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McFarland v. Loan Care

United States District Court, Second Circuit

May 29, 2013

KEITH B. McFARLAND, Plaintiff,
LOAN CARE, Defendant.


J. PAUL OETKEN, District Judge.

Plaintiff Keith McFarland alleges that Defendant Loan Care defrauded him in the course of their dealings related to a loan modification. Loan Care has moved for summary judgment. For the reasons that follow, Loan Care's motion is granted.

I. Standard of Review

Summary judgment is appropriate in a case where the evidence, viewed in the light most favorable to the non-moving party, demonstrates "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Vacold, L.L.C. v. Cerami, 545 F.3d 114, 121 (2d Cir. 2008). The moving party bears the burden of showing that there is no genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). A fact is "material" only if it will affect the outcome of the suit under governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). For there to be a "genuine" issue about the fact, the evidence must be such "that a reasonable jury could return a verdict for the nonmoving party." Id. In determining whether there is a genuine issue of material fact, the Court must resolve all ambiguities and draw all permissible inferences in favor of the non-moving party. See Sec. Ins. Co. of Hartford v. Old Dominion Freight Line, Inc., 391 F.3d 77, 83 (2d Cir. 2004). "Resolutions of credibility conflicts and choices between conflicting versions of the facts are matters for the jury, not for the court on summary judgment." United States v. Rem, 38 F.3d 634, 644 (2d Cir. 1994) (citations omitted). Where there is no evidence in the record "from which a reasonable inference could be drawn in favor of the non-moving party on a material issue of fact, " summary judgment is proper. Catlin v. Sobol, 93 F.3d 1112, 1116 (2d Cir. 1996). Although the nonmoving party can defeat summary judgment by presenting evidence sufficient to create a genuine issue of material fact, it is well established that "[m]ere speculation and conjecture [are] insufficient to preclude the granting of the motion." Harlen Assocs. v. Vill. of Mineola, 273 F.3d 494, 499 (2d Cir. 2001).

II. Jurisdiction

The Court has original jurisdiction over this case pursuant to 28 U.S.C. § 1332. At all relevant times, McFarland has been a citizen of New York and FNF Servicing Inc., of which Loan Care is a division, has been incorporated and maintained its principal place of business in Virginia. The diversity of citizenship requirement is therefore satisfied. Because McFarland seeks damages in the amount of $239, 500, the amount in controversy requirement of diversity jurisdiction is also satisfied. This case was originally filed in the Supreme Court of the State of New York, County of Bronx, and Loan Care filed a Notice of Removal pursuant to 28 U.S.C. §§ 1332, 1441, and 1446 in a timely fashion. Accordingly, removal to this Court was proper.

III. Background

On April 20, 2009, McFarland purchased the premises known as 850 Home Street, Apartment 2E, Bronx, New York 10459 ("the Premises"). He obtained a mortgage in the amount of $235, 063 from the Freedom Mortgage Company with an interest rate of five percent per year. Under the terms of the mortgage, he owed $1, 261.87 in monthly payments for principal and interest, along with various escrow items that brought the total monthly payment to $1, 518.70. The loan was due May 1, 2039.

Whereas McFarland's 2008 tax return indicated an adjusted gross income of $79, 448, this figure fell to $61, 216 in 2009 and then increased to $61, 929 in 2010. Throughout this period, McFarland was employed at Madison Square Garden as a suite attendant and as a substitute teacher at PS 83; the bulk of his income was derived from his job at Madison Square Garden.

On June 12, 2010, McFarland filed for Chapter 13 bankruptcy with the United States Bankruptcy Court, Southern District of New York. His petition listed assets totaling $217, 965 and liabilities totaling $276, 209. His main asset, comprising $202, 373 of his total assets, was the Premises. McFarland recalls that he owed approximately $3, 000 per month in debt at that time. He explains that school budgets were slashed in 2009-2010, and that his gross income dropped by $20, 000. McFarland was represented by Daniel M. Katzner, an attorney, throughout his Chapter 13 bankruptcy proceedings.

In September 2010, McFarland was late in making his mortgage payment. He made his last payment-a partial payment-in October 2010. This payment was applied retroactively to his missed September payment. McFarland explains that his situation had changed because of cutbacks in the hours he worked at both of his jobs, and that he saw no point to making payments after being threatened with foreclosure proceedings because "there was no sense in [him] throwing good money after bad." McFarland's 2011 tax return indicated an adjusted gross income of $53, 869.

On January 18, 2011, acting as "Servicer for Freedom Mortgage Co., a secured creditor of [McFarland], " Loan Care moved to lift the automatic stay imposed by 11 U.S.C. § 362(a) to allow Loan Care to enforce its rights to the Premises.

On May 9, 2011, with advice of counsel, McFarland filed a motion in the U.S. Bankruptcy Court requesting loss mitigation and agreeing to comply with the Loss Mitigation Procedures. McFarland does not recall whether Katzner advised him regarding his legal rights and the bank's legal duties with respect to loan modification. He does recall, however, that Katzner was a good and competent attorney. On May 12, 2011, as part of bankruptcy proceedings, Loan Care received a loss mitigation request from McFarland.

On May 19, 2011, McFarland was approved by Loan Care for a loan modification. This approval was memorialized in a letter to McFarland dated May 23, 2011. That letter described an offer to reduce McFarland's monthly payments to $1, 454.25, lower McFarland's ...

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