FORRESTER WINNE v. NATIONAL COLLEGIATE STUDENT LOAN TRUST 2005-1 et al
ORDER ON PLAINTIFFS MOTION FOR LEAVE TO AMEND THE COMPLAINT FOR THE SECOND TIME granting in part and denying in part 64 Motion for Leave to File By JUDGE JON D. LEVY. (nrg)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
JANE C. FORRESTER WINNE,
STUDENT LOAN TRUST 2005-1,
ORDER ON PLAINTIFF’S MOTION FOR LEAVE TO AMEND THE
COMPLAINT FOR THE SECOND TIME
The Plaintiff, Jane C. Forrester Winne, moves pursuant to Federal Rule of
Civil Procedure 15(a)(2) to amend her complaint for a second time. ECF No. 64. The
Proposed Second Amended Complaint adds three plaintiffs, seventeen defendants,
and three causes of action, in addition to providing additional information in support
of class certification. Id. at 1. Defendants Citizens Bank, N.A.1 (“Citizens”), U.S.
Bank National Association (“US Bank”), PNC Bank, N.A. (“PNC”), National
Collegiate Student Loan Trust 2005-1 (“NCSLT 2005-1”), National Collegiate Student
Loan Trust 2005-3 (“NCSLT 2005-3”), Transworld Systems, Inc. (“Transworld”), and
Turnstile Capital Management, LLC (“Turnstile”) oppose the motion. ECF No. 71;
Citizens Bank, N.A. was erroneously named as “Charter One Bank, N.A.” in the First Amended
Complaint; Charter One was acquired by Citizens at some point after the loan at issue in this case
was first applied for. The proposed Second Amended Complaint substitutes Citizens for Charter One
as a defendant.
ECF No. 72, ECF No. 73; ECF No. 74. Oral argument on the motion was held before
me on November 17, 2016.
Winne’s First Amended Complaint centered on debt collection activities
related to two private student loans that Winne allegedly took out in 2004 and 2005.
She contends that NCSLT 2005-1 and NCSLT 2005-3 are attempting to collect on
these loans, having purportedly acquired them from Citizens and PNC, respectively.
Winne denies receiving the proceeds from the loans and claims she has never made a
payment toward either loan. She seeks to certify the suit as a class action on behalf
of “vulnerable Maine students who are being unlawfully pursued on alleged private
student loan debts they do not owe, were fraudulently procured, or both.” ECF No. 3
The proposed Second Amended Complaint would join three additional
plaintiffs who also claim to have been the subjects of debt collection efforts related to
private student loans allegedly owned by various National Collegiate Student Loan
It would add fifteen NCSLTs as defendants, as well as
Wilmington Trust Company, a statutory trust that is allegedly an owner trustee of
the NCSLTs, and The First Marblehead Corporation, a company that is alleged to
have served as Administrator to the NCSLTs.
The Proposed Second Amended
Complaint also includes new causes of action for fraud, fraudulent concealment, and
breach of contract.
Three of the defendants named in the First Amended Complaint—Citizens,
PNC, and US Bank—moved to dismiss the claims against them. I have addressed
those motions in a separate order, dated January 11, 2017, that grants dismissal as
to Citizens and PNC, and denies dismissal as to US Bank. See ECF No. 109.
After the time for amendments as a matter of course has passed, a party may
amend its pleading with leave of the court, which should be freely given “when justice
so requires.” Fed. R. Civ. P. 15(a)(2). Accordingly, leave to amend should be granted
where there is no “undue delay, bad faith or dilatory motive on the part of the movant,
repeated failure to cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the amendment, [or] futility
. . . .” Foman v. Davis, 371 U.S. 178, 182 (1962); see also Chiang v. Skeirik, 582 F.3d
238, 244 (1st Cir. 2009). If leave to amend is sought before discovery is complete and
neither party has moved for summary judgment, a proposed amendment will be
denied if the amendment fails to state a claim and is, therefore, futile. See Hatch v.
Dept. for Children, Youth and Their Families, 274 F.3d 12, 19 (1st Cir. 2001).
“Futility” is gauged by the criteria of Federal Rule of Civil Procedure 12(b)(6)
governing motions to dismiss for failure to state a claim. Id.
To survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible
on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 570 (2007)). In considering the merits of a motion to
dismiss, the Court must accept as true all well-pleaded factual allegations in the
complaint and draw all reasonable inferences in the plaintiff's favor. Gargano v.
Liberty Intern. Underwriters, Inc., 572 F.3d 45, 48 (1st Cir. 2009). The complaint
must contain facts that support a reasonable inference “that the defendant is liable
for the misconduct alleged.” Iqbal, 556 U.S. at 678. “If the factual allegations in the
complaint are too meager, vague, or conclusory to remove the possibility of relief from
the realm of mere conjecture, the complaint is open to dismissal.” Haley v. City of
Boston, 657 F.3d 39, 46 (1st Cir. 2011) (quotation and internal citations omitted).
Allegations of fraud and fraudulent concealment are subject to the higher
pleading standard of Federal Rule of Civil Procedure Rule 9(b). See Fed. R. Civ. P.
9(b). The complaint must “be specific about the ‘time, place, and content of an alleged
false representation[.]’” Murtagh v. St. Mary’s Reg’l Health Ctr., 2013 WL 5348607,
at *6 (D. Me. Sep. 23, 2013) (quoting Hayduk v. Lanna, 775 F.2d 441, 444 (1st Cir.
1985)). Mere conclusory allegations will not satisfy the particularity requirement.
See Hayduk, 775 F.2d at 444. Rule 9(b) also requires that plaintiffs identify a basis
for inferring scienter on the part of the defendant.
N. Am. Catholic Educ.
Programming Found., Inc. v. Cardinale, 567 F.3d 8, 13 (1st Cir. 2009).
Citizens objects to Winne’s motion to amend the complaint on the ground that
the amendment would be futile. ECF No. 71 at 6. Citizens claims that none of the
causes of action asserted against it in the Proposed Second Amended Complaint state
a claim sufficient to survive a motion to dismiss under Rule 12(b)(6). Id. Winne and
the additional plaintiffs propose claims against Citizens under the Truth in Lending
Act, 15 U.S.C.A. § 1601, et seq., and the Maine Unfair Trade Practices Act, 5 M.R.S.A.
§ 205-A, et seq. (2016), as well as common law claims alleging fraud, fraudulent
concealment, and breach of contract. ECF No. 64-1 at 45-50.
1. Truth in Lending Act (“TILA”) and Maine Unfair Trade Practices
I analyzed the claims against Citizens under TILA and the MUTPA in my
separate order on Citizens’ motion to dismiss, and found that the TILA claim is timebarred by the statute of limitations and the MUTPA claim may not be asserted
against a bank such as Citizens. ECF No. 109 at 2-6. There is nothing contained in
the proposed Second Amended Complaint that changes this analysis. Accordingly,
with respect to the TILA and MUTPA claims asserted against Citizens, Winne’s
motion to amend the complaint is denied as futile.
To state a claim for fraud under Rule 9(b), the Plaintiffs must plead facts
which, if true, would demonstrate that Citizens made a false statement of material
fact, with knowledge of its falsity or reckless disregard for its truth or falsity, with
the purpose of inducing the Plaintiffs to rely on the statement, and the Plaintiffs must
have in fact justifiably relied on it and suffered damages. See Rutland v. Mullen,
2002 ME 98, ¶ 14, 798 A.2d 1104.
The only statement alleged in the proposed Second Amended Complaint that
can be attributed to Citizens is the disclaimer on the Loan Request/Credit Agreement,
which states that the loan agreement is a consumer credit transaction. ECF No. 641 at 30, ¶ 203. Plaintiffs claim that this statement is false, because the loans were in
fact “pipeline loans feeding a huge commercial beast,” rather than consumer
transactions. Id. at 48, ¶ 311. This metaphor appears to refer to loans that the lender
intended to assign to a National Collegiate Student Loan Trust, and that, once
assigned, were then securitized. See id.
