Veloz v. Green Tree Servicing LLC

Filing 29

ORDER granting 23 Motion to Amend/Correct. Signed by Judge David G Campbell on 11/21/2013.(DGC, nvo)

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Maria Veloz, No. CV-13-00915-PHX-DGC Plaintiff, 10 11 v. 12 ORDER Green Tree Servicing LLC, 13 Defendant. 14 15 Plaintiff Maria Veloz has filed a motion to amend her complaint. Doc. 23. The 16 motion has been fully briefed. Docs. 23, 24, 27. No party has requested oral argument. 17 For the reasons set forth below, the Court will grant Plaintiff’s motion. 18 Plaintiff’s original complaint alleged violations of the Real Estate Settlement 19 Procedures Act (“RESPA”), 12 U.S.C. § 2605 et seq., and the Arizona Consumer Fraud 20 Act (“ACFA”) A.R.S. § 44-1521 et seq. Doc. 23 at 6. Specifically, Plaintiff alleged that 21 Defendant, a servicer of mortgage loans to whom the Plaintiff’s Deed of Trust was 22 assigned, failed to make timely payments on an insurance policy, resulting in 23 cancellation of coverage and subsequent denial of a claim for water damage by Plaintiff. 24 Id. 25 In her proposed amended complaint, Plaintiff seeks to add a claim of negligence 26 against Defendant. Doc. 23 at 12. The additional claim asserts that Defendant’s failure 27 to pay the insurance premium on time was a breach of Defendant’s duty to Plaintiff, and 28 that Defendant acted negligently and unreasonably in servicing Plaintiff’s loan. Id. 1 I. Rule 15 Standard Regarding Amendments to Pleadings. 2 Under Rule 15, the Court “should freely give leave [to amend pleadings] when 3 justice so requires.” Fed. R. Civ. P. 15(a)(2). The policy in favor of leave to amend must 4 not only be heeded, see Foman v. Davis, 371 U.S. 178, 182 (1962), it must be applied 5 with extreme liberality, see Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 6 (9th Cir. 2001). This liberality “is not dependent on whether the amendment will add 7 causes of action or parties.” DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th 8 Cir. 1987). 9 Motions to amend should be granted unless the district court determines that there 10 has been a showing of: (1) undue delay, (2) bad faith or dilatory motives on the part of 11 the movant, (3) repeated failure to cure deficiencies by previous amendments, (4) undue 12 prejudice to the opposing party, or (5) futility of the proposed amendment. Foman v. 13 Davis, 371 U.S. 178, 182 (1962). “Generally, this determination should be performed 14 with all inferences in favor of granting the motion.” Griggs v. Pace Am. Grp., Inc., 170 15 F.3d 877, 880 (9th Cir. 1999) (citing DCD Programs, 833 F.2d at 186). The party 16 opposing amendment bears the burden of showing a reason for denying a motion to 17 amend. DCD Programs, 833 F.2d at 187. 18 II. 19 Defendant argues that Plaintiff’s proposed amendment is futile. Doc. 24 at 4. A 20 motion for leave to amend is futile only “if no set of facts can be proved under the 21 amendment to the pleadings that would constitute a valid and sufficient claim or 22 defense.” Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988); see also 23 Gabrielson v. Montgomery Ward & Co., 785 F.2d 762, 766 (9th Cir. 1986). Futility. 24 Defendant argues that Plaintiff’s new negligence claim is futile because Plaintiff 25 has failed to identify any duty owed Plaintiff by Defendant. Doc. 24 at 5. Defendant 26 argues that no “special relationship” exists between Plaintiff and Defendant that could 27 form the basis of a duty. Id. As a result, Defendant argues that Plaintiff’s amended 28 claim cannot meet the requirements of Rule 8 and the pleading standards articulated in -2- 1 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) and Bell Atlantic Corp. v. Twombly, 550 2 U.S. 544, 555 (2007). The absence of a duty would make any claim for negligence 3 futile and subject to dismissal. Gipson v. Kasey, 150 P.3d 228, 230 (2007). 4 Contractual relationships can give rise to duties of care. Gilbert Tuscany Lender, 5 LLC v. Wells Fargo Bank, 307 P.3d 1025, 1028 (App. 2013), citing Gipson, 150 P.3d at 6 232. Here, Plaintiff asserts that its Deed of Trust provides that Plaintiff would pay to 7 Defendant “Funds” for taxes and insurance. 8 sufficient statement of a contractual relationship to allege a duty by Defendant to pass 9 the funds on to the insurer. Doc. 23, ¶ 14. This allegation is a 10 Additionally, no “special relationship” is required between Plaintiff and 11 Defendant to create a duty of care. Gipson, 150 P.3d at 232. Rather, “when public 12 policy has supported the existence of a legal obligation, courts have imposed duties for 13 the protection of persons with whom no preexisting ‘relationship’ existed.” Id. at 232. 14 Statutes may be an appropriate expression of public policy upon which a duty of care 15 can be based, id. at 233, and Plaintiff’s claim of negligence in her amended complaint 16 rests on the timeliness of Defendant’s insurance premium payments, an obligation 17 required under RESPA, 12 U.S.C. § 2605(g) (“the servicer shall make payments from 18 the escrow account for such taxes, insurance premiums, and other charges in a timely 19 20 21 22 23 24 25 manner as such payments become due”). Plaintiff asserts that Defendant was assigned the Deed of Trust to Plaintiff’s residential real estate, that Defendant is a servicer under RESPA, and that Defendant failed to make payments on time. Doc. 23 at 7. These factual allegations are sufficient to state a claim that Defendant owed a duty of care to Plaintiff, and that the duty was breached. Iqbal, 556 U.S. at 678 (noting that a complaint must “contain sufficient factual matter, accepted as true,” to allow the court to draw reasonable inference that defendant is liable”). 26 27 28 -3- 1 IT IS ORDERED that Plaintiff’s motion to amend (Doc. 23) is granted. 2 Dated this 21st day of November, 2013. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -4-

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