Korrow v. Aaron's, Inc.

300 F.R.D. 215, 2014 WL 3040802, 2014 U.S. Dist. LEXIS 90777
CourtDistrict Court, D. New Jersey
DecidedJune 30, 2014
DocketCivil Action No. 10-cv-6317 (MAS)(LHG)
StatusPublished
Cited by25 cases

This text of 300 F.R.D. 215 (Korrow v. Aaron's, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Korrow v. Aaron's, Inc., 300 F.R.D. 215, 2014 WL 3040802, 2014 U.S. Dist. LEXIS 90777 (D.N.J. 2014).

Opinion

ORDER DENYING DEFENDANT’S MOTION TO AMEND

LOIS H. GOODMAN, United States Magistrate Judge.

This matter comes before this Court upon Defendant Aaron’s, Inc. (“Defendant” or “Aaron’s”) Motion for Leave to File Amended Counterclaim (the “Motion”). [Docket Entry No. 90]. On October 4, 2013, Defendant filed a brief in support of its motion (“Defs Brief’). [Docket Entry 90-1]. Plaintiff Margaret Korrow (“Plaintiff’ or “Kor-row”) filed her brief in opposition on October 21, 2013 (“Plaint’s Opp.”). [Docket Entry No. 92]. On October 28, 2013, Defendant filed a reply brief in further support of the motion (“Reply”). [Docket Entry No. 95]. The Court has considered the Motion on the papers, without oral argument, pursuant to Federal Rule of Civil Procedure 78. For the reasons set forth below, Aaron’s application seeking leave to amend is DENIED.

I. BACKGROUND

Plaintiff, a former New Jersey resident, entered into a “rent-to-own” agreement with Defendant, and was allegedly charged usurious and illegal interest rates and fees. Complaint ¶ 1 [Docket Entry No. 1-1]. She filed a complaint on behalf of herself and fellow New Jersey consumers against Defendant in the Superior Court of New Jersey alleging that Defendant had violated the New Jersey Retail Installment Sales Act, N.J.S.A 17:16C-1, et seq. (“RISA”). [Docket Entry No. 1-1] (“Complaint”). Plaintiff further alleged that a violation of RISA is a per se violation of the New Jersey Truth in Consumer Contract, Warranty and Notice Act, N.J.S.A 56:12-14, et seq. (“TCCWNA”) and the New Jersey Consumer Fraud Act, N.J.S.A 56:8-1, et seq. (“CFA”). Id. Defendant, whose main business address is in Georgia and principal business location is New Jersey [Docket Entry No. 1], removed to this Court pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d), on December 6, 2010. [Docket Entry No. 1-4].

Defendant then filed an answer. [Docket Entry No. 25]. Pursuant to a Stipulation and Consent Order, Defendant filed an [217]*217Amended Answer on February 7, 2012, this time asserting a Counterclaim against Kor-row (the “Counterclaim”). [Docket Entry No. 33]. The Amended Answer contained numerous Separate Defenses, including Plaintiffs breach of contract (18th Separate Defense), as well as the doctrines of recoupment (22nd Separate Defense) and setoff (23rd Separate Defense). [Docket Entry No. 33]. In the Counterclaim against Korrow, Defendant asserts that she failed to make monthly payments as required under the lease agreement. Counterclaim ¶ 9. Aaron’s further asserts that Korrow failed to return the leased merchandise until she allowed Aaron’s to repossess it, causing Aaron’s to suffer damages. Counterclaim ¶¶ 10-11.

The Court conducted an initial conference on November 9, 2011, which resulted in the entry of the November 22, 2011 Pretrial Scheduling Order. [Docket Entry No. 27]. The Order provided that any motions for leave to amend pleadings or add parties must be filed by February 10, 2012. That Order was later amended on February 15, 2012, and the deadline extended to April 13, 2012 to seek leave to amend. [Docket Entry No. 35]. No further extensions of the date were sought or received.

Subsequently, Defendant filed a Motion to Deny Class Certification. [Docket Entry No. 45]. In its brief, Defendant raised the issue that is the subject of the present Motion, arguing that many potential class members “face the prospect of being dragged into this lawsuit only to be sued on compulsory counterclaims.” [Docket Entry No. 45-1 at page 2]. In response, Plaintiff filed a Cross-Motion to Certify Class on February 5, 2013. [Docket Entry No. 52]. In granting Plaintiffs motion for class certification, the Court noted that “[h]ypothetical counterclaims do not impact class certification, particularly where the record provides no basis for finding that such counterclaims would create difficulties that outbalance the advantages of class treatment.” [Docket Entry No. 78 at page 15] (quoting Allen v. Holiday Universal, 249 F.R.D. 166, 183 (E.D.Pa.2008)).1 Defendant now asks for leave to make those hypothetical counterclaims concrete.

By the present motion, Defendant seeks to add counterclaims against numerous unidentified class members.2 The gravamen of the proposed counterclaim is that these class members breached their agreements with Aaron’s in that they “failed to make all required monthly payments, failed to timely return leased merchandise, failed to pay late fees, destroyed or absconded with merchandise, and otherwise remained indebted to Aaron’s for substantial sums of money....” See Proposed Amended Counterclaim, attached as Exhibit A to the Motion [Docket Entry No. 90-1] (“PAC”) ¶ 16. The PAC asserts breach of contract, quantum meruit, and unjust enrichment against any class member who defaulted on his or her obligations; it also seeks to add quantum meruit and unjust enrichment to the previously pled breach of contract claims against Korrow. The PAC would also add new factual allegations as to Korrow, asserting that she entered into other agreements with Aaron’s prior to the July 2013 Agreement that formed the original basis of this suit and that she had breached those Agreements as well. PAC ¶ 12.

II. ARGUMENTS OF THE PARTIES

A Defendant’s Arguments

Aaron’s argues that it is entitled to amend its counterclaim because under Federal Rule of Civil Procedure 15 such leave is to be freely given, and its request is unburdened by the recognized countervailing factors of undue delay, bad faith or dilatory motive, undue prejudice or futility. Def s Brief at 4-5.

Aaron’s argues that there has been no undue delay because the class was not previ[218]*218ously certified so as to allow Aaron’s to bring the motion to amend at an earlier time. Id. at 5. Prior to class certification, the individual members of the class were not parties to the suit and therefore Aaron’s could not pursue its counterclaims against them. Id. at 7. As to Korrow, Aaron’s contends that the proposed amendment will not prejudice her because it would not affect her claim or her defense to the amended counterclaim. Id. at 5-6. Class members would not be prejudiced because they were not parties to this action prior to class certification when the counterclaim was initially filed. Id. Aaron’s urges that because the amended counterclaim arises out of the same contract that forms the basis of the class members’ claims and because Plaintiffs counsel was aware that Aaron’s would be compelled to pursue breach of contract counterclaims if a class were certified, the counterclaim does not create the type of “undue prejudice” appropriate to justify denial of its leave to amend its counterclaim. Defs Brief at 5-6; Defendant’s Brief in Support of Motion to' Deny Class Certification at 39-43; Harvey Decl. ¶¶ 52-54.

Aaron’s asserts that the Court must exercise supplemental jurisdiction over the counterclaim because it is compulsory pursuant to Rule 13 and 28 U.S.C. § 1367(a), as well as New Jersey Rules 4:7-1 and 4:30A.

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Bluebook (online)
300 F.R.D. 215, 2014 WL 3040802, 2014 U.S. Dist. LEXIS 90777, Counsel Stack Legal Research, https://law.counselstack.com/opinion/korrow-v-aarons-inc-njd-2014.