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Aurora Commercial Corp. v. Approved Funding Corp.

United States District Court, S.D. New York

April 9, 2014

AURORA COMMERCIAL CORP., Plaintiff,
v.
APPROVED FUNDING CORP., Defendant.

Christopher P. Carrington, Foster Graham Milstein & Claisher, LLP, Denver, Co., Counsel for Plaintiff,

Approved Funding Corp., c/o Shmuel Shayowitz, President, River Edge, NJ, Defendant.

OPINION & ORDER

ROBERT P. PATTERSON, Jr., District Judge.

On December 18, 2013, Plaintiff Aurora Commercial Corp. (the "Plaintiff" or "Aurora") moved pursuant to Federal Rule of Civil Procedure 56 for summary judgment in its favor and against Defendant Approved Funding Corp. (the "Defendant" or "Approved"). (Pl.'s Mot. for Summary J. ("Pl.'s Mot."), ECF No. 63.) This motion is unopposed and for the reasons stated below, the motion is granted, and the Plaintiff is awarded its full damages in the amount of $134, 545.88, plus pre- and post-judgment interest, attorney fees, and costs.

I. BACKGROUND

Aurora[1] is formerly known as Lehman Brothers Bank, FSB ("LBB"). (Pl.'s Rule 56.1 Stmt ("56.1 Stmt") ¶ 1, ECF No. 62.) Part of LBB's business in 2007 was to purchase mortgage loans as part of the mortgage-backed securities market. (Id.) Approved originated and sold mortgage loans in 2007. (Id.) LBB purchased a series of loans from Approved, including Loan Number ****3030, to borrower Hyman Sitko, ("the Sitko loan"), a second position mortgage on the property located at 16 Amsterdam Avenue, Monsey, New York, 10952 (the "Property") with an original loan amount of $120, 000. (Id. ¶¶ 2, 5, 12, 13; Decl. of Helen M. Placente ("Placente Decl."), Dec. 18, 2013, ECF No. 64; Placente Decl. Ex. 3 ("Mortgage Note"); Placente Decl. Ex. 4 ("Purchase Advice").)

The sale of the Sitko loan is governed by a Loan Purchase Agreement, which incorporates the terms of the applicable Seller's Guide from affiliated company Aurora Loan Services, Inc. (56.1 Stmt ¶¶ 3, 6-10; Placente Decl. Ex. 1 ("Loan Purchase Agreement"); Placente Decl. Ex. 2 ("Seller's Guide").) The Loan Purchase Agreement and the Seller's Guide contain certain warranties and representations by Approved, including a warranty that none of the loans in the transaction, including the Sitko loan, were subject to an early payment default (first or second payment not made by the borrower by the due date). (56.1 Stmt ¶¶ 6-10; Loan Purchase Agreement § 2 (Incorporation of Seller's Guide); Seller's Guide §§ 703(1) (seller represents that all payments under the mortgage loan are current); 703(18) (seller represents that there are no defaults existing under the mortgage); 715 (defining early payment default).) Approved agreed that if any of the loans in the transaction suffered an early payment default, then Approved would repurchase the defaulting loan. (Seller's Guide §§ 710, 715.) The Sitko loan suffered from an early payment default. (56.1 Stmt ¶¶ 15-17; Placente Decl. Ex. 5 ("Pay History").) Aurora, as predecessor to LBB, submitted a repurchase demand on May 15, 2007 demanding repurchase of the Sitko loan. (56.1 Stmt ¶ 18; Placente Decl. Ex. 6 ("Repurchase Demand").) Approved did not repurchase the Sitko loan. (56.1 Stmt ¶ 18.)

Sitko, the borrower, executed a short sale of the subject Property for $310, 000, which amount represented less than the value of the first mortgage. (56.1 Stmt ¶ 19; Placente Decl. Ex. 7 ("Order to Show Cause on Stay of Foreclosure/Auction"), at 4.) The Sitko loan at issue here was a second mortgage on the Property. After the short sale, Aurora and LBB determined that there was insufficient equity to provide collateral for the Sitko loan, and entered a charge-off of the loan on February 25, 2008. (Placente Decl. ¶ 27.)

Aurora filed the instant lawsuit on January 10, 2013 on the grounds that Approved breached its obligations under the Loan Purchase Agreement and the Seller's Guide to repurchase the Sitko loan. (Compl., ECF No. 1.) On February 19, 2013, Approved filed a motion to dismiss the complaint based on res judicata, first to file doctrine, and forum non conveniens. (Def. Mot. to Dismiss Compl. ("Def. Mot. Dismiss") 2-4, ECF No. 7.) This Court denied Approved's motion to dismiss from the bench. (Tr. of May 23, 2013 Hr'g ("Hr'g Tr. 5/23/13"), ECF No. 19.) On August 28, 2013, Approved filed a motion to transfer venue to the District of New Jersey. (Def.'s Mot. to Change Venue to Dist. of New Jersey ("Def.'s Venue Mot."), ECF No. 36.) This Court denied the motion to transfer venue from the bench on October 2, 2013. (Tr. of Oct. 2, 2013 Hr'g ("Hr'g Tr. 10/2/13").)

On December 3, 2013, Approved's counsel filed a motion to withdraw. (Def.'s Mem. of Law in Supp. of Mot. for Scott McCleary to Withdraw ("Mot. to Withdraw"), ECF No. 53.) The Court issued an Order giving Approved until December 9, 2013 to appoint new counsel. (Order, Dec. 6, 2013, ECF No. 55.) Approved failed to do so. On December 16, 2013, the Court ordered Approved to "retain counsel immediately or face a summary judgment granted on Defendant's failure to file opposition papers." (Order, Dec. 16, 2013, ECF No. 56.) Approved failed to retain new counsel. The instant motion for summary judgment was filed by Aurora on December 18, 2013, and served on Approved. (Pl.'s Mot. at 9.) On December 19, 2013, the Court granted Approved's counsel's motion to withdraw. (Order, Dec. 19, 2013, ECF No. 65.) As of April 8, 2013, Approved had not retained new counsel or filed any opposition to Aurora's summary judgment motion. The Court thus treats the Plaintiff's motion for summary judgment as unopposed.

II. MOTION FOR SUMMARY JUDGMENT

A. Legal Standard

Summary judgment is appropriate when "there is no genuine issue as to any material fact and....the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). An issue of fact is genuine when "a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby , 477 U.S. 242, 250 (1986). It is the movant's burden to show that no genuine factual dispute exists. Adickes v. S.H. Kress & Co. , 398 U.S. 144, 157 (1970).

The moving party has the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrates the absence of a genuine issue of material fact." Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986). In determining whether the moving party has met its burden of showing the absence of a genuine issue for trial, the court may not rely solely on the statement of undisputed facts contained in the moving party's Rule 56.1 statement, but must be satisfied that citations to evidence in the record support the assertions. Vermont Teddy Bear Co. v. ...


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