Holton et al v. Wells Fargo Bank, N.A.

Filing 36

MEMORANDUM AND ORDER: granting 14 Motion to Intervene; granting 5 Motion to Dismiss; granting 15 Motion to Dismiss; denying as moot 19 Motion to Amend/Correct; denying as futile 32 Motion to Amend/Correct; granti ng 29 Motion to Dismiss, and those claims are hereby DISMISSED WITHOUT PREJUDICE; and the remainder of this action is hereby DISMISSED WITH PREJUDICE. The Clerk is DIRECTED to close this case and enter separate judgment. Signed by District Judge Harry S Mattice, Jr on 3/19/2012. (BJL) Modified Text on 3/19/2012 (BJL).

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
at CHATTANOOGA
MARK L. HOLTON and
CATHY S. HOLTON,
Plaintiffs,
v.
WELLS FARGO BANK, N.A.,
Defendant,
v.
STATE OF TENNESSEE,
Defendant-Intervenor

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Case No. 1:11-cv-65
Judge Mattice

MEMORANDUM AND ORDER
Before the Court are several motions filed by Defendant Wells Fargo Bank (“Wells
Fargo”) and Defendant-Intervenor the State of Tennessee (“Tennessee”) (collectively,
“Defendants”), as well those filed by Plaintiffs Mark and Cathy Holton (“Plaintiffs”).
Specifically, the Court here addresses Wells Fargo’s Motion to Dismiss (Doc. 5),
Tennessee’s (“Tennessee”) Motion to Intervene (Doc. 14), Tennessee’s Motion to Dismiss
(Doc. 15), Plaintiffs’ Motion to Dismiss State Claims (Doc. 29), and Plaintiff’s Motions to
Amend (Docs. 19, 32).
For the reasons explained below, the Court will GRANT Plaintiffs’ Motion to Dismiss
State Claims (Doc. 29); GRANT Tennessee’ Motion to Intervene (Doc. 14); GRANT
Defendants’ Motions to Dismiss (Docs. 5, 15); DENY Plaintiffs’ First Motion to Amend (Doc.
19) as moot; and DENY Plaintiffs’ Second Motion to Amend (Doc. 32) as futile.

I.

STANDARD OF REVIEW
“A motion to dismiss for failure to state a claim [per Fed. R. Civ. P. 12(b)(6)] is a test

of the plaintiff's cause of action as stated in the complaint, not a challenge to the plaintiff's
factual allegations.” Flanory v. Bonn, 604 F.3d 249, 252 (6th Cir. 2010). For purposes of
a motion to dismiss, the Court must take all of the factual allegations in the complaint as
true.

Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009).

However,

“[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory
statements do not suffice,” and a plaintiff’s legal conclusions couched as factual allegations
need not be accepted as true. Id.; see Fritz v. Charter Twp. of Comstock, 592 F.3d 718,
722 (6th Cir. 2010). “While legal conclusions can provide the framework of a complaint,
they must be supported by factual allegations.” Iqbal, 129 S.Ct. at 1950.
Further, “only a complaint that states a plausible claim for relief survives a motion
to dismiss.” Id. “A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. at 1949 (citing Bell Atlantic v. Twombly, 550 U.S. 544, 556 (2007)).
The reviewing court must determine not whether the plaintiff will ultimately prevail, but
whether the facts permit the court to infer “more than the mere possibility of misconduct,”
which is “a context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 1950. Therefore, to survive a motion to dismiss
under 12(b)(6), plaintiff’s “factual allegations must be enough to raise a right to relief above
the speculative level on the assumption that all the allegations in the complaint are true.”
Ass’n of Cleveland Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir.

