Opinion
CV 19-2048 (GRB) CV 19-2053 (GRB)
2021-03-31
IN RE Marilyn MADER, Debtor, Marilyn Mader, Appellant, v. JPMorgan Chase Bank, N.A., Appellee.
Tammy Terrell Benoza, Fein, Such, Kahn & Shepard P.C., Parsippany, NJ, Kevin M. Butler, Stephen E. Zaino, Bonchonsky and Zaino, LLP, Garden City, NY, for Appellee. Alfred M. Dimino, U.S. Department of Justice, Office of the United States Trustee, Central Islip, NY, for Trustee. Richard L. Stern, Islandia, NY, Pro Se.
Tammy Terrell Benoza, Fein, Such, Kahn & Shepard P.C., Parsippany, NJ, Kevin M. Butler, Stephen E. Zaino, Bonchonsky and Zaino, LLP, Garden City, NY, for Appellee.
Alfred M. Dimino, U.S. Department of Justice, Office of the United States Trustee, Central Islip, NY, for Trustee.
Richard L. Stern, Islandia, NY, Pro Se.
MEMORANDUM & ORDER
GARY R. BROWN, United States District Judge:
The instant case involves two separate appeals from orders in the voluntary bankruptcy proceeding of debtor Marilyn Mader (hereinafter "debtor" or "appellant" or "Mader") under Chapter 7 of the Bankruptcy Code, in the United States Bankruptcy Court for the Eastern District of New York (hereinafter the "Bankruptcy Court"), against JPMorgan Chase Bank, N.A. (hereinafter "creditor" or "appellee" or "JPMorgan Chase"). Specifically, in her first appeal, CV 19-2048 (GRB) filed on April 8, 2019, Mader, proceeding pro se, appeals from an order of the Honorable Louis A. Scarcella dated March 22, 2019, which granted JPMorgan Chase's motion for relief from the automatic stay in the bankruptcy case pursuant to Section 362 of the Bankruptcy Code, 11 U.S.C. § 362(d). In her second appeal, CV 19-2053 (GRB) filed on April 8, 2019, Mader appeals from an order of Judge Scarcella dated March 22, 2019, denying her motion for reconsideration of the Bankruptcy Court's prior order dated February 5, 2019 pursuant to Rule 60(b) of the Federal Rules of Civil Procedure ("Rule 60(b)"), wherein Judge Scarcella terminated the court's loss mitigation program with respect to Mader's mortgage loan with JPMorgan Chase. For the reasons set forth below, the Court affirms the rulings of the Bankruptcy Court in all respects.
BACKGROUND
Familiarity with the record of the Bankruptcy Court in the underlying proceedings is assumed. The following facts and procedural history are derived from the parties' briefs and the bankruptcy record
References to the Bankruptcy Records filed in the two separate appeals will be to the Appendix to Appellee's Brief in CV 19-2053, DE 23-1, which incorporates all the records filed in the two appeals.
(a) Facts
On March 22, 2002, Mader executed a note in the amount of $100,875 to Washington Mutual Bank, FA ("Washington Mutual") secured by a mortgage executed on the same day against her property located at 7 Federal Lane, Coram, New York (the "Property"). See DE 23-1, at 23-53. The mortgage was recorded on April 22, 2002. Id. at 23.
On March 12, 2003, Mader executed a second note and mortgage in the amount of $50,037.41 to Washington Mutual secured against the Property. The second mortgage was recorded on April 2, 2003. Id. at 54-86. On the same day, Mader executed a Consolidation, Extension and Modification Agreement, which consolidated the two notes and mortgages to form a single lien in the amount of $150,000 (the "Modification Agreement"). Id. at 87-125. The Modification Agreement was recorded on April 2, 2003. Id. at 87.
On January 15, 2004, Mader executed a third note and mortgage in the amount of $35,290.14 to Washington Mutual secured against the Property. The third mortgage was recorded on February 2, 2004. Id. at 135-36. On the same day, Mader executed a further Consolidation, Extension and Modification Agreement, which consolidated all three notes and mortgages to form a single lien in the amount of $183,750 (the "Second Modification Agreement"). Id. at 136-80. The Second Modification Agreement was recorded on February 10, 2004. Id. at 136.
The notes and mortgages, as consolidated in the Second Modification Agreement, were assigned to JPMorgan Chase by assignment dated February 10, 2013 (the "Assignment"). The Assignment was recorded on October 4, 2013. Id. at 181-85.
As of January 31, 2019, Mader was in default for 74 months (since December 2012). Id. at 187-88. Throughout that time, JPMorgan Chase advanced and paid the Property real estate taxes and homeowner's insurance on behalf of Mader. Id. During the 74-month period of default, Mader's escrow account balance accrued to negative $40,900.02. Id. at 196.
