Couple Seeking $30 Million Has ‘History Of Vexatious Litigation,’ ResCap Says

by Tara Arick on September 13, 2013 · 0 comments

in Bankruptcy

Bankrupt Residential Capital LLC (ResCap) on Sept. 11 filed a brief arguing that the bankruptcy court should expunge two separate claims valued at total of $ 30 million that it says have been filed by a couple who has a “documented history of vexatious litigation” (In Re: Residential Capital LLC, No. 12-12020, Chapter 11, S.D. N.Y. Bkcy.).

ResCap filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York on May 14, 2012.

$ 30 Million Sought

ResCap contends that two separate claims filed against the bankruptcy estate by Sidney T. Lewis and Yvonne D. Lewis for a total of $ 30 million should be denied because the claims actually amount to sanctions against ResCap and the Official Committee of Unsecured Creditors.

Specifically, the claims are $ 25 million against ResCap’s affiliate GMAC Mortgage LLC (GMACM) brought by the couple and $ 5 million against GMACM brought by Sidney Lewis as the executor of the estate of Bettie Hamilton.

ResCap argues that the Lewises filed an adversary complaint against GMACM in the Bankruptcy Court earlier in the bankruptcy proceeding, which was ultimately dismissed. As part of the dismissal, the Bankruptcy Court denied the Lewises leave to amend their claim.

‘Intelligible Statement’ Missing

However, despite the fact that the couple was denied leave to amend their adversary proceeding, they still filed the $ 30 million claims, ResCap says. The claims fail to provide an intelligible statement of how GMACM, and by extension ResCap, harmed the Lewises, it says.

The claims fail to establish entitlement to relief under applicable law because the Lewises do not have a right to assert damages based on equitable defenses, ResCap adds; therefore, the claims should be expunged in their entirety.

Moreover, ResCap says that the Lewises are seeking monetary damages from foreclosures, and it is “well-established” that violations of federal servicing guidelines do not allow borrowers to recovery monetary damages. It is also too late for the couple to assert any defenses related to the foreclosures, ResCap adds.

ResCap is represented by Norman S. Rosenbaum, Gary S. Lee, Jordan A. Wishnew and Samantha Martin of Morrison Foerster in New York and Colt B. Dodrill of Wolfe & Wyman in Phoenix. The Lewises of Columbus, Ohio, appear pro se.

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