Manti's Transp. v. Kenner

MANTI'S TRANSPORTATION,ALFRED J. MANTI, Plaintiffs, v. PATRICIA KENNER, CT LINES d/b/a CampusCoach, GENERAL ELECTRIC, CITI CAPITAL, Defendants.

13-CV-6546 (SJF)(AYS)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

April 27, 2015

ORDER

FEUERSTEIN, J.

On November 26, 2013, Alfred J. Manti ("Manti" or "plaintiff") and Manti's Transportation (a/k/a Manti's Transportation, Inc.) ("MTI")¹ commenced the instant action (the "Instant Action") against Patricia Kenner ("Kenner"), CT Lines d/b/a Campus Coach ("CT Lines"), General Electric and CitiCapital.² Defendants moved to dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. [Docket Entry No. 14 (the "CT Lines/Kenner MTD"); Docket Entry No. 26 (the "GECC MTD")], and CT Lines and Kenner filed a motion for sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure ("Rule 11") [Docket Entry No. 15 (the "CT Lines/Kenner Sanctions Motion")]. By order dated September 9, 2014, the CT Lines/Kenner MTD and the GECC MTD were both granted, the complaint was dismissed with prejudice, the CT Lines/Kenner Sanctions Motion was grantedand plaintiff was directed to show cause on or before September 19, 2014 why an order should not issue enjoining him from filing any new action or proceeding in this Court without first obtaining leave of the Court. [Docket Entry No. 40 (the "September 2014 Order" or "Manti III")]. On September 18, 2014, plaintiff filed an affidavit, which the Court will, upon plaintiff's request, treat as a motion for reconsideration. [Docket Entry Nos. 44, 47 ("Pl. Reconsideration Mot.")]. Plaintiff filed two subsequent letters with the Court supplementing his reconsideration motion and requesting that the Court refer the case to the U.S. Attorney for possible criminal prosecution. [Docket Entry Nos. 55, 56]. On February 25, 2015, CT Lines and Kenner filed a motion for sanctions and charges of criminal contempt based on alleged representations by Manti that he was preparing to file and commence a new action [Docket Entry Nos. 59 and 60], which Manti opposed. [Docket Entry Nos. 61 and 62].

For the reasons set forth below, plaintiff's motion for reconsideration is denied, a filing injunction and a fifteen thousand dollar ($15,000.00) sanction are imposed on plaintiff according to the terms set forth herein, and plaintiff's request for a "referral" to the U.S. Attorney for criminal prosecution and the motion by CT Lines/Kenner for an order of criminal contempt are both denied.

I. BACKGROUND³

A. Factual Background

In November 1997, MTI, a New York corporation previously engaged in the business of providing commuter bus service in the New York City area, purchased a fleet of buses from athird-party vendor, financed by a loan from Associates Commercial Corporation ("Associates")⁴ pursuant to a security agreement dated March 31, 1998. Manti II, 2008 WL 977192, at *1. Manti was the president and sole shareholder of MTI. Id. Following the purchase, Manti discovered that the buses were defective and unusable, but his repeated demands that the third-party vendor repair the buses went unheeded, and in June 1998, he contacted Lawrence Shute ("Shute"), an Associates branch manager, to notify him that since he could not use the buses, MTI was unable to make timely payments on the various security agreements between MTI and Associates. Id. MTI returned the fleet of buses to the third-party vendor. Id. Without the buses or a new loan from Associates, MTI ceased operations. Id.

On November 18, 1999, approximately fifteen (15) months after MTI returned the buses to the third-party vendor, Associates agreed to provide MTI with a new loan and to refinance MTI's existing debt, and MTI and Associates executed the following agreements: (i) a modification agreement governing the refinancing of MTI's existing debt ("Modification Agreement"); (ii) a security agreement governing a new loan to finance the purchase of two (2) buses from CT Lines (the "November 18, 1999 Security Agreement"); and (iii) a general release (the "Release").⁵ See Manti III, 2014 WL 4437689, at *1. Pursuant to the November 18, 1999 Security Agreement, MTI agreed to pay Associates one hundred eighty thousand four hundredsixty dollars and thirty-two cents ($180,460.32) in monthly installments beginning on January 2, 2000, and Associates agreed to disburse one hundred thirty-three thousand sixty-six dollars ($133,066.00) to CT Lines. Id. at *2. The Release provided that it was executed in consideration for, inter alia, the November 18, 1999 Security Agreement and MTI's performance of all of its obligations thereunder. Id. In compliance with the November 18, 1999 Security Agreement, Associates provided the additional financing to MTI, by disbursing one hundred thirty-three thousand sixty-six dollars ($133,066.00) to CT Lines (the "November 1999 Transaction"), and modified the terms of plaintiff's previous loans as required by the Modification Agreement. Id. (citing Manti I, 2002 WL 369807, at *2). On August 21, 2000, MTI and Associates rolled MTI's debt over into two (2) new security agreements (the "August 21, 2000 Security Agreements"). Id.

