The Money Source Inc. v. American Ken, Inc.
2:22-cv-05204
E.D.N.YMay 19, 2025Background
- The Money Source, Inc. (TMS) and American Ken, Inc. entered into a Purchase Agreement in 2019, under which American Ken sold mortgage loans to TMS in the TMS Correspondent Seller’s Program.
- The agreement required that all loans comply with Fannie Mae (FNMA) guidelines and that American Ken would repurchase or indemnify TMS for any noncompliant loans.
- TMS terminated the agreement in June 2022 after discovering a pattern of loans with material misrepresentations and unmet Fannie Mae standards, for which American Ken failed to repurchase or indemnify.
- Fourteen loans were identified as noncompliant; TMS suffered losses by selling 12 of these as “scratch and dent” and was unable to sell the remaining two.
- TMS sued for breach of contract and indemnification; American Ken did not oppose the summary judgment motion.
- The court considered only TMS’s claims for breach of contract and indemnification, finding their recitation of facts to be uncontroverted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of Contract (repurchase) | TMS: American Ken failed to repurchase loans as required by the agreement. | Not opposed | For TMS: Breach of contract established |
| Damages for Unrepaid Loans | TMS: Suffered quantifiable financial loss due to breach. | Not opposed | For TMS: Requested damages awarded |
| Contractual Right to Indemnification | TMS: Agreement entitles TMS to indemnification for costs, fees, losses. | Not opposed | For TMS: Right to indemnification clear |
| Attorney's Fees and Costs | TMS: Entitled under contract for litigation costs | Not opposed | Denied without prejudice (insufficient documentation) |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (defining summary judgment materiality and sufficiency standards)
- Bolt Elec., Inc. v. City of New York, 223 F.3d 146 (2d Cir. 2000) (contract interpretation governed by parties’ intent)
- Ministers & Missionaries Benefit Bd. v. Snow, 26 N.Y.3d 466 (N.Y. 2015) (enforcement of choice-of-law clauses)
- Hooper Assocs., Ltd. v. AGS Computers, Inc., 74 N.Y.2d 487 (N.Y. 1989) (attorney’s fees indemnification requires unmistakably clear contractual language)