Opinion
Civ. 3:20-CV-231
09-20-2023
JEANNE M. HAMILL, Individually and as Administratrix and Administratrix ad Prosequendum of the Estate of Eugene Hamill, Deceased, Plaintiff, v. TWIN CEDARS SENIOR LIVING, LLC, d/b/a and a/k/a Twin Cedars Senior Living, et al., Defendants.
Mariani, Judge
REPORT AND RECOMMENDATION
Martin C. Carlson United States Magistrate Judge
I. Introduction
This is a personal injury, wrongful death, and survival action brought by Jeanne Hamill as administratrix of the estate of her late husband, Eugene Hamill. This case comes before us for consideration of an array of motions, including four closely related motions: (1) a motion to dismiss a fraudulent transfer of asset claim set forth in the plaintiff's second amended complaint which was lodged against defendants Little Walker Holdings, LLC, Shohola Realty, LLC, Jacob Gutman, and Gary Rohinsky (Doc. 120); (2) a related motion for summary judgment filed by Little Walker Holdings, LLC, Shohola Realty, LLC, Jacob Gutman, and Gary Rohinsky attacking the legal sufficiency of this fraudulent transfer claim (Doc. 151); and (3) a motion for judgment on the pleadings and a motion for summary judgment filed by Defendants Tamara Singer, Blair Realty, and Twin Cedars Senior Living, LLC, which also contends, in part, that plaintiff's fraudulent transfer claim fails as a matter of law with respect to Singer and Twin Cedars. (Docs. 150, 210).
These motions, and the plaintiff's fraudulent transfer claims against these defendants, call upon us to revisit a recurring theme in this litigation; namely, the efforts of the plaintiff to extend liability in this case to parties who had no involvement in the events that allegedly resulted in Eugene Hamill's injuries and death. Hamill has pursued these allegations of fraudulent asset transfers repeatedly throughout this litigation, but with a dearth of proof to support her claims. In our view, Hamill's continued failure to present facts to support this claim now has consequences for the plaintiff, in that it compels us to recommend that these fraudulent transfer claims be dismissed as to all defendants.
Finally, we note that Singer's and Twin Cedars' summary judgment motion also challenges the legal sufficiency of the plaintiff's negligence, wrongful death, and survival act claims against these defendants. Specifically, as to these claims, Singer and Twin Cedars insist that Hamill has not timely provided expert reports supporting her claims, as required by Pennsylvania law. The defendants further contend that Hamill has not pleaded or proven sufficient direct action by Singer to establish personal liability on her part. (Doc. 150). The defendants' attack upon these claims, which lie at the heart of this lawsuit, are given astonishingly scant attention by Hamill, who largely neglects the address these arguments in her response in opposition to this summary judgment motion. Yet, as we discuss below, Hamill's response, while meager, is sufficient to allow these claims to proceed forward.
II. Background
A. Procedural History
Jeanne Hamill initially brought this case on behalf of her deceased husband on February 10, 2020. (Doc. 1). Hamill filed an amended complaint on March 17, 2020, (Doc. 17), and a second amended complaint on December 31, 2021, which is currently the operative pleading in this lawsuit. (Doc. 109).
This second amended complaint alleges that Eugene Hamill became a resident of the defendant, Twin Cedars Senior Living, on July 6, 2018. (Id., ¶ 24). Mr. Hamill had several serious medical diagnoses, including hypertension, atrial fibrillation, and coronary artery disease, among others, and was required to wear a cardiac life vest. (Id., ¶ 25). The complaint further alleges that on September 11, 2018, Defendant Tamara Singer, who owned and operated Twin Cedars, made arrangements to discharge Mr. Hamill from that facility. (Id., ¶ 26). These arrangements allegedly included a three-hour Uber ride from Twin Cedars to Mr. Hamill's home in Toms River, New Jersey. (Id., ¶ 27). The second amended complaint further alleges that Defendant Singer was responsible for these arrangements, and that she was told it was an unsafe discharge plan. (Id.) Nonetheless, Mr. Hamill was discharged on September 11, 2018, and an Uber took him to his residence in Toms River.
During the trip to Toms River, Mr. Hamill began vomiting in the Uber and became unresponsive. As his condition deteriorated, Mr. Hamill required an EMS transport to Barnabas Health Community Center where he was intubated, put on a ventilator, and placed in the Intensive Care Unit. (Id., ¶ 28). Mr. Hamill suffered a stroke and a heart attack. (Id., ¶30) Following treatment in the ICU, Mr. Hamill was transferred to a Skilled Nursing Facility, where he remained until he passed away just over a year later on September 26, 2019. (Id., ¶¶ 29, 30).
While these allegations of medical neglect and negligence are set forth in detail in the plaintiff's second amended complaint, (Id., ¶¶ 1-35), notably the only defendants named as participants in these events are Tamara Singer and Twin Cedars. (Id.) Indeed, the first factual averment relating to the moving defendants in this case relates to Little Walker's purchase of the Twin Cedars facility in December of 2019, long after the events which inspired this lawsuit. (Id., ¶¶ 36, 83-88).