The proposed Second Amended Complaint’s fraud allegations against Citizens
fall short of the pleading standard of Rule 9(b). As an initial matter, the Complaint
itself characterizes the loan as a consumer credit transaction in asserting the TILA
claims. See id. at 45, ¶ 292 (“the Loan Request/Credit Agreements that are the
subject of this action are ‘consumer credit transactions’ pursuant to [TILA]”). This
contradicts the Complaint’s later allegation that the loans were not consumer
transactions in asserting Plaintiffs’ fraud claims. More importantly, although the
Complaint contends that the loan agreement characterized the transaction as a
consumer loan, it does not allege that Citizens ever represented that the loan would
not later be assigned or securitized. Therefore, the Complaint fails to identify a false
statement or representation by Citizens. Accordingly, Plaintiffs have not pleaded a
claim of fraud with the particularity required by Rule 9(b).
3. Fraudulent Concealment
Fraudulent concealment involves a failure to disclose a material fact where a
duty to disclose exists, with the intention of inducing reliance, and which is in fact
relied upon to the plaintiff’s detriment. See Picher v. Roman Catholic Bishop of
Portland, 2009 ME 67, ¶ 30, 974 A.2d 286. The allegations of fraudulent concealment
against Citizens in the proposed Second Amended Complaint consist of its alleged
failure to make the disclosures required under TILA at the time that the loans were
made, and its failure to disclose that “what were sold as ‘consumer’ credit transactions
were really securities.” ECF No. 64-1 at 49, ¶ 316.
Citizens’ alleged failure to provide the disclosures required by TILA will not
support a fraudulent concealment claim, either as a method of tolling TILA’s statute
of limitations or as an independent basis for relief. As discussed more fully in my
order on Citizens’ motion to dismiss, an alleged disclosure violation under TILA
cannot be used to prove fraudulent concealment for purposes of tolling the statute of
limitations: otherwise, the statute of limitations would be tolled in every case and
become a nullity. See ECF No. 109 at 5-6. The Second Amended Complaint also does
not plead facts that could establish that Citizens’ alleged non-disclosure
independently entitles Plaintiffs to relief under a common law fraudulent
concealment theory, because it does not assert that Citizens was under a duty to
disclose the information beyond TILA itself. Cf. Epstein v. C.R. Bard, Inc., 460 F.3d
183, 189-90 (1st Cir. 2006) (holding that complaint fails to meet Rule 9(b) standard
where it fails to explain how the complained-of actions constituted fraud); see also
Warren v. Hancock Mortg. Corp., 2016 WL 6689092, at *6 (W.D. La. Oct. 6, 2016). To
the extent that Winne seeks to assert a fraudulent concealment claim based on a
violation of TILA simply to avoid the statute’s limitations period, such a claim would
be preempted. See Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, 1007, n.3 (9th Cir.
2008) (noting that state cause of action is preempted where it represents an attempt
to “go outside the congressionally enacted limitation period of TILA”). Similarly, the
proposed Second Amended Complaint does not allege any duty on the part of Citizens
to inform Plaintiffs that their loans may later be bundled with others and securitized.
The Second Amended Complaint therefore fails to adequately plead a claim for
4. Breach of Contract
The proposed Second Amended Complaint also asserts a breach of contract
claim against Citizens, alleging that the Plaintiffs were charged interest rates in
excess of the maximum provided for by the Loan Agreements. ECF No. 64-1 at 4950. Citizens argues that because the breach of contract allegations are directed
against “Defendants acting as NCSLT,” the proposed Second Amended Complaint
fails to “make any allegations that even pertain to Citizens, never mind put Citizens
on notice as to when and how it breached its contracts with the plaintiffs.” ECF No.
71 at 19.
Citizens’ argument overlooks that the breach of contract count of the proposed
Second Amended Complaint also asserts that Plaintiffs were charged interest rates
that were not agreed to by the parties and that exceeded the maximum allowed by
the contractual terms. ECF No. 64-1 at 49-50. The proposed Second Amended
Complaint fails to identify which defendant or defendants these allegations apply to,
but they can be reasonably construed as applying to defendants Citizens and PNC,
the original lenders. This construction is borne out by Winne’s reply memorandum
which argues that the note disclosures—which would have been issued by the original
lenders—contained an interest rate that exceeded the rate permitted by the loan
agreements. ECF No. 81 at 5-6.
The loan agreement attached to the proposed Second Amended Complaint
contains a variable rate of interest provision that states: “In no event will the Variable
Rate exceed the maximum interest rate allowed by the laws of the State of Ohio.”
