United States District Court, E.D. Pennsylvania
April 5, 2004.
HENRY R. ORTLIEB, Plaintiff,
HUDSON BANK, et al, Defendants
The opinion of the court was delivered by: MARVIN KATZ, Senior District Judge
MEMORANDUM & ORDER
Plaintiff Henry Ortlieb brings this action against Defendant
Jefferson Bank and its successor, Defendant Hudson United Bank
(collectively, the "Bank") for their alleged failure to enter
satisfaction of three mortgages given to Defendant on two of Plaintiff s
real property holdings one located in Pennsylvania and the other
in New Jersey. As such, Plaintiff brings claims under both the
Pennsylvania Mortgage Satisfaction statute, 21 P. S. §§ 681-682, and
the New Jersey common law for slander of title. Now before this court are
the Plaintiff's Motion for Partial Summary Judgment, Plaintiff's
Supplemental Motion for Summary Judgment, and Defendant Hudson United
Bank's Motion for Summary Judgment.*fn1 Because Plaintiff's claims are
barred by both the doctrine of judicial estoppel and the applicable
statutes of limitations, the Defendant's Motion is granted and the
I. BACKGROUND On April 29, 1999, Plaintiff borrowed $550,000 from Jefferson Bank. As
security for this loan, Plaintiff took out two $550,000 mortgages-one on
his property in Fort Washington, Pennsylvania, and the other on his
ocean-front house in Ocean City, New Jersey. Approximately one year
later, on May 15, 2000, Plaintiff borrowed another $40,000, this time
from Hudson United Bank, which had acquired Jefferson in the interim. As
security for this second loan, Plaintiff gave Hudson United a $40,000
mortgage on the Ocean City, New Jersey house. By September 28, 2000,
Plaintiff had repaid both loans in full.
For the next two months, his obligations with respect to Defendant
having been fulfilled, Plaintiff took steps to ensure that the Bank
complied with its statutory duty to enter satisfaction of the repaid
mortgages. First, some time in October, 2000, within a few weeks of
repayment, Plaintiff spoke with Thomas Kelly, one of Hudson United's
officers, and requested that Mr. Kelly provide satisfactions of the
mortgages on both the Pennsylvania and New Jersey properties. The Bank
failed to comply with these requests. Then, on November 28, 2000,
Plaintiff's attorney at the time, Warren Trainor, wrote to Robert Seiger,
the Bank's counsel in connection with the prior loans to Plaintiff, to
inquire into whether the Pennsylvania mortgage had been satisfied. The
November 28 letter marked the last time that Plaintiff, or any of his
representatives, contacted the Bank regarding satisfactions until 2002.
Plaintiff's first contact with Defendant in 2002 came on January 22,
when Maxine Werbit, identifying herself as employed by a title insurance
company, left a voice-mail on behalf of Plaintiff for Rose Diaz,
Defendant's Vice President of Loan Operations, requesting satisfaction of
Plaintiff's New Jersey and Pennsylvania mortgages. A few weeks later, the
Bank received a letter dated February 18, 2002 from Plaintiff's new
attorney, Dennis Nolan. Therein, Mr. Nolan cited the Pennsylvania Mortgage Satisfaction statute, 21 P.S, § 682, and
threatened to sue Defendant if it did not prepare a satisfaction piece
for the Pennsylvania mortgage and send it to him within ten days. A copy
of this letter was furnished to Plaintiff, who also received oral
confirmation from Mr. Nolan that the attorney had indeed threatened
litigation against the Bank.
In response to the February 18 letter, Barbara Montgomery, a file room
employee at Hudson United, called Mr. Nolan's office to request the title
information necessary to prepare the satisfaction; the attorney's office
faxed the requested information to the Bank on February 27. Upon
receiving this information, Hudson United promptly prepared and executed
a release of the Pennsylvania mortgage, which it sent via Federal Express
to Mr. Nolan's office on March 1. The delivery arrived at Mr. Nolan's
office on March 4 and was signed for there by Theresa Marcone, Mr.
Approximately two months later, on or about April 30, 2002, Mr. Nolan's
office called Defendant to inquire into satisfaction of Plaintiff s
mortgages on the New Jersey property. On May 4, the Bank received a fax
on Mr. Nolan's stationary containing the title information regarding the
$550,000 mortgage on the New Jersey house. As requested, the Bank then
prepared and executed a release for that mortgage, which it mailed to Mr.
