Adler v. American Home Mortgage Servicing, Inc.

Filing 34

ORDER. ORDERED that Adler's Motion to Amend the Judgment in this Matter to Allow for Leave to File a Second Amended Complaint and to Reconsider the Court's Order Dismissing the Action 29 is DENIED, by Judge Lewis T. Babcock on 9/5/12.(lygsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
LEWIS T. BABCOCK, JUDGE
Civil Case No. 12-cv-00291-LTB-MEH
GARY ADLER,
Plaintiff,
v.
AMERICAN HOME MORTGAGE SERVICING, INC.,
Defendant.
______________________________________________________________________________
ORDER
______________________________________________________________________________
This matter is before me on Plaintiff Gary Adler’s Motion to Amend the Judgment in this
Matter to Allow for Leave to File a Second Amended Complaint and to Reconsider the Court’s
Order Dismissing the Action [Doc #29]. After considering the parties’ arguments, for the reasons
below, I DENY the motion.
I. Background
This motion arises from Adler’s discrimination action against Defendant American Home
Mortgage Servicing, Inc. (“American”). Adler alleged that he was legally blind and, as a result, that
he could not read American’s correspondence, documents, and website. American was servicing
Adler’s mortgage, which it had bought from the original mortgagor. Adler repeatedly asked
American to issue all correspondence and documents to him in 24-point bold font and to alter its
website so he could read and access materials pertaining to his mortgage. American refused. Feeling
aggrieved, Adler brought claims under the Fair Housing Act (the “FHA”), 42 U.S.C. § 3604(f)(2),

Section 504 of the Rehabilitation Act (“Section 504"), 29 U.S.C. § 701 et seq., and the Americans
with Disabilities Act (the “ADA”), 42 U.S.C. § 12181 et seq.
American filed a motion to dismiss Adler’s original complaint. See Docket #7. Adler moved
for leave to file an amended complaint pursuant to Fed. R. Civ. P. 15(a). See Pl.’s Mot. Docket #
17. I granted Adler’s motion and accepted his first amended complaint. See Docket ## 18, 19.
American then filed its motion to dismiss the first amended complaint pursuant to Fed. R. Civ. P.
12(b)(6). See Docket #24. On June 27, 2012, I issued an order granting that motion (the “Order”).
Docket # 27. Judgment was entered in American’s favor on July 5, 2012. See Docket #28.
Adler now moves pursuant to Fed. R. Civ. P. 15 and 59(e). He seeks an amendment of the
judgment allowing him leave to amend his first amended complaint and reconsideration of the
Order–specifically and only my determination that he did not state a claim under Section 504.
II. Law
Rule 15(a) provides that a party may its pleadings once as a matter of course at any time
before a responsible pleading is served. Glenn v. First Nat’l Bank in Grand Junction, 868 F.2d 368,
370 (10th Cir. 1989). “In all other cases, a party may amend its pleading only with the opposing
party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). A court should freely grant
leave “when justice so requires.” Id. “[T]his presumption,” however, “is reversed in cases, such
as here, where a plaintiff seeks to amend a complaint after judgment has been entered and a case has
been dismissed.” The Tool Box, Inc. v. Ogden City Corp. 419 F.3d 1084, 1087 (internal quotations
omitted). The Tenth Circuit has “repeatedly and unequivocally held that, once judgment is entered,
the filing of an amended complaint is not permissible until judgment is set aside or vacated pursuant
to Fed. R. Civ. P. 59(e).” Id.; accord Seymour v. Thornton, 79 F.3d 980, 987 (10th Cir. 1996); see

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also Combs v. PricewaterhouseCoopers LLP, 382 F.3d 1196, 1205 (10th Cir. 2005); U.S. v. Nelson,
465 F.3d 1145, 1148 (10th Cir. 2006).
Rule 59(e) allows a litigant subject to an adverse judgment by a trial court to seek
reconsideration of that judgment by filing a motion to amend or alter the judgment. See Van Skiver
v. United States, 952 F.2d 1241, 1243 (10th Cir. 1991). A motion to alter or amend must be filed
within 28 days after the judgment is entered. See Fed. R. Civ. P. 59(e). Three major grounds justify
reconsideration: (1) an intervening change in controlling law; (2) the availability of new evidence;
and (3) the need to correct clear error or prevent manifest injustice. See Servants of the Paraclete
v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000).
III. Discussion
In his motion, Adler argues that relief per Rule 59(e) is appropriate on two grounds. The first
is the availability of new evidence. The second is the need to correct clear error. I address these
arguments in turn and conclude that Adler fails to show that relief under 59(e) is warranted.
A
Adler first argues that “in reviewing [American’s] web site in connection with the Motion
to Dismiss the [first amended complaint], [he] discovered that [American] also receives federal
funding from federal entities Fannie Mae and Freddie Mac, and such facts were not known at the
time the [first amended complaint] was filed.” Pl.’s Mot. at 3. This information, Adler urges, “raised
the issue, factually, that [American] receives federal funding from those sources and thus may be
liable under Section 504.” Id. He argues that refusing to amend the judgment to grant him leave to
add this information to the first amended complaint will result in manifest injustice.

