Law et al v. Ocwen Loan Servicing, LLC et al
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
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 ,
OCWEN LOAN SERV ICING , LLC,
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 .
Factual and Procedural Backcround
Plaintiffs Roger Law and Lucindra Law ('plaintiffs' allege
September 29, 2005, they
Woodlake Lane, Missouri City, Texas (uthe Property' x
initial lender sold their loan to U .S . Bank N . ., as Tru stee for
the Registered Holders of MASTR Asset Backed Securities Trust 2006-
AM1, Mortgage Pass-Through Certificates, Series 2006-AM1 ('U. .
Their loan was then serv iced by defendant Ocwen Loan
Servicing, LLC (uOcwen' or ' endant')
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 .
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
'), 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 .
Defendant Ocwen timely removed the case to this
Plaintiffs now move to amend their Original Petition to
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) (
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.
Notice of Removal, Docket Entry No .
plaintiffs' Motion for Leave to Amend Pleadings ('
Amend' , Docket Entry No . 13; Plaintiffs' Amended Original Petition
uAmended Petition' , Docket Entry No. 14, pp . 13-14.
Wimm v . Jack Eckerd Corp w
F.3d 137, l39 (
5th Cir. 1993)). But
' tqhe court should freely give leave when justice so requires.'
P. 15( 2).
A district court must possess a
'substantial reason' to deny a request for leave to amend . Lyn-Lea
Travel Corp . v . American Airlines, Inc ., 283 F.3d 282, 286 (
Cir. 2002) (
quoting Jamieson v. Shaw, 772 F.2d 1205, 1208 (
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 ,
failure to cure deficiencies by previous amendm ents ,
prejudice to the opposing party, and
Rosenzweiq v . Azurix Corp w
futility of the amendment.
332 F.3d 854, 864 (
5th Cir. 2003)
citing Foman v . Davis, 83 S .
227, 230 (
amendment could not survive a Rule 12 ( 6) motion to dismiss,
amendment would be futile .
See Briqqs v . Mississipri, 33l F .3d
499, 508 (
5th Cir. 2003) (
citing Lewis v . Fresne, 252 F. 352, 360
5th Cir. 2001)).
111 . Analysis
Common Law Fraud Claim
Under Texas law the elements of a common 1aw fraud claim are :
1) that a material representation was made; (
representation was false; ( when the representation was
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
the intent that the other party should act upon it ;
( the party acted in reliance on the representation;
and ( the party thereby suffered injury .
In re FirstMerit Bank, N . ., 52 S . .3d 749, 758 (
Tex . 2001) (
Formosa Plastics Corr . v . Presidio Enqineers & Contractors, Inc w
96O S. . 41, 47 (
Tex . 1998)). When pleading fraud in a federal
complaint, 'a party must state with particularity the circumstances
constituting fraud .' Fed. R . Civ . P. 9(
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
see , e . g ., Amended
Petition, Docket Entry No . 14, p .
$! 5. 5.5, & 5.67 p. 8 ! 5.
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 .
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
Without knowing when Ocwen represented any facts about
the ownership of the Property , it cannot be determined whether the
representation was false when made .
Third , Plaintiffs do not
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
representations to their
negligence claim .?
Nor do Plaintiffs allege
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.
? d. Rt 11 f 6.
Plaintiffs also make several references to a '
'fraud on the
C Ok r t Y8
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 .
Doyle, 281 F . 304, 3l0 (
9th Cir. 1960)
Rozier v . Ford Motor Co .,
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 .
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,
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
$ 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 .
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 .'
But Defendant fails to argue that the remedies sought by Plaintiffs
are unavailab le should
Plaintiffs prevail on
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 .
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 .
perm issible .
Plaintiffs' Motion for Leave to Amend Pleadings (
is therefore GRANTED in part and DENIED in part .
SIGNED at Houston , Texas , on this 28th day of
UNITED STATES DISTRICT JUDGE
Defendant's Response in Opposition to Motion for Leave to
Amend Pleadings , Docket Entry No . l7, p . 5 .
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