United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER DENYING THE MOTION OF DEFENDANTS
WILLIAM GRAY AND THE WILLIAM GRAY TRUST FOR SUMMARY
BERNARD A. FRIEDMAN, SENIOR UNITED STATES DISTRICT JUDGE
matter is presently before the Court on the motion of
defendants William Gray (“Gray”) and the William
Gray Trust (“the Gray Trust”) for summary
judgment [docket entry 195]. Plaintiff has filed a response
in opposition and defendants have filed a reply. Pursuant to
E.D. Mich. LR 7.1(f)(2), the Court shall decide this motion
on the briefs.
case involves a commercial transaction gone awry. Plaintiff
Kalitta Air, LLC (“Kalitta”) is a cargo airline
operating from Ypsilanti, Michigan. In July 2009 Kalitta
entered into a Jet Fuel Purchase Agreement
(“JFPA”) with GSB & Associates, Inc.
(“GSB”), now known as GSBD & Associates, Inc.
(“GSBD”), whereby Kalitta would purchase jet fuel
from GSB. A copy of the JFPA is attached to the First Amended
Complaint (“FAC”) as Ex. 1. The essence of the
JFPA, and of the Escrow Agreement attached thereto as Ex. A,
was that Kalitta would order fuel from GSB, monthly or as
needed, and deposit the purchase price into an escrow
account. GSB would deliver the fuel to a terminal in New
Jersey. When the escrow agent, FIEC, received certain
documentation verifying the amount and quality of the fuel
GSB had delivered, FIEC was to release the escrowed funds.
Gray signed the JFPA and the Escrow Agreement as GSB's
managing director; Conrad Kalitta signed both documents as
Kalitta's president; and G. Gottschalk signed the Escrow
Agreement as FIEC's executive vice-president.
addition to GSBD itself, the defendants in this matter are
Gray (individually and as the trustee of the William Gray
Trust), Cree Enterprises, LLC (“Cree”) and S.
Westman, all allegedly managing members of GSB; G.
Gottschalk, allegedly a managing member of GSB and an agent
of FIEC; J. Gottschalk, allegedly the managing member of
Cree; FIEC and its alleged alter ego, FIEG; Dhafir Dalaly,
allegedly the managing member of FIEC; Hamood, Runco &
Fergestrom (“HRF”), a law firm whose client trust
account for FIEC served initially as the escrow account at
issue in this case; and True Gem Co., C. Westman, Scottfuel,
LLC, OGM, Ltd., Sheldon Sandweiss and Michael T. Lyon,
allegedly all recipients of a portion of the improperly
disbursed escrow funds. See FAC ¶¶ 3-17.
alleges, in short, that it paid far more into the escrow
account than it received in jet fuel and that defendants
perpetrated an elaborate scam to divert and steal the
difference of approximately $4.7 million. Plaintiff alleges,
among other things, that the escrow agent released escrowed
funds without first receiving required documentation; that
GSB delivered far less fuel than plaintiff had ordered and
paid for; that a GSB employee created fake invoices to
convince plaintiff that plaintiff's funds were being used
to purchase fuel from a third party; and that the escrow
agent transferred hundreds of thousands and perhaps millions
of dollars from the escrow account to various defendants
(e.g., GSB, FIEC, Gray and his trust, G. Gottschalk, Dalaly,
Cree, S. Westman, Sandweiss, C. Westman, OGM, True Gem and
Lyon) and third parties (e.g., KeroJet, a bank in Lithuania,
Dresden Bank, an individual in Russia, and an entity in Abu
Dhabi) none of whom or which had anything to do with
purchasing or supplying jet fuel for plaintiff. See
FAC ¶¶ 45-55.The FAC asserts ten claims. Count I is a
claim under the Racketeer Influenced and Corrupt
Organizations Act (“RICO”), 18 U.S.C. §
1962(c) and (d), against Gray, Gottschalk, Cree, S. Westman,
Dalaly, FIEC, FIEG and HRF; Count II is a claim for statutory
conversion under Mich. Comp. Laws § 600.2919(A) against
Gray, G. Gottschalk, J. Gottschalk, Cree, S. Westman, Dalaly,
FIEC, FIEG and HRF; Counts III and IV are claims for fraud
and fraud in the inducement against Gray, G. Gottschalk, S.