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This argument fails for multiple reasons. Adler fails to establish that this information is
“new” or was otherwise unavailable. I need not look further than Adler’s motion: Adler discovered
this information “in reviewing [American’s] web site in connection with the Motion to Dismiss the
[first amended complaint].” Pl.’s Mot. at 3. He thus had this information before the Order was
issued and judgment was entered. Adler also fails to demonstrate how this information was
“unavailable,” as it appears from the briefs that it was on American’s publicly accessible web site.
Adler therefore does not show that amending the judgment is justified on grounds of the availability
of new evidence. See The Tool Box, 419 F.3d at 1087 (“Courts have refused to allow a
postjudgment amendment when the moving party had an opportunity to seek the amendment before
entry of judgment but waited until after judgment before requesting leave.”).
Nor does he establish that manifest injustice will result from a refusal to amend the Order.
If this information was available and known to Adler prior to the Order and judgment, it is unclear
from where “manifest injustice” derives if he is not allowed to add that information to his first
amended complaint now. Furthermore, Adler already alleged in his first amended complaint that
American receives federal funding, an allegation necessary to state claim under Section 504. Pl.’s
First Am. Compl. at ¶¶ 13, 25; Barber v. Colorado, 562 F.3d 1222, 1228 (10th Cir. 2009). That
claim was not dismissed for failing to sufficiently allege that American receives federal funding.
See Docket #27 at 10-12. Not only, then, does the complaint’s extant allegation of federal funding
vitiate the alleged “newness” of the Fannie Mae and Freddie Mac information, it also shows that its
absence did not and would not harm Adler in the way required for “manifest injustice.”

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B
Adler secondly argues that the Order should be altered to correct clear legal error regarding
the dismissal of his Section 504 claim.

That claim alleged that by failing to modify its

correspondence to him regarding the federal Home Affordable Modification Program (“HAMP”),
American violated Section 504 of the Rehabilitation Act. Citing Barber, supra, I first stated that
“[t]o establish a prima facie claim under Section 504, Adler must demonstrate that “(1) [he] is
handicapped under the Act; (2) [he] is otherwise qualified to participate in the program; (3) the
program receives federal financial assistance; and (4) the program discriminates against [him].” See
Docket #27 at 11. American challenged whether Adler had sufficiently pled the second element, and
I determined the following:
HAMP has eligibility requirements, and even an eligible mortgage is not
automatically entitled to modification under the program. See, e.g., Boyd v. U.S.
Bank, 787 F.Supp.2d 747, 753 (N.D. Ill. 2011) (“Defendants are correct that HAMP
does not automatically entitle eligible borrowers to loan modifications.”), Hart v.
Countrywide Home Loan, Inc., 735 F.Supp.2d 741, 747 (E.D. Mich. 2010) (“[E]ven
if the Court assumes that Plaintiff's mortgage was eligible for modification under
[HAMP], Plaintiff's claims fail because Plaintiff misconstrues [HAMP]. [HAMP]
do[es] not impose a duty on Defendant to modify every eligible mortgage and thus,
even if Plaintiff had been eligible for loan modification, her claims still fail.”). Even
though this by itself would not be enough, the complaint fails to generally allege that
he was qualified for HAMP. See. Compl., Docket #19; see also Iqbal, 556 U.S. at
678 (“A pleading that offers labels and conclusion or a formulaic recitation of the
elements of a cause of action will not do.”) (internal quotations omitted). More
importantly, assuming, arguendo, it did so allege, the complaint is nevertheless
bereft of the necessary further factual enhancement in support thereof. See Compl.,
Docket #19; see also Iqbal, 556 U.S. at 678. Thus, Adler fails to make a prima facie
claim under § 504.
Id. Here, Adler does not challenge the four elements of a prima facie Section 504 claim. He instead
argues that my construction of “otherwise qualified” is clear legal error. His position is that to show
he was “otherwise qualified,” he only had to allege was that he had a mortgage serviced by