According to JPMorgan Chase's payoff letter dated December 18, 2018, Mader owed the sum of $307,198.84 through January 5, 2019. Id.
According to Mader's Bankruptcy Schedule A, the Property had a value of $160,000. Id. at 213.
(b) Procedural History
On January 12, 2018, appellant filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code in the Bankruptcy Court. In re Mader, Bankruptcy Petition No. 18-70291 (LAS) (E.D.N.Y.); see DE 23-1 at 241-75.
On February 14, 2018, Mader filed a request for loss mitigation. See DE 23-1 at 276. By Order dated March 26, 2018, the Bankruptcy Court directed Mader and JPMorgan Chase to participate in the court's loss mitigation program. Id. at 277-87. JPMorgan Chase sent a Loss Mitigation Contact Designation with Loan Modification Application to Mader on March 28, 2018. Id. at 288-301.
JPMorgan Chase filed a loss mitigation status report on May 8, 2018, stating that it never received a loss mitigation application from Mader. Id. at 302. The report further stated that Mader's loan account
was reviewed for a "stream-lined" modification, but she was denied. Id. JPMorgan requested that the loss mitigation program be terminated. Id.
JPMorgan Chase filed a loss mitigation status report on June 15, 2018, stating that it had forwarded a copy of the denial letter to Mader's counsel for review with additional details concerning the program and reasons for Mader's disqualification. Id. at 303-19. The report further requested that the loss mitigation program be terminated. Id.
JPMorgan Chase filed a loss mitigation status report on August 6, 2018, stating that it had provided a payoff statement, reinstatement quote, pay history and escrow information to Mader's counsel. Id. at 320. The report stated that Mader's loan account had been reviewed for loss mitigation and her request for a loan modification was denied for the reasons stated in the previous status report filed June 15, 2018. Id. The report further requested that the loss mitigation program be terminated. Id.
On September 6, 2018, Mader filed an objection to the request for termination of loss mitigation. Id. at 321-34.
The Bankruptcy Court held a loss mitigation status conference on September 11, 2018. Id. at 336-57. JPMorgan Chase advised the court that (i) it had reviewed Mader's loan account under the loss mitigation program twice but denied her application because JPMorgan Chase could not create an affordable payment on the previously modified loan; and (ii) the requested loan statements had been sent to Mader's counsel. Id. at 336-37. Mader informed the court that she was proceeding pro se in this matter. Id. at 350-52. The court adjourned the conference to October 30, 2018 and directed JPMorgan Chase to appear with a representative with personal knowledge of the Mortgage loan. Id.
At the status conference on October 30, 2018, JPMorgan Chase appeared with a representative with personal knowledge of the loan. Id. at 367-74. The conference was adjourned twice thereafter to allow Mader additional time to review a further detailed denial letter that JPMorgan Chase sent to Mader on October 26, 2018. Id. at 369-71.
At the status conference on December 18, 2018, JPMorgan Chase appeared with a representative with personal knowledge of the loan. Id. at 377-94. At the conference, Mader raised an issue concerning a mortgage statement dated November 8, 2018 documenting a monthly escrow amount payment of $1,032.45. Id. at 378-79. The court adjourned the conference to January 31, 2019 for an evidentiary hearing to address issues concerning appellant's negative escrow balance and monthly escrow payments, and to determine whether the loss mitigation program should be terminated. Id. at 388-89.
At the evidentiary hearing on January 31, 2019, Mader appeared with counsel. Id. at 397-454. The court considered the request to terminate the loss mitigation program, stating preliminarily as follows:
So now I return to what is the heart of the dispute. I think one thing we can all agree on is that the Court cannot force the mortgagee to modify the mortgage. That, they need to do on their own volition in accordance with whatever program that they may have in place with respect to the particular homeowner and the request to modify the mortgage was denied. They only have one program available, Ms. Mader wasn't eligible for that program and the appeal was also upheld.
Id. at 408. The court then heard testimony from JPMorgan Chase's representative who explained the escrow analysis of Mader's mortgage and the increase in escrow
payments due to the inclusion of the monthly taxes and insurance on the Property. Id. at 410-22.
Following the testimony at the hearing, the court stated as follows:
After careful consideration of the arguments that have been presented to me today and after listening to the testimony of this afternoon, I am satisfied with the explanation from J.P.Morgan Chase as to how the escrow balance is in excess of $1,000 on the mortgage statement. That excess of $1,000 on the mortgage takes into account the current escrow payment that Ms. Mader would be obligated to make plus the monthly shortfall because J.P. Morgan Chase has taken the escrow shortfall, i.e., the monies that they have paid out on behalf of Ms. Mader, the customer, for insurance and taxes. They have this lump sum that they have paid out and they are spreading that out over 48 months so when you calculate the spread over 48 months and take that number and you add it to the current escrow payment that's why the mortgage statement reflects an escrow payment in excess of $1,000.
