Maria Velazquez et al v. GMAC Mortgage Corporation et al, No. 2:2008cv05444 - Document 65 (C.D. Cal. 2009)
Court Description: ORDER DENYING Plaintiffs' Motion for Leave to File Second Amended Complaint 59 and Motion to Amend Corrected Motion for Leave to File Second Amended Complaint 60 by Judge Dean D. Pregerson. For the foregoing reasons, the Court DENIES Plaintiffs Motion for Leave to File Second Amended Complaint and Motion to Amend Corrected Motion for Leave to File Second Amended Complaint. (See Order for Details). (sch)
Download PDF
<![CDATA[
Maria Velazquez et al v. GMAC Mortgage Corporation et al Doc. 65 1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 13 MARIA and GUADALUPE VELAZQUEZ, individually and on behalf of themselves and all others similarly situated, 14 Plaintiff, 15 16 v. GMAC MORTGAGE CORPORATION, GMAC MORTGAGE, LLC, 17 18 Defendants. ___________________________ 19 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 08-05444 DDP (PLAx) ORDER DENYING PLAINTIFFS’ MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT AND MOTION TO AMEND CORRECTED MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT [Motions filed on July 15, 2009 and July 16, 2009] This matter is before the Court on Plaintiffs’ motion for 20 leave to file a second amended complaint.1 21 submissions of the parties, the Court denies the motion. 22 I. After reviewing the BACKGROUND 23 On August 19, 2008, Plaintiffs Maria and Guadalupe Velazquez 24 filed this suit against GMAC Mortgage Corporation, GMAC Mortgage, 25 LLC, and other unnamed defendants (collectively “Defendants”) on 26 behalf of themselves and all others similarly situated, alleging 27 1 28 After filing a Motion for Leave to File Second Amended Complaint on July 15, 2009, Plaintiffs filed a Corrected Motion on July 16, 2009, which includes exhibits that had been inadvertently omitted. (Docket Nos. 59 & 60.) Dockets.Justia.com 1 that Defendants’ actions in connection with the sale and servicing 2 of Plaintiffs’ loans violated the federal Truth in Lending Act 3 (“TILA”), 15 U.S.C. § 1601 et seq., and raising several state law 4 claims for relief. 5 Defendants filed a Motion to Dismiss, relying in part on facts 6 unique to the Velazquezes, namely that: (1) the re-finance of their 7 mortgage loan in May 2007 precludes any claim for rescission under 8 TILA, and (2) a one-year statute of limitations bars any claim for 9 damages under TILA. 10 On December 22, 2008, the Court granted in part and denied in 11 part Defendants’ Motion to Dismiss. 12 Corp., 605 F. Supp. 2d 1049 (C.D. Cal. 2008). 13 the motion with respect to Plaintiffs’ TILA rescission claim, but 14 denied the motion as to Plaintiffs’ claim for damages under TILA. 15 The Court noted that because Plaintiffs may be entitled to 16 equitable tolling, the statute of limitations issue is better 17 suited to resolution on summary judgment. 18 Velazquez v. GMAC Mortg. The Court granted Id. at 1061. Since the Court’s ruling on Defendants’ Motion to Dismiss, the 19 parties have engaged in discovery particular to the Velazquezes, 20 for example, with respect to whether equitable tolling applies to 21 their TILA claim. 22 information and documents through discovery concerning whom the 23 Velazquezes spoke with regarding their loan, what documents they 24 were provided, what they understood the loan terms to be, and what 25 contact they had with Defendants. 26 Defendants have answered written discovery requests relating to the 27 Velazquezes’ loan and subpoenaed several third parties with 28 information regarding the Velazquezes’ loan. (Opp. 2:10-13.) Defendants have sought (Id. at 2:13-18.) 2 In addition, (Id. 2:20-3:6.) 1 On May 8, 2009, the parties filed a stipulation and proposed 2 order for Plaintiffs to file a First Amended Complaint (“FAC”) to 3 substitute Residential Funding Company, LLC, as a defendant for 4 GMAC Mortgage Corp. 5 (Docket No. 55.) 6 (Docket No. 56.) 7 The Court signed the order on May 14, 2009. Plaintiffs filed the FAC on May 15, 2009. On May 27, 2009, Defendants deposed Maria and Guadalupe 8 Velazquez. 9 Dep.).) (Defs.’ Ex. A (G. Velazquez Dep.); Ex. B (M. Velazquez The depositions revealed that Mr. and Mrs. Velazquez: (1) 10 do not speak or read English, and thus did not read the disclosure 11 documents that form the basis of their claims, (Ex. A 10:23-11:3; 12 Ex. B 12:19-23); (2) did not request or receive any Spanish- 13 language translations of any loan disclosure documents, instead 14 relying on a Spanish-speaking mortgage broker to explain the loan 15 terms, (Ex. A 21:11-22:9, 74:25-76, 78:11-79:1; Ex. B 13:11-17, 16 19:23-20:2); (3) realized the loan terms were not what they 17 expected almost immediately upon repayment and quickly sought to 18 re-finance, (Ex. A 92:10-93:9, 95:7-15; Ex. B 25:25-26:13); and (4) 19 did not meet with their attorneys until the day before the 20 depositions and the day of the depositions, respectively, (Ex. A 21 108:9-108:13; Ex. B 23:21-24:1.) 