Homeward Residential, Inc. v. Sand Canyon Corporation

Filing 289

OPINION AND ORDER. For the reasons above, Homeward's motion for reconsideration of the Court's November 13 Order denying permission to prove Sand Canyon's liability via statistical sampling and to admit Dr. Cowan's sampling testim ony is DENIED. The Clerk of Court is respectfully directed to terminate the motion docketed at ECF No. 282. SO ORDERED. re: 282 MOTION for Reconsideration re; 272 Memorandum & Opinion filed by Homeward Residential, Inc. (Signed by Judge John F. Keenan on 5/22/2018) (rjm)

Case 1:09-md-02013-PAC Document 57 Filed 09/30/10 Page 1 of 45
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
USDC SDNY
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DOCUMENT
:
HOMEWARD RESIDENTIAL, INC.,
ELECTRONICALLY FILED
solely in its capacity as
:
DOC #: _________________
Master Servicer for the Option :
DATE FILED: 5/22/2018
One Mortgage DISTRICT COURT
:
UNITED STATES Loan Trust
2006-2, for the benefit of the :
SOUTHERN DISTRICT OF NEW YORK
:
Trustee and the holders of
-----------------------------------------------------------x
Option One Mortgage Loan Trust ::
In re FANNIE MAE 2008 SECURITIES
08 Civ. 7831 (PAC)
2006-2 Certificates,
::
LITIGATION
09 MD 2013 (PAC)
::
No. 12 Civ. 5067 (JFK)
OPINION & ORDER
Plaintiff,
::
OPINION & ORDER
:
-----------------------------------------------------------x
-against:
:
SAND CANYON CORPORATION,
:
f/k/a Option One Mortgage
:
HONORABLE PAUL A. CROTTY, United States District Judge:
Corporation,
:
:
Defendant.
:
BACKGROUND1
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APPEARANCES
The early years of this decade saw a boom in home financing which was fueled, among
FOR PLAINTIFF HOMEWARD RESIDENTIAL, INC.:
other things, byV. Otero rates and lax credit conditions. New lending instruments, such as
Brian low interest
Stephen R. Blacklocks
subprime mortgages (high credit risk loans) and Alt-A mortgages (low-documentation loans)
Michael B. Kruse
Kristen Madison
kept the boom going. Borrowers LLP a role too; they took on unmanageable risks on the
HUNTON & WILLIAMS played
assumption that the market would continue to rise and that
FOR DEFENDANT SAND CANYON CORPORATION: refinancing options would always be
Douglas W. Henkin
available in the Y. Young
Joyce future. Lending discipline was lacking in the system. Mortgage originators did
Michael L. Calhoon
not hold these high-risk mortgage loans. Rather than carry the rising risk on their books, the
Richard P. Sobiecki
Vernon A. Cassin
originators soldB. Rubenstein secondary mortgage market, often as securitized packages
Julia their loans into the
Patrick Marecki
knownBAKER BOTTS L.L.P.
as mortgage-backed securities (“MBSs”). MBS markets grew almost exponentially.
But then the housing
James Goldfarb bubble burst. In 2006, the demand for housing dropped abruptly
Daniel T. Brown
and home prices Berkowitz In light of the changing housing market, banks modified their
Hannah began to fall.
MURPHY & McGONIGLE, P.C.
lending practices and became unwilling to refinance home mortgages without refinancing.

1
Unless otherwise indicated, all references cited as “(¶ _)” 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

JOHN F. KEENAN, United States District Judge:
Before the Court is Plaintiff Homeward Residential, Inc.’s
(“Homeward”) motion for reconsideration of the Court’s November
13, 2017 Opinion and Order (the “November 13 Order”) denying
Homeward’s motion under Federal Rule of Civil Procedure 26
(“Rule 26”) and Federal Rule of Evidence 702 (“Rule 702”) for an
order permitting Homeward to prove its claims against Defendant
Sand Canyon Corp. (“Sand Canyon”) using statistical sampling
evidence and to admit testimony from its statistical sampling
expert, Dr. Charles D. Cowan, regarding the sampling exercise
and results.

For the reasons stated below, Homeward’s motion

for reconsideration is DENIED.
I. Background
Knowledge of the facts and allegations in this action is
presumed and is discussed extensively in the Court’s November 13
Order.

However, a brief recitation of the procedural history of

this motion is warranted.

On July 29, 2015, Homeward moved

pursuant to Federal Rule of Civil Procedure 26 (“Rule 26”) and
Federal Rule of Evidence 702 (“Rule 702”) for an order:

(1)

permitting Homeward to prove its claims against Sand Canyon
using statistical sampling evidence, and (2) determining the
admissibility of Dr. Cowan’s proposed sampling methodology and
related analysis. (See Notice of Pl.’s Mot. to Admit Statistical
Sampling Testimony, ECF No. 105 (filed July 29, 2015).)
2

Homeward argued that sampling is relevant to two of its theories
of the case, both of which rely on breaches of Mortgage Loan
Purchase Agreement (“MLPA”) § 3.01 representations and
warranties as to individual loans. (See Pl.’s Mem. of L. in
Supp. of its Mot. to Admit Statistical Sampling Testimony at 56, ECF No. 107 (filed July 29, 2015).
On November 13, 2017, the Court denied Homeward’s motion.
(See Op. & Order, ECF No. 272 (filed Nov. 13, 2017).)

The Court

held that the MLPA and the Pooling and Service Agreement (“PSA”
and together, the “Governing Agreements”) call for proof of Sand
Canyon’s breach on a loan-by-loan basis, and, thus, Homeward’s
proposed sampling would not “assist the trier of fact to
understand the evidence or to determine a fact in issue.” (Id.
at 17.)

