Backus et al v. Bank of America, N.A.
Filing
23
OPINION AND ORDER denying 19 Motion for Leave to File An Amended Complaint. Signed by Magistrate Judge Norah McCann King on 10/22/2012. (sr)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
KEVIN BACKUS, et al.,
Plaintiffs,
vs.
Civil Action 2:12-CV-278
Judge Frost
Magistrate Judge King
BANK OF AMERICA, N.A.,
Defendant.
OPINION AND ORDER
This matter is before the Court on Plaintiffs’ Motion for Leave
to File an Amended Complaint (“Plaintiffs’ Motion to Amend”), Doc. No.
19.
Defendant Bank of America, N.A., filed a response to the motion,
Defendant’s Brief in Opposition to Plaintiffs’ Motion for Leave to
File an Amended Complaint (“Defendant’s Response”), Doc. No. 21, to
which plaintiffs filed a reply.
Plaintiffs’ Reply to Defendant’s
Response in Opposition to Plaintiffs’ Motion for Leave to File an
Amended Complaint (“Plaintiffs’ Reply”), Doc. No. 22.
For the reasons
that follow, Plaintiffs’ Motion to Amend is DENIED.
I.
BACKGROUND
Plaintiffs Kevin and Jill Backus, homeowners in Pickerington,
Ohio, initiated this case on March 30, 2012, asserting claims of
fraud, promissory estoppel and breach of contract in connection with
defendant’s threat to initiate a foreclosure action against them.
According to the Complaint, plaintiffs executed a promissory note and
mortgage in March 2004 related to their residential property in
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Pickerington, Ohio.
Complaint, Doc. No. 1, ¶ 6.
Backus underwent a kidney transplant.
In July 2011, Kevin
Prior to that procedure,
plaintiffs contacted defendant to inquire about accommodations should
plaintiffs miss future monthly payments.
Id. at ¶ 8.
Defendant
allegedly informed plaintiffs that no assistance would be provided
unless and until plaintiffs missed monthly payments.
Id. at ¶ 9.
Plaintiffs failed to make their November and December 2011
mortgage payments.
Id. at ¶ 12.
Plaintiffs made payments of
$1,706.66 in January and February 2012, but defendant returned those
payments.
Id. at ¶¶ 14-16.
Plaintiffs allege that they then
contacted an employee of defendant, James Tatum, who informed
plaintiffs that their payments should be submitted in the form of a
cashier’s check.
Id. at ¶ 17.
In February 2012, plaintiffs submitted
a cashier’s check to defendant in an amount equivalent to two monthly
payments, but defendant returned that check and informed plaintiffs
that payment should be for the total amount due, i.e., $11,429.60.
Id. at ¶¶ 18-21.
On approximately March 15, 2012, plaintiffs allege
they again contacted Tatum, who informed them “that their loan could
be reinstated if Plaintiffs paid $5,714.80, or one-half of the
$11,429.60, to bring the loan current.”
Id. at ¶¶ 23-24.
Plaintiffs
allege that they accumulated this amount but that, when they contacted
Tatum, they were informed that $11,429.60 must be paid before the loan
would be reinstated.
Id. at ¶¶ 25-28.
Plaintiffs were unable to pay
this amount and defendant threatened foreclosure.
Id. at ¶¶ 29-30.
Defendant filed a motion to dismiss on June 18, 2012, Defendant’s
Motion to Dismiss Complaint, Doc. No. 5, which was granted in part on
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September 13, 2012.
Opinion and Order, Doc. No. 17.
The Court
dismissed plaintiffs’ fraud claim as insufficient because the alleged
fraud was predicated on representations relating to future actions and
because plaintiffs failed to plead “factual allegation[s] pointing to
lack of intent to complete the future action or conduct at the time
Tatum allegedly made his statement of predictive future action.”
at pp. 4-5 (emphasis in original).
Id.
The Court specifically concluded
that plaintiffs “have not pled facts presenting even an inference that
Defendant never intended to honor Tatum’s asserted promise.”
Id.
Plaintiffs’ Motion to Amend seeks to amend the Complaint to eliminate
these pleading deficiencies.
The Proposed Amended Complaint, Doc. No. 19-1, does not assert a
claim for breach of contract and, despite numerous formatting and nonsubstantive changes, see id. at ¶¶ 19-21, 25-26, 28, 30, 32-33, 36-40,
46-47, the proposed pleading contains relatively few new allegations.
Plaintiffs maintain that the Proposed Amended Complaint “corrects the
pleading deficiency noted by this Court in the original complaint,
where the use of if and could implied Defendant merely made a
representation of a possible or contingent outcome.”
Reply, p. 4.
Plaintiffs’
The original allegation referred to provides:
James Tatum informed Plaintiffs that their loan could be
reinstated if Plaintiffs paid $5,714.80, or one-half of the
$11,429.60, to bring the loan current.