22 On July 16, 2009, Plaintiffs filed this Motion for Leave to 23 File a Second Amended Complaint (“SAC”). 24 “Maria and Guadalupe Velazquez have elected to withdraw as named 25 Plaintiffs in the action” and requests leave to file the SAC, 26 which: (1) dismisses the Velazquezes from the case; (2) substitutes 27 four new plaintiffs, the Lowerys and the Largents, the latter of 28 whom have no connection whatsoever with Defendants regarding their 3 The Motion notes that 1 loan; (3) adds three new defendants– Countrywide Home Loans and BAC 2 Home Loans Servicing LLP, who allegedly owned and serviced, 3 respectively, the Largents’ loan, and Aurora Loan Services, LLC, 4 who allegedly serviced the Lowerys’ loan; and (4) revives the TILA 5 rescission cause of action on behalf of the newly-named plaintiffs 6 that the Court previously dismissed with respect to the 7 Velazquezes. 8 II. 9 10 DISCUSSION A. Legal Standard Federal Rule of Civil Procedure 15(a), which governs 11 requests for leave to amend pleadings, provides that "leave shall 12 be freely given when justice so requires." 13 Leave to amend should be granted with "extreme liberality" in order 14 "to facilitate decision on the merits, rather than on the pleadings 15 or technicalities." 16 Cir. 1981). 17 leave should not be granted rests with the non-moving party. 18 DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186-87 (9th Cir. 19 1987). 20 to amend, the district court has “particularly broad” discretion in 21 deciding subsequent motions to amend. 22 Co., 292 F.3d 992, 1003 (9th Cir. 2002) (quoting Griggs v. Pace Am. 23 Group, Inc., 170 F.3d 877, 879 (9th Cir. 1999)). FED. R. CIV. P. 15(a). United States v. Webb, 655 F.2d 977, 979 (9th Accordingly, the burden of persuading the Court that See However, where a plaintiff already has been granted leave Chodos v. West Publishing 24 Leave to amend should be freely given unless the opposing 25 party makes a showing of undue delay, bad faith or dilatory motive, 26 futility of amendment, or prejudice. Foman v. Davis, 371 U.S. 178, 27 182 (1962); see also Ascon Properties, Inc. v. Mobil Oil Co., 866 28 F.2d 1149, 1160 (9th Cir. 1989). The Ninth Circuit holds that 4 1 these factors are not of equal weight. 2 touchstone of the inquiry under rule 15(a),” Eminence Capital, 3 L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003), delay 4 alone is insufficient ground for denying leave to amend, Webb, 655 5 F.2d at 980. 6 amendment analysis, it is relevant, especially when no reason is 7 given for the delay.” 8 Inc., 194 F.3d 980, 986 (9th Cir. 1999). 9 is justified where the “new facts” underlying the amendment were While prejudice is “the Although delay “is not a dispositive factor in the Lockheed Martin Corp. v. Network Solutions, A finding of undue delay 10 previously available to the party seeking amendment. 11 F.3d at 1003 (affirming denial of motion to amend where “new facts” 12 were available prior to the first amended complaint). Chodos, 292 13 B. 14 Plaintiffs’ justification for seeking amendment at so late a Analysis 15 date is that the Velazquezes “have elected to withdraw.” 16 3:14-15.) 17 plaintiffs are similarly situated to the Velazquezes, no prejudice 18 to Defendants will result. 19 assert that courts “routinely grant motions to amend in class 20 actions to add or substitute named plaintiffs.” 21 (Mot. Plaintiffs argue that because the proposed new (Id. 4:18-21.) In addition, Plaintiffs (Id. 4:21-22.) Defendants counter that Plaintiffs are asking for a “fresh 22 start” because “discovery as to the Velazquezes has revealed that 23 not only are they inadequate class representatives, they likely 24 have no substantive claims at all.” 25 argue the motion should be denied because: (1) leave to substitute 26 named plaintiffs is not routinely granted prior to class 27 certification, (opp. 6:8-9); (2) substituting named plaintiffs 28 would prejudice Defendants; (id. 8:10-11); and (3) undue delay 5 (Opp. 1:7-9.) Defendants 1 exists because “the fundamental deficiencies with the Velazquezes 2 serving as class representatives” should have been discovered by 3 plaintiffs’ counsel prior to filing the complaint, (id. 9:23-26). 4 The Court addresses each argument in turn. 5 1. 6 7 Substitution of Named Plaintiffs Prior to Class Certification Plaintiffs cite several district court cases for the 8 proposition that “courts routinely grant motions to amend in class 9 actions to add or substitute named plaintiffs.” (Mot. 4:21-22.) 10 However, the cases Plaintiffs cite are factually inapposite, as 11 they involve the addition of named plaintiffs after class 12 certification, rather than the substitution of named plaintiffs 13 before class certification. 