Westman, Cree, Dalaly, FIEC, FIEG and HRF. Count V is a claim
for breach of contract against GSBD, FIEC and FIEG. Count VI
is a claim for common law conversion against GSBD, Gray, G.
Gottschalk, Cree, J. Gottschalk, S. Westman, C. Westman,
Scottfuel, Dalaly, FIEC, FIEG and HRF. Count VII is a claim
for breach of fiduciary duty against Dalaly, FIEC, FIEG and
HRF. Count VIII is a claim for common law conspiracy against
Gray, G. Gottschalk, Cree, J. Gottschalk, S. Westman, C.
Westman, Scottfuel, Dalaly, FIEC, FIEG, HRF, and GSBD. Count
IX is a claim for common law concert of action against Gray,
G. Gottschalk, Cree, J. Gottschalk, S. Westman, Dalaly, FIEC,
FIEG, HRF, and GSBD. And Count X is a claim against all
defendants for certain equitable relief.
addition, FIEC, FIEG and Dalaly (“the Dalaly
parties”) have filed a cross claim against G.
Gottschalk, J. Gottschalk, GSBD, Gray and the Gray Trust,
asserting a RICO claim. The Delaly parties allege that the
cross claim defendants perpetrated the fraud against
plaintiff as alleged in the complaint (but without the Delaly
parties' knowledge) by, among other things,
“deceiving FIEC into unwittingly participating in the
transfer of funds belonging to the Plaintiff in this
matter.” Cross Claim ¶ 11(b).
instant motion, defendant Gray and the Gray Trust seek
summary judgment on all of the claims plaintiff asserts
against them, i.e., Counts I, II, III, IV, VI, VIII, IX, and
X. They argue that all of these claims fail because the facts
show that Gray did not intend to defraud plaintiff, that he
had no control over plaintiff's money and therefore could
not commit conversion, that he had no knowledge of or control
over the escrow account, that he made no false statements to
induce plaintiff to enter into the JFPA, and that he
committed no fraud or other tort that would support the
conspiracy and concert of action claims. Plaintiff disputes
each of these points.
Fed.R.Civ.P. 56(a), 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.” “[T]he mere existence of
some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for
summary judgment; the requirement is that there be no
genuine dispute as to any material
fact.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247-48 (1986) (emphasis in original). Viewing the
evidence in the light most favorable to the opposing party,
summary judgment may be granted only if the evidence is so
one-sided that a reasonable fact-finder could not find for
the opposing party. See Id. at 248-50; Street v.
J.C. Bradford & Co., 886 F.2d 1472, 1478-80 (6th
Cir. 1989). In other words, “[a] material issue of fact
exists where a reasonable jury, viewing the evidence in the
light most favorable to the non-moving party, could return a
verdict for that party.” Vollrath v.
Georgia-Pacific Corp., 899 F.2d 533, 534 (6th Cir.
1990). “The pivotal question is whether the party
bearing the burden of proof has presented a jury question as
to each element of its case.” Hartsel v. Keys,
87 F.3d 795, 799 (6th Cir. 1996).
reviewed the parties' voluminous briefs and exhibits, the
Court concludes that none of plaintiff's claims can be
resolved on summary judgment. As plaintiff acknowledges,
“[a] RICO claim is complicated and often fact
intensive, ” Pl.'s Br. at 17, as it certainly is in
the present case. Allegations of fraud are at the heart of
this case, and fraud claims generally do not lend themselves
to being resolved on summary judgment due to the presence of
issues regarding intent, state of mind, and credibility. As
the Supreme Court has noted, “questions of subjective
intent so rarely can be decided by summary judgment.”
Harlow v. Fitzgerald, 457 U.S. 800, 816 (1982).
Further, the Court notes that defendants' motion is
supported by many hundreds, if not thousands, of pages of
deposition testimony from nine witnesses. Plaintiff's
response is likewise supported by hundreds, if not thousands,
of pages of deposition testimony from ten witnesses. These
witnesses (some of whom overlap) offer conflicting testimony
on critical issues. It will be for the jury, not the Court,
to resolve the conflicting testimony and decide
plaintiff's many claims. In short, this case cannot be
resolved on summary judgment. Accordingly, IT IS ORDERED that
the motion of defendants Gray and the Gray Trust for summary
judgment is denied.
 A more detailed recitation of
plaintiff's allegations may be found in Kalitta Air,
LLC v. GSBD & Assocs., 591 F. App'x 338 ...