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Summary Judgment Motion Denied When Record Lacks Material Facts

Month: November 2024

Summary Judgment Motion Denied When Record Lacks Material Facts

Posted on by Christie Bowness

What You Need to Know

  • Adherence to Local Rules is Essential. The court emphasized the importance of compliance with local procedural rules, including the requirement to file a separate Statement of Material Facts with specific citations to the record. Failure to do so limited the court's ability to assess the facts.
  • Burden of Proof in Summary Judgment. Parties moving for summary judgment bear the burden of demonstrating that no genuine issue of material fact exists. In this case, both Keyes and Coretitle failed to meet this standard due to insufficient evidence and unclear legal arguments.
  • Role of Supporting Evidence. A lack of record evidence and case law to support arguments can result in denial of motions, as seen with both Keyes’s and Coretitle’s submissions. Properly identifying standards of care and citing relevant law are critical in disputes involving professional duties.
  • Importance of Litigation Fundamentals. This case underscores the need for practitioners to present clear, comprehensive arguments that incorporate relevant legal standards and factual details to enable effective judicial review.

Introduction

In a recent case from the Southern District of Florida, the Court denied a motion for summary judgment when the record was void of facts, preventing the Court from understanding the matter at hand and reiterating the importance of adherence to local rules and the essentials of litigation when petitioning a court for relief.  Tek Grubu Gayrimenkul Franchising Pazarlama ic ve dis Ticaret Anonim Sirketi v. Coretitle LLC, No. 1:23-cv-21026-LEIBOWITZ/LOUIS, 2024 U.S. Dist. LEXIS 181682, at *11 (S.D. Fla. Oct. 3, 2024)

Background and Procedural History

In 2022, two parcels in Miami-Dade County, Florida owned by Tek Grubu Gayrimenkil Franchising Pazarlama ic ve dis Ticaret Anonim Sirketi's (“Tek Grubu”) were fraudulently transferred to 0520 VL LLC by three unidentified individuals who claimed to own the two parcels.  Coretitle, LLC (“Coretitle”) served as the title agent for the fraudulent transfer.  As a result, Tek Grubu initiated an action against Coretitle for negligence and unlawful filing of false statements against real property.  In response, Coretitle filed a Third Party Complaint against Keyes Company (“Keyes”) for common law indemnification based on Coretitle’s allegation “that Keyes acted as a ‘listing owner’ during the fraudulent transfer on behalf of the purported seller, and presented the subject real property for sale to prospective buyers.”

Prior to this instant decision, the Court had denied Tek Grubu’s Motion for Summary Judgment and granted in part and denied in part Coretitle’s Motion for Partial Summary Judgment against Tek Grubu.  On July 16, 2024, Third Party Defendant Keyes filed a Motion for Summary Judgment “claiming that it is not liable to Coretitle because (1) Coretitle had a duty to independently investigate the ownership of the parcels at issue, and failed to do so; and (2) Keyes owed Coretitle no duty to warn them of a fraudulent third party of which it was not aware.”  Ultimately, the Southern District of Florida denied Keyes’s motion because “Keyes fail[ed] to convince th[e] Court that there is no genuine issue of material facts as to both . . . arguments.”

Decision

As an initial matter, the Court noted that Keyes neglected to comply with S.D. Fla. L.R. 56.1 by failing to file its Statement of Material Facts separately and failing to “support its statements with specific, pinpoint references to particular parts of record material[.]”  Because Keyes failed to comply with the rule and neglected to provide the necessary information, the Court was “limited in its ability to determine the factual background” when evaluating Keyes’s Motion for Summary Judgment.  Further, Coretitle, in response to Keyes’s motion, also neglected to comply with the local rule and failed to provide pincites to record evidence in its Statement of Facts.  In the end, the Court determined that whether it did or did not consider both Keyes’s and Coretitle’s Statement of Facts, “it would come to the same conclusion: Keyes . . . presented insufficient evidence to [the] Court to justify granting summary judgment.”

As to Keyes’s assertion that Coretitle had a duty to independently investigate, the Court reasoned that Keyes failed to show that Coretitle did not conduct its own investigation as to the ownership of the parcels.  The Court opined that it was “unable to assess the standard of care for a title agent”  because Keyes declined to “cite any law” that defined and/or explained whether Coretitle had an obligation/duty to conduct an independent investigation of title and whether a failure to do so is a breach of its obligation “to act in a reasonably prudent manner.”  The Court held that because Coretitle disputed Keyes’s assertion that it did not verify the sellers’ identities there was a triable issue of fact that precluded summary judgment.

Turning to Keyes’s claim that it owed Coretitle no duty to warn of the fraudulent actions, the Court concluded that Keyes had again failed to meet its burden and neglected to offer the Court any “evidence that it was not aware of the fraudulent activity” conducted by the unidentified individuals.  The Court reiterated the well-known standard that “the burden is on the movant to show that no genuine issues of material fact exist” and held that “[w]ithout any sort of evidence regarding Keyes’s knowledge of the parties involved (or lack thereof), this Court is unable to determine whether Keyes met any duty it had.” (emphasis in original). The Court also rejected Keyes’s argument that it did not have a “duty to verify the identity” of the undisclosed sellers.  The Court opined that Keyes misinterpreted the law and a real estate agent’s duties are not simply limited to their statutory duties as Keyes attempted to argue.

Coretitle did not fare better regarding its argument that Keyes breached its duty to “act as a reasonable realtor” as the Court determined that Coretitle failed to “identify the standard of care for a reasonable realtor, [or] . . . provide th[e] Court with any guidance as to Keyes’s role or actions in the underlying transaction.”  The Court found the cases relied on by Coretitle unavailing and inapplicable to the facts at issue.

In sum, because both Coretitle and Keyes provided the Court with “no facts as to Keyes’s involvement in the underlying transaction, it . . . [was] unable to determine as a matter of law that Keyes had no duty to Coretitle[.]”  The Court cautioned both parties that “[t]he Local Rules are not optional; parties which submit motions for summary judgment and responses to the motions must present both the relevant issues and the facts in such a way that the Court can comprehend the situation at hand.”

Key Takeaways

This case confirms that fundamentals matter.  It serves as an important reminder for legal practitioners to not only adhere to the well-known rules of civil procedure but also the various local rules that have been issued in both state and federal jurisdictions across the country.  Moreover, this case reiterates the importance of providing a complete and efficient review of both the relevant legal standard and factual information to the court.  In short, this case upholds the cornerstones of litigation.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Matthews Florez at mflorez@riker.com, Kori Pruett at kpruett@riker.com or Shelley Wu at swu@riker.com.

Does an Oil Stain Require a Call to the Hotline?

Posted on by Christie Bowness

NJDEP Proposes Expansive New Discharge Reporting Rule

The New Jersey Department of Environmental Protection (“NJDEP”) has proposed amendments to its site remediation rules to implement the 2019 amendments to the Site Remediation Reform Act, commonly known as SRRA 2.0. In a significant departure from existing discharge reporting obligations, the proposed section would require that any person with knowledge that a discharge occurred notify NJDEP of the discharge immediately. This proposed expansion of the reporting obligation will complicate environmental due diligence for transactions in New Jersey.

Purchasers’ due diligence generally includes an environmental evaluation of the previous uses of the property, as the purchaser could become strictly liable for remediation costs after closing. In addition, a property owner has an “innocent purchaser defense” to liability under the Spill Compensation and Control Act (the “Spill Act”) if it performed “all appropriate inquiry” into previous ownership and uses of the property before it acquired the property. “All appropriate inquiry” means performing a preliminary assessment and site investigation, which includes environmental sampling, if the preliminary assessment indicates that a site investigation is necessary. Thus, a purchaser’s due diligence often must include a site investigation to secure the benefits of the innocent purchaser defense.

Under NJDEP’s existing regulations, the current property owner has an obligation to notify NJDEP when it discovers a discharge that is not already known, an immediate environmental concern (“IEC”), or contamination that has migrated onto the property from off-site. N.J.A.C. 7:26C-1.7; N.J.A.C. 7:1E-5. Licensed site remediation professionals (“LSRPs”) also have reporting obligations. Like the property owner, an LSRP retained to perform remediation at a site must report to NJDEP when the LSRP gains knowledge of a previously unreported discharge. N.J.A.C. 7:26I-6.10. Additionally, any LSRP must report an IEC, even if the LSRP has not been retained for that site. N.J.A.C. 7:26I-6.9. Finally, any person has an obligation to report a confirmed discharge from certain underground storage tanks (“USTs”), although residential heating oil tanks and smaller heating oil tanks for commercial buildings are exempt. N.J.A.C. 7:14B-1.4(b); N.J.A.C. 7:14B-7.3.  Notably, except for releases from regulated USTs, these existing rules do not impose reporting obligations on prospective purchasers who may discover a discharge during their environmental due diligence.

These existing reporting obligations have shaped how sellers allow prospective purchasers to conduct due diligence. To avoid triggering a reporting obligation as a result of investigations during due diligence, sellers have been reluctant to allow LSRPs to participate in purchaser’s due diligence because of LSRPs’ professional obligation to report IECs and perceived heightened reporting obligations upon the discovery of a discharge. Typically, sellers also require purchasers to keep information learned during due diligence confidential to avoid triggering the seller’s reporting obligation as the current owner, which could give rise to new remediation requirements for the seller.

The proposed rule alters this existing framework by requiring that a person who discovers a discharge during “all appropriate inquiry” under the Spill Act report the discharge to NJDEP and the owner of the property. The proposed rule in fact goes even further and would obligate any person to report to NJDEP whenever that person obtains knowledge of a discharge. Neither the proposal nor the existing rules define “knowledge” – does a person have to take samples confirming impacts to obtain knowledge of a discharge, or would seeing oil-stained soil or smelling an odor be enough to have knowledge that a discharge occurred? Thus, sellers may not want to allow access even for a preliminary assessment.

The proposed rule purports to maintain the innocent purchaser defense under the Spill Act, providing that the person undertaking “all appropriate inquiry” will not be liable for cleanup and removal costs unless and until the person acquires the property. This provision, however, seems unnecessary because a person who discovers a discharge has not been considered “in any way responsible” for the discharge under the Spill Act simply because they discovered it. Perhaps NJDEP is trying to provide comfort to prospective purchasers while reinforcing the obligations of property owners.

Even though the innocent purchaser defense will still exist under the law, the proposed rule will likely make it more difficult to perform “all appropriate inquiry” and thus qualify for the defense. Sellers can be expected to be even more reluctant than they have been to permit prospective purchasers to perform due diligence when, under the new rule, any discovery of a discharge will result in reporting and impose remediation obligations on the seller. The proposed reporting rule likely will make real estate transactions in New Jersey riskier. If sellers refuse to permit sampling during due diligence, prospective purchasers will have to decide whether to purchase property on the basis of incomplete information and, if they move forward with a purchase, they will not have a defense to Spill Act liability where they could not perform “all appropriate inquiry.” On the other hand, where sellers acquiesce to environmental sampling, they may have to accept that these due diligence activities could impose remedial obligations even if the transaction does not go through.

The Department will hold a virtual public hearing on the proposal on Thursday, November 21, 2024, at 1:00 P.M. A link to the virtual public hearing with a telephone call-in option is provided on NJDEP’s website here. Written comments on the proposal are due by December 20, 2024.

For more information, please contact any attorney in our Environmental Practice Group.

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