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Citimortgage, Inc. v. Chicago Bancorp, Inc.

United States District Court, E.D. Missouri, Eastern Division

February 12, 2015

CITIMORTGAGE, INC., Plaintiff,
v.
CHICAGO BANCORP, INC., et al., Defendants.

MEMORANDUM AND ORDER

AUDREY G. FLEISSIG, District Judge.

This matter is before the Court on the following motions: (1) a motion for judgment on the pleadings by Defendant Chicago Bancorp, Inc., and Defendants Federal Savings Bank, National Bancorp Holdings, Inc., Stephen Calk, and John Calk (the latter four, collectively, the "FSB Defendants")[1] (Doc. Nos. 32 & 55); (2) a motion for fees and costs, pursuant to Federal Rule of Civil Procedure 41(d), by the FSB Defendants (Doc. No. 50); and (3) a motion for leave to file a first amended complaint by Plaintiff CitiMortgage, Inc. ("CMI") (Doc. No. 27). At issue in each of these motions is the effect on this lawsuit, if any, of another lawsuit filed by CMI in this District, asserting similar claims against the same Defendants. For the reasons set forth below, the Court holds that the other lawsuit neither precludes CMI from asserting its current and proposed claims against Defendants in this case, nor entitles the FSB Defendants to fees and costs under Rule 41(d). Therefore, the Court will deny Defendants' motions and will grant CMI's motion for leave to file an amended complaint.

BACKGROUND

In 2004, CMI and Chicago Bancorp entered into a contract by which CMI would, from time to time, purchase residential mortgage loans from Chicago Bancorp. The contract consisted of a standard form contract entitled Correspondent Agreement Form 200, a Delegated Underwriting Addendum, and a CMI Select Addendum (collectively, the "Agreement"). The Agreement also incorporated by reference a more detailed CMI Correspondent Manual. The Agreement required Chicago Bancorp to repurchase its loans if CMI, in its sole discretion, determined the loans violated the terms of the Agreement.

CMI determined that 11 loans sold by Chicago Bancorp failed to comply with the Agreement, and demanded that Chicago Bancorp repurchase the loans. When Chicago Bancorp failed to do so, CMI filed suit. That suit, Case No. 4:12-cv-00246 (the "2012 lawsuit"), was filed in this District on February 13, 2012 and heard by Chief Judge Catherine D. Perry.

In the 2012 lawsuit, CMI brought a one-count claim for breach of contract against Chicago Bancorp, alleging in separate paragraphs the specific ways in which each of the 11 loans failed to comply with the Agreement. Chicago Bancorp moved to require CMI to state its claim with respect to each loan in a separate count, pursuant to Federal Rule of Civil Procedure 10(b), which states that "[i]f doing so would promote clarity, each claim founded on a separate transaction... must be stated in a separate count[.]" Fed.R.Civ.P. 10(b). Judge Perry denied Chicago Bancorp's motion, finding that "[a]lthough CMI could have separated each loan that allegedly breached the contract into a separate count of breach of contract, " it was not required to do so under Rule 10(b) because CMI already separated its allegations with respect to each loan in different paragraphs, and further separation by count was therefore "not necessary for a clear understanding of CMI's claims against Bancorp." CitiMortgage, Inc. v. Chicago Bancorp, Inc., No. 4:12CV246 CDP, 2012 WL 1660825, at *2 (E.D. Mo. May 11, 2012).

Judge Perry ultimately granted CMI summary judgment on its breach of contract claims with respect to some, but not all, of the 11 loans at issue. See CitiMortgage, Inc. v. Chicago Bancorp, Inc., No. 4:12 CV 246 CDP, 2014 WL 4415261, at *4 (E.D. Mo. Sept. 8, 2014). To reach this decision, Judge Perry analyzed each loan, including the facts and circumstances underlying CMI's determination that each loan was defective, in order to decide whether CMI exercised its discretion in good faith. Id. at *2-3. Judge Perry granted summary judgment in favor of CMI on all but three of the loans. Id. CMI later voluntarily dismissed its claims on the remaining three loans, and final judgment was entered in the 2012 lawsuit on January 23, 2015. (Doc. No. 238.)

