Brickert v. Deutsche Bank National Trust Company

Filing 64

ORDER denying 57 Plaintiff's "Motion for Leave to Add SBMP Ventures LLC ("SBMP") and DFW Group LLLP ("DFW") as Party Defendants (Motion for Leave to Amend Second Amended Complaint)" by Magistrate Judge Michael E. Hegarty on 05/09/2019. The proposed amendments are futile, because Plaintiffs lawsuit, as amended, would have to be dismissed for lack of subject-matter jurisdiction. Accordingly, it is not appropriate to grant Plaintiff leave to amend under Rule 15(a)(2). (mdave, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 17-cv-03106-MEH
DERRICK BRICKERT,
Plaintiff,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY,
Defendant.

ORDER

Michael E. Hegarty, United States Magistrate Judge.
Before the Court is Plaintiff’s “Motion for Leave to Add SBMP Ventures LLC (“SBMP”)
and DFW Group LLLP (“DFW”) as Party Defendants (Motion for Leave to Amend Second
Amended Complaint)” [filed March 8, 2019; ECF No. 57]. For the reasons that follow, the Motion
is denied.
BACKGROUND
Plaintiff initiated this action on December 22, 2017, ECF No. 1, and filed the operative
Second Amended Complaint (“SAC”) on May 11, 2018. ECF No. 12. The SAC generally alleges
the Defendant fabricated documents to create the appearance that it was the holder of the Note that
secured the Deed of Trust on Plaintiff’s residence at 3076 S. Holly Pl., Denver, CO 80222 (the
“Property”) and wrongfully initiated foreclosure proceedings on the Property. See ECF No. 12
¶¶ 2-10. The SAC asserts the following six claims: (1) “wrongful foreclosure”; (2) “restitution”;
(3) “no contract”; (4) fraud and deceit; (5) quiet title; and (6) “declaratory and injunctive relief.”
Id. ¶¶ 16-47.

Plaintiff now seeks leave to file the proposed Third Amended Complaint (“PTAC”), which
asserts Claims 4-6 against SBMP and DFW. The PTAC would add allegations that on June 5,
2018, the Arapahoe County Public Trustee recorded a certificate of purchase that listed SBMP as
a certified purchaser of the Property. ECF No. 57-1 ¶ 28. It then alleges that SBMP recorded an
assignment of the Property to DFW “to immunize all from the illegalities of the transactions.” Id.
¶ 29. The PTAC does not add substantive allegations as they pertain to the claims against
Defendant.
Plaintiff initially filed the present Motion on December 27, 2018, ECF No. 51, which was
within the December 29, 2018 deadline for the amendment of pleadings set in the Scheduling
Order, ECF No. 40 ¶ 9(a). The Court denied that motion without prejudice on January 8, 2019,
because it failed to comply with D.C. Colo. LCivR 7.1(a), and allowed Plaintiff to refile the motion
on or before January 15, 2019. ECF No. 52. On that date, Plaintiff timely filed a new motion to
amend his pleading. ECF No. 53. On February 20, 2019, the Court denied the motion without
prejudice again, because it failed to comply with Local Rule 15.1(b). The Court allowed Plaintiff
to refile the motion on or before March 8, 2019. ECF No. 56. On that date, Plaintiff filed the
present Motion in conformance with all applicable Local Rules.
DISCUSSION
Because Plaintiff seeks leave to amend the SAC after Fed. R. Civ. P. 15(a)(1) permits a
party to amend its pleading as a matter of course, the Motion implicates Rule 15(a)(2), which
states:
In all other cases, a party may amend its pleading only with the opposing party’s
written consent or the court’s leave. The court should freely give leave when justice
so requires.

