Fortunato v. Chase Bank USA, N.A.
Filing
41
MEMORANDUM OPINION AND ORDER: Defendant's application to implead a third party into this action is grant Defendant is directed to file the third-party complaint no later than November 30, 2011. The initial conference scheduled for November 21, 2011 is adjourned until February 1, 2012 at 10:30 a.m. to allow time for service so that all parties may attend. (Signed by Judge John F. Keenan on 11/16/2011) (ab)
Case 1:09-md-02013-PAC Document 57
Filed 09/30/10 Page 1 of 45
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: 11-16-11
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------X
UNITED STATES DISTRICT COURT
LORRI J. FORTUNATO,
:
SOUTHERN DISTRICT OF NEW YORK
:
-----------------------------------------------------------x
Plaintiff,
:
In re FANNIE MAE 2008 SECURITIES
08 Civ. 7831 (PAC)
::
LITIGATION
09 11 Civ. 6608
-against::
No. MD 2013 (PAC) (JFK)
:
:
Memorandum Opinion & Order
:
OPINION & ORDER
CHASE BANK USA, N.A.,
:
-----------------------------------------------------------x
:
Defendant.
:
------------------------------X
JOHN F. KEENAN, United States District Judge:
HONORABLE PAUL A. CROTTY, United States District Judge:
Before the Court is Defendant Chase Bank USA, N.A.’s
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(“Chase” or “Defendant”) BACKGROUND
letter application for leave to file a
The early years of this decade saw a boom in Rule 14(a) of the fueled, among
third-party complaint pursuant to home financing which was Federal
other things, by Civil Procedure. credit conditions. New lending instruments, the as
Rules of low interest rates and lax For the reasons that follow, such
subprime mortgages is granted. loans) and Alt-A mortgages (low-documentation loans)
application (high credit risk
I.
Background
kept the boom going. Borrowers played a role too; they took on unmanageable risks on the
In an market would continue to rise and June 22, 2011, Plaintiff
assumption that theamended complaint dated that refinancing options would always be
Lorri the Forunato (“Lorri” or “Plaintiff”) alleges that another
available inJ. future. Lending discipline was lacking in the system. Mortgage originators did
person fraudulently opened a Chase credit card on their books, her
not hold these high-risk mortgage loans. Rather than carry the rising riskaccount in the
name and their loans into the incur debt without often as securitized or
originators sold proceeded to secondary mortgage market, her knowledge packages
authorization. (Am. Compl. ¶¶ MBS markets grew almost exponentially.
known as mortgage-backed securities (“MBSs”). 7-9). When the debt went unpaid,
Chase initiated collection proceedings against Lorri in abruptly
But then the housing bubble burst. In 2006, the demand for housing dropped New York
Supreme Court on March 4, the changing housing market, banks modified their
and home prices began to fall. In light of 2009 by completing service of process
at practices and in Carmel, to refinance home mortgages without refinancing.
lendingan addressbecame unwilling New York; Lorri claims that she has
never lived at the address where Chase attempted to serve her
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notice of the action. (Id. ¶¶ or to the “Complaint” are to 31, 2009, Chase
Unless otherwise indicated, all references cited as “(¶ _)” 14-15). On July the Amended Complaint,
dated June 22, 2009. For purposes of this Motion, all allegations in the Amended Complaint are taken as true.
1 1
obtained a default judgment against Lorri, and on May 24, 2010,
Chase began proceedings to garnish her wages.
(Id. ¶¶ 20, 23).
Chase eventually satisfied the full amount of the default
judgment through garnishment of Lorri’s wages.
(Id. ¶ 27).
Lorri brings claims against Chase for violation of the Fair
Credit Reporting Act, abuse of process, and conversion.
(Id. ¶¶
33-47).
Lorri initially filed this action in the United States
District Court for the District of New Jersey.
In an order
dated September 14, 2011, Judge Chesler granted Chase’s motion
to transfer the case to the Southern District of New York
pursuant to 28 U.S.C. § 1404(a).
Subsequently, in a letter
dated October 13, 2011, Chase requested leave to implead Nicole
Fortunato (“Nicole”), Lorri’s daughter, into this action.
In a
proposed third-party complaint, Chase alleges that Nicole opened
the credit card account in her mother’s name, listed her own
address in Carmel, New York in the account application, and
proceeded to charge $1,243.09, which amount was ultimately
garnished from Lorri’s wages.
