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Spaulding v. Citifinancial Servicing LLC

United States District Court, D. Massachusetts

April 6, 2018

JAMES E. SPAULDING and JOANN C. SPAULDING, Plaintiffs,
v.
CITIFINANCIAL SERVICING, LLC, et al., Defendants.

          MEMORANDUM AND ORDER REGARDING PLAINTIFFS' MOTION TO FURTHER AMEND THE VERIFIED COMPLAINT (DKT. NO. 61)

          KATHERINE A. ROBERTSON U.S. MAGISTRATE JUDGE.

         I. Introduction

         This matter is before the court on the motion by plaintiffs James E. Spaulding and Joann Spaulding (“Plaintiffs”) for leave to further amend their verified complaint (“Plaintiff's Motion”). Citifinancial Servicing, LLC, the sole remaining defendant (“Defendant”), opposes the motion. The court heard argument from the parties on March 9, 2018, and, for the reasons set forth below, DENIES on the ground of futility Plaintiff's Motion for leave to further amend their verified complaint.

         II. Background

         Plaintiffs filed their initial complaint in the Berkshire County Superior Court on September 19, 2016. They amended the complaint to add additional claims on October 3, 2016 (Dkt. No. 1-2). The defendants removed the case to this court (Dkt. No. 1). The factual allegations on which Plaintiffs based their claims did not change when they initially amended their complaint, nor have those allegations changed with respect to instant motion. In summary, Plaintiffs allege that they are the owners of land in Egremont which was historically shown on a plan as two lots, which Plaintiffs refer to as Lot 1 and Lot 2. The parents of plaintiff Joann Spaulding acquired both lots, Lot 1 in 1952 and Lot 2 in 1973, from different sellers and conveyed a one-half undivided interest in each lot to Plaintiffs in 1982. In April 2002, Josephine Curtiss, plaintiff Joann Spaulding's mother, granted a mortgage to Citifinancial Services, Inc. secured by Lots 1 and 2, less and excepting the property interest conveyed to Plaintiffs. This mortgage was subsequently discharged. On February 14, 2003, Ms. Curtiss granted a second mortgage to Citifinancial Services, Inc (“Second Mortgage”). The metes and bounds description of the property securing the Second Mortgage corresponded to Lot 2 only. Lot 2 is landlocked and unbuildable and is subject to Plaintiffs' one-half undivided interest. Ms. Curtiss was discharged in bankruptcy on April 11, 2005. On March 6, 2009, Ms. Curtiss conveyed her remaining one-half interest in Lots 1 and 2 to Plaintiffs. Ms. Curtiss died in 2010 (Dkt. 1-1 at 9-10, ¶¶ 4-14). Plaintiffs' residence is on Lot 1, which, according to the metes and bounds description, is not subject to the Second Mortgage (id. at 11, ¶¶ 17, 23).

         Without specificity as to dates or amounts, Plaintiffs allege that they “continued to make monthly payments on the [Second] [M]ortgage” (id. at 10, ¶ 15).[1] They further allege that beginning in July 2015, Defendant cashed the checks Plaintiffs were sending to pay off the Second Mortgage but failed to credit the payments to the mortgage account. On October 22, 2015, Defendant conducted an appraisal of Plaintiff's residence. In November 2015, Defendant ceased sending monthly mortgage statements and Plaintiffs ceased making payments on the Second Mortgage. On May 13, 2016, Defendant sent a notice of default addressed to Ms. Curtiss and, on August 5, 2016, Defendant sent a “threat of foreclosure” addressed to Ms. Curtiss. Defendant, Plaintiffs allege, was unresponsive when, through counsel and on multiple occasions, they sought to communicate with the point of contact identified in the threat of foreclosure document (id. at 11-12, ¶¶ 16-22). On September 8, 2016, Plaintiffs returned home to find that Mortgage Contracting Services (“MCS”) had posted a notice on their home stating that MCS was taking steps to secure the property (id. at 12, ¶ 23).

