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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

INVENTORY RECOVERY 

CORPORATION,

Plaintiff,

v.

ASHLEY A. GABRIEL, et al.,

Defendants.

Civ. No. 2:11-cv-01604 (WJM)

OPINION

WILLIAM J. MARTINI, U.S.D.J.:

Plaintiff Inventory Recovery Corporation (“IRC”) brings this action against 

Richard Gabriel (“R. Gabriel”) and Ashley Gabriel (“A. Gabriel”) (“Defendants”), 

alleging that Defendants engaged in fraudulent inducement with respect to, and breached 

an agreement for, the sale of 324 Internet domain names and related assets (“the 

Business”). In April 2016, the Court granted in part and denied in part the parties’ crossmotions for summary judgment.

This matter comes before the Court upon three motions: (1) a motion by Plaintiff 

to reopen the action; (2) a cross-motion by Defendants to enforce the parties’ settlement 

agreement; and (3) Plaintiff’s motion for reconsideration of a portion of this Court’s 

April 2016 Order granting in part and denying in part the parties’ cross motions for 

summary judgment. There was no oral argument. Fed. R. Civ. P. 78(b). For the reasons 

set forth below, Plaintiff’s motion to reopen the case is GRANTED; Defendants’ cross 

motion to enforce the settlement agreement is DENIED; and Plaintiff’s motion for 

reconsideration is GRANTED. 

I. RELEVANT BACKGROUND

The Court writes for the benefit of the parties and assumes familiarity with the 

underlying facts, as described more thoroughly in the Court’s April 2016 Opinion. See 

Inventory Recovery Corp. v. Gabriel, No. 2:11-CV-01604, 2016 WL 1365995 (D.N.J. 

Apr. 6, 2016). What follows is a brief recitation of the facts relevant to the current 

pending motions. 

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In August 2014, Plaintiff filed an Amended Complaint, asserting three causes of 

action arising from Defendants’ sale of the Business to Plaintiff: (1) fraudulent 

inducement; (2) breach of contract; and (3) breach of duty of good faith and fair dealing. 

ECF No. 52 at ¶¶ 60-74. 

On April 6, 2016, this Court granted in part and denied in part the parties’ crossmotions for summary judgment. ECF No. 93. As is relevant here, the Court denied 

Plaintiff partial summary judgment, and granted Defendants summary judgment, on that 

portion of Plaintiff’s breach of contract claim based on the “material adverse change” 

clause of the parties’ contract. Id. In April 2016, Plaintiff moved for reconsideration of 

that portion of this Court’s Opinion and Order. ECF No. 98.

On July 27, 2016, the parties met with Magistrate Judge Falk and participated in a

settlement conference. At that conference, the parties agreed to a potential settlement 

structure. That day, this Court, after being notified that the matter had settled, dismissed 

the action without prejudice to the right, upon good cause shown, to reopen the matter if 

the settlement was not consummated. ECF No. 107. 

On July 28, 2016, Plaintiff’s counsel emailed defense counsel to “confirm the 

proposed settlement” and noting that the “general structure” of a settlement was: 

(1) payment of a settlement amount over time; (2) a first priority lien on certain real 

property in New York (the “Real Property”) “to secure the payment;” (3) entry of a 

consent judgment against R. Gabriel; and (4) a release of both A. and R. Gabriel. ECF 

No. 116-1 (Decl.), Ex. A (Email) at 2. 

Plaintiff’s counsel stated that: “[t]his settlement is contingent on [Plaintiff]

satisfying itself that the Real Property has sufficient value to secure the settlement 

amount” and that, “if at any time [Plaintiff] determines, in its sole discretion that the Real 

Property is insufficient to secure the settlement, that [Defendants] are withholding 

documents IRC deems necessary to complete its due diligence or if [Plaintiff] otherwise 

decides not to go forward with this settlement, it is agreed and understood that the parties 

will request reinstatement of the case . . . .” Id. at 3. 