Id. at 443-44. The court concluded that, after careful consideration of the arguments and testimony, the loss mitigation program should be terminated. Id. at 444.
On February 5, 2019, the court entered an order terminating loss mitigation with respect to Mader's mortgage with JPMorgan Chase. Id. at 459-60. Mader did not appeal the order, but on February 15, 2019, Mader filed a one-page motion for reconsideration of the February 5, 2019 order terminating loss mitigation. Id. at 20-22. On February 18, 2019, JPMorgan Chase filed a motion for relief from the automatic stay, and on March 6, 2019, Mader filed an "Objection to Notice of Motion for Relief." Id. at 461-732.
The Bankruptcy Court held a hearing on March 19, 2019 on Mader's motion for reconsideration, and on JPMorgan Chase's motion for relief from the automatic stay. Id. at 733-65. Following this hearing on March 22, 2019, the Bankruptcy Court denied Mader's motion for reconsideration and granted JPMorgan Chase's motion for relief from the stay (the "Stay Relief Order"). Id. at 766-69; see DE 5 at 11-12.
Lastly, Mader filed a Notice of Appeal from the order denying her motion for reconsideration and from the order granting JPMorgan Chase relief from the automatic stay on April 5, 2019. DE 23-1, at 13-19.
The Court has fully considered all the submission of the parties.
DISCUSSION
A. Standard of Review
District Courts have appellate jurisdiction over "final judgments, orders, and decrees" of a bankruptcy court pursuant to 28 U.S.C. § 158(a)(1). See 28 U.S.C. § 158(a)(1). A district court may "affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree," or it may remand with instructions for further proceedings. Fed. R. Bank. P. 8013. On appeal, a district court reviews the bankruptcy court's findings of fact for clear error and its conclusions of law de novo. See In re Hyman, 502 F.3d 61, 65 (2d Cir. 2007); see also Odums, III v. Wells Fargo, N.A., No. CV 20-1100 (AMD), 2021 WL 918323, at *2 (E.D.N.Y. Mar. 10, 2021) ("On appeal, a district court reviews the legal conclusions of a bankruptcy court "de novo, and its factual findings for clear error.").
"A finding of fact is clearly erroneous when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been
committed." District Lodge 26, Int'l Ass'n of Machinists & Aerospace Workers, AFL-CIO v. United Techs. Corp., 610 F.3d 44, 51 (2d Cir. 2010) (internal quotation marks and citations omitted). The clearly erroneous standard requires "strong deference" to "findings of fact based on credibility assessments of witnesses [the court] has heard testify." In re Pisculli, 426 B.R. 52, 59 (E.D.N.Y. 2010), aff'd, 408 F. App'x 477 (2d Cir. 2011). Moreover, "[a]n appellate court cannot substitute its interpretation of the evidence for that of the trial court simply because the reviewing court might give the facts another construction [and] resolve the ambiguities differently." Id. at 68 (alterations in original).
Finally, the Court reviews the Bankruptcy Court's decisions (1) to lift the automatic stay, and (2) to deny a motion for reconsideration under Rule 60(b) for abuse of discretion. See In re Dairy Mart Convenience Stores, Inc., 351 F. 3d 86, 91 (2d Cir. 2003) ("The decision to lift an automatic stay is left to the discretion of the bankruptcy court, and this Court will review that decision for abuse of discretion."); Odums, III, 2021 WL 918323, at *2 ("A bankruptcy order granting relief from an automatic stay ... [is] reviewed for abuse of discretion."); see also McMahon v. Chubb Group of Ins. Co., 553 F. App'x 85, 86 (2d Cir. 2014) ("We review the denial of a Rule 60(b) motion for reconsideration for an abuse of discretion.") (internal quotation marks and citation omitted); In re Carlton Concrete Corp., No. 08-CV-242 (JFB), 2008 WL 4443233, at *5 (E.D.N.Y. Sept. 26, 2008) ("This Court reviews the grant or denial by the Bankruptcy Court of a motion for relief from judgment pursuant to Rule 60(b) for abuse of discretion"). A court "abuses its discretion if it (1) bases its decision on an error of law or uses the wrong legal standard; (2) bases its decision on a clearly erroneous factual finding; or (3) reaches a conclusion that, though not necessarily the product of a legal error or a clearly erroneous factual finding, cannot be located within the range of permissible decisions." E.E.O.C. v. KarenKim, Inc., 698 F.3d 92, 99-100 (2d Cir. 2012) (internal quotation marks omitted).
