360 Mortgage Group, LLC v. Fortress Investment Group LLC

Background

The order addressed three matters: Fortress Investment Group LLC’s motion for reconsideration; supplemental briefing about the Noerr-Pennington doctrine, which can protect petitioning or advocacy directed toward government action; and 360 Mortgage Group, LLC’s motion for leave to amend its First Amended Complaint.

An earlier opinion had denied Fortress’s motion for summary judgment. The earlier opinion concluded that the record contained enough evidence for a reasonable jury to infer that Fortress improperly influenced the Government National Mortgage Association (GNMA) to terminate 360 Mortgage’s license. The evidence discussed included alleged threats by Fortress, communications between Fortress and GNMA, the unusual nature of the termination, the role of GNMA’s former president Michael Bright, Bright’s later employment as chief executive officer of the Structured Finance Association, and evidence that Fortress was a major contributor or donor to that organization.

Motion for Reconsideration

The court stated that reconsideration is available only when a party identifies an intervening change in controlling law, new evidence, or a need to correct clear error or prevent manifest injustice. Fortress did not identify any of those grounds.

The court rejected Fortress’s arguments that the evidence did not support an inference of bribery, that the court had relied on inadmissible evidence, and that the court had improperly shifted the burden of proof. The court explained that it had considered the record as a whole and that the evidence, including the alleged threats and communications with GNMA, created factual disputes for a jury. The court also rejected Fortress’s argument that the earlier opinion had misunderstood the alleged threats or the parties’ respective interests.

Noerr-Pennington Doctrine

The parties disputed whether federal or New York law governed the doctrine’s scope and whether the doctrine could protect alleged criminal or corrupt conduct. The court noted that the parties had not identified binding authority from the New York Court of Appeals or the United States Court of Appeals for the Second Circuit resolving those issues in this context.

The court explained that, regardless of the doctrine’s applicability, the First Amendment does not protect speech or writing used as an integral part of conduct violating a valid criminal statute. The court further stated that the record could support an inference that Fortress bribed a GNMA employee, which would be criminal conduct directed at the government. For the reasons stated in the earlier opinion, factual questions about Fortress’s conduct that would not be protected by First Amendment principles or the Noerr-Pennington doctrine prevented summary judgment.

Leave to Amend

The First Amended Complaint had asserted a claim for tortious interference with existing and prospective business relations involving third parties other than GNMA. An earlier order had dismissed that claim, leaving tortious interference with contract as the sole surviving claim. The court had then asked the parties to explain why the complaint should not be amended to reinstate a business-relations claim concerning 360 Mortgage’s relationship with GNMA.

Fortress argued that the proposed claim duplicated the contract-interference claim and was not a separate cause of action under New York law. The court explained that a plaintiff cannot recover on both claims, but may plead them as alternatives because their elements differ. Unlike tortious interference with contract, tortious interference with business relations does not require an existing contract or a breach of contract. The court concluded that the proposed claim could proceed as an alternative if a jury found that no contract had been breached. The court also found that Fortress would not be prejudiced because the claims had overlapping elements and no additional discovery was needed.

Disposition

The court ordered that Fortress’s motion for reconsideration was DENIED. It ordered that 360 Mortgage’s motion for leave to amend the First Amended Complaint to plead a tortious-interference-with-business-relations claim was GRANTED. The court directed 360 Mortgage to file a proposed Second Amended Complaint by September 13, 2022, and directed the clerk to close the motion at Docket No. 225.