On the basis of these allegations of medical neglect and negligence which allegedly resulted in the death of Eugene Hamill, the plaintiff's second amended complaint brings claims of negligence, wrongful death, and a survival action against Twin Cedars and Singer. (Id., Counts I-VI). In addition, the plaintiff's second amended complaint brings a claim against Singer and Twin Cedars under Pennsylvania's Unfair Trade Practices and Consumer Protection Act, 73 Pa.C.S. §201-1. (Id., Count VII).
However, the second amended complaint also sets forth in Count VIII a claim naming all of the defendants, including defendants Gutman, Rohinsky, Little Walker Holdings, LLC, and Shohola Realty, LLC. (Id., Count VIII). In Count VIII of the second amended complaint, the plaintiff seeks to void the December 2019 sale of the Twin Cedars facility to Little Walker Holdings, LLC, and demands other sweeping injunctive relief including the freezing of assets and an injunction compelling the parties to place in escrow the proceeds from this December 2019 real estate transaction pending the ultimate outcome of this lawsuit. While it is not entirely clear from the second amended complaint, it appears that the plaintiff asserts this fraudulent transfer claim pursuant to Pennsylvania's Uniform Fraud Transfer Act (“PUVTA”). 12 Pa. Cons. Stat. § 5104.
We say that the precise nature of this claim is not entirely clear from the second amended complaint because that pleading does not cite to Pennsylvania's Uniform Fraud Transfer Act (“PUVTA”). 12 Pa. Cons. Stat. § 5104, although in their pleadings all parties assume that PUVTA is the statutory basis for this claim.
We note that these averments in the plaintiff's second amended complaint are but the latest in a series of persistent efforts by the plaintiff to extend the scope of potential liability in this case to parties who admittedly had no direct involvement in the matters which led to the death of Eugene Hamill. These efforts began with Hamill's initial and first amended complaints, both of which named Little Walker Holdings, LLC, as a defendant based upon a successor corporate liability theory due to Little Walker's purchase of Twin Cedars in December of 2019. Upon review of this allegation, we recommended that this claim be dismissed noting that:
In sum, Hamill has not alleged factual averments that are sufficient to support an inference of successor liability against Little Walker, either under a de facto merger theory or a “mere continuation” theory. Rather, the complaint solely alleges that Twin Cedars continues to operate a senior living facility following Little Walker's purchase of its assets. This is simply not enough to state a claim for successor liability against Little Walker.Hamill v. Twin Cedars Senior Living Ctr., No. 3:20-CV-231, 2020 WL 7329228, at *7 (M.D. Pa. Nov. 23, 2020), report and recommendation adopted sub nom. Hamill v. Twin Cedars Senior Living, LLC, No. 3:20-CV-231, 2020 WL 7323870 (M.D. Pa. Dec. 11, 2020). In December of 2020, the district court adopted this recommendation, and Little Walker Holdings, LLC was dismissed as a defendant.
Undeterred, the plaintiff sought to renew claims against Little Walker and others under a slightly different garb. Specifically, in June of 2021, Hamill filed a motion for preliminary injunction and a second motion to amend her complaint. (Docs. 75, 76). In these pleadings, Hamill sought to join Little Walker Holdings, LLC, Shohola Realty, LLC, Jacob Gutman, and Gary Rohinsky as defendants. Hamill also requested that we grant her sweeping prayer for preliminary injunctive relief, requesting that the court void the December 2019 transfer of the assets and real property of Twin Cedars, order an accounting of the proceeds of any sales or transfers, and direct that the proceeds from the transfer of Twin Cedars or sale of real property be held in escrow. (Doc. 76).
Upon consideration, we recommended that Hamill's motion for preliminary injunction be denied, finding that:
Here, at this early stage in the litigation where the plaintiff has not yet prevailed on any of her claims, we cannot conclude that the plaintiff will suffer irreparable harm if the preliminary injunction is not granted. The plaintiff has not shown that absent a court order to place the proceeds of these sales or transfers in escrow, there will be insufficient funds to pay a future money judgment if she prevails on her claims. Additionally, as we have noted, Twin Cedars currently has an insurance policy with limits of $1 million dollars. While the plaintiff has demanded $15 million in damages, we are unaware of any similar cases in this district where such a high verdict has been awarded. Moreover, we are constrained to note the possible hurdles the plaintiff may face in terms of proving causation, as the decedent died more than one year after his discharge from Twin Cedars.
