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Lehman Brothers Holdings, Inc. v. 1St New England Mortgage Corporation

United States District Court, D. Massachusetts

September 25, 2014

LEHMAN BROTHERS HOLDINGS, INC., Plaintiff,
v.
1ST NEW ENGLAND MORTGAGE CORPORATION dba ABERDEEN MORTGAGE and FNE MORTGAGE, Defendant.

ORDER

GEORGE A. O'TOOLE, Jr., District Judge.

I. Background

In an Order issued on September 12, 2012, the Court granted Lehman Brothers Holdings, Inc.'s motion for summary judgment as to liability. The parties have submitted cross-motions for summary judgment as to damages, including attorney fees and costs. Lehman seeks damages in the amount of $685, 249.29, plus post-judgment interest, in damages, $216, 036.60 in attorneys' fees, and $43, 089.58 in costs. In opposition, 1st New England Mortgage Corporation argues that Lehman's motion should be denied because a fact issue remains as to mitigation of damages. 1st New England asserts that Lehman failed to mitigate its damages by not acting promptly to demand repurchase of the Bloat loans but instead waiting until the value of the underlying property had plummeted. Alternatively, 1st New England moves for summary judgment in its favor, contending that Lehman has not sufficiently established that it has incurred any damages at all because it has not presented evidence that it repurchased the Bloat loans from Structured Asset Securities Corporation ("SASCO").

II. Discussion

A. Motions to Strike

Both parties have filed motions to strike. I will resolve only those that must be resolved prior to a ruling on the cross-motions for summary judgment.

1st New England's Motion (dkt. no. 112) to Strike the Supplemental Declaration of John Baker is DENIED. Under the circumstances, the declaration was timely filed.

1st New England's Motion (dkt. no. 114) to Strike the Supplemental Declaration of Robert T. Mowrey is DENIED. This declaration was also timely filed, considering the attendant circumstances, and 1st New England has not shown any material prejudice.

B. Repurchase of Loans

1st New England contends that summary judgment should enter in its favor because Lehman has failed to establish that it repurchased the Bloat loans from SASCO. Notably, 1st New England does not point to any contrary evidence but simply asserts that the record, either with or without Lehman's Vice President John Baker's supplemental declaration, does not establish the fact of repurchase.

I find that there is no genuine dispute that Lehman in fact repurchased the loans. Baker testified to the same at his deposition (Cabrera Decl., Ex. 1 at 5-8 (dkt. no. 107-1)), and his supplemental declaration and accompanying exhibits satisfactorily document the transfers underlying the repurchase.

1st New England's Cross-Motion for Summary Judgment (dkt. no. 93) is therefore DENIED.

C. Mitigation

1st New England argues that Lehman should have mitigated damages by (1) diligently asserting its repurchase rights instead of lying in wait until the real estate market crashed, and (2) challenging SASCO's repurchase demand. As to both arguments, Lehman is correct that a general mitigation defense is inapplicable to a case like this involving a repurchase clause, which specifically shifts risk to the seller. See Resolution Trust Corp. v. Key Fin. Servs., Inc. , 280 F.3d 12, 18 & n.14 (1st Cir. 2002) (holding that the risk of market fluctuation should be borne by the seller); Wells Fargo Bank, N.A. v. LaSalle Bank Nat. Ass'n, 2011 WL 3739170, at *6 (W.D. Okla. Aug. 23, 2011). What is more, 1st New England claims that Lehman ...


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