Regions Bank v. NBV Loan Acquisition Member LLC

REGIONS BANK, Plaintiff, v. NBV LOAN ACQUISITION MEMBER, LLC, et al., Defendants.

No. 21-23578-CIV-MORE/GOODMAN

United States District Court, S.D. Florida, Miami Division

December 1, 2022

Federico A. Moreno, All counsel of record

REPORT AND RECOMMENDATIONS ON COMPETING SUMMARY JUDGMENT MOTIONS^[1]

JONATHAN GOODMAN, UNITED STATES MAGISTRATE JUDGE

Plaintiff Regions Bank (“Plaintiff” or “Regions”), the judgment creditor of nonparty NBV Loan Acquisition LLC (“NBV Loan”), filed this fraudulent transfer and civil conspiracy lawsuit against six defendants related to NBV Loan: Allen Greenwald (“Allen”), Scott Greenwald (“Scott”) and Amy Greenwald (“Amy”) (collectively, the “Greenwalds”), as well as NBV Loan Acquisition Member LLC (“NBV Member”), Billy's Creek Preserve LLC (“Billy's Creek”), and GFS Corp. (“GFS”) (collectively, the “Corporate Defendants”). [ECF No. 95]. Senior United States District Court Judge Federico A. Moreno referred to the Undersigned all pretrial matters for an Order on non-dispositive motions and for a Report and Recommendations on dispositive motions. [ECF No. 78].

Before the Undersigned are the parties' competing summary judgment motions. [ECF Nos. 132; 135]. Both motions are fully briefed with a response [ECF Nos. 145; 148] and a reply [ECF Nos. 156; 157]. By way of summary, Plaintiff seeks summary judgment on Counts I, XV, and XII, while Defendants argue that summary judgment is appropriate in their favor on all Counts.

As explained below, there are multiple bona fide disputes over material facts. Because of these factual disputes, the Undersigned respectfully recommends that the District Court deny both summary judgment motions.

A. Factual Background

Plaintiff and Defendants each submitted a statement of material facts. [ECF Nos. 133; 136]. Both parties also responded to the opposing party's statement of facts. [ECF Nos. 147; 149].

Plaintiff included in its response to Defendants' summary judgment motion “additional facts,” as permitted by Southern District of Florida Local Rule 56.1(a)(2). Defendants failed to respond to Plaintiff's additional facts, as required by the Local Rules. See S.D. Fla. L.R. 56.1(a)(3) (“The movant shall respond to any additional facts asserted in the opponent's Statement of Material Facts even if the movant does not serve a reply memorandum.” (emphasis added)).

Defendants, “[i]n the interest of brevity and to avoid redundancy . . ., incorporate[d] their Statement of Material Fact [sic]” as additional facts in opposition to Plaintiff's summary judgment motion. This is impermissible. See Happy Tax Franchising, LLC v. Hill, No. 19-24539-CIV, 2021 WL 3811041, at *3 (S.D. Fla. June 7, 2021), report and recommendation adopted sub nom. Happy Tax Franchising, LLC v. JL Hill Grp., LLC, No. 19-24539-CIV, 2021 WL 3793050 (S.D. Fla. Aug. 26, 2021) (refusing to consider arguments incorporated by reference because such arguments attempt to avoid the page limits set by the courts).

The Local Rules require that the “Additional Facts” section not exceed five pages. See S.D. Fla. L.R. 56.1(b)(2)(D). The document that Defendants offer in opposition to Plaintiff's summary judgment motion contains an additional ten pages of facts. Thus, not only does the incorporation fail to accomplish its stated purpose -- brevity and avoidance of redundancy (many of the incorporated facts are redundant) -- but, more importantly, it violates the Local Rules' page limitation. Therefore, the Undersigned will not consider these purported additional facts from Defendants in evaluating Plaintiff's summary judgment motion.

The facts outlined below are generated, in part, from the paragraphs in each party's statement of facts or response to the statement of facts which the respective opposing party expressly agreed are undisputed. For those purported facts which the opposing party classified as partly disputed, the Undersigned includes only the undisputed portions. The Undersigned will retain the paragraph numbering used by Plaintiff and Defendants in their motion. The abbreviation “N/A,” means that the paragraph is substantively and substantially disputed and cannot be reworded in a way to accurately reflect an actual undisputed fact.

The Undersigned sometimes changed the wording of an undisputed fact for stylistic and/or grammatical purposes. In addition, to enhance readability, I removed the specific record citations. They can be found in the source document, if needed.