In sum, as part of her irreparable injury showing Hamill invites us to make a series of speculative inferences: first, that she will prevail; second, that an award will far excess $1,000,000 and will almost certainly entail up to $15,000,000; and third, that the defendants will be unable to satisfy such a judgment, when and if this judgment is incurred. On the spare factual record presently before us we cannot conclude that the plaintiff has shown she will be subject to irreparable harm if the injunction is not granted. The plaintiff has provided no evidence at this juncture that absent the injunction, the defendants will be unable to pay any monetary judgment she may be awarded in the future. Accordingly, because the plaintiff has failed to meet the two threshold elements for a preliminary injunction, we recommend that the motion for preliminary injunction be denied.(Doc. 107, at 11-12).
In rejecting Hamill's request for this far-reaching preliminary injunctive relief, we also noted that it appeared that the plaintiff was inviting us to draw an inference that the sale of this property was a fraudulent transfer based solely upon the timing of the transfer, which took place four months after plaintiff's counsel served a $15,000,000 demand letter upon Tamara Singer and Twin Cedars. We concluded, however, that other, uncontested evidence largely undermined this causal inference since:
[W]hile these transfers were finalized after the demand letter was received, the process of selling Twin Cedars' assets and property began in December of 2018, well before the demand letter was received. (Doc. 86-2, at 3). Indeed, Singer contends that she contacted a real estate attorney in November of 2018; hired a market professional to analyze feasibility in February of 2019; signed a listing agreement with a brokerage firm and contacted an environmental impact group in March of 2019; entered into a listing agreement with a general business broker in June of 2019; and on August 15, 2019- two weeks before the demand letter was received-executed a Letter of Intent with the buyers of Twin Cedars, Jacob Gutman and Gary Rohinsky. (Id.) Accordingly, given the current state of the evidence this factor does not weigh in favor of finding that this transfer was fraudulent.(Id., at 9).
However, in recognition of the policy embodied in Rule 15 of the Federal Rules of Civil Procedure favoring liberal amendment of pleadings, we recommended that Hamill be given leave to amend her complaint in order to try to state a claim upon which relief may be granted. (Id., at 20). The district court adopted this recommendation. (Doc. 108). On December 13, 2021, Hamill complied with this instruction and filed her second amended complaint in this case. (Doc. 109).
With respect to the fraudulent transfer of assets claim against defendants Little Walker, Shohola, Gutman, and Rohinsky, the factual narrative set forth in this pleading remains threadbare. In her second amended complaint, Hamill identified the corporate defendants, Little Walker and Shohola, and stated that Mr. Gutman and Mr. Rohinsky were the owners and organizers of these two companies. (Id., ¶¶16-18). The plaintiff then alleges in a cursory fashion that on August 19, 2019, Tamara Singer and Twin Cedars received a $15,000,000 demand letter from plaintiff's counsel. (Id., ¶84). According to Hamill, four months later, in December of 2019, Little Walker acquired ownership of the Twin Cedars facility. (Id., ¶¶ 85, 86).
Notably missing from Count VIII of this second amended complaint was any reference to Pennsylvania's Uniform Fraud Transfer Act (“PUVTA”). 12 Pa. Cons. Stat. § 5104. Moreover, this count of the second amended complaint did not even directly allege any fraud on the part of the defendants. Instead, it simply averred that Defendants Little Walker, Shohola, Gutman, and Rohinsky acquired this property “with knowledge, actual or constructive, of the Plaintiff's pending claim and potential legal action.” (Id., ¶ 88). It is upon these thin reeds that the plaintiff once again attempted to assert legal claims against these parties who had absolutely no involvement in the seminal events giving rise to this lawsuit.
Defendants Little Walker, Shohola, Gutman, and Rohinsky filed a motion to dismiss which challenged the legal sufficiency of these allegations to state a fraudulent transfer claim under 12 Pa. Cons. Stat. § 5104. (Doc. 120). Upon consideration, we agreed and recommended that this claim be dismissed. (Doc. 155). That recommendation remains pending before the district court, which has also requested that we examine the viability of this legal claim in the context of the pending summary judgment motions filed by all of the defendants. (Docs. 150, 151).
These summary judgment motions are also now ripe for resolution. A review of these motions discloses the following constellation of essentially undisputed facts.
B. Factual Background of the Current Summary Judgment Motions
With respect to the factual background for these summary judgment motions, we are constrained to observe that there have been a series of grave discovery delinquencies by the plaintiff in the course of this litigation. These delinquencies and shortcomings have involved neglect and failure to comply with court orders in a timely fashion; unexcused failures to produce evidence; and an inexplicable and potentially prejudicial neglect of expert witness disclosure deadlines. We have found that: “These are grave errors that in our view warrant some sanctions. However, we recognize that this case involves claims arising out of a fatality, and we do not believe that the lawyer's error should redound to the detriment of the client.” (Doc. 182, at 1). Therefore, we denied the defendants' request to preclude expert testimony, but have granted other monetary sanctions to the defendants. (Id.)
These problems apparently persist since the defendants contend that Hamill engaged in virtually no discovery to support these claims, despite having been put on notice by the court that there was a paucity of proof with respect to these fraudulent transfer of asset claims. Instead, we are left with an essentially uncontested factual record which refutes this claim.