ECF 81-2 at 2. Winne claims that the statutory maximum interest rate in Ohio is
8%, citing to O.R.C.A. § 1343.01 (2016), ECF No. 81 at 6, but that the note disclosure
statement provides for an interest rate of 11.982%, id., n.12. However, as Citizens
pointed out at oral argument, the loan at issue in this case is actually governed by
O.R.C.A. § 1109.20, which prescribes a maximum interest rate of 25%.2 The rate of
interest alleged to have been charged by Citizens, 11.982%, therefore does not exceed
the maximum rate set by the contract. The Proposed Second Amended Complaint
therefore fails to state a claim for breach of contract against Citizens, and the
proposed amendment is futile.
The claims asserted against PNC in both the First Amended Complaint and
the proposed Second Amended Complaint are the same as the claims asserted against
Citizens. As discussed above, there are no new allegations in the Proposed Second
Amended Complaint that would change the analysis laid out in the order granting
PNC’s motion to dismiss, see ECF No. 109, and the motion for leave to amend is
therefore denied as futile with respect to the TILA and MUTPA claims asserted
Ohio Revised Code Annotated § 1109.20 provides in relevant part that “[a] bank may contract for and
receive interest or finance charges at any rate or rates agreed upon or consented to by the parties to
the loan contract, extension of credit, or revolving credit agreement, but not exceeding an annual
percentage rate of twenty-five per cent.” In contrast, O.R.C.A. § 1343.01 provides in relevant part that
“[t]he parties to a bond, bill, promissory note, or other instrument of writing for the forbearance or
payment of money at any future time, may stipulate therein for the payment of interest upon the
amount thereof at any rate not exceeding eight per cent per annum payable annually[.]” Following
the oral argument and in response to the Court’s inquiry, Winne informed the Court that she does not
dispute that O.R.C.A. § 1109.20 is the governing provision. ECF No. 103. Winne also made additional,
unsolicited arguments in response to the Court’s inquiry, which I do not consider.
against PNC. Similarly, the fraud, fraudulent concealment, and breach of contract
claims asserted against PNC are identical to those asserted against Citizens, and fail
for the reasons set forth above. Plaintiff’s motion for leave to amend is denied with
respect to the claims asserted against PNC.
US Bank’s Objection
The Proposed Second Amended Complaint asserts claims against US Bank
under the federal Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C.A. § 1692,
et seq., the Maine Fair Debt Collection Practices Act (“MFDCPA”), 32 M.R.S.A. §
11001, et seq., and the MUTPA, as well as common law claims for fraud, fraudulent
concealment, and breach of contract. ECF No. 64-1 at 41-50. US Bank objects to
Winne’s motion for leave to amend on the basis that the amendment would be futile.
ECF No. 72 at 3. US Bank asserted in its earlier motion to dismiss that Winne failed
to establish personal jurisdiction, and that the substantive claims of the First
Amended Complaint for violations of the FDCPA, MFDCPA, and MUTPA failed to
meet the pleading standard of Rule 12(b)(6), see ECF No. 27, and argues that nothing
in the proposed Second Amended Complaint remedies those defects, ECF No. 72 at
In a separate order, I found that Winne had in fact alleged sufficient facts to
survive US Bank’s motion to dismiss. See ECF No. 109 at 16-19. Therefore, the
proposed amendment would not be futile as to the FDCPA, MFDCPA, and MUTPA
claims. See Hatch, 274 F.3d at 19. US Bank has not challenged the proposed
amendment on grounds other than futility, see ECF No. 72, and there is no indication
of bad faith, dilatory motive, or undue prejudice to US Bank if the motion is allowed,
see Foman, 371 U.S. at 182. Therefore, Winne’s motion for leave to amend will be
granted with respect to her FDCPA, MFDCPA, and MUTPA claims against US Bank.
US Bank also argues that Plaintiffs’ proposed fraud and fraudulent
concealment claims fail to meet the pleading standard of Rule 9(b). ECF No. 72 at 810. As noted earlier, to satisfy Rule 9(b)’s particularity requirement the Plaintiffs
must specifically allege the time, place, and content of an alleged false representation.
