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Shinn v. Champion Mortgage Company


August 3, 2010


The opinion of the court was delivered by: Judge William J. Martini



Dear Litigants:

This matter comes before the Court on the Motion for Reconsideration filed by Plaintiffs Stanley and Catherine Shinn (the "Shinns") and the Cross Motion for Reconsideration filed by Defendant Champion Mortgage Company, Inc. ("Champion") pursuant to Federal Rule of Civil Procedure 59(e) and Local Civil Rule 7.1(i). Plaintiffs and Defendant seek reconsideration of the Court‟s February 2010 letter opinion and order dismissing Counts I -- IX of Plaintiffs‟ Complaint. Oral arguments were not held. Fed. R. Civ. P. 78. For the reasons stated below, both Plaintiffs‟ Motion and Defendant‟s Cross Motion are DENIED.


Because the facts pertaining to this action are well-known to the parties, only those details relevant to the motions for reconsideration will be set forth here. In 2001, Plaintiffs obtained a mortgage loan from Defendant in the amount of $102,000.00 for the purchase of a home in Oaklyn, NJ. Cmplt. && 1, 13. The mortgage contract was executed on April 23, 2001. Id. at & 13. By October 2004, Plaintiffs had begun to miss payments on the loan. Id. at & 15. On February 22, 2005, Defendant initiated foreclosure proceedings against Plaintiffs. Id. at & 16. At that same time, Defendant also provided Plaintiffs with the opportunity to enter into a forbearance agreement (the "Forbearance Agreement"). Id. at & 17. Under the terms of the Forbearance Agreement, Plaintiffs would pay Defendant a reinstatement fee, in exchange for which Defendant would agree to abstain from going forward with the foreclosure proceedings. Id. The default itself would not be vacated. Id. Plaintiffs agreed to the terms of this arrangement and in June 2005, the parties executed the Forbearance Agreement. Id. at Ex. B. There are no allegations that Plaintiffs missed any subsequent payments or failed to comply with the terms of the Forbearance Agreement in any way. Id. at & 19.

In January 2009, Plaintiffs filed a ten- count complaint with this Court, alleging that Defendant had "engaged in a uniform scheme and course of conduct to inflate. profits by charging various fees not authorized by the loan documents or applicable law."*fn1 Id. at & 20. In particular, Plaintiffs argued that the terms of the original mortgage and the Forbearance Agreement violated various state laws including the New Jersey Fair Foreclosure Act ("FFA") and the New Jersey Consumer Fraud Act ("CFA"). Id. at && 65- 69, 74-77. They also alleged that Defendant had breached contractual obligations owed to Plaintiffs. Id. at && 37- 42. Defendant filed a motion to dismiss, and in an opinion issued on February 5, 2010, the Court granted the motion in part and dismissed with prejudice nine of Plaintiffs‟ ten counts. Shinn v. Champion Mortgage Co., Inc., 2010 WL 500410 (D.N.J. February 5, 2010). The only count remaining following the motion to dismiss is breach of contract, which itself was limited to a narrow theory of liability only. Id. at * 3. Presently before the Court is a motion for reconsideration filed by Plaintiffs and a cross motion for reconsideration filed by Defendant.


A motion to reconsider pursuant to Fed. R. Civ. P. 59(e) and L. Civ. R. 7.1(i) is an Aextremely limited procedural vehicle,@ and Arequests pursuant to these rules are to be granted sparingly.@ In re Audible, Inc. Securities Litigation, 2007 WL 4546823 (D.N.J.). The Third Circuit has consistently held that the purpose of a motion to reconsider is to Acorrect manifest errors of law or fact or to present newly discovered evidence.@ Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985).

To prevail on a motion for reconsideration, the moving party must demonstrate one of the following: (1) an intervening change in the controlling law, (2) the existence of new evidence that was not available when the court issued its order, or (3) the need to correct a clear error of law or fact or to prevent manifest injustice. See North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir. 1995). To satisfy its burden, the moving party must show Adispositive factual matters or controlling decisions of law@ that were brought to the court=s attention but not considered. P. Schoenfeld Asset Mgmt., LLC v. Cendant Corp., 161 F.Supp.2d 349, 353 (D.N.J. 1992).