Nolan's office on May 7.
On May 28, 2002, Mr. Nolan passed away and was replaced as Plaintiff's
counsel by Frank Marcone. Although Mr. Marcone made diligent efforts to
recover the Ortlieb files, he was unable to do so. He did, however,
discover that-despite the Bank's having executed and sent to Mr. Nolan
the releases for both the Pennsylvania mortgage and the $550,000 New
Jersey mortgage-neither release was ever filed by Plaintiff or any of his
representatives. As such, a title company requested confirmation of
satisfaction of the Pennsylvania mortgage on August 1, 2002, while Mr. Marcone himself requested a satisfaction piece for both New Jersey
mortgages on September 27, 2002. Defendant complied with those requests
on August 6 and October 1, respectively, and, thereafter, Mr. Marcone
filed the satisfaction pieces with the appropriate authorities.
Before filing his Complaint in this court on July 18, 2003-some time
between July 2002 and January 2003-Plaintiff contacted Kirk Wycoff, a
banking executive with Progress Bank, in an attempt to again use his
properties as collateral in order to obtain personal financing. Mr.
Wycoff, however, told Plaintiff that he could do nothing for him as long
as the Hudson United mortgages were not marked as satisfied. In addition,
he explained to Plaintiff that, based on Mr. Wycoff's personal experience
at Progress, he believed that Plaintiff might have a cause of action
against Hudson United for the Bank's failure to satisfy the three
mortgages in a timely manner.
Although Plaintiff had satisfied his obligations to Hudson United by
September 28, 2000, he remained indebted to other creditors throughout
the course of his dealings with Defendant. In particular, Washington
Mutual, which owned mortgages totaling in excess of $1 million on both
the Pennsylvania and New Jersey properties, were pursuing foreclosures
against both properties. Plaintiff also owed $250,000 to DSB, LLC, which
had purchased the second lien position on the Pennsylvania property. In
addition, Plaintiff owed $156,000 to GE Capital, and he had over $100,000
in unpaid state and federal taxes.
As a result of these debts, Plaintiff filed personal bankruptcy
petitions with this court's bankruptcy division on April 24, 2001,
September 21, 2001, November 16, 2001, February 26, 2002, and April 24,
2003. In three of those five proceedings-the first, fourth, and
fifth-Plaintiff filed the requisite schedules listing his assets but declined to
mention his possible claim against Defendant in the instant
Throughout the ongoing bankruptcy process, attorneys for Plaintiff
attempted to settle his debts on the grounds that he could not afford to
pay his creditors the amounts he owed in full. For example, on February
27, 2002, Mr. Nolan wrote to counsel for DSB and offered to settle
Plaintiff's $250,000 debt for $125,000. He explained that the first lien
holder on the Pennsylvania property was pursuing foreclosure and that,
unless a proposed sale of the house to Mr. Ortlieb's wife financed by a
mortgage in her name was approved, there would be no alternative other
than to go through Chapter 11 and abandon the property. In addition, on
September 18, 2002, Mr. Marcone faxed to counsel for Washington Mutual a
letter containing an offer to settle Plaintiff's debt with that
institution. Therein, Mr. Marcone explained that Plaintiff could not
afford to pay the amount due because he was indebted to a host of
additional creditors. The attorney went on to list Plaintiff's creditors
and the amount owed to each, including a $550,000 debt to Jefferson Bank.
Plaintiff, however, had paid off his debt to the Bank in full on
September 28, 2000.
This court finds that summary judgment must be granted in favor of
Defendant because Plaintiff's claims are barred by the equitable doctrine
of judicial estoppel. Even absent judicial estoppel, all of Plaintiff's
claims based on the Pennsylvania mortgage are either untimely or fail as
a matter of law, while his claims based on the New Jersey mortgages are
likewise time-barred. A. Summary Judgment Standard
Summary judgment is appropriate if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits,
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(c). At the summary judgment stage, the court does not weigh the
evidence and determine the truth of the matter. Rather, it determines
whether or not there is a genuine issue for trial Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). In making this
determination, all of the facts must be viewed in the light most
favorable to, and all reasonable inferences must be drawn in favor of,
the non-moving party. Id. at 256.
The moving party has the burden of showing there are no genuine issues
of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986); Mathews v. Lancaster Gen. Hosp., 87 F.3d 624, 639 (3d
Cir. 1996). In response, the non-moving party must adduce more than a
mere scintilla of evidence in its favor and cannot simply reassert
factually unsupported allegations contained in its pleadings.
