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Harris v. Deardorff

October 14, 2010

DOUGLAS O. HARRIS & CONNIE S. HARRIS, PLAINTIFFS,
v.
JAMES E. DEARDORFF, JR., ET AL., DEFENDANTS



The opinion of the court was delivered by: Yvette Kane, Chief Judge United States District Court Middle District of Pennsylvania

MEMORANDUM

(Chief Judge Kane)

Pending before the Court is Defendant Countrywide Bank, FSB's ("Countrywide") motion to dismiss Plaintiffs' amended complaint (Doc. No. 13) and Plaintiffs' motion for leave to file a second amended complaint (Doc. No. 38). Pursuant to the following analysis, the Court will deny Plaintiffs' motion for leave to amend and dismiss the claims asserted against Countrywide.

I. Background

A. Factual Background

The facts alleged in the second amended complaint*fn1 concern a "scheme to defraud homeowners of their home and their equity" spearheaded by Defendants Joanne Seeley ("Seeley") and James Deardorff, Jr. (Doc. No. 38, Ex. 1; Second Am. Compl. ¶¶ 16-24.) In November 2007, Plaintiffs Douglas and Connie Harris were facing a sheriff's sale of their home in New Cumberland, Pennsylvania. (Id. ¶ 18.)*fn2 Seeley and several of her cohorts offered Plaintiffs "credit counseling, a way to stop the sheriff's sale, help with their bills and the ability to stay in their home." (Id. ¶ 25.) Plaintiffs accepted the offer to enter into the "Seeley-Deardorff" program. (Id. ¶ 27.) Seeley then contacted Defendant Bill Bryson, an agent of Defendant Allsource Mortgage, to start the process of refinancing Plaintiffs' home. (Id. ¶ 28.) Seeley also sought appraisers who would return a high appraisal amount on the house. (Id. ¶¶ 29-36.) When such an appraisal was attained, Seeley "would submit the inflated appraisal value to Allsource and Bryson who would then submit it to Countrywide to be approved." (Id. ¶ 34.)

On January 18, 2008, Plaintiffs met with Seeley regarding a mortgage settlement. (Id. ¶ 35.) Plaintiffs "were led to believe that they were transferring their equity to someone else so that they would receive money to take care of their bills, that they would receive credit counseling to assist them and that they would remain in ownership of their homes." (Id. ¶ 43.) But "[i]nstead of signing an agreement to receive credit counseling, [Plaintiffs] unknowingly signed over their deed to [James and Lisa Deardorff] and signed other documents which stated that the homeowners would receive $190,000." (Id. ¶ 44.) Through Defendants Allsource and Meritage Settlement Services, LLC, the Deardorffs agreed to a mortgage provided by Countrywide for $171,000. (Id. ¶ 47.) Plaintiffs never received any of the money or credit counseling that had been promised to them. (Id. ¶¶ 48, 50-51.) Instead, the amount of money equal to the amount of equity in the home was held by Seeley and James Deardorff. (Id. ¶ 49.)

To stay in their home, Plaintiffs made biweekly $610 payments to investors in the "Seeley-Deardorff" program. (Id. ¶¶ 59-60.) By August 14, 2009, Plaintiffs were one month behind in their payments and were given notice to leave the premises. (Id. ¶¶ 61-62.) According to the second amended complaint, the deed of the house has been signed back to Plaintiffs as owners of the property by the Deardorffs. (Id. ¶ 63.) Countrywide, despite knowing of the existence of the Deed, has scheduled a sheriff's sale of the property. (Id. ¶ 64.)

B. Procedural Background

Plaintiffs filed their complaint on November 6, 2009. (Doc. No. 1.) On January 25, 2010, Countrywide filed its first motion to dismiss. (Doc. No. 8.) In response, on February 15, 2010, Plaintiffs filed an amended complaint. (Doc. No. 10.) On March 1, 2010, Countrywide again moved to dismiss Plaintiffs' amended complaint. (Doc. No. 13.) Countrywide supported its motion with a brief in support. (Doc. No. 14.) After requesting and receiving several continuances in order to respond to the motion to dismiss (see Doc. Nos. 22, 25, 29) Plaintiffs' brief in opposition was due on June 28, 2010 (see Doc. No. 30). Rather than filing a brief in opposition, however, on June 14, 2010, Plaintiffs filed a second amended complaint. (See Doc. No. 33.) When doing so, Plaintiffs failed to include the opposing party's written consent or to seek leave of the Court. As a result, the Court struck the filing pursuant to Rule 15(a) of the Federal Rules of Civil Procedure. (Doc. No. 34.)

On August 28, 2010, again instead of filing any brief in opposition, Plaintiffs sought leave to re-file the second amended complaint that the Court had previously stricken. (See Doc. No. 38.) Countrywide has submitted a brief in opposition to the motion for leave to amend. (Doc. No. 41.)

II. Standard of Review

This case is uniquely postured to allow the Court to resolve the parties' motions under the same standard of review. Because the time for a "matter of course" amendment allowed by Rule 15 has passed, Plaintiffs "may amend [their] pleading only with the opposing party's written consent or the court's leave." Fed. R. Civ. P. 15(a)(2). A court is directed to "freely give [such] leave when justice so requires." Id. Here, Countrywide opposes Plaintiffs' motion for leave to amend because any amendments would be "futile, prejudicial, and based on dilatory motive." (Doc. No. 41 at 1.) "'Futility' means that the complaint, as amended, would fail to state a claim upon which relief could be granted. In assessing 'futility,' the District Court applies the same standard of legal sufficiency as applies under Rule 12(b)(6)." Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000) (citations omitted).

In a Rule 12(b)(6) analysis, "courts 'accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.'" Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)). To undertake such an analysis, the Court should first separate the factual and legal elements of a claim. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009) (citing Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009)). All well-pleaded facts must be accepted as true, but mere legal conclusions may be disregarded. Id. The Court must determine whether the facts alleged in the complaint show that the claims are plausible and that the plaintiff is entitled to relief. Id.; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (stating that a complaint's "[f]actual allegations must be enough to raise a right to relief above the speculative level"). "This does not impose a ...


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