See Hayduk, 775 F.2d at 444. The Proposed Second Amended Complaint does not
attribute any statements or representations to US Bank specifically. Viewing the
complaint in the light most favorable to the Plaintiffs, it does not suggest that there
was any direct communication, relationship or contact between US Bank and the
Plaintiffs. See ECF No. 64-1. Therefore, the proposed Second Amended Complaint
does not sufficiently state a claim for fraud or fraudulent concealment against US
Bank, and Winne’s motion for leave to amend as to those claims is denied on futility
grounds. See OfficeMax Inc. v. Cty. Qwik Print, Inc., 802 F. Supp. 2d 271, 284 (D. Me.
It is not clear from the proposed Second Amended Complaint whether the
proposed breach of contract claim was intended to be asserted against US Bank, but
Winne does not allege that she or any of the three putative plaintiffs ever entered
into a contract with US Bank. See ECF No. 64-1. A breach of contract claim cannot
be maintained against a person who is not a party to the contract. See E.E.O.C. v.
Waffle House, Inc., 534 U.S. 279, 294 (2002) (“It goes without saying that a contract
cannot bind a nonparty.”). The proposed Second Amended Complaint therefore does
not state a plausible claim for breach of contract against US Bank, and the
amendment would be futile.
NCSLT 2005-1’s, NCSLT 2005-3’s, Turnstile’s, and Transworld’s
NCSLT 2005-1, NCSLT 2005-3, Turnstile, and Transworld filed a joint
objection to Winne’s motion for leave to amend. ECF No. 74. The proposed Second
Amended Complaint asserts claims against these Defendants under the federal Fair
Debt Collection Practices Act (“FDCPA”), 15 U.S.C.A. § 1692, et seq., the Maine Fair
Debt Collection Practices Act (“MFDCPA”), 32 M.R.S.A. § 11001, et seq., and the
Maine Unfair Trade Practices Act (“MUTPA”), 5 M.R.S.A. § 205-A, et seq., as well as
common law claims for fraud, fraudulent concealment, and breach of contract. These
Defendants assert that the proposed Second Amended Complaint fails to comply with
the pleading standards of Federal Rule of Civil Procedure 8 by virtue of its length
(327 paragraphs) and lack of clarity. Id. at 3-6. They also argue that the proposed
complaint misjoins plaintiffs under Federal Rule of Civil Procedure 20, id. at 6-7, and
that the proposed fraud and fraudulent concealment claims fail to meet the standards
of Rule 9(b), id. at 8-9.
1. Fed. R. Civ. P. 8
Rule 8 states that a claim for relief must contain “a short and plain statement
of the claim showing that the pleader is entitled to relief[.]” Fed. R. Civ. P. 8(a)(2).
The pleading rules are permissive, see Swierkiewicz v. Sorema N.A., 534 U.S. 506,
512-13 (2002), and decisions to dismiss based on the pleading standards of Rule 8 are
within the discretion of the district court, see Jackson v. Polaroid Corp., 181 F.3d 79
(1st Cir. 1999) (table decision) (reviewing dismissal for abuse of discretion).
The proposed Second Amended Complaint asserts several discrete claims
against a large number of defendants, all allegedly arising out of a series of
transactions on private student loans over the course of many years. Furthermore,
the Plaintiffs are alleging fraud, which must be pleaded with particularity. In light
of these circumstances, I find that the length and complexity of the Proposed Second
Amended Complaint do not warrant the denial of the motion to amend. See In re
Glob. Crossing, Ltd. Sec. Litig., 313 F. Supp. 2d 189, 211-12 (S.D.N.Y. 2003) (declining
to dismiss 326-page, 840-paragraph complaint where suit involved multiples claims
against multiple defendants, including complex accounting fraud claims); see also
Dennis v. DeJong, 867 F. Supp. 2d 588, 619-20 (E.D. Pa. 2001) (declining to dismiss
166-page complaint, in part due to need for fraud to be pleaded with particularity).