Anderson, 477 U.S. at 249; Celotex, 477 U.S. at 325;
Williams v. Borough of West Chester. 891 F.2d 458, 460 (3d Cir.
1989). Rather, there must be evidence on which a jury could reasonably
find for the nonmovant. Liberty Lobby. 477 U.S. at 252.
"Rule 56(c) mandates the entry of summary judgment, after adequate time for
discovery and upon motion, against a party who 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 of proof at
trial." Celotex. 477 U.S. at 322.
B. Judicial Estoppel
Defendant's primary contention is that judicial estoppel acts as a bar
to Plaintiff's claims because he knowingly and misleadingly failed to
disclose the existence of those claims on the bankruptcy schedules he filed with this court's bankruptcy
division between 2001 and 2003. This court agrees. The circumstances
surrounding Plaintiff's knowing, bad faith failure to disclose his
contingent claims against the Bank throughout the bankruptcy process,
coupled with his subsequent pursuit of those claims in this court, meets
the Third Circuit's test for application of this equitable doctrine.
First articulated by this Circuit in 1953, the judge-made doctrine of
judicial estoppel polices a litigant's use of the judicial system insofar
as "a plaintiff who has obtained relief from an adversary by asserting
and offering proof to support one position, may not be heard later in the
same court to contradict himself in an effort to establish against the
same adversary a second claim inconsistent with his earlier contention."
Scarano v. Cent. R.R. Co. of New Jersey, 203 F.2d 510, 513 (3d
Cir. 1953). Thus, the doctrine's basic principle is that absent a
sufficient explanation, a party should be prohibited from gaining an
advantage by litigating on one theory and then subsequently seeking an
additional advantage by pursuing an irreconcilably inconsistent theory.
Ryan Operations G.P. v. Santiam-Midwest Lumber Co.,
81 F.3d 355, 358 (3d Cir. 1996).
Although seemingly broad, judicial estoppel is not intended to
eliminate any slight or inadvertent inconsistency in a litigant's
position; instead it is to be reserved for only the most egregious cases
to prevent a party from deliberately "playing fast and loose with the
courts." Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. Gen. Motors
Corp., 337 F.3d 314, 319 (3d Cir. 2003) (quoting Scarano,
203 F.2d at 513). Still, however, the Court of Appeals has recently
opined that "the fact that a sanction is to be used sparingly does not
mean that it is not to be used when appropriate." Krystal, 337
F.3d at 325. Indeed, courts in this Circuit have found it appropriate to apply the
doctrine to bar claims brought by litigants who had previously acted in
bad faith in concealing those claims during prior bankruptcy proceedings.
See, e.g., Krystal 337 F.3d at 319-25 (applying judicial
estoppel to bar debtor Plaintiff's claim against defendant creditor for
violation of the automatic stay imposed by the Bankruptcy Code because
plaintiff knew about the claim during the prior bankruptcy proceeding and
had a motive to conceal it in the face of an affirmative duty to
disclose); Oneida Motor Freight Inc. v. United Jersey Bank
848 F.2d 414, 419-420 (3d Cir. 1988) (invoking judicial estoppel against
debtor plaintiff to bar claims for breach of contract, breach of the duty
of good faith, and fraudulent misrepresentation against defendant
creditor because plaintiff failed to disclose those claims in bankruptcy
proceedings despite citing defendant's improper activities as the
catalyst for its bankruptcy filing): In re Okan's Foods, Inc.
217 B.R. 739, 754-56 (Bankr. E.D. Pa. 1998) (barring Plaintiff's civil
rights claim against defendant because plaintiff represented the
contingent claim to the bankruptcy court as having little value and later
filed a claim for $750,000, an amount that would have satisfied all of
plaintiff's outstanding debts). But see Ryan. 81 F.3d at 362-65
(rejecting application of judicial estoppel based on lack of evidence of
plaintiff's bad faith in failing to disclose contingent claims in prior
In determining when to apply judicial estoppel to bar a seemingly
inconsistent litigation stance, this court must consider (1) whether the
party to be estopped has taken two positions that are "irreconcilably
inconsistent;" (2) whether the change of position was in "bad faith" or
was coupled with the intent of playing "fast and loose" with the court;
and (3) whether the application of the doctrine is "tailored to address
the harm identified" and "no lesser sanction would adequately remedy the
damage done by the litigant's misconduct." Krystal 337 F.3d at
319-320 (quoting Montrose Med. Group Participating Sav. Plan v.
