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Onewest Bank, Fsb, and Deutsche Bank National Trust Company, As v. Joam LLC

January 23, 2012

ONEWEST BANK, FSB, AND DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE AND SUPPLEMENTAL INTEREST TRUSTEE WITH RESPECT TO INDYMAC IMSC MORTGAGE LOAN TRUST 2007-AR2, MORTGAGEPASS THROUGH CERTIFICATES SERIES 2007-AR2, PLAINTIFFS,
v.
JOAM LLC, DEAN A. RESKAKIS, ANTHONY HORAN, FAIGE NEUMANN A/K/A FAGIE NEUMANN, ESTHER EREZ, SARA OVITS, SACCO & FILLAS, LLP, THE MORTGAGE ZONE, INC., GE LAND SERVICES, INC. D/B/A GE ABSTRACT LLC, 85 PULASKI STREET CORP., AND JOHN DOES 1-20, DEFENDANTS.



The opinion of the court was delivered by: John Gleeson, United States District Judge:

FOR ONLINE PUBLICATION ONLY

MEMORANDUM AND ORDER

Plaintiffs OneWest Bank, FSB ("OneWest") and Deutsche Bank National Trust Company ("Deutsche Bank"), as Trustee, allege in their Third Amended Complaint ("Complaint") that defendants Joam LLC ("Joam"), Dean A. Reskakis, Anthony Horan, Fagie Neumann, Esther Erez, Sara Ovits, Sacco & Fillas, LLP ("S&F"), The Mortgage Zone, GE Land Services Inc. d/b/a GE Abstract LLC, and 85 Pulaski Street Corp. ("85 Pulaski") defrauded plaintiffs in connection with a mortgage loan for property located at 1432 East 14th Street, Brooklyn, NY 11230 (the "Property"). Defendants S&F, Reskakis and Neumann now move to dismiss the Complaint on various grounds.*fn1

This is the moving defendants' second set of motions to dismiss, which have been styled as "renewed" motions to dismiss upon limited discovery. In July 2011, I provisionally denied the first set of motions to dismiss, subject to limited discovery to allow the plaintiffs to obtain documents establishing an affirmative assignment of ancillary claims when the mortgage note in question was initially assigned. See Memorandum and Order, No. 10-CV-1063 (JG) (SMG) (E.D.N.Y. July 26, 2011) (ECF No. 88) ("July Order"). The plaintiffs have now obtained such documents, and therefore I deny the motions to dismiss in substantial part. However, I dismiss the plaintiffs' claims for attorney malpractice for lack of standing, because the plaintiffs' claims derive from an assignment contract governed by California law, and under California law, such claims are unassignable.

BACKGROUND*fn2

A. The Facts

1. Original Loan Transaction

In 1998 Joseph Gutman deeded the Property to his three daughters, Neumann, Erez and Ovits (the "sisters") as tenants in common. (Compl. ¶ 27.)*fn3 On December 18, 2006, the sisters entered into a contract to sell the Property to Joam for $715,000. (Id. ¶ 28.) Reskakis, an attorney employed by S&F, represented Joam in the sale, which was completed on January 29, 2007. (Id. ¶ 29.) The transfer of title was never recorded and Joam has no recorded interest in the Property. (Id. ¶ 30.)

Three weeks after executing the sale contract with Joam, the sisters allegedly entered into a second contract to sell the Property on January 7, 2007 -- this time, to Horan. (Id. ¶ 31.) The purchase price of this second sale of the Property was $1,300,000. (Id. ¶ 32.) To finance the purchase, Horan obtained a first mortgage loan ("Horan Loan") from American Brokers Conduit ("American Brokers")*fn4 in the amount of $999,999.*fn5 Reskakis acted as agent and attorney for American Brokers for this transaction, in spite of having facilitated the sale of the same Property from the sisters to Joam soon before. (Id. ¶ 34.) The Horan Loan closed on April 13, 2007. (Id. ¶ 35.) On that day, American Brokers wired the $999,999 sum to Reskakis, and Horan executed a Mortgage and Note in favor of American Brokers.*fn6 (Id. ¶¶ 36-38.) Reskakis failed to record the second sale of the Property. (Id. ¶ 50.) Reskakis also failed to obtain title insurance for the Property, failed to pay off existing liens on the property, failed to prepare an accurate HUD-1 Settlement Statement, failed to distribute funds in accordance with the HUD-1 Settlement Statement and failed to account for the funds that American Brokers sent to him. (Id. ¶¶ 49-50.) Reskakis made several distributions of funds from the Horan Loan proceeds by checks written on the S&F attorney account. (Id. ¶¶ 42-44, 47.) Reskakis was employed by S&F during the sales to Joam and Horan, and allegedly S&F was aware of Reskakis's wrongful actions and of other incidents of intentional wrongdoing and malpractice by Reskakis prior to the Horan Loan. (Id. ¶¶ 52-53.)

2. Transfer of Horan Loan from American Brokers to IndyMac

Around May 2007, a batch of mortgage loans including the Horan Loan was sold by American Brokers to IndyMac Bank, F.S.B. ("IndyMac"). A document called the Mortgage Loan Purchase and Interim Servicing Agreement ("MLPISA")*fn7 governed this transaction. The MLPISA states that it is "intended to set forth the terms and conditions by which Seller [i.e., American Brokers] shall transfer and Purchaser [i.e., IndyMac] shall acquire" certain mortgage loans. (MLPISA, p. 1.) The MLPISA defined "Mortgage Loan" as "[a]n individual mortgage loan which is the subject of this Agreement, . . . [as] identified on the Mortgage Loan Schedule, which Mortgage Loan includes without limitation the Mortgage File, the Monthly Payments, and all other rights, benefits, proceeds and obligations arising from or in connection with such Mortgage Loan."*fn8 (MLPISA, art. I, p. 4.) A Mortgage Loan Schedule from American Brokers' records includes the Horan Loan at line 51.*fn9 (Colagiacomo Dec. ¶ 6.) A letter entitled "Purchase Bid and Trade Confirmation"*fn10 sent from IndyMac to American Brokers on May 4, 2007, described the transaction as a "servicing-released purchase," confirming that the sale included the servicing rights for the loans. (Colagiacomo Dec. ¶ 6; Voulo Dec. ¶ 3).

The MLPISA contained the following California choice-of-law provision at § 5.08: "This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to agreements entered into and wholly performed within that state." (MLPISA § 5.08, p. 25.)

3. Pooling and Service Agreement Among IndyMac, IndyMac MBS, and Deutsche Bank

On July 1, 2007, IndyMac, IndyMac MBS, Inc. ("IndyMac MBS"), and Deutsche Bank entered into a Pooling and Servicing Agreement ("PSA").*fn11 Pursuant to § 2.01 of the PSA, IndyMac transferred ownership of the Horan Loan to IndyMacMBS. (PSA § 2.01.)*fn12 IndyMac MBS then assigned its interest in the loan to a trust controlled by Deutsche Bank. (PSA p. 1.) However, under § 3.01 of the PSA, IndyMac retained servicing rights over the loan, including the right to "undertak[e] any legal action that it may deem appropriate with respect to the Mortgage Loans including, without limitation, any rights or causes of action arising out of the origination of the Mortgage Loans." *fn13 (PSA § 3.01.)

4. IndyMac Goes Into FDIC Receivership

In July 2008, the Office of Thrift Supervision closed IndyMac and appointed the

FDIC as receiver, pursuant to 12 U.S.C. § 1464(d)(2)(A). (Compl. ¶ 8.) At that time, the FDIC, "by operation of law, succeed[ed] to . . . all rights, titles, powers, and privileges of" IndyMac, and obtained the right to "perform all functions of" IndyMac. See 12 U.S.C. § 1821(d)(2)(A)-(B). The FDIC then created a new entity called IndyMac Federal Bank, FSB ("IndyMac Fed"), with itself as conservator. See id. § 1821(d)(2)(F) (conferring this power on FDIC). On July 11, 2008, the FDIC-as-receiver for IndyMac, the FDIC-as-conservator for IndyMac Fed, and the FDIC for itself entered into an agreement entitled the Amended and Restated Insured Deposit Purchase and Assumption Agreement ("APAA").*fn14 Under the APAA, IndyMac Fed assumed all "right, title, and interest" of IndyMac in the Horan loan. (APAA § 3.1.)*fn15 However, ยง 3.4(b) of the APAA excluded from the assignment "any interest, right, action, claim, or judgment against (i) any . . . attorney, or any other Person employed or retained by the Failed Bank [i.e., IndyMac] . . . arising out of any act or omission by such Person in such capacity . . . or (iv) any other Person whose action or inaction may be related to any loss (exclusive of any loss ...


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