That factual record reflects that Tamara Singer was actively engaged in the marketing of Twin Cedars long before she first received notice of this potential litigation in September of 2019. On this score, the evidence shows that Singer contacted a real estate attorney in November of 2018; hired a market professional to analyze feasibility in February of 2019; signed a listing agreement with a brokerage firm and contacted an environmental impact group in March of 2019; entered into a listing agreement with a general business broker in June of 2019; and on August 15, 2019-two weeks before the demand letter was received-executed a Letter of Intent with the buyers of Twin Cedars, Jacob Gutman and Gary Rohinsky.
Further, this transaction has none of the “badges of fraud” that are typically required to sustain a fraudulent transfer claim. The record before us seems to confirm that this was a valid arms' length transaction between unrelated parties that was supported by adequate consideration. Thus, there is no evidence that Singer engaged in a collusive transfer of Twin Cedars to Little Walker, Gutman, or Rohinsky. Quite the contrary, the transaction was an open one, openly arrived at, and openly consummated between these parties in December of 2019. (Doc. 150-2, ¶¶ 21-35). Moreover, Singer, who by this time had received an initial communication from plaintiff's counsel regarding Hamill's potential claim which had not yet ripened into litigation, was completely transparent about this fact in her disclosures made in connection with this sale. Simply put, there was nothing furtive or surreptitious about this transaction.
Further, the fact that it appears that more than $5,000,000 was exchanged by the parties in consideration for the sale of this business and property is a clear indication that this was a legitimate arms' length transaction, and not some fictitious or fraudulent transaction. In addition, it is abundantly clear that these defendants have had no other ongoing business dealings which would be suggestive of some subterfuge or fraud. Thus, there is no indication that Singer plays an active role in the current operations of this business.
Finally, there is no showing that the defendants have engaged in some calculated effort to become judgment proof in anticipation of this litigation. Instead, it is undisputed that the defendants have, at a minimum, $1,000,000 in insurance coverage to address any judgments that might arise out of this litigation.
It is against the backdrop of these essentially undisputed facts that we consider these various defense motions.
III. Discussion
A. Motion for Summary Judgment - Standard of Review
The defendants have moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, which provides that the court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Through summary adjudication, a court is empowered to dispose of those claims that do not present a “genuine dispute as to any material fact,” Fed.R.Civ.P. 56(a), and for which a trial would be “an empty and unnecessary formality.” Univac Dental Co. v. Dentsply Int'l, Inc., 702 F.Supp.2d 465, 468 (M.D. Pa. 2010). The substantive law identifies which facts are material, and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a material fact is genuine only if there is a sufficient evidentiary basis that would allow a reasonable fact finder to return a verdict for the non-moving party. Id. at 248-49.
The moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145-46 (3d Cir. 2004). Once the moving party has shown that there is an absence of evidence to support the non-moving party's claims, “the non-moving party must rebut the motion with facts in the record and cannot rest solely on assertions made in the pleadings, legal memoranda, or oral argument.” Berckeley Inv. Group. Ltd. v. Colkitt, 455 F.3d 195, 201 (3d Cir. 2006), accord Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). If the non-moving party “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden at trial,” summary judgment is appropriate. Celotex, 477 U.S. at 322. Summary judgment is also appropriate if the non-moving party provides merely colorable, conclusory, or speculative evidence. Anderson, 477 U.S. at 249. There must be more than a scintilla of evidence supporting the non-moving party and more than some metaphysical doubt as to the material facts. Id. at 252; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). In making this determination, the Court must “consider all evidence in the light most favorable to the party opposing the motion.” A.W. v. Jersey City Pub. Schs., 486 F.3d 791, 794 (3d Cir. 2007).
Moreover, a party who seeks to resist a summary judgment motion by citing to disputed material issues of fact must show by competent evidence that such factual disputes exist. Further, “only evidence which is admissible at trial may be considered in ruling on a motion for summary judgment.” Countryside Oil Co., Inc. v. Travelers Ins. Co., 928 F.Supp. 474, 482 (D.N.J. 1995). Similarly, it is well-settled that: “[o]ne cannot create an issue of fact merely by . . . denying averments . . . without producing any supporting evidence of the denials.” Thimons v. PNC Bank, NA, 254 Fed.Appx. 896, 899 (3d Cir. 2007) (citation omitted). Thus, “[w]hen a motion for summary judgment is made and supported . . ., an adverse party may not rest upon mere allegations or denial.” Fireman's Ins. Co. of Newark New Jersey v. DuFresne, 676 F.2d 965, 968 (3d Cir. 1982); see Sunshine Books, Ltd. v. Temple University, 697 F.2d 90, 96 (3d Cir. 1982). “[A] mere denial is insufficient to raise a disputed issue of fact, and an unsubstantiated doubt as to the veracity of the opposing affidavit is also not sufficient.” Lockhart v. Hoenstine, 411 F.2d 455, 458 (3d Cir. 1969). Furthermore, “a party resisting a [Rule 56] motion cannot expect to rely merely upon bare assertions, conclusory allegations or suspicions.” Gans v. Mundy, 762 F.2d 338, 341 (3d Cir. 1985) (citing Ness v. Marshall, 660 F.2d 517, 519 (3d Cir. 1981)).
