United States District Court, D. Minnesota
M. Schehr, Esq., Kristina Kaluza, Esq. and Dykema Gossett,
PLLC, counsel for plaintiff.
R. Markowitz, Esq. and Stinson Leonard Street LLP, counsel
S. Doty, Judge United States District Court
matter is before the court upon the motion for summary
judgment by plaintiff Ally Bank. Based on a review of the
file, record, and proceedings herein, and for the following
reasons, the court grants the motion.
contract dispute arises out of the sale of ten mortgage loans
by defendant Lenox Financial Mortgage Corporation to
Ally.Lenox sold nine loans - the Holland, Scott,
Welch, Williams, and five Sumner loans - to Ally
pursuant to the Correspondent Agreement, dated February 4,
2004, and one loan - the Raetchi loan - pursuant to a Client
Contract, dated July 21, 2008. See Ellis Decl. Ex.
3, Correspondent Agreement; id. Ex. 4, Client
Contract. Under the Correspondent Agreement, Lenox obtained
the right to sell mortgage loans to Ally subject to the terms
of the GMAC Bank Correspondent Lending Manual (Correspondent
Manual). Correspondent Agreement, Recital D. The
Correspondent Manual was revised from time to time, but the
substantive provisions remained the same. See, e.g.,
Hughes Decl. Exs. 1, 5, 9, 13 (Section VIII of the
Correspondent Manual for the Holland, Scott, Welch, and
Williams loans). As discussed below, Lenox disputes that Ally
can prove that the provisions remained the same for the five
Sumner loans because Ally is not able to produce the version
of the manual that applied to those loans. Under the Client
Contract, Lenox sold loans to Ally subject to the terms of
the Client Guide, which is substantively similar to the terms
in the Correspondent Manual. See Ellis Decl. Ex. 4,
Client Contract, ¶¶ 1, 3.
the terms of the Correspondent Manual and Client Guide, Lenox
agreed, among other things, that the mortgages sold to Ally
would meet Fannie Mae's and Freddie Mac's
underwriting requirements and would not be based on improper
appraisal practices as defined in the agreement. Hughes Decl.
Exs. 1-2, 5-6, 9-10, 13-14, Correspondent Manual,
§§ VIII(9-1), XIII.a(9), XIII.b(38), XIII.b(2)-(3);
id. Ex. 17, Client Guide, Ch. 1C, § C102.
Further, Ally could, in its “sole discretion”
declare a breach on any loan that Ally deemed “to fail
to conform with each an every requirement, representation and
warranty of the Correspondent Agreement and the Correspondent
Manual.” Id. Exs. 3, 7, 11, 15, Correspondent
Manual, § XIV(a); id. Ex. 17, Client Guide, Ch.
1A, §§ A100D, A100E. Lenox was required to
repurchase the loan, or indemnify Ally for any losses, if it
failed to cure any loan defects within ten days of receiving
written notice from Ally. Id. Exs. 3, 7, 11, 15,
Correspondent Manual, §§ XVI(a)-(b); id.
Ex. 17, Client Guide, Ch. 1D, §§ D102A, D103.
sold the Holland, Scott, Welch, Williams, and Raetchi loans
to Fannie Mae and the five Sumner loans to Freddie Mac, but
both Fannie Mae and Freddie Mac later made repurchase and
indemnification demands of Ally because the loans did not
meet their underwriting requirements. Ellis Decl. Exs. 6, 9,
12, 16, 23-27, 30. Ally notified Lenox of the repurchase and
indemnification demands and requested information to rebut
Fannie Mae's and Freddie Mac's conclusions.
Id. It is undisputed that Lenox provided no new
information to Ally. From 2012-2013, Ally either repurchased
the loans or indemnified Fannie Mae's and Freddie
Mac's losses. Hughes Decl. ¶¶ 26-27. Ally then
made repurchase and indemnification demands of Lenox pursuant
to the Correspondent Manual and Client Guide, but Lenox
refused. Ellis Decl. Exs. 7, 10, 14, 17, 28, 31. On October
11, 2016, Ally filed an amended complaint, asserting claims
of breach of contract and indemnification against Lenox. Ally
now moves for summary judgment.
Standard of Review
court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986). A fact is material only when its
resolution affects the outcome of the case. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute
is genuine if the evidence is such that it could cause a
reasonable jury to return a verdict for either party. See
id. at 252 (“The mere existence of a scintilla of
evidence in support of the plaintiff's position will be
motion for summary judgment, the court views all evidence and
inferences in a light most favorable to the nonmoving party.
Id. at 255. The nonmoving party, however, may not
rest upon mere denials or allegations in the pleadings but
must set forth specific facts sufficient to raise a genuine
issue for trial. Celotex, 477 U.S. at 324. A party
asserting that a genuine dispute exists - or cannot exist -
about a material fact must cite “particular parts of
materials in the record.” Fed.R.Civ.P. 56(c)(1)(A). If
a plaintiff cannot support each essential element of a claim,
the court must grant summary judgment because a complete
failure of proof regarding an essential element necessarily
renders all other facts immaterial. Celotex, 477
U.S. at 322-23.
The Holland, Scott, Welch, Williams, and Raetchi
does not oppose summary judgment on the Holland, Scott,
Welch, Williams, and Raetchi loans, nor does it challenge
Ally's calculation of damages on these loans. As a
result, the court grants Ally's motion for summary
judgment as to these loans. Satcher v. Univ. of Ark. at
Pine Bluff Bd. of Trs., 558 F.3d 731, 734 (8th Cir.