United States District Court, S.D. New York
MEMORANDUM OPINION & ORDER
J. NATHAN UNITED STATES DISTRICT JUDGE.
matter was referred to the bankruptcy court. See
12-mc-32. The bankruptcy court issued its proposed findings
of fact and conclusions of law in June 2017, and they were
submitted to this Court on August 3, 2017. See Dkt.
No. 1 (Bankr. Op.). No. objections have been filed. For the
reasons below, the Court affirms the bankruptcy court's
2005, Debtor Philip Michael Scott, along with Defendants
Barbara Campbell and Marlene Gaethers-Langley, purchased real
property located in Scarsdale, New York. Bankr. Op. at 13. To
finance that purchase, Campbell borrowed $725, 000 from
Finance America, LLC, executed a note, and secured the loan
with a mortgage that Gaethers-Langley and the Debtor also
executed. Id. Finance America assigned the mortgage
to JP Morgan Chase Bank, N.A. ("Chase"), which
assigned the mortgage to Defendant Bank of New York Mellon
("BNY"). Id. Defendant Ocwen Loan
Servicing ("Ocwen") services the loan for BNY.
defaulted on the loan in 2008 and Chase commenced a
foreclosure action that resulted in the entry of a judgment
of foreclosure and a sale on March 16, 2009. Id. at
13-14. In June 2016, Ocwen and BNY filed a notice of
foreclosure and sale in New York state court and scheduled a
sale of the property for July 22, 2016. Id. at
14-15. However, that sale did not go forward because the
Debtor filed a petition under chapter 13 of the Bankruptcy
Code before the sale was scheduled to occur, thereby
automatically staying the sale. Id. at 15.
Debtor alleges that in 2014, Ocwen purchased an insurance
policy covering the property from Defendant American Security
Insurance Company ("ASIC"). Id. at 2, 16.
On December 31, 2014, a fire destroyed the property.
Id. at 2, 16. The Debtor asserts that after the
fire, ASIC paid the insurance proceeds to Ocwen in full
satisfaction of the note and mortgage, but he alleges that
BNY and Ocwen have wrongfully failed to credit those
instruments for the amounts paid and to issue a satisfaction
of the mortgage. Id. at 2, 16-17.
Debtor seeks money damages based upon violations of common
law, state law, and federal law, and he seeks a declaratory
judgment establishing that the mortgage was paid in full and
that the mortgage and judgment of foreclosure and sale
entered in 2009 are null and void. Id. at 3, 17.
Specifically, the Debtor brings claims for conversion,
embezzlement, breach of contract, constructively fraudulent
conveyances under New York Debtor and Creditor Law ("NY
DCL"), violations of the New York General Business Law,
and violations of the Fair Debt Collection Practices Act
("FDCPA") against ASIC, BNY, and Ocwen. See
Id. at 3-4, 17. The Debtor also seeks damages against
Ocwen based on its failure to credit the loan balance with
the insurance proceeds and against BNY for its failure to
record a satisfaction of mortgage and judgment as required by
New York law. See Id. at 4, 18. The Debtor also
asserts claims against Defendants Erwin Veneer and McCabe,
Weisberg & Conway, P.C. ("McCabe") for
violations of the FDCPA. See Id. at 4, 18. Campbell
and Gaethers-Langley (together, the
"Cross-Claimants") filed cross complaints.
Id. at 3.
Ocwen moved to dismiss the complaint and cross-complaints;
ASIC filed an answer and moved for judgment on the pleadings
dismissing the complaint and cross-complaints; and McCabe and
Veneer moved to dismiss the complaint and cross-complaints
or, in the alternative, for summary judgment. See
Id. at 4-5.
REFERRAL TO BANKRUPTCY COURT
United States District Court for the Southern District of New
York referred this matter to the bankruptcy court.
See 12-mc-32; 28 U.S.C. § 157.
proceeding has been referred, "[t]he manner in which a
bankruptcy judge may act. . . depends on the type of
proceeding involved." Stern v. Marshall, 564
U.S. 462, 473 (2011). A bankruptcy court may enter final
judgment in a core proceeding referred to it, subject to
appellate review by the district court. 28 U.S.C. §
157(b)(1); see Stern, 564 U.S. at 474-75. By
contrast, in a non-core proceeding that is "otherwise
related to a case under title 11, " the bankruptcy court
"shall submit proposed findings of fact and conclusions
of law to the district court, and any final order or judgment
shall be entered by the district judge after considering the
bankruptcy judge's proposed findings and conclusions and
after reviewing de novo those matters to which any party has
timely and specifically objected." 28 U.S.C. §
157(c)(1); see also Fed. R. Bankr. P. 9033(d)
("The district judge shall make a de novo review upon
the record or, after additional evidence, of any portion of
the bankruptcy judge's findings of fact or conclusions of
law to which specific written objection has been made in
accordance with this rule. The district judge may accept,
reject, or modify the proposed findings of fact or
conclusions of law, receive further evidence, or recommit the
matter to the bankruptcy judge with instructions.").
bankruptcy court held hearings on the motions to dismiss
filed in response to the complaint and cross-complaints.
See Bankr. Op. at 6.
court concluded that the Debtor and the Cross-Claimants lack
standing to assert claims under the NY DCL and thus dismissed
those claims. See Id. at 23-27, 36. The bankruptcy
court also concluded that it had neither core nor non-core
jurisdiction to consider the Cross-Claimants' non-NY DCL
cross-claims, so it dismissed those claims as well. See
Id. at 36-38. However, the court concluded that it had
jurisdiction over the Debtor's non-NY DCL claims because
they were non-core claims that were otherwise related to a
case under title 11. See Id. at 27-35. Although
ASIC, Ocwen, and BNY consented to the bankruptcy court's
entry of a final order, the Debtor did not. See Id.
at 36. Accordingly, the bankruptcy court treated its decision
as proposed findings of fact and conclusions of law. See
2017, the bankruptcy court filed its proposed findings of
fact and conclusions of law. Following the objection period,
the proposed findings and conclusions were transmitted to