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13% of defendants never served
The missed service
The case named over 300 defendants. A new legal team took it over after the Fifth Circuit appeal, retained in November 2025 for a trial four months away. During that trial, the team learned that prior counsel had never served about 13% of the named lenders with the complaint.
The second lawsuit
Six years from the June 2020 transaction was running out, so the team filed a second lawsuit in New York state court against those same lenders, this time serving them. There is an argument that the clock paused during COVID, but the second suit was filed to be as cautious as possible.
Collateral estoppel plan
The plan for that case is to argue that the Texas ruling can be used against them through offensive collateral estoppel, since the court already found against the lenders who did the transaction. They may answer that they were not in privity with the parties who did the deal and lost.
Why do lawsuits have a six-year deadline?
A statute of limitations sets the last date a claim can be filed. New York gives six years for most breach of contract claims, counted from the date the contract was breached. Deadlines exist because witnesses forget, documents disappear, and defendants should not face claims indefinitely. A claim filed after the deadline can be dismissed even when the underlying complaint is valid.
How can a ruling be used against people outside the case?
Offensive collateral estoppel lets a plaintiff use a finding from an earlier case to stop a defendant from arguing that point again. The U.S. Supreme Court approved the doctrine for federal courts in Parklane Hosiery v. Shore in 1979. It applies only when the defendant had a full and fair chance to litigate the issue the first time. Courts also weigh whether using the earlier finding would be unfair to the defendant.
Why must every defendant be formally served?
Service of process is how a court gives a defendant notice that it has been sued. The U.S. Supreme Court held in Mullane v. Central Hanover Bank in 1950 that due process requires notice reasonably calculated to reach the people affected. A court generally lacks the power to enter a judgment against a party that was never properly notified. That is why a missing service record can force a plaintiff to start again.
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