Bulger, 243 F.3d 773, 779-80 (3d Cir. 2001)).
1. Plaintiff's Inconsistent Positions
In order to apply judicial estoppel to bar Plaintiff's claims, this
court must first find that he is currently asserting a position that is
"irreconcilably inconsistent" with one he asserted in a prior proceeding.
Montrose, 243 F.3d at 777. It is not required that the litigant
arguing in favor of estoppel was a party to the prior proceeding nor that
he or she was in privity with a party to that proceeding. Ryan.
81 F.3d at 360-61 ("Where the contentions are mutually exclusive, it is
irrelevant that they are asserted against diverse parties., The
integrity of the court is affronted by the inconsistency notwithstanding
the lack of identity of those against whom it is asserted,"). All that is
necessary to meet this first prong is that the party to be estopped
asserted an inconsistent position in a previous proceeding and cannot
credibly reconcile his or her changed stance. See, e.g.,
Montrose, 243 F.3d at 781 (inconsistency element was satisfied
because, among other inconsistences, plaintiff repeatedly denied that a
retirement plan was covered by ERISA in an earlier action but later filed
an action based on the premise that the same plan was indeed covered by
Plaintiff filed this action for violation of the Pennsylvania Mortgage
Satisfaction statute against Defendant on July 18, 2003, yet it is
undisputed that he failed to disclose it as a contingent claim on the
three bankruptcy schedules he had previously filed with this court's
bankruptcy division. Thus, Plaintiff asserted a position with this
court-that he possessed a viable claim against Defendant-that was
irreconcilably inconsistent with his failure to disclose the existence of
this claim before the bankruptcy court. As such, this court finds that
Plaintiff's conduct meets the first prong of the judicial estoppel test, The finding that Plaintiff asserted irreconcilably inconsistent
positions comports with Third Circuit precedent. In contrast to the
instant case-in which Plaintiff completely failed to mention his
contingent claims in any stage of the bankruptcy proceedings-the Third
Circuit in Krystal found that the first prong of the judicial
estoppel test was met when the plaintiff merely failed to adequately
characterize his contingent claims.
Krystal involved a plaintiff former car dealership, named
Krystal, whose franchise agreement was in the process of being terminated
by General Motors, the franchisor. Krystal, however, believed that
General Motors' attempted termination was unlawful and pursued that claim
in state court. It also filed for bankruptcy, after which time the
termination became effected. In its disclosure statement in bankruptcy
court, Krystal revealed that it was involved in state court proceedings
with General Motors and referenced its position that, because the
franchisor had unlawfully terminated the agreement, the franchise
constituted part of the bankruptcy estate. Subsequently, Krystal brought
suit against General Motors in this district, alleging that the
termination violated the bankruptcy court's automatic stay. The case was
then transferred to the Middle District of Pennsylvania, which held that
the Plaintiff's claims were barred by judicial estoppel.
Krystal. 337 F.3d at 317-19.
In affirming the Middle District on appeal, the Third Circuit found
that Krystal asserted irreconcilably inconsistent positions because its
disclosure statement was insufficient to notify the court of its
contingent claims against General Motors for violation of the automatic
stay. Id. at 321. The court explained, "[T]he language in the
Amended Disclosure Statement was little more than boilerplate. It did not
specify any of the claims contained in the instant complaint against GM,
much less attempt to place any monetary value on them. We agree that such
boilerplate language is simply not adequate to provide the level of notice
required. The bankruptcy rules were clearly not intended to encourage
this kind of inadequate and misleading disclosure by creating an escape
hatch debtors can duck into to avoid sanctions for omitting claims once
their lack of candor is discovered." Id.
