Wong v. Bann Co. Mortg., 2011 WL 1467665 (W.D. Mo. April 18, 2011).
A District Court in Missouri held that amended petition replacing Doe defendants with specific named defendants relates back to the original filing only when the Doe allegations adequately informed the defendants at the outset who was the real person conditionally designated by the fictitious name
This case has had a long history in the state and federal courts. On October 31, 2000, the plaintiffs filed their original petition in the state court alleging that their subordinate lien loans originated by Bann–Cor Mortgage and secured by Missouri real estate violate the Missouri Second Mortgage Loan Act.
The defendants in the original petition were Bann–Cor, U.S. Bank N.A. and Does 1 through 25 (yet to be named or fictitious defendants). U.S. Bank N.A. and Does 1–25 were identified collectively as the “assignee defendants” and were alleged to be the purchasers and/or assignees and/or were or are the current holders of the Second Mortgage Loans of the plaintiffs and the plaintiff class, which Second Mortgage Loans were originated and made by Bann–Cor to plaintiffs and the plaintiff class.
The plaintiffs amended their petition multiple times, naming additional defendants, and voluntarily dismissing a few of them. However, the allegations against Does 1–25 remained the same as in the original petition. In March 2008, after the state court certified a class consisting of all individuals who obtained a Second Mortgage Loan from Bann-Cor, the state court granted plaintiffs partial summary judgment on certain liability issues against Bann-Cor.
On September 22, 2010, the plaintiffs filed a Sixth Amended Petition ("SAP") seeking to substitute a number of mortgage finance businesses for the previously named "Doe" defendants, and members of the previously alleged Defendant Class. The SAP named, among others, Wells Fargo, Sovereign Bank, and Franklin Credit Management Corporation as defendants. It also named previously dismissed defendants, U.S. Bank N.A. and others.
On October 22, 2010, Wells Fargo removed the action to federal court pursuant to CAFA, arguing that the SAP commenced a new action against it in 2010. Numerous other defendants joined in Wells Fargo’s removal.
The plaintiffs moved to remand, arguing that the action should be considered “commenced” as of October 31, 2000, the date of the filing of their original petition.
The District Court denied the plaintiffs’ motion.
The sole issue before the Court was whether the SAP commenced a new action, or whether instead the SAP related back to the October 2000 petition, which was filed before the enactment of CAFA.
Applying the state law, the Court stated that in Missouri, under Mo. R. Civ. P. 55.33(c), an amended pleading relates back to the date of the original petition whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading. An amended pleading changing the defendant relates back if the preceding sentence is satisfied and the new defendant 1) has received notice of the suit so it will not be prejudiced in defending on the merits and 2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party.
Under Rule 55.33(c), a misnomer or mis-description is not considered to be a change in party. However, under Missouri law, relation back of a correction of a misnomer is allowed only "when it is clear the proper party received notice." When new parties are added (instead of changed or substituted), there is no relation back even if the defendant “had notice of the claims before the statute ran or whether it would suffer prejudice by allowing relation-back.”
The Court noted that amended petition replacing Doe entities with specific named defendants relates back to the original filing if the Doe allegations adequately informed the defendants at the outset who was the real person conditionally designated by the fictitious name. But here, the defendants U.S. Bank N.A. and others could not be considered “Doe” defendants because the plaintiffs were obviously aware of their identity at the inception of this lawsuit as those defendants were dismissed from this matter without prejudice in 2002. This was not a “misnomer” situation because the plaintiffs made a choice to dismiss them from the lawsuit, and then made another choice over eight years later to re-assert claims against them. Thus, the Court concluded that that there was no mistake concerning identity of these defendants when plaintiffs asserted the exact same claims against these parties as long as ten years ago.
Next, the Court found that the defendants Wells Fargo, Sovereign Bank and Franklin Credit were added as new defendants and not substituted for an existing Doe defendants because the original petition did not adequately inform these defendants at the outset who was the real person conditionally designated by the fictitious name, in that Does 1–25 were identified as “individual business trusts or mortgage pools organized under various state laws,” and that these defendants were none of these things. Further, the plaintiffs did not delete any of the fictitious names in any of their various amended pleadings, indicating that plaintiffs were adding new parties, not substituting parties for existing Doe defendants.
The Court remarked that because claims against Bann–Cor were timely commenced, it did not mean that claims against defendants named 10 years after the filing of the original petition were timely commenced. And that just because Bann–Cor supposedly had contractual duties to notify assignees of this lawsuit did not mean that Bann–Cor actually provided such notice.
Additionally, the Court found that defendants first named in the SAP would be prejudiced if it were found to relate back to the original petition because these defendants had no opportunity to protect their rights in the ten years that this case had already been proceeding, had no opportunity to cross-examine Bann–Cor before its dissolution, and had no opportunity to contest class certification or the plaintiffs’ motion for partial summary judgment.
Finally, the Court concluded that there was no mistake concerning the identity of the parties because the plaintiffs’ joinder and over forty other new defendants reflected a change in strategy.
Therefore, the Court concluded that the SAP should be considered “commenced” as to these defendants on September 22, 2010, and accordingly removal was proper under CAFA.