Homeward Residential, Inc. v. Sand Canyon Corporation
1:12-cv-05067
| S.D.N.Y. | May 22, 2018Background
- Homeward Residential, as Master Servicer for Option One Mortgage Loan Trust 2006-2, sought to prove claims against Sand Canyon (formerly Option One Mortgage Corp.) using statistical sampling and expert testimony from Dr. Charles D. Cowan.
- The dispute arises under the Mortgage Loan Purchase Agreement (MLPA) and the Pooling and Service Agreement (PSA), which include representations, warranties, and repurchase remedies tied to individual mortgage loans.
- Homeward moved (July 29, 2015) under Fed. R. Civ. P. 26 and Fed. R. Evid. 702 to admit sampling evidence and pre-approve Dr. Cowan’s methodology.
- The Court denied that motion in an Opinion & Order dated November 13, 2017, concluding the Governing Agreements require loan-by-loan proof of breach and that sampling would not assist the trier of fact.
- Homeward filed a motion for reconsideration arguing the Court misapplied contract interpretation principles and effectively nullified the MLPA’s All Mortgage Loans provision; the Court treated that as relitigation of decided issues.
- The Court denied reconsideration (May 2018), finding no new law or evidence and that Homeward had not shown clear error or manifest injustice warranting reconsideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Homeward may prove breaches via statistical sampling | Sampling is relevant and can show systemic breaches across the pool; Dr. Cowan’s methodology is reliable | Governing Agreements require loan-by-loan proof; sampling would not identify which loans triggered repurchase obligations | Denied: Contracts call for loan-by-loan proof; sampling would not assist the trier of fact |
| Whether sampling should be permitted despite contract language | Contract should be read to allow aggregate proof; otherwise an "All Mortgage Loans" clause is nullified | Contract language and remedial scheme require individualized triggers and repurchase determinations | Denied: Court interpreted provisions to give effect to all clauses and preserve loan-specific remedies |
| Whether the Court misapplied contract interpretation on initial ruling | Court’s interpretation erases key contractual provisions and is inconsistent with settled principles | Court properly considered and harmonized provisions, not rewriting them | Denied: Reconsideration denied because argument rehashes already-decided issues, no new controlling law or evidence |
| Whether reconsideration standard is met | Homeward urges correction of alleged error | Sand Canyon argues motion is impermissible relitigation; no new authority/evidence | Denied: Motion fails Local Rule 6.3 standard (no intervening law, new evidence, or clear error) |
Key Cases Cited
- In re Health Mgmt. Sys. Inc. Sec. Litig., 113 F. Supp. 2d 613 (S.D.N.Y. 2000) (reconsideration is extraordinary and should be granted sparingly)
- Schonberger v. Serchuk, 742 F. Supp. 108 (S.D.N.Y. 1990) (reargument not meant for repetition of already considered arguments)
- Schrader v. CSX Transp., Inc., 70 F.3d 255 (2d Cir. 1995) (motions to reconsider should not be used to relitigate issues)
- Virgin Atl. Airways, Ltd. v. Nat’l Mediation Bd., 956 F.2d 1245 (2d Cir. 1992) (grounds for reconsideration include intervening law, new evidence, or correcting clear error)