14 460, 464, 466 (N.D. Cal. 2006)(granting leave to add plaintiffs 15 after the court had granted certification in part where the newly- 16 added plaintiffs were the named plaintiffs in a separate action 17 against defendants); Morgan v. Laborers Pension Trust Fund, 81 18 F.R.D. 669, 673-75 (N.D. Cal. 1979)(granting leave to add 19 plaintiffs concurrently with grant of class certification); see 20 also Gilliam v. Addicts Rehab. Ctr. Fund., 2006 WL 1049352, at *2 21 (S.D.N.Y. Apr. 19, 2006) (granting unopposed motion for leave to 22 add plaintiff). 23 See Palmer v. Stassinos, 236 F.R.D. It is true that Courts regularly allow replacement of the 24 named plaintiff after class certification. 25 Steel Corp. V. Tennessee Valley Authority, 353 F.3d 1331 (11th Cir. 26 2003) (giving class counsel time to find a new class representative 27 for certified class); Brookhaven Housing Coalition v. Sampson, 65 28 F.R.D. 24 (E.D.N.Y. 1974) (requiring notice of motion to dismiss 6 See, e.g., Birmingham 1 for lack of standing be provided to class members for potential 2 substitution as named plaintiff). 3 However, the reason substitution is appropriate after class 4 certification is that “once certified, a class acquires a legal 5 status separate from that of the named plaintiffs,” such that the 6 named plaintiff’s loss of standing does “not necessarily call for 7 the simultaneous dismissal of the class action, if members of that 8 class might still have live claims.” 9 F.3d at 1036 (citation omitted). 10 Birmingham Steel Corp., 353 This line of reasoning is inapposite here, where no class has yet been certified. 11 2. 12 Prejudice to Defendants Defendants argue that granting leave to amend would result in 13 undue prejudice by presenting “substantial new discovery burdens 14 related to new plaintiffs, new claims, and new defendants” and 15 “moot[ing] the substantial amount of discovery that has already 16 been completed regarding the Velazquezes.” 17 (Mot. 9:5-9.) After almost one year of motion practice, fairly extensive 18 discovery, a motion to dismiss dealing with issues particular to 19 the Velazquezes, and the filing of an amended complaint to add new 20 defendants, Plaintiffs now seek to start anew. 21 new named plaintiffs– two of whom have no connection whatsoever to 22 Defendants– would require Defendants to “re-do all of the discovery 23 they already did as to the Velazquezes.” 24 Furthermore, it would mandate “re-explor[ing] the same issues that 25 were already covered with the Velazquezes,” including, among other 26 things, the availability of rescission and the impact of the 27 statute of limitations and possible equitable tolling. 28 5:4.) 7 Substituting four (Opp. 4:23-24.) (Id. 4:27- 1 The Ninth Circuit has affirmed denial of leave to amend 2 where, as here, “[t]he proposed amendment was not based upon any 3 facts which were not known or readily available” and prior 4 extensive discovery was “not directed” to the factual issues raised 5 by the proposed amendment. 6 648 (9th Cir. 1971). 7 prejudiced by the proposed SAC weighs heavily against granting the 8 motion. 9 3. Komie v. Buehler Corp., 449 F.2d 644, Thus, the likelihood Defendants will be Undue Delay 10 Furthermore, the Court is inclined to find that the facts 11 which likely prompted Plaintiffs to seek leave to file the SAC were 12 readily available prior to filing the original complaint. 13 Velazquezes do not speak or read English, did not read the 14 disclosure documents before signing them, did not request Spanish 15 translations, and realized almost immediately that the loan terms 16 were not what they had thought are all facts which Plaintiffs knew 17 or should have known prior to initiating this suit. 18 have offered no justification why it took six months of discovery 19 for these facts to come to light. 20 That the Plaintiffs Contrary to Plaintiffs’ assertion that the proposed amendments 21 are routine, the proposed SAC appears to be“a vehicle to bring an 22 entirely new action against new defendants on behalf of new 23 plaintiffs for business practices that were never mentioned, let 24 alone at issue, in the Original Complaint or the First Amended 25 Complaint.” 26 Velazquezes’ rights to voluntarily dismiss the case, and, of 27 course, Plaintiffs’ counsel remains free to file a new case on 28 behalf of the Lowerys and the Largents. (Id. 5:18-21.) It is perfectly within the 8 But, the Court will not 1 permit amendments that amount to a “back-door attempt to begin the 2 action anew” where, in all likelihood, “the original plaintiffs 3 were never qualified to represent the class.” Lidie v. State of 4 California, 478 F.2d 552, 555 (9th Cir. 1973). 5 III. CONCLUSION 6 For the foregoing reasons, the Court DENIES Plaintiffs’ Motion 7 for Leave to File Second Amended Complaint and Motion to Amend 8 Corrected Motion for Leave to File Second Amended Complaint. 9 IT IS SO ORDERED. 10 11 12 Dated: September 10, 2009 DEAN D. PREGERSON United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
