Fortunato v. Chase Bank USA, N.A., No. 1:2011cv06608 - Document 41 (S.D.N.Y. 2011)
Court Description: 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)
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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 1 ( 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 1 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 2 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 3 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 4 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 5
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