Koesler v. Beneficial Fin. I, Inc.

267 F.Supp.3d 873

Richard KOESLER and San Juana Koesler, Plaintiffs,

v.BENEFICIAL FINANCE I, INC., Successor By Merger To Benefecial Texas, Inc.; Caliber Home Loans, Inc.; U.S. Bank Trust, N.A., as Trustee of LSF8 Master Participation Trust; Wells Fargo Delaware Trust Company, N.A., as Trustee for Vericrest Opportunity Loan Trust 2013 NLP2; and Vericrest Opportunity Loan Trust 2014 NPL2, Defendants.

EP–16–CV–138–PRM

United States District Court, W.D. Texas, El Paso Division.

Signed October 12, 2016

Carmen Elena Rodriguez, Attorney at Law, El Paso, TX, for Plaintiff.

Bryan Harris Hall, Beck & Hall, P.C., El Paso, TX, Steven T. Holmes, McGlinchey Stafford, P.L.L.C., Dallas, TX, Jason Levi Sanders, Robert T. Mowrey, Christopher Michael Boeck, Locke Lord L.L.P., Dallas, TX, Victor M. Firth, El Paso, TX, Edward DeVere Bunn, Jr., Firth Johnston Bunn Kerr, P.C., El Paso, TX, for Defendant.

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO DISMISS

PHILIP R. MARTINEZ, UNITED STATES DISTRICT JUDGE

On this day, the Court considered the following motions filed in the above-captioned cause:

• Defendants Caliber Home Loans, Inc., ("Caliber"), U.S. Bank Trust, N.A., as trustee for LSF8 Master Participation Trust, Wells Fargo Delaware Trust Company, N.A., as trustee for Vericrest Opportunity Loan Trust 2013 NPL2, and Vericrest Opportunity Loan Trust 2014 NPL2's (collectively referred to as "Caliber Defendants") "Motion to Dismiss and Brief in Support" (ECF No. 14) [hereinafter "Caliber Defendants' First Motion"], filed on July 6, 2016;

• Defendant Beneficial Financial I, Inc.'s, ("Beneficial") "Motion to Dismiss Plaintiff's Complaint and Its Memorandum of Law in Support of its Motion to Dismiss" (ECF No. 15) [hereinafter "Defendant Beneficial's First Motion"], filed on July 6, 2016;

• Plaintiffs' "Response to Beneficial's Motion to Dismiss and to Caliber Defendants' Motion to Dismiss" (ECF No. 19) [hereinafter "Plaintiffs' First Response"], filed on July 21, 2016;

• Caliber Defendants' "Motion to Dismiss Plaintiffs' Complaint Filed July 20, 2016 and Brief in Support" (ECF No. 20) [hereinafter "Caliber Defendants' Second Motion"], filed on August 3, 2016;

• Beneficial's "Motion to Dismiss Plaintiff's Complaint and Its Memorandum in Support of its Motion to Dismiss" (ECF No. 21) [hereinafter "Defendant Beneficial's Second Motion"], filed on August 3, 2016; and

• Plaintiffs' "Response to Defendant Beneficial's and Caliber Defendants' Second Motion to Dismiss and Motion for Leave to Amend" (ECF No. 23) [hereinafter "Plaintiffs' Second Response"], filed on August 15, 2016.

After due consideration, the Court is of the opinion that Defendants' second set of motions to dismiss should be granted in part and denied in part for the reasons set forth below.

I. PROCEDURAL BACKGROUND AND DEFENDANTS' REQUEST TO STRIKE PLAINTIFFS' AMENDED COMPLAINT

This case revolves around a dispute regarding a home equity loan. As a preliminary matter, the Court must address Defendants' request to strike Plaintiffs' "Amended Complaint Fair Debt Collection Practices Act, Truth in Lending Act and Pendant State Claims" (ECF No. 18) [hereinafter "Amended Complaint"], filed on July 20, 2016. For the reasons discussed below, the Court concludes that Plaintiffs' Amended Complaint should not be struck.

Plaintiffs originally filed the instant action in state court. Defendant Caliber then removed the case on April 22, 2016, on the basis of federal question jurisdiction. Notice of Removal 1, 3, Apr. 22, 2016, ECF No. 1 [hereinafter "Notice of Removal"]. In accordance with the Court's "Standing Order to Replead in Removed Cases" (ECF No. 3) [hereinafter "Standing Order"], filed on April 25, 2016, Plaintiffs filed their "Complaint in Case Removed from State Court for Violations of Fair Debt Collection Practices Act, Real Estate Settlement Procedures Act, Truth in Lending Act and Pendant State Claims" (ECF No. 11) [hereinafter "Original Complaint"] on June 15, 2016.

