PHILADELPHIA – A federal judge recently granted summary judgment against a Philadelphia marine supply company that believed a promissory note and related mortgage were fraudulently secured.
Judge Mitchell S. Goldberg, of the U.S. District Court for the Eastern District of Pennsylvania, ruled May 14 in favor of Jane Blumenfeld and against Scandinavian Ship Supply Company (SSSC), a marine supply and ship chandlery business that operated on Philadelphia’s Christian Street.
On Nov. 3, 2009, SSSC owner Bengt Jansson signed a promissory note payable to Jack Blumenfeld in the amount of $300,000, and a mortgage on the Christian Street Property securing the note.
Approximately two-and-a-half years later, on April 5, 2012, SSSC filed an initial complaint against Blumenfeld alleging that he fraudulently induced Jansson into signing the mortgage and note or, in the alternative, that he forged Jansson’s signature.
However, Jansson died on June 30, 2012, followed by Blumenfeld five weeks later on August 5, 2012.
Subsequently on Aug. 15, 2012, SSSC and Jansson’s wife, Josephine Jansson, filed an amended complaint against the Estate of Jack Blumenfeld raising essentially the same allegations pled in the original complaint – that the note and mortgage were secured through fraud.
SSSC and Josephine Jansson successfully motioned to have Blumenfeld’s wife, Jane Blumenfeld, substituted as the defendant party to the litigation on Oct. 10, 2013.
Further, SSSC sold the Christian Street property for $1.61 million on Nov. 30, 2012. Upon selling the property, the plaintiffs placed $400,000 in an escrow account pending the resolution of this case.
The plaintiffs charge both the promissory note and mortgage are invalid because Jack Blumenfeld gained Bengt Jansson’s signature through fraudulent means, and both documents fail for lack of consideration.
Through her counsel, Jane Blumenfeld filed for summary judgment on both of those suppositions on Oct. 21.
Goldberg listed the elements of fraud as: “(1) a misrepresentation, (2) a fraudulent utterance thereof, (3) an intention by the maker that the recipient will thereby be induced to act, (4) justifiable reliance by the recipient upon the misrepresentation and (5) damage to the recipient as the proximate result.”
Goldberg found the contentions raised by the plaintiffs, namely of Jack Blumenfeld’s alleged prior forgery and fraud in a prior, unrelated business transaction with the Jansson family as “not sufficient” and “tenuous” at best.
“None of these contentions affirmatively demonstrate that Jack Blumenfeld made a fraudulent misrepresentation in connection with the signing of the mortgage and note,” Goldberg said.
“In the absence of any evidence to support their claim, plaintiffs instead point to unrelated prior litigation involving Jack Blumenfeld, Linda and Jane Jansson’s opinions, and the lack of documentary corroboration of the mortgage’s validity. This is insufficient evidence of fraud, which would defeat summary judgment.”
The plaintiffs also sought to label the promissory note and mortgage as unenforceable for lack of consideration under Pennsylvania’s Uniform Written Obligations Act (UWOA), which stipulates, “A written release or promise, hereafter made and signed by the person releasing or promising, shall not be invalid or unenforceable for lack of consideration, if the writing also contains an additional express statement, in any form of language, that the signer intends to be legally bound by it.”
The note in question says “For value received and intending to be legally bound, Scandinavian Ship Supply Company, Inc., a corporation, and Bengt Jansson…promises to pay Jack Blumenfeld…the principal sum of three hundred thousand dollars ($300,000) lawful money.”
The language of the note satisfied Goldberg’s legal judgment.
“The express statement that Bengt Jansson and SSSC intend to be bound is sufficient consideration under the UWOA and the note and mortgage, therefore, are not subject to attack on the grounds of insufficient consideration,” Goldberg said.
On May 14, Goldberg thereby granted the defense motion for summary judgment. Further, Goldberg ruled on May 27 that all parties involved would meet no later than June 12 to resolve the dispute.
Should that not take place, the defense will have the opportunity to submit a letter brief of no more than three pages regarding distribution of the funds in question by June 22, with the plaintiffs, upon reception of said brief, having one week to respond in an equal-length letter brief of their own.
The plaintiffs are seeking preliminary and permanent relief consisting of an injunctive order directing the release of the second mortgage placed by Blumenfeld on the Christian Street property, plus compensatory damages, interest, court costs and any other relief the Court deems proper in this case.
The plaintiffs are represented by David F. McComb and Zachary Silverstein of Zarwin Baum DeVito Kaplan Schaer Toddy, in Philadelphia.
The defendants is represented by Thomas S. McNamara of Indik & McNamara, David L. Braverman and Lisa Ann Buckalew of Braverman Kaskey and Robin Switzenbaum of Berger & Montague, all in Philadelphia.
U.S. District Court for the Eastern District of Pennsylvania case 2:12-cv-01732
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at email@example.com