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Law v. Ocwen Loan Servicing, LLC

United States District Court, S.D. Texas, Houston Division

March 28, 2017

ROGER LAW and LUCINDRA LAW, Plaintiffs,
v.
OCWEN LOAN SERVICING, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          SIM LAKE UNITED STATES DISTRICT JUDGE

         Pending before the court is 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.

         I. Factual and Procedural Background

         Plaintiffs Roger Law and Lucindra Law ("Plaintiffs") allege that on September 29, 2005, they purchased property at 4115 Woodlake Lane, Missouri City, Texas ("the Property").[1] Plaintiffs' initial lender sold their loan to U.S. Bank N.A., as Trustee for 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 serviced by defendant Ocwen Loan Servicing, LLC ("Ocwen" or "Defendant"). On December 3, 2013, U.S. Bank purchased the Property in a non-judicial foreclosure sale.

         On October 13, 2014, U.S. Bank filed suit to evict Plaintiffs. On October 27, 2014, Ocwen sold the Property to a third party. But on October 30, 2014, U.S. Bank's attorneys, Mackie Wolf Zientz & Mann, PC ("MWZM"), allegedly represented to the court that U.S. Bank still owned the Property. The trial court ruled in favor of U.S. Bank. Plaintiffs appealed. On appeal, U.S. Bank again allegedly represented that it owned the Property. Plaintiffs were evicted in March of 2015.

         Plaintiffs filed suit against Ocwen and MWZM[2] 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 court.[3] Plaintiffs now move to amend their Original Petition to allege a claim for common law fraud and to seek additional remedies.[4]

         II. Standard of Review

         Decisions concerning motions to amend are "entrusted to the sound discretion of the district court . . . ." Ouintanilla v. Texas Television Inc., 139 F.3d 494, 499 (5th Cir. 1998) (quoting Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139 (5th Cir. 1993)). But "[t]he court should freely give leave when justice so requires." Fed.R.Civ.P. 15(a) (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 (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: (1) undue delay, (2) bad faith or dilatory motive, (3) repeated failure to cure deficiencies by previous amendments, (4) undue prejudice to the opposing party, and (5) futility of the amendment. Rosenzweig v. Azurix Corp., 332 F.3d 854, 864 (5th Cir. 2003) (citing Foman v. Davis, 83 S.Ct. 227, 230 (1962)). If a proposed amendment could not survive a Rule 12(b)(6) motion to dismiss, amendment would be futile. See Briggs v. Mississippi, 331 F.3d 499, 508 (5th Cir. 2003) (citing Lewis v. Fresne, 252 F.3d 352, 360 n.7 (5th Cir. 2001)) .

         III. Analysis

         A. Common Law Fraud Claim

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

(1) that a material representation was made; (2) the representation was false; (3) 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; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury.

In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001) (citing Formosa Plastics Corp. v. Presidio Engineers & Contractors, Inc., 960 S.W.2d 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(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 preliminary matter the court notes that Plaintiffs attribute the alleged fraud variously to U.S. Bank, MWZM, and Ocwen, making more difficult the ...


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