Opinion
Civil Action No. 2:04-CV-02897-LDD.
October 4, 2004
MEMORANDUM AND ORDER
I. Introduction
Presently before this Court are Defendant Spear Hoffman, P.A.'s ("Spear Hoffman") Motion to Dismiss filed on August 30, 2004 (Doc. No. 7), Plaintiffs' Opposition to Defendant Spear Hoffman's Motion to Dismiss filed on September 10, 2004 (Doc. No. 8), and the Reply Brief in Support of Spear Hoffman's Motion to Dismiss the Complaint filed on September 27, 2004 (Doc. No. 14). Also before this Court are Plaintiffs' Motion for Leave to File an Amended Complaint filed on September 13, 2004 (Doc. No. 9), and Defendant Spear Hoffman, P.A.'s Brief in Opposition to Plaintiffs' Motion for Leave to File an Amended Complaint filed on September 27, 2004 (Doc. No. 14).
For the following reasons, plaintiffs' Motion for Leave to File an Amended Complaint shall be GRANTED and defendant's Motion to Dismiss shall be DENIED as moot.
II. Factual and Procedural History
On October 17, 1988, plaintiffs purchased their family home in Sellersville, Pennsylvania. (Compl. at ¶ 10). On April 17, 1997, a judgment by default in the amount of $153,910.86 was entered against plaintiffs in favor of Nationsbanc Mortgage Corporation ("Nationsbanc"), due to plaintiffs' inability to make timely mortgage payments. (Compl. at ¶ 12). A writ of execution was issued for the sale of plaintiffs' home, and a sheriff's sale was scheduled for March 9, 2001. (Compl. at ¶ 13). According to the face of the writ, the total amount due was $159,909.87, which included the amount of the original default judgment plus costs of $5,999.01. (Compl. at ¶ 14).
Plaintiffs were notified of the sale of their home, which was scheduled to take place at 11:00 am on March 9, 2001. (Compl. at ¶ 15). The Notice referenced the original default judgment amount, and listed the judgment creditor as defendant BA Mortgage, LLC ("BA Mortgage"), Successor in Interest by Merger of Nationsbanc Mortgage Corporation. (Compl. at ¶ 16). On March 7, 2001, the law firm of Dolchin, Slotkin, and Todd ("DST"), which represented plaintiffs, hand delivered to defendant Spear Hoffman, a Florida law firm that represented BA Mortgage, a certified check in the amount of $159,909.87. (Compl. at ¶ 18). The check was accompanied by a letter asking to cancel the sale of the plaintiffs' home, and to mark as satisfied the judgment and mortgage. (Compl. at ¶¶ 19-20). After receiving no response from defendants, plaintiffs' counsel sent another letter on March 8, 2001 to Spear Hoffman's Florida address, demanding that defendant BA Mortgage satisfy the judgment. (Compl. at ¶ 21).
On March 9, 2001, at precisely 11:00 am, plaintiffs' counsel received from Spear Hoffman via hand delivery the certified check that plaintiffs tendered on March 9, 2001 in full payment of the judgment and costs. (Compl. at ¶ 28). In addition to the certified check, Spear Hoffman provided a letter stating that the check was insufficient and that the amount necessary to satisfy the judgment and costs was now $191,887.46. (Compl. at ¶ 30). The timing of the return of the funds rendered it impossible for plaintiffs to attend the sheriff's sale and bid on the home. (Compl. at ¶ 29). The plaintiffs' home was sold through the Sheriff of Bucks County to defendant BA Mortgage on March 9, 2001. (Compl. at ¶ 31).
