Opinion
No. 04 C 1088.
October 1, 2004
ORDER
Plaintiffs David and Lurlene Hurd have filed a two-count complaint against First NLC Financial Services, LaSalle Bank, and Ocwen Federal Bank. Counts 1 alleges that the plaintiffs' mortgage transaction is subject to rescission under the Truth in Lending Act 15 U.S.C. § 1601 et seq. (TILA). The parties have settled Count 2, which involved First NLC's alleged failure to disclose that it was taking a security interest in personal property on a class-wide basis. The Court granted preliminary approval of the settlement on June 23, 2004. Plaintiffs have also joined Ocwen, who is the current servicer of the loan, as a defendent under Federal Rule of Civil Procedure 19. Ocwen has moved for summary judgment, contending that it is not a creditor or an assignee that can be held liable under TILA. It further contends that it is not an appropriate Rule 19 defendant. Plaintiffs do not appear to dispute Ocwen's arguments regarding its liability under TILA, thus the only issue before the Court is whether Ocwen is an appropriate Rule 19 defendant. For the reasons discussed below, the Court denies Ocwen's motion for summary judgment.
Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The Court evaluates evidence in the record in the light most favorable to the nonmoving party. Bennett v. Roberts, 295 F.3d 687, 694 (7th Cir. 2002).
Plaintiffs seek rescission of their loan, which is currently owned by LaSalle Bank. Ocwen is the loan servicer and claims a right to payment on the loan. Plaintiffs have not alleged that Ocwen has engaged in any wrongdoing. Instead, they contend that Ocwen was properly joined as a Rule 19 defendant because, among other reasons, it controls the loan rescission and payoff processes. Rule 19(a) provides that a person shall be joined if "the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest." Fed.R.Civ.P. 19(a)(2).
It is clear that if the loan is rescinded, Ocwen will cease to have any collection or other functions in connection with the loan. The question is whether dismissing a loan servicer from an action seeking rescission of the loan at issue would impair the ability of the party seeking rescission to fully protect its interest or would prejudice the other parties involved. District courts addressing this issue have come to differing conclusions. Compare Walker v. Gateway Financial Corp., 286 F.Supp. 2d 965, 969 (N.D. Ill. 2003), with Hankins v. Equicredit Corp, No. 03 C 6524, order of Dec. 2, 2003 (N.D. Ill.).
The Court believes that dismissing Ocwen at this stage in the litigation would be premature. Discovery in this case has not yet been completed, and thus it is not entirely clear at this point exactly what Ocwen's interests are, what its role in the rescission process would be, or what affect dismissing them from this action might have on the other parties. The Court agrees with Judge Holderman's conclusion in Hankin that there may be some set of facts under which Ocwen would be a necessary party under Rule 19(a), for example if Ocwen attempts to foreclose on the loan or report adverse credit information during the course of this litigation. The Court does not believe these possibilities to be so speculative that summary judgment is warranted. As a result, the Court denies Ocwen's motion for summary judgment [Docket #17].