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Nelson v. Repossessors, Inc.

United States District Court, D. Minnesota

April 20, 2018

Kurk Matthew Nelson, Plaintiff,
v.
Repossessors, Inc.; Consumer Portfolio Services, Inc.; and Chase Towing & Transport, Inc., Defendants.

          Katelyn Rae Cartier and Thomas J. Lyons, Jr., Esq., Consumer Justice Center, P.A., Vadnais Heights, Minnesota, for Plaintiff.

          Chad A. Snyder, Esq., Rubric Legal LLC, Minneapolis, Minnesota, for Defendants.

          Jeffrey D. Pilgrim, Esq., Pilgrim Christakis LLP, Chicago, Illinois, for Defendants.

          ORDER

          STEVEN E. RAU, UNITED STATES MAGISTRATE JUDGE

         The above-captioned case comes before the undersigned on Defendants Repossessors, Inc.; Chase Towing & Transport, Inc.; and Consumer Portfolio Services, Inc.'s (collectively, “Defendants”) Motion to Amend Pleadings and Add a Party (the “Motion”) [Doc. No. 29]. This matter was referred for the resolution of pretrial matters pursuant to 28 U.S.C. § 636(b)(1)(A) and District of Minnesota Local Rule 72.1. For the reasons stated below, the Court grants the Motion.

         I.BACKGROUND

         Jeremy Floyd (“Floyd”) purchased a Jeep Patriot (the “vehicle”) using financing from Defendant Consumer Portfolio Services, Inc. (“CPS”) in October 2014. (Compl.) [Doc. No. 1 ¶¶ 9-10]. On January 11, 2017, Professional Recovery Services (“PRS”) towed and stored the vehicle because it was parked illegally. (Id. ¶ 11). PRS sent CPS and Floyd a legal notice informing them that the vehicle “was being stored and that failure to redeem would result in sale or salvage of the Vehicle.” (Id. ¶ 12). CPS received the notice on February 6, 2017, but did not respond. (Id. ¶¶ 13-14). On February 28, 2017, Plaintiff Kurk Matthew Nelson (“Nelson”) purchased the vehicle from PRS for $1, 000. (Id. ¶¶ 15-16). Defendant Chase Towing & Transport, Inc. (“Chase”) repossessed the vehicle from Nelson on June 17, 2017, between 2:00 and 3:00 a.m. (Id. ¶ 17). Nelson called Chase that morning, and its agent confirmed that it repossessed the vehicle on CPS's instruction. (Id. ¶¶ 18, 20). Specifically, Chase's agent explained that Floyd owed CPS money for the vehicle, and CPS had a lien on the vehicle. (Id. ¶ 20). Nelson, who believed he “owned the car and possessed title ‘clear and free, '” attempted to report the vehicle stolen; attempted to obtain CPS's information regarding Floyd from Defendant Repossessors, Inc.; and called CPS two more times (Id. ¶¶ 19, 21, 23-30). The vehicle was returned to Nelson at 12:30 p.m. on the same day. (Id. ¶ 31). It had approximately $781 worth of damage when it was returned. (Id. ¶¶ 32-33).

         Nelson alleges the following claims: Count 1-violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692f(6);[1] Count 2-common law trespass to chattels; Count 3-wrongful repossession in violation of Minnesota Statute section 336.9-609; Count 4- conversion; and Count 5-intrusion upon seclusion. (Compl. at 6-9).

         Through discovery, Defendants learned that PRS did not meet the statutory requirements necessary to sell the so-called abandoned vehicle to Nelson, who is an agent and/or employee of PRS. (Defs.' Mem. of Law in Supp. of Mot., “Mem. in Supp.”) [Doc. No. 32 at 2-3] (citing Minn. Stat. § 168B.01, et seq.). Defendants seek the Court's permission to file: (1) an amended answer on behalf of Repossessors, Inc. and Chase to assert an additional affirmative defense; (2) an amended answer on behalf of CPS to add an affirmative defense, add counterclaims against Nelson and PRS, and add PRS as a party; and (3) a third-party complaint on behalf of Defendants against PRS. (Id. at 3).

         Nelson only opposes the Motion to the extent it seeks leave to file a counterclaim against him. See (Pl.'s Resp. in Opp'n to Mot., “Mem. in Opp'n”) [Doc. No. 38]. Thus, the Court's analysis is confined to this issue and the remainder of the Motion is granted without discussion. At the hearing, the Court asked for supplemental briefing regarding whether CPS's proposed counterclaim was a compulsory counterclaim under Rule 13 of the Federal Rules of Civil Procedure that was required to be brought at the time of its answer. (Minute Entry Dated Apr. 3, 2018) [Doc. No. 45]. If so, the Court asked the parties to address whether the compulsory counterclaim was waived if not asserted in the original answer. (Id.). The parties submitted supplemental briefing on April 10, 2018, and the matter is now ripe for adjudication.

         II. DISCUSSION

         The Court first addresses the subject of the parties' supplemental briefing: whether Defendants' counterclaim is compulsory and whether it is waived because it was not asserted in their original answer. See (id.). A counterclaim is compulsory if the claim “arises out of the transaction or occurrence that is the subject matter of the opposing party's claim; and . . . does not require adding another party over whom the court cannot acquire jurisdiction.” Fed.R.Civ.P. 13(a)(1). The parties agree that Defendants' claim against Nelson is compulsory. (Nelson's Letter to Mag. J.) [Doc. No. 46 at 2]; (Defs.' Letter to Mag. J.) [Doc. No. 47 at 2-3]. The Court agrees. The central issue raised in the Complaint is whether Defendants had authority to repossess the vehicle. Defendants' proposed counterclaim against Nelson and PRS alleges that their sale of the vehicle to Nelson failed to satisfy the statutory requirements for abandoned vehicles. (CPS's Proposed (1) Am. Answer & Aff. Defenses to Compl. & (2) Countercl. Against Nelson & PRS, Ex. B., Attached to Ex. Index) [Doc. No. 33-2 at 24-29]. Thus, the Complaint and proposed counterclaim both require resolution of who or what entity owned the vehicle at the time of its repossession from Nelson.

         Additionally, Defendants' counterclaim is not waived. A compulsory counterclaim that is not brought is waived in subsequent litigation. Schinzing v. Mid-States Stainless, Inc., 415 F.3d 807, 813 (8th Cir. 2005). A party's amendment that seeks the court's permission to assert a compulsory counterclaim in the same litigation as the common “transaction or occurrence, ” however, is analyzed under Rule 15(a). See Costello, Porter, Hill, Heisterkamp & Bushnell v. Providers Fidelity Life Ins. Co., 958 F.2d 836, 839-40 (8th Cir. 1992); Wayzata Bank & Tr. Co. v. A & B Farms, 855 F.2d 590, 594 (8th Cir. 1988); Fed.R.Civ.P. 13, advisory committee note to 2009 amendment (“An amendment to add a counterclaim will be governed by Rule 15.”). The transaction or occurrence at issue in this case is (1) the removal of the vehicle from Nelson's possession; and (2) who or what entity owned the vehicle at that time. See generally (Compl.). Defendants' counterclaim addresses the ownership issue and is therefore the same transaction or occurrence. Thus, the Defendants' counterclaim is not waived and the Motion must be analyzed under Rule 15(a).

         A. ...


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