Free Motion for Joinder - District Court of Colorado - Colorado

Case 1:01-cv-01644-REB-CBS

Document 453

Filed 02/07/2008

Page 1 of 5

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 01-cv-1644-REB-CBS CARTEL ASSET MANAGEMENT, a Colorado corporation, Plaintiff, vs. OCWEN FINANCIAL CORPORATION, a Florida corporation; and OCWEN FEDERAL BANK FSB, a subsidiary of OCWEN FINANCIAL CORPORATION, Defendants.

MOTION TO JOIN OCWEN FINANCIAL CORP. AS A PARTY DEFENDANT UNDER FED.R.CIV.P. 18(b) and 20 (a)

Pursuant to Fed.R.Civ.P. 18(b) and 20(a), Plaintiff, Cartel Asset Management ("Cartel"), through its undersigned counsel, G.W. MERRICK & ASSOCIATES, LLC, respectfully moves this Court for an Order joining Ocwen Financial Corp. ("OFC") as a party Defendant. 1 As grounds for this Motion to Join, Cartel advises the Court as follows: 1. In the original trial in this matter, the jury returned a verdict in the

aggregate amount of Nearly $9 million in favor of Cartel and against Ocwen Federal Bank, FSB (the "Bank"). Following entry of the original judgment on the jury verdict,

OFC was a defendant in the original trial of this case. Following trial, judgment was entered in OFC's favor. Accordingly, counsel for OFC has asked that it be removed as a defendant in connection with the re-trial, and that OFC be removed from the case caption. "Joinder" is used in this situation to reflect that OFC should remain as a Defendant in this case based upon its unconditional and comprehensive guarantee of the obligations of the Bank as described in the text.

1

Case 1:01-cv-01644-REB-CBS

Document 453

Filed 02/07/2008

Page 2 of 5

the trial court vacated that judgment and thereafter entered a judgment n.o.v. An appeal followed. 2. On or about September 18, 2007, the United States Court of The Tenth Circuit

Appeals for the Tenth Circuit issued its Order and Judgment.

remanded the matter to this court for a new trial on damages against the Bank. Cartel Asset Management v. Ocwen Financial Corp., 2007 U.S.App. LEXIS 22346 (10th Cir. Sept. 18, 2007). 3. Meanwhile, on or about June 13, 2005, the Office of Thrift

Supervision approved the Bank's plan of voluntary dissolution subject to certain conditions. These conditions included one that OFC fully guarantee OFB's obligations (including the litigation obligation to Cartel), (ii) enter into a Cash Collateral Agreement, and (iii) enter into a Collateral Trust Agreement. See Ocwen Financial Corp., SEC Form 10-K, dated March 30, 2006, at p.3 (attached to "Defendant Ocwen Federal Bank FSB's Motion for Substitution of Party and for Amendment of Caption"). 4. Accordingly, in order to induce the OTS to approve the Bank's

Dissolution Plan, OFC executed "an agreement to guaranty the obligations of the Bank ... a cash collateral agreement and a collateral trust agreement, all on terms acceptable to the OTS." Id. By virtue of this action OFC fully and unconditionally guaranteed the Bank's litigation liability to Cartel upon retrial of this matter. 5. Fed.R.Civ.P. 18(b), captioned "Permissive Joinder of Claims,"

provides, in pertinent part: "[w]henever a claim is one heretofore cognizable only after another claim has been prosecuted to a conclusion, the two claims may be joined in a single action." Fed. R.Civ.P. 20(a), captioned "Permissive Joinder," provides, in

2

Case 1:01-cv-01644-REB-CBS

Document 453

Filed 02/07/2008

Page 3 of 5

pertinent part: "[a]ll persons ... may be joined in one action as defendants if there is asserted against them jointly, severally, or in the alternative, any right to relief in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all defendants will arise in the action." 6. The confluence of Fed.R.Civ.P. 18(b) and 20 (a) permits Cartel to

join OFC (the guarantor of the Bank's obligations to Cartel) as a Defendant in this action. E.g., Decatur Coca-Cola Bottling Co. v. Variety Vending Corp., 277 F.Supp. 393 (N.D. Ga. 1967)(under Fed.R.Civ.P. 18(b) and 20(a) guarantor may be joined in suit without the necessity of the plaintiff first obtaining a judgment against the principal obligor); see also Bailey v. Zlotnick, 133 F.2d 35, 37 (D.C.Cir. 1942)(principal and agent can be joined in the same action under Fed.R.Civ.P. 20(a) even though the principal's liability is predicated solely upon the agency); Sypherd v. Haeckl's Express, Inc., 31 F.R.D. 255 (S.D. Ohio 1962)(master and servant may be joined under Fed.R.Civ.P. 20(a) even though master's liability is based solely on the doctrine of respondeat superior); Citizens Bank of Ashville v. Cameron & Co., 40 F.Supp. 1002, 1004 (S.D.Ohio 1941), aff'd 134 F.2d 888 (6th Cir. 1943)(under Fed.R.Civ.P. 20(a) a surety may be joined as a defendant although it has no liability until judgment is obtained against the principal obligor). 7. As is emphasized in the cases cited herein, joinder of OFC as a

Defendant under Fed.R.Civ.P. 18(b) and 20 will have the salutary effects of: (a) providing an efficient and cost-effective mechanism for enforcing OFC's guaranty used to induce the approval of the OTS, a federal agency, and (b) avoiding a multiplicity of

3

Case 1:01-cv-01644-REB-CBS

Document 453

Filed 02/07/2008

Page 4 of 5

suits in respect of that guaranty. Moreover, joinder of OFC does not unfairly prejudice the rights of any of the parties to this litigation. 8. On February 5, 2008, Cartel filed a Supplemental Response to the

Bank's Motion to Substitute Ocwen Loan Servicing, LLC for the Bank as a party defendant. In that Supplemental Response, Cartel urged that OFC be "joined" as a Defendant under Fed.R.Civ.P. 25 and the case law interpreting that rule (based upon OFC's guaranty of the Bank's obligation). This Motion to Join is not intended to supersede Cartel's Supplemental Response. Rather, this Motion to Join is intended to further inform the Court that such joinder is also appropriate under Fed.R.Civ.P. 18(b) and 20(a). WHEREFORE, Cartel respectfully moves this Court under Fed.R.Civ.P. 18(b) and 20 to join as a Defendant Ocwen Financial Corp. as a party Defendant upon retrial of this case. Respectfully submitted this 7th day of February, 2008.

/s/ Glenn W. Merrick Glenn W. Merrick Brian S. Emeson G.W. MERRICK & ASSOCIATES, LLC 5445 DTC Parkway, Suite 912 Greenwood Village, Colorado 80111 Telephone: (303) 831-9400 Facsimile: (303) 771-5803 ATTORNEYS FOR PLAINTIFF

4

Case 1:01-cv-01644-REB-CBS

Document 453

Filed 02/07/2008

Page 5 of 5

CERTIFICATE OF SERVICE I hereby certify that on the 7th day of February, 2008, a true and correct copy of the foregoing MOTION TO JOIN OCWEN FINANCIAL CORP AS A DEFENDANT UNDER FED.R.CIV.P. 18(b) and 20 was electronically filed with the clerk of court using the CM/ECF System: Lino S. Lipinsky de Orlov, Esq. Sandra Wick Mulvany, Esq. McKENNA LONG & ALDERIDGE LLP 1875 Lawrence Street, Suite 200 Denver, Colorado 80202

/s/ Dyanna M. Spicher

5