Juarez v. U.S. Bank Nat'l Ass'n
| Decision Date | 01 March 2014 |
| Docket Number | Civil Action No. 11-10318-DJC |
| Parties | MELISSA A. JUAREZ, Plaintiff, v. U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, et al., Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Plaintiff Melissa Juarez ("Juarez") has filed this lawsuit against the Defendants in connection with the foreclosure of her residence. Defendants U.S. Bank National Association ("U.S. Bank") and Select Portfolio Servicing, Inc. ("SPS") (collectively, the "Defendants") have moved to strike Juarez's second amended complaint, D. 43, and dismiss certain of the claims in the amended pleading, namely the fraud and M.G.L. c. 93A claims, pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted, D. 44. For the reasons stated below, the Court DENIES Defendants' motion to strike, REMANDS this action to state court and DENIES the motion to dismiss as moot.
The Court has previously summarized the facts of this case. See Juarez v. U.S. Bank Nat. Ass'n ex rel. Holders of the Asset Backed Sec. Corp. Home Equity Loan Trust, Series NC2005-HE8, No. 11-10318-DJC, 2011 WL 5330465, at *1-2 (D. Mass. Nov. 4, 2011) ("Juarez I"). Although Juarez has filed a second amended complaint since the Court initially heard the parties, the thrust of her allegations remain the same. Compare id. with Second Am. Compl., D. 42; see also Juarez v. Select Portfolio Servicing, Inc., 708 F.3d 269, 271-74 (1st Cir. 2013) ("Juarez II"). In short, Juarez alleges that at the time U.S. Bank initiated foreclosure proceedings against her in 2008, U.S. Bank was not the holder of Juarez's mortgage because it neither was the original mortgagee of Juarez's mortgage nor possessed a valid assignment of mortgage. D. 42 ¶ 181. In addition, Juarez alleges that after her property was sold at auction, id. ¶ 20, Christopher and Jacqueline Fencer (the "Fencers") purchased the property on October 29, 2008. Id. ¶¶ 25, 28.
On October 29, 2010, proceeding pro se, Juarez filed a complaint in Suffolk Superior Court against U.S. Bank and SPS alleging fraud and violations of Massachusetts foreclosure statutes. D. 9 at 8-22. On January 24, 2011, Juarez filed an amended complaint, alleging fraud (Count I), violations of Massachusetts foreclosure statutes, Mass. Gen. L. c. 244, § 14 (Count II); Mass. Gen. L. c. 244, § 2 (Count III), as well as violations of Mass. Gen. L. c. 93A (Count IV). D. 9 at 61-80. Juarez also sought to invalidate the foreclosure sale, restore her status as the rightful legal owner of the Property, determine that the Defendants were not the legal owners of the Mortgage and Note at the time of foreclosure and obtain a court order allowing Juarez to move back into the Property or alternatively to sell it. D. 9 at 21.
On February 24, 2011, U.S. Bank and SPS removed this action to this Court. D. 1. Juarez moved to remand this case to state court on March 11, 2011. D. 4. The Court denied that motion. May 6, 2011 docket entry. U.S. Bank and SPS moved to dismiss the amended complaint. D. 10. After U.S. Bank and SPS filed this motion, but before the Court heardargument, Juarez retained counsel. D. 20. After hearing the parties, the Court dismissed the amended complaint. D. 30; D. 31. The First Circuit reversed this Court's decision, ruling, in relevant part, that:
Juarez II, 708 F.3d at 271, 280-82. After the First Circuit remanded the case to this Court, Juarez filed her second amended complaint. D. 42. In addition to amending her fraud and c. 93A claims, Juarez added four new counts for declaratory judgments against Defendants, including a civil conspiracy claim against U.S. Bank, SPS and New Century and, for the first time, asserting claims against the Fencers for a declaratory judgment, use and occupancy and slander of title. Id. ¶¶ 184-208; 221-237. Defendants moved to strike this complaint and dismiss Juarez's fraud and c. 93A claims. D. 43, 44.
1. Motion to Amend
The Court understands Defendants' motion to strike as an objection to the nature of Juarez's amendment to her complaint. D. 43 at 1. Defendants argue that Juarez's amendment "far exceeds" the scope of the amendment envisioned by the First Circuit. Id. The Court, however, treats Juarez's second amended complaint as a motion for leave to amend hercomplaint.
