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Citimortgage, Inc. v. Chicago Bancorp, Inc.

United States District Court, E.D. Missouri, Eastern Division

September 8, 2014

CITIMORTGAGE, INC., Plaintiff,
v.
CHICAGO BANCORP, INC., et al., Defendants.

MEMORANDUM AND ORDER

CATHERINE D. PERRY, District Judge.

Pending before me is defendant Chicago Bancorp's motion for reconsideration of one portion of my March 31, 2014 memorandum and order. In that order, I granted partial summary judgment to plaintiff CMI and denied Chicago Bancorp's cross motion for summary judgment.

The facts are set out in my earlier order, and I will not recount them here in any detail. In brief, CMI sued Chicago Bancorp for breach of contract over 11 mortgage loans sold by Chicago Bancorp to CMI. Under the terms of an agreement between the two parties, Chicago Bancorp was required to buy back any loan that CMI determined was defective. Chicago Bancorp contends that the Court erred in ruling that Chicago Bancorp was required to repurchase one of the loans, called the Wade loan. It argues that a proper reading of the governing agreement shows that the loan was not defective. Further, it maintains that it (and not CMI) was entitled to summary judgment on the loan because CMI could not have determined in good faith that the loan was defective.

After careful reconsideration of the relevant materials in the record, I find that Chicago Bancorp still has not demonstrated that it is entitled to summary judgment because issues of fact remain about CMI's good or bad faith. Nonetheless, I am convinced that my earlier interpretation of the governing provision was incorrect. Accordingly, I will grant in part Chicago Bancorp's motion for reconsideration and vacate the portion of my order granting CMI summary judgment on the Wade loan.

I. Standard for Motion for Reconsideration

Under Rule 54(b), Fed. R. Civ. P., an interlocutory order "may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and responsibilities." Rule 54(b) "governs reconsideration of orders that do not constitute final judgments in a case." Singh v. George Washington Univ., 383 F.Supp.2d 99, 101 (D.D.C. 2005). Orders granting summary judgment are interlocutory in nature, and they may be reconsidered and revised up until the time a final judgment is entered. Wells' Dairy Inc. v. Travelers Indem. Co. of Ill., 336 F.Supp.2d 906, 909 (N.D. Iowa 2004); Ideal Instruments, Inc. v. Rivard Instruments, Inc., 434 F.Supp.2d 640, 647 (N.D. Iowa 2006).

District courts have substantial discretion in deciding whether to reconsider an interlocutory order under Rule 54(b). Wells' Dairy, 336 F.Supp.2d at 909; Ideal Instruments, 434 F.Supp.2d at 647. A court may reconsider an interlocutory order to "correct any clearly or manifestly erroneous findings of fact or conclusions of law." Jones v. Casey's Gen. Stores, 551 F.Supp.2d 848, 854 (S.D. Iowa 2008) (internal quotation marks omitted).

Although parties are not generally allowed to raise new legal arguments that they could have raised earlier, reconsideration may be granted "as justice requires." Singh, 383 F.Supp.2d at 101. The decision to reconsider a judgment or interlocutory order is one grounded in equity, and should be used to "prevent the judgment from becoming a vehicle of injustice." Harley v. Zoesch, 413 F.3d 866, 870 (8th Cir. 2005) (considering a motion for reconsideration of a final judgment brought under Rule 60(b), Fed. R. Civ. P.); see also Wells' Dairy, 336 F.Supp.2d at 909 (standard under Rule 54(b) is "typically held to be less exacting" than standards for motions brought under Rules 59(e) or 60(b)).

II. Earlier ruling on the Wade loan

Chicago Bancorp requests that I revisit the portion of my order relating to the Wade loan. In my previous order, I granted summary judgment to CMI on this loan. I found that CMI had shown that it had determined that the Wade loan was originated in violation of the Agreement between the parties, and Chicago Bancorp was contractually required to repurchase it.

Under the Agreement, CMI agreed to purchase a loan made to a borrower like Wade[1] only if he contributed at least $500 of his own funds at closing. I found earlier that the Agreement required the $500 contribution to be verified in one of two specified ways. If the contribution was not properly verified, the loan was originated in violation of the Agreement, and CMI was permitted to demand repurchase by Chicago Bancorp.

Chicago Bancorp previously submitted evidence supporting its contention that Wade made the required $500 contribution. It argued that the verification requirement was either met or did not apply. It also argued that CMI should not be permitted to recover on the basis of lack of verification because its letters of demand to Chicago Bancorp had only questioned whether Wade had made a $500 contribution at all, not whether the contribution was properly verified.

In my earlier order, I concluded that the verification requirement did apply, and CMI had permissibly determined it had not been met. As such, I did not consider whether the HUD-1 settlement statement or other submitted evidence showed that Wade contributed at least $500 of his own funds; since the contribution was not verified through one of the ways enumerated by the Agreement, the loan was defective and subject to repurchase. I also rejected Chicago Bancorp's secondary argument. I concluded that both theories of recovery - whether Wade had paid $500 ...


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