Watkins v. Wells Fargo Home Mortg.
| Decision Date | 05 November 2008 |
| Docket Number | Civil Action No. 3:08-0132. |
| Citation | 631 F.Supp.2d 776 |
| Court | U.S. District Court — Southern District of West Virginia |
| Parties | Corletta Rosie WATKINS, individually and on behalf of all others similarly situated, Plaintiffs, v. WELLS FARGO HOME MORTGAGE, a Division of Wells Fargo Bank, N.A., Defendant. |
Bren J. Pomponio, Daniel F. Hedges, Mountain State Justice, Inc., Charleston, WV, for Plaintiff.
E. Kyle McNew, John C. Lynch, Troutman Sanders, Virginia Beach, VA, for Defendant.
Pending before the Court is Plaintiff's Motion for Relief from Judgment (doc. 25) and Motion to Amend Complaint (doc. 33). Based on the parties' briefs, and for the reasons discussed below, the Court GRANTS in part Plaintiff's Motion to Amend Complaint, to the extent that amendment is not futile. The Court also GRANTS in part Plaintiff's Motion for Relief from Judgment, to the extent that the Court has revised its analysis pertaining to field and conflict preemption.
Plaintiff Corletta Rosie Watkins refinanced her home through Defendant Wells Fargo in September 2003, obtaining a loan for $43,350. The loan was in the form of an "adjustable rate mortgage" that allowed for fluctuations in the interest rate over the course of the loan, up to a maximum of 12.625%. As the interest rate rose, Plaintiff's payments likewise rose. Ultimately, she defaulted on the loan.
On June 19, 2008, pursuant to a motion to dismiss by Defendant, the Court dismissed Counts I and II of Plaintiff's Amended Complaint. These claims had alleged an unconscionable contract. However, the Court did not dismiss Count III, alleging fraudulent loan origination.
Plaintiff filed a motion for relief from the judgment on June 20, 2008. On June 26, 2008, Plaintiff filed her Second Amended Complaint. The Second Amended Complaint changes several aspects of the previous Amended Complaint. It changes Count I from a class claim for unconscionable contract to a class claim for unconscionable conduct. It changes Count II from an individual claim for unconscionable contract to an individual claim for unconscionable inducement. Count III remains a claim for fraudulent origination. Finally, the Second Amended Complaint adds an entirely new claim, Count IV, claiming unconscionable inducement.
The Court has reviewed its opinion of June 19, 2008, and alters the preemption analysis contained therein. The Court also finds that many of the changes made in Plaintiff's Second Amended Complaint merit the Court's attention. These facts create a somewhat unique procedural posture because, in light of Plaintiff's motions, the Court now is positioned to apply an altered preemption analysis to the allegations contained in Plaintiff's Second Amended Complaint. In the interest of properly and quickly advancing this case for a resolution on its merits, the Court now applies its reconsidered preemption analysis to Plaintiff's Second Amended Complaint.
To the extent that the substantive allegations of Plaintiff's Second Amended Complaint continue to be preempted, amendment is futile and these allegations flunk the test presented by Federal Rule of Civil Procedure 15(a). The Court notes that this case has stalled somewhat in recent months while the Court resolved the issues presented by preemption. Accordingly, in the interest of avoiding further delay to the parties and the Court, the Court treats any preempted portions of Plaintiff's newly amended claims as dismissed.
Rule 15(a) provides that "[t]he court should freely give leave [to amend a complaint] when justice so requires." Rule 15(a) should be construed "liberal[ly]," since it "gives effect to the federal policy in favor of resolving cases on their merits instead of disposing of them on technicalities." Laber v. Harvey, 438 F.3d 404, 426 (4th Cir.2006). Therefore, "leave to amend a pleading should be denied only when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or the amendment would have been futile." Laber, 438 F.3d at 426. In fact, if a trial court denies a motion to amend without finding prejudice, bad faith or futility, it abuses its discretion. Id. at 429. This standard applies regardless of whether the motion is filed prior to or after judgment: "[A] post-judgment motion to amend is evaluated under the same legal standard as a similar motion filed before judgment was entered—for prejudice, bad faith, or futility." Id. at 427. In addition to the requirements of Rule 15(a), Rule 16(b)(4) further provides that "[a] schedule may be modified only for good cause...."
"Whether an amendment is prejudicial will often be determined by the nature of the amendment and its timing." Id. For instance, prejudice commonly arises when an amendment "raises a new legal theory that would require the gathering and analysis of facts not already considered by the [defendant, and] is offered before or during trial." Id. (quoting Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir.1986)). However, "an amendment is not prejudicial, by contrast, if it merely adds an additional theory of recovery to the facts already pled and is offered before any discovery has occurred." Id. "Delay alone ... is [also] an insufficient reason to deny the plaintiff's motion to amend." Id. "For this reason, a district court may not deny such a motion simply because it has entered judgment against the plaintiff—be it a judgment of dismissal [or otherwise]." Id.