Courts should grant leave to amend "freely . . . when justice so requires." Fed. R. Civ. P. 15(a)(2). Leave to amend may be denied for reasons such as "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of amendment." Foman v. Davis, 371 U.S. 178, 182 (1962). Courts grant pro se litigants wide latitude in amending their complaints. Alexander v. Jeffries, No. 93-15830, 1993 WL 503234, at *1 (9th Cir. Dec. 8, 1993) (). This latitude extends to litigants who have retained counsel since filing their initial complaint. Echevarria v. Puerto Rico Dep't of Corr., No. 07-2134(JAF), 2009 WL 349560, at *1 (D.P.R. Feb. 9, 2009) (). Where amendments add new defendants and where such amendments will disrupt litigation only in a "relatively insignificant" manner, "the new parties should be joined so as to resolve the entire dispute." Pray v. SMPO Properties, Inc., 746 F. Supp. 2d 317, 324 (D. Mass. 2010). Where the joinder of new defendants destroys complete diversity, however, courts look to Rule 15 in concert with 28 U.S.C. § 1447(e), which permits courts to "deny joinder, or permit joinder and remand the action to the State court." 28 U.S.C. § 1447(e) (2012). Under these circumstances, "where adding a defendant will destroy diversity jurisdiction, the motion for leave to amend must be given greater scrutiny." Espat v. Espat, 56 F. Supp. 2d 1377, 1382 (M.D. Fla. 1999) (citing Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987)).
As part of the Court's determination as to whether justice requires allowing Juarez leave to amend to add claims against the Fencers, it must determine whether her new claims are plausible. The First Circuit has "emphasize[d] that the complaint must be read as a whole," and that circumstantial evidence may be sufficient to surpass the plausibility threshold. García-Catalán v. United States, 734 F.3d 100, 103 (1st Cir. 2013). The claim should move forward if the complaint "create[s] a reasonable expectation that discovery may yield evidence" of the defendant's liability. Id. Dismissal is appropriate only if Juarez's well-pleaded facts do not "possess enough heft to show that plaintiff is entitled to relief." Ruiz Rivera v. Pfizer Pharm., LLC, 521 F.3d 76, 84 (1st Cir. 2008) (quotations and original alterations omitted). Courts deny plaintiffs leave to amend where amendment would be futile. McGee v. Benjamin, No. 08-11818-DPW, 2012 WL 959377, at *11-12 (D. Mass. Mar. 20, 2012) (citing Hatch v. Dep't for Children, Youth & Their Families, 274 F.3d 12, 19 (1st Cir. 2001)). As discussed below, however, amendment is not futile in this case.
Juarez's wrongful foreclosure claims against U.S. Bank and SPS are of the sort that has been the subject of extensive appellate litigation in Massachusetts over the past few years. In that time, the Massachusetts Supreme Judicial Court has decided three opinions in this area, which have provided significant guidance to trial courts. The first two of these opinions, U.S. Bank, N.A. v. Ibañez, 458 Mass. 637 (2011) and Bevilacqua v. Rodriguez, 460 Mass. 767 (2011), are directly at issue in this case. In Ibañez, the Supreme Judicial Court held that underMass. Gen. L. c. 244, § 14, a foreclosing entity claiming to be an assignee of the mortgage must hold the mortgage at the time of the notice of sale and foreclosure sale. Id. at 655. The Court explained that a foreclosing entity need not have recorded an assignment at the time of the notice of sale so long as the assignment is otherwise valid since "[a] valid assignment of a mortgage gives the holder of that mortgage the statutory power to sell after a default regardless whether the assignment has been recorded." Ibañez, 458 Mass. at 654 (citing Mass. Gen. L. c. 183 § 21; MacFarlane v. Thompson, 241 Mass. 486, 489 (1922)). If the foreclosing entity had not recorded a valid assignment prior to the foreclosure, "a written assignment executed after foreclosure" confirming the assignment may be properly recorded. Ibañez, 458 Mass. at 654 (emphasis added). Nevertheless, such "confirmatory assignment," "cannot confirm an assignment that was not validly made earlier or backdate an assignment being made for the first time." Id. (citing Scaplen v. Blanchard, 187 Mass. 73, 76 (1904)). Where the foreclosing party obtains an assignment of mortgage after it has published the notice of sale, the foreclosure is void, as such a foreclosing entity was not the holder of the mortgage at the time of foreclosure. Id. at 648; see also Mass. Gen. L. c. 244,...
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