VAI. As a result, VAI will not realize any monies from the Blue Paper Property. Based upon determinations made by this court that the amount of Six hundred eighty two thousand five hundred dollars ($682,500.00) plus the "Contingent Amounts" are owed by the Ieracitano Defendants to the Plaintiffs, and the final determination of such amounts by the Florida District Court in the amount of one million four hundred thirty two thousand seven hundred forty one dollars and twenty four cents ($1,432,741.24), Plaintiffs now seek judgment against the Ieracitano Defendants.

ARGUMENT Fed. R. Civ. P. 56(c) provides in pertinent part: "The judgment sought should be rendered if the pleadings, the discovery and disclosure materials on file, and the affidavits show that there is no genuine issue as to any material fact and that the Movent is entitled to judgment as a matter of law." Summary judgment procedure is properly regarded not as a disfavored procedural shortcut but rather as an integral part of the Federal Rules as a whole which are designed "...to secure the just, speedy and inexpensive determination of every action and proceeding" Fed. R. Civ. P. 1;

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Celotex Corp. v. Catrett, 477 US 317, 327; 106 S.Ct. 2548, 2555; 719 L.Ed.2d 265 (1986). By its very terms the summary judgment standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly support motion for summary judgment; the requirement is that there is no genuine issue of material fact. Anderson v. Liberty Lobby Inc., 477 US 242, 247-48; 106 S.Ct. 2505, 2510; 91 L.Ed. 2d 202 (1986). One of the principle purposes of summary judgment is to isolate and dispose of factually unsupported defenses and the rules shall be interpreted in a fashion so as to accomplish such purpose. Louis, Federal Summary Doctrine, a Critical Analysis, 84 Yale Law Journal 745, 752 (1974); Celotex Corp. v. Catret, 477 US at p. 323, 324. As to the materiality requirement of Rule 56(c), the substantive law will identify which facts are material. Only disputes concerning the facts which might affect the outcome of the suit under the governing law will properly preclude entry of summary judgment. Factual disputes which are irrelevant or unnecessary will not be counted. Anderson v. Liberty Lobby Inc., 477 US at p. 248. Also see 10A.,C. Right, A. Miller, M. Kane Federal Practice of Procedure §2725 pp. 93-95 (1983). The dispute about the material fact must be "genuine", that is, the evidence must be such that a reasonable jury could return a verdict in favor of the non moving party. Anderson v. Liberty Lobby Inc., 477 US at p. 248. This standard mirrors the standard for directed verdict under Fed. R. Civ. P. 50(a) which is that the trial judge must direct a verdict if, under the governing law, there can be but one reasonable conclusion as to the verdict. id. at p. 250. Rule 56(c) provides that when a properly supported motion for summary judgment is made, the adverse party "... must set forth specific facts showing there is a genuine issue for trial." In the absence of the non moving party doing so, Rule 56(c) provides the trial judge shall grant summary judgment in favor of the moving party.

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In the present case, there is no genuine issue of material fact as to the prior orders of this Court and the ruling of the Florida District Court. Such rulings are that the Ieracitano

Defendants owe to the Plaintiffs the sum on one million four hundred thirty two thousand seven hundred forty one dollars and twenty four cents ($1,432,741.24) together with interest at the rate of 6% per annum. As such, the Plaintiffs, of behalf of purchasers whose interests they represent in this litigation are entitled to judgment against the Ieracitano Defendants in the amount of one million four hundred thirty two thousand seven hundred forty one dollars and twenty four cents ($1,432,741.24) together with interest at the rate of 6% per annum from March 3, 2008 until fully paid.

Law Of The Case Doctrine Should Be Applied In Favor Of Plaintiffs Under the "law of the case" doctrine, findings made at one point during the litigation become the "law of the case" at subsequent stages of that same litigation. United States v. Webb, 98 F.3d 585, 587 (10th Cir, 1996). The "law of the case" is a judicial doctrine designed to promote finality. Flannery v. Allstate Insurance Company, 49 F. Supp. 2d 1223, 1226 (D. Colo. 1999). Once a court decides an issue, the doctrine comes into play to prevent the relitigation of that issue in subsequent proceedings in the same case. id. The law of the case doctrine should be applied in the sound discretion of the Court to effectuate the proper administration of justice. United States v. Carson, 793 F.2d 1141, 1147 (10th Cir. 1986). It expresses the practice that courts generally refuse to reopen what has been decided, but it is not a limit on their power. Messinger v. Anderson, 225 US 436, 444; 32 S.Ct. 739, 740; 56 L.Ed. 1152 (1912). The circumstances justifying departure from the law of the case doctrine are narrow. The law of the case doctrine must be followed unless the evidence on a subsequent trial was substantially different, controlling authority has since made a contrary decision of law applicable to such issue

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or the decision was clearly erroneous and would work a manifest injustice. Flannery v. Allstate Insurance Company, 49 F. Supp. 2d at p. 1226. In the Order Approving Settlement Agreement this Court determined that the Ieracitano Defendants owe to the Plaintiffs the following: a. Six hundred eighty two thousand five hundred dollars ($682,500.00) together with interest at the rate of eight percent (8%) per annum, compounded annually, such interest commencing on March 1, 1999; and b. What is defined as the "Contingent Amounts" in the Settlement Agreement together with interest thereon at the rate of eight percent (8%) per annum, compounded annually, such interest commencing on March 1, 1999. The resolution of the issues of what the Ieracitano Defendants owed to the Plaintiffs is the law of the case. It is not subject to relitigation, except in the narrow circumstances of; (1) evidence on a subsequent trial was substantially different, (2) controlling authority has since made a contrary decision of applicable law on such issue or (3) the decision was clearly erroneous and would work a manifest injustice. Simply, none of the delineated narrow

circumstances are applicable. Accordingly, the determinations made by this Court in the Order Approving Settlement Agreement of the amounts owed by the Ieracitano Defendants to the Plaintiffs are the "law of this case". This court did not determine the precise amount of the "Contingent Amounts". This amount was determined by the Florida District Court in the Florida Litigation in the number contained within the Florida Districts Court's determination of the principle amount of the equitable liens of seven hundred nineteen thousand three hundred thirteen dollars and sixty eight

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cents ($719,313.68).

