Law et al v. Ocwen Loan Servicing, LLC et al

Filing 20

MEMORANDUM OPINION AND ORDER granting in part and denying in part 13 MOTION for Leave to File Amended Pleadings. (Signed by Judge Sim Lake) Parties notified.(gclair, 4)

United States District Court
Southern District of Texas

ENTERED
March 28, 2017

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIV ISION

David J. Bradley, Clerk

ROGER LAW and LUCINDRA LAW ,

Plaintiffs,

OCWEN LOAN SERV ICING , LLC,

Defendant .

K;MOKAHDUM OPINION AND ORDER
Pending before the court

Plaintiffs' Motion for Leave to

Amend Pleadings (
Docket Entry No. 13).

For the reasons stated

below , the motion will be granted in part and denied in part .
1.

Factual and Procedural Backcround

Plaintiffs Roger Law and Lucindra Law ('plaintiffs' allege
'
')
that on

September 29, 2005, they

purchased property

Woodlake Lane, Missouri City, Texas (uthe Property' x
o

at 4115

Plaintiffs'

initial lender sold their loan to U .S . Bank N . ., as Tru stee for
A
the Registered Holders of MASTR Asset Backed Securities Trust 2006-

AM1, Mortgage Pass-Through Certificates, Series 2006-AM1 ('U. .
' S
Bank')
'

Their loan was then serv iced by defendant Ocwen Loan

Servicing, LLC (uOcwen' or ' endant')
'
l
Def
'

On December

2013 , U .S .

Bank purchased the Property in a non-judicial foreclosure sale.
lplaintiffs' Original Petition , Factual Background, Exhibit D-l
to Notice of Removal, Docket Entry No . 1-4 , pp . 6-8 .

On October l3 , 2014 , U .S . Bank filed suit to evict Plaintiffs .
On October

2014, Ocwen sold the Property to a third party . But

on October 3O, 2014 , U .S . Bank's attorneys, Mackie Wolf Zientz &

Mann, PC (U
MWZM'
'), allegedly represented to the court that U.S.
Bank still owned the Property .
U .S . Bank .

The trial court ruled in favor of

Plaintiffs appealed .

allegedly represented that

appeal , U .S . Bank again

owned the Property . Plaintiffs were

evicted in March of 2015 .
Plaintiffs filed suit against Ocwen and MW ZMZ in the 434th
Judicial District Court of Fort Bend , Texas, asserting claims of
negligence and statutory fraud arising from the statements made in
state court .

court .3
allege

Defendant Ocwen timely removed the case to this

Plaintiffs now move to amend their Original Petition to
a claim

for

common

law

fraud

and

to

seek

additional

remedies .4
II .

Standard of Rev iew

Decisions concerning motions to amend are uentrusted to the
sound discretion of the district court

Texas Television Incw

Ouintanilla v .

139 F.3d 494, 499 (
5th Cir . 1998) (
quoting

2
The attorneys have since been dism issed . See Order Granting
Mackie Wolf Zientz & Mann , PC 's Motion to Dism iss Pursuant to

Federal Rule of Civil Procedure 12( 6), Docket Entry No . 8.
b)(
3
Notice of Removal, Docket Entry No .

4
plaintiffs' Motion for Leave to Amend Pleadings ('
'
Motion to
Amend' , Docket Entry No . 13; Plaintiffs' Amended Original Petition
o
(
uAmended Petition' , Docket Entry No. 14, pp . 13-14.
o

Wimm v . Jack Eckerd Corp w

F.3d 137, l39 (
5th Cir. 1993)). But

' tqhe court should freely give leave when justice so requires.'
'E
'
Fed. R.

P. 15( 2).
a)(

A district court must possess a

N
'substantial reason' to deny a request for leave to amend . Lyn-Lea
'

Travel Corp . v . American Airlines, Inc ., 283 F.3d 282, 286 (
5th
Cir. 2002) (
quoting Jamieson v. Shaw, 772 F.2d 1205, 1208 (
5th Cir.
1985)).

