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Chase v. Lop Capital, LLC

United States District Court, D. South Carolina, Charleston Division

February 27, 2017

Nelson S. Chase, Esq., Plaintiff,
v.
LOP Capital, LLC, Strategic Lending Solutions, LLC, Brian Knight, and Michael Loprieno, Defendants.

          ORDER AND OPINION

          Bruce Howe Hendricks United States District Judge

         On January 15, 2013, this civil action was removed from state court. In accordance with 28 U.S.C. § 636(b)(1) and Local Civil Rule 73.02 D.S.C., this matter was referred to United States Magistrate Judge Kevin F. McDonald, for consideration of pretrial matters. After a settlement was reached by the parties, Plaintiff filed a motion to compel, among other things. On January 27, 2017, the Magistrate Judge prepared a thorough Report and Recommendation (“Report”), which recommends denying Plaintiff's various motions. (ECF No. 242.) Plaintiff filed timely objections to the Report. (ECF No. 250.) Defendant Knight filed a “motion to reconsider order of entry of judgment”, which is better characterized as an objection to the Report. (ECF No. 251.) For the reasons set forth herein, the Court adopts the Report in part and directs Plaintiff to file an amended Confession of Judgment #1 if appropriate.

         BACKGROUND AND PROCEDURAL HISTORY[1]

         The Report sets forth in detail the relevant facts and standards of law, and the Court incorporates them and summarizes below only in relevant part. Plaintiff represented one or more of the defendants in several civil actions arising out of the same operative facts and sharing a common objective; namely, obtaining satisfaction of a deficiency judgment. On December 17, 2012, Plaintiff filed the instant action against the defendants in state court, which was later removed to federal court. In his second amended complaint, Plaintiff alleged claims for breach of written contract, breach of oral contract, fraud, fraudulent misrepresentation and conspiracy to commit fraud, and quantum meruit. He alleged that the defendants owed him $272, 431.31 in attorney's fees and costs. On October 14, 2013, the defendants filed their answer to Plaintiff's second amended complaint, alleging counterclaims against Plaintiff for legal malpractice, breach of contract, intentional interference with prospective contractual relations, tortious interference with existing contractual relations, and unjust enrichment. On October 16, 2014, this Court granted summary judgment to the defendants on Plaintiff's claims for fraud, fraudulent misrepresentation, and conspiracy to commit fraud.

         The parties then engaged in mediation before Magistrate Judge McDonald on June 4, 2015, and reached an agreement for settlement of the case. The terms of the settlement were placed on the record, including that this Court would retain jurisdiction over enforcing the settlement, and the Court dismissed the case. On July 8, 2015, Plaintiff, through his attorney of record at that time, moved to compel settlement, asserting that the defendants had not yet paid him $5, 000 that was allegedly overdue. On January 14, 2016, this Court entered a Consent Order of dismissal finding the motion to compel settlement moot. The Consent Order set out the terms of the parties' settlement agreement, as quoted verbatim in the Report. The settlement agreement provides that in the event of default, Plaintiff can enforce Confessions of Judgment against the defendants, which serves as security for the agreed upon payments. The agreement outlines specific steps Plaintiff must follow to enforce the Confessions of Judgment.

         On July 11, 2016, Plaintiff filed a pro se motion to compel settlement, to hold Defendants Brian Knight (“Knight”) and Michael Loprieno (“Loprieno”) (collectively, “Defendants”) in contempt, and for sanctions and attorney fees, claiming that Loprieno and Knight had not made certain payments due under the settlement agreement. In his motion, Plaintiff stated that as of July 11, 2016, he had received $14, 999.63 ($5, 000 down payment, 11 monthly payments of $833.33, and one monthly payment of $833.00) from Defendants. He claimed Defendants owed him $180 for the cost of the wire transfers. Defendants responded pro se in opposition to Plaintiff's motion, arguing that the additional lump sum payment was not due until August 3, 2016, and that all the requirements of the settlement agreement had thus far been met.

