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Crawford v. Franklin Credit Management Corporation

United States District Court, Second Circuit

June 14, 2013

LINDA D. CRAWFORD, Plaintiff,
v.
FRANKLIN CREDIT MANAGEMENT CORPORATION, TRIBECA LENDING, CORPORATION, AND LENDER'S FIRST CHOICE AGENCY, INC., Defendants.

KRISHNAN CHITTUR CHITTUR & ASSOCIATES, P.C. for Plaintiff Linda D. Crawford.

ROBERT A. O'HARE, Jr. ANDREW C. LEVITT O'HARE PARNAGIAN LLP, for Defendants Franklin Credit Management, et al.

OPINION AND ORDER

JOHN F. KEENAN, District Judge.

Before the Court is a motion under Rule 60(b) (5) and (6) of the Federal Rules of Civil Procedure, made by Plaintiff Linda Crawford ("Crawford" or "Plaintiff"). The Court had previously granted summary judgment to defendants Franklin Credit Management Corporation ("Franklin") and Tribeca Lending Corporation ("Tribeca") (collectively, "Defendants"), and Crawford moves the Court for relief from this judgment. For the reasons that follow, the motion is denied.

I. Background

The Court presumes familiarity with the facts of this case, as set forth in the Opinion and Order of March 23, 2011. (ECF Document No. 82 (hereinafter ("Op.").) Briefly stated, Crawford commenced this action in July 2008, asserting various claims arising from Defendants' alleged operation of a fraudulent mortgage refinancing scheme. 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 claims in her 2006 bankruptcy petition.

Shortly after 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).

II. Discussion

"Motions for relief 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 Hoffenberg v. United States, No. 00 Civ. 1686 , 2010 WL 1685558, at *4 (S.D.N.Y. Apr. 26, 2010) ("Relief 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." Project Strategies Corp. v. Nat'l Commc'ns Corp., 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, e.g., Horne v. Flores , 129 S.Ct. 2579, 2593 (2009) (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 standing to assert these claims or in the alternative 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 of law." (Id.)

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" 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 ...

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