Crawford v. Franklin Credit Management Corporation et al
Filing
100
OPINION AND ORDER re: 93 MOTION to Reopen Case filed by Linda D. Crawford. For the reasons stated above, Crawford's motion for relief under Rule 60(b) (5) and (6) is denied. (Signed by Judge John F. Keenan on 6/14/2013) (lmb)
Case 1:09-md-02013-PAC Document 57
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
UNITED STATES DISTRICT COURT
- --- ----- ---X
SOUTHERN DISTRICT OF NEW YORK
LINDA D. CRAWFORD,
-----------------------------------------------------------x
In re FANNIE MAE 2008 SECURITIES
Plaintiff, :
LITIGATION
:
:
against:
-----------------------------------------------------------x
FRANKLIN CREDIT MANAGEMENT,
Filed 09/30/10 Page 1 of 45
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: June 14, 2013
08 Civ. 7831 (PAC)
09 MD 2013 (PAC)
08 Civ. 6293 (JFK)
OPINION & ORDER
OPINION AND ORDER
CORPORATION, TRIBECA LENDING,
CORPORATION, AND LENDER'S FIRST
CHOICE AGENCY, INC.,
HONORABLE PAUL A. CROTTY, United States District Judge:
De
-------- - ---------X
BACKGROUND1
APPEARANCES
The early years of this decade saw a boom in home financing which was fueled, among
For
aintiff Linda D. Crawford:
KRISHNAN CHITTUR interest rates and lax credit conditions. New lending instruments, such as
other things, by low
CHITTUR & ASSOCIATES, P.C.
subprime mortgages (high credit risk loans) and Alt-A mortgages (low-documentation loans)
For Defendants Franklin Credit Management, et al.:
ROBERTthe boom going. Borrowers played a role too; they took on unmanageable risks on the
kept A. O'HARE, Jr.
ANDREW C. LEVITT
O'HARE PARNAGIANmarket
would continue to rise and that refinancing options would always be
assumption that the LLP
available in the future. Lending discipline was lacking in the system. Mortgage originators did
JOHN F. KEENAN, United States District Judge:
not hold these high-risk mortgage loans. Rather than carry the rising risk on their books, the
Before the Court is a motion under Rule 60(b) (5) and (6) of
originators sold their loans into the secondary mortgage market, often as securitized packages
the Federal Rules of Civil Procedure, made by
aintiff Linda
known as ("Crawford" securities (“MBSs”). MBS markets grew almost exponentially.
Crawford mortgage-backed or "Plaintiff"). The Court had previously
granted But then the housing bubble burst. In 2006, theFranklin housing dropped abruptly
summary judgment to defendants demand for Credit
and home prices began to fall. ("Franklin") and Tribeca Lending
Management Corporation In light of the changing housing market, banks modified their
lending practices and became (collectively, "Defendants"), refinancing.
Corporation ("Tribeca")unwilling to refinance home mortgages withoutand
Crawford moves the Court for relief from this judgment.
For the
1
Unless
reasons otherwise indicated, all references cited as “(¶ _)”denied.
that follow, the motion is or to the “Complaint” are to the Amended Complaint,
dated June 22, 2009. For purposes of this Motion, all allegations in the Amended Complaint are taken as true.
1
I. Background
The Court presumes familiarity with the facts
this case,
as set forth in the Opinion and Order of March 23, 2011.
(ECF
Document No. 82 (hereinafter ("Op.H).)
Briefly stated, Crawford
commenced this action in July 2008, asserting various claims
arising from Defendants' alleged operation
mortgage refinancing scheme.
a fraudulent
After the completion of discovery,
the parties cross-moved for summary judgment.
The Court granted
Defendants' motion for summary judgment on the grounds that
Crawford lacked standing to or was collaterally estopped from
bringing the claims because she failed to assert any of the
aims in her 2006 bankruptcy petition.
Shortly
ter this Court closed the case, Crawford again
filed for bankruptcy, this time asserting the claims she
neglected to assert in 2006.
In January 2012, the Bankruptcy
Court held that the claims belonged to Ms. Crawford's estate in
bankruptcy, so she could not pursue them.
In May 2012, the
trustee in bankruptcy abandoned the claims, at which point
Crawford commenced an adversary proceeding in Bankruptcy Court.
Defendants moved to dismiss, and the Bankruptcy Court granted
the motion, stating that the Trustee's abandonment did not have
the effect of conferring standing upon Plaintiff, nor did her
claims "re-vest."
Crawford now moves this Court for relief
under Rule 60(b).
2
II. Discussion
"Motions for reli
under Rule 60(b} are disfavored, and
are reserved for exceptional cases." Canale v. Manco Power
Sports, LLC, No. 06 Civ. 6131, 2010 WL 2771871, at *2 (S.D.N.Y.
July 13, 2010); see also Hof
v. United States, No. 00
Civ. 1686, 2010 WL 1685558, at *4
("ReI
(S.D.N.Y. Apr. 26, 2010)
f under Rule 60(b) is only warranted if the [party]
presents 'highly convincing' evidence that demonstrates
'extraordinary circumstances' justifying relief.")
(citation
omitted) .
A party may move for relief pursuant to Rule 60(b} (5)
"if
changed circumstances make it no longer equitable that the
judgment should have prospective application."
______~______~~__________~________~__~, No. 94 Civ. 4925, 1995
WL 669655, at *2,
(E.D.N.Y. Oct. 27, 1995).