         On August 3, 2016, Plaintiff filed the Confessions of Judgment with the requisite affidavit averring that he followed the steps outlined in the settlement agreement. (ECF Nos. 197; 197-1.) At the Court's request, Plaintiff filed a declaration on October 14, 2016, stating that Knight had made installment payments for July, August, and September on July 24th, August 24th, and September 23rd, respectively. These payments, due on the 15th of the month, appear to have been made within the ten-day grace period as provided in the settlement agreement. Plaintiff, however, asserted that the July payment was not made within the grace period, and that Knight was therefore in default, rendering the balance of the monthly payments due. With respect to Loprieno, Plaintiff stated that he never paid the $10, 000 lump sum. Shortly thereafter, Plaintiff filed a supplemental brief, restating the claims made in his declaration and arguing that Defendants committed fraud through the transfer of worthless stock. (ECF No. 229 at 2-3.) Specifically, Plaintiff argued that the settlement agreement hinged on a transfer of stock worth $15, 000 from Knight to Loprieno, which would be partial security for $15, 000 of Loprieno's obligation for the lump sum payments. (Id. at 3.) Plaintiff claimed that the stock transferred to Loprieno was worthless and evidenced Defendants' attempt to commit fraud. (Id. at 3-5.)

         On December 20, 2016, Plaintiff filed two motions to compel discovery from Defendants. In the first motion, Plaintiff asserted that Knight has not made the monthly payments for November or December 2016 and requested that the Court order Knight to comply with a discovery order. In the second motion, Plaintiff stated that Loprieno has not made any payments and requested the Court order Loprieno to comply with a discovery order. On January 26, 2017, Knight filed a response to Plaintiff's first motion to compel discovery, asserting that Plaintiff breached the settlement agreement by filing the motion to compel against him when he was, in fact, in compliance with the settlement agreement. (ECF No. 244 at 4-5.)

         On January 27, 2017, the Magistrate Judge issued a thorough Report recommending that the Court deny Plaintiff's motions. The Magistrate Judge found that both Defendants defaulted under the terms of the settlement agreement as set out in the Consent Order. Citing that agreement, Magistrate Judge McDonald found that the proper remedy for the default was to enter judgment against both Defendants jointly and severally in the amount of $30, 000 in accordance with Confession of Judgment #1 and against Loprieno in the amount of $30, 000 in accordance with Confession of Judgment #2. The Court has reviewed the objections to the Report, but finds them to be largely without merit. Therefore, it will enter judgment accordingly, making a brief modification to the Report.

         STANDARD OF REVIEW

         The Magistrate Judge makes only a recommendation to this Court. The recommendation has no presumptive weight. The responsibility for making a final determination remains with this Court. Mathews v. Weber, 423 U.S. 261, 270 (1976). The Court is charged with making a de novo determination of any portions of the Report to which a specific objection is made. The Court may accept, reject, or modify, in whole or in part, the recommendation made by the Magistrate Judge or may recommit the matter to the Magistrate Judge with instructions. See 28 U.S.C. § 636(b)(1). The Court need not conduct a de novo review when a party makes only “general and conclusory objections that do not direct the court to a specific error in the magistrate's proposed findings and recommendations.” Orpiano v. Johnson, 687 F.2d 44, 47 (4th Cir. 1982). In the absence of a timely filed, specific objection, the Magistrate Judge's conclusions are reviewed only for clear error. See Diamond v. Colonial Life & Accident Ins. Co., 416 F.3d 310, 315 (4th Cir. 2005).

         DISCUSSION

         Plaintiff's objections briefly rehash the same arguments made in his various briefs. (ECF No. 250.) He claims that the Report fails to consider Defendants' alleged fraud in transferring worthless stock and argues that such fraud warrants additional remedies. (Id. at 2-5.) Specifically, Plaintiff seeks the following modifications to the Report:

1. Find the Defendant in Contempt and award Damages/ Sanctions for not obeying the June 4, 2015 Agreement Order in the amount of $10, 000 against Knight ...

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