Significantly, a motion for reconsideration may not be used to re-litigate old matters or to argue new matters that could have been raised before the original decision was reached. P. Schoenfeld Asset Mgmt., 161 F.Supp.2d at 352. A party seeking reconsideration must show more than a disagreement with the Court=s decision. Recapitulation of the cases and arguments considered by the Court before rendering its original decision fails to carry the moving party=s burden. Id.

A. Plaintiffs' Motion for Reconsideration

In its February 2010 opinion, the Court dismissed Count VI (alleged violation of the FFA) and Count VIII (alleged violation of the CFA) because both claims were predicated upon an alleged violation of New Jersey Rule 4:42-9(a)(4) (the "Rule"), a regulation limiting the fees that can be charged in a foreclosure action, and the Court concluded that the Rule had not been violated. Shinn, 2010 WL 500410 at *6, *8. Specifically, the Complaint argued that the fees charged by Defendant in the Forbearance Agreement violated the Rule, and that a violation of the Rule constituted violations of both the CFA and the FFA. Cmplt. && 66, 68, 77. However, the Court concluded that the Rule applies to foreclosure actions only, and not to private settlements of foreclosure proceedings such as the Forbearance Agreement entered into by the Shinns. Shinn, 2010 WL 500410 at *7. Because the Rule had not been violated, there was clearly no consequent violation of the CFA or the FFA. Id. There was also no need for the Court to rule on whether or not violations of the Rule constituted violations of the CFA or FFA.

Plaintiffs‟ Motion for Reconsideration argues that a recent decision of the New Jersey Appellate Division, Gonzalez v. Wilshire Credit Corporation, 411 N.J. Super. 582 (App. Div. 2010), is directly on point, contravenes the Court‟s decision to dismiss Counts VI and VIII, and must be reviewed by the Court to prevent manifest injustice.*fn2 Plaintiffs‟ Brief ("Pl. Br.") at 3-5. However, it is apparent that Plaintiffs misconstrue this Court‟s February 2010 holding, the Gonzalez holding, or both. In Gonzalez, the Appellate Division expanded the scope of the CFA by finding that it applies not only to foreclosure actions but also to certain private settlement agreements in the foreclosure context, provided the settlement agreements are similar in nature to the reinstatement agreements provided for by statute. Gonzalez, 411 N.J. Super. at 593 (stating that "while we would hesitate greatly to hold that most "settlements‟ are subject to the CFA‟s strictures, we regard these particular agreements to be so closely allied to the cure of default recognized in [the FFA] as to warrant coverage"). Because the terms of the Shinns‟ settlement agreement did not provide for the dismissal of the foreclosure proceedings and the default was not cured so much as it was put on hold, it is by no means clear that the Forbearance Agreement is similar enough to a statutory reinstatement agreement to fall within the ambit of the CFA. Even more importantly, the Court did not dismiss Counts VI and VIII because it held that the CFA and FFA did not apply to settlements; rather, the Counts were dismissed because the Court found that Rule 4:42-9(a)(4) did not apply to settlements. Shinn, 2010 WL 500410 at *7. The Gonzalez decision sheds no light on the applicability of Rule 4:42-9(a)(4) and therefore has no implications for Plaintiffs‟ case. The motion for reconsideration must be denied.