The Florida District Court accepted this Courts determination of an

equitable lien in the amount of six hundred eighty two thousand five hundred dollars ($682,500.00). (See Florida Litigation, Docket Entry #61, Joint Pre-Trial Stipulation, p.10 ¶ j; Trial Transcript pg 165 ll. 14-18). The Florida District Court determined the Contingent Amount to be thirty six thousand eight hundred thirteen dollars and sixty eight cents ($36,813.68), which when added to the $682,500.00 totals the seven hundred nineteen thousand three hundred thirteen dollars and sixty eight cents ($719,313.68) amount determined by the Florida District Court as owning to VAI.

This Court Should Follow The Florida District Court's Determination Of The Amount Owed To VAI In The Corrected Final Judgment Of Foreclosure In recognizing that one federal court must recognize the valid orders another federal court, the Third Circuit Court of Appeals stated the following: "On the other hand, the matter here is between two courts of the same sovereignty, the United States of America. If one federal court failed to give effect to the judgment of another federal court, the Supreme Court of the United States as the head of the judicial system of the United States would compel it to do so because "they are many members, yet one body." An analogy is found in the conclusive effect in a federal court given the fact finding of a federal administrative commission." Caterpillar Tractor Company v. International Harvester Company, 120 F.2d 82, 86 (3d Cir. 1941) More recently, in Employers Reassurance Corp. v. Mid Continental Casualty Company, 358 F.3d 757, 765 (10th Cir. 2004) it was held that the full faith and credit clause of the United States Constitution (Article IV, §1) is not applicable to federal judicial proceedings. However, the full faith and credit clause as well as its implementing statue, 28 U.S.C. §1738, and interstitial federal common law dictates that courts of the United Sates must recognize and give

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effect to valid judgments rendered by other courts of the United States. 18 Moore's Fed. Prac. §130.01 (Mathew Bender 3d). The Corrected Final Judgment of Foreclosure is a valid order of the Florida District Court.1 VAI, as Plaintiff, properly submitted itself to the jurisdiction of the Florida District Court. Proper defaults were entered against Ieracitano and Blue Paper. As a valid order of the Florida District Court, this Court should recognize and give effect to the determination of the Florida District Court that the amount owed by the Ieracitano Defendants to the Plaintiffs pursuant to the Order Approving Settlement Agreement and the Order Modifying Settlement Agreement is one million four hundred thirty two thousand seven hundred forty one dollars and twenty four cents ($1,432,741.24). CONCLUSION The Plaintiffs' Motion for Summary Judgment relies upon the combination of prior determinations made by this Court and the Florida District Court regarding the amounts owed by the Ieracitano Defendants to the Plaintiffs. There is no genuine issue of material fact as to those prior orders and determinations. Under the applicable law as set forth above, the Plaintiffs are entitled to judgment in their favor and against Joseph F. Ieracitano and Blue Paper Inc. jointly and severely, in the amount of one million four hundred thirty two thousand seven hundred forty one dollars and twenty four cents ($1,432,741.24) together with interest at the rate of 6% per annum, until fully paid.

VAI does not agree with the Florida District Court's determination that its equitable liens are inferior to the construction loan mortgage of BankUnited FSB and has appealed such determination to the 11th Circuit Court of Appeals. However, the appeal does not contest the Florida District Court's determination of the amount owed, one million four hundred thirty two thousand seven hundred forty one dollars and twenty four cents ($1,432,741.24).

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Respectfully submitted,

DILL DILL CARR STONBRAKER & HUTCHINGS, P.C.

/s/ John A. Hutchings John A. Hutchings 455 Sherman Street, Suite 300 Denver, Colorado 80203 Telephone: (303) 777-3737 Facsimile: (303) 777-3823 E-mail: [email protected] ATTORNEYS FOR PLAINTIFFS

CERTIFICATE OF SERVICE I hereby certify that on June 16th, 2008 I electronically filed the foregoing MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT AGAINST JOSEPH IERACITANO AND BLUE PAPER INC. with the Clerk of Court using CM/ECF System, which will send notification of such filing to the following e-mail addresses: [email protected] [email protected] [email protected] [email protected]

and I hereby certify that I have mailed the MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT AGAINST JOSEPH IERACITANO AND BLUE PAPER to the following non-CM/ECF participants by depositing same in the United States mail, postage prepaid, addressed to the following on the 16th day of June, 2008: Akerman Senterfitt 350 East Las Olas Blvd., #1600 Ft. Lauderdale, FL 33301 Gary Hoskie Professional Consultants & Managers, Inc. P.O. Box 644320 Vero Beach, FL 32954-4320 Mr. Isadore Cohen 1920 East Hallandale Blvd., #626 Hallandale, FL 33009 Mr. Joseph Ieracitano Blue Paper, Inc. 2608-10 North Ocean Boulevard Pompano Beach, FL 33062

/s/ Juliann Pettaway

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