On March 19, 2001, plaintiffs received an eviction notice from attorneys representing the Federal Home Loan Mortgage Corporation ("Freddie Mac"), which allegedly purchased the home from BA Mortgage after the March 9, 2001 sheriff's sale. (Compl. at ¶¶ 34-36). The notice stated that Freddie Mac was the owner of the home and that plaintiffs immediately had to vacate the premises. (Compl. at ¶ 36). On that same day, plaintiffs' counsel filed a petition to stay the eviction and to set aside the sheriff's sale of the home in the Court of Common Pleas for Bucks County. (Compl. at ¶ 37). The litigation lasted more than two years. (Compl. at ¶¶ 37-70). On June 10, 2003, the Superior Court of Pennsylvania reversed the trial court's decision and granted plaintiffs' petition to set aside the sheriff's sale. (Compl. at ¶¶ 66-70); see Nationsbanc Mortgage Corp. v. Grillo, 827 A.2d 489, 493 (Pa.Super.Ct. 2003). The Supreme Court of Pennsylvania refused to hear defendant BA Mortgage's appeal, and, in April 2004, plaintiffs sent a check for $159,909.87 to the mortgagee in satisfaction of the mortgage and judgment. (Compl. at ¶¶ 71-72).
On June 30, 2004, plaintiffs filed a complaint in this Court pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1367(a). (Compl. at ¶¶ 3-4). Plaintiffs' complaint alleges a violation of 28 U.S.C. § 1983, and several Pennsylvania statutory and common-law causes of action. (Compl. at ¶¶ 74-96). Defendant BA Mortgage filed an answer with affirmative defenses on August 12, 2004. (Doc. No. 3). On August 30, 2004, Spear Hoffman filed a Motion to Dismiss the Complaint ("motion to dismiss") pursuant to Federal Rule of Civil Procedure 12(b)(6) and 12(b)(1). (Doc. No. 7). Plaintiffs filed a Brief in Support of Plaintiffs' Opposition to Defendant Spear Hoffman's Motion to Dismiss on September 10, 2004 (Doc. No. 8), and defendant was granted leave to file and filed a reply brief on September 27, 2004 (Doc. No. 12).
In addition to responding to the motion to dismiss, plaintiffs filed a Motion for Leave to File an Amended Complaint on September 13, 2004. (Doc. No. 9) ("motion to amend"). The amended complaint asserts that Spear Hoffman is the registered name of two law firms, with different places of incorporation. (Am. Compl. at ¶¶ 9-10). However, the amended complaint alleges that the Florida law firm of Spear Hoffman (referred to as "Florida Spear Hoffman" when necessary) acted by and through the attorneys working at the New Jersey law firm (referred to as "New Jersey Spear Hoffman" when necessary), and seeks to pursue Florida Spear Hoffman through an alter ego and/or agency theory of liability. (Am. Compl. at ¶¶ 11-12). Florida Spear Hoffman submitted a Brief in Opposition to Plaintiffs' Motion for Leave to File an Amended Complaint on September 27, 2004 (Doc. No. 14), arguing that the motion to amend the complaint should be denied on the basis of the arguments put forth in the motion to dismiss the original complaint.
III. Discussion
Currently before the Court are plaintiffs' motion to amend the original complaint and Spear Hoffman's motion to dismiss the original complaint for failure to state a claim and for insufficiency of process. Because the plaintiffs' motion to amend the complaint may moot Spear Hoffman's arguments in favor of dismissal, this Court first addresses the merits of plaintiffs' motion to amend. See Mammone v. Solna Web Press, Inc., 1992 WL 350215, at *2 (E.D. Pa. Nov. 23, 1992) (adjudicating motion to amend prior to motion to dismiss on ground of judicial economy).
Spear Hoffman's brief seeks to dismiss the complaint pursuant to Rule 12(b)(1), which involves lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b). However, nowhere in Spear Hoffman's brief does the defendant address the issue of subject matter jurisdiction. Instead, Spear Hoffman puts forth the argument that because Florida Spear Hoffman was not served properly, the Court lacks personal jurisdiction over the defendant. (Def. Mot. to Dismiss at 4).
A. Motion to Amend
After a responsive pleading is served, "a party may amend the party's pleading only by leave of the court or by written consent if justice so requires." Fed.R.Civ.P. 15(a). Leave to amend should be freely granted absent a concern of: (1) undue delay; (2) bad faith or dilatory motive; (3) continued failure to cure deficiencies by prior amendments; (4) undue prejudice to the opposition; or (5) futility of the amendment. Forman v. Davis, 371 U.S. 178, 182 (1962).
