Montalvo v. Bank of America Corporation et al

Filing 79

ORDER DENYING 58 Motion to Amend Complaint. Signed by Judge Nancy Stein Nowak. (rf)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION

LISSETTE MONTALVO,

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Plaintiff,
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v.
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BANK OF AMERICA CORPORATION, §
BAC HOME LOANS SERVICING, LP
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f/k/a Countrywide Home Loans
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Servicing, LP,
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Defendants.
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CIVIL ACTION NO.
SA-10-CV-0360 XR

ORDER DENYING MOTION TO AMEND COMPLAINT
This order addresses plaintiff Lissette Montalvo’s motion to file a second
amended complaint.1 Montalvo seeks to amend her complaint to correct two mistakes.
She seeks to delete an erroneous reference to a wrongfully terminated probation officer
and an erroneous reference to a federal regulation. The defendants Bank of America
Corporation and BAC Home Loans Servicing oppose the amendment.

1

Docket entry # 58. I have authority to resolve the motion under 28 U.S.C.
§ 636(b) and the district judge’s order of referral. See docket entry # 78.
1

Because the deadline to amend pleadings has passed, Rule 16(b)2 applies.3 The
rule provides that a scheduling order “may be modified only for good cause and with
the judge’s consent.”4 “The good cause standard requires the ‘party seeking relief to
show that the deadlines cannot reasonably be met despite the diligence of the party
needing the extension.’”5 In determining whether the good-cause standard has been
met, the court considers four factors: (1) the movant’s 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.6 “While there is a strong presumption in favor of granting leave to
amend, a district court may refuse leave to amend if the complaint as amended would
be subject to dismissal.”7
Montalvo’s explanation for failing to timely move for leave to amend.
Montalvo relies on mistake for failing to ask to amend earlier. Her attorney explained

2

Fed. R. Civ. P. 16.

3

See S&W Enterprises v. SouthTrust Bank of Ala., 315 F.3d 533, 535 (5th Cir. 2003)
(deciding that the rule applies after the deadline for amending pleadings has expired).
4

Fed. R. Civ. P. 16(b).

5

S&W Enterprises, 315 F.3d at 535 (citation omitted).

6

S&W Enterprises, 315 F.3d at 536.

7

Ackerson v. Bean Dredging LLC, 589 F.3d 196, 208 (5th Cir. 2009).
2

that he discovered the mistakes when responding to the defendants’ motion for
summary judgment. The defendants correctly asserted that the mistakes should have
been corrected the first time Montalvo amended her complaint. Although the mistakes
should have been corrected at that time, few attorneys are excepted from human error.
This factor weighs neither for or against amending.
Importance of the amendment. The first mistake—the reference to the
terminated probation officer8—is scrivener’s error of no significance. It is the kind of
mistake the parties and the court can ignore. Correcting the first mistake holds no
importance.
Correcting the second mistake—the reference to the erroneous federal
regulation9—holds significance because the correction identifies the authority for an
allegation supporting the Montalvo’s breach of contract claim. The first amended
complaint alleged that the defendants failed to comply with 24 C.F.R. § 203.500. That
provision requires a lender to contact the borrower “either in a face-to-face meeting or
by telephone, to discuss the reasons for the default and to seek its cure.”10 The
provision does not apply to this case because the provision applies to mortgages for

8

Docket entry # 38, ¶ 1.1.

9

Docket entry # 38, ¶ 5.3.

10

24 C.F.R. § 203.500(a).
3

manufactured homes.11 The mortgaged property in this case is not a manufactured
home. Instead, 24 C.F.R. § 203.604 applies.
Section 203.604 requires the “mortgagee [to] have a face-to-face interview with
the mortgagor, or make a reasonable effort to arrange such a meeting….”12 That
provision also anticipates a face-to-face meeting. Even though the regulatory
provisions are very similar in substance, the defendants maintained amending is futile
because an exception applies in this case.
Section 203.604’s exception provides that a face-to-face meeting is not required if
“[t]he mortgaged property is not within 200 miles of the mortgagee, its servicer, or a
branch office of either….”13 The proposed second amended complaint cites section
203.604 and alleges that if Montalvo “had been allowed a face to face meeting with [the
defendants], she presumably would have been correctly informed of what she needed
to do and the acceleration and foreclosure could have been avoided.”14 There are two
reasons section 203.604’s exception applies to this claim. First, Montalvo did not allege
that the mortgaged property is located within 200 miles of the mortgagee. Second, the

11

See 24 C.F.R. § 201.1 (stating the purpose of the regulations as applying to loans
for manufactured homes).
12

24 C.F.R. § 203.604(b).

13

24 C.F.R. § 203.604(c)(2).

14

Docket entry # 58, ex. A, ¶ 5.3.
4

defendants presented summary-judgment evidence that the lender “did not operate a
servicing center within a 200-mile radius [of the mortgaged property] that was staffed
with employees familiar with servicing issues….”15 Thus, even if Montalvo amended
her complaint to assert the correct regulatory basis for the allegation, amending the
complaint would be futile because Montalvo was not entitled to a face-to-face meeting.
As a result, amending the complaint to reflect the correct federal regulation holds no
importance to Montalvo’s breach of contract claim. In addition, the allegation about the
face-to-face meeting is only one of the factual allegations supporting the breach of
contract claim. The importance factor weighs against the amendment.
Prejudice in allowing the amendment and the availability of a continuance to
cure prejudice. Montalvo contended the amendment would not prejudice the
defendants because they have deposed her about the correct federal regulation and
because she will accommodate any action required by the amendment. The defendants
responded that they deposed Montalvo based on the first amended complaint and
argued that they should not be required to guess about the correct basis for Montalvo’s
claim. The application of section 203.604’s exception negates the issue of prejudice. The
applicability of the exception was argued in summary-judgment pleadings and
Montalvo presented no summary judgment evidence negating the applicability of the

15

Docket entry # 64, ex. 2, ¶ 4.
5

exception. These factors weigh neither for or against the amendment.
Conclusion. The balance of the good-cause factors weighs against the
amendment. For that reason, I deny the motion to amend (docket entry # 58).
Although Montalvo may not amend her complaint, she may rely on her allegation that
if she “had been allowed a face to face meeting with [the defendants], she presumably
would have been correctly informed of what she needed to do and the acceleration and
foreclosure could have been avoided.”
SIGNED on December 13, 2011.

_____________________________________
NANCY STEIN NOWAK
UNITED STATES MAGISTRATE JUDGE

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