On July 29, 2016, Plaintiff’s counsel sent an email stating that he had found 

information suggesting the presence of an unground storage tank which had a hazardous 

spill in 1993 (hereinafter, “the environmental issue”), and requested documentation 

confirming remediation of that spill. Ex. B (Email). Plaintiff’s counsel also indicated 

that he had more general concerns that the property’s value was sufficient to secure the 

proposed settlement amount. Id. 

An August 16, 2016 appraisal of the property stated that a “determination of the 

effect on market value of any hazardous materials that may be present at the subject 

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property is beyond the scope of this appraisal,” and that the appraisers had received no 

information concerning the need for remediation at the site or its cost. Ex. D (Appraisal).

According to Defendants, the parties agreed that an accelerated payment of the 

settlement amount would solve the environmental issue. ECF No. 116-1 (Cert.) at 4. 

However, in September 2016, Plaintiff’s counsel circulated a draft mortgage for the real 

property. That mortgage included a provision indemnifying Plaintiff for the 

environmental issue, which Defendants refused to sign, causing the settlement to fall 

apart. Id. at 6-7. 

In November 2016, Plaintiff filed a motion to reopen the case, stating that the 

parties had reached an impasse in consummating settlement. ECF No. 114. Defendants 

have filed a cross motion to reinstate the case to enforce the settlement agreement. ECF 

No. 116. These motions are presently pending. In December, the Court had a 

confidential status conference with the parties to better glean each party’s position. 

II. DISCUSSION

A. Plaintiff’s Motion to Reopen and Defendants’ Cross Motion to Enforce 

Settlement 

Under New Jersey Local Civil Rule 41.1(b), when the Court receives notice that a 

case has settled, the Court shall enter an order dismissing the action, without costs, and 

without prejudice to the right to reopen the action within 60 days upon good cause shown 

if the settlement is not consummated. See N.J. L. Civ. R. 41.1(b); see also Sander Sales 

Enterprises, Ltd. v. Saks, Inc., 245 F. App’x 108, 110 (3d Cir. 2007). 

Plaintiff has unquestionably shown good cause for reopening the action. At the 

July 27, 2016 settlement conference with Judge Falk, the parties agreed to the general 

terms of a proposed settlement. On July 28, 2016, Plaintiff’s counsel underscored that 

“[t]his settlement is contingent on [Plaintiff] satisfying itself that the Real Property has 

sufficient value to secure the settlement amount.” The record demonstrates that, despite 

its best efforts, Plaintiff has been unable to satisfy itself that the property has sufficient 

value to secure the settlement amount. Specifically, on July 29, 2016, Plaintiff 

discovered that the property had an undisclosed environmental issue. Since then, 

Defendants have not provided any documentation concerning the environmental issue, 

and have refused to sign an indemnification clause in the draft mortgage. Under these 

circumstances, Plaintiff is entitled to reopen the matter and proceed to trial. 

In opposition, Defendants contend that the settlement agreement should be 

enforced, because the parties have entered into a binding agreement, and that their “sole

disagreement concerns the inclusion of the Environmental Indemnification Provision in 

the Mortgage.” Defendants argue that Plaintiff’s counsel’s July 28 email setting forth the 

general terms of the settlement agreement is sufficient to confirm that the parties entered 

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into a binding agreement. Defendants further contend that, once Plaintiff learned about 

the environmental issue, both parties agreed that acceleration of payment would solve 

any potential problems with the property’s value.

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The Court finds that a settlement agreement between the parties cannot be 

enforced. First, despite Defendants’ representation that the settlement agreement is 

“complete,” the fact that the date of the first accelerated payment – September 30, 2016 –

has long passed with no payment by Defendants, belies that representation. Moreover, 

Defendants concede in their brief that the parties “remain in disagreement” over the issue 

of indemnification of any future environmental liabilities, further confirming that a final

agreement was never reached. Finally, the Court finds that, in any event, enforcement of 

a settlement agreement which requires one party to accept a property with wholly 

unknown environmental liabilities as security for future payment would be 

unconscionable. 

