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)

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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 .

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