Lehman Brothers Holdings Inc. v. Universal American Mortgage Company, LLC

Filing 21

ORDER denying 16 Motion to Consolidate Certain Cases by Judge Christine M. Arguello on 4/17/13.(dkals, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Christine M. Arguello
Civil Action No. 13-cv-000087-CMA-MJW
LEHMAN BROTHERS HOLDINGS INC.,
Plaintiff,
v.
UNIVERSAL AMERICAN MORTGAGE COMPANY,
Defendant.

ORDER DENYING MOTION TO CONSOLIDATE

This matter is before the Court on the Motion to Consolidate Certain Cases (Doc.
# 16) filed by Plaintiff Lehman Brothers Holdings, Inc. (“Lehman”) in the abovecaptioned case (13-cv-00087). Lehman seeks to consolidate Case Nos. 13-cv-00087
through 13-cv-00093. Plaintiff Universal American Mortgage Company, LLC.
(“Universal”) a filed response (Doc. # 19), and Lehman filed a reply (Doc. # 20). For
the following reasons, Lehman’s motion to consolidate is DENIED.
I. BACKGROUND
Lehman originally filed the cases at issue here as one action in the District Court
for the Southern District of Florida (“SDFL”) in 2011. (Doc. 16 at 3.) On January 4,
2013, Judge King of SDFL presided over a pre-trial conference to address the parties’
cross-motions for summary judgment. (Doc. 16, Ex. 1 at 1.) (“Order Severing Claims”)

At the conference, Judge King expressed concern the eight1 cases lacked sufficient
commonality to be adjudicated together and gave counsel an opportunity to be heard on
this issue. (Doc. # 16, Ex. 4.) Subsequently, Judge King issued a written order
severing the cases, in which he reasoned,
[E]ach of these loans was made at a different time, to different borrowers,
in different locations involving different purchases of different real
properties; most fundamentally, each loan requires separate proof as to
whether a breach occurred, what damages, if any, flowed from any such
breach, and what the amounts of any such damages are.
(Order Severing Claims at 1-2.) Judge King then dismissed the case without prejudice
and gave Lehman leave to refile separate cases. (Id.) On January 15, 2013, Lehman
refiled the complaints in this district, and amended those complaints two days later.
(Complete Doc. Rpts. in Case Nos. 13-cv-00087 through -00093.)
In these complaints, Lehman asserts breach of contract claims against Universal
pursuant to the parties’ loan purchase agreement. The claims allege various
misrepresentations2 in the respective loan applications, misuse of certain loan products,
and mishandling of defaulted loans. The claims also implicate different sections of the
loan purchase agreement. On March 8, 2013, Lehman moved to consolidate the cases
again. (Doc. # 16.)

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Judge King retained the eighth case, not at issue here, and later dismissed that case for lack
of jurisdiction.

2

For instance, in Case No. 13-cv-00092, Lehman alleges that a borrower misrepresented
his or her mortgage debt and that the purchased home would be his or her primary residence.
In Case No. 13-cv-00091, Lehman alleges that the borrower misrepresented his or her
employment and in Case No. 13-cv-00089, Lehman alleges that the borrower misrepresented
his or her income.