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2007) (citing Twombly, 550 U.S. at 555).
A party may amend its pleadings once as a matter of course within 21 days after
serving it, or within 21 days after service of a responsive pleading or motion to dismiss.
Fed. R. Civ. P. 15(a). In all other cases, a party may amend its pleading only by leave of
court, and “leave shall be given when justice so requires.” See id.; Miller v. Calhoun Cnty.,
408 F.3d 803, 817 (6th Cir. 2005). A court need not grant leave to amend, however, where
such amendment would be futile. Miller, 408 F.3d at 817 (citing Foman v. Davis, 371 U.S.
178, 182 (1962)). Amendment of a complaint is “futile” when the proposed amendment
would not survive a motion to dismiss. Id.
II.

BACKGROUND
On March 16, 2011, Plaintiffs filed their initial Complaint, which related to the

impending non-judicial foreclosure of their home by mortgage holder Wells Fargo. (Doc.
1). Wells Fargo moved to dismiss the Complaint for failure to state a claim pursuant to
Fed. R. Civ. P. 12(b)(6). (Doc. 5). Plaintiffs subsequently amended their Complaint within
the time provided by Fed. R. Civ. P. 15(a)(1)(B). (Doc. 9).
In their Amended Complaint, Plaintiffs again sought relief based on Wells Fargo’s
threatened non-judicial foreclosure of their home. (Doc. 9 at 3). In December 2009,
Plaintiffs entered into a mortgage loan on the property, which was secured by a deed of
trust in favor of the lender, and which contained a “power of sale” clause permitting nonjudicial foreclosure in the event of default.1 (Id.) Plaintiffs assert that, beginning in
1

“NFM, Inc.” was the lender identified on the deed of trust. (Doc. 1-1 at 1). Apparently, at som e
point between the execution of the m ortgage and the initiation of the current suit, W ells Fargo becam e the
m ortgage holder. The Court will assum e that W ells Fargo is the appropriate party to this lawsuit – it is
som ewhat im m aterial which private party held the m ortgage, as Plaintiffs’ claim s fail as a m atter of law for the
reasons specified.

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December 2010 and continuing through February 2011, Wells Fargo sent multiple letters
threatening to foreclose on their home.2 (Id.).
Plaintiffs raised several claims in their Amended Complaint. First, by way of 28
U.S.C. § 1983, they asserted a violation of their rights under the Fourteenth Amendment
to the United States Constitution, insofar as Wells Fargo failed to give them reasonable
notice and a meaningful opportunity to be heard before initiating non-judicial foreclosure
proceedings. (Id. at 4, 9). They requested relief pursuant to the Declaratory Judgment Act,
28 U.S.C. §§ 2201 and 2202; specifically, they sought a court order declaring the
Tennessee statutes addressing the non-judicial foreclosure proceedings unconstitutional
due to the provisions’ “noncompliance with the Due Process Clause.”3 (Id. at 4, 6).
Plaintiffs sought to enjoin Wells Fargo from taking any further steps toward foreclosure.
(Id. at 11). They also challenged the validity of the non-judicial foreclosure statutes based
upon the Tennessee constitution and Tennessee public policy. (Id. at 6-7).
Wells Fargo urged the Court to Dismiss Plaintiffs’ Amended Complaint.4 (Doc. 13).
Wells Fargo argued that the Tennessee statutes treating non-judicial foreclosure
2

In Plaintiffs’ Proposed Third Am ended Com plaint, they allege that W ells Fargo eventually exercised
its right to foreclose on their property.
3

Plaintiffs identify a litany of allegedly unconstitutional statutory provisions, all of which they assert
relate to Tennessee non-judicial foreclosure proceedings. Specifically, Plaintiffs challenge the constitutionality
of Tenn. Code Ann. §§ 29-18-119(c) (“Forcible Entry and Detainer – Trial; issues; general sessions courts”),
29-18-125 ("Forcible Entry and Detainer – Judgm ents and decrees; plaintiffs"), 29-18-133 (“Forcible Entry and
Detainer – Illegal possession; fines and penalties”), 29-23-201 (providing that Tennessee judges m ay not
enjoin a foreclosure sale unless the person seeking the injunction gives five days' notice to the trustee or
m ortgagee), 35-5-101 (defining the process by which advertisem ents concerning foreclosure sales m ust be
published), 35-5-103 (providing the tim e for written notice when an advertisem ent cannot be effected), and
35-5-106 (providing that a foreclosure sale shall not be voidable solely for failure com ply with certain statutory
procedures). (Doc. 9 at 6).
4

Although W ells Fargo’s subm ission in response to Plaintiffs’ am endm ents is captioned “Reply Brief
in Support of Motion to Dism iss,” it explicitly reincorporates the term s of its original Motion to Dism iss. (See
Doc. 13 at 1 n.1).