Additionally, it is emphatically not the province of the court to weigh evidence or assess credibility when passing upon a motion for summary judgment. Rather, in adjudicating the motion, the court must view the evidence presented in the light most favorable to the opposing party, Anderson, 477 U.S. at 255, and draw all reasonable inferences in the light most favorable to the non-moving party. Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir. 1992). Where the non-moving party's evidence contradicts the movant's, then the non-movant's must be taken as true. Id. Additionally, the court is not to decide whether the evidence unquestionably favors one side or the other, or to make credibility determinations, but instead must decide whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. Anderson, 477 U.S. at 252; see also Big Apple BMW, 974 F.2d at 1363. In reaching this determination, the Third Circuit has instructed that:
To raise a genuine issue of material fact . . . the opponent need not match, item for item, each piece of evidence proffered by the movant. In practical terms, if the opponent has exceeded the “mere scintilla” threshold and has offered a genuine issue of material fact, then the court cannot credit the movant's version of events against the opponent, even if the quantity of the movant's evidence far outweighs that of its opponent. It thus remains the province of the fact finder to ascertain the believability and weight of the evidence.Id. In contrast, “[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal quotation marks omitted); NAACP v. North Hudson Reg'l Fire & Rescue, 665 F.3d 464, 476 (3d Cir. 2011).
These are the legal benchmarks which we apply when evaluating the sufficiency of Hamill's fraudulent transfer claim. Judged by these guideposts, we submit that the second amended complaint fails to state a claim upon which relief may be granted and the defendants are entitled to summary judgment on this claim.
B. The Plaintiff's Fraudulent Transfer Claim Fails.
In this case, Hamill's fraudulent transfer claim fails on several scores. While the second amended complaint is not entirely clear on this point, it seems that the plaintiff asserts this fraudulent transfer claim pursuant to Pennsylvania's Uniform Voidable Transactions Act (“PUVTA”). 12 Pa. Cons. Stat. § 5104. This Act provides that:
A transfer made or obligation incurred by a debtor is voidable as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
(1) with actual intent to hinder, delay or defraud any creditor of the debtor; or
(2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
(i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
(ii) intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor's ability to pay as they became due.12 Pa. Cons. Stat. § 5104 (a).
In order to show that a transfer of assets or property is voidable under PUVTA, a plaintiff must demonstrate that there was either an actual intent to hinder or defraud the transferor's creditors, or that the effect of the transfer frustrates future creditors because the transfer rendered the debtor unable to pay. See 12 Pa. Cons. Stat. § 5104(a)(1)-(2); Agri-Marketing, Inc. v. ProTerra Solutions, LLC, 2018 WL 1444167, at *9 (E.D. Pa. Mar. 22, 2018). The first method requires actual intent to defraud, and the second “‘presumes constructive fraud' where the plaintiff has established the elements specified in § 5104(a)(2).” Agri-Marketing, Inc., 2018 WL 1444167, at *9; see 12 Pa. Cons. Stat. § 5104(a)(2) (requiring a showing that the debtor did not receive a reasonable equivalent value in exchange for the transfer and intended to incur debts beyond his or her ability to pay).
Here, Hamill insists that she is proceeding on a claim of actual, rather than constructive, fraud, stating that the plaintiff is “alleging that this transfer was done with the actual intent to defraud....” (Doc. 129, at 10). Given the nature of Hamill's claim, this claim fails both in its pleading and in its proof.
In any event, even if Hamill were now change her position and to argue constructive fraud under § 5104(a)(2), that claim would fail since Hamill has not made the required showing that Singer did not receive a reasonable equivalent value in exchange for the transfer and intended to incur debts beyond her ability to pay. See Agri-Marketing, Inc., 2018 WL 1444167, at *9; see 12 Pa. Cons. Stat. § 5104(a)(2).
At the outset, to sustain this claim it is incumbent upon the plaintiff to satisfy Rule 9's requirements and plead “with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). Pennsylvania's Uniform Voidable Transactions Act, in turn, states that allegations of actual fraud typically should be accompanied by well-pleaded facts asserting specific “badges of fraud,” including:
(1) the transfer or obligation was to an insider;
(2) the debtor retained possession or control of the property transferred after the transfer;
(3) the transfer or obligation was disclosed or concealed;
(4) before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;
(5) the transfer was of substantially all the debtor's assets;
(6) the debtor absconded;
(7) the debtor removed or concealed assets;
(8) the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;
(9) the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;
(10) the transfer occurred shortly before or shortly after a substantial debt was incurred; and
(11) the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.12 Pa. Cons. Stat. § 5104 (b). Under Rule 9, “boilerplate and conclusory allegations will not suffice. . . . Plaintiffs must accompany their legal theory with factual allegations that make their theoretically viable claim plausible.” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1418 (3d Cir. 1997).