If either party argued that a fact was disputed but did not provide record evidence to support the contention, then I deemed the fact to be undisputed if otherwise supported by record evidence.

At times, a party challenged a fact as disputed, but analysis demonstrates that the undisputed fact is not actually disputed. Instead, the party was at times merely offering an additional, but not contradictory, point.

To provide a factually-simple analogy, assume that a plaintiff in a garden-variety car collision personal injury case submits an affidavit (in support of a summary judgment motion) that the traffic light at issue was red for the defendant driver. Assume that the defendant submits a response, arguing that the fact is “disputed,” and files a supporting affidavit saying (only) that it was storming and the visibility was poor. The weather and visibility might be additional facts leading to another point or argument, but they do not prevent the fact about the traffic light being red from being treated as undisputed.

This analogy applies even if the party offered several additional facts to support the notion that the undisputed fact is actually disputed. Thus, if the hypothetical affidavit mentioned above also explained that it was storming, the visibility was poor, the radio was on loud, it was dusk, the driver was changing stations on the car radio, the windshield wipers were inoperable and the plaintiff was speeding, none of these additional facts would cause the undisputed fact that the light was red for the defendant driver to somehow be deemed a disputed fact.

To provide a more-comprehensive and more-balanced factual background, the Undersigned sometimes combined an undisputed fact from a response and added it into the initial numbered paragraph.

If a party took the position that a purported undisputed fact is disputed but cited only to inappropriate source material, then the Undersigned would treat the undisputed fact as undisputed. For example, if a party relied solely on the unverified allegations of a pleading as supposed grounds to support the argument that a factual dispute exists, then that reliance is not well founded and was ignored, as it is mere rhetoric, inadequate to generate a viable evidentiary reason to conclude that a factual dispute exists.

If a party, in responding to a purportedly undisputed fact, injected a new fact (as opposed to actually opposing the undisputed fact or filing their own additional undisputed facts, as the Local Rule requires), then I would sometimes include the additional fact to provide context and a more-comprehensive factual narrative.

I will first provide Plaintiff's Statement of Material Facts and then Defendants' Statement of Material Facts. Because factual disputes and inferences must be resolved in favor of the non-moving party, this method, at times, will result in the same factual contention being characterized differently based upon which party provided or disputed the fact.

Plaintiff's Statement of Facts

The numbered paragraphs correspond to the numbered paragraphs in Plaintiff's Statement of Material Facts. [ECF No. 136].

1. Regions holds a judgment entered January 23, 2020 against NBV Loan for $3,736,606.10 (“NBV Judgment”), on which $3,895,509.11 is owing with interest as of October 14, 2022.

2. Regions: (1) holds an unsatisfied writ of execution; (2) served writs of garnishment on F&F, NBV Loan's counsel, and Marquis Bank (“MB”), both of which served negative responses; and (3) obtained final judgment garnishing any Class 6 distributions to NBV Loan from Lexi's estate. Lexi has made no Class 6 distributions, and the NBV Judgment remains unpaid.

3. In December 2005, the Bank Group made the Senior Loan to enable development of The Lexi. At the same time, Allen and Jill made the Junior Loan, then for $6 million, secured by Lexi's stock and guaranteed in full by Scott and Amy. The Bank Group, Allen and Jill entered into an Intercreditor Agreement (“ICA”), requiring Regions to provide Lexi default notices to Allen and Jill.

4. To fund the Junior Loan, GFB made the GFB-Lexi Loan, secured by the Junior Loan documents, including Scott and Amy's Unlimited Guaranty.

5. On June 23, 2008, Regions and Lexi modified the Senior Loan extending the maturity to April 5, 2009 and requiring Lexi to fund a $2 million collateral account with Regions. Lexi obtained the $2 million through an increase in the Junior Loan, funded by an increase in the GFB-Lexi Loan. Scott and Amy ratified their Unlimited Guaranty of the $8 million Junior Loan. The ICA was also modified to require Regions to send Lexi default notices to GFB, which then had the same right as Allen and Jill to cure Lexi's default or purchase the Senior Loan at par. 6. On May 6, 2009, Scott met with GFB's President, Mehdi Ghomeshi (“Ghomeshi”), to review the ICA. The following day, Scott emailed Ghomeshi the October 2008 default notice not copied to GFB noting “it is critically important to both of our rights to determine that you were not properly notified per the [ICA] and subsequently not given an opportunity to take the appropriate actions under the loan documents. As discussed, Regions did not act in either of our interests.”

7. About a year later, GFB sued the Bank Group for breach of the...