Defendant argues that Plaintiff's newly proposed Count IV will require it "to engage in a whole new round of motions practice ... because ... Count IV may have serious legal flaws." Specifically, Defendant alleges that Count IV may be preempted, that it may fail to adequate plead unconscionability under West Virginia law, and that it is no different from Count III. However, the Court addresses, and rejects, each of these arguments later in this opinion. Defendant also claims that Count IV may lack particularity under Rule 9(b), but in the Court's Order of June 19, 2008, the Court considered and rejected a similar attack on Count III, which Defendant alleges is substantially the same as Count IV. Of course, none of the Court's discussion here is intended to suggest that Defendant is not free to challenge the legal sufficiency of Count IV. However, the Court also cannot find that making such a challenge would constitute sufficient prejudice to Defendant so as to deprive Plaintiff of her right to amend her complaint.
The Court also notes that while Count IV "raises a new legal theory," it does not "require the gathering and analysis of facts not already considered by [Defendant]," since Count IV is based on the same alleged conduct as Count III. Id. Nor has it been "offered shortly before or during trial." Id. In fact, Plaintiff submitted her Second Amended Complaint less than a month after the deadline for amendment of pleadings. Furthermore, the Court has stayed the schedule for this case, and no deadline has been set for discovery. Any trial in this case would likely occur months from now. As stated, this Court cannot "deny ... a motion to amend simply because it has entered judgment against the plaintiff...." Id. Thus the Court finds that Defendant would not be prejudiced by allowing Plaintiff to amend.
Plaintiff undoubtedly and understandably wishes to escape the Court's prior Order dismissing her first two counts. However, just because Plaintiff seeks to avoid having much of her amended complaint dismissed does not change the standard under which her motion to amend is considered, since "a post-judgment motion to amend is evaluated under the same legal standard as a similar motion filed before judgment was entered—for prejudice, bad faith, or futility." Id. Thus to deny Plaintiff's motion, the Court still must find bad faith (or prejudice or futility). However, there appears to be no indications of bad faith. Although Defendant argues that Plaintiff lacks good cause for amendment, it does not argue that she seeks to amend in bad faith. For example, there is no allegation that Plaintiff's motivation in bringing her motion is to delay a final adjudication of the case, harass Defendant or waste its resources. As stated, the Court does not believe that Plaintiff's proposed amendments will delay the case or prejudice Defendant. The Court also notes that Plaintiff did not dally in seeking to amend, but rather brought her motion within a week of the Court's order dismissing her unconscionable contract claims. In short, a finding of bad faith is not appropriate under these circumstances.
Defendant also argues that amendment of Counts I and II would be futile because the proposed counts "complain of the same thing as their predecessors—inadequate underwriting and explanations." The Court acknowledges that Defendant's argument is understandable given the Court's finding of field and conflict preemption in its previous order. However, for reasons more fully discussed later in this opinion, the Court believes that proposed Counts I and II are not subject to conflict preemption in their entirety, and that field preemption does not apply at all. Because the Court finds that portions of the newly amended counts are not preempted, amendment would not be futile.
The Court reiterates that this case has not yet proceeded very far and that permitting Plaintiff to amend her Amended Complaint would not prejudice Defendant. In light of these facts, and the unique circumstances presented by the Court's reconsideration of its previous preemption analysis, the Court finds that good cause exists to permit Plaintiff to amend her Amended Complaint.
As a threshold matter, Plaintiff contends...
To continue reading
Request your trial
-
Powell v. Huntington Nat'l Bank
...the Supremacy Clause in three ways—by express preemption, field preemption, or conflict preemption. See Watkins v. Wells Fargo Home Mortg. , 631 F.Supp.2d 776, 783 (S.D. W. Va. 2008) (citing Anderson v. Sara Lee Corp. , 508 F.3d 181, 191 (4th Cir. 2007) (internal citation omitted)). Express......
-
Marion v. Smith
...and Operations; Real Estate Lending and Appraisals, 69 Fed. Reg. 1,904, 1,911 (Jan. 13, 2004); see also Watkins v. Wells Fargo Home Mortg., 631 F.Supp.2d 776, 783–85 (S.D.W.Va.2008) (explaining why field preemption is inapplicable). The second type of preemption—express preemption—arises “w......
-
Dixon v. Wells Fargo Bank, N.A.
...Loan Servicing, LLC, Civ. No. 3:10–0468, 2010 WL 4115463, at *4 (S.D.W.Va. Oct. 19, 2010). See Watkins v. Wells Fargo Home Mortg., 631 F.Supp.2d 776, 782–83 (S.D.W.Va.2008) (“If the plaintiff truly complains of a term or practice outside the purview of the federal regulations, there is no p......
-
Croye v. GreenPoint Mortg. Funding, Inc.
...854, 860 (1998) (quoting Uniform Consumer Credit Code, § 5.108 comment 3, 7A U.L.A. 170 (1974)). See also Watkins v. Wells Fargo Home Mortg., 631 F.Supp.2d 776, 787 (S.D.W.Va.2008); Herrod v. First Republic Mortg. Corp., Inc., 218 W.Va. 611, 625 S.E.2d 373, 379 (W.Va.2005). The facts of eac......