Unlike in Krystal Plaintiff in the instant case did not even
fail to adequately disclose his contingent claims by employing
ambiguous language in his bankruptcy filings. Instead, Plaintiff
completely omitted any mention of such claims in any of his
three disclosure statements. Thus, based on the holding in
Krystal Plaintiff undoubtedly asserted a position in this court
that is irreconcilably inconsistent with his earlier stance in the
2. Plaintiff's Bad Faith
Having concluded that Plaintiff's failing to disclose his contingent
claims against the Bank and subsequent filing of those claims in this
court were irreconcilably inconsistent, it must next consider the second
prong of the judicial estoppel test: whether Plaintiff changed his
position in bad faith, or, with the intent to "play fast and loose with
the court." Montrose. 243 F.3d at 779 (quoting Ryan,
81 F.3d at 361). In making this determination, a court must distinguish
between a change of position based on a good faith mistake, on the one
hand, and an intentional self-contradiction employed as a means of
misleading the court in order to obtain an unfair advantage, on the
other. Ryan 81 F.3d at 362. Only the latter would support the
finding of bad faith necessary to trigger the application of judicial
Although the intent to mislead cannot be inferred from the mere fact of
nondisclosure, Ryan 81 F.3d at 364, courts are permitted to
draw a rebuttable inference of bad faith "when averments in the pleadings
demonstrate both knowledge of a claim and a motive to conceal that claim in the face of an affirmative duty to disclose."
Krystal 337 F.3d at 321 (citing Oneida. 848 F.2d at
416-18). Here, Plaintiff not only knowingly failed to disclose his
potential claim against the Bank when disclosure was mandated, but he
also had compelling motivation to do so.
a. Plaintiff's Knowledge of the Claims
With respect to knowledge, the Third Circuit has opined that "if the
debtor has enough information prior to confirmation to suggest that it
may have a possible cause of action, then it is a known cause of action
such that it must be disclosed." Krystal 337 F.3d at 323
(citation omitted). Here, it is undisputed that Plaintiff knew of his
potential claims against the Bank before he failed to disclose them in
his third bankruptcy schedule on April 24, 2003. By the time of that
filing, Plaintiff would have received his copy of Mr. Nolan's February
18, 2002 letter, in which Plaintiff's attorney cited the Pennsylvania
Mortgage Satisfaction statute in support of his threat to sue the Bank.
In addition, Plaintiff's April 24, 2003 filing took place at least three
months after his conversation with Mr. Wycoff, during which the Progress
Bank executive advised Plaintiff that he may have a claim against
Defendant for its failure to satisfy the repaid mortgages. Thus, the
pleadings make plain that Plaintiff knowingly failed to disclose his
contingent claim against the Bank in his third and final bankruptcy
Plaintiff's situation is similar to that in Oneida. in which
the Third Circuit held that judicial estoppel barred a claim by the
plaintiff trucking company against the defendant bank with whom the
plaintiff had entered into a credit agreement. There, after the
Plaintiff's account had been habitually overdrawn, the bank requested
that the trucking company's owner personally guarantee his company's
debt. The owner refused, and the bank ceased to honor the company's
checks, an occurrence that allegedly harmed the company's reputation and
forced it to file for bankruptcy. Although the plaintiff made no mention of its potential
claim during the ensuing bankruptcy proceeding, it subsequently commenced
an action against the bank in New Jersey state court and alleged that the
bank's improper activities-including breaches of both the credit
agreement and the duty of good faith-caused it to file for bankruptcy.
Oneida, 848 F.2d at 415-16. It was this allegation, the Third
Circuit later confirmed, that supported the finding that the plaintiff
had knowledge of its claim during the prior bankruptcy proceeding. The
Ryan court explained, n[A]s the gravamen of
Oneida's case against the bank was that the bank's actions were
responsible for forcing Oneida into bankruptcy, it is clear that Oneida
had knowledge of this potential claim at the time it filed for
bankruptcy." 81 F.3d at 363.
As in Oneida. Plaintiff alleges that Defendant's actions have
caused him to file for bankruptcy. Amended Complaint (Document 25), ¶
14 ("The actions of the Defendant have damaged the Plaintiff in that the
Plaintiff has had to retain counsel to force the Defendants to satisfy
the mortgage, to seek assistance in the Bankruptcy system, [and
to] defend the action in foreclosure . . .") (emphasis added). Thus,
following the logic of Oneida, this allegation corroborates the
undisputed facts that Plaintiff acted with the requisite knowledge in
failing to disclose his contingent claim against the Bank in his third
b. Plaintiff's Motive to Conceal
Plaintiff not only acted knowingly in failing to list his contingent
claim against Defendant in his final bankruptcy filing, but he also
possessed a strong motive to conceal that potential asset. This
combination of knowledge and motive to conceal permits this court to
infer that he acted in bad faith, Krystal, 337 F.3d at 322, and
Plaintiff has done nothing to rebut that presumption.*fn3
It is an established principle of bankruptcy law that one seeking
benefits under its terms must fulfill certain reciprocal duties, which
include filing a "schedule of assets and liabilities . . . and a
statement of the debtor's financial affairs." 11 U.S.C. § 521(1).