Spear Hoffman argues that plaintiffs' amendment is futile for two reasons. First, Spear Hoffman argues that plaintiffs' amended complaint still fails to state a valid claim under 28 U.S.C. § 1983. (Br. in Opp'n. to Mot. to File Am. Compl. at 1). Second, Spear Hoffman argues that plaintiff advances the factually "incorrect" argument in the amended complaint that New Jersey Spear Hoffman is an "alter ego" of Florida Spear Hoffman. (Id. at 2).
1. Legal Standard
To determine whether a proposed amendment would be futile for purposes of Rule 15(a), courts apply the legal standard applicable to a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Young v. Reconstructive Orthopedic Assoc., 2004 WL 350508, at *1 (E.D. Pa. Feb. 24, 2004). A Rule 12(b)(6) motion may be granted only when it clearly appears that a plaintiff can prove no set of facts in support of the claim which would entitle her to relief. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Robb v. City of Philadelphia, 733 F.2d 286, 290 (3d Cir. 1984). In applying this standard, this Court "must take all the well pleaded allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the pleadings, the plaintiff may be entitled to relief." Colburn v. Upper Darby Township, 838 F.2d 663, 665-66 (3d Cir. 1988).
2. Plaintiffs' section 1983 cause of action states a claim upon which relief can be granted.
Section 1983 does not create substantive rights, but, instead, provides a remedy for the violation of rights created by federal law. Groman v. Township of Manalapan, 48 F.3d 628, 633 (3d Cir. 1995). To make out a prima facie case of liability under section 1983, a plaintiff must establish: (1) that a person deprived plaintiff of a federally protected constitutional or statutory right; and (2) that the person who deprived plaintiff of that right acted under color of state law. 42 U.S.C.A. § 1983; see also Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 155-156 (1978).
Plaintiffs have met this burden.
a. Constitutional Violation
Spear Hoffman claims that plaintiffs have failed to allege a violation of their right to due process under the Fourteenth Amendment to the United States Constitution. U.S. Const. Amend. XIV (prohibiting state from taking property without due process of law); see also Dykes v. Southeastern Pa. Transp. Auth., 68 F.3d 1564, 1570 (3d Cir. 1995) (to state section 1983 claim based on Fourteenth Amendment, plaintiff must allege deprivation of property interest under color of state law without due process). Spear Hoffman does not contest the general rule that procedural due process under the Fourteenth Amendment requires "notice and an opportunity to be heard before the Government deprives them of property." U.S. v. James Daniel Good Real Prop., 510 U.S. 43, 48 (1993). Instead, Spear Hoffman argues that plaintiffs' due process rights were not violated because they had multiple opportunities to be heard in court to contest the sale and seizure of their property, and because they took advantage of every opportunity. (Mot. to Dismiss at 6-7).
To the extent that Spear Hoffman argues that plaintiffs' home was not "seized," this Court rejects defendant's argument. (Def. Rpl. Br. at 1). A seizure occurs when "there is some meaningful interference with an individual's possessory interests in that property." See California v. Hodari, 499 U.S. 621, 640 (1991). Plaintiffs' home was sold pursuant to a sheriff's sale, and plaintiffs were sent eviction notices demanding that they leave the property immediately. (Compl. at ¶¶ 31, 36, 47). The fact that plaintiffs were not physically forced to leave their former property, pending the outcome of their petition to set aside the sheriff's sale, in no way impacts the analysis of whether plaintiffs' property was "seized."
Spear Hoffman miscontrues plaintiffs' theory of liability. Plaintiffs do not argue that Spear Hoffman's contestation of plaintiffs' petition to set aside the sheriff's sale was a violation of their due process rights. Instead, plaintiffs argue that they had no notice and no opportunity to be heard prior to filing the petition, when the defendants unilaterally increased the amount of the writ of execution without judicial approval and without notification. (Pl. Opp'n to Def. Mot. to Dismiss at 6). The enforcement of the writ of execution based upon this unilateral increase, in turn, constituted a violation of their constitutional right to procedural due process. (Id.).