B. Appeal from the March 22, 2019 Stay Relief Order
In her first appeal, CV 19-2048, Mader challenges the Bankruptcy Court's March 22, 2019 order lifting the stay to allow JPMorgan Chase to proceed with its foreclosure action on 7 Federal Lane, Coram, New York under 11 U.S.C. § 362(d). Mader argues that the Bankruptcy Court erred in granting JPMorgan Chase's motion to lift the automatic stay because the Court improperly terminated the loss mitigation program. See CV 19-2048, DE 15 at 1-2. Mader states in her reply papers, that "without being remanded back into the Mitigation Program" she does "not have grounds for a Stay." DE 31 at 10. For the reasons that follow, the Court finds that the Bankruptcy Court did not abuse its discretion when granting JPMorgan Chase relief from the automatic stay.
The relevant statute, 11 U.S.C. § 362(d), states as follows:
On request of a party of interest and after notice and a hearing, the court shall grant relief from the stay provided under the subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay —
(1) for cause, including lack of adequate protection of an interest in property of such party in interest; or
(2) with respect to a stay of an act against property under subsection (a) of this section —
(A) the debtor does not have an equity in such property and
(B) such property is not necessary to an effective reorganization.
(1) Party in Interest
Where, as here, "the movant claims rights as a secured creditor by virtue of an assignment of rights to a promissory note secured by a lien against real property," under New York law, to establish standing as a party in interest, the movant must produce "satisfactory proof of [movant's] status as the owner or holder of the note at issue." In re Escobar, 457 B.R. 229, 241 (Bankr. E.D.N.Y. 2011); see In re Fennell, 495 B.R. 232, 239 (Bankr. E.D.N.Y. 2012) (finding that a party "through its physical possession of the Note and Mortgage ... [has] met its burden establishing that it possesses standing to request relief from the automatic stay pursuant to § 362(d)"). The Bankruptcy Court properly determined under the Assignment and relevant mortgage documents with respect to the Property that JPMorgan Chase, as a secured creditor, was entitled to relief from the stay to allow appellee as mortgagee to exercise its rights and remedies under state law. DE 7-4 at 19-22. Accordingly, the Court concludes that the Bankruptcy Court properly determined JPMorgan Chase was a party of interest entitled to seek relief from the automatic stay pursuant to 11 U.S.C. § 362(d).
(2) Lifting the Automatic Stay
The Court next reviews whether the Bankruptcy Court abused its discretion by granting JPMorgan Chase relief from the automatic stay. In its review, this Court considers the "non-exclusive list of factors that may be relevant in determining whether an automatic stay should be lifted for 'cause' under § 362(d)(1)," as set forth by the Second Circuit in In re Sonnax Industries, Inc., 907 F.2d 1280 (2d Cir. 1990). See also Selig v. Druckman Law Group PLLC, No. 17-CV-4510 (JS), 2018 WL 3973013, at *6 (E.D.N.Y. Aug. 20, 2018). These factors include:
(1) whether relief would result in a partial or complete resolution of the issues; (2) lack of any connection with or interference with the bankruptcy case; (3) whether the other proceeding involves the debtor as a fiduciary; (4) whether a specialized tribunal with the necessary expertise has been established to hear the cause of action; (5) whether the debtor's insurer has assumed full responsibility for defending it; (6) whether the action primarily involves third parties; (7) whether litigation in another forum would prejudice the interests of other creditors; (8) whether the judgment claim arising from the other action is subject to equitable subordination; (9) whether movant's success in the other proceeding would result in a judicial lien avoidable by the debtor; (10) the interests of judicial economy and the expeditious and economical resolution of litigation; (11) whether the parties are ready for trial in the other proceeding; and (12) the impact of the stay on the parties and the balance of harms.
In re Sonnax, 907 F.2d at 1286.
The Court has considered these factors and concludes that cause existed to lift the automatic stay under § 362(d)(1). First, JPMorgan Chase established that there was cause for relief from the automatic stay as it is undisputed that Mader has not made a mortgage payment since December 31, 2012. See DE 24 at 17-18. "Courts in this Circuit have ruled that a debtor's failure to make mortgage payments can constitute sufficient cause to modify an automatic stay (as the debtor can be deemed to lack ... adequate protection of an interest in [the] property.").
Osuji v. Deutsche Bank, N.A., 589 B.R. 502, 511 (Bankr. E.D.N.Y. 2018) (internal quotation marks and citation omitted); see also In re Fennell, 495 B.R. at 289 (finding cause existed to lift the automatic stay when the debtor failed to make mortgage payments, and failed to "introduce [any] evidence to contradict [the] assertion that she is delinquent on her mortgage payments"). Mader, in her appeal, offers no evidence to contradict JPMorgan Chase's assertion that she was delinquent in her payments. Thus, the Court finds that the Bankruptcy Court did not abuse its discretion in granting JPMorgan Chase's motion and vacating the automatic stay pursuant to § 362(d)(1).