B. Procedural Background

1. Manti I

On October 17, 2000, MTI commenced the Manti I action against Associates alleging breach of contract, fraud, unjust enrichment, and tortious interference with prospective business advantage. Manti I, 2002 WL 369807, at *1.⁶ In Manti I, "[a]ll of [MTI's] claims [arose] from its theory that defendant breached its oral agreement to immediately provide [MTI] with the necessary financing to purchase a new fleet of buses by refusing to provide the additional financing for fifteen months after plaintiff returned the buses." Id. at *2 (quotations omitted). Associates raised the Release as a complete affirmative defense to MTI's claims and asserted counterclaims for: (i) breach of the August 21, 2000 Security Agreements in the total amount ofone million two hundred ninety-six thousand five hundred ninety-one dollars and thirty-one cents ($1,296,591.31), plus interest and consequential damages, and (ii) breach of the Release. Id.

On March 8, 2002, Judge Block granted Associates' motion for summary judgment, rejecting MTI's contention that it should not be bound by the Release, the terms of which "clearly bar[red] any and all claims [MTI] may have had against [Associates]." Id. at *3. Judge Block held that "[i]n light of Manti's admission that he signed the release, the clear and unambiguous language of the release, and [MTI's] failure to put forth cognizable facts to make out a fraud, duress or misrepresentation defense, . . . the [R]elease is effective and bars all of [MTI's] claims." Id. Judge Block concluded that "[w]hile the [R]elease does not include an explicit covenant not to sue, the inclusion of the prospective language regarding the entitlement to attorney's fees and costs creates an implied covenant not to sue," which MTI breached by commencing the Manti I suit. Id. at *4. Judge Block held that Associates was entitled to an award of attorney's fees and costs on its counterclaim for MTI's breach of the Release. Id. at *5.

With respect to MTI's breach of the August 21, 2000 Security Agreements, Judge Block, noting that plaintiff "admit[ted] that he signed [the August 21, 2000] Security Agreements" and MTI failed to dispute that it was in default or challenge the amount Associates claimed was due under the August 21, 2000 Security Agreements (id. at *4), granted Associates summary judgment and awarded Associates the total amount sought - one million two hundred ninety-six thousand five hundred ninety-one dollars and thirty-one cents ($1,296,591.31) - plus interest at the rate of nine percent (.09) per annum from the dates of the default. Id. at *4-5. Judge Block instructed MTI and Associates "to attempt to reach agreement on the dates of default and the amount of [Associate's] attorney's fees and costs." Id. at *5. On May 31, 2002, MTI stipulated, inter alia, to the date of default of the August 21, 2000 Security Agreements, the amount ofdamages it would pay defendant for breach of the agreements, and the amount of attorney's fees and costs it would pay to Associates for its breach of the Release, and final judgment was entered against MTI on June 17, 2002. See Manti II, 2008 WL 977192, at *3. MTI did not appeal or move for reconsideration of the Manti I Order or Judgment, or move to vacate the Manti I Judgment within one (1) year of the date of its entry pursuant to subsections one (1) through three (3) of Rule 60(b) of the Federal Rules of Civil Procedure ("Rule 60(b)"). Id.

2. Manti II

On April 12, 2006, MTI and Manti commenced the Manti II action which asserted one claim against Citicapital pursuant to the "savings clause" of Rule 60(b),⁷ seeking to vacate the Manti I order and judgment on the ground of fraud upon the court. Manti II, 2008 WL 977192, at *1. "Specifically, plaintiffs contend[ed], in effect, that [Associates'] representations in Manti I that MTI had title to the buses in issue and that [Associates] had liens on the title to those vehicles were material misrepresentations and that since MTI never had title to the vehicles as a result of [Associates'] conduct and [Associates] never had recorded liens on those vehicles, defendant breached the August 21, 2000 security agreements and, thus, was not entitled to judgment on its counterclaims." Id. at *4.

On April 9, 2008, this Court granted Citicapital's motion to dismiss the action pursuant to Federal Rule 12(b)(6), finding that "at the most, plaintiffs allege fraud committed by defendant on them, not the court, which can only be brought pursuant to Rule 60(b)(3) and which is, thus, time-barred." Id. at *8. The Court further held that "'allegations of nondisclosure during pretrial discovery do not constitute grounds for an independent action under Fed.R.Civ.P. 60(b)'" (id. (quoting Gleason v. Jandrucko, 860 F.2d 556, 559-60 (2d Cir. ...