Galindo et al v. BSI Financial Services, Inc.

Filing 30

Order by Hon. Lucy H. Koh granting 26 Unopposed Motion for Leave to File a First Amended Complaint.(lhklc3, COURT STAFF) (Filed on 5/26/2017)

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION

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United States District Court
Northern District of California

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CESAR GALINDO, ET AL.,
Plaintiffs,

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ORDER GRANTING UNOPPOSED
MOTION FOR LEAVE TO FILE A
FIRST AMENDED COMPLAINT

v.

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Case No. 17-CV-00021-LHK

BSI FINANCIAL SERVICES, INC.,

Re: Dkt. No. 26

Defendant.

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Plaintiffs Cesar Galindo (“Galindo”) and Maria Rivera (“Rivera”) (collectively,

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“Plaintiffs”), bring suit against Defendant BSI Financial Services, Inc. (“BSI”) for negligence,

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violation of the implied covenant of good faith and fair dealing, violation of California Civil Code

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§ 2923.6(c), and violation of California’s Unfair Competition Law (“UCL”). Currently before the

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Court is Plaintiffs’ motion for leave to file a First Amended Complaint (“FAC”), which seeks

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leave to add Ocwen Loan Servicing LLC (“Ocwen”) as a defendant. ECF No. 26 (“Mot.”). BSI

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does not oppose the motion. ECF No. 28. The Court finds this matter suitable for resolution

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without oral argument and accordingly VACATES the motion hearing set for June 1, 2017, at 1:30

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p.m. See Civil L.R. 7-1(b). Having considered the parties’ submissions, the relevant law, and the

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record in this case, the Court hereby GRANTS Plaintiffs’ motion for leave to amend.

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I.

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BACKGROUND
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Case No. 17-CV-00021-LHK
ORDER GRANTING UNOPPOSED MOTION FOR LEAVE TO FILE A FIRST AMENDED COMPLAINT

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A.

Factual Background
On September 26, 2006, Galindo borrowed $436,000 from Bank of America, N.A.

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(“BOA”), secured by a deed of trust encumbering property located at 3146 Barletta Lane in San

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Jose, CA (hereinafter, “the Property”). ECF No. 1 (“Compl.”), Ex. 1. Plaintiffs defaulted on the

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loan on March 1, 2009.

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On September 1, 2012, Ocwen acquired from BOA the servicing rights for Plaintiffs’ loan.

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Compl., Ex. 2. On January 23, 2014, Ocwen recorded a Notice of Default and Election to Sell

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under Deed of Trust against the Property. Plaintiffs “began applying for a [Home Affordable

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Modification Program (“HAMP”)] loan modification.” Id. ¶ 14. In 2015, “after years of
applications [for home loan modifications] that resulted in bad faith denials, Plaintiffs’ filed an

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United States District Court
Northern District of California

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administrative complaint” with Ocwen. Compl. ¶ 14–15.

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On May 29, 2015, Plaintiffs received a letter from Ocwen in response to Plaintiffs’

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administrative complaint. Id. Ex. 2. Ocwen informed Plaintiffs that Plaintiffs had been approved

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for a Trial Period Plan (“TPP”) Offer on September 14, 2012, but Ocwen ultimately denied

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Plaintiffs a loan modification on December 13, 2012 because Plaintiffs failed to make the TPP

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payments. See id. Further, Ocwen had approved Plaintiffs “for a Proprietary Modification” on

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December 14, 2014, but Plaintiff failed to make the initial payments by the due date and

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accordingly Ocwen denied Plaintiff a Proprietary Modification on February 11, 2015. See id.

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Ocwen’s May 29, 2015 letter to Plaintiffs also informed Plaintiffs that Ocwen received “[a]

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second HAMP request” from Plaintiffs on April 8, 2015.” Id. However, Ocwen again denied

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Plaintiffs a HAMP modification “because the owner of the account either does not allow principal

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reduction or does not participate in the HAMP” program. Id.