In the instant case, we conclude that Hamill's second amended complaint has not met Rule 9's particularity requirement with respect to these fraud allegations. Indeed, Count VIII of the second amended complaint does not even directly assert that the defendants acted with fraudulent intent. Further, many of §5104(b)'s “badges of fraud” seem to have no application here since there are no allegations that this was an illicit insider transaction involving highly suspicious timing or extensive evidence of flight and concealment. Quite the contrary, it is evident from Hamill's pleadings that the plaintiff was aware of Little Walker's acquisition of Twin Cedars from the inception of this litigation since Hamill alluded to this fact in her initial complaint filed in February of 2020. (Doc. 1, ¶¶ 35, 36).
Instead, the plaintiff simply alleges that Little Walker acquired these assets some four months after the plaintiff's counsel issued a demand letter to Tamara Singer and Twin Cedars, and suggests that the defendants should have had actual or constructive knowledge of Hamill's demand when these acquired this property. In our view, the plaintiff may not rely upon this tenuous chronology of events to satisfy her obligation to plead fraud with particularity. Moreover, given the plaintiff's insistence that this claim proceeds solely upon an actual fraud theory, a claim of constructive knowledge of Hamill's claims, standing alone, is insufficient to establish fraudulent intent. In light of Rule 9's heightened pleading requirements, more is needed here in order to state a plausible claim of fraudulent transfer against defendants.
Furthermore, with respect to the individual defendants, Mr. Gutman and Mr. Rohinsky, there is yet another obstacle to Hamill maintaining this fraudulent transfer claim. The well-pleaded facts in the second amended complaint simply allege that the Twin Cedars property was sold to a separate corporation, Little Walker Holdings, LLC, in December of 2019. Mr. Gutman and Mr. Rohinsky, in turn, are merely alleged to be the owners of Little Walker. Therefore, in order to sustain this claim against the individual defendants Hamill's second amended complaint seems to invite us to pierce the corporate veil in order to hold these individuals liable.
This we cannot do based upon the threadbare allegations in the second amended complaint. On this score, it is well settled that:
Courts do not lightly entertain requests to set aside corporate structures and pierce the corporate veil. Quite the contrary, courts have found corporate veil piercing to be appropriate only “when the court must prevent fraud, illegality, or injustice, or when recognition of the corporate entity would defeat public policy or shield someone from liability for a crime,” Pearson v. Component Tech. Corp., 247 F.3d 471, 484-85 (3d Cir.2001) (quoting Zubik v. Zubik, 384 F.2d 267, 272 (3d Cir.1967)), or when “the parent so dominated the subsidiary that it had no separate existence [.]” Id. (quoting New Jersey Dep't of Envtl. Prot. v. Ventron Corp., 94 N.J. 473, 468 A.2d 150, 164 (N.J.1983)). Veil piercing is not a remedy to be taken lightly, but should only be used as an “extraordinary equitable remedy.” Shenango, Inc. v. American Coal Sales Co., No. 6-149, 2007 WL 2310869 at *3(W.D.Pa. Aug.9, 2007) (emphasis added). The Third Circuit has enumerated eight . . . factors to analyze when determining if the corporate veil can be pierced:
gross undercapitalization, failure to observe corporate formalities, nonpayment of dividends, insolvency of debtor corporation, siphoning of funds from the debtor corporation by the dominant stakeholder, nonfunctioning of officers and directors, absence of corporate records, and whether the corporation is merely a facade for the operations of the dominant stakeholder.
Pearson, 247 F.3d at 484-85.J.B. Hunt Transp., Inc. v. Liverpool Trucking Co., No. 1:11-CV-1751, 2013 WL 3208586, at *9 (M.D. Pa. June 24, 2013).
In the instant case, Hamill's second amended complaint is completely devoid of any well-pleaded facts which would justify the extraordinary remedy of piercing the corporate veil. There are simply no factual averments which would suggest that the corporate form of Little Walker Holdings, LLC, should be disregarded. Thus, Hamill has not stated any facts showing gross undercapitalization of this corporation, misuse, or disregard of corporate formalities, siphoning of corporate funds, or any other malfeasance by Mr. Gutman or Mr. Rohinsky.