See also Oneida, 848 F.2d at 416-17 (explaining that this
duty includes an obligation that the debtor disclose any litigation
likely to arise outside of the bankruptcy proceeding). Because both
creditors and the court must rely heavily on these disclosure
statements, a court "cannot overemphasize" the importance of the
debtor's obligation to accurately represent its financial position.
Oneida. 848 F.2d at 417.
In Krystal the Third Circuit found sufficient evidence of a
motive to conceal on the part of a debtor who knowingly failed to list
contingent claims in its bankruptcy filings in the face of this
affirmative duty to disclose. There, the court found that the debtor's
owner-who was engaged both in negotiating claims with unsecured creditors
and in funding the payment of claims and expenses associated with his
company's reorganization-had "every reason" to minimize the company's
assets so that creditors would conclude that they had no choice but to
substantially compromise their claims and approve the debtor's
reorganization plan. 337 F.3d at 323, See also Oneida, 848 F.2d
at 418-19 (finding that the Plaintiff's acknowledging a $7.7 million debt
to the bank in its bankruptcy filing without any mention of a possible
setoff, despite filing suit only seven months later, "worked in
opposition to preservation of the integrity of the system which the
doctrine of judicial estoppel seeks to protect").
On the other hand, the court in Ryan found insufficient
evidence of bad faith when the debtor builder's nondisclosure of a
potential product liability claim for defective wood trim against a
manufacturer was offset by its omission of the corresponding claims
against the debtor of homeowners affected by the defect. It explained
that, "[T]he balance of assets and liabilities before the court and
creditors when the reorganization plan was approved may have been
unaffected by the failure to list the claims as assets." Ryan,
81 F.3d at 363
Unlike in Ryan, there is no evidence in this case that
Plaintiff omitted any potentially offsetting liabilities in any of his
bankruptcy filings. Instead, he is better compared to the plaintiff in
Krystal, whom the court found had acted in bad faith because he
had "every reason" to minimize his assets during his bankruptcy
proceeding in order that creditors-with whom he was negotiating-might
compromise their claims. In a similar fashion, as Plaintiff here was
benefitting from the protection of the bankruptcy court, his attorneys
were simultaneously writing letters to creditors in attempts to persuade
them to allow Plaintiff to settle his debts for less than the unpaid
balances. Thus, Plaintiff's motive to conceal his assets is apparent.
Perhaps most illustrative of this practice is Mr. Marcone's September
18, 2002 letter to Washington Mutual. Therein, he explained that
Plaintiff could not afford to pay his past due balance because he was
indebted to a host of additional creditors. As support for this position,
Mr. Marcone listed those creditors and the amount Plaintiff owed to each.
Significantly, this list included the $550,000 debt to Jefferson Bank
that Plaintiff has repeatedly emphasized to this court he had paid off more than two years
earlier, on September 28, 2000. Although that letter was, of course,
outside the context of a judicial proceeding, it offers ample support for
the position that Plaintiff was familiar with the process of overstating
liabilities and understating assets in order to advance his own interests
throughout the bankruptcy process. Both because he did so knowingly, and
because he did so with a motive to conceal, this court finds that the
undisputed evidence supports a finding that Plaintiff acted in bad faith.
3. Appropriateness of Remedy
Third, having concluded that Plaintiff asserted irreconcilably
inconsistent positions and did so in bad faith, this court must determine
whether it is appropriate to exercise its inherent power to sanction
misconduct and apply judicial estoppel to bar Plaintiff's claims. While
the Supreme Court has cautioned that "because of their very potency,
inherent powers must be exercised with restraint and discretion,"
Chalmers v. NASCO, Inc., 501 U.S. 32, 44 (1992), it is likewise
true that "the fact that a sanction is to be used sparingly does not mean
that it is not to be used when appropriate." Krystal, 337 F.3d
at 325. In making this determination, a court must consider (1) whether
judicial estoppel is tailored to address the harm identified, and (2)
whether any lesser sanction would adequately remedy the damage done by
the conduct of the party to be estopped. Id. at 320 (quoting
Montrose. 243 F.3d at 779-80).