Plaintiffs' argument is supported both by a line of cases from the Pennsylvania Superior Court and by jurisprudence from the United States Court of Appeals for the Third Circuit. In Union Nat'l Bank of Pittsburgh v. Ciongoli, 595 A.2d 179 (Pa.Super.Ct. 1991), the Superior Court of Pennsylvania discussed the constitutional infirmities of a county foreclosure practice, which permitted a creditor first to increase unilaterally the judgment amount on the face of a sheriff's writ in a mortgage foreclosure action, based simply on a mortgagee's letter or affidavit to the sheriff, and then to execute foreclosure unless the increased amount was tendered.Id. at 180. Applying the due process test of Mathews v. Eldridge, 424 U.S. 319 (1976), the Court held that unilaterally increasing a judgment amount in a foreclosure action without notice to the debtor, without judicial review by the court that issued the judgment, and without recourse to a bond in the event or error, violated the due process clause of the Fourteenth Amendment. Id. at 182; see also Morgan Gaur. Trust Co. v. Mowl, 705 A.2d 923, 926 (Pa.Super.Ct. 1998) ("mortgagee's ex parte attempt to increase the writ of execution figure was procedurally improper as well as constitutionally impermissible"). The Court reasoned that such a practice was tantamount to a "prejudgment execution." Id. The Court further reasoned that the mortgagee should have petitioned the court to amend the judgment prior to its satisfaction, rather than attempting to execute a judgment for a sum that was never considered and approved by the court. Id.; see also Nationsbanc Mortgage Corp. v. Grillo, 827 A.2d 489, 492-493 (Pa.Super.Ct. 2003) (holding that BA Mortgage was required to petition court to amend writ of execution and to provide notice and opportunity for Grillos to be heard prior to increasing amount of judgment).
The holdings of Ciongoli and Mowl involve state court determinations of whether a unilateral increase in a default judgment obtained pursuant to Pennsylvania law, without notice to a mortgagee, violates the due process clause of the Fourteenth Amendment to the United States Constitution. Of course, these decisions are not binding on this Court. However, this Court finds their reasoning persuasive. Furthermore, they were issued by a Pennsylvania appellate court intimately familiar with the Pennsylvania Rules of Civil Procedure and the proper mechanisms for obtaining and executing mortgage foreclosure judgments under Pennsylvania law.
Spear Hoffman fails to distinguish these cases. Nor has Spear Hoffman pointed to any binding decisions that hold to the contrary. In fact, the principles embodied in the Pennsylvania Superior Court decisions of Ciongoli, Mowl, and Grillo have been echoed by Third Circuit case law. In Jordan v. Fox, Rothschild, O'Brien Frankel, for instance, the Third Circuit evaluated whether attorneys who invoked the aid of Pennsylvania state officials to obtain and to execute a confessed judgment against the lessee of property by garnishing the lessee's checking account could be held liable under section 1983. 20 F.3d 1250, 1271 (3d Cir. 1994). As to the first prong of the section 1983 test, the Court held that the enforcement of a writ of execution on confessed judgment, without providing means for the plaintiff to secure a pre-deprivation hearing or to obtain prompt post-seizure relief, violated the Fourteenth Amendment to the United States Constitution. Id. According to the Third Circuit, the due process violation occurred when the law firm used the sheriff to enforce the writ of execution and to seize plaintiff's bank account. Id.; see also Connecticut v. Doehr, 501 U.S. 1, 4 (1991) (finding unconstitutional state statute that enables private party to enlist aid of state to deprive another of property, without prior notice or hearing, by means of prejudgment attachment of real estate).
