Bank of America, N.A. v. Alley et al

Filing 24

ORDER denying 19 Motion to Strike; granting 21 plaintiff's Motion to Amend; granting 19 Motion for Attorney Fees associated with the Answer and Counterclaims, the response to the Motion to Dismiss Counterclaims and the Motion to Strike. Defendant Alley is granted fourteen days in which to amend her answer and counterclaims. Signed by Magistrate Judge Norah McCann King on 7/23/2012. (nmk0)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION

BANK OF AMERICA, N.A.,
Plaintiff,
vs.

Civil Action 2:11-CV-881
Judge Sargus
Magistrate Judge King

SARAH L. ALLEY, et al.,
Defendants.

OPINION AND ORDER
This is a foreclosure action removed to this Court by
defendant Sarah L. Alley [“defendant”], who asserted counterclaims
alleging that plaintiff is not the holder of the note and mortgage
upon which plaintiff is proceeding.

This matter is now before the

Court on defendant’s Motion to Strike Plaintiff’s Notice of
Substitution of Exhibit “A” to the Complaint, Doc. No. 19, [“Motion to
Strike”], and on Plaintiff Bank of America N.A.’s (1)Opposition to
Motion to Strike (Doc. 19) or, in the Alternative, (2) Motion for
Leave to Amend Complaint, Doc. No. 21 [“Motion to Amend”].
Background
Plaintiff alleges in the Complaint that it “is the holder of
a note, a copy of which is attached hereto as Exhibit ‘A’.”
Complaint, Doc. No. 3, ¶ 1.

Exhibit A appears to be a photocopy of a

promissory note [“Note”] signed by defendant and which identifies the
lender as “America’s Wholesale Lender.”

In her Answer, Doc. No. 5,

defendant denied the allegation that “Plaintiff Bank of America is the
holder of the Promissory Note and Mortgage and further denies that

Defendant Alley owes any money to the Plaintiff.”

Id. at ¶ 1. In her

counterclaims, defendant also specifically denied that the Note was
“ever indorsed over to, and/or physically delivered” to an assignee by
America’s Wholesale Lender.

Id., Counterclaim, ¶ 15.

Defendant

asserted counterclaims of abuse of process, unjust enrichment, fraud
and violation of the Fair Debt Collection Practices Act, 15 U.S.C. §
1692.

Id.
Plaintiff filed a motion to dismiss the counterclaims,

Plaintiff’s Motion to Dismiss, Doc. No. 10.

Although plaintiff

asserted in that motion that “[t]he Note and Mortgage were
subsequently transferred to Bank of America Home Loans Servicing, LP .
. . [and that] Bank of America Home Loans Servicing LP merged into
Bank of America N.A. (the plaintiff in this case) . . . .”
Plaintiff’s Memorandum in Support of Motion to Dismiss, Doc. No. 11,
pp. 1-2, plaintiff did not provide any evidence that the Note was ever
transferred or assigned by America’s Wholesale Lender, the original
creditor.

Defendant filed a 10 page memorandum in opposition to the

motion to dismiss the counterclaims and attached a number of exhibits
thereto.

Defendant Sarah Alley’s Memo contra to Plaintiff’s Motion to

Dismiss, Doc. No. 13.
Motion to Strike; Motion to Amend
Two weeks after plaintiff filed its reply in support of the
motion to dismiss the counterclaims, plaintiff filed its Notice of
Substitution of Exhibit “A” to the Complaint, Doc. No. 18 [“Notice”],
attached to which is a photocopy of the Note with an endorsement in
blank signed by a representative of America’s Wholesale Lender.
Plaintiff filed the Motion to Strike, arguing that the Notice is,
in reality, an improper attempt to amend the Complaint and that to

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permit plaintiff to effect such an amendment would prejudice
defendant, whose answer and counterclaims were based “solely on the
statements and Exhibits contained within the Complaint, including the
unendorsed Promissory Note.” Id. at 2 (emphasis in original).
Defendant asks that the Notice and substituted Exhibit A be stricken
and that she be awarded “reasonable attorney fees for all work done
thus far on the case, on reliance upon the invalid filings of the
Plaintiff, and an award or attorneys fees to rewrite all of the
Defendant’s pleadings.”

Id. at 3.

In response, plaintiff filed a

memorandum in opposition to the Motion to Strike; in the alternative,
plaintiff asked for leave to amend the Complaint.

Motion to Amend.

Plaintiff represents that its current counsel (who did not file the
Complaint), had only recently come into possession of the original
Note, which reflected the endorsement.