The Court also finds that the automatic stay was properly lifted pursuant to § 362(d)(2). As set forth above, an automatic stay may be lifted under § 362(d)(2) if "(A) the debtor does not have an equity in such property; and (B) such property is not necessary to an effective reorganization." 11 U.S.C. § 362(d)(2). JPMorgan Chase, as creditor, bears the burden of establishing the debtor has no equity in the Property; then the burden shifts to Mader, as debtor, to show the property is necessary to an effective reorganization. Osuji, 589 B.R. at 508. For these purposes, "a debtor lacks equity in a particular piece of property when the sum total of the claims secured by the property exceed its value." In re Ehrenfeld, No. 19-CV-8718, 2020 WL 5758819, at *4 (S.D.N.Y. Sept. 28, 2020) (internal quotation marks and citation omitted). Here, the creditor presented evidence of a payoff letter dated December 18, 2018, establishing that as of January 5, 2019, Mader owed JPMorgan Chase the sum of $307,198.84. It also demonstrated that according to the debtor's Schedule A, the Property was valued at $160,000. Thus, JPMorgan Chase met its burden of demonstrating lack of equity in the Property, given the mortgage debt far exceeded the value of the Property.
In addition, because Mader is seeking Chapter 7 bankruptcy, she seeks liquidation of her estate, not reorganization. See In re DBSD N. Am., Inc., 634 F.3d 79, 98 (2d Cir. 2010) (noting that Chapter 7 bankruptcy "involves a liquidation of the debtor, not a reorganization"). Hence, she cannot show that retention of the property is necessary to an effective reorganization.
Accordingly, the Court finds that the Bankruptcy Court did not abuse its discretion in lifting the automatic stay pursuant to either § 362(d)(1) or § 362(d)(2).
C. Appeal from the March 22, 2019 Order Denying Motion for Reconsideration
In her second appeal, CV 19-2053, Mader challenges the Bankruptcy Court's March 22, 2019 order, denying the motion for reconsideration of the court's prior order dated February 5, 2019 which terminated the court's loss mitigation program with respect to Mader's mortgage loan with JPMorgan Chase. See CV 19-2053, DE 1, 5. Mader argues the Bankruptcy Court abused its discretion in denying her motion for reconsideration because (1) the court failed to permit her to present new evidence at the March 19, 2019 hearing; and (2) JPMorgan Chase provided false evidence with respect to her escrow account at the January 31, 2019 evidentiary hearing (which was held to assist the court in deciding whether to terminate the court's loss mitigation program). Appellant's arguments are unavailing.
A motion for reconsideration is reviewed under Rule 60(b) of the Federal Rules of Civil Procedure, which is made applicable to bankruptcy proceedings pursuant to Rule 9024 of the Federal Rule of Bankruptcy Procedure. Fed. R. Bank. P.
9024; see In re Pinnock, 833 F. App'x 498, 501 (2d Cir. 2020). Rule 60(b) provides that the Court may relieve a party from a final judgment, order or proceeding due to:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud, ... misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief.
Fed. R. Civ. P. 60(b)(1)-(6). The Second Circuit has made clear that "[t]he standard for granting [a motion to reconsideration] is strict, and reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked ... that might reasonably be expected to alter the conclusion reached by the court." Massop v. U.S. Postal Serv., 493 F. App'x 231, 232 (2d Cir. 2012) (quoting Shrader v. CSX Transp. Inc., 70 F.3d 255, 257 (2d Cir. 1995)). "The burden of proof is on the party seeking relief from the judgment." United States v. Int'l Bhd. of Teamsters, 247 F.3d 370, 391 (2d Cir. 2001).
"[A]n appeal from an order denying a Rule 60(b) motion brings up for review only the denial of the motion and not the merits of the underlying judgment for errors that could have been asserted on direct appeal." Lora v. O'Heaney, 602 F.3d 106, 111 (2d Cir. 2010) (internal quotation marks and citations omitted). That is, a motion for reconsideration "is not a vehicle for relitigating old issues ... securing a rehearing on the merits, or otherwise taking a second bit at the apple." Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012) (internal quotation marks and citation omitted). "Since 60(b) allows extraordinary relief, it is invoked only upon a showing of exceptional circumstances." Id.; see Massop, 493 F. App'x at 232 (holding a motion for reconsideration "will not be granted absent the demonstration of extraordinary circumstances") (internal quotation marks and citation omitted). In considering relief under Rule 60(b), the Court must weigh the need for substantial justice against the value of "preserving the finality of judgments." Nemaizer v. Baker, 793 F.2d 58, 63 (2d Cir. 1986). For the following reasons, the Court finds that the Bankruptcy Court did not err in denying appellant's motion for reconsideration on the grounds of presentation of new evidence or alleged false evidence by the appellee.
