Crawford v. Franklin Credit Management Corporation et al, No. 1:2008cv06293 - Document 100 (S.D.N.Y. 2013)
Court Description: 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)
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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
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