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II. LEGAL STANDARD
Fed. R. Civ. P. 42(a) provides that, “[i]f actions before the court involve a
common question of law or fact, the court may: (1) join for hearing or trial any or all
matters at issue in the actions; (2) consolidate the actions; or (3) issue any other orders
to avoid unnecessary cost or delay.” In ruling on a motion to consolidate, “[t]he court
generally weighs the saving of time and effort that consolidation would produce against
any inconvenience, delay, or expense that consolidation would cause.” Emp’rs Mut.
Cas. Co. v. W. Skyways, Inc., No. 09-cv-01717, 2010 WL 2035577, at *1 (D. Colo. May
21, 2010) (unpublished). As the language of Rule 42(a) indicates, a district court has
broad discretion to grant or deny a motion to consolidate. See Walker v. United Parcel
Serv., Inc., 240 F.3d 1268, 1279 (10th Cir. 2001) (“[I]t is of course within the district
court’s discretion to consolidate the claims.”).
III. ANALYSIS
The Court has considered but rejects the parties’ arguments on the applicability
of the law of the case doctrine. The doctrine only applies when a court is dealing with
“subsequent stages in the same case” or “decisions of a coordinate court in the same
case.” Christianson v. Cold Industries Operating Corp., 486 U.S. 800, 816 (1988)
(emphasis added). Judge King dismissed the prior consolidated case and that case
no longer exists except as history. Following dismissal, Lehman refiled the separate
cases. Therefore, although related, the cases subject to this motion are not the same
case as before Judge King, nor is this motion a subsequent stage of that case.
See United States v. Phillips, 59 F. Supp. 2d 1178, 1188 (D. Utah 1999) (law of the
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case does not apply where case is dismissed then refiled). While the law of the case
doctrine has no applicability here, the Court will consider the pre-trial conference
transcript, which both parties attached to their motions, in rendering this decision.
After reviewing the parties’ briefs and considering the history of each case,
the Court finds that there are not common questions of law and fact to warrant
consolidation of these seven cases. Judge King, after considering voluminous
discovery and cross-motions for summary judgment, previously severed this case.
As Judge King found, and as the complaints and hearing transcript demonstrate, these
cases involve different questions of law and fact. Although each loan arises from the
same loan purchase agreement, each individual loan concerns different sections of that
agreement, which require distinct legal analyses. The cases involve different brokers,
borrowers, property, and loan products, defects, and documentation. Further, each
case may require divergent proof of damages. Therefore, individual questions of law
and fact may well predominate over common ones. See Servants of Paraclete, Inc.
v. Great American Ins. Co., 866 F. Supp. 1560, 1573 (D.N.M. 1994) (citing Henderson
v. National R.R. Passenger Corp., 118 F.R.D. 440, 441 (N.D.Ill.1987) (declining to
consolidate cases where, “[a]lthough certain common issues of fact may exist in both
actions, the variety of individual issues predominate.”)).
Further, this Court is not persuaded by Lehman’s argument that consolidation
promotes judicial economy and efficiency. This argument diminishes the fact that these
identical cases were once consolidated, only to be severed after almost two years of
discovery and motion practice. Judicial economy is not served when a court is asked to
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revisit a prior ruling without the benefit of the substantial record considered by a prior
court. Under these circumstances, a decision contrary to Judge King’s runs the risk that
this Court will have to sever the cases again after the case progresses to the summary
judgment stage. Therefore, consolidation is not likely to promote judicial economy.
Lehman also argues that Universal should be estopped from opposing
consolidation because it “recently argued before this Court in the Aurora Bank Case in
favor of consolidation for the same reasons asserted by [Lehman] here . . . .” (Doc.
# 16 at 9.) “[W]here a party assumes a certain position in a legal proceeding, and
succeeds in maintaining that position, he may not thereafter . . . assume a contrary
position . . . .” New Hampshire v. Maine, 532 U.S. 742, 749 (2001). The statements
cited by Lehman were made in a motion to transfer, and Universal only referenced its
intention to move to consolidate at a later stage. Moreover, this Court denied that
motion, observing that the cases are distinct because they involve different loans,
debtors, property, loan documentation, and witnesses. (Doc. # 25., No. 12-cv-02067CMA-MJW.) Universal did not succeed in maintaining its position; therefore, estoppel
does not apply.3

3

The Court also notes that Universal makes various arguments regarding impermissible forum
shopping. These arguments are more appropriately addressed in the motion to transfer, which
the Court will rule on once that motion becomes ripe.

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IV. CONCLUSION
Accordingly, Lehman’s Motion to Consolidate Certain Cases is DENIED.
DATED: April

17

, 2013
BY THE COURT:

_______________________________
CHRISTINE M. ARGUELLO
United States District Judge

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