United States District Court, D. Minnesota
Katelyn Rae Cartier and Thomas J. Lyons, Jr., Esq., Consumer
Justice Center, P.A., Vadnais Heights, Minnesota, for
A. Snyder, Esq., Rubric Legal LLC, Minneapolis, Minnesota,
Jeffrey D. Pilgrim, Esq., Pilgrim Christakis LLP, Chicago,
Illinois, for Defendants.
E. RAU, UNITED STATES MAGISTRATE JUDGE
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.
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.
alleges the following claims: Count 1-violations of the Fair
Debt Collection Practices Act (“FDCPA”), 15
U.S.C. § 1692f(6); 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).
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).
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.
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.
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).