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In or about September 2015, BSI acquired from Ocwen the servicing rights to Plaintiffs’

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loan. Thereafter, Plaintiffs sent a loan modification request to BSI. Id. ¶ 18. On September 22,

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2015, Galindo emailed documents to Daniel McAteer (“McAteer”), senior loss mitigation

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specialist for BSI. Id. Ex. 3. On September 23, 2015, McAteer replied to Galindo and told

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Galindo that he would “forward these [documents to] our Loan Processor to review to determine if

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Case No. 17-CV-00021-LHK
ORDER GRANTING UNOPPOSED MOTION FOR LEAVE TO FILE A FIRST AMENDED COMPLAINT

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any additional documentation is needed.” Id.
On September 28, 2015, BSI filed a Notice of Trustee’s Sale (hereinafter, “Notice of

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Sale”) with the Santa Clara County Recorder’s Office. Compl. ¶ 20. The Notice of Sale

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scheduled sale for October 30, 2015. Id. Plaintiff alleges that at the time that BSI recorded the

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Notice of Sale on September 28, 2015, “[n]o decision had been made on Plaintiffs’ loan

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modification application.” Id.
Galindo emailed McAteer again on October 6, 2017 and told McAteer that Galindo was

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“re sending the Email” that Galindo originally sent to McAteer on September 22, 2015. Id., Ex. 3.

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On October 7, 2015, McAteer emailed Galindo and informed Galindo that “[p]er the letter
provided out to you via FedEx (tracking#774579202934) and delivered [September 24, 2015] the

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United States District Court
Northern District of California

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following items are still needed: [1] July to August Bank Statements” and “[2] 2013 & 2014 Tax

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Returns (signed).” Id. McAteer informed Galindo that he had “re-reviewed the items provided”

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by Galindo and that the documents did “NOT include[]” Galindo’s July to August bank statements

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or signed 2013 and 2014 tax returns. Id.

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B.

Procedural History

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On January 4, 2017, Plaintiffs filed suit against BSI in this Court. ECF No. 1. Plaintiffs

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alleged four causes of action against BSI: (1) negligence; (2) breach of the implied covenant of

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good faith and fair dealing; (3) violation of California Civil Code Section 2923.6(c); and (4)

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violation of the UCL. See id.

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On January 26, 2017, BSI moved to dismiss all four causes of action. See Def. Mot. On

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February 2, 2017, Plaintiffs opposed BSI’s motion to dismiss. ECF No. 14 (“Pl. Opp.”). On

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February 9, 2017, BSI filed a Reply. ECF No. 15 (“Reply”).

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On March 17, 2017, the Court granted BSI’s motion to dismiss. ECF No. 23. As relevant

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here, the Court held that Plaintiffs had failed to state a claim for negligence against BSI because

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Plaintiffs based their negligence claim, in part, on conduct that was committed by Ocwen, not BSI.

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Id. at 10–11. The Court held that Plaintiff had failed to allege that BSI had assumed Ocwen’s

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liabilities, and thus BSI could not be held liable for Ocwen’s alleged misconduct. Id. at 10–11.

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Case No. 17-CV-00021-LHK
ORDER GRANTING UNOPPOSED MOTION FOR LEAVE TO FILE A FIRST AMENDED COMPLAINT

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For similar reasons, the Court held that Plaintiffs could not state a claim for implied covenant of

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good faith and fair dealing against BSI for Ocwen’s conduct. Id. at 14. The Court granted

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Plaintiffs leave to amend the complaint within thirty days, but stated that Plaintiffs “may not add

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new causes of action or parties without leave of the Court or stipulation of the parties pursuant to

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Federal Rules of Civil Procedure 15.” Id. at 17.
On April 13, 2017—within the 30-day deadline set by the Court for Plaintiffs to file an

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amended complaint—Plaintiffs filed a motion for leave to file a First Amended Complaint. See

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Mot. Specifically, Plaintiffs requested leave of Court to add Ocwen as a defendant. According to

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Plaintiffs, Plaintiffs “learned that Ocwen is the primary defendant because BSI is a separate entity
from Ocwen, and BSI did not assume Ocwen’s liabilities when BSI purchased Ocwen’s assets.”