Several of the averments contained in the proposed Second Amended
Complaint are indeed argumentative. Read as a whole, however, the complaint
adequately expresses the gravamen of the Plaintiffs’ claims against these defendants,
save in one important respect. There are many instances in which the complaint
alleges acts or omissions by the “Defendants” without specifying which
defendants. For example, paragraph 100 is preceded by 57 separate paragraphs
specific to Plaintiff Winne’s loans. Paragraph 100 then states: “The Defendants
communicate with Winne for the purposes of attempting to collect alleged debts when
they know or should know Winne is represented by counsel.” ECF No. 64-1 at
15. Similarly, Paragraph 105 asserts, “Defendants also reported falsely to credit
reporting agencies that Winne was current in her payments on the alleged Private
loans through 2010 in order to create the false impression her so-called delinquency
is not time barred in a deceptive and misleading way.” Id. at 16. The proposed Second
Amended Complaint fails to identify which defendant or defendants are alleged to
have communicated with Winne or to have made false credit reports. These are but
two examples of numerous instances where the proposed Second Amended Complaint
requires the defendants to guess as to who among them are the subjects of a
The proposed Second Amended Complaint’s failure to identify which
defendants are alleged to have committed alleged acts or omissions will make it
unreasonably difficult for each defendant to formulate an answer or otherwise
respond, and might justify the denial of Plaintiff’s motion. However, because this
defect will be remedied if the Plaintiff is required to specify by name the defendant
or defendants in every paragraph of the proposed Second Amended Complaint that
currently refers to the “Defendant” or “Defendants,” I will conditionally grant the
motion, and require Winne to cure the defect in the Second Amended Complaint that
she files in response to this order. Cf. 5C Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 1378 (3d ed.) (noting that a court may, sua sponte,
treat a defendant’s motion as a motion for a more definite statement).
Defendants may file a motion to dismiss if they believe that Plaintiff has failed to
adequately identify which defendant or defendants the complaint’s averments apply
2. Joinder of Plaintiffs
The joinder of parties is governed by Rule 20, which states that multiple
plaintiffs may join together in an action if “they assert any right to relief jointly,
severally, or in the alternative with respect to or arising out of the same transaction,
occurrence, or series of transactions or occurrences; and any question of law or fact
common to all plaintiffs will arise in the action.” Fed. R. Civ. P. 20(a)(1)(A)-(B). The
joinder of parties is within the discretion of the district court, and the joinder rules
“are construed liberally for the sake of convenience and economy[.]” Cruz v. BristolMyers Squibb Co., PR, Inc., 699 F.3d 563, 569 (1st Cir. 2012).
The proposed Second Amended Complaint alleges that each of the four named
Plaintiffs has been subjected to collection efforts by the same group of defendants on
loans that are purportedly owned by the NCSLTs. See ECF No. 64-1. It further
alleges that these loans were all purchased by The Education Resources Institute
pursuant to its Chapter 11 bankruptcy Plan of Reorganization.
Id. at 33-36.
Accepting the plaintiffs’ factual allegations as true, and drawing all inferences in
their favor, I find that their claims arise out of the same series of transactions, and
present common questions of law, including whether the NCSLTs had a right to
undertake collection efforts, and whether the debt collection activities of the
defendants violate the FDCPA and MFDCPA. Furthermore, each Plaintiff seeks the
same injunctive relief against the Defendants on their own behalf and on behalf of a
plaintiff class. Joinder of the named plaintiffs is therefore proper, and the motion for
leave to amend is granted in this respect.
3. Fraud Claims
As noted earlier, fraud claims must be pleaded with particularity, and must be
specific regarding the time, place, and content of an alleged false representation.
Murtagh, 2013 WL 5348607, at *6. Although the NCSLTs, Turnstile, and Transworld
argue that the fraud claims contained in the proposed Second Amended Complaint
do not meet this standard because they are asserted generally and collectively against
“Defendants,” ECF No. 74 at 8, the proposed complaint does contain specific
allegations of misrepresentations made by the NCSLTs, Turnstile, and Transworld
at specific times, see, e.g., ECF No. 64-1 at ¶¶ 107-10, 126, 148, 158, 162, 183, 184.
The particularity requirement of Federal Rule of Civil Procedure 9(b) requires
that a complaint allege the “who, what, when, where, and how of the alleged
fraud.” Hagerty ex rel. United States v. Cyberonics, Inc., 2016 WL 7321224, at *3, --F.3d --- (1st Cir. Dec. 16, 2016) (quoting United States ex rel. Ge v. Takeda Pharm.