In such circumstances, where a request to pierce the corporate veil is unaccompanied by well-pleaded facts justifying this relief, courts have frequently granted motions to dismiss based solely upon a speculative invitation to discount the corporate form. Id. at *9 (citing Patroski v. Ridge; No. 11-105, 2011 WL 4955274 (W.D.Pa.2011) (count dismissed when complainant “provided little or nothing in the way of factual allegations to support her contention that liability should be imposed ... to pierce the veil”); Essex Insurance Co. v. Miles, No. 10-3598, 2010 WL 5069871 (E.D.Pa. December 3, 2010) (holding that averments based on information and belief that the defendants “failed to observe corporate formalities, intermingled funds, used corporate property for personal expenses, left [the company] grossly undercapitalized, and used [the company] as a ‘facade' or ‘alter ego[,]' ” was “merely a ‘formulaic recitation of the elements of a cause of action' for piecing the corporate veil”); Preferred Real Estate Investments, LLC v. Lucent Technologies, Inc., No. 07-5374, 2009 WL 1748954, (D.N.J. June 19, 2009) (dismissing count to pierce the corporate veil when complainant alleged common ownership, common principal place of business, common email addresses, common corporate letterhead, and funds of principals of one company were used to make payments to the other company); Lumax Indus., Inc. v. Aultman, 543 Pa. 38, 669 A.2d 893, 895 (Pa. 1995) (finding that in order to withstand a motion to dismiss, the pleader must state what the defendant allegedly did that would bring his actions within the parameters of a cause of action based on a theory of piercing the corporate veil)).
Accordingly, entirely aside from the failure to adequately allege this claim of fraud, Hamill's second amended complaint fails with respect to the individual defendants, Mr. Gutman and Mr. Rohinsky, because the plaintiff has failed to state well-pleaded facts which would justify piercing the corporate veil of Little Walker Holdings, LLC.
Aside from this failure of pleading, Hamill's fraudulent transfer claim encounters insurmountable problems of proof. On this score, notably, Hamill appeared to have engaged in virtually no discovery to support these claims, despite having been put on notice by the court that there was a paucity of proof with respect to these fraudulent transfer of asset claims.
Instead, the undisputed evidence undermines this claim of fraud. For example, the apparent premise of Hamill's fraudulent transfer claim is her contention that Singer moved to sell Twin Cedars after she learned of this potential litigation. This premise, which is the lynchpin of this fraudulent transfer claim, is completely refuted by the evidence that shows that Tamara Singer was actively engaged in the marketing of Twin Cedars long before she first received notice of this potential litigation in September of 2019. On this score, the evidence shows that Singer contacted a real estate attorney in November of 2018; hired a market professional to analyze feasibility in February of 2019; signed a listing agreement with a brokerage firm and contacted an environmental impact group in March of 2019; entered into a listing agreement with a general business broker in June of 2019; and on August 15, 2019-two weeks before the demand letter was received-executed a Letter of Intent with the buyers of Twin Cedars, Jacob Gutman and Gary Rohinsky.
Further, the undisputed evidence reveals this transaction has none of the “badges of fraud” that are typically required to sustain a fraudulent transfer claim. The record before us reflects nothing more than a valid arms' length transaction between unrelated parties that was supported by adequate consideration. Thus, there is no evidence that Singer engaged in a collusive transfer of Twin Cedars to Little Walker, Gutman, or Rohinsky. Quite the contrary, the transaction was an open one, openly arrived at, and openly consummated between these parties in December of 2019. (Doc. 150-2 ¶¶ 21-35). Moreover, Singer, who by this time had received an initial communication from plaintiff's counsel regarding Hamill's potential claim which had not yet ripened into litigation, was completely transparent about this fact in her disclosures made in connection with this sale. Simply put, the evidence does not permit a reasonable inference of fraudulent collusion in this transaction.
Given the great weight of this evidence, we discount Hamill's strained and speculative attempt to convert a single form line from the sales agreement, which noted that the agreement did not need to be filed with the Recorder of Deeds, into evidence of fraud. In fact, the best evidence of the open and transparent nature of this transaction comes from the plaintiff. It is evident from Hamill's pleadings that the plaintiff was aware of Little Walker's acquisition of Twin Cedars from the inception of this litigation since Hamill alluded to this fact in her initial complaint filed in February of 2020. (Doc. 1, ¶¶ 35, 36).
Further, the fact that more than $5,000,000 was exchanged by the parties in consideration for the sale of this business and property is a clear indication that this was a legitimate arms' length transaction and not some fictitious or fraudulent transaction. In addition, it is abundantly clear that these defendants have had no other ongoing business dealings that would be suggestive of some subterfuge or fraud. Thus, there is no indication that Singer plays an active role in the current operations of this business. Finally, there is no showing that the defendants have engaged in some calculated effort to become judgment proof in anticipation of this litigation. Instead, it is undisputed that the defendants have, at a minimum, $1,000,000 in insurance coverage to address any judgments that might arise out of this litigation.
At this juncture, it is incumbent upon Hamill to plead and point to some evidence of fraud to sustain this claim which seeks extraordinary injunctive relief.
We have over the course of this lawsuit provided Hamill ample opportunity to do so, despite her discovery defaults. Despite being afforded these opportunities, Hamill has failed to adequately plead or prove these claims. This failure has consequences and now compels the dismissal of this fraudulent transfer claim.