The Court also rejected Homeward’s alternative argument

that it should be allowed to proceed with proof by sampling
notwithstanding contractual provisions to the contrary. (Id. at
27-29.)

On November 27, 2017, Homeward moved for

reconsideration of the Court’s decision. (See Mot. for
Reconsideration, ECF No. 282 (filed Dec. 18, 2017).)
II. Legal Standard
Reconsideration of a previous order is an “extraordinary
remedy to be employed sparingly in the interests of finality and
conservation of scarce judicial resources.” In re Health Mgmt.
Sys. Inc. Sec. Litig., 113 F. Supp. 2d 613, 614 (S.D.N.Y. 2000)
3

(internal quotation marks and citation omitted).

“The provision

for reargument is not designed to allow wasteful repetition of
arguments already briefed, considered and decided.” Schonberger
v. Serchuk, 742 F. Supp. 108, 119 (S.D.N.Y. 1990).

“The major

grounds justifying reconsideration are ‘an intervening change of
controlling law, the availability of new evidence, or the need
to correct a clear error or prevent manifest injustice.’” Virgin
Atl. Airways, Ltd. v. Nat’l Mediation Bd., 956 F.2d 1245, 1255
(2d Cir. 1992) (quoting 18 C. Wright, A. Miller & E. Cooper,
Federal Practice & Procedure § 4478 at 790).

Accordingly, a

request for reconsideration under Local Rule 6.3 must
“demonstrate controlling law or factual matters put before the
court in its decision on the underlying matter that the movant
believes the court overlooked and that might reasonably be
expected to alter the conclusion reached by the court.” Fisk v.
Letterman, 501 F. Supp. 2d 505, 530 (S.D.N.Y. 2007).
Local Rule 6.3 is intended to “ensure the finality of
decisions and to prevent the practice of a losing party . . .
plugging the gaps of a lost motion with additional matters.”
S.E.C. v. Ashbury Capital Partners, No. 00 Civ. 7898 (RCC), 2001
WL 604044, at *1 (S.D.N.Y. May 31, 2001) (internal quotation
marks and citation omitted).

A court must “narrowly construe

and strictly apply Local Rule 6.3 so as to avoid duplicative
rulings on previously considered issues and to prevent the Rule
4

from being used to advance different theories not previously
argued, or as a substitute for appealing a final judgment.”
Fisk, 501 F. Supp. 2d at 530.
III. Discussion
In its motion for reconsideration, Homeward argues that
“the Court misapplied settled principles of contract
interpretation” by “eras[ing] a key contract provision” and
effectively rewriting the Governing Agreements to “resolve the
contradiction that arises from interpreting them as requiring
loan-by-loan proof of breach.” (Pl.’s Mem. of L. in Supp. of
Mot. for Reconsideration at 1, 4, ECF No. 283 (filed Dec. 18,
2017).)

This argument is inappropriate on a motion for

reconsideration.

Homeward has offered no new authorities or

evidence in support of its motion, but merely contends that the
Court erred in interpreting the contracts and, thus, seeks to
relitigate issues already decided. See Schrader 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.”).

The Court has already

considered the relevant contractual language in the MLPA and
PSA, and determined that “the applicable provisions of the
Governing Agreements generally refer to a breach event, the
offending loan, and the repurchase price in singular terms,”
leading to the conclusion that the parties agreed upon a
5

remedial process that generally calls for proof of breach on a
loan-by-loan basis. (See Op. & Order at 19-20.)
Homeward argues that the Court overlooked its argument that
a loan-by-loan requirement would effectively “erase” the All
Mortgage Loans Provision in MLPA § 3.04 and, in doing so,
misapplied settled principles of contract interpretation. (See
Pl.’s Mem. of L. in Supp. of Mot. for Reconsideration at 1-2.)
The Court did not overlook, but explicitly considered and
rejected the argument that a loan-by-loan requirement would not
give effect to the All Mortgage Loans Provision. (See Op. &
Order at 18, 22-24.)

Moreover, the Court’s opinion did not

“wipe out” the All Mortgage Loans Provision or any other
provision.

The Court noted that “[i]n all the aforementioned

instances under the Governing Agreements, the nature of the
remedy is the same:

repurchase by Sand Canyon.

What may vary

is the threshold to trigger Sand Canyon’s obligation to
repurchase.” (Op. & Order at 24-25.)

This is not “erasing” or

“rewriting” the Governing Agreements, but interpreting them and
giving effect to all provisions, as Homeward urged the Court to
do in its motion for permission to prove its claims through
sampling.

Although Homeward disagrees with the Court’s

interpretation of the relevant contractual provisions,
disagreement is not a proper ground for reconsideration. See
Premium Sports Inc. v. Connell, No. 10 CIV. 3753 KBF, 2012 WL
6

2878085, at *1

(S.D.N.Y. July 11, 2012)

("A motion for

reconsideration should not be used as a vehicle simply to voice
disagreement with the Court's decision.")
Conclusion

For the reasons above, Homeward's motion for
reconsideration of the Court's November 13 Order denying
permission to prove Sand Canyon's liability via statistical
sampling and to admit Dr. Cowan's sampling testimony is DENIED.
The Clerk of Court is respectfully directed to terminate the
motion docketed at ECF No. 282.

SO ORDERED.

Dated:

New York, New York
May :( /_ , 2 0 18

V

7

John F. Keenan
United States District Judge