Free Response to Motion - District Court of Colorado - Colorado

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

Document 443

Filed 12/24/2007

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

RESPONSE TO "DEFENDANT OCWEN FEDERAL BANK FSB'S MOTION FOR SUBSTITUTION OF PARTY AND FOR AMENDMENT OF CAPTION"

Plaintiff, Cartel Asset Management ("Cartel"), through its undersigned counsel, hereby responds to "Defendant Ocwen Federal Bank FSB's Motion for Substitution of Party and for Amendment of Caption" (the "Motion to Substitute Party") as follows: 1. Cartel does not oppose the amendment of the case caption to

remove the reference to Ocwen Technology Xchange, Inc. ("OTX"). OTX has paid all judgment amounts and costs for which it was responsible. 2. With respect to the request to substitute for Ocwen Federal Bank,

FSB ("OFB"), there are a different set of considerations. These arise out of the fact that the jury returned an $8.8 million judgment in favor of Cartel and against OFB ($4.9 million in compensatory damages, and $3.9 million in punitive damages). Although this

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

Document 443

Filed 12/24/2007

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Court subsequently set aside the judgment on the jury verdict, the Tenth Circuit has reversed and ordered a new trial on damages. 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 OFB's plan of voluntary dissolution subject to certain conditions. These conditions include the conditions that OFC: (i) fully guaranty OFB's obligations (including the unliquidated 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 for 2006, attached to the Motion to Substitute Party. Neither the Cash Collateral Agreement not the Collateral Trust Agreement was attached to OFB's Motion to Substitute Party. 4. Cartel does not object to OLS being added as a party -- as a

successor in interest to OFB. However, since OFC has guaranteed the obligations of OFB, it should remain as a party as a "successor," or party "guarantor," of the obligations of OFB. More particularly, in light of its commitment to the Office of Thrift Supervision any judgment in Cartel's favor should apply with equal force against OFC. Cartel should not be put to the expense, burden and delay of having to initiate follow on litigation against OFC to enforce this guaranty. 5. Furthermore, upon information and belief, Cartel understands that

the aforementioned Cash Collateral Agreement and/or Collateral Trust Agreement include one or more pledges of unencumbered cash assets by OFC and/or OFB to secure the obligations of OFB. As OFB has elected not to produce either of these agreements, Cartel respectfully urges that the Court deny any motion to remove OFB as a party if the

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

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removal would imperil or prejudice Cartel's right to access any collateral or trust assets securing the obligations of OFB. Accordingly, the Motion to Substitute Party should be denied unless and until it is demonstrated by OFB that the removal of OFB will not imperil or prejudice Cartel's right to access such collateral or trust assets. WHEREFORE, Cartel does not oppose the motion to amend the caption to remove OTX as a party. Cartel consents to the addition of OLS as a party and urges that the Court retain OFC as a successor party or a party guarantor. Finally, Cartel opposes the removal of OFB as a party until such time as OFB demonstrates that its removal from the case as a party will not imperil or prejudice Cartel's right to access any collateral or trust assets securing the obligations of OFB. Respectfully submitted this 24th day of December, 2007.

/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

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

Document 443

Filed 12/24/2007

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CERTIFICATE OF SERVICE I hereby certify that on the 24th day of December, 2007, a true and correct copy of the foregoing RESPONSE TO "DEFENDANT OCWEN FEDERAL BANK FSB'S MOTION FOR SUBSTITUTION OF PARTY AND FOR AMENDMENT OF CAPTION" 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

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