(1) Newly Discovered Evidence Under Rule 60(b)(2)
To prevail on a motion for reconsideration on the grounds of newly discovered evidence, the movant must establish "(1) the newly discovered evidence was of facts that existed at the time of trial or other dispositive proceeding, (2) the movant must have been justifiably ignorant of them despite due diligence, (3) the evidence must be admissible and of such importance that it probably would have changed the outcome, and (4) the evidence must not be merely cumulative or impeaching." Metzler Investment Gmbh v. Mexican Grill, Inc., 970 F.3d 133, 147 (2d Cir. 2020) (quoting Int'l Bhd. of Teamsters, 247 F.3d at 392).
As set forth below, a review of the transcript of the March 19, 2019 proceeding
makes clear that Judge Scarcella gave Mader a fair and full opportunity to present new evidence and correctly concluded that she had failed to meet the stringent standard for reconsideration of his prior order:
THE COURT: Your motion is barren. What I mean is that there is nothing attached to the motion, with respect to what additional evidence and documentation you have.... There is nothing attached to your motion, concerning what false testimony was given to the Court. So what you're asking for is a do-over. So let me hear you, very briefly, tell me what is this additional evidence and documentation that you want to present to the Court.
MS. MADER: Firstly, I filed documents on Friday. I don't know how they didn't get into the [inaudible], but I have them stamped.
THE COURT: I don't know where you filed them, but they're not on the docket.
MS. MADER: Okay, I filed everything, my new taxes, the letters —
THE COURT: Let's not lose sight. This is just a loss mitigation, Ms., Mader.
MS. MADER: Right.
THE COURT: That's all this is. This is just a loss mitigation. And again, I gave you the benefit of making your presentation at repeated hearings. We adjourned the request to terminate loss mitigation a number of times, to give you the opportunity to discuss with the lender, or make a presentation concerning the calculation of the escrow shortage. That is the heart of this dispute. You feel that they have miscalculated the escrow shortage amount. We went through a hearing in January, where it was all laid out. You were represented by counsel.
So my question to you is: What is the additional evidence or documentation, with respect to the escrow amount? That would've been newly learned facts that you did not have at the time of the hearing.
MS. MADER: Mr. O'Guin's testimony, which the transcript is on record, on page 44, lines 20 through 25. He states that the total amount of escrow, from the date of default to the very last day of 2017, is that number that they reported to be 22,849.49. Now they also go on to say that that is to be a repay, which you cannot have a repay —
THE COURT: Stop for a moment. I don't want to revisit everything that happened when we were back here in January. But this is the issue. The issue is that you have a mortgage balance due to the lender. That balance due to the lender consists of the unpaid principal balance and unpaid interest. Interest that has accrued, but has not been paid on the mortgage.
You have not made a mortgage payment in well over six years. And according to you, based upon your schedules, the value of the property doesn't come close to the amount of the mortgage, so you have no equity in the property. Since you have not made a mortgage payment, you didn't pay any principal, you didn't pay the interest, you also did not pay any of the real estate taxes, you have an escrow. You're supposed to be making monthly payments to the bank. Those monthly payments include principal, interest, and escrow payment for taxes and escrow payment for insurance. You failed to make those payments. The bank made those payments.
So the bank then makes those payments, and the total amount, according to the bank, the total amount of those payments made, through 2018, the escrow shortage amount, totaled in excess of 40,000.
The lesser number that your counsel referred to when we were here in January was the amount that was the escrow shortage as of 2017, but it grew. So that's why the escrow shortage is higher at the end of 2018, because there's 12 months of real estate taxes that's due, and 12 months of insurance that's due. And it was also made clear at the hearing that even if your bank was entertaining your request to modify your mortgage, and use the mortgage balance that included the (inaudible) amount of the escrow shortage, which is what you were claiming it was, you still would not qualify for a modification of the mortgage, under the bank's Streamline mortgage program.
So whether the amount was 28,000, or somewhere about that, or the 40-plus thousand, which was at the end of 2018, according to the bank's Streamline program, you would not qualify for a mortgage modification.
MS. MADER: May I add something?
THE COURT: Yes.
MS. MADER: Okay, so if the amount is 22,849.49, from the day of default, to the last day of 2017, right, that's what they contended, then if you subtract that from the $40,000, $40,900.02, you end up with $18,000 is my escrow for 2018. My escrow for 2018 is $6,000.
THE COURT: Well, you have both the arrears that you owe, plus the current amount that you owe. What the bank did is they took the amount that they went out of pocket, to pay your taxes and insurance, and they spread it out over four years. And so when it's spread out over four years, your monthly mortgage payment then increases, because you're responsible for principal, interest, taxes, and escrow, plus the past due amount.
MS. MADER: I feel that that was — the shortage recovery is just a way to add that on. Because I'm not allowed to make payments....
THE COURT: This is not any newly learned facts. The issue of the escrow is not something new. Your counsel —
MS. MADER: The fact that they charged $18,000.