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proceedings do not constitute the “state action” required to state a § 1983 claim for
violation of the Fourteenth Amendment. (Id. at 3-8). Wells Fargo noted that this Court
recently considered a similar complaint and found that it could not withstand a motion to
dismiss. (Id.) (citing Drake v. Citimortgage, Inc., Case No. 1:10-cv-305, 2011 WL 1396774
(E.D. Tenn. Apr. 13, 2011)).
Thereafter, Tennessee moved to intervene pursuant to 28 U.S.C. § 2403(b) and
Fed. R. Civ. P. 24(a). (Doc. 14). Tennessee also moved to Dismiss Plaintiffs’ Amended
Complaint. (Doc. 15). Like Wells Fargo, it alleged that Plaintiffs’ Complaint failed to
identify “state action” on which to base a Fourteenth Amendment claim and did not
establish that the challenged statutes violated either the Tennessee constitution or
Tennessee public policy. (Doc. 16).
Plaintiffs responded by asserting that they had pleaded facts in this case that were
not raised in Drake or any other case on which Defendants relied. (Doc. 17). Specifically,
they recited passages from their Amended Complaint alleging that “the protections given
to them under Tennessee Law are illusory and . . . unconstitutional as actually applied.”
They concluded without explanation that “[t]hese allegations require proof from all parties,
and a motion to dismiss cannot be granted where the Court must assess that proof.” (Id.
at 3).
Plaintiffs subsequently moved to amend their Complaint twice more. (Docs. 19, 32).
In their proposed Third Amended Complaint – the most recent iteration of substantially
similar pleadings – Plaintiffs added “class action allegations,” in which they sought to define
a class of borrowers as potential plaintiffs and a class of lenders as potential defendants.
(Doc. 32-1). The proposed Third Amended Complaint is specifically predicated on
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Plaintiffs’ allegations in their Amended Complaint – namely, that the Tennessee
non-judicial foreclosure statutes violate the Fourteenth Amendment. (Id. at 1).
Plaintiffs have also moved to dismiss their state law causes of action. (Doc. 29).
Defendants did not respond to Plaitniffs’ Motion.
III.

ANALYSIS
As initial matters, the Court will address Tennessee’s Motion to Intervene (Doc. 14),

Plaintiffs First Motion to Amend their Complaint (Doc. 19), and Plaintiffs’ Motion to Dismiss
their state law claims (Doc. 29).
Pursuant to 28 U.S.C. § 2403(b) and Fed. R. Civ. P. 5.1(c) and 24(a), Tennessee
is entitled to intervene in an action in which the constitutionality of its statutes is challenged.
No party objects to Tennessee’s involvement in this case. Accordingly, the Court will
GRANT Tennessee’s Motion to Intervene (Doc. 14).
Plaintiffs have filed two motions to amend their Complaint, which they have already
amended once as of right. (Docs. 9, 19, 32). Appended to each Motion is a proposed
Amended Complaint. (See Docs. 19-1, 32-1). It is evident that Plaintiffs sought to
supersede the proposed Second Amended Complaint (attached to the First Motion to
Amend) with the proposed Third Amended Complaint. Thus, the Court will DENY Plaintiffs’
First Motion to Amend (Doc. 19) as moot.
Plaintiffs have also moved to dismiss their state law claims pursuant to Fed. R. Civ.
P. 41(a)(2), which provides that “an action may be dismissed at the plaintiff's request only
by court order, on terms that the court considers proper . . . . Unless the order states
otherwise, a dismissal under this paragraph . . . is without prejudice.” The Court deems