C. Singer and Twin Cedars Are Not Entitled to Summary Judgment on Hamill's Negligence Claims.
Finally, in their summary judgment motion, Singer and Twin Cedars raise two other contentions regarding the plaintiff's negligence, wrongful death, and survivor action claims which warrant brief attention. Specifically, as to these claims, Singer and Twin Cedars insist that Hamill has not timely provided expert reports supporting her claims, as required by Pennsylvania law. The defendants further contend that Hamill has not pleaded or proven sufficient direct action by Singer to establish personal liability on her part. (Doc. 150).
Hamill's response to these claims is frankly disappointing. For her part, it appears that Hamill simply filed essentially identical responses to the summary judgment motions filed by Singer and the Little Walker defendants without addressing or even acknowledging that the motions raised significantly different legal issues. (Compare Doc. 171 with Doc. 173). Thus, we cannot even discern from this generic response whether Hamill was aware of these separate contentions raised by Singer and Twin Cedars.
In any event, however, we conclude that neither of these two contentions provides grounds for summary judgment in favor of Singer and Twin Cedars. Turning first to the defendants' argument that Hamill has not timely provided expert reports supporting her claims, as required by Pennsylvania law, to be sure, in order to present a prima facie case of medical malpractice under Pennsylvania law, “as a general rule, a plaintiff has the burden of presenting expert opinions that the alleged act or omission of the defendant physician or hospital personnel fell below the appropriate standard of care in the community, and that the negligent conduct caused the injuries for which recovery is sought.” Simpson v. Bureau of Prisons, No. 022213, 2005 WL 2387631, at *5 (M.D.Pa. Sept. 28, 2005). This requirement is imposed upon plaintiffs by Pennsylvania Rule of Civil Procedure 1042.3, which requires the filing a valid certificate of merit along with any medical negligence claim. The requirements of Rule 1042.3 are deemed substantive in nature and, therefore, federal courts in Pennsylvania will apply these prerequisites of Pennsylvania law when assessing the merits of a medical malpractice claim. Liggon-Reading v. Estate of Sugarman, 659 F.3d 258 (3d Cir. 2011); Iwanejko v. Cohen & Grigsby, P.C., 249 Fed.Appx. 938, 944 (3d Cir. 2007); Ramos v. Quien, 631 F.Supp.2d 601, 611 (E.D. Pa. 2008); Stroud v. Abington Memorial Hosp., 546 F.Supp.2d 238, 248 (E.D. Pa. 2008) (noting that Pennsylvania federal courts “have uniformly held that the COM requirement is a substantive rule of law that applies in professional liability actions proceeding in federal court”).
While we agree with the defendants that Hamill is subject to this legal requirement, Singer and Twin Cedar's summary judgment motion ignores the fact that with leave of this court, Hamill ultimately provided the required medical opinions, albeit in a tardy and halting fashion that has exposed plaintiff's counsel to potential monetary sanctions. In our view, our prior ruling on the defendants' motion to preclude this expert evidence as a sanction for Hamill's prior discovery violations controls here and is dispositive of this argument. Presented with this issue in the context of a sanctions motion, we acknowledged and sanctioned Hamill's misconduct but did not preclude her from presenting expert testimony in support of her claims, holding that “[t]hese are grave errors that in our view warrant some sanctions. However, we recognize that this case involves claims arising out of a fatality, and we do not believe that the lawyer's error should redound to the detriment of the client.” (Doc. 182, at 1).
Finally, Singer argues that she is entitled to summary judgment on these claims because the evidence indicates that her role in these events constituted of nothing more than “passive negligence.” (Doc. 150-3, at 13). We disagree. In our view, Singer's own deposition testimony reveals that she played an active role in the eviction of Eugene Hamill from Twin Cedars. Singer made the decision to remove Hamill. She then was personally involved in implementing that decision, meeting with Hamill, preparing documents for him to sign, packing his belongings in garbage bags, summoning an Uber, and personally placing him in that vehicle. Given this testimony, it cannot be said that Singer's role was confined to some form of passive negligence. Therefore, these aspects of the defendants' summary judgment should also be denied.
IV. Recommendation
For the foregoing reasons, IT IS RECOMMENDED as follows:
The defendants' summary judgment motions (Docs. 150, 151), should be GRANTED with respect to Hamill's fraudulent asset transfer claim, Count VIII of her second amended complaint, and the defendants who are named solely in that count should be dismissed. In light of this recommendation, Singer's motion for judgment on the pleadings with respect to Count VIII of this complaint, (Doc. 210), should be DISMISSED as moot.
Singer and Twin Cedars' motion for summary judgment on the plaintiff's negligence, wrongful death, and survivor action claims (Doc. 150) should be DENIED.
The parties are further placed on notice that pursuant to Local Rule 72.3:
Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636 (b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which
objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall witnesses, or recommit the matter to the magistrate judge with instructions. The failure to timely object may constitute a waiver of any future right to object or appeal this issue.
Submitted this 20th day of September 2023.