This Court adopts the reasoning of Ciongoli, Mowl, andGrillo, and applies by analogy the Third Circuit's decision inJordan concerning the execution of confessed judgments without due process. According to the allegations in the complaint, which must be taken as true for purposes of a Rule 12(b)(6) analysis, Spear Hoffman unilaterally increased the amount listed on the writ of execution, refused to accept plaintiffs' tender of the original amount, and caused the sheriff of Bucks County to sell the plaintiffs' home. (Compl. at ¶¶ 17-35). Spear Hoffman never petitioned the court to amend the default judgment and the amount entered in the writ of execution prior to rejecting the plaintiffs' tender. See Chase Home Mortgage Corp. v. Good, 537 A.2d 22, 23 (Pa.Super.Ct. 1988) (mortgagee can move court to amend default judgment to add additional sums and to provide relief until judgment is satisfied). Nor did the defendant provide notice to the plaintiffs that it was unilaterally increasing the original amount. As such, plaintiffs were never given a pre-deprivation hearing to contest the execution of the new writ and to prevent the sale of their home. Even more egregiously, plaintiffs only received a letter describing the defendants' impermissible conduct after it was too late to attend and to participate in the sheriff's sale. (Compl. at ¶ 28-30). Accordingly, taking all of the allegations in the complaint as true, plaintiffs' complaint satisfies the constitutional deprivation element of a section 1983 claim.
b. State Action
It is settled that private persons can be considered state actors for purposes of section 1983, so long as the state significantly contributes to the constitutional deprivation.See e.g. Lugar v. Edmondson Oil Co., 457 U.S. 922, 937 (1982) (requiring that deprivation be caused by exercise of right created by state and that private party act together or obtain significant aid from state official). Acknowledging that the seizure of plaintiffs' home occurred pursuant to Pennsylvania law, Spear Hoffman claims that plaintiffs "do not allege that there was any 'enlistment' of state power or lack of notice or any action in concert with any state official." (Mot. to Dismiss at 7). Spear Hoffman further claims that plaintiffs' section 1983 claim "rests upon the dubious notion that arguing in court that a sheriff's sale should be allowed to proceed constitutes 'state action' under § 1983." (Id.).
Spear Hoffman once again misconstrues the nature of plaintiffs' argument. Plaintiffs do not argue that the state action for purposes of the section 1983 claim was the defendant's use of the judicial process to validate the sheriff's sale. (Pl. Br. in Opp'n. at 5). Instead, plaintiffs argue that the unconstitutional state action was Spear Hoffman's enlistment of the "compulsive power of the local Sheriff" after unilaterally and without notice increasing the amount of the default judgment. (Id. at 6).
Plaintiffs' argument is supported by Third Circuit case law. InJordan, the Third Circuit held that a "judgment creditor who uses Pennsylvania's procedure for executing on a confessed judgment acts under color of law and becomes a state actor. . . ." 20 F.3d at 1267. The Court reasoned that when the sheriff, on the direct request of defendants, served the writ garnishing plaintiff's checking account, defendants caused the state to use legal force. Id. The Court further rejected the argument that the attorneys who initiated the proceeding were merely acting as officers of the court; instead, the Court found that the attorneys were acting under color of law in invoking Pennsylvania's procedures for attaching and seizing property on behalf of a client. Id.
Like the situation in Jordan, the defendants used Pennsylvania law to cause the issuance of a writ of execution for the sale of plaintiffs' home. (Compl. at ¶ 13). Furthermore, according to the complaint, the defendants actually "caused the Sheriff of Bucks County to sell the Grillos' Home to BA/Nationsbanc," which, in turn, caused plaintiffs to spend years in litigation without proper title to their home. (Compl. at ¶ 31). Spear Hoffman has provided no distinction between the use of a sheriff to execute a writ on a confessed judgment to garnish a bank account and the use of a sheriff to execute a writ on a default judgment to sell a home. Furthermore, none of the cases cited by defendants in support of their argument are binding on this Court, nor are they germane to the fact pattern of this litigation. See, e.g., Mildfelt v. Circuit Court of Jackson County, Missouri, 827 F.2d 343, 345 (8th Cir. 1987) (mortgage holders not acting under color of state law by initiating and executing foreclosure action because action was pursuant to an extrajudicial, contractual power of sale among private parties, with no state official or agency involved in the foreclosure proceedings); Earnest v. Lowentritt, 690 F.2d 1198, 1201 (5th Cir. 1987) (foreclosure proceedings not under authority of state law because plaintiffs had notice and opportunity to be heard in private adversary hearing concerning merits of seizure). Consequently, pursuant to Jordan, this Court finds that, for purposes of a section 1983 analysis, Spear Hoffman functioned as a state actor when it effectively and knowingly invoked the force of Pennsylvania law to foreclose on plaintiffs' property.See Jordan, 20 F.3d at 1265.
