Cendant Mortg. Corp. v. Saxon Nat. Mortg.
| Decision Date | 03 April 2007 |
| Docket Number | No. 99 CV 3161 ADS MLO.,99 CV 3161 ADS MLO. |
| Citation | 492 F.Supp.2d 119 |
| Parties | CENDANT MORTGAGE CORPORATION d/b/a PHH Mortgage Services Corporation, Plaintiff, v. SAXON NATIONAL MORTGAGE, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Certilman, Balin, Adler & Hyman, LLP, East Meadow, NY (Candace Reid Gladston, Thomas J. McNamara, of Counsel), for Plaintiff.
Wolf & Wolf, Hauppauge, NY (Edward L. Wolf, of Counsel), Poli & Lamura, Northport, NY (John G. Poli, of Counsel), Dollinger, Gonski & Grossman, Carle Place, NY (Matthew Dollinger, of Counsel), for the Defendant.
Currently pending before the Court are objections by the Plaintiff Cendant Mortgage Corporation, d/b/a PHH Mortgage Services Corporation ("PHH" or the "Plaintiff') and the Defendant Saxon National Mortgage ("Saxon" or the "Defendant") to a report and recommendation (the "Report") issued by Chief United States Magistrate Judge Michael L. Orenstein.
Although the Court assumes the parties are familiar with the lengthy procedural and factual background of this case, in the interests of clarity, the Court will restate the pertinent history.
On June 4, 1999, PHH, an institutional investor, commenced this action against Saxon, a licensed mortgage banker, seeking specific performance and damages under a Wholesale Mortgage Purchase Agreement (the "Agreement") entered into by the parties on April 21, 1997. Pursuant to the Agreement, the Plaintiff agreed to purchase from the Defendant both government and conventional first mortgage loans. Acting under the Agreement, Saxon sold 13 mortgage loans to Cendant. The Plaintiff claimed that all of the loans contained misrepresentations concerning the borrowers' employment or income in the originating mortgage loan documentation, thereby constituting a breach of the representation and warranty provisions of the Agreement. Pursuant to the terms of the Agreement, as a result of the alleged breach, Saxon was required to repurchase the loans.
On July 17, 2000, PHH moved for summary judgment asserting that the Defendant breached the terms of the Agreement and was liable to the Plaintiff for specific performance and damages. By Memorandum of Decision and Order, dated November 13, 2000, United States District Judge Jacob Mishler found no genuine issue of material fact "on the issue of liability although there is a genuine issue as to the amount of damages." As a result, Judge Mishler granted the Plaintiffs motion on the issue of liability and directed that a trial be held on the issue of damages. On November 28, 2000, the Defendant moved for reconsideration of the November 13, 2000 Decision with regard to the issue of liability. On December 8, 2000, Judge Mishler denied the Defendant's motion for reconsideration.
On December 18 and 28, 2000, the Plaintiff presented evidence on the issue of damages at a bench trial before Judge Mishler. The Plaintiff withdrew three causes of action in connection with three loans. Thus, PHH calculated the compensation due from the Defendant in connection with ten loans. In addition, the Plaintiff submitted an affidavit regarding attorneys' fees incurred and recoverable by the Plaintiff in the action pursuant to the Agreement. After the bench trial, both parties submitted post-trial memoranda of law.
By Memorandum of Decision and Order, dated February 14, 2001, Judge Mishler granted specific performance to the Plaintiff with regard to the loans known as the Craft, Diaz, Salazar and Wright loans and damages on the Vasquez and Munoz loans in the amount of $198,769.22. Subsequently, on February 18, 2001, Judge Mishler issued an Order modifying the February 14, 2001 Decision and granting the Plaintiff specific performance with respect to the Jeffrey, Ramirez, Rodriguez and Statkevicus loans as well.
On February 28, 2001, Judge Mishler rendered a Judgment (the "Original Judgment") that directed Saxon to deposit the sum of $1,893,431.85, together with interest from January 1, 2001, in PHH's escrow account. In return, PHH was ordered to transfer back to Saxon eight of the mortgages that it had previously sold to PHH. In addition to the specific performance remedy, the Original Judgment awarded monetary damages to PHH in the amount of $198,769.22 and attorneys' fees in the sum of $59,383.13. The Original Judgment further provided that if Saxon failed to make the deposit to PHH's escrow account, "the Court will grant such additional relief as it deems appropriate."
