Free Motion to Substitute Party - District Court of Colorado - Colorado

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

Document 442

Filed 12/21/2007

Page 1 of 4

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, v. 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. DEFENDANT OCWEN FEDERAL BANK FSB'S MOTION FOR SUBSTITUTION OF PARTY AND FOR AMENDMENT OF CAPTION Defendant Ocwen Federal Bank FSB (the "Bank") respectfully moves, pursuant to Rule 25(c) of the Federal Rules of Civil Procedure, for an order substituting Ocwen Loan Servicing, LLC ("OLS") for the Bank, and amending the caption of this action, for the reasons set forth below. CERTIFICATION PURSUANT TO D.C.COLO.LCIVR 7.1(A) Counsel for the Bank conferred with Glenn Merrick, counsel for plaintiff, Cartel Asset Management ("Cartel"), regarding this motion through exchanges of e-mails on December 10, 13, 18, 19, and 20, 2007. Cartel opposes substitution of OLS for the Bank, unless Ocwen Financial Corporation ("OFC"), the corporate parent of OLS, is also substituted for the Bank. As

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

Document 442

Filed 12/21/2007

Page 2 of 4

explained below, there is no basis for substituting both OLS and OFC for the Bank. Cartel does not oppose removal of OTX's name from the case caption. ARGUMENT 1. On June 30, 2005, OFC concluded various transactions to effectuate the transfer

of its loan servicing business and related businesses from the Bank to OLS and the dissolution of the Bank. See OFC's Form 10-K dated March 30, 2006 at 3, 7. (Relevant pages from the Form 10-K are attached hereto as Exhibit A.) The transactions included the transfer of the Bank's branch facility in Fort Lee, New Jersey, including deposit liabilities associated therewith, to Marathon National Bank of New York, and the assignment by the Bank of its remaining assets, liabilities, and businesses to OLS, a wholly owned subsidiary of OFC. See id. at 3, F-10. OLS is the successor in interest to the Bank with respect to all legal actions. See id. at 13. 2. OLS is an active and solvent business, as reported in OFC's filings with the

Securities and Exchange Commission ("SEC"). OLS is a licensed servicer in all fifty states, the District of Columbia, and Puerto Rico. See id. at 3. 3. Because the Bank has been dissolved, it can no longer be a party to this case.

Moreover, because OLS took over the remaining assets, liabilities, and businesses of the Bank, and because OLS is the legal successor-in-interest of the Bank, OLS is the appropriate party to be substituted for the Bank. "When a court is asked to substitute a party under Rule 25(c), the court proceeds to determine which entity is the successor in interest to the original [party]." Standard Fed. Bank v. United States, 51 Fed. Cl. 695, 707 (2002); see Virgo v. Riviera Beach Assocs., Ltd., 30 F.3d 1350, 1357-58 (11th Cir. 1994); Kanaji v. Philadelphia Child Guidance Ctr. of Children's Hosp., No. CIV A. 00-937, 2001 WL 708898, at *1 (E.D. Pa. June 20, 2001).

2

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

Document 442

Filed 12/21/2007

Page 3 of 4

OFC is not a successor-in-interest of the Bank and, therefore, should not be substituted for the Bank. 4. No prejudice to any party would result from the substitution of OLS for the Bank

in this case, particularly given that OLS is an active, solvent business with its own assets. 5. The Bank filed a similar motion to substitute parties in the Tenth Circuit. The

Tenth Circuit denied such motion, however, on the grounds that "[a]ny adjustment in party status is best determined by the district court on remand." See Order and Judgment entered on Sept. 18, 2007, at 49. 6. In addition, the name of defendant Ocwen Technology Xchange, Inc. ("OTX")

may be removed from the case caption because all claims against OTX have been resolved. Cartel will be filing a Satisfaction of Judgment with respect to its claims against OTX. CONCLUSION WHEREFORE, the Bank respectfully request that this Court enter an order (a) substituting OLS for the Bank in this action, and (b) changing the caption of this action to reflect the substitution of OLS for the Bank in OLS's capacity as the successor-in-interest to the Bank, and to remove OTX's name. Respectfully submitted this 21st day of December, 2007. /s/Lino S. Lipinsky de Orlov_________ Lino S. Lipinsky de Orlov Sandra Wick Mulvany MCKENNA LONG & ALDRIDGE LLP 1875 Lawrence Street, Suite 200 Denver, CO 80202 (303) 634-4000 ATTORNEYS FOR DEFENDANT OCWEN FEDERAL BANK FSB 3

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

Document 442

Filed 12/21/2007

Page 4 of 4

CERTIFICATE OF SERVICE I hereby certify that on this 21st day of December, 2007, a true and correct copy of the foregoing 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:

Glenn W. Merrick, Esq. T.W. Merrick & Associates, LLC 5445 DTC Parkway, Suite 912 Greenwood Village, CO 80111 [email protected] /s/Lino S. Lipinsky de Orlov_________
DN:32133390.1

4