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Legal Asset Funding, LLC v. Veneski

May 2, 2008

LEGAL ASSET FUNDING, LLC, PLAINTIFF,
v.
KEVIN VENESKI AND JUANITA VENESKI, DEFENDANTS.



The opinion of the court was delivered by: Judge Caputo

MEMORANDUM

Presently before the Court is Plaintiff's Second Motion to Transfer Venue to the Hudson County New Jersey Chancery Division Superior Court. (Doc. 102.) For the reasons set forth below, Plaintiff's motion to transfer venue will be denied.

The Court has jurisdiction over this matter based on diversity of citizenship. 28 U.S.C. § 1332(a).

BACKGROUND

Plaintiff Legal Asset Funding, LLC ("LAF") is engaged in the business of purchasing legal receivables, such as anticipated legal fees in pending cases. (Compl. ¶ 1, Doc. 1.) Defendants, the Veneskis, were plaintiffs in a medical malpractice action. The Veneskis' attorney, Norman Leonard Cousins, financed the medical malpractice action with money from fee purchase agreements entered into with Plaintiff LAF. Cousins misrepresented to Plaintiff that he was to receive a one-third (1/3) contingency fee for representing the Veneskis in their action. (Compl. ¶ 11, Doc. 1.) This was despite the fact that New York, the state in which the medical malpractice action was prosecuted, imposes a statutory cap on attorney's fees in medical malpractice cases which is well below one-third of the award or settlement. See N.Y. JUD. L. 474-a (McKinney Supp. 2003).

Plaintiff LAF alleges that the Defendant Veneskis were complicit in Cousins' fraud because of an affidavit executed by Kevin Veneski to support a potential application for an additur to Cousins' contingency fee. In the affidavit, Veneski stated that, in the event that Cousins was not given a one-third (1/3) contingency fee by the court, he would nonetheless pay the difference in the form of a gift. (Doc. 19-2 ¶ 2.) Plaintiff asserts that this affidavit was only created to induce it to enter into the fee purchase agreements with Cousins to fund the Veneskis' medical malpractice action. (Compl. ¶ 22, Doc. 1.)

Plaintiff LAF filed its Complaint against Defendants Kevin and Juanita Veneski on May 27, 2004. (Doc. 1.) Plaintiff filed a Motion to Stay Proceedings (Doc. 13) on August 3, 2004, contending that because there was a parallel action in New Jersey state court, the case should be stayed. On February 14, 2005, the Court denied Plaintiff's motion, finding that the Cone factors did not require a stay of the proceedings, as the New Jersey action was not a parallel action. (Doc. 43.) See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983).

On September 12, 2006, Defendant Juanita Veneski was granted summary judgment and dismissed from the case. (Doc. 74.) Defendant Kevin Veneski was also granted summary judgment on Counts II and IV of the Complaint. (Doc. 74.) Two counts remain against Defendant Kevin Veneski on the theory of promissory estoppel and unjust enrichment. (Doc. 74.)

On February 11, 2008, Plaintiff LAF filed the present Motion to Change Venue to the Hudson County New Jersey Chancery Division Superior Court. (Doc. 102.) The motion is ripe and fully briefed for disposition.

DISCUSSION

Plaintiff LAF argues that this action should be transferred to the Hudson County, New Jersey, Chancery Division Superior Court. Plaintiff reaches this conclusion through an unusual theory. Plaintiff LAF argues that the Bankruptcy Court for the Southern District of New York has jurisdiction over the instant action because this action is a "core proceeding" under 28 U.S.C. § 157. Nonparty Norman Cousins is a debtor in the Bankruptcy Court for the Southern District of New York, and the Defendant Veneskis filed proof of claim in that action as creditors. The Bankruptcy Court transferred the Cousins bankruptcy action from the Southern District of New York to the Hudson County, New Jersey, Chancery Division Superior Court, where Cousins and the Defendant Veneskis were defendants to a previously filed action by Plaintiff LAF.

On March 8, 2006 the Order from Bankruptcy Judge Robert D. Drain transferred the bankruptcy proceeding in the Southern District of New York to the Hudson County, New Jersey Chancery Division Superior Court, with Judge Drain ordering that "[t]his adversary proceeding [be] remanded to the Superior Court of the State of New Jersey, Hudson County (Chancery Division) for adjudication of all issues therein (the "State Court Proceeding")." (Doc. 104 Ex. A.) Therefore, Plaintiff argues that the Bankruptcy Court for the Southern District of New York has "core jurisdiction" over the instant action.

According to Plaintiff, because the Bankruptcy Court transferred venue to the Hudson County, New Jersey, Chancery Division Superior Court, Plaintiff concludes that this Court should likewise transfer venue to the New Jersey Court.

Plaintiff cites 28 U.S.C. ยง 157(b), which concerns "core proceedings" in a bankruptcy case. Specifically, the Plaintiff addresses three (3) ...


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