M. Geller, LTD. v. Squillante et al

Filing 44

MEMORANDUM OPINION & ORDER: For the reasons set forth above, Plaintiff's application for the Court to hold Squillante in contempt is DENIED. As the Court noted at the contempt hearing, this case appears ripe for summary judgment. According ly, it is hereby ORDERED that if Plaintiff's counsel intends to move for summary judgment, he must confer with opposing counsel and submit a proposed briefing schedule to the Court by no later than March 27, 2017. IT IS FURTHER O RDERED that if Plaintiff's counsel intends to make any motion seeking to enforce rights or obligations arising under the settlement agreement, he must first electronically file a letter with the Court explaining the basis for the proposed motio n, including the relief sought and the grounds for this Court's jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994) (discussing the limits of federal subject matter jurisdiction on claims arising out of breach of a s ettlement agreement). The Court thanks Ms. Gabrielle Yvonne Vazquez for her pro bono service in this case and respectfully requests that she continue her representation of Mr. Squillante. (As further set forth in this Memorandum Opinion & Order.) (Signed by Judge John F. Keenan on 3/6/2017) (mro)

Case 1:09-md-02013-PAC Document 57

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------X
M. GELLER, LTD.,
:
UNITED STATES DISTRICT COURT
:
SOUTHERN DISTRICT Plaintiff,
OF NEW YORK
:
-----------------------------------------------------------x
:
In re FANNIE MAE 2008 SECURITIES
-against::
LITIGATION
::
DANIEL SQUILLANTE AND KRISTINA
::
FINE JEWELRY, LTD.,
::
-----------------------------------------------------------x
:
Defendants.
:
-----------------------------------X

Filed 09/30/10 Page 1 of 45
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: 03/06/2017
No. 14 Civ. 5673 (JFK)
08 Civ. 7831 (PAC)
09 MD 2013 OPINION &
MEMORANDUM (PAC)
ORDER
OPINION & ORDER

JOHN F. KEENAN, United States District Judge:
HONORABLE PAUL A. CROTTY, United States District Judge:
Before the Court is Plaintiff M. Geller Ltd.’s application

BACKGROUND1
for the Court to hold Defendant Daniel Squillante in contempt in
light of The early years of this decade saw a boom inpayment under the terms among
Squillante’s failure to make home financing which was fueled, of

other things, agreement reached between the New lending For the
a settlementby low interest rates and lax credit conditions. parties. instruments, such as
subprime mortgages below, risk application is denied.
reasons set forth(high credit the loans) and Alt-A mortgages (low-documentation loans)
kept the boom going. Borrowers played a role too; they took on unmanageable risks on the
Background
assumption that the market would after several that refinancing options would always be
On November 9, 2015, continue to rise and failed attempts to
available in the future. the parties informed in the system. Mortgage originators
resolve this case, Lending discipline was lacking the Court that they had did
not hold settlement agreement requiring Squillante, then acting
reached athese high-risk mortgage loans. Rather than carry the rising risk on their books, the
pro originators sold their loans certain sum of money (the often as securitized packages
se, to deliver a into the secondary mortgage market, “Settlement

known to the Plaintiff’s (“MBSs”). on markets grew almost exponentially.
Amount”)as mortgage-backed securitiesattorney MBSNovember 16, 2015.
But then the housing bubble burst. In to collect the Settlement
Following several failed attempts 2006, the demand for housing dropped abruptly
and from Squillante, Plaintiff’s counsel petitioned modified their
Amounthome prices began to fall. In light of the changing housing market, banksthe Court
lending practices settlement agreement and require Squillante to
to enforce the and became unwilling to refinance home mortgages without refinancing.
pay.

In response, the Court entered an order directing

1

Unless otherwise follow references cited as the or to the “Complaint” are Settlement
Squillante to indicated, all through on “(¶ _)” payment of the to the Amended Complaint,
dated June 22, 2009. For purposes of this Motion, all allegations in the Amended Complaint are taken as true.

1

Amount or, in the alternative, to show cause why such payment
had not been made. (See Order dated Nov. 23, 2015, ECF No. 28.)
After no payment was made, Plaintiff’s counsel moved by
order to show cause to hold Squillante in contempt for failing
to make payment.

Consistent with the Court’s November 23, 2015

order, the Court directed Squillante to show cause why he failed
to pay under the settlement agreement. (See Order to Show Cause
dated Dec. 21, 2015, ECF No. 34.)

The Court also entered an

order requesting appointment of pro bono counsel, noting that
“involvement of counsel would aid in resolving the contempt
application and would help the parties get back on track towards
a resolution to this case.” (See Order dated Dec. 21, 2015, ECF
No. 35 at 4.)

Volunteer counsel then appeared on Squillante’s

behalf, and a hearing on the order to show cause was scheduled
for March 17, 2016.
In advance of the hearing, Squillante submitted a sworn
affidavit dated February 16, 2016, explaining that he had
entered into the settlement agreement under a good faith belief
that he would be able to obtain the Settlement Amount from third
parties, but that he had not been able to do so. (See Aff. of
Daniel Squillante, ECF No. 41.)