THE COURT: Your counsel — excuse me. Your counsel had a full and fair opportunity to take issue with whatever statements that were made by JPMorgan Chase, on the issue of the escrow. But at the end of the day, the loss mitigation program is designed for the parties to negotiate, to see if the Debtor qualifies for a mortgage modification. And according to the bank's, what they call the Chase Streamline program, you did not qualify for the mortgage modification. So there's nothing further. There was a denial. There's nothing further for the parties to do, under the umbrella of loss mitigation. You received a denial letter, and you wanted the lender to do a re-review. And the lender did that, they did a re-review. And they came back and said you still did not qualify for the mortgage modification. And so again, there's a request to terminate loss mit, because there's nothing further to be done in loss mit. There has been a denial.
Now that does not mean that you can't continue to have discussions with the lender, in an effort to modify your mortgage, but it's just not going to be done under the umbrella of the Bankruptcy Court's loss mitigation, because we have [d]one that. There has been a denial, and a denial on a re-review of your request. There's nothing further to be accomplished under the auspices of the Bankruptcy Court's loss mitigation program.
MS. MADER: But what I'm saying is they were with 12 pages of [inaudible], they were told to add in good faith, provide paperwork. I've just proven to you they've now charged me $18,000.
THE COURT: You haven't proven anything to me. You have not proven any —
MS. MADER: For 2018.
THE COURT: Ms. Mader, you had the opportunity at the hearing to make your case. I gave you that opportunity on — request to terminate loss mitigation is normally not an evidentiary hearing, but to the extent that you wanted to make a statement, and you were represented by counsel, it was appropriate for you to make those statements under oath, which you did.
And if the bank officer now wanted to make statements concerning the escrow amount, it was appropriate for the bank officer to make those statements under oath. So you did. And your counsel had the opportunity to elicit your testimony, introduce whatever documentary evidence that he felt should be introduced, or you felt that should be introduced, you had an opportunity. You had an opportunity to ask questions of the bank officer.
At the end of the day, this comes down to whether or not loss mitigation should be terminated, because there has been a denial of the request, by you, to modify the mortgage. As I mentioned, there was a denial, and then there was a re-review done by the lender. And even in the re-review, it resulted in a denial.
The motion that you make, in asking the Court to vacate the order that terminated loss mit, we are looking at that, as I mention, as a motion under Rule 60(b) of the Federal Civil Procedure, again applicable here, by Bankruptcy Rule 9024, and Rule 60(b) provides that the Court may relieve a party from a final judgment order or proceeding if it falls under one of the six enumerated provisions. And giving you solicitude here, because you're appearing pro se, when I look at your one-page motion, I construe it as a request under 60(b)(2) for newly discovered evidence.... So with respect to 60(b)(2), you have not met your burden that there was any newly discovered evidence, concerning the escrowed amount. And as I mentioned, the burden of proof is on you, to establish the application of Rule 60(b)(2).
Id. at 738-45; see DE 6-3 at 7-14.
Notably, the court docket indicates that the documents Mader filed on March 15, 2019 under DE 71 were not new evidence, as the documents referenced Mader's Objection to Chase's Motion for Relief from Stay, see DE 28-1 at 770-78, not her motion for reconsideration. Nevertheless, the information contained in the documents were not newly discovered but, with one exception, consisted of documents available to Mader at the January 31, 2019 proceeding and were consistent with JPMorgan Chase's escrow calculations. See id. at 770-75. As the Bankruptcy Court observed:
The one exception was a mortgage statement dated February 8, 2019 which showed a negative escrow balance of $40,900.02 and was consistent with the prior monthly mortgage statements that JPMorgan Chase sent to Mader.
All of the documents that you had concerning this escrow, you had those at the time we were in court for the hearing. So it's not considered like newly discovered evidence. This is information you had, with respect to your claim that the escrow amount was X, and the bank's claim the escrow amount was X-plus.
Id. at 750-51.
Accordingly, based on this record and the parties' submissions, the Court concludes
that Judge Scarcella acted well within his discretion in denying Mader's motion for reconsideration on the grounds of newly discovered evidence.
(2) Fraud, Misrepresentation or Other Misconduct Under Rule 60(b)(3)
To prevail on a motion for reconsideration on the grounds of fraud, misrepresentation or other misconduct, the movant must demonstrate by clear and convincing evidence "that the conduct complained of prevented the moving party from fully and fairly presenting his [or her] case." State Street Bank and Trust Co. v. Inversiones Errazuriz Limitada, 374 F.3d 158, 176 (2d Cir. 2004) (internal quotation marks and citations omitted). To be sure, "a Rule 60(b)(3) motion cannot be granted absent clear and convincing evidence of material misrepresentations and cannot serve as an attempt to relitigate the merits." Fleming v. New York University, 865 F.2d 478, 484 (2d Cir. 1989); see Ace Investors, LLC v. Rubin, 561 F. App'x 114, 117 (2d Cir. 2014). "To meet this high burden, the [movant] must do more than make conclusory allegations of fraud and must show that the alleged fraud, misrepresentation, or other misconduct was material to the outcome." In re Koper, 552 B.R. 208, 216 (Bankr. E.D.N.Y. 2016) (internal quotation marks and citations omitted); see Latimore v. NBC Universal Inc., 489 F. App'x 521, 521 (2d Cir. 2013) (holding a motion made under Rule 60(b)(3) may fail "if the proffered evidence is irrelevant to the ultimate conclusion").