Here, judicial estoppel is plainly tailored to address Plaintiff's bad
faith misuse of the federal court system. Plaintiff's knowing failure to
disclose this potential claim against Defendant throughout the
proceedings in the bankruptcy division of this very court, coupled with
his subsequent filing in this court, constitutes the exact type of
"affront to the court's integrity" that judicial estoppel is meant to
protect. Montrose. 243 F.3d at 785. As such, this court finds that the sanction of judicial estoppel is necessary to protect its
own authority. While Plaintiff may have been successful in attempting to
mislead creditors with respect to the extent of his indebtedness in the
past, this court will not allow itself to fall victim to such tactics.
In addition, this court can think of no lesser sanction that would
adequately remedy the harm caused by Plaintiff's conduct. The Third
Circuit has explained that alternative remedies, such as those found in
the Federal Rules of Civil Procedure, should be deemed inadequate only
when "they would not provide a district court with the authority to
sanction all of the conduct deserving of sanction." Id.
(quoting Klein v. Stahl GMBH & Co. Maschinefabrik,
195 F.3d 98, 109 (3d Cir. 1999)).
Although this court can find no provision in the Federal Rules that
would be up to the task of adequately sanctioning all of Plaintiff's
reprehensible conduct, it could decide to allow the case to move forward
and force Plaintiff to distribute any damages recovered in this action
among his remaining creditors. As the Krystal court found,
however, such a remedy would not only undermine the integrity of the both
the bankruptcy and judicial processes, but it would also "send a message
that a debtor should consider disclosing potential assets only if he is
caught concealing them," 337 F.3d at 325 (citation and quotations
omitted). As such, this court finds it appropriate to exercise its
discretion and apply judicial estoppel to bar all of Plaintiff's claims.
C. The Pennsylvania Mortgage
Even if Plaintiff's claims that Defendant failed to satisfy the
Pennsylvania mortgage were not barred by judicial estoppel, the Defendant
would nevertheless prevail because all such claims are either untimely or
fail as a matter of law.
1. Claims Based on Plaintiff's 2000 Requests Plaintiff's principal contention is that Defendant's failure to satisfy
his Pennsylvania mortgage despite Plaintiff's repeated post-repayment
demands violated 21 P.S. § 681, which provides that, "Any mortgagee
. . . having received full satisfaction and payment [of all funds due]
. . . shall, at the request of the mortgagor, enter satisfaction
either upon the margin of the record of such mortgage recorded in the
said office or by means of a satisfaction piece." As such, Plaintiff
seeks damages under 21 P.S. § 682, entitled "Fine for Neglect," which
explains that a mortgagee who fails to enter satisfaction within 45 days
of a mortgagor's request may be held liable for a sum not exceeding the
amount of the mortgage. The statute further provides that this fine for
failure to satisfy a mortgage applies "for every such offense." 21 P.S.
Pennsylvania's two year statute of limitations, which governs actions
for civil penalty or forfeiture, controls Plaintiff's claims under 21
P.S. § 682 for failure to satisfy a mortgage upon request.
42 Pa. C.S.A. § 5524(5), See, e.g., Valenza v. Heine, 1986 WL
8728, at *1 (E.D. Pa. Aug. 8, 1986) (applying two-year statute of
limitations to claims brought under 21 P.S. § 682); Pantuso
Motors, Inc. v. Corestates Bank, N.A., 798 A.2d 614, 618-19 (
Pa. Super. 1999) (same). In interpreting § 682, the Superior Court
has held that each request to mark a mortgage as satisfied that is not
timely complied with is actionable as a separate claim.
Pantuso, 798 A.2d at 618-19. As such, the two year limitations
period begins to run anew whenever a mortgagor makes a request-either the
initial request or a subsequent one-for satisfaction.*fn4 Id.
at 619. Based upon the teaching of Pantuso, Plaintiff is time-barred
from bringing against Defendant any claims that are based on requests to
satisfy made prior to July 18, 2001, or, two years before Plaintiff filed
his Complaint with this court in the instant action. Thus, any claims
based either on Plaintiff's October 2000 conversation with Defendant's
officer Thomas Kelly, or on attorney Warren Trainor's November 2000
letter on behalf of Plaintiff to the Bank's counsel are untimely and,
therefore, must be dismissed.
