Morlock, LLC A Texas Limited Liability Company v. The Bank of New York Mellon et al

Filing 25

MEMORANDUM AND ORDER DENIED 18 MOTION to Amend 1 Notice of Removal, (Signed by Judge Nancy F. Atlas) Parties notified.(sashabranner, )

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
MORLOCK, LLC,
Plaintiff,
v.
BANK OF NEW YORK MELLON,
Defendant.

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CIVIL ACTION NO. H-12-1585

MEMORANDUM AND ORDER
This case is before the Court on the Motion for Leave to File First Amended
Complaint (“Motion to Amend”) [Doc. # 18] filed by Plaintiff Morlock, LLC, to
which Defendant Bank of New York Mellon (“BNY”) filed an Opposition [Doc.
# 24]. Plaintiff neither filed a reply nor requested additional time to do so. Having
reviewed the record and relevant legal authorities, the Court denies the Motion to
Amend.
Plaintiff filed this lawsuit asserting that it is the owner of property located at
1958 Augusta, Houston, Texas. Morlock does not explain in the original complaint
the basis for its claim of ownership. Instead, Plaintiff alleges that Mingfeng Zhu and
Tsan Hung Timothy So executed a Deed of Trust to secure a loan from Franklin Bank,
SSB, and that the Deed of Trust was allegedly assigned to BNY by the Mortgage
Electronic Registration Systems (“MERS”). Plaintiff alleges that it “has been

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advised” that BNY has posted the property for a Substitute Trustee’s Sale under the
Deed of Trust in April 2012. Plaintiff alleges that it was not given notice and,
therefore, the notice of sale was invalid.
At the initial scheduling conference on August 10, 2012, the Court ordered
BNY to provide to Morlock a copy of the original note and affidavit of chain of title
by September 24, 2012. BNY provided the documents as directed on the September
24, 2012 deadline. Plaintiff was ordered to file an Amended Complaint by October
8, 2012. Plaintiff failed to do so. Instead, on November 1, 2012, Plaintiff filed its
Motion to Amend, which is now ripe for decision.
Where the Court has established a deadline for amendments to pleadings,
Federal Rule of Civil Procedure 16(b)(4) provides the standard for requests to amend
after that deadline has expired. See E.E.O.C. v. Serv. Temps Inc., 679 F.3d 323, 33334 (5th Cir. 2012); Marathon Financial Ins., Inc. v Ford Motor Co., 591 F.3d 458,
470 (5th Cir. 2009); Fahim v. Marriott Hotel Servs., Inc., 551 F.3d 344, 348 (5th Cir.
2008). “Rule 16(b) provides that once a scheduling order has been entered, it ‘may
be modified only for good cause and with the judge’s consent.’” Marathon, 591 F.3d
at 470 (quoting FED. R. CIV. P. 16(b). Rule 16(b) requires a party “to show that the
deadlines cannot reasonably be met despite the diligence of the party needing the
extension.” Id. (quoting S&W Enters., LLC v. Southtrust Bank of Ala., NA, 315 F.3d

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533, 535 (5th Cir. 2003)). To determine whether the moving party has established
good cause, the Court considers the following four factors: “(1) the explanation for
the failure to timely move for leave to amend; (2) the importance of the amendment;
(3) potential prejudice in allowing the amendment; and (4) the availability of a
continuance to cure such prejudice.” Id. (quoting Sw. Bell Tel. Co. v. City of El Paso,
346 F.3d 541, 546 (5th Cir. 2003)); see also Serv. Temp, 679 F.3d at 334.
Plaintiff’s explanation for its failure to file the amendment by the Court’s
deadline does not show good cause. Plaintiff claims that it believed BNY would fail
to comply with the Court’s order to provide the note and the affidavit and, therefore,
Plaintiff did not review the documents and affidavit provided by BNY on
September 24, 2012. Indeed, Plaintiff admits that it did not review the documents
until October 24, 2012, a month after they were provided to Plaintiff.
The importance of the proposed amendment is minimal because it would be
subject to dismissal. Plaintiff seeks to amend to add a claim that the assignment of the
loan to BNY was void under New York law because it lacked certain endorsements
in violation of the Pooling and Servicing Agreement (“PSA”). Plaintiff, who is not
a party to the PSA, lacks standing to challenge the manner in which the loan on the
subject property was transferred to BNY. See, e.g., Abruzzo v. PNC Bank, N.A., 2012

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WL 3200871, *2 (N.D. Tex. Jul. 30, 2012), Kiggundu v. Mortg. Elec. Registration
Systems, Inc., 2011 WL 2606359, *4 (S.D. Tex. Jun. 30, 2011).
The potential prejudice to BNY if the amendment were allowed is significant.
BNY would be required to file a motion to dismiss and, if Plaintiff filed a response,
to file a reply. This would increase BNY’s expenses in this case and, perhaps more
importantly, would delay final resolution of this lawsuit and final completion of
BNY’s right to foreclose. The Court notes that Plaintiff admits that BNY has actual
possession of the original note and deed of trust.
Because any additional delay is prejudicial to BNY, the availability of a
continuance would not avoid the prejudice.
Plaintiff has failed to establish good cause for its failure to comply with the
Court’s order to file its Amended Complaint by October 8, 2012. As a result, it is
hereby
ORDERED that Plaintiff’s Motion to Amend [Doc. # 18] is DENIED.
SIGNED at Houston, Texas, this 27th day of November, 2012.

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