Kelly et al v. U.S. Bank et al

Filing 85

OPINION AND ORDER - US Bank's motion 71 for leave to file an amended answer is GRANTED. Signed on 2/4/10 by Magistrate Judge John V. Acosta. (peg)

UNITED STATES DISTRICT COURT DISTRICT OF O R E G O N P O R T L A N D DIVISION

ROBERTA KELLY and D. LAWRENCE OLSTAD, Plaintiffs,

CV 08-1421-AC O P I N I O N AND O R D E R

v.
U.S. BANK, BISHOP, WHITE & M A R S H A L L , P.S., a W a s h i n g t o n P r o f e s s i o n a l S e r v i c e s Company, a n d K R I S T A WHITE, Defendants,

A C O S T A , M a g i s t r a t e Judge:
Opinion a n d Order

Pursuant to Federal Rule o f Civil Procedure ("Rule") 15(a) defendant U.S. Bank National Association ("U.S. Bank") seeks leave o f cOUli to amend its answer to add a foreclosure claim. FINDINGS AND RECOMMENDATION
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Plaintiffs Roberta Kelly ("Kelly") and D. Lawrence Olstad ("Olstad") (collectively "Plaintiffs") have f i l e d s e p a r a t e r e s p o n s e s o p p o s i n g U.S. B a n k ' s m o t i o n t o a m e n d . T h e C o u r t finds t h a t P l a i n t i f f s objections to the motion t o amend are without merit. Accordingly, U.S. B a n k ' s motion for leave to file a n a m e n d e d a n s w e r i s G R A N T E D .

Procedural Background
O n December 8, 2009, U.S. B a n k filed its motion for leave to file a n amended answer. O n J a n u m y 6 , 2 0 1 0 , P l a i n t i f f s filed s e p a r a t e r e s p o n s e s o p p o s i n g U . S . B a n k ' s m o t i o n t o a m e n d . O n January 2 0 , 2 0 1 0 , U.S. B a n k filed a n affidavit in SUppOlt o f its m o t i o n for leave to file a n a m e n d e d answer. Plaintiffs were permitted to file a sur-reply by January 26, 2010.

Discussion
U.S. B a n k seeks leave o f COUtt to a m e n d its answer to add a foreclosure c l a i m a g a i n s t P l a i n t i f f s . A m e n d m e n t s t o p l e a d i n g s are g o v e m e d b y R u l e 15(a), w h i c h p r o v i d e s : " A p a r t y m a y amend the p m t y ' s pleading only by leave o f COUtt o r by written consent o f the a d v e r s e pmty; and leave shall b e freely given w h e n j u s t i c e so requires." FED. R. CIV. P. 15(a). T h e court recognizes t h a t leave to a m e n d should b e granted with "extreme liberality." Eminence Capital, L L e . v. Aspeon,

Inc., 316 F J d 1048, 1051 (9th Cir. 2003). The N i n t h Circuit h a s h e l d that a number o f f a c t o r s may
b e a r o n whether to grant leave t o amend, such as: (1) prejudice to the non-movingpmty; (2) b a d faith by the moving pmty; and (3) whether the a m e n d m e n t w o u l d b e futile. Bowles v. Reade, 198 F J d 7 5 2 , 7 5 7 - 5 8 ( 9 t h Cir. 1999). Plaintiffs originally filed this action i n N o v e m b e r 2008 in a n effOlt to s t o p a nonjudicial foreclosure sale o f K e l l y ' s property. U.S. B a n k agreed to halt sale after Kelly paid a p o r t i o n o f the

FINDINGS A N D R E C O M M E N D A T I O N

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delinquency on her loan and again started making mortgage payments. (Bennett Declaration ("Dec!.")
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2.) However, Kelly failed to make any payments o n the loan after August 2009.

(Bennett Dec!. ~ 2.) Since Kelly has asselted claims relating to the loan and is i n default under the. loan documents, U.S. Bank has requested leave to amend its answer to file a foreclosure counterclaim and, thus, resolve all issues regarding the loan in this action. Plaintiffs argue that the motion should be denied for two reasons. First, Plaintiffs argue that U.S. Bank has not alleged the statutOly basis for judicial foreclosure i n its amended answer. (Plaintiffs Opposition ( " P ! . ' s O p p ' n " ) ~ 2.) Second, Plaintiffs argue that U.S. B a n k ' s allegation that it has no "adequate remedy at law" is inaccurate, and argue, i n essence, that U.S. Bank does have an adequate legal remedy as evidence that it previously instituted a nonjudicial foreclosure proceeding.
Id.

U.S. Bank contends that its proposed amendment is not sought in bath faith, is not futile, and would not prejudice plaintiffs. U.S. B a n k ' s alleged purpose o f the amendment is to allow it to exercise its remedies under the loan documents and Oregon law. (Defendant's Memorandum i n Support ( " D e f . ' s Mem. Supp.")
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3.) Further, U.S. B a n k states it has not previously asked the court

for leave to file an amended answer because Kelly was making mortgage payments and the Bank agreed to participate i n a settlement conference. Id. Thus, once Kelly stopped making payments, U.S. B a n k decided to no longer negotiate with Kelly to avoid foreclosure and now wishes to assert its counterclaim. Id.
I t is well-settled law that a liberal standard is applied to motions for leave to amend, that

application constrained only where the amendment is prejudicial, i n bad faith, or futile. However, Plaintiffs do not argue that this amendment implicates any o f these three factors. Plaintiffs raise FINDINGS AND RECOMMENDATION 3
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substantive defenses to the foreclosure counterclaim, but merit-based objections to proposed amendments are not a valid basis for opposing a motion to amend. Therefore, none o f these tlll'ee factors apply i f Plaintiffs leave to amend is granted.
Conclusion

For the reasons stated, U.S. B a n k ' s motion for leave to file an amended answer is GRANTED.

DATED this 4 t h day o f Febmal'Y, 2010

J O H N V . A C O TA . p i t e d S t a t e s M a g i s t r a t e Judge

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FINDINGS AND RECOMMENDATION

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