A presiding magistrate Judge has recommended denying reverse mortgage servicer Celink‘s recent motion to have a case brought against it and bankrupt lender Reverse Mortgage Funding (RMF) dismissed, pending further progress in a separate case involving allegations of improper collection of property taxes from homeowners with Home Equity Conversion Mortgages (HECMs).

The motion in Dancy-Wilkins v. Celink — a case recently joined by the AARP Foundation — is recommended to be denied “without prejudice,” meaning that it could be refiled at a later date, pending the observance of operational rules as well as discovery in a related case, Shakespeare v. Live Well Financial, that also involves both Celink and RMF.

Judge Joanna Seybert has final authority on whether to grant, deny or modify the recommendation by the presiding magistrate judge.

The initial complaint in Shakespeare v. Live Well Financial alleges that the companies improperly paid property taxes before they became due without legal justification or notice.

Attorneys must bring important facts to the court to determine if the same judge should hear another case, preventing “unnecessary duplication of judicial effort.” This is according to the operational rules cited by the magistrate judge in the Dancy-Wilkins case.

The rules also say that attorneys must provide judges in adjacent cases with any relevant documents or orders that could be relevant to the case before the judge.

“Defendant violated the letter and spirit of these rules in the Motion,” wrote U.S. Magistrate Judge Lee Dunst. “Defendant’s opening memorandum in support of the Motion omitted any mention of the Shakespeare case or the prior decisions of the Second Circuit[…].”

Judge Dunst castigated attorneys for Celink over what he determined was an attempt to obfuscate critical details highlighting the relevance of the Shakespeare case to the Dancy-Wilkins case.

“Defendant furthered its obfuscation about the existence of the Shakespeare case when, in identifying the alleged differences between this unnamed ‘different case’ and the Dancy-Wilkins case, Defendant omitted a critical fact – Celink is a defendant in both cases,” Dunst wrote. “It is clear to the Court that Defendant has ‘engaged in hide the ball tactics’ that are at best too cute by half and, at worst, disingenuous.”

Celink will have the option to refile its dismissal motion following a ruling on a different motion in the Shakespeare case, Dunst explained.

Attorneys for the Aarp Foundation declined to comment on the development, while an attorney for Celink did not immediately return a request for comment.

In an interview with RMD, Senior AARP Foundation Attorney Julie Nepveu explained that the Shakespeare case and the Dancy-Wilkins case are related, motivating the Foundation to become involved in the latter.

“We have been co-counsel in that case for a long time, since its inception, and now that discovery is starting to flow it was time to get involved in this case, too, because the discovery is coming from this case rather than the Shakespeare case.”

Originally filed in late 2022, the Dancy-Wilkins case alleges the companies “added various types of unlawful loan servicing fees that violate reverse mortgage contracts and federal and state laws” according to a review of the initial court complaint obtained by RMD.

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