Co., 737 F.3d 116, 123 (1st Cir. 2013)). As I have already explained, the proposed
Second Amended Complaint fails to sufficiently identify the “who” element.
however, Plaintiff complies with the direction that she specify, by name, the
defendant or defendants in every averment pleaded (and, in particular, paragraph
311 of the proposed Second Amended Complaint, which contains a distillation of each
specific fraudulent statement or act alleged), this requirement will be satisfied.
The various allegations of false statements and misrepresentations contained
in the proposed Second Amended Complaint are otherwise sufficient “(1) to place the
defendants on notice and enable them to prepare meaningful responses; (2) to
preclude the use of a groundless fraud claim as a pretext to discovering a wrong or as
a ‘strike suit’; and (3) to safeguard defendants from frivolous charges which might
damage their reputations.” Enercon v. Glob. Comp. Supplies, Inc., 675 F. Supp. 2d
188, 191 (D. Me. 2009) (quoting New England Data Servs., Inc. v. Becher, 829 F.2d
286, 289 (1st Cir. 1987)). Furthermore, the proposed Second Amended Complaint
sets forth sufficient facts to infer that the Defendants were aware that their
statements were false or misleading, see id. at 199, as it alleges that the defendants
were involved in The Educational Resource Institute’s bankruptcy proceedings, and
therefore knew that the NCSLTs did not have the right to collect the loans at the time
the Defendants sought to collect them, ECF No. 64-1 at 34, ¶ 232. Therefore, subject
to Plaintiff identifying by name each defendant to whom each averment relates, the
proposed Second Amended Complaint will satisfy the requirements of Rule 9(b) with
respect to the fraud claims against the NCSLTs, Turnstile, and Transworld. See Cota
v. U.S. Bank Nat’l Ass’n, 2016 WL 922784, at *6 (D. Me. Mar. 10, 2016) (finding
pleadings sufficient under Rule 9(b) where plaintiffs alleged factual predicates of
fraud claim); see also Hamilton v. Fed. Home Loan Mortg. Corp., 2015 WL 144562, at
*15 (D. Me. Jan. 12, 2015). Accordingly, the motion for leave to amend is conditionally
granted with respect to those claims.
The fraudulent concealment claims in the proposed Second Amended
Complaint, however, fail to meet the heightened pleading standard of Rule 9(b). The
fraudulent concealment claims are redundant because they simply restate the
allegations of fraud—e.g., asserting that the defendants failed to disclose that the
NCSLTs did not have title to the loans, rather than asserting that they falsely
represented that they did have title to them.
See ECF No. 64-1 at 49, ¶ 316.
Furthermore, the allegations do not assert that any of the defendants had a duty to
disclose the information allegedly withheld, a necessary element of fraudulent
concealment. Cf. Epstein, 460 F.3d at 189-90 (holding that complaint failed to meet
Rule 9(b) standard where it failed to explain how the actions complained of
Accordingly, the fraudulent concealment claims against the
NCSLTs, Turnstile, and Transworld are not pled with particularity, and the motion
for leave to amend is denied with respect to those claims.
These defendants do not object to the addition of the proposed breach of
contract claims against them. ECF No. 74 at 9, n.2. Therefore, Winne’s motion is
granted with respect to the breach of contract claims.
Based on the foregoing, it is ORDERED that Plaintiff’s Motion for Leave to
Amend her Complaint a Second Time (ECF No. 64) is:
1. DENIED with respect to all claims against Defendants Citizens Bank, N.A.
and PNC Bank, N.A.
2. DENIED with respect to the fraud, fraudulent concealment, and breach of
contract claims against U.S. Bank National Association.
3. DENIED with respect to the fraudulent concealment claims against
NCSLT 2005-1, NCLST 2005-3, Turnstile Capital Management, LLC,
Transworld Systems, Inc., and all other defendants named in the proposed
Second Amended Complaint.
4. GRANTED conditionally with respect to the fraud claims against the
NCSLT defendants, Turnstile Capital Management, LLC, and Transworld
Systems, Inc. Plaintiff is further ORDERED not to refer generally to the
defendants in the allegations made in the Second Amended Complaint, but
to instead identify in each averment the name or names of the specific
defendant or defendants the averment relates to.
5. GRANTED in all other respects.
6. The Second Amended Complaint shall be filed within ten days.
Dated this 17th day of January 2017.
/s/ JON D. LEVY
U.S. DISTRICT JUDGE
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