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dismissal of Plaintiffs’ state law claims (i.e., those causes of action based on the
Tennessee constitution and Tennessee public policy) appropriate under the circumstances.
It will therefore GRANT Plaintiffs’ Motion (Doc. 29), to which Defendants did not timely
respond, and DISMISS their state law claims WITHOUT PREJUDICE.
The remaining claims in both the Amended and proposed Third Amended
Complaints are predicated on only one issue: the alleged deprivation of Plaintiffs’ rights
secured by the Due Process Clause of the Fourteenth Amendment to the United States
Constitution. (See Doc. 9 at 9-11).
In relevant part, the Fourteenth Amendment provides:
No State shall make or enforce any law which shall abridge the privileges or
immunities of citizens of the United States; nor shall any State deprive any
person of life, liberty, or property, without due process of law; nor deny to any
person within its jurisdiction the equal protection of the laws.
U.S. Const. amend. XIV, § 1. It is well-established that the Due Process Clause of the
Fourteenth Amendment applies only to state action, not private conduct. See, e.g., Lugar
v. Edmonson Oil Co., Inc., 457 U.S. 922, 930 (1982) (“Because a due process violation
was alleged and because the Due Process Clause protects individuals only from
governmental and not from private action, plaintiffs had to demonstrate that [the conduct
of which they complained] was accomplished by state action.”) (citing Flagg Bros., Inc. v.
Brooks, 436 U.S. 149 (1978)); Craft v. Memphis Light, Gas and Water Division, 867 F.2d
684, 687 (6th Cir. 1976) (“[T]he Fourteenth Amendment requires due process only if ‘state
action’ is ‘depriv(ing) any person of life, liberty or property.’”) (citation omitted). Likewise,
to state a successful § 1983 claim, Plaintiffs must show that they were deprived of a
federal constitutional or legal right “by a person acting under color of state law.” Paige v.
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Coyner, 614 F.3d 273, 278 (6th Cir. 2010) (emphasis original).

The “state action”

requirements under the Fourteenth Amendment and § 1983 are functionally equivalent.
Id. (holding that the analyses are identical because, like § 1983, “the Fourteenth
Amendment prohibits only states (as opposed to private entities) from depriving individuals
of due process”). Thus, regardless of how Plaintiffs characterize their constitutional
challenge – “facial” or “as applied” – they must first identify some “state action” by which
the Tennessee statutes run afoul of the Fourteenth Amendment. See id.; Lugar, 457 U.S.
at 930; see also Focus on the Family v. Pinellas Suncoast Transit Auth., 344 F.3d 1263,
1277 (11th Cir. 2003) (holding in the context of a First Amendment challenge that “Section
1983 applies regardless of the nature of the substantive deprivation being alleged. Thus,
[a plaintiff] may advance neither its facial nor its as-applied challenge if the [alleged
deprivation] is not attributable to [the state actor]”).
“A private party’s actions constitute ‘state action’ where those actions may be fairly
attributable to the state.” Chapman v. Higbee Co., 319 F.3d 825, 833 (6th Cir. 2003) (en
banc). Plaintiffs do not contend that the State of Tennessee has foreclosed on their home
or intends to do so. (See Docs. 9, 19-1). Indeed, they acknowledge that Tennessee law
provides for private non-judicial foreclosures via “power of sale” provisions such as the one
at issue here. (See Doc. 12 at 2). They therefore point the Court’s attention to the
Tennessee statutes addressing those private foreclosures, and they allege that the system
of regulations governing the process is so pervasive and coercive as to constitute state
action. The great weight of authority – including that of the United States Court of Appeals
for the Sixth Circuit and this Court – is to the contrary.

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In King v. Emery, 836 F.2d 1348 (table), 1988 WL 1101 (6th Cir. Jan. 11, 1988)
– a case remarkably similar to this one – the Sixth Circuit addressed the Tennessee laws
governing non-judicial foreclosure and held:
The district court correctly concluded that this private foreclosure sale does
not constitute state action. The Supreme Court has held that where state
involvement in a private action constitutes no more than acquiescence or
tacit approval, the private action is not transformed into state action even if
the private party would not have acted without authorization of state law.
Flagg Bros. v. Brooks, 436 U.S. 149 (1978). Indeed, under the Flagg
standard, the actions of a private party will not be attributed to the state
unless the state actually compels the action. United States v. Coleman, 628
F.2d 961, 964 (6th Cir.1980) . . . .
Tennessee does not compel the use of private nonjudicial foreclosure sales
in financing agreements, but rather allows the creditor to choose between
judicial sale or private nonjudicial sale . . . . This recognition of private
nonjudicial foreclosures falls short of the compulsion required to establish
state action. See Flagg, 436 U.S. 149; Adikes v. S.H. Kress & Co., 398 U.S.
144 (1970).
King, 1988 WL 1101 at *1.5
Thus, the Sixth Circuit held that Tennessee statutes governing the enforcement of
non-judicial foreclosures do not permit a plaintiff to recast those private proceedings into
state action. See id. That holding is consistent with the Sixth Circuit’s prior opinions. See
United States v. Coleman, 628 F.2d 961, 964 (6th Cir. 1980) (“[W]here state involvement
in private action constitutes no more than acquiescence or tacit approval, the private action
is not transformed into state action even if the private party would not have acted without
the authorization of state law.”); Northrip v. Fed. Nat’l Mortg. Ass’n 527 F.2d 23, 28 (6th

5

The Court notes that the Sixth Circuit rejected the King plaintiff's suggestion (echoed by Plaintiffs
in this case) that Clark v. Jones, 27 S.W . 1009 (1894), a nineteenth-century Tennessee Suprem e Court case
discussing early non-judicial foreclosure actions, is effectively tantam ount to state action. See King, 1988 W L
1101 at *1; (Doc. 12 at 3).

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Cir. 1975) (“We fail to see how the creditor is attempting to enforce any right in reliance
upon a constitutional or statutory provision . . . or is even asserting any state-created right.
Rather, we see a creditor privately effectuating a right which was created in advance by
contract between the parties. At best, the right is one that is merely codified, but not
created, in the statute”). It is also consistent with the conclusions reached by several other
courts. See, e.g., Pease v. First Nat’l Bank, 335 F. App’x 412, 414 (5th Cir. 2009) (“[N]o
significant state action is involved in non-judicial foreclosures under a deed of trust.”); Apao
v. Bank of New York, 324 F.3d 1091, 1094-95 (9th Cir. 2003) (surveying several federal
appellate cases and noting that, of the six circuit courts to address whether non-judicial
foreclosure constituted state action, all six held in the negative); Van Daam v. Chrysler First
Fin. Svc. Corp. of R.I., 915 F.2d 1557 (table), 1990 WL 151385 at *2 (1st Cir. Sept. 28,
1990) (“Courts which have examined the constitutional validity of such non-judicial
foreclosures have almost uniformly found that they do not involve ‘state action.’”); see also,
e.g., Dodd v. Fed. Home Loan Mortg. Co., Case No. S-11-1603, 2011 WL 6370032 (E.D.
Cal. Dec. 19, 2011) (“Non-judicial foreclosure proceedings are a purely private remedy and
do not constitute state action . . . .”); Bolone v. Wells Fargo Home Mortg., Inc., Case No.
11-10663, 2001 WL 3706600 at *4 (E.D. Mich. Aug. 24, 2011) (holding that non-judicial
foreclosures advertised pursuant to statute “do not involve state action for purposes of the
due process clause”); Robinson v. Bank of New York Mellon, Case No. 10-cv-1829, 2011
WL 810658 (D. Ariz. Mar. 4, 2011) (“[N]o state action exists when a private lender invokes
non-judicial foreclosure.”); Brunson v. Am. Home Mortg. Servicing, Case No. 2:09-cv-436
2010 WL 1329711 (D. Utah Mar. 30, 2010) (dismissing a case and agreeing with the

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defendant’s argument that “a private non-judicial foreclosure sale does not constitute state
action for purposes of the due process clause[] . . . .”).
In fact, as Defendants correctly note, this Court has recently addressed a case
nearly identical to this one. See Drake, 2011 WL 1396774 (E.D. Tenn. Apr. 13, 2011).
Large portions of the Amended Complaint in this case are nearly identical to the complaint
in Drake, and plaintiffs in both cases challenged as unconstitutional the same set of
Tennessee statutes. (Compare Doc. 9 with Case No. 1:10-cv-305 Doc. 1). In Drake, this
Court held that
[The statutory provisions identified by Plaintiffs] show only that Tennessee
recognizes the right of private parties to contract for power of sale, provides
some default terms in the event contracts authorizing power of sale are silent
on some issues, and will enforce such contracts. They do not show that
Tennessee compels non-judicial foreclosure, or is otherwise so entwined
with the non-judicial foreclosure process that its apparent private character
is only illusory. In fact, if Tennessee’s recognition and willingness to enforce
private contracts authorizing non-judicial foreclosure amounts to State action,
it is difficult to see why the enforcement of almost any private contractual
remedy in Tennessee would not be State action.
Drake, 2011 WL 1396774 at *2.
The Court finds the reasoning in Drake directly apposite here.

The statutes

Plaintiffs have identified do not establish that Tennessee’s regulation of the non-judicial
foreclosure process is “state action.” The challenged statutes did not create the terms of
the parties’ deed of trust or mandate the power-of-sale clause’s inclusion therein, nor did
they compel Defendant to foreclose pursuant to that agreement. Rather, those laws
recognize that parties may enter into private contracts containing power-of-sale provisions,
and they define some means by which enforcement may be effected. They are merely
default regulations that become applicable only after (1) the parties have chosen to enter
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into a contractual agreement and (2) the creditor has chosen to act pursuant to that
agreement’s terms. Nothing in the existence or application of the statutes supports
Plaintiffs’ contention that Tennessee is so entangled with the non-judicial foreclosure
process as to call into question the process’s private character. See King 1988 WL 1101
at *1; Coleman, 628 F.2d at 964.
Plaintiffs attempt to distinguish this case from Drake (and the many other cases to
reach the same conclusion) by pointing to paragraphs 20 through 23 of their Amended
Complaint, in which they allege that the protections Tennessee affords those in non-judicial
foreclosure proceedings are “illusory.” These arguments are unpersuasive, and Plaintiffs’
position in this regard is somewhat puzzling: when they sought to consolidate this case with
Drake, Plaintiffs themselves acknowledged that the
allegations and claims for relief [of Angeline Drake, the named plaintiff in
Drake,] are almost identical to those of the Plaintiffs. [Drake’s] Complaint has
been filed with this Court . . . . The principal differences between the
Plaintiffs’ case and that of Ms. Drake are: a very similar but somewhat
differently worded deed of trust is involved; the defendant is a separate entity
but of comparable importance in the mortgage industry; and foreclosure has
already occurred in the case of Ms. Drake.
(Doc. 3; see Doc. 7).
Although Plaintiffs cite cases in support of their position that non-judicial foreclosure
statutes may be held to constitute state action, the cases to which they refer are
inapposite.6 Plaintiffs allege that “a borrower must run one or more of three very difficult
6

Plaintiffs cite Turner v. Blackburn, 389 F. Supp 1250 (W .D.N.C. 1975); Garner v. Tri-State Dev. Co.,
382 F. Supp. 377 (E.D. Mich. 1974); Coffey Enter. Realty & Dev. v. Holmes, 213 S.E.2d 882 (Ga. 1975);
Valley Dev. at Vail v. W arder, 557 P.2d 1180 (Colo. 1976); Dieffenbach Atty. Gen. of Vt., 604 F.2d 187 (2d
Cir. 1979); and New Destiny Dev. Court v. Piccone, 802 F. Supp. 692 (D. Conn. 1992). New Destiny and
Valley Development both relate to judicially sanctioned foreclosure actions. New Destiny 802 F. Supp at 694;
Valley Dev., 557 P.2d at 1181. Turner and Dieffenbach involved statutory schem es significantly m ore intrusive
than Tennessee’s. See Dieffenbach, 604 F.2d at 191-95; Turner, 389 F. Supp. at 1256-57. Garner was a