This Court rejects Spear Hoffman's narrow reading ofJordan's "state action" analysis as only applying to execution of a confessed judgment by private attorneys. In support of this argument, Spear Hoffman cites Egervary v. Young, 366 F.3d 238 (3d Cir. 2004), which distinguished Jordan from the situation where a plaintiff attempts to impose Bivens liability on parties who obtain and then execute a wrongly decided ex parte order from an independent judicial officer. Id. at 251. However, as plaintiffs point out, Egervary dealt with Bivens liability, rather that liability under section 1983, and did not involve a question of whether there was state action. In fact,Egervary discussed Jordan only to demonstrate that, as opposed to Jordan, the chain of causation for Bivens liability was broken by the issuance of a wrongly decided order, based upon accurate representations made to the judicial officer by defendants. Id. Egervary in no way limits the holding ofJordan to its facts, nor is the decision applicable to the instant matter.
c. Conclusion
Because plaintiffs' section 1983 claim would survive a Rule 12(b)(6) motion, this Court rejects Spear Hoffman's argument that the filing of an amended complaint would be futile. Plaintiffs therefore will be allowed to pursue their section 1983 claim in their amended complaint.
3. Plaintiffs may file an amended complaint that asserts an alter ego theory of liability against Florida Spear Hoffman.
Florida Spear Hoffman also summarily argues that plaintiffs' motion to file an amended complaint should be denied to the extent that it asserts that New Jersey Spear Hoffman is its "alter ego." (Br. in Opp'n. to Mot. to Dismiss at 2). In lone support of this argument, defendant refers the Court to the affidavit of L. Joseph Hoffman (the "Hoffman affidavit"), a partner in Florida Spear and Hoffman.
Defendant claims that argument was "previously argued to the Court" in defendant's motion to dismiss. (Br. in Opp'n to Mot. to Amend at 2). Although an argument against plaintiffs' alter ego theory of liability was not put forth in the defendant's motion to dismiss, as that motion was directed at the original complaint, this Court will address the issue to the extent that Spear Hoffman provides factual and legal support for its assertion.
The Hoffman affidavit was attached to the original motion to dismiss. (Exhibit "B" of Mot. to Dismiss).
At this early stage in the proceedings, this Court will not prohibit plaintiffs from filing an amended complaint on the basis of Hoffman's affidavit, without more. Several reasons support this analysis. First, based upon the amended complaint, it does not appear that plaintiffs are seeking to hold liable Florida Spear Hoffman on the sole basis of alter ego liability. Plaintiffs also allege a theory of liability based upon customary principles of agency, whereby New Jersey Spear Hoffman was an agent acting at the command of Florida Spear Hoffman. (Am. Compl. at ¶¶ 11-12); see e.g. Casey v. GAF Corp., 828 A.2d 362, 368 (Pa.Super.Ct. 2003) (defining elements of agency under Pennsylvania law). The defendant fails to address why this theory of liability would not survive a motion to dismiss.
In addition to failing to address the alleged infirmities in the plaintiffs' agency theory of liability, Spear Hoffman makes no legal argument why plaintiffs' alter ego theory would not survive a motion to dismiss for failure to state a claim. See e.g. Gould Electronics Inc. v. U.S., 220 F.3d 169, 178 (3d Cir. 2000) (defendant has burden of showing that no claim has been stated). Spear Hoffman cites no case law, