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Pasternack v. Klein

United States District Court, M.D. Florida, Tampa Division

March 22, 2018

ALLA PASTERNACK, Executrix of the Estate of Leon Frenkel, Plaintiff,
BRUCE K. KLEIN, individually, and in all other employee, owner, member, corporate and agent capacities as regards his various business entities, and OZEAN PARTNERS, LLC, Defendants.



         This matter comes before the Court pursuant to Defendants Bruce Klein and Ozean Partners, LLC's Motion for Summary Judgment (Doc. # 67), filed on December 27, 2017, and Plaintiff Alla Pasternack's Motion for Summary Judgment (Doc. # 68), filed on December 28, 2017. Each side filed responses in opposition. (Doc. ## 76, 80). Pasternack filed a reply to Klein and Ozean Partners' response on February 20, 2018. (Doc. # 82). For the reasons that follow, the Court denies both Klein and Ozean Partners' Motion and Pasternack's Motion.

         I. Background

         Leon Frenkel and Klein had a business relationship. On May 7, 2010, Klein, Klein's company Victory Partners, LLC, and Frenkel executed a promissory note “in favor of [] Frenkel, for the principal amount of $153, 000.00, plus standard interest at the rate of 8%, payable on demand” and “a pledge agreement . . . guarantying the [Victory Partners] Note.” (Doc. # 68 at ¶ 2; Doc. # 68-1 at 16, 25, 36). Then, on June 17, 2011, “a promissory note [was] executed by [] Frenkel and [] Klein . . . in favor of [] Frenkel, for the principal amount of $25, 000.00, plus standard interest at the rate of 12%” as well as “a pledge agreement . . . guarantying the Klein Note.” (Doc. # 68 at ¶ 2; Doc. # 68-1 at 29, 33, 36).

         Because of Klein and Victory Partners' later defaults on these notes and pledge agreements, Frenkel filed an action for breach of contract and to pierce the corporate veil on April 18, 2014, in the United States District Court for the Eastern District of Pennsylvania. (Doc. # 69-1). After Frenkel served them, Klein and Victory Partners failed to appear. The Pennsylvania court subsequently entered default judgment for Frenkel and against Klein and Victory Partners on August 11, 2014. (Doc. # 69-6 at 2).

         On March 9, 2015, Klein and his then-wife Elise Gieger Klein entered a Matrimonial Settlement Agreement, through which Gieger agreed to transfer title of a Florida condo in Longboat Key to Klein so that Klein could retain exclusive use and possession of it. (Doc. # 69-3). The Matrimonial Settlement Agreement states that Klein had been residing in the Longboat Key property since November of 2013. (Id. at 2). Then, on September 19, 2015, Gieger transferred the Longboat Key property to Ozean Partners for $10.00. (Doc. # 69-5). Ozean Partners had been created a little over a month before the transfer - on August 10, 2015 - with Klein as its managing member. (Doc. # 69-4).

         Thereafter, on October 30, 2015, Klein and Victory Partners moved to set aside the default judgment in the Pennsylvania action, which that court allowed on March 21, 2016. (Doc. # 69-6). Before deciding the motion to set aside default, the Pennsylvania court held an evidentiary hearing on January 22, 2016, at which Klein testified. In his testimony, he stated that he had been living with a friend in Sarasota from April to September of 2014. (Doc. # 77-4 at 37:20-23). He acknowledged that prior to May of 2014, he had not been residing at the Longboat Key property for months and would only stay at the property for a few nights at most because “it was like a jail” for Klein. (Id. at 60:9-61:17). From January to May of 2014, Klein would stay at the property “six, seven days a month, at the most.” (Id. at 62:17-21). Nevertheless, Klein acknowledged the Longboat Key property's address was listed on his driver's license. (Id. at 55:15-57:11). Klein further testified that, although his answer in his divorce proceedings stated he resided at the Longboat Key property, his residence was actually in New Jersey. (Id. at 78:16-23).

         Regarding when the property was transferred by his ex-wife to Ozean Partners, Klein explained that he had no ownership interest in the property or Ozean Partners - he was only the manager of Ozean Partners for its formation. (Id. at 93:20-94:14, 95:22-23). Because he “wasn't interested in living at that location, staying there or whatever you want to call it, ” his son Peter Klein, who is the owner of Ozean Partners, resided at the property. (Id. at 95:14-21). Relatedly, in his deposition taken on January 8, 2016, Klein stated that the Longboat Key property was “not [his] residence, ” that he does not live at that address and never did. (Doc. # 77-2 at 13:8-22). He testified that in 2015 he did not consider the Longboat Key property his residence. (Id. at 49:14-23).

         While the Pennsylvania action was still ongoing, Frenkel initiated this action on February 29, 2016, asserting claims for actual fraudulent transfer of the Longboat Key property and for constructive fraudulent transfer of the property against Klein and Ozean Partners. (Doc. # 1). The case was stayed pending the outcome of the Pennsylvania action on November 15, 2016. (Doc. # 38). Then, on March 14, 2016, Frenkel filed an Amended Complaint with the same claims. (Doc. # 8). The Second Amended Complaint was filed on May 10, 2016, again asserting the same claims. (Doc. # 30). After Frenkel's death, his daughter and executrix of his estate, Pasternack, substituted herself as plaintiff on May 2, 2017. (Doc. # 43).

         In the Pennsylvania action, the parties settled as to multiple claims, but Klein failed to tender the settlement payment until the Pennsylvania court imposed sanctions. (Doc. ## 69-10 at 8-9, 69-12, 69-14). A bench trial for the remaining claims was held on January 9, 2017, and on July 24, 2017, the Pennsylvania court entered judgment against Klein and Victory Partners for $318, 744 in principal and pre-judgment interest, with $62.88 in pre-judgment interest per day. (Doc. # 69-14 at 1, 24). After final judgment was entered in the Pennsylvania action, the Court lifted the stay in this action on August 22, 2017. (Doc. # 48).

         Meanwhile, Ozean Partners took out a $150, 000 mortgage on the Longboat Key property in favor of Samuel Mesrie on July 15, 2017. (Doc. # 69-13). A Florida UCC security interest listing Ozean Partners as the debtor was filed on the Longboat Key property on July 18, 2017, to expire on July 18, 2022, with Samuel Mesrie as the secured party. (Doc. # 77-12). An Assignment of Leases and Rents was recorded for the Longboat Key property on July 20, 2017, on behalf of Samuel Mesrie. (Doc. # 77-11).

         Then, “[o]n August 4, 2017, Ozean Partners through their manager John Tidrow, executed a quit claim deed in favor of Bruce Klein for transfer of ownership and title to Bruce Klein, ” which “was filed and recorded with the Clerk for Sarasota County, Florida on such date.” (Doc. # 67 at ¶ 3; Doc. # 67-1; Doc. # 69-15). Klein paid $10.00 in consideration for the Longboat Key property. (Doc. # 69-15 at 1). Also on August 4, 2017, Klein executed and filed a Homestead Declaration and application with the Sarasota County Clerk. (Doc. # 67-2). In the Homestead Declaration, Klein declared under penalty of perjury that his “date of permanent residency” was February 20, 2007. (Id. at 4-5).

         The parties mediated on November 17, 2017, but reached an impasse. (Doc. # 66). Because Pasternack had not been physically present at the first mediation, the parties mediated a second time at the Court's direction but again met an impasse. (Doc. ## 72, 84). The parties filed cross-Motions for Summary Judgment, which have been briefed. (Doc. ## 67-68, 76, 80, 82).

         II. Legal Standard

         Summary judgment is appropriate “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). A factual dispute alone is not enough to defeat a properly pled motion for summary judgment; only the existence of a genuine issue of material fact will preclude a grant of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).

         An issue is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742 (11th Cir. 1996)(citing Hairston v. Gainesville Sun Publ'g Co., 9 F.3d 913, 918 (11th Cir. 1993)). A fact is material if it may affect the outcome of the suit under the governing law. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997). The moving party bears the initial burden of showing the court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial. Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1260 (11th Cir. 2004)(citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). “When a moving party has discharged its burden, the non-moving party must then ‘go beyond the pleadings, ' and by its own affidavits, or by ‘depositions, answers to interrogatories, and admissions on file, ' designate specific facts showing that there is a genuine issue for trial.” Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590, 593-94 (11th Cir. 1995)(citing Celotex, 477 U.S. at 324).

         If there is a conflict between the parties' allegations or evidence, the non-moving party's evidence is presumed to be true and all reasonable inferences must be drawn in the non-moving party's favor. Shotz v. City of Plantation, Fla., 344 F.3d 1161, 1164 (11th Cir. 2003). If a reasonable fact finder evaluating the evidence could draw more than one inference from the facts, and if that inference introduces a genuine issue of material fact, the court should not grant summary judgment. Samples ex rel. Samples v. City of Atlanta, 846 F.2d 1328, 1330 (11th Cir. 1988)(citing Augusta Iron & Steel Works, Inc. v. Emp'rs Ins. of Wausau, 835 F.2d 855, 856 (11th Cir. 1988)). However, if the non-movant's response consists ...

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