Accordingly, Plaintiff’s motion to reopen the case is GRANTED; Defendants’ 

cross-motion to enforce the settlement is DENIED. 

B. Plaintiff’s Motion for Reconsideration

Because the case will be reopened, any motions that were pending at the time of 

settlement are reinstated. Therefore, presently pending before this Court is Plaintiff’s 

motion for reconsideration of this Court’s April 2016 Opinion disposing of the parties’ 

motions for summary judgment. For the reasons stated below, Plaintiff’s motion for 

reconsideration will be GRANTED. 

Reconsideration is appropriate where, inter alia, it is necessary to correct a clear 

error of law or fact or to prevent manifest injustice. Max’s Seafood Café by Lou–Ann, 

Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999) (citing North River Ins. Co. v. CIGNA 

Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir. 1995)). Manifest injustice pertains to 

situations where a court overlooks some dispositive factual or legal matter that was 

presented to it. See In re Rose, No. 06–1818, 2007 WL 2533894, at *3 (D.N.J. Aug. 30, 

2007). 

Plaintiff seeks reconsideration of the portion of this Court’s decision in which it 

granted summary judgment in favor of Defendants as to Plaintiff’s claim that the material

adverse change clause in the parties’ contract was breached. The Court found that there 

 

1 The Court comments that while Defendants insist that the appraisal report “specifically took into account the 

Environmental Issue,” see Def. Br. at 6, the record clearly demonstrates that the opposite is true: the report explicitly 

stated that “a determination of the effect on market value of any hazardous materials that may be present at the 

subject property is beyond the scope of this appraisal” and that the appraisers received no information concerning 

the need for remediation at the site or its cost, see Appraisal. Defendants are cautioned that any future distortions of 

the record will not be taken lightly by this Court. 

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was no breach because, to the extent that there was a material adverse change, Plaintiff 

had failed to demonstrate that Defendants had knowledge of that change. In so finding, 

the Court overlooked evidence in the record that creates a triable issue of fact as to 

whether the Defendants breached that clause.

The material adverse change at issue is a change in Google’s ad policy, which 

barred Defendants’ business from using pay-per-click advertisements. In its April 2016 

Opinion, the Court determined that Plaintiff had not provided any evidence of Todd 

Rodenborn’s agency relationship with R. Gabriel such that Rodenborn’s knowledge of 

Google’s ad policy change should be imputed to Defendants, and therefore, granted 

summary judgment in favor of Defendants as to this claim. IRC v. Gabriel, 2016 WL 

1365995, at *5. Plaintiff now points to two material facts in the record that the Court 

overlooked that, if credited by a jury, could demonstrate an agency relationship. First, in 

their Rule 36 admissions, Defendants admitted that Rodenborn “acted on behalf of 

Defendants when he made decisions with regard to the Business’s PPC advertising 

campaigns during 2009.” ECF No. 80-2 at Ex. 5, ¶ 53 (emphasis added). Second, 

Rodenborn confirmed at his deposition that the nature of his business is “being the agent” 

for “the purchaser, for people like Richard [Gabriel].” ECF No. 80-2 at Ex. 27 (Dep.). 

Taken together, these statements could lead a reasonable juror to conclude that 

Rodenborn was, indeed, Defendants’ agent and therefore, that his knowledge of the 

material adverse change in Google’s ad policy could be imputed to Defendants. Because

a question of material fact remains as to whether Rodenborn’s knowledge of the material 

adverse change should be imputed to Defendants, reconsideration is GRANTED, and 

Defendants’ motion for summary judgment as to the material adverse contract clause is 

DENIED. 

III. CONCLUSION

For the reasons stated above, Plaintiff’s motion to reopen the case is GRANTED; 

Defendants’ cross motion to reinstate and enforce the settlement agreement is DENIED; 

and Plaintiff’s motion for reconsideration is GRANTED. The parties are directed to 

contact Judge Falk’s chambers to arrange for a pretrial conference. An appropriate order 

follows.

 s/ William J. Martini 

 WILLIAM J. MARTINI, U.S.D.J.

Date: January 23, 2017

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