Arguing that a foreclosing

plaintiff need not establish evidence of assignment of a note at the
outset of a foreclosure action, plaintiff characterizes defendant’s
demand for attorneys fees as “absurd.”

Motion to Amend, at 2.

Discussion
Defendant contends, plaintiff apparently concedes and this Court
agrees that plaintiff’s Notice – by which plaintiff substituted a
critical exhibit attached to the Complaint – is, in effect, an
amendment of the Complaint.

The Court will therefore consider

plaintiff’s belated request for leave to amend by reference to the
standards of Rule 15 of the Federal Rules of Civil Procedure, which
governs amendments to the pleadings.1
Rule 15(a) specifies that leave to amend a pleading “shall be

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Plaintiff’s Notice and Motion to Amend were not untimely.
Preliminary Pretrial Order, Doc. No. 16.

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See

freely given when justice so requires.”

Whether to grant or deny a

plaintiff leave to amend a complaint “is committed to the district
court's sound discretion.” Moore v. City of Paducah, 790 F.2d 557, 559
(6th Cir.1986).

Among the reasons justifying denial of leave to amend

are bad faith, dilatory motive or undue prejudice to the opposing
party. Foman v. Davis, 371 U.S. 178, 182 (1962); Gen. Elec. Co. v.
Sargent & Lundy, 916 F.2d 1119, 1129 (6th Cir.1990).
In exercising its discretion, a district court may address the
issue of prejudice to the party opposing leave to amend by imposing
conditions on the grant of leave to amend. See Local 783 Allied Indus.
Workers of Am. v. Gen. Elec. Co., 471 F.2d 751, 756 (6th Cir. 1973).
“Requiring the applicant to pay attorneys' fees, discovery costs, and
costs of preparing responsive pleadings rendered moot by the amendment
are conditions district courts may impose to mitigate the prejudice
caused to the opposing party by the amendment.”

Ruschel v. Nestle

Holding, Inc., 89 Fed. Appx. 518, 2004 WL 346034, **3 (6th Cir.
February 23, 2004).
This Court is persuaded by defendant’s protestation of prejudice:
she clearly based her defense to the litigation and her counterclaims
on her understanding that plaintiff was not the holder of the Note.
This understanding was well-grounded in light of the fact that the
Complaint was supported by an exhibit that affirmatively called into
question plaintiff’s status as a holder of the Note.

By contrast, the

Court is not persuaded by plaintiff’s dismissive rejection of
defendant’s claim of prejudice: the authority upon which plaintiff
relies in discounting defendant’s request for attorneys fees, Deutsche
Bank Natl. Trust Co. V. Traxler, 2010 WL 3294292 (Ohio App. 9 Dist.,
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August 23, 2010), did not, apparently, involve a complaint supported
by an erroneous and misleading exhibit.
Under the circumstances presented in this case, the Court
concludes that the grant of plaintiff’s Motion to Amend would result
in serious prejudice to defendant.

The Court will therefore condition

the grant of plaintiff’s Motion to Amend on its payment to defendant
of the latter’s attorneys fees unnecessarily incurred by reason of
plaintiff’s use of the misleading exhibit in support of the Complaint.
See Ruschel, 2004 WL 346034, **3.
Defendant asks that she be reimbursed for not only the fees
associated with her filings based on plaintiff’s use of the original
exhibit, but also for the fees associated with future filings based on
the substituted exhibit.

The Court rejects that request.

Defendant

can reasonably be expected to incur attorneys fees in connection with
her defense of the action; it is only the fees incurred in connection
with her response to plaintiff’s original, and misleading, exhibit
that should rightfully be borne by plaintiff. Defendant will therefore
be awarded her attorneys fees associated with the Answer and
Counterclaims, her response to the Motion to Dismiss and her Motion to
Strike.

Defendant’s counsel shall promptly provide to plaintiff an

itemization of attorneys fees associated with those filings.

WHEREUPON defendant Sarah L. Alley’s Motion to Strike, Doc. No.
19, is DENIED and plaintiff’s alternative Motion to Amend, Doc. No.
21, is GRANTED, conditional on plaintiff’s payment to defendant Sarah
L. Alley her attorneys fees associated with the Answer and

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Counterclaims, Doc. No. 5, her response to the Motion to Dismiss, Doc.
No. 13, and her Motion to Strike, Doc. No. 19.

Moreover, defendant

Sarah L. Alley is GRANTED fourteen (14) days in which to amend, if she
chooses to do so, her answer and counterclaims.

s/Norah McCann King
Norah McCann King
United States Magistrate Judge
July 23, 2012
Date

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