22).
(Third Party Compl. ¶¶ 12-14, 20,
Chase seeks to assert claims against Nicole for
contribution, indemnification, breach of contract, account
stated, fraud, and unjust enrichment.
(Id. ¶¶ 23-48).
In a
letter dated October 21, 2011, Plaintiff’s counsel informed the
Court that Lorri “takes no position” regarding Chase’s
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application for leave to file a third-party complaint against
her daughter.
II.
Discussion
Under Rule 14(a)(1), a defendant may implead a third party
“who is or may be liable to it for all or part of the claim
against it.”
Although leave of court is required to file a
third-party complaint more than fourteen days after defendant
served its original answer to the complaint, Fed. R. Civ. P.
14(a)(1), “[t]imely
motions for leave to implead non-parties
should be freely granted to promote [judicial] efficiency unless
to do so would prejudice the plaintiff, unduly complicate the
trial, or would foster an obviously unmeritorious claim.”
Shafarman v. Ryder Truck Rental, Inc., 100 F.R.D. 454, 459
(S.D.N.Y. 1984).
“Impleader is appropriate when the third-party
defendant’s liability to the third-party plaintiff is ‘dependent
upon the outcome of the main claim’ or the third-party defendant
is ‘potentially secondarily liable as a contributor to the
defendant.’”
Too, Inc. v. Kohl’s Dep’t Stores, Inc., 213 F.R.D.
138, 140 (S.D.N.Y. 2003) (quoting Kenneth Leventhal & Co. v.
Joyner Wholesale Co., 736 F.2d 29, 31 (2d Cir. 1984)).
“Factors relevant to the determination of whether to permit the
filing of a third-party complaint include: (1) whether the
movant deliberately delayed or was derelict in filing the
motion; (2) whether impleading would delay or unduly complicate
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the trial; (3) whether impleading would prejudice the thirdparty defendant; and (4) whether the proposed third-party
complaint states a claim upon which relief can be granted.”
Fashion-in-Prints, Inc. v. Salon, Marrow & Dyckman, L.L.P., No.
97 Civ. 340, 1999 WL 500149, at *6 (S.D.N.Y. July 15, 1999).
Each of the four factors favor impleader.
It is unlikely
that Defendant could have brought Nicole into the case prior to
its transfer to the Southern District of New York since Nicole
is not a New Jersey resident and there are no facts indicating
any connection between Nicole and the New Jersey forum.
As soon
as the case was transferred to a jurisdiction where Nicole could
be reached, Defendant requested leave to file a third-party
complaint.
Accordingly, there is no indication that Defendant
delayed in its Rule 14(a) application.
Nor would impleader
delay or complicate the case, as the parties have yet to appear
for an initial conference in this District, discovery has not
yet begun, and no trial date has been set.
The Court has no
reason to believe impleading Nicole at this early stage would
cause her prejudice.
Finally, although it is an open question
whether indemnification and contribution are available with
respect to the Fair Credit Reporting Act, see, e.g., Smith v.
Waverly Partners, LLC, No. 10 Civ. 28, 2011 WL 1655592, at *6-7
(W.D.N.C. Apr. 29, 2011) (finding that neither the Fair Credit
Reporting Act itself nor federal common law create rights of
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contribution or indemnity)
Servs.
i
McMillan v.
fax Credit
--------------~~--------~~--~~-
Inc., 153 F. Supp. 2d 129, 132 (D. Conn. 2001)
(denying
motion to file third-party complaint asserting indemnif
ion
claim in connection with alleged Fair Credit Reporting Act
olation), Defendant may have valid claims against Nicole for,
among other things, breach of contract and fraud that are
ose
ated to the underlying action and may affect
De
's liability to Plaintiff.
object
As Plaintiff has raised no
to the application, the Court believes the most
course of action is to permit impleader and allow the
claims to be tested through fully briefed motion
third
pract
Conclusion
III.
's application to implead a third party into this
De
Defendant is directed to file the third-
action is grant
party compl
no later than November 30, 2011.
conference schedul
The initial
November 21, 2011 is adjourned until
February 1, 2012 at 10:30 a.m. to allow time for service so that
all parties may att
SO ORDERED.
Dated:
New York, New
November 16, 2011
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