The Supreme Court has provided five considerations to

determine whether to grant a party leave to amend a complaint :
undue delay ,

bad faith or dilatory motive ,

repeated

failure to cure deficiencies by previous amendm ents ,

prejudice to the opposing party, and
Rosenzweiq v . Azurix Corp w

undue

futility of the amendment.

332 F.3d 854, 864 (
5th Cir. 2003)

(
citing Foman v . Davis, 83 S .

227, 230 (
1962))

a proposed

amendment could not survive a Rule 12 ( 6) motion to dismiss,
b)(
amendment would be futile .

See Briqqs v . Mississipri, 33l F .3d

499, 508 (
5th Cir. 2003) (
citing Lewis v . Fresne, 252 F. 352, 360
3d
(
5th Cir. 2001)).
111 . Analysis
A.

Common Law Fraud Claim

Under Texas law the elements of a common 1aw fraud claim are :

(
1) that a material representation was made; (
2) the
representation was false; ( when the representation was
3)
made , the speaker knew it was false or made it recklessly
without any knowledge of the truth and as a positive

assertion; ( the speaker made the representation with
4)
the intent that the other party should act upon it ;

( the party acted in reliance on the representation;
5)

and ( the party thereby suffered injury .
6)

In re FirstMerit Bank, N . ., 52 S . .3d 749, 758 (
A
W
Tex . 2001) (
citing
Formosa Plastics Corr . v . Presidio Enqineers & Contractors, Inc w

96O S. . 41, 47 (
W 2d
Tex . 1998)). When pleading fraud in a federal
complaint, 'a party must state with particularity the circumstances

constituting fraud .' Fed. R . Civ . P. 9(
'
b).
Plaintiffs' proposed Amended Petition fails to support a claim
for common law fraud .

Neither Plaintiffs ' claim itself, which

merely lists the elements of common law fraud , nor the facts

alleged support an action for fraud . As a prelim inary matter the
court notes that Plaintiffs attribute the alleged fraud variously
to U .S . Bank , MWZM , and Ocwen , making more difficult the court 's

task of determining whether the requisite knowledge and intent is
attributed to the proper party .s
Turning to the elements themselves the court concludes that

Plaintiffs fail to state a claim for common law fraud . Plaintiffs

s
see , e . g ., Amended

Petition, Docket Entry No . 14, p .

$! 5. 5.5, & 5.67 p. 8 ! 5.
4,
17:
On October 3O, 2014 , during a trial to the bench ,
attorneys from MWZM , upon Ocwen 's instruction , presented
sworn evidence and represented to the Court that U .S .
Bank owned the property in question . . . . During the
trial of this matter on February 4 , 2015 , Attorney Rex

Kesler , an aqent of Defendant MWZM L I misrep resented to
the Court that U .S . Bank owned the property in question
and offered sworn testimony to that effect , when in fact ,
the Bank hadn 't owned the property since October 27 ,
2014 . . . . U .S . Bank obtained the wronqful eviction by
committinq fraud on the Courts and on the parties .

(
emphases added).
-

4-

first fail to adequately allege that the representations were
material. Plaintiffs concede that U .S . Bank purchased the property
at a foreclosure sale .

Because Plaintiffs do not argue that they

had a superior right of possession ,

is not clear whether any

alleged misrepresentation was material. Second , Plaintiffs do not

allege what specific m isrepresentations were made by Ocwen and
when , as opposed to the statements made in court by U .S . Bank 's

lawyersx

Without knowing when Ocwen represented any facts about

the ownership of the Property , it cannot be determined whether the
representation was false when made .
allege

that

Ocwen

directed

Third , Plaintiffs do not

any

misrepresentations

toward

Plaintiffs , as opposed to the court . Nor do Plaintiffs allege any
facts that would support a finding that Ocwen intended Plaintiffs,
rather than the court, to rely on the alleged misrepresentations .
Moreover , Plaintiffs do not specify in what manner they acted

reliance upon Ocwen 's statements .

Plaintiffs make the conclusory

allegation that they

the

detriment' without
'

nrelied on

further

representations to their

explanation

in

support

negligence claim .?

