OneWest Bank N.A. v. Conroy
1:14-cv-05862
E.D.N.YSep 15, 2016Background
- OneWest Bank N.A. (plaintiff) brought a diversity action on October 7, 2014 to foreclose a mortgage on 11 Waverly Court, Wading River, NY, following borrowers Tara Conroy and James Donovan's default on a loan originated by IndyMac for $600,000.
- IndyMac assigned the mortgage to plaintiff in 2010; unpaid principal as of September 12, 2014 was $592,405.03 plus interest/charges.
- Defendants Conroy and Donovan answered (not moved to dismiss); substantial discovery has occurred; other named defendants include various judgment creditors (some in default).
- Plaintiff moved to amend the complaint under Rule 15 to (1) change its corporate name from OneWest to CIT Bank, N.A. (successor name after acquisition) and (2) correct a factual/typographical error in ¶18 replacing a reference to MERS with IndyMac as mortgagee; no new claims or parties were proposed.
- Defendants Donovan and Conroy opposed the amendment but did not specifically contest the two discrete amendments; instead they argued broadly that the case is futile due to res judicata, collateral estoppel, and lack of plaintiff’s standing.
- The Court treated defendants’ merits arguments (which should have been raised via Rule 12/summary judgment) as improper in response to a Rule 15 motion, found no prejudice or bad faith, and granted leave to amend; it set deadlines for filing the amended complaint and for scheduling summary judgment briefing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Leave to amend under Rule 15 to change plaintiff name to CIT Bank, N.A. | The corporate name changed following acquisition; CIT Bank is successor and should be reflected in the caption. | Amendment unnecessary or futile because broader case supposedly barred (res judicata, collateral estoppel, lack of standing). | Granted: name change permitted; defendants acknowledge CIT as successor in answer. |
| Amendment to correct mortgagee identification (¶18) from MERS to IndyMac | Correction is a limited factual fix (typographical/error) and does not add claims or parties. | Not specifically contested as prejudicial; argued generally that case is futile. | Granted: no prejudice; defendant was on notice of the error and no undue prejudice shown. |
| Use of opposition to Rule 15 motion to seek dismissal on res judicata/standing grounds | Seeks only to amend pleadings, not to relitigate merits at this stage. | Opposed amendment and asserted doctrines (res judicata, collateral estoppel, lack of standing) to argue futility of the whole case. | Denied as procedural vehicle: Court held Rule 15 opposition is not the proper mechanism to raise Rule 12(b)(6) or preclusion defenses; such merits issues are better raised via motion to dismiss or summary judgment after discovery. |
Key Cases Cited
- Amaya v. Roadhouse Brick Oven Pizza, Inc., 285 F.R.D. 251 (E.D.N.Y. 2012) (Rule 15 leave-to-amend should be liberally granted)
- Hosking v. New World Mortg., Inc., 602 F. Supp. 2d 441 (E.D.N.Y. 2009) (leave to amend denied only for delay, bad faith, futility, or prejudice)
- Foman v. Davis, 371 U.S. 178 (U.S. 1962) (factors that justify denial of leave to amend)
- Organic Cow, LLC v. Ctr. for New Eng. Dairy Compact Research, 335 F.3d 66 (2d Cir. 2003) (substitution/joinder of successor in interest under Rule 25(c) is within trial court’s discretion)
- Cummings-Fowler v. Suffolk Cty. Cmty. Coll., 282 F.R.D. 292 (E.D.N.Y. 2012) (party opposing amendment bears burden to show prejudice or futility)