B. Defendant's Cross Motion for Reconsideration

Defendant has filed a cross motion for reconsideration, also on a theory of preventing manifest injustice. Defendant‟s Brief ("Def. Br.") at 8. In support of its motion to dismiss, Defendant argued that Plaintiffs‟ Complaint was barred due to the entire controversy doctrine (the "ECD"), which requires parties to fully litigate all aspects of a dispute in a single legal proceeding and bars claims that are withheld. Defendant‟s Motion to Dismiss ("Def. MTD") at 8-9; Rycoline Prods v. C & W Unlimited, 109 F.3d 883, 887 (3d Cir. 1997); Kaselaan & D'Angelo Assocs., Inc. v. Soffian, 290 N.J. Super. 293, 299 (App. Div. 1996). The ECD applies not only to claims that are resolved in court but to those that settle as well. Id. Defendant maintained that Plaintiffs should have raised any disputes related to fees or charges during the pendency of the foreclosure and settlement procedures and that by failing to do so, they forfeited their ability to bring these claims later on. Def. MTD at 8-9. The Court rejected this argument on the grounds that the misconduct complained of by Plaintiffs did not occur until after the Forbearance Agreement was signed and Defendant enforced its terms by collecting the allegedly improper fees from Plaintiffs, at which point Plaintiffs had no recourse but to file a separate legal action. Shinn, 2010 WL 500410 at *10.

Defendant argues that a recent District of New Jersey opinion, Oliver v. American Home Mortgage Servicing, Inc., 2009 WL 4129043 (D.N.J. November 19, 2009), has significant implications for the case at hand. In Oliver, the court found that the ECD applied to a plaintiff‟s claims arising out of alleged overcharging in a reinstatement agreement, barring them completely. Oliver, 2009 WL 4129043 at *3. Therefore, Defendant argues that because there is little difference between a reinstatement agreement and the Forbearance Agreement entered into by the Shinns, the Complaint should be barred in its entirety. Def. Br. at 12.

However, the decision of the district court in Oliver is not binding precedent. See Threadgill v. Armstrong World Industries, Inc., 928 F.2d 1366, 1371 (3d Cir. 1991) ("Even where the facts of a prior district court case are, for all practical purposes, the same as those presented to a different district court in the same district, the prior resolution of those claims does not bar reconsideration by this Court of similar contentions. The doctrine of stare decisis does not compel one district court judge to follow the decision of another."); see also United States v. Article of Drugs Consisting of 203 Paper Bags, 818 F.2d 569, 573 (7th Cir. 1987), as qtd. in Threadgill, 928 F.2d at 1371 ("single district court decision has little precedential effect and is not binding on other district judges in the same district").

Moreover, the pertinent details of the Oliver case are not, for all practical purposes, the same as those with which the Court is presently faced. In Oliver, the court relied heavily on the fact that, for unknown reasons, the mortgage lender sent the plaintiff two separate and inconsistent reinstatement quotes within a short period of time. Oliver, 2009 WL 4129043 at *3. Although the two statements purported to cover the same services and costs, the amount charged in the second was significantly less, alerting the plaintiff to the likelihood that at least one of the quotes was inaccurate. Id. The Oliver court reasoned that as soon as the plaintiff received the second, inconsistent quote, he was put on notice as to the possibility of overcharging and the existence of legal claims. Id.

Here, there was no similar document or incident that should have alerted Plaintiffs to the alleged overcharging in the Forbearance Agreement. Indeed, it appears that Defendant, whether deliberately or not, concealed from Plaintiffs the existence of any such claims by failing to provide the Shinns with an itemized invoice, even upon request. Plaintiff‟s Brief in Opposition to Def. MTD at 2-3. Therefore, unlike in Oliver, there was nothing to put Plaintiffs on notice of possible errors contained in the Forbearance Agreement. For these reasons, the Court declines to follow Oliver here, and Defendant‟s Cross Motion for Reconsideration is denied.


For the reasons stated above, there is no basis to reconsider the Court=s February 5, 2010 letter opinion. Therefore, Plaintiffs‟ Motion and Defendant‟s Cross Motion are DENIED. The February 5, 2010 letter opinion and order dismissing Counts I - IX of Plaintiff=s Complaint with prejudice shall remain in place. Plaintiffs shall not be granted leave to amend the Complaint, as doing so would be futile.


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