Easy Financial, LLC v. Churchill MRA Funding I, LLC
- Gregory Woods
- 1:23-cv-02948
- U.S. District Court · Southern District of New York
- 6
In Easy Financial v. Churchill MRA Funding, Magistrate Judge Cave struck Churchill’s amended answer but allowed Sunrise’s answer.
Churchill must address whether it will seek permission to bring its new claims or seek approval to withdraw its earlier claims. Sunrise’s answer remains in place, and Easy’s claims continue to be asserted against Sunrise as a joined defendant. Some of Churchill’s response deadlines were paused, while briefing on Easy’s sanctions motion was scheduled.
What happened
Easy Financial, LLC v. Churchill MRA Funding I, LLC and Sunrise NPL, LLC concerned Easy’s request to strike two answers filed after Sunrise was added as a defendant. Magistrate Judge Cave ruled that Churchill’s filing was improper but that Sunrise’s answer was allowed.
Churchill’s amended answer added new claims without the court’s permission and removed earlier counterclaims and third-party claims without a required stipulation or court order. Sunrise filed an answer that included most of the claims Churchill had previously asserted. Easy argued that neither filing was proper.
Judge Sarah L. Cave granted in part and denied in part Easy’s strike request. She struck Churchill’s amended answer but denied the request as to Sunrise’s answer. The order gave Churchill deadlines to seek permission to file the new claims or to withdraw the earlier claims, and it paused some response deadlines.
The detailed version
- Easy Financial, LLC v. Churchill MRA Funding I, LLC · No. 1:23-cv-02948
- Gregory Woods
- Jan. 18, 2024
Background
Easy sued Churchill over alleged breaches of a settlement agreement resolving disputes related to a 2020 Master Repurchase Agreement and Securities Contract. Easy amended its complaint three times. Churchill later asked the court to add Sunrise as a necessary party because Churchill had assigned Sunrise rights in loans under the agreements and because the case could affect Sunrise’s interests.
The court granted Churchill’s request to join Sunrise and directed that Sunrise be added as a defendant. At a later conference, Churchill was directed to file an amended answer. The court did not authorize Churchill to file new counterclaims or third-party claims, and it did not authorize withdrawal of its existing counterclaims and third-party claims.
Churchill then filed an amended answer that omitted its earlier counterclaims and third-party claims but added a new counterclaim against Easy and a new third-party claim against Easy’s principal, Benjamin Donel. Sunrise separately filed an answer that included most of the counterclaims and third-party claims Churchill had previously asserted. Easy asked the court to strike both filings.
Court’s Analysis
The court granted the request as to Churchill’s amended answer. Under Federal Rule of Civil Procedure 15, Churchill needed the court’s permission to assert the new claims, but it neither requested nor received that permission. Churchill also could not withdraw counterclaims and third-party claims that had been answered unless all appearing parties stipulated to the withdrawal or the court approved it. No stipulation was filed, and Churchill did not request or receive court approval. The court therefore found Churchill’s amended answer improper.
The court denied the request as to Sunrise’s answer. In the earlier joinder order, the court had found Sunrise to be a required party and had directed that Sunrise be joined under Rule 19. Because Sunrise was now a defendant to Easy’s claims, the court concluded that Sunrise’s answer was proper. Easy had not objected to or sought reconsideration of the joinder order within the applicable deadline.
Order
The court granted in part and denied in part the strike request. It struck Churchill’s amended answer. By January 26, 2024, Churchill was required to file a motion for permission to assert the new claims if it wished to pursue them. If it wished to withdraw the earlier counterclaims and third-party claims, it had to submit either a stipulation signed by all parties or a motion for voluntary dismissal to Judge Gregory H. Woods.
Churchill’s deadlines to respond to the third amended complaint and to Easy’s motion for judgment on the pleadings were held in abeyance pending compliance with the order. The court also set deadlines for briefing Easy’s sanctions motion: Churchill’s opposition was due February 8, 2024, and Easy’s reply, if any, was due February 22, 2024.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.