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American, not that he met HAMP’s requirements. Pl.’s Mot. at 5. From this he argues that American
was required to accommodate him in accessing and applying to HAMP.
I disagree. In the first instance, Adler fails to cite a single legal authority in support of his
construction of “otherwise qualified” in this context. See Pl.’s Mot. at 4-6. And while he instead
attempts to analogize HAMP to ADA and Section 504 prescriptions in employment applications,
he still fails to cite any authority supporting that importation.
Additionally, Supreme Court precedent strongly suggests that my construction of “otherwise
qualified” is not clearly legally erroneous. In Southeastern Community College v. Davis, 442 U.S.
397 (1979), a plaintiff with a major hearing disability sought admission to a college to be trained as
a registered nurse, but she was not capable of safely performing as a nurse even with full-time
supervision. The Court concluded that “[a]n otherwise qualified person is one who is able to meet
all of a program's requirements in spite of his handicap.” Id. at 406 (affirming district court’s ruling
that an “[o]therwise qualified, can only be read to mean otherwise able to function sufficiently in
the position sought in spite of the handicap, if proper training and facilities are suitable and
available.”). In Davis, the “program” was the specific nursing program to which the plaintiff had
applied, not to the community college as a whole. See, e.g., id. at 405 (“Section 504 by its terms
does not compel educational institutions to disregard the disabilities of handicapped individuals or
to make substantial modifications in their programs to allow disabled persons to participate.”).
In Alexander v. Choate, 469 U.S. 287 (1985), Medicaid recipients challenged the State of
Tennessee’s proposal to reduce the number of annual days of inpatient hospital care covered by its
Medicaid program as violating Section 504. The Court’s review was whether such claim was
cognizable. Id. at 289. Alexander reaffirmed Davis’s construction of “otherwise qualified” as

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meaning that the plaintiff must meet the requirements for the specific program or benefit sought:
“[A]n otherwise qualified handicapped individual must be provided with meaningful access to the
benefit that the grantee offers. The benefit itself, of course, cannot be defined in a way that
effectively denies otherwise qualified handicapped individuals the meaningful access to which they
are entitled . . . .” Id. at 301 (emphases added); see also id. at 300 n.19 (“[T]he ultimate question
is the extent to which a grantee is required to make reasonable modifications in its programs for the
needs of the handicapped.”).
Adler’s contention that all that was necessary for him to be “otherwise qualified” was to
allege that he had a mortgage serviced by American flies in the face of both cases. In Davis, simply
being an applicant or prospective applicant to the community college was not enough; rather, the
plaintiff had to show that she met all of the college’s nursing program’s requirements. See 442
U.S.397. Likewise, in Alexander, a plaintiff was not “otherwise qualified” just because he was a
Tennessee resident; he had to show that he was in fact eligible for the Medicaid benefits at issue.
See 469 U.S. 287. HAMP has certain baseline eligibility beyond just having a mortgage, and even
an eligible mortgage was not entitled to modification under the program. See, e.g., Boyd, 787
F.Supp.2d at 753; Hart, 735 F.Supp.2d at 747. Adler was thus not “otherwise qualified” merely
because he had a mortgage serviced by American–the grantee-entity offering the program at issue.
He must have instead sufficiently alleged that he met HAMP’s requirements. See Davis, 442 U.S.
397; Alexander, 469 U.S. 287. That was what I concluded in the Order. And Adler did not so allege.
Moreover, those cases concluded that Section 504 mandates that access to certain benefits and
programs be provided to those who actually meet that program or benefit’s requirements. Because

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Adler did not allege he met HAMP’s requirements, his argument that American was required to
accommodate his request so as to access and apply to the program fails.
Consequently, Adler fails to establish that relief under 59(e) is justified.

IV. Conclusion
For the foregoing reasons, IT IS ORDERED that Adler’s Motion to Amend the Judgment
in this Matter to Allow for Leave to File a Second Amended Complaint and to Reconsider the
Court’s Order Dismissing the Action [Doc #29] is DENIED.

Date: September

5 , 2012 in Denver, Colorado.

BY THE COURT:

s/Lewis T. Babcock
LEWIS T. BABCOCK, JUDGE

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