Rule 60(b} (5)
relief often arises in the context of "institutional reform
litigation," in which prospective reforms embodied in judgments
are reviewed for inequitable application because of changed
circumstances. See
(2009)
e . . , Horne v. Flores, 129 S.Ct. 2579, 2593
(noting that injunctions tend to remain in force for long
periods of time in such cases, warranting reexamination) .
As the Court held in its March 2011 Opinion,
"because
Plaintiff failed to assert any of the claims in this action in
her 2006 bankruptcy petition as discussed above, she lacks
3
standing to assert these claims or in the
ternative is
collaterally estopped from bringing these claims."
(Op. at 37.)
The court further held that "the fact that Defendants contested
these claims in the 2007 adversary proceeding cannot confer
standing on Plaintiff because .
unscheduled assets can only
re-vest in the debtor by the operation
law."
rd.
Plaintiff argues that because the Trustee abandoned the
claims in 2007, she was re vested with standing to pursue her
claims.
This, she argues, satisfies the "changed circumstances u
requirement of Rule 60(b) (5) and warrants relief. Lee v. Marvel
Enters.
Inc., 765 F.Supp.2d 440, 451 (S.D.N.Y. 2011).
--------~-----
The
Bankruptcy Court rejected this argument when it dismissed
Crawford's case:
[T]he mere fact that in this bankruptcy, which was
obviously subsequent to the 2006 bankruptcy, the Chapter 7
Trustee has abandoned this cause of action.
. does not
give the Debtor the right to pursue it.
Therefore, it
appears clear to me that the mere fact that the Trustee
does not administer a property or abandons it, does not
provide the Debtor the ability to rectify the mistake she
made in 2006.
(O'Hare Decl. Ex. 6 at 50 51.)
The view of the Bankruptcy Court is supported by a wealth
of precedent in this Circuit.
"While properly scheduled estate
property that has not been administered by the trustee normally
returns to the debtor when the bankruptcy court closes the case,
undisclosed assets automatically remain property of the estate
4
er the case is closed. Chartschlaa v. Nationwide Mut. Ins.
Co., 538 F.3d 116, 122 (2d Cir. 2008)
554(c),
(cit
11 U.S.C.
§
"A debtor may not conceal assets and then, upon
(d))
termination
the bankruptcy case, utilize the assets for its
own benefit."
B:osenshein v. Kleban,
(S.D.N.Y. 1996).
918 F. Supp. 98, 102
Supreme Court has held:
It cannot be that a bankrupt, by omitting to schedule and
withholding from his trustee all knowledge of certain
property, can,
er his estate in bankruptcy has been
finally closed up, immediately thereafter assert tit
to
the property on the ground that the trustee
never taken
any action in respect to it.
First Nat'l Bank of Jacksboro v. Lasater, 196 U.S. 115, 119
(1905).
Plaintiff's argument that the claims have re vest
inaccurate.
is
Accordingly, she is not eligible for relief under
Rule 60 (b) (5) .
Crawford has also sought relief under Rule 60(b) (6), which
grants authority to relieve a party from final judgment provided
grounds
that a motion "is not premised on one of
enumerated in clauses (b) (1) through (b) (5)
1/
relief
Warren v.
i,
No. 05 Civ. 8438, 2010 WL 3033615, at *4 n. 3 (S.D.N.Y. Aug. 2/
2010) i see also Scherer v. Ci
of New York, No. 03 Civ. 8445,
----------------~-------------
2007 WL 2710100, at *4
(S.D.N.Y. Sept. 7, 2007)
("A party may
not depend on the broad 'any other reason' provision of Rule
60(b) (6) where the
sis
the Rule 60{b) motion may be
construed under any other clause of Rule 60(b) ./1).
5
Since
Crawford has not articulated any ground
relief other than
those arising under Rule 60 (b) (5), relief under Rule 60 (b) (6)
relief is unavailable.
Even if Crawford could seek relief pursuant to Rule
60 (b) (6), she has set forth neither the "extraordinary
circumstances" nor the "extreme and undue hardship" required to
prevail under such a motion.
"Rule 60(b) (6) has been used
sparingly as an equitable remedy to prevent manifest injustice.
The rule is to
utilized only where extraordinary
circumstances prevented a party from taking timely action to
prevent or correct an erroneous judgment."
Reservoir Co.,
984 F.2d 1047, 1049 (9th
U.S. 813, 114 S.Ct. 60
(1993)
u.s.
v.
ine Land &
------------~-----------
r.), cert. denied, 510
(reversing grant of 60(b) (6)
relief where party failed to demonstrate extraordinary
circumstances).
To qualify for such relief, a party must set
forth "highly convincing material" in support of its motion. In
re
Mut. Funds Fee
., 240 F.R.D. lIS, 119
--------.~----------------------------~
(S.D.N.Y.2007)
(Rule 60(b) (6) relief denied where movants'
"blanket assertions of extraordinary circumstances and undue
hardship [we]re insufficient to support consideration under
[Rule 60 (b) (6)
].").
Although Plaintiff has waited at least 19 months
(Defendants claim she waited 21 months) to file this motion, and
Defendant has argued that this delay violates the timeliness
6
requirement of Rule 60(c)
1
the Court need not reach
of the above analysis.
in 1
consider Defendants
l
Simil
1
s issue
l
the Court need not
arguments related to judie
estoppel.
III. Conclusion
For the reasons stated above
1
Crawford/s motion for relief
under Rule 60(b) (5) and (6) is denied.
SO ORDERED.
Dated:
New York New York
June 141 2013
l
'1 ~:?L,tcv~\,/
JOHN F. KEENAN
States District Judge
7
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?