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United States District Court
Northern District of California

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Mot. at 4–6. Plaintiffs state that leave to add Ocwen as a defendant is necessary to support

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Plaintiff’s previously asserted claims, which this Court dismissed as brought against BSI. See Id.

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at 4–6.
On April 25, 2017, BSI filed a statement of non-opposition to Plaintiffs’ motion. See ECF

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No. 28.

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II.

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DISCUSSION
Pursuant to Federal Rule of Civil Procedure 15(a), a party may amend its pleading once as

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a matter of course within 21 days of serving it. Fed. R. Civ. P. 15(a)(1). After that initial period

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has passed, amendment is permitted only with the opposing party’s written consent or leave of

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Court. Id. 15(a)(2). Rule 15 instructs that “[t]he court should freely give leave when justice so

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requires.” Id. Although this rule “should be interpreted with extreme liberality, leave to amend is

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not to be granted automatically.” Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990)

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(internal citation and quotation marks omitted). Courts commonly consider four factors when

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determining whether to grant leave to amend: (1) bad faith on the part of the movant; (2) undue

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delay; (3) prejudice to the opposing party; and (4) futility of the proposed amendment. Foman v.

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Davis, 371 U.S. 178, 182 (1962); Lockheed Martin Corp. v. Network Solus., Inc., 194 F.3d 980,

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986 (9th Cir. 1999). Of these factors, prejudice to the opposing party is the most important.

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Case No. 17-CV-00021-LHK
ORDER GRANTING UNOPPOSED MOTION FOR LEAVE TO FILE A FIRST AMENDED COMPLAINT

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Jackson, 902 F.2d at 1387. In addition, a court may also consider whether the plaintiff has

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previously amended his complaint. DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 n. 3 (9th

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Cir. 1987). Where a court has already provided the plaintiff one or more opportunities to amend

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his complaint, its discretion over further amendments is particularly broad. Id.
The Court finds that granting leave to amend is appropriate in this case. This is Plaintiffs’

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first request to file an amended complaint, and there is no allegation that Plaintiffs are acting in

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bad faith or that Plaintiffs have unduly delayed. Plaintiffs request for leave to add Ocwen as a

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defendant is made within the 30-day deadline provided by the Court in the Court’s March 17,

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2017 order, which dismissed Plaintiff’s original complaint with leave to amend. See ECF No. 23.
Further, there is no reason to believe that amendment is futile. The Court dismissed Plaintiffs’

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United States District Court
Northern District of California

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original complaint, in part, because Plaintiffs brought claims against only BSI for conduct that was

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committed by Ocwen. Plaintiffs’ request for leave to add Ocwen as a defendant is a response to

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the Court’s order. See id., at 10–11.

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Finally, Plaintiffs’ amendment will not prejudice BSI. BSI has not opposed this motion,

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and this case is still in its early stages. The initial case management conference is scheduled for

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June 7, 2017, and the Court has yet to set a case schedule. Accordingly, the Court GRANTS

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Plaintiffs’ motion for leave to amend. See Adams v. Kraft, 2010 WL 4939440, at *4 (N.D. Cal.

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Nov. 30, 2010) (granting leave to amend, even though “Plaintiff could have amended his

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complaint earlier,” because the case was still in its early stages and it was the plaintiff’s first

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attempt at amending his complaint).

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IV.

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CONCLUSION
For the reasons discussed above, the Court GRANTS Plaintiffs’ motion for leave to file the

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proposed FAC.

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IT IS SO ORDERED.

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Dated: May 26, 2017

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______________________________________
LUCY H. KOH
United States District Judge
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Case No. 17-CV-00021-LHK
ORDER GRANTING UNOPPOSED MOTION FOR LEAVE TO FILE A FIRST AMENDED COMPLAINT