CMI also sued the FSB Defendants in the 2012 lawsuit. CMI alleged that Defendants Stephen and John Calk, brothers and owners of Chicago Bancorp, unlawfully stripped Chicago Bancorp of its assets and transferred the assets to their other companies, Defendant National Bancorp Holdings and its subsidiary, Defendant Federal Savings Bank, for the purpose of avoiding any judgment awarded to CMI. CMI sued the FSB Defendants on theories of fraudulent transfer, alter ego, and successor liability. However, CMI later moved to voluntarily dismiss its claims against the FSB Defendants in the 2012 lawsuit. CMI's stated reasons for the dismissal were that Chicago Bancorp promised that it would retain enough assets to pay in full any unfavorable judgment in the 2012 lawsuit, and CMI had brought a second lawsuit regarding a different group of loans in which it would pursue the FSB Defendants. Judge Perry granted CMI's motion. In doing so, she found that CMI's "veil-piercing-type claims" against the FSB Defendants would be more appropriately presented in the second suit, where, if CMI prevailed, there was evidence Chicago Bancorp did not have enough assets to pay a judgment, and the secondary liability of the FSB Defendants would therefore be more central to the dispute. See No. 4:12 CV 246 CDP, Doc. No. 233 (E.D. Mo. Nov. 19, 2014).

The second lawsuit described above is this lawsuit. CMI filed this lawsuit on July 21, 2014, again asserting one breach of contract count against Chicago Bancorp (Count I) for failing to repurchase several defective loans, and fraudulent transfer, alter ego, and successor liability claims against the FSB Defendants (Counts II-IV) for unlawfully transferring assets away from Chicago Bancorp to avoid paying an unfavorable judgment in this case. The primary difference between the two lawsuits is the underlying loans at issue. This lawsuit asserts claims with respect to 18 loans, none of which was at issue in the 2012 lawsuit.

On October 17, 2014, CMI moved to amend its complaint in this lawsuit to add claims regarding 36 more loans to Count I, bringing the total loans at issue in Count I to 54. None of these loans was at issue in the 2012 lawsuit. The motion for leave to amend also seeks to add a new count asserting an alternative breach of contract theory with respect to a subset of the loans at issue in Count I;[2] to incorporate the new count into its alter ego and successor liability claims; and to clarify its jurisdictional allegations.[3]

Defendants move for judgment on the pleadings with respect to all of CMI's claims in this lawsuit. Defendants argue that CMI's claims could and should have been raised in the 2012 lawsuit, and CMI is therefore precluded from asserting its claims in this lawsuit under the doctrine of res judicata and the rule against claim splitting.

For the same reason, Defendants also oppose CMI's motion for leave to amend its complaint. Defendants argue that amendment would be futile because the new claims, too, should have been asserted in the 2012 lawsuit and would likewise be subject to judgment on the pleadings in this case.

Finally, the FSB Defendants move to recover the costs and attorneys' fees they incurred in defending against CMI's claims in the 2012 lawsuit before their dismissal from that case. The FSB Defendants argue that they are entitled to $17, 579.00 in costs and fees, pursuant to Federal Rule of Civil Procedure 41(d), for work performed in the 2012 lawsuit that will have to be repeated in this lawsuit. Specifically, the FSB Defendants request the fees incurred in preparing and filing their initial pleadings and disclosures in the 2012 lawsuit, in performing various scheduling tasks in the 2012 lawsuit, and in preparing the motion for costs and fees in this lawsuit.

CMI responds that res judicata and claim splitting principles do not apply here because each loan constitutes a separate transaction on which a separate claim may be raised. Therefore, CMI maintains that it is entitled to assert both its current and proposed claims in this lawsuit, notwithstanding that it asserted similar claims in the 2012 lawsuit. For the same reason, CMI argues that the FSB Defendants are not entitled to any costs and fees under Rule 41(d). CMI contends that although it asserts similar veil-piercing claims against the FSB Defendants as it did in the 2012 lawsuit, the claims are not duplicative because they are based on a different set of loans. ...


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