Nor do Plaintiffs allege

reliance resulted

their injury.

that

of

their

their

own

In sum, Plaintiffs fail

plead adequate facts to support several of the elements of a common
law fraud claim .

6nOn October 3O, 2014 , during a trial to the bench , attorneys
from MWZM , upon Ocwen 's instruction , presented sworn ev idence and
represented to the Court that U .S . Bank owned the property in
question .' Amended Petition , Docket Entry No. l4, p. 3 $ 5.
'
4.

? d. Rt 11 f 6.
I
4.
-

5-

Plaintiffs also make several references to a '
'fraud on the
C Ok r t Y8
l

Generally

speaking ,

only

the

most

egreg ious

misconduct, such as bribery of a judge or members of a
jury, or the fabrication of evidence by a party in which
an attorney is implicated , will constitute a fraud on the
court . See Hazel-A tlas Glass Co . v . Hartford-Empire Co .,
.
.
64 S. Ct. 997
(
1944); Root Refininq Co . v.
Universal Oil Products, l69 F.2d 514 (
3d Cir . 1948);

7 J. Moore, Federal Practice, $ 60.33 at 510-11. Less
egregious misconduct, such as nondisclosure to the court
of facts allegedly pertinent to the matter before it ,
will not ordinarily rise to the level of fraud on the
court . See Kupferman v . Consolidated Research & Mfg .

Co., 459 F . 1072 ( Cir. 1972); see also Enqland v .
2d
2d
Doyle, 281 F . 304, 3l0 (
2d
9th Cir. 1960)

Rozier v . Ford Motor Co .,

F.
2d 1332, 1338 (
5th Cir. 1978)

(
quoting United States v . International Telephone & Telegraph Corp w
349 F. Supp. 22, 29 ( . Conn . 1972), aff' without opinion, 93 S .
D
d
1363 (
1973)). To establish fraud on the court, uit is necessary
to show an unconscionable plan or scheme which is designed to
improperly influence the court in its decision .'
'

Bank of Louisville v . Lustiq,

First National

F.
3d 1554, 1573 (
5th Cir. 1996)

(
quoting Rozier, 573 F.
2d at 1338) (
internal quotation marks and
citation omitted). Even accepting as true Plaintiffs' allegations,
the alleged misrepresentations do not rise to the level of fraud on
the court . Ocwen 's alleged nondisclosure of the subsequent sale of
the property , even if material, is not evidence of an unconscionable
plan or scheme designed to improperly influence the court . Because

Plaintiffs have not pled specific facts sufficient to support a
claim for common law fraud against Ocwen, the proposed amendment

8
Id., p.

$ 5.6, p.

! 5.11, p. 8 f

and p. 13 $

would be futile .

Plaintiffs' Motion to Amend will therefore be

denied as to the additional cause of action .

B.

Additional Remedies
Plaintiffs also seek leave to amend their Original Petition to

seek additional remedies in the form of declaratory relief and
attorney 's fees .

Defendant argues that nbecause Plaintiffs have

not asserted any v iable causes

action against Defendant in the

proposed Amended Comp laint based on the alleged common-law fraud

claim , Plaintiffs' requested declaratory relief should be denied .'
'g
But Defendant fails to argue that the remedies sought by Plaintiffs
are unavailab le should

Plaintiffs prevail on

their remaining

claims . Because the additional remedies sought by Plaintiffs are
not limited to their common 1aw fraud claim , leave to amend will be
granted as to these remedies .

IV .

Conclusion and Order

For the reasons stated above , the court concludes that an
amendment to add a claim for common 1aw fraud would be futile .

Plaintiffs'

proposed

amendment

is

otherw ise

perm issible .

Plaintiffs' Motion for Leave to Amend Pleadings (
Docket Entry
No .

is therefore GRANTED in part and DENIED in part .
SIGNED at Houston , Texas , on this 28th day of

h,

7.

*

A
SIM LAKE
UNITED STATES DISTRICT JUDGE

g
Defendant's Response in Opposition to Motion for Leave to
Amend Pleadings , Docket Entry No . l7, p . 5 .