Complaint, ¶ 24.
The new allegation provides:
James Tatum informed Plaintiffs their loan would be reinstated
when Plaintiffs paid $5,714.80, or one-half of the $11,429.60,
to bring the loan current.
Proposed Amended Complaint, ¶ 24.
Plaintiffs also makes the following
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new allegations: (1) “Defendant’s repeated failure to honor its
promises to reinstate the loan shortly after making them creates an
inference Defendant never intended to honor the promises,” id. at ¶
35, and (2) “Plaintiffs relied on Defendant’s representations and
organized their finances around the represented amount.
This deprived
Plaintiffs of the opportunity to obtain the new amount Defendant
demanded to reinstate the loan, so that foreclosure is now imminent.”
Id. at ¶ 43.
II.
STANDARD
Plaintiffs’ Motion to Amend is governed by Rule 15(a) of the
Federal Rules of Civil Procedure,1 which provides that a “court should
freely give leave [to amend] when justice so requires.”
P. 15(a)(2).
Fed. R. Civ.
“The thrust of Rule 15 is to reinforce the principle
that cases should be tried on their merits rather than the
technicalities of pleadings.”
Tefft v. Seward, 689 F.2d 637, 639 (6th
Cir. 1982) (citing Conley v. Gibson, 355 U.S. 41, 48 (1957)).
The
grant or denial of a request to amend a complaint is left to the broad
discretion of the trial court.
F.2d 1119, 1130 (6th Cir. 1990).
Gen. Elec. Co. v. Sargent & Lundy, 916
In exercising its discretion, the
trial court may consider such factors as “undue delay, bad faith or
dilatory motive on the part of a movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the
opposing party by virtue of allowance of the amendment [and] futility
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Plaintiffs’ Motion to Amend is also governed by Rule 16(b) of the
Federal Rules of Civil Procedure, because plaintiffs are seeking to amend the
Complaint beyond the date set in the Preliminary Pretrial Order, Doc. No. 11.
The Court need not address whether there is good cause to modify the
scheduling order because, as discussed infra, permitting amendment would be
futile.
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of the amendment.”
Foman v. Davis, 371 U.S. 178, 182 (1962).
“A proposed amendment is futile if the amendment could not
withstand a Rule 12(b)(6) motion to dismiss.”
Rose v. Hartford
Underwriters Ins. Co., 203 F.3d 417, 420 (6th Cir. 2000) (citing
Thiokol Corp. v. Dep’t of Treasury, Revenue Div., 987 F.2d 376, 382-83
(6th Cir. 1993)).
A motion to dismiss under Rule 12(b)(6) attacks the
legal sufficiency of the complaint.
See Roth Steel Prods. v. Sharon
Steel Co., 705 F.2d 134, 155 (6th Cir. 1983).
In determining whether
dismissal on this basis is appropriate, a complaint must be construed
in the light most favorable to the plaintiff, and all well-pleaded
facts must be accepted as true.
See Bower v. Fed. Express Corp., 96
F.3d 200, 203 (6th Cir. 1996);
Misch v. Cmty. Mut. Ins. Co., 896 F.
Supp. 734, 738 (S.D. Ohio 1994).
The United States Supreme Court has
explained that “once a claim has been stated adequately, it may be
supported by showing any set of facts consistent with the allegations
in the complaint.”
(2007).
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 546
However, a plaintiff’s claim for relief “requires more than
labels and conclusions, and a formulaic recitation of the elements of
a cause of action will not do.”
Id. at 555.
“Factual allegations
must be enough to raise a right to relief above the speculative
level . . . .”
Id.
Accordingly, a complaint must be dismissed – and
amending a complaint is futile – if the complaint does not plead
“enough facts to state a claim to relief that is plausible on its
face.”
Id. at 570.
III. DISCUSSION
In order to state a claim for fraud, Ohio law requires that
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plaintiffs plead
(1) a representation (or concealment of a fact when there is
a duty to disclose), (2) that is material to the transaction
at hand, (3) made falsely, with knowledge of its falsity or
with such utter disregard and recklessness as to whether it is
true or false that knowledge may be inferred, and (4) with
intent to mislead another into relying upon it, (5)
justifiable reliance, and (6) resulting injury proximately
caused by the reliance.
Volbers-Klarich v. Middletown Mgt., Inc., 929 N.E.2d 434, 440 (Ohio
2010) (citing Burr v. Stark Cty. Bd. Of Comm’rs., 491 N.E.2d 1101,
paragraph two of the syllabus (Ohio 1986)).
Ohio courts follow the
rule that, in order to state an action for fraud, the fraud must
relate to a past or present fact; a mere promise of future conduct is
insufficient.