The Caliber Defendants and Defendant Beneficial subsequently filed their first set of motions to dismiss Plaintiffs' Original Complaint. See Caliber Defs. First Mot; Def. Beneficial's First Mot. As a result, Plaintiffs amended their Original Complaint and filed their First Response. See Am. Compl. Fair Debt Collection Practices Act, Truth in Lending Act and Pendent State Claims, July 20, 2016, ECF No. 18 [hereinafter "Amended Complaint"]. Plaintiffs' Amended Complaint differs from their Original Complaint in that it does not contain any Real Estate Settlement Procedures Act, statutory fraud, or fraudulent inducement claims as their Original Complaint did and provides more factual details. Compare Original Compl. with Am. Compl. Thus, in their First Response, Plaintiffs argue that their Amended Complaint addresses the deficiencies that Defendant Beneficial and the Caliber Defendants raise in their first set of motions to dismiss. First Resp. 4–8.

The Caliber Defendants and Defendant Beneficial thereafter filed their second set of motions to dismiss. See Caliber Defs.' Second Mot.; Def. Beneficial's Second Mot. In their second set of motions to dismiss, the Caliber Defendants and Defendant Beneficial argue that their first set of motions to dismiss should be granted and that Plaintiffs' Amended Complaint should be struck because it was filed without leave of court or Defendants' consent in violation of Federal Rule of Civil Procedure 15(a)(2). See Caliber Defs.' Second Mot. 2; Def. Beneficial's Second Mot. 5. In the alternative, the Caliber Defendants and Defendant Beneficial argue that, should the Court accept Plaintiffs' Amended Complaint, the Court should nevertheless dismiss it because it is still deficient pursuant to the federal pleading standard. Caliber Defs.' Second Mot. 2; Def. Beneficial's Second Mot. 5.

Pursuant to Federal Rule of Civil Procedure 15(a)(1)(B), "[a] party may amend its pleading once as a matter of course within ... 21 days after serving it, or ... 21 days after service of a responsive pleading or 21 days after service of a motion under Rule 12(b) ... whichever is earlier." "In all other cases, a party may amend its pleading only with the opposing party's written consent or the court's leave. The Court should freely give leave when justice so requires." Fed. R. Civ. P. 15(a)(2).

Before filing their Original and Amended Complaints in federal court, Plaintiffs had previously filed their original petition and four subsequent amended petitions in state court. Notice of Removal Ex. A. Therefore, Defendant Beneficial and the Caliber Defendants contend that Plaintiffs had already amended their complaint several times and were required to seek leave or obtain Defendants' consent prior to filing their Amended Complaint. Def. Beneficial's Second Mot. 5; Caliber Defs.' Second Mot. 2.¹

"A case removed from state court ... comes into the federal system in the same condition in which it left the state system." Matter of Meyerland Co. , 960 F.2d 512, 520 (5th Cir. 1992). "The pleadings as already filed stand as if they had been filed in federal court." Murray v. Ford Motor Co., 770 F.2d 461, 464 (5th Cir. 1985). Given that Plaintiffs had previously amended their complaint four times in the instant action, it is understandable why Defendants now assert that they should have sought leave of Court or Defendants' consent prior to amending their complaint. See Lee v. Wells Fargo Bank , N.A. , No. CIV.A. H–11–1334, 2012 WL 6132510, at *1–2 (S.D. Tex. Dec. 10, 2012) (similarly finding that plaintiff should have sought leave of court prior to filing amended complaint where plaintiff previously amended petition in state court); Manzano v. Metlife Bank N.A. , 2011 WL 2080249, at *3 (E.D. Cal. May 25, 2011) ("Because plaintiff filed her First Amended Complaint in state court prior to removal to this court, plaintiff already amended her pleading once as a matter of course. Thus, she could not properly file the [second amended complaint] without first obtaining leave of court.").

However, the Court will nevertheless consider Plaintiffs' Amended Complaint as properly filed because the Court would have granted leave upon Plaintiffs' request and because Defendants would not be prejudiced:

some courts have held ... that an untimely amended pleading served without judicial permission may be considered properly introduced when leave to amend would have been granted had it been sought and when it does not appear that any of the parties will be prejudiced by allowing the change.

6 Charles A. Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice and Procedure § 1484 (3d ed.) (collecting cases).

While the Fifth Circuit has held that, normally, "failing to request leave from the court when leave is required .... results in an amended complaint having no legal effect," it has also recognized the exception discussed by Professors Wright and Miller. See U.S. ex rel. Mathews v. HealthSouth Corp., 332 F.3d 293, 295 (5th Cir. 2003) (recognizing this exception but holding that it did not apply where the defendant would be prejudiced by the amended complaint because it would cause the defendant to lose its statute of limitations defense).²

Consequently, the Court finds that it is more procedurally expedient to consider the Amended Complaint filed, rather than strike it and then grant leave to file another complaint that raises the exact same issues. Significantly, the parties would be in the same position regardless of which procedure the Court uses. See U.S. ex rel. Mathews , 332 F.3d at 296–97 (holding similarly). Accordingly, the Court denies Defendants' request to strike Plaintiffs' Amended Complaint.

II. FACTUAL BACKGROUND

Plaintiffs provide the following factual allegations in their Amended Complaint. Plaintiffs co-owned a residence in El Paso, Texas; they obtained a mortgage loan from Defendant Beneficial, which was secured by the residence. Am. Compl. 4. In March of 2006, Plaintiffs refinanced...