         Plaintiff's complaint, as amended, seeks a declaratory judgment (Count I); injunctive relief (Count II); and a permanent injunction (Count III); and asserts claims for trespass (Count IV); infliction of emotional distress (Count V); slander of title (Count VI) (id. at 12-16, ¶¶ 24-33); unfair and deceptive trade practices (Count VIII); unfair debt collection practices in violation of federal law (Count IX); and unfair debt collection practices in violation of state law (Count X) (Dkt. No. 1-2 at 2-3, at ¶¶ 34-41).[2] Plaintiffs' proposed second amendment to their verified complaint would add claims that Defendant violated the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2610-2617 (proposed Count XI); the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 (proposed Count XII); and the Massachusetts Consumer Credit Cost Disclosure Act (“MCCCDA”), Mass. Gen. Laws ch. 140D, et seq. (proposed Count XIII) (Dkt. No. 60-1 at 2-5, ¶¶ 42-63). Just as Plaintiffs did not seek to add to or amend the factual allegations in their initial verified complaint by their first amendment to the complaint, they do not seek to do so in support of the claims they seek to add by their proposed second amendment (id.).

         III. Discussion

A motion to amend a complaint will be treated differently depending on its timing and the context in which it is filed. . . . The default rule mandates that leave to amend is to be “freely given when justice so requires” . . . unless the amendment “would be futile, or reward, inter alia, undue or intended delay.” As a case progresses, and the issues are joined, the burden on a plaintiff seeking to amend a complaint becomes more exacting. . . . Once a scheduling order is in place [if leave to amend is sought after the cut-off date established in the order], the liberal default rule is replaced by the more demanding “good cause” standard of Fed.R.Civ.P. 16(b).

Steir v. Girl Scouts of the USA, 383 F.3d 7, 11-12 (2004) (internal citations omitted).

         “[T]he ‘spirit of the rule' dictates a preference for decisions ‘on the merits, not because of missteps by counsel in pleading.'” J.S. McCarthy Co. v. Braus Diecutting & Converting, 226 F.R.D. 14, 17 (D. Me. 2005) (quoting Allendale Mut. Ins. Co. v. Rutherford, 178 F.R.D. 1, 3 (D. Me. 1998) (quoting Sweeney v. Keystone Provident Life Ins. Co., 578 F.Supp. 31, 34 (D. Mass. 1983))); see also Torres-Alamo v. Puerto Rico, 502 F.3d 20, 25-25 (1st Cir. 2007) (Rule 15(a) embodies a liberal standard for judging a motion for leave to file an amended complaint). “In considering a motion for leave to amend . . . the trial court must first consider whether the proposed new claims are futile[.] . . . If the claims are not futile, then the trial court must consider whether, given the timing of the motion for leave to amend, such prejudice to the defendant would arise from granting the motion that the motion should be denied on that ground.” Smith v. Mitre Corp., 949 F.Supp. 943, 945 (D. Mass. 1997). “In determining whether the plaintiffs unduly delayed in filing their motion to amend, the focus . . . is on whether allowing the amendment would unfairly prejudice the defendants.” Bond Opportunity Fund II, LLC v. Heffernan, 340 F.Supp.2d 146, 155-56 (D.R.I. 2004); Mitre Corp., 949 F.Supp. at 945. “Amendment of pleadings is largely a matter within the discretion of the district court.” Guest-Tek Interactive Entm't Inc. v. Pullen, 731 F.Supp.2d 80, 92 (D. Mass. 2010).

         Futility

         “If leave to amend is sought before discovery is complete and neither party has moved for summary judgment, the accuracy of the ‘futility' label is gauged by reference to the liberal criteria of Federal Rule of Civil Procedure 12(b)(6).” Hatch v. Dept. for Children, Youth & Their Families, 274 F.3d 12, 19 (1st Cir. 2001); see Adorno v. Crowley Towing & Transp. Co., 443 F.3d 122, 126 (1st Cir. 2006) (“In assessing futility, the district court must apply the standard which applies to motions to dismiss under Fed.R.Civ.P. 12(b)(6).”). Thus, in this context, “[f]utility means that the complaint, as amended, would fail to state a claim upon which relief could be granted.” Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir. 1996); see also Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417, 421 (6th Cir. 2000) (“a proposed amendment is futile only if it could not withstand a 12(b)(6) motion to dismiss”). Thus, where the question of futility is raised in opposition to a motion for leave to amend a complaint, the proposed amended complaint must satisfy the Rule 12(b)(6) standard.

         Defendant's opposition to Plaintiffs' Motion is based on the single contention that adding the proposed additional claims would be futile because Plaintiffs have not alleged (and cannot allege) that they were signatories to the promissory note which required repayment of the loan secured by the Second Mortgage. According to Defendant, Plaintiffs, therefore, are not “borrowers” and lack standing to assert any of the three causes of action identified in the newly proposed amendments to the verified complaint (Dkt. No. 64). Plaintiffs do not dispute that their status as borrowers is the critical question. Rather, they contend that there is persuasive authority for ...


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