Dolan et al v. Fairbanks Capital Corporation

Filing 436

ORDER denying #433 Motion for Reconsideration: For the reasons stated in the attached Memorandum & Order, Defendant's motion for reconsideration of the Court's #430 6/22/16 MSJ Order is DENIED. Plaintiff shall be permitted to pursue at trial his claim that Defendant breached its fiduciary duty by charging and paying for allegedly unnecessary and excessive premiums for force-placed insurance from Plaintiff's escrow account under the Third Forbearance Agreement. Ordered by Judge Pamela K. Chen on 7/21/2016. (Levanon, Neta)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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MICHAEL T. DOLAN,
Plaintiff,
MEMORANDUM & ORDER
03-CV-3285 (PKC) (AKT)

- against SELECT PORTFOLIO SERVICING,
Defendant.
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PAMELA K. CHEN, United States District Judge:

Defendant Select Portfolio Servicing (“Defendant” or “SPS”) seeks partial reconsideration
of the Court’s June 22, 2016 summary judgment Memorandum & Order (“6/22/16 MSJ Order”),
namely the Court’s denial of summary judgment as to Plaintiff’s breach of fiduciary duty claim
premised on the theory of force-placed insurance. For the reasons stated below, Defendant’s
motion for reconsideration is DENIED.
DISCUSSION
I.

Legal Standard
Local Civil Rule 6.3, under which Defendants have moved for reconsideration (see Def.

Mot. (Dkt. 433-3) at 2), must be “strictly construed” so as to avoid “unnecessary relitigation.” See
Pena-Rosario v. Reno, No. 99-CV-4652, 2000 U.S. Dist. LEXIS 6333, at *2–4 (E.D.N.Y. May 11,
2000). The grounds for reconsideration are therefore limited to “an intervening change of
controlling law, the availability of new evidence, or the need to correct a clear error or prevent
manifest injustice,” Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Trust, 729 F.3d
99, 104 (2d Cir. 2013) (quotation marks and citation omitted), and such motions “will generally
be denied unless the moving party can point to controlling decisions or data that the court
overlooked—matters, in other words, that might reasonably be expected to alter the conclusion
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reached by the court,” Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995). “[A] motion
to reconsider should not be granted where the moving party seeks solely to relitigate an issue
already decided,” id., because motions for reconsideration are not “vehicle[s] for . . . taking a
second bite at the apple,” Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d
Cir.), as amended (2d Cir. 2012) (quotation marks omitted).
II.

Defendant’s Motion
Defendant argues that, in light of representations made by Plaintiff at the oral argument

held before the Court on June 27, 2016, Plaintiff’s force-placed insurance theory is “now defined
. . . [a]s SPS [having] imposed excessive force-placed insurance as part of the negotiation of the
third forbearance agreement dated September 23, 2002,” 1 and that this theory cannot survive
summary judgment because (1) the Court held in its 6/22/16 MSJ Order that SPS owed no fiduciary
duty to Plaintiff as part of the negotiation of the Third Forbearance Agreement, and (2) the Third
Forbearance Agreement did not impose force-placed insurance, but instead required Plaintiff to
maintain his own insurance, just like the original mortgage. (Def. Mot. at 1.) The Court disagrees.
Defendant’s motion ignores the distinction between SPS’s negotiation of the Third
Forbearance Agreement with Plaintiff—as to which the Court has ruled SPS owed Plaintiff no
fiduciary duty—and SPS’s alleged use of Plaintiff’s escrow funds to pay excessive force-placed
insurance premiums under the Third Forbearance Agreement, which does implicate SPS’s
fiduciary duty to Plaintiff. (6/22/16 MSJ Order (Dkt. 430) at 15–16.) Defendant’s motion also
incorrectly asserts that the Third Forbearance Agreement did not impose a force-placed insurance
requirement on Plaintiff. While it is true that the Agreement requires Plaintiff, in the first instance,

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Defendant relies on various exchanges during the oral argument. (See 6/27/16 Oral
Argument Tr. at 58:4–61:10, 62:7–25.)
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to obtain his own insurance (Dkt. 433-2 ¶ 10), it also fully preserves the enforceability of the terms
of the original mortgage (id. ¶ 11.b), which, in turn, provided that, if Plaintiff failed to maintain
hazard or property insurance, SPS could “obtain insurance coverage to protect Lender’s rights in
the Property,” and “do and pay for whatever [was] necessary to protect the value of the Property.”
(Dkt. 413-3 ¶¶ 5, 7.) In other words, regardless of whether the Third Forbearance Agreement itself
imposed force-placed insurance, SPS retained the power to impose such insurance under that
Agreement, and Plaintiff's contention is that SPS did so, and charged the premiums to Plaintiff’s
escrow account, allegedly breaching SPS’s fiduciary duty to properly manage Plaintiff’s escrow
funds. That contention is reinforced by SPS’s acknowledgment, in its third motion for summary
judgment, that SPS “purchased a hazard insurance policy on [the Dolans’ primary residence], the
annual premium of which was charged to the Dolans’ account.” (Dkt. 413-19 at 3. See also Dkts.
413-9, 413-10, 413-11 (letters from SPS to Dolan dated May 4, 2001, November 23, 2001, and
November 29, 2002, respectively, regarding SPS’s acquisition from Balboa Insurance Company
of hazard insurance on Plaintiff’s property).) Furthermore, even if the force-placed insurance
requirement was part of the parties’ negotiation of the Third Forbearance Agreement, that does not
negate the fiduciary duty owed by SPS thereafter to properly handle Plaintiff’s escrow funds as it
related to SPS’s authority under the Agreement to pay for force-placed insurance.
Accordingly, because Defendant has failed to point to any matter “that might reasonably
be expected to alter the conclusion reached by the court,” Shrader, 70 F.3d at 257, with respect to
Defendant’s summary judgment motion, the motion for reconsideration is denied.
CONCLUSION
For the reasons stated above, Defendant’s motion for reconsideration of the Court’s 6/22/16
MSJ Order is DENIED. Plaintiff shall be permitted to pursue at trial his claim that Defendant

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breached its fiduciary duty by charging and paying for allegedly unnecessary and excessive
premiums for force-placed insurance from Plaintiff’s escrow account under the Third Forbearance
Agreement.

SO ORDERED.
/s/ Pamela K. Chen
Pamela K. Chen
United States District Judge
Dated: July 21, 2016
Brooklyn, New York

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