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Shinn v. Champion Mortgage Company

August 3, 2010

RE: SHINN ET AL.
v.
CHAMPION MORTGAGE COMPANY, INC.



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

MARTIN LUTHER KING JR. FEDERAL BLDG. & U.S. COURTHOUSE 50 WALNUT STREET, P.O. BOX 419 NEWARK, NJ 07101-0419 (973) 645-6340

LETTER OPINION

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.

I. BACKGROUND

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.

II. ANALYSIS

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 ...


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