On March 14, 2001, the case was reassigned to this Court and on March 16, 2001, the Defendant moved, pursuant to Rules 52, 59(a)(2), and 60(b) of the Federal Rules of Civil Procedure ("Fed. R. Civ.P.") for a new trial, and to be relieved from the terms of the Judgment. On September 18, 2004, this Court denied the Defendant's motion, finding that the Defendant had not demonstrated that Judge Mishler's findings of fact and conclusions of law were based on a mistake of fact or clear error of law. In addition, the Court found that Judge Mishler's verdict in favor of the Plaintiff was supported by substantial evidence.
On December 30, 2004, Saxon filed a second motion pursuant to Fed.R.Civ.P. 60(b) seeking relief from the Judgment. PHH also moved under Rule 60(b) to amend the Judgment due to a change in circumstances. On August 13, 2005, the Court issued an Order that denied the second motion by the Defendant and granted the Plaintiffs motion to amend the Judgment due to a change in circumstances. The Court found that during the three years that Saxon's first motion for reconsideration was pending, six of the mortgages were satisfied by the mortgagors. In addition, PHH had foreclosed on the "Diaz" and "Salazar" mortgages and sold the properties. In these transactions, the "Salazar" property was sold for $28,476.64 in excess of the amount due under the loan, and the "Diaz" property was sold at a loss of $185,656.33.
Recognizing the change in circumstances, the Court granted the Plaintiffs motion; denied the Defendant's motion; cancelled the specific performance part of the judgment; and awarded PHH monetary damages and attorneys' fees "in the same amount [as was] awarded in the [O]riginal Judgment." Although this Court specifically awarded monetary damages in the amount of $209,967.72, this award was made in error. The Court had intended to award $198,769.22, the same damages as were awarded by Judge Mishler in the Original Judgment.
On August 15, 2005, this Court entered an Amended Judgment, setting forth the $209,967.72 monetary damages award. On August 23, 2005, following the entry of the Amended Judgment, the Defendant filed a notice of appeal. On August 25, 2005, the Defendant filed a third motion under Rules 59(e), 60(a) and (b)(1), (2) and 62(b) of the Fed.R.Civ.P. for relief from the Amended Judgment. The Defendant requested that the Court decrease the amount of damages to $10,067.32. The Defendant claimed that the August 2005 Order stated that "PHH does not seek any damages from the loss it sustained on the sale of the `Diaz' property," and therefore, it should not be liable for the sum of $185,656.33, which is the amount reported lost by PHH on the Diaz loan.
The Plaintiff objected to the Defendant's motion and cross-moved for additional attorneys' fees that were incurred prior to the entry of the Amended Judgment. PHH claimed that the award of damages in the Amended Judgment properly included damages for the Diaz property, even though the Order stated otherwise. The Plaintiff argued that the Court misstated "PHH does not seek any damages from the loss it sustained on the sale of the `Diaz' property."
On January 26, 2006, this Court determined that it had erred in awarding damages in the amount of $209,967.72. The Court held that the correct amount of damages was $198,769.22 and that it had not intended to award anything in addition to that sum set forth in Judge Mishler's February 2001 Order. The Court further noted that "[t]o the extent that PHH believes that the Amended Judgment awarded damages for the Diaz property, notwithstanding the Order's explicit direction to the contrary, the Court hereby vacates the Amended Judgment." The Court determined that any other request for damages by the Plaintiff, including a request for damages related to the Diaz mortgage, required a hearing before United States Magistrate Judge Michael L. Orenstein. As a result, this Court granted the Defendant's motion for reconsideration; vacated the August. 15, 2005 Amended Judgment; and referred the Plaintiffs application for additional damages to Judge Orenstein for a hearing and Report.
On March 17, 2006, pursuant to this Court's January 26, 2006 Order, Judge Orenstein held a hearing with regard to damages that the Plaintiff sustained after the entry of the Original Judgment. Judge Orenstein noted that the parties focused their attention on damages related to the Diaz mortgage. He found that during the pendency of this action, the Plaintiff brought the Diaz mortgage to foreclosure and purchased the property at the foreclosure sale. According to the Referee's Deed, the Plaintiff paid $200,000 on August 11, 2000. However, Judge Orenstein found that, according to the Defendant's exhibits, in a Broker Price Opinion ("BPO"), the Plaintiffs broker valued the property at $325,000 on June 28, 2000. Judge Orenstein further noted that on December 7, 2000, the BPO was $150,000, with a BPO loss of value of $175,000 in five months. Relying on various exhibits submitted by the Plaintiff, Judge Orenstein noted that the Plaintiff claimed that the property's loss of BPO value was attributed to maintenance and cleanup costs, as well as the costs of evicting tenants.
The magistrate judge further found that in March 2001, the Plaintiff entered into a contract for sale of the Diaz property for $150,000....
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