United States District Court, E.D. New York
FINDINGS OF FACT & CONCLUSIONS OF LAW
RAMON E. REYES, Jr., Magistrate Judge.
Igor Krishtul ("Krishtul") brought this action against VSLP United, LLC ("VSLP") pursuant to the Truth in Lending Act, 15 U.S.C. § 1601 et seq. ("TILA") to rescind two loans he received from VSLP and to void the lien on his co-operative apartment. Krishtul also demands damages, attorney's fees, and costs. The parties consented to my jurisdiction to decide their cross-motions for partial summary judgment (Dkt. No. 9) and to conduct all proceedings, including trial and entry of final judgment (Dkt. No. 32). After denying VSLP's summary judgment motion, the Court presided over a two-day bench trial and heard testimony from Krishtul, Leonid Raytburg ("Raytburg"), David Zybin ("Zybin"), and John VanderNeut ("VanderNeut") and received various exhibits into evidence. ( See Minute Entry dated 2/19/13; Minute Entry dated 2/20/13.) At the Court's direction, the parties subsequently submitted proposed findings of facts and conclusions of law. ( See Dkt. Nos. 80 ("VSLP's FFCL"); 87 ("Krishtul's FFCL").)
The central factual disputes to be resolved at trial concerned whether TILA applies to the loans at issue. ( See Dkt. No. 28 ("Mem. & Order") at 18, 21.) Having considered all of the evidence at trial, assessed the credibility of the witnesses, and reviewed the parties' post-trial submissions, the Court concludes that TILA does not apply to the subject loans and that VSLP is entitled to reasonable attorney's fees and costs pursuant to the loan documents. The following constitutes the Court's findings of facts and conclusions of law pursuant to Federal Rule of Civil Procedure 52.
A. Procedural History
The Court begins with a brief review of the procedural history to account for certain developments that affected the prosecution of this case. The parties submitted their Joint Pretrial Order on July 10, 2012. (Dkt. No. 29 ("Joint Pretrial Order").) Soon after the Court set October 22, 2012 as the trial date, Krishtul's former counsel, Randy Newman ("Newman"), sought to withdraw as counsel and to assert a charging lien pursuant to New York Judiciary § 475. (Dkt. No. 31.) After conducting a hearing, at which Krishtul was present, the Court relieved Newman as counsel, leaving the determination of the amount of the charging lien for a later evidentiary hearing, and adjourned the trial to January 15, 2013. ( See Amended Minute Entry dated 9/25/12.) The Court ordered the parties to submit their pre-trial submissions by January 4, 2013 and advised Krishtul that counsel must appear on his behalf by November 30, 2012, or that he would be expected to proceed pro se. ( Id. ) On December 5, 2012, nearly a week after the Court's deadline, John E. Tiffany ("Tiffany") entered a notice of appearance on behalf of Krishtul. (Dkt. No. 35.) The Court held a status conference on December 11, 2012, at which both Newman and Tiffany, were present. ( See Minute Entry dated 12/13/12.) The Court ordered Tiffany to file a joint motion to adjourn the bench trial, if necessary, by December 21, 2012. ( Id. )
That deadline passed with no request for an adjournment. On January 2, 2013, the Court issued a notice requiring the parties to file a joint motion to adjourn the bench trial, if so desired, that same day. ( See Notice dated 1/2/13.) No such request was made. Pursuant to the Court's previous scheduling order, the parties' pre-trial submissions were due on January 4, 2013. Krishtul failed to comply with that deadline and the Court unsuccessfully attempted to call Tiffany as a courtesy. ( See Staff Note dated 1/8/13.) The Court then issued a written notice expressly warning Krishtul that a failure to appear at the January 15, 2013 trial would result in an order dismissing his claims for failure to prosecute. (Dkt. No. 40.)
Just days before the trial date, Krishtul, through his counsel Tiffany, filed a letter requesting to adjourn the trial until March 2013. (Dkt. No. 42.) VSLP strenuously objected to that request. (Dkt. No. 43.) The Court convened a telephone conference, at which it reluctantly adjourned the bench trial to February 19, 2013, with pre-trial submissions due on February 1, 2013. (Minute Entry dated 1/11/13.) The Court admonished "NO FURTHER ADJOURNMENTS FOR ANY REASON WHATSOEVER." ( Id. ) Once again that deadline for pre-trial submissions passed with no word from Krishtul.
VSLP promptly filed a motion to dismiss for lack of prosecution, wherein it accurately catalogued Krishtul's disregard for the Court's orders affecting the bench trial. (Dkt. No. 45 at 1-3.) Krishtul filed no opposition. Nonetheless, the Court denied VSLP's motion, recognizing that Krishtul had previously filed a Joint Pretrial Order, and that dismissal for failure to prosecute is a "drastic remedy." (Order denying Motion to Dismiss for Lack of Prosecution dated 2/14/13.) But "in light of [Krishtul's] failure to adhere to the [February 1, 2013 deadline for pre-trial submissions], " the Court granted VSLP's motion in limine as unopposed. ( Id .; see also Order granting Motion in Limine dated 2/14/13.)
On the day of trial, Tiffany moved to be relieved as counsel, complaining that he had not been "paid a dime for [his] work" (2/19/13 Tr. at 6:16-17), and that Krishtul had not assisted in trial preparation ( see, e.g., id. at 8:17-23.) With regard to his failure to timely advise the Court of these issues, Tiffany conceded that he "should have written to the Court, " ( id. at 9:25-10:1), and stated only "I can sit here and give all sorts of excuses. I'm not going to give an excuse." ( Id. at 10:2-3.) Although "tak[ing] responsibility for not addressing [the issue] and sending a letter to the Court" ( id. at 10:9-10), Tiffany admitted to the Court that he was "not prepared" to go forward with the trial ( id. at 12:8). A query to Krishtul about his failure to advise the Court about issues concerning his representation was met only with silence. ( Id. at 11:3-5.)
The Court presented Krishtul with two options: one, Krishtul could proceed with trial, either with Tiffany representing him or proceeding pro se, or two, the Court would grant VSLP's motion to dismiss, which Krishtul could appeal. ( Id. at 12:24-13:2; 13:16-18.) The Court recalled its previous admonishment that no further adjournments would be entertained and emphasized the prejudice that yet another delay would impose on both VSLP and the Court. ( Id. at 13:3-15.) Krishtul opted to proceed with trial and the Court denied Tiffany's motion to withdrawal as counsel. ( Id. at 13:20, 15:3-6.)
Although the parties estimated in the Joint Pretrial Order that five trial days would be needed (Joint Pretrial Order at 3), the bench trial lasted not two full days. The Court heard testimony and received as evidence those exhibits to which the parties previously stipulated in the Joint Pretrial Order. (2/19/13 Tr. at 66:5-67:3.) The Court afforded the parties the opportunity to submit proposed findings of facts and conclusions of law by March 8, 2013. (2/20/13 Tr. at 152:2-3.) Only VSLP timely filed a submission.
On March 13, 2013, Krishtul filed a letter, pro se, requesting additional time to submit his proposed findings of facts and conclusions of law. (Dkt. No. 82.) Krishtul explained that, although Tiffany's conduct at trial was "indeed odd and unusual, " he and Tiffany had resolved their differences. (Dkt. No. 81.) Krishtul averred that he had communicated with Tiffany since the close of trial and that he had provided Tiffany with "several hundred documents" in anticipation of the proposed findings of facts and conclusions of law. ( Id. ) Krishtul attested that, until his conversation with Tiffany on March 8, 2013, he was unaware that Tiffany failed to file the proposed findings of fact and conclusions of law on his behalf. ( Id. ) During their conversation, Tiffany explained to Krishtul that he was experiencing stress arising from "serious problems, including being suspended from practicing law." ( Id. ) The Court extended the time for Krishtul to submit his post-trial submissions to March 29, 2013.