Mader seeks to vacate the Bankruptcy Court's March 22, 2019 order pursuant to Rule 60(b)(3) on the grounds that JPMorgan Chase and its representative Greg O'Guin, provided "false evidence and testimony" with respect to the escrow account balances at the January 31, 2019 hearing, which was held to assist the court in deciding whether it should terminate loss mitigation. See DE 15, 30. Appellant argues that the Bankruptcy Court's decision to terminate the loss mitigation program was procured by fraud and misrepresentation. See id. Mader's argument fails as she is attempting to relitigate the merits of her fraud claim but cannot do so under Rule 60(b)(3). See Ace Investors, LLC, 561 F. App'x at 117
Significantly, Mader had the opportunity to litigate her claims of fraud and misrepresentation at the January 31, 2019 proceeding. Nevertheless, although represented by counsel, Mader did not call any witnesses, introduce any documentary evidence nor asked any questions of the bank's representative despite her allegations of misconduct. See DE 23-1 at 736-37; DE 6-3 at 4-5. Thereafter, Judge Scarcella held a hearing on March 19, 2019 on appellant's motion for reconsideration. As set forth below, Judge Scarcella considered Mader's allegations but found the record devoid of any evidence that JPMorgan Chase engaged in fraud or prevented the debtor from fully presenting her case:
The Court gave several opportunities to the Debtor, to state her position, with respect to what she alleged was a miscalculation by the lender, with respect to the escrow shortage.
And the most recent presentation was made toward the end of January, where we had a hearing.... She was represented by counsel at the hearing, and that was a hearing on the mortgagee's request to terminate loss mitigation. There was nothing further to do in the loss mitigation program here, as there was a denial, and the determination was made by the mortgagee that Ms. Mader did not qualify for the single program that's offered by JPMorgan Chase, the Chase Streamline program.
Ms. Mader wished to make statements to the Court at the last hearing, and those statements were made under oath. Her counsel elicited testimony from Ms. Mader. Counsel did not seek to introduce any documentary evidence at that time, with respect to any of the claims made by the Debtor, concerning the escrow account, nor did counsel for the Debtor ask any questions of the bank's witness at that time, Greg O'Guin. He explained to the Court, and he did so under oath, how the escrow shortage came about, and counsel declined to ask any questions of the bank officer, with respect to the escrow issue....
You mention the false testimony ... your motion is barren. What I mean is that there is nothing attached to the motion, with respect to what additional evidence and documentation you have.... There is nothing attached to your motion, concerning what false testimony was given to the Court. So what you are asking me to do is a do-over.
DE 23-1 at 736-39; see DE 6-3 at 4-7.
Moreover, Judge Scarcella noted that even if JPMorgan Chase used Mader's proffered documents reflecting her escrow calculations, the ultimate conclusion would have remained the same, viz. she still would not have qualified for a loan modification. See DE 23-1 at 741; DE 6-3 at 9; see also Latimore, 489 F. App'x at 521.
Finally, far from demonstrating clear and convincing evidence of material misrepresentation, Mader's submissions on appeal to this Court consist of wholly conclusory and unsupported claims of misconduct that center on (i) alleged fraudulent monthly charges, calculation of interest rates, escrow numbers, (ii) confusion and mistreatment on the part of the court, (iii) inaccurate documents, and (iv) various discovery errors. See DE 15, 30. Her allegations are repeatedly stated without proof or justification and again appear to constitute an improper attempt to relitigate the merits of Judge Scarcella's prior decision to terminate the loan mitigation program. See id.; see also Fleming, 865 F.2d at 484.
Accordingly, based on this record and the parties' submissions, the Court concludes that Judge Scarcella acted well within his discretion in denying Mader's motion for reconsideration on the grounds of fraud, misrepresentation, or misconduct. Indeed, Judge Scarcella invested considerable effort and time, applying considerable diligence, thoroughness and fairness to this matter.
CONCLUSION
For the foregoing reasons, the Court affirms the rulings of the Bankruptcy Court in all respects. Appellant's appeals in CV 19-2048 and CV 19-2053 are denied with prejudice. The Clerk of the Court shall enter judgment accordingly and close the cases. The Clerk of the Court is respectfully directed to serve the pro se plaintiff a copy of this Memorandum and Order.