2. Claims Based on Plaintiff's 2002 Requests
Plaintiff's remaining claims that Defendant failed to satisfy the
Pennsylvania mortgage are based on Plaintiff's 2002 requests for
satisfaction.*fn5 Because Defendant complied with each such request by rendering a satisfaction piece within the
45-day window provided by the Pennsylvania Mortgage Satisfaction statute,
Plaintiff's claims based on these requests fail as a matter of law.
In order to prove entitlement to the fine under 21 P.S. § 682, a
plaintiff mortgagor must prove (1) that he or she has paid all sums due
and owing with respect to the mortgage; (2) that he or she has requested
that the mortgagee enter satisfaction or provide a satisfaction piece;
and (3) that the mortgagee failed to comply with the request within 45
days. O'Donoghue v. Laurel Sav. Ass'n. 728 A.2d 914, 917 (
Pa. 1999), Here, there is no genuine issue as to the fact that Defendant
timely complied with all of Plaintiff's 2002 requests for satisfaction.
Plaintiff's earliest communication with Defendant in 2002 came on
January 22, when title company employee Maxine Werbit called the Bank to
request satisfaction of Plaintiff's mortgages. After receiving a letter
to the same effect from Plaintiff's attorney, Dennis Nolan, Defendant
worked with Mr. Nolan to obtain the information necessary to comply with
the request, and it eventually prepared a satisfaction piece that it sent
by Federal Express to the attorney's office on March 1. Three days later,
on March 4-before the expiration of the 45 day window opened Ms. Werbit's
January 22 phone call-Mr. Nolan's secretary, Theresa Marcone, signed for
a package sent by Hudson United Bank and delivered by Federal Express.
The shipping company's records indicate that the package sent by Hudson
United and that signed for by Mrs. Marcone had identical tracking numbers. Based on this
evidence, no reasonable jury could find that Hudson United failed to
comply with Plaintiff's request for satisfaction of the Pennsylvania
mortgage within the statutorily mandated time frame,*fn6
D. The New Jersey Mortgages
In addition to his Pennsylvania law claims, Plaintiff contends that
Defendant's alleged failure to satisfy the two mortgages on the New
Jersey property entitles him to damages under that state's common law.
Although Plaintiff's Amended Complaint vaguely characterizes this claim
as one for "Neglect," Plaintiff apparently is seeking damages under the
common law for slander of title. See Plaintiff's Proposed
Verdict Sheet (Document 63), ¶ 23 ("As to the New Jersey property, do
you find the Bank's failure to satisfy the mortgages constituted a
slander to the title of the New Jersey property?") (emphasis
added). It cannot be disputed, however, that this claim is untimely and
must, therefore, be dismissed.
Because jurisdiction in the instant case is based on diversity of
citizenship, this court must apply the conflicts of law principles of
Pennsylvania, as the forum state. Rohm & Haas Co. v. Adco. Chem.
Co., 689 F.2d 424, 429 (3d Cir. 1982) (citing Klaxon Co. v.
Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941)). In cases
involving claims based on another state's substantive law, Pennsylvania courts will apply whichever
limitations period-between Pennsylvania's and that of the foreign
state-is shorter. 42 Pa. C.S.A. § 5521(b).
In Pennsylvania, actions for slander of title are governed by a
one-year statute of limitations. Pro Golf Mfg., Inc. v. Tribune
Review Newspaper Co., 809 A.2d 243, 246 (Pa. 2002). On the other
hand, New Jersey courts have not definitively answered the question of
which limitations period should be applied to slander of title actions.
This court, however, needs not consider that question today because even
assuming that the Pennsylvania limitations period is longer than that of
New Jersey-in which case this court would apply the shorter New Jersey
period and applying that longer, one year period, Plaintiff's
claim would still be untimely.
Plaintiff requested that the Bank enter satisfaction of his repaid
mortgages in October of 2000. It is undisputed that, after the Bank
failed to comply with that request, some time in November 2000 Plaintiff
hired an attorney, who contacted the Bank's counsel to follow up on that
request. As such, there can be no doubt that the limitations period began
to run by November 2000. VU Skin, 118 F.3d at 144 (limitations
period begins to run when the right to institute and maintain the suit
arises). By that time, Plaintiff knew of his right to institute this
suit, yet he did not file his Complaint in this court until July 2003,
almost three years later. As such, Plaintiff's claim under New Jersey law
is untimely and must be dismissed.
An appropriate Order follows.