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“[T]he Rule itself states that ‘leave shall be freely given when justice so requires.’” Minter v.
Prime Equip. Co., 451 F.3d 1196, 1204 (10th Cir. 2006) (citing Fed. R. Civ. P. 15(a)). “Refusing
leave to amend is generally only justified upon a showing of undue delay, undue prejudice to the
opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously
allowed, or futility of amendment.” Bylin v. Billings, 568 F.3d 1224, 1229 (10th Cir. 2009)
(quoting Frank v. U.S. W., Inc., 3 F.3d 1357, 1365 (10th Cir. 1993)). “The purpose of the Rule is
to provide litigants ‘the maximum opportunity for each claim to be decided on its merits rather
than on procedural niceties.’” Minter, 451 F.3d at 1204 (quoting Hardin v. Manitowoc–Forsythe
Corp., 691 F.2d 449, 456 (10th Cir. 1982)).
Defendant opposes the motion, arguing that the proposed amendment would be futile. “A
proposed amendment is futile if the complaint, as amended, would be subject to dismissal.” Lind
v. Aetna Health, Inc., 466 F.3d 1195, 1199 (10th Cir. 2006); Watson ex rel. Watson v. Beckel, 242
F.3d 1237, 1239-40 (10th Cir. 2001) (“A proposed amendment is futile if the complaint, as
amended, would be subject to dismissal for any reason . . . .”).
In this case, the proposed amendment would be futile, because joining the additional
parties would defeat the diversity jurisdiction on which Plaintiff relies to bring his lawsuit in this
Court. Plaintiff asserts jurisdiction under 28 U.S.C. § 1332, which provides “[t]he district courts
shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum
or value of $75,000, exclusive of interests and costs, and is between . . . citizens of different
States.” It is Plaintiff’s burden to show diversity exists and subject matter jurisdiction is proper.
Observatory Place LLC v. Interstate Fire & Cas., No. 10-cv-02423-PAB-KLM, 2010 WL
4942534, at *1 (D. Colo. Nov. 23, 2010) (“It is well established that ‘[t]he party invoking federal
jurisdiction bears the burden of establishing such jurisdiction as a threshold matter.’” (alteration
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in original) (quoting Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1224 (10th Cir. 2004))).
Diversity jurisdiction requires every defendant to be diverse from Plaintiff. Ravenswood Inv. Co.
v. Avalon Corr. Servs., 651 F.3d 1219, 1223 (10th Cir. 2011) (“[E]ach plaintiff must be diverse
from each defendant to have what is known as complete diversity.”). Plaintiff alleges he is a
citizen of the state of Colorado. ECF No. 12 ¶ 7; ECF No. 57-1 ¶ 7. Thus, it is Plaintiff’s burden
to establish that each proposed defendant is not a citizen of Colorado.
The PTAC does not properly allege the citizenship of SBMP or DFW; but the statements
in the proposed pleading suggest those parties are not diverse. The PTAC alleges SBMP “is a
Colorado Limited Liability Company” and DFW “is the trade name for DS Fine, LLLP, a Colorado
Limited Liability Limited Partnership.” ECF No. 57-1 ¶ 8(b)-(c). If true, the addition of these
parties would defeat diversity jurisdiction. However, neither of these allegations is sufficient to
meet Plaintiff’s burden to demonstrate diversity jurisdiction, because the citizenship of those
entities must be established by the citizenship of its individual members or partners. Peelle v.
Walmart Inc., No. 19-cv-0171 SMV/GJF, 2019 WL 1559285, at *2 (D.N.M. Apr. 10, 2019)
(“Partnerships, limited partnerships, and limited liability companies . . . are citizens of each and
every State in which any partner or member is a citizen.”); Nehemiah Rebar Servs, Inc. v. Hertz,
No. 17-cv-01081-PAB, 2017 WL 1830301, at *1 (D. Colo. May 8, 2017). Here, Plaintiff has not
established the citizenship of SBMP or DFW, because he does not allege the citizenship of the
members or partners of the proposed defendants.
Due to this deficiency, the Court issued an Order to Show Cause on April 23, 2019,
instructing Plaintiff to file a written response on or before May 2, 2019, demonstrating why the
present Motion to Amend should not be denied for failure to establish complete diversity. ECF
No. 62. That time has expired and Plaintiff has not responded. As such, Plaintiff’s lawsuit would
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be subject to dismissal if he were permitted leave to file the PTAC. Observatory Place LLC, 2010
WL 4942534, at *2 (“[T]his Court cannot proceed under diversity jurisdiction without fully
accounting for the citizenship of all the parties. Such accounting has not occurred in the present
case. As a consequence, plaintiff’s case must be dismissed.”).
CONCLUSION
The proposed amendments are futile, because Plaintiff’s lawsuit, as amended, would have
to be dismissed for lack of subject-matter jurisdiction. Accordingly, it is not appropriate to grant
Plaintiff leave to amend under Rule 15(a)(2). For the foregoing reasons, Plaintiff’s motion [filed
March 8, 2019; ECF No. 57] is denied.
Dated at Denver, Colorado this 9th day of May, 2019.
BY THE COURT:

Michael E. Hegarty
United States Magistrate Judge

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