The affidavit explained that

Squillante did not personally have the financial means to make
payment under the settlement agreement. (Id. ¶ 6.)

In support,

Squillante provided supporting documentation demonstrating that
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he is indebted for approximately $375,000, including over
$150,000 owed to the Internal Revenue Service. (Id. ¶¶ 8, 11,
14, Exs. A-E.)

Squillante also explained that he has monthly

living expenses of approximately $6,000 and relies on social
security of approximately $2,000 a month as his only source of
income. (Id. ¶ 8, Exs. F-O.)
On March 17, 2016, the Court held a hearing on the order to
show cause, which included testimony from Squillante.

At the

conclusion of the hearing, the Court granted Plaintiff leave to
supplement the record with a certified copy of a deed showing
that Squillante jointly owns a residence in Plantation, Florida,
which Plaintiff contended was contrary to Squillante’s testimony
at the hearing.

On April 18, 2016, the Court received the

supplemental submission from Plaintiff’s counsel, which included
a certified copy of the deed.

The submission also included

records reflecting tax payments on the property of $7,190.64 in
2014 and $6,358.41 in 2015.
On May 3, 2016, the Court received from Squillante a
response to Plaintiff’s supplemental submission.

Included in

the response was a supplemental affidavit by Squillante
explaining that, at the time of the March 17, 2016 hearing, he
believed that the Florida property had been transferred to his
wife’s name, but that he now understands that that he is a joint
owner of the property.

Squillante’s response also included an
3

affidavit from Michael Milano, one of the third parties from
whom Squillante previously indicated he believed he could obtain
a loan to pay under the settlement agreement.

Milano’s

affidavit states that he has known Squillante for approximately
ten years, and that in October 2015 he discussed with Squillante
the possibility of lending Squillante money, but was ultimately
unable to do so. (Aff. of Michael Milano ¶¶ 2-5.)
Discussion
Plaintiff asks the Court to hold Squillante in contempt for
failing to pay under the settlement agreement and for being
untruthful with the Court regarding his intent to pay and
inability to do so.

Federal law empowers the Court to “punish

by fine or imprisonment, or both, at its discretion, such
contempt of its authority . . . as . . . [d]isobedience or
resistance to its lawful writ, process, order, rule, decree, or
command.” 18 U.S.C. § 401.

The Court also has the inherent

authority to hold parties in contempt for disobedience of its
orders. S. New England Tel. Co. v. Glob. NAPs Inc., 624 F.3d
123, 144 (2d Cir. 2010).

Specifically, “[a] party may be held

in civil contempt for failure to comply with a court order if
(1) the order the contemnor failed to comply with is clear and
unambiguous, (2) the proof of noncompliance is clear and
convincing, and (3) the contemnor has not diligently attempted
to comply in a reasonable manner.” Paramedics Electromedicina
4

Comercial, Ltda v. GE Med. Sys. Info. Techs., Inc., 369 F.3d
645, 655 (2d Cir. 2004) (citations omitted).
Upon review, there is no basis for the Court to hold
Squillante in contempt.

First, Squillante has complied with the

Court’s November 23, 2015 and December 21, 2015 orders by
showing cause why he failed to make payment under the settlement
agreement–namely, that he does not have the wherewithal to pay.
Squillante’s affidavit and the documentation submitted in
support demonstrate that he has substantial debts and that his
monthly expenses significantly exceed his sole source of income,
which is social security.

While Squillante jointly owns a home

in Florida with his wife, the Court is convinced that he
nonetheless lacks the resources to pay the Settlement Amount in
light of his substantial financial obligations.

Second,

Squillante has provided support for his claim that, when
representing to opposing counsel that he intended to pay the
Settlement Amount, he believed he would be able to obtain the
funds from third parties.

Specifically, the affidavit of

Michael Milano corroborates Squillante’s testimony that he
discussed obtaining a loan from Milano in order to make payment
on the settlement.

As a result, the Court finds that Squillante

has shown sufficient cause why he should not be held in
contempt.

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Conclusion

For the reasons set forth above, Plaintiff's application
for the Court to hold Squillante in contempt is DENIED.
As the Court noted at the contempt hearing, this case appears
ripe for summary judgment.

Accordingly, it is hereby

ORDERED that if Plaintiff's counsel intends to move for
summary judgment, he must confer with opposing counsel and
submit a proposed briefing schedule to the Court by no later
than March 27, 2017.
IT IS FURTHER ORDERED that if Plaintiff's counsel intends
to make any motion seeking to enforce rights or obligations
arising under the settlement agreement, he must first
electronically file a letter with the Court explaining the basis
for the proposed motion, including the relief sought and the
grounds for this Court's jurisdiction. See Kokkonen v. Guardian
Life Ins. Co. of Am., 511 U.S. 375 (1994)

(discussing the limits

of federal subject matter jurisdiction on claims arising out of
breach of a settlement agreement).
The Court thanks Ms. Gabrielle Yvonne Vazquez for her pro
bono service in this case and respectfully requests that she
continue her representation of Mr. Squillante.
SO ORDERED.

Dated:

New York, New York
March b , 2017

~JOHN F. KEENAN
United States District Judge
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