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obstacle courses to contest foreclosure,” and aside from an anecdotal recitation of those
purported options, they offer no factual basis or legal authority to support their apparent
contention that a statue may be declared unconstitutional because the protections it
provides are not as sweeping as one might otherwise envision. To the extent that Plaintiffs
may find Tennessee’s law addressing non-judicial foreclosures disagreeable, their problem
is one that is best addressed by the Tennessee legislature, not a federal court.
The great weight of authority holds that statutes of which Plaintiffs complain do not
constitute “state action” within the meaning of 42 U.S.C. § 1983 or the Fourteenth
Amendment. Plaintiffs have identified no meaningful basis on which to depart from that
authority here. Because no state action was involved in the non-judicial foreclosure of
Plaintiffs’ home, they cannot state a plausible claim under § 1983 or the Fourteenth
Amendment. The Court will therefore GRANT Defendants’ Motions to Dismiss (Doc. 5, 15)
and DISMISS Plaintiffs’ Amended Complaint.
In their proposed Third Amended Complaint, Plaintiffs again expressly invoke the
Due Process Clause of the Fourteenth Amendment as a basis for declaring the Tennessee
statutes unconstitutional. (Doc. 32-1 at 1). The proposed Third Amended Complaint is
based on the same allegations contained in the Amended Complaint, but the proposed
amendments attempt to assert those allegations on behalf of a defined class of borrowers

district court case that relied heavily on the district court’s analysis in Northrip, 372 F. Supp. 594 (E.D. Mich.
1974) – which was later overruled by the Sixth Circuit – and addressed a statutory schem e that the Sixth
Circuit later held insufficient to constitute state action. Compare Garner, 382 F. Supp. at 378-39 (addressing
Mich. Com p. Laws § 600.3201 et seq.) with Northrip, 527 F.2d at 27-30. Finally, Coffey appears to hold
precisely the opposite of the position Plaintiffs now espouse. Coffey, 213 S.E.2d at 885 (“Since no m eaningful
governm ent involvem ent to constitute state action is involved, any contention that such statute violates the
equal protection or due process provisions of the Constitution is without m erit.”). Consequently, these cases
do not m eaningfully guide the Court’s analysis, and to the extent they do, they do not favor Plaintiffs’ position.

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against a defined class of lenders. As the Court discussed above, Plaintiffs’ Amended
Complaint identifies no state action on which to base a Fourteenth Amendment claim.
That claim brought on behalf of a class of plaintiffs necessarily fails for the same reasons.
The Court will therefore DENY Plaintiffs’ Second Motion for Permission to Amend (Doc.
32) as futile.
Accordingly, and for the reasons stated:
•

The State of Tennessee’s Motion to Intervene (Doc. 14) is GRANTED;

•

Defendants’ Motions to Dismiss (Docs. 5, 15) are GRANTED;

•

Plaintiffs’ First Motion for Permission to Amend (Doc. 19) is DENIED AS MOOT;

•

Plaintiffs’ Second Motion for Permission to Amend (Doc. 32) is DENIED AS
FUTILE;

•

Plaintiffs’ Motion to Dismiss their state law claims (Doc. 29) is GRANTED, and those
claims are hereby DISMISSED WITHOUT PREJUDICE; and

•

The remainder of this action is hereby DISMISSED WITH PREJUDICE.

The Clerk is DIRECTED to close this case and enter a separate judgment in
accordance with Fed. R. Civ. P. 58.

SO ORDERED this 19th day of March, 2012.

/s/Harry S. Mattice, Jr.
HARRY S. MATTICE, JR.
UNITED STATES DISTRICT JUDGE

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