See Kasuri v. St. Elizabeth Hosp. Med. Ctr., 897 F.2d
845, 851-52 (6th Cir. 1990) (citing Tibbs v. Nat’l Homes Constr.
Corp., 369 N.E.2d 1218 (Ohio App. 12th Dist. 1977)).
A fraud claim
will exist, however, where the person or entity making the promise of
future action has no intention, at the time the promise is made, of
keeping the promise.
Tibbs, 369 N.E.2d at 1223.
In ruling on defendant’s motion to dismiss, the Court concluded
that “Tatum’s alleged promise that Defendant would accept certain
payment and reinstate the loan is future action or conduct.”
Plaintiffs attempted to correct this “pleading deficiency” in the
Proposed Amended Complaint by alleging that Tatum informed plaintiffs
that their loan “would be reinstated when” plaintiffs paid $5,714.80,
rather than that the loan “could be reinstated if” plaintiffs paid
$5,714.80.
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See Plaintiffs’ Reply, p. 4; Proposed Amended Complaint, ¶
Regardless of plaintiffs’ proposed new wording, Tatum’s alleged
promise – i.e., that plaintiffs’ loan would be reinstated when
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plaintiffs paid $5,714.80 – is still properly characterized as a
promise relating to future action or conduct.
The reinstatement of
the loan would be a future act by defendant.
Moreover, plaintiffs have failed to plead facts pointing to a
fraudulent intent in connection with that alleged promise of future
action at the time Tatum allegedly made his statement.
The only new
allegation in the Proposed Amended Complaint pertaining to defendant’s
intent provides: “Defendant’s repeated failure to honor its promises
to reinstate the loan shortly after making them creates an inference
Defendant never intended to honor the promises.”
Complaint, ¶ 35.
Proposed Amended
Plaintiffs have not pled any new facts to support an
inference that defendant never intended to honor Tatum’s alleged
promise.
Instead, plaintiffs rely on Lanford v. Sloan, 833 N.E.2d 331
(Ohio App. 2th Dist. 2005), for the proposition that the existing
factual allegations create an inference that Tatum’s promises were
made “with the intent to mislead Plaintiffs into relying upon them.”
Plaintiffs’ Reply, p. 4.
The facts alleged by plaintiffs are not analogous to those in
Langford.
The defendant in Langford entered into an agreement to buy
a house from the plaintiff.
Langford, 833 N.E.2d at 334.
The
defendant convinced the plaintiff to give her a deed to the house,
which she promised not to record and to use to apply for a loan.
at 335.
Id.
The Langford court concluded that the defendant’s promises
were made with no intention of being kept because the defendant broke
those promises “immediately after” making them.
Id.
In the case
presently before the Court, plaintiffs allege that, on or about March
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15, 2012, Tatum promised plaintiffs that “their loan would be
reinstated when Plaintiffs paid $5,714.80,” and that defendant broke
that promise on or about March 20, 2012, when it required $11,429.60
for reinstatement.
Proposed Amended Complaint, ¶¶ 23-28.
Plaintiffs
also maintain that defendant “promised to reinstate Plaintiffs’ loan
in February 2012 when Plaintiffs made two payments by cashier’s check,
and Plaintiffs actually mailed the requested check in February 2012,
but Defendant reneged on its promise.”
Plaintiffs’ Reply, p. 4.
The
immediate breach of a promise, as reflected in Langford, is not
alleged to have occurred here, and a lapse of five days between
Tatum’s alleged promise and defendant’s alleged breach of the promise
does not lead to an inference that Tatum or defendant had no intention
of keeping the promise at the time it was made.
Cf. Blackward Props.,
LLC v. Bank of Am., No. 10-2226, 2012 WL 762882, at *4 (6th Cir. Mar.
9, 2012) (rejecting Michigan state law fraud claim because evidence of
a broken promise does not show that the promisor did not intend to
fulfill the promise at the time it was made).
The Court previously concluded that plaintiffs “have not pled
facts presenting even an inference that Defendant never intended to
honor Tatum’s asserted promise.”
4.
Opinion and Order, Doc. No. 17, p.
The Proposed Amended Complaint does not contain any new factual
allegations that would warrant an alternative conclusion.
Plaintiffs’
proposed allegation that the facts previously alleged do in fact give
rise to an inference, Proposed Amended Complaint, ¶ 35, simply
reflects their disagreement with the Court’s earlier dismissal of
their claim.
There are no factual allegations supporting a fraudulent intent
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at the time Tatum allegedly made the promise to reinstate plaintiffs’
loan upon receipt of payment.
Consequently, plaintiffs have failed to
present a colorable fraud claim, and plaintiffs’ proposed amendment is
futile.
Plaintiffs’ Motion for Leave to File an Amended Complaint, Doc.
No. 19, is therefore DENIED.
October 22, 2012
(Date)
s/Norah McCann King
Norah McCann King
United States Magistrate Judge
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