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Fogg v. Ocwen Loan Servicing, LLC

United States District Court, D. Maine

April 8, 2015

STANLEY FOGG and HELEN FOGG, Plaintiffs.
v.
OCWEN LOAN SERVICING, LLC, Defendant.

MEMORANDUM DECISION AND ORDER ON MOTION TO AMEND

JOHN H. RICH, III, Magistrate Judge.

Plaintiffs Stanley and Helen Fogg ("the Foggs") seek to amend their complaint to set forth additional facts, add two parties, Bank of New York Mellon ("Mellon Bank") and Bank of America, N.A. ("Bank of America"), and add claims for (i) violation of the Maine Consumer Credit Code, 9-A M.R.S.A. §§ 9-403(F)-(G), against all defendants, (ii) violation of the Maine Unfair Trade Practices Act ("UTPA"), 5 M.R.S.A. § 205-A et seq., against defendants Ocwen Loan Servicing, LLC ("Ocwen") and Mellon Bank, (iii) negligence, against all defendants, and (iv) intentional and/or negligent infliction of emotional distress, against all defendants. See generally Plaintiffs' Motion To Amend Complaint ("Motion") (ECF No. 16); [Proposed] First Amended Complaint ("Proposed Complaint"), Exh. 1 (ECF No. 16-1) thereto.

Ocwen does not object to amending the complaint to add the Foggs' proposed supplemental facts and the exhibits referenced therein, but argues that the Motion should otherwise be denied on the basis that three of the four proposed new claims - those seeking redress for UTPA violations, negligence, and intentional/negligent infliction of emotional distress - are futile. See Opposition of Defendant Ocwen Loan Servicing, LLC to Plaintiffs' Motion To Amend and Request for Hearing ("Opposition") (ECF No. 17). It also challenges the addition of new parties. See id. at 1-2. I granted Ocwen's request for a hearing, see ECF Nos. 18, 21, which was held on March 27, 2015.[1] With the benefit of that hearing, I grant the Motion insofar as it seeks to add new facts, two new parties, and a Maine Consumer Credit Code claim against all defendants, and otherwise deny it. I also direct the plaintiffs to file on the docket, no later than April 15, 2015, an amended complaint consistent herewith.[2]

I. Applicable Legal Standards

Pursuant to Federal Rule of Civil Procedure 15(a)(2), "[t]he court should freely give leave [to amend a pleading] when justice so requires." Fed.R.Civ.P. 15(a)(2). Leave to amend should be granted in the absence of reasons "such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc" Foman v. Davis, 371 U.S. 178, 182 (1962).

The First Circuit has explained:

A motion to amend a complaint will be treated differently depending on its timing and the context in which it is filed.... As a case progresses, and the issues are joined, the burden on a plaintiff seeking to amend a complaint becomes more exacting. Scheduling orders, for example, typically establish a cut-off date for amendments (as was apparently the case here). Once a scheduling order is in place, the liberal default rule is replaced by the more demanding "good cause" standard of Fed.R.Civ.P. 16(b). This standard focuses on the diligence (or lack thereof) of the moving party more than it does on any prejudice to the party-opponent. Where the motion to amend is filed after the opposing party has timely moved for summary judgment, a plaintiff is required to show "substantial and convincing evidence" to justify a belated attempt to amend a complaint.

Steir v. Girl Scouts of the USA, 383 F.3d 7, 11-12 (1st Cir. 2004) (citations, internal quotation marks, and footnotes omitted).

The Foggs filed the Motion on January 26, 2015, see Motion at 1, prior to the parties' February 20, 2015, deadline to amend pleadings and join parties, see Scheduling Order (ECF No. 9) at 2. Therefore, the liberal default rule applies.

II. Discussion

A. Futility

1. Applicable Legal Standards

An amendment is futile when "the complaint, as amended, would fail to state a claim upon which relief could be granted." Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir. 1996). "In assessing futility, the district court must apply the standard which applies to motions to dismiss under [Federal Rule of Civil Procedure] 12(b)(6)." Adorno v. Crowley Towing & Trans. Co., 443 F.3d 122, 126 (1st Cir. 2006).

The Supreme Court has stated:

While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level.

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations and internal punctuation omitted). This standard requires the pleading of "only enough facts to state a claim to relief that is plausible on its face." Id. at 570. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

In ruling on a motion to dismiss under Rule 12(b)(6), a court assumes the truth of all of the well-pleaded facts in the complaint and draws all reasonable inferences in favor of the plaintiff. Román-Oliveras v. Puerto Rico Elec. Power Auth., 655 F.3d 43, 45 (1st Cir. 2011).

2. Factual Background

In relevant part, the Foggs allege:

In December 2007, following Helen Fogg's serious illness and layoff from her job, the Foggs fell behind on home loan payments that they had been making since they had obtained a home loan in October 1998 from Countrywide Home Loans, Inc. ("Countrywide"). See Proposed Complaint ¶¶ 20-21, 24. Bank of America was, at all relevant times, the Master Servicer of the Foggs' loan, see id. ¶ 6, and Mellon Bank was, at all relevant times, the trustee of a trust that obtained their loan and accompanying mortgage, see id. ¶¶ 7, 23.

In February 2008, Stanley Fogg suffered a life-threatening illness that left him hospitalized for almost two months. See id. ¶ 25. At about this time, Helen Fogg tried to work with Countrywide to obtain a loan modification but was provided conflicting information about the amount that the Foggs needed to send in to be eligible. See id. ¶ 26. In mid-2008, the servicing of the Foggs' loan was transferred to Litton Loan Servicing ("Litton"). See id. ¶ 27. The Foggs sent two mortgage payments in 2008, but Litton declined to accept further payment in September 2008, informing them that their loan had been referred for foreclosure. See id. ¶ 29. Mellon Bank instituted a foreclosure action in December 2008. See id. ¶ 30.

Commencing in January 2009, the Foggs engaged in what proved to be fruitless negotiations with Litton to obtain a then newly-available Making Home Affordable loan modification. See id. ¶¶ 32-42. In January 2010, in reliance on a statement by Kim Johnson of Litton that, if they did not pay $25, 000, their house would be sold that month, the Foggs moved out of their home into a rental property. See id. ¶¶ 43, 45. They incurred moving costs and provided a deposit and rent payment for the rental property. See id. ¶ 46. Shortly afterwards, Mellon Bank moved for summary judgment in the foreclosure action, but the court denied its motion and dismissed the action. See id. ¶ 47.

In February 2011, Mellon Bank filed a new foreclosure action. See id. ¶ 48. In May 2011, the Foggs attended a mediation during which they believed that they had agreed with Litton to a "deed in lieu of foreclosure" or "DIL, " under which any deficiency in the loan would be waived and the foreclosure ended. See id. ¶ 51. During the mediation, they learned for the first time that Johnson had been wrong, and that their house could not have been sold without a judgment. See id. ¶ 52. However, by then, it would have caused them ...


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