Jacobs et al v. Federal Housing Finance Agency et al

Filing 61

MEMORANDUM ORDER - Pursuant to Fed. R. Civ. P. 15(a)(2), Plaintiffs' motion for leave to file a first amended complaint (D.I. #48 ) is GRANTED. Defendants' motions to dismiss for lack of subject matter jurisdiction and failure to state claim (D.I. #17 , D.I. #19 ) are DENIED as moot. Signed by Judge Gregory M. Sleet on 2/24/2017. (mdb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

DAVID JACOBS and GARY HINDES, on
behalf of themselves and all others similarly
situated, and derivatively on behalf of the
Federal National Mortgage Association and
Federal Home Loan Mortgage Corporation,

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Plaintiffs,
v.
THE FEDERAL HOUSING FINANCE
AGENCY, in its capacity as Conservator of
the Federal National Mortgage Association
and the Federal Home Loan Mortgage
Corporation, and THE UNITED STATES
DEPARTMENT OF THE TREASURY,

Defendants,
and
THE FEDERAL NATIONAL MORTGAGE
ASSOCIATION and THE FEDERAL HOME
LOAN MORTGAGE CORPORATION,

Nominal Defendants.

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Civ. No. 15-708-GMS

MEMORANDUM ORDER
Pending before the court are motions to dismiss for lack of subject matter jurisdiction and
failure to state a claim filed by Defendants (D.I. 17, D.I. 19) and a motion for leave to amend the
complaint filed by Plaintiffs (D.I. 48). Plaintiffs have not previously amended or sought leave to
amend the Complaint. This case is still in its earliest stages; no discovery has been taken; and the
complaint has not been answered. (D.I. 53 at 1). To the extent there has been little activity in this
case since the complaint was filed on August 17, 2015 (D.I. 1), it can be largely attributed to the

stay imposed while Defendants unsuccessfully moved to transfer the case to a multidistrict
litigation court (D.I. 39, Minute Entry on Mar. 28, 2016).
Leave to file an amended complaint should be freely granted "when justice so requires."
Fed. R. Civ. P. 15(a)(2). The Third Circuit has adopted a policy of "strong liberality" in the
amendment of pleadings. Dole v. Arco Chem. Co., 921 F.2d 484, 487 (3d Cir. 1990). "This
approach ensures that a particular claim will be decided on the merits rather than on technicalities."
Id. Defendants primarily oppose the amendment based on same arguments raised in their pending
motions to dismiss. (D.I. 52). These arguments are more appropriately considered upon renewal
of Defendants' motion to dismiss or a motion for summary judgment. See Summerville v. Gregory,
2015 WL 4623515, at *3 (D.N.J. Aug. 3, 2015) ("In the interests of judicial economy and in the
absence of undue prejudice, the Court may decline to engage in a detailed futility analysis where
the Court finds that these arguments are better suited for consideration in the context of a motion
to dismiss."); Atkins v. Astrue, 2011WL1335607, at *4 (N.D. Cal. Apr. 7, 2011) (granting motion
to amend, because the time to resolve a dispute over subject matter jurisdiction "is not in
conjunction with the motion for leave to amend," but in conjunction with a motion to dismiss).
Defendants have not shown "undue delay, bad faith or dilatory motive on the part of the movant,
repeated failure to cure deficiencies by amendments previously· allowed, or undue prejudice to the
opposing party." Dole v. Arco Chem. Co., 921 F.2d 484, 487 (3d Cir. 1990).
Finally, Plaintiffs assert that notice of the amendment is required pursuant to Fed. R. Civ.
P. 23.1, because two derivative claims (Counts IX and X) will be dropped from the amended
complaint. (D.I. 48 at 8). Those counts allege that the "Net Worth Sweep," as that term is defined
in the complaint, "constituted an unfair, self-dealing transaction" with the U.S. Department of
Treasury, the controlling stockholder of Fannie Mae and Freddie Mac. (D.I. 48, Ex. B
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iii!

173,

184). The amended complaint will preserve Counts I and II, direct and derivative claims alleging
that the Net Worth Sweep is invalid as a matter of state statutory law. (Id. at ifif 173, 184). It will
also add two direct and derivative claims alleging that the Net Worth Sweep allowed Treasury to
be unjustly emiched at the expense of Frannie Mae and Freddie Mac's other stockholders. (Id. at

ifif 96,

103).

In effect, Plaintiffs analogize the filing of the amended complaint to a voluntary

dismissal of the derivative claims pursuant to Fed. R. Civ. P. 41(a)(l). The court is not entirely
convinced that is the case here where Plaintiffs still seek relief based on the same transactions and
occurrences, just under different legal theories. Accordingly, the court finds that notice under Fed.
R. Civ. P. 23.l is not required under these circumstances.
NOW, THEREFORE, at Wilmington this

f.. t..l

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day of February, 2016, it is HEREBY

ORDERED that:

1.

Pursuant to Fed. R. Civ. P. 15(a)(2), Plaintiffs' motion for leave to file a first

amended complaint (D.I. 48) is GRANTED.
2.

Defendants' motions to dismiss for lack of subject matter jurisdiction and failure to

state claim (D.I. 17, D.I. 19) are DENIED as moot.

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