Krishtul filed pro se his proposed findings of facts and conclusions of law. (Krishtul's FFCL.) His submission is replete with statements and documents that were not presented at the bench trial. Some purported documents and accounts of alleged telephone conversations are offered for the first time in these proceedings. ( See, e.g., Krishtul's FFCL at 3-5; Dkt. No. 87-1, at 1 (sample advertisements by Patrick of Broadscope); 87-1, at 3-14 (2008 email exchange regarding mortgage loan and "coop" search); Dkt. No. 87-1, at 161-75 (purported phone records).) Other documents and alleged statements concern purported emails that were the subject of VSLP's unopposed in limine motion to exclude certain documents from trial. ( See Dkt. No. 87 in passim; see, e.g., 87-1, at 3-87-1, at 21-27.) Through his submission, Krishtul provides a version of events markedly different than that offered by VSLP, and seeks to create the record that he did not create at trial. In short, Krishtul relies heavily on evidence not properly before the Court. Thus, while the Court has considered the parties' post-trial submissions, it affirms that the following facts and conclusions of law are based solely on the evidence received at trial.
B. Findings of Fact
The application of TILA to the loans depends on two distinct issues: (1) whether the subject loans are "consumer credit transactions" for purposes of TILA and (2) whether the mortgage loan extended by VSLP in 2007 originated through a "mortgage broker" such that VSLP is a "creditor" within the meaning of TILA. Following a recitation of the basic facts, the Court makes factual findings as to each issue in turn.
1. Basic Facts
Krishtul is the owner of a co-operative apartment located at 1311 Brightwater Ave., Apt. 9D, Brooklyn, New York 11235 (the "Co-op") and has resided at that address since 1994. (Dkt. No. 29-1 ("Joint. Stip. of Facts") ¶ 1; 2/19/13 Tr. at 25:12-13.) He earned a bachelor's degree in accounting and worked as a field agent for the Internal Revenue Service. (Joint Stip. of Facts ¶¶ 22-23.) Krishtul is a chartered financial consultant and is licensed to sell insurance. ( Id. ¶¶ 24-25.) For the last fifteen years, he has earned his livelihood preparing tax returns and selling insurance. (See id. ¶ 26.) Since 2001, Krishtul has conducted his tax preparation and insurance sales business through Krishtulco, Inc. ("Krishtulco"), of which he is sole shareholder. ( Id. ¶ 27.)
When Krishtul first purchased the Co-op in 1994, he obtained a loan from the developer in the amount of $125, 000. (2/19/13 Tr. at 59:22-60:3.) In 2002, Krishtul obtained another loan secured by the Co-op in the amount of $125, 000 from Emigrant Mortgage Company, Inc. (the "Emigrant Loan"). (Joint Stip. of Facts ¶ 3.) His reasons for obtaining the Emigrant Loan appear to stem from his divorce. ( See 2/19/13 Tr. at 59:10-13 ("This was due to divorce because I had a very bitter situation which involved both state supreme court as well as family court."); id. at 60:7 ("[M]y hands were tied because of my family situation.").) Krishtul failed to pay the Emigrant Loan and Emigrant Mortgage Company instituted a nonjudicial co-op foreclosure. (Joint Stip. of Facts ¶ 3.) To prevent foreclosure, Krishtul obtained a one-year loan in the amount of $250, 000 from Anotoly Lipkin ("Lipkin") in April or May 2006 (the "Lipkin Loan"), which was due in full on February 17, 2007. ( Id. ¶¶ 4-5; 2/19/13 Tr. at 26:10-18.) Krishtul used the Lipkin Loan to satisfy the $125, 000 Emigrant Loan, to pay $50, 000 in child support, and to finance the fees and costs associated with the transaction. (2/19/13 Tr. at 60:16-25.) Around January 2007, Krishtul sought to refinance the Lipkin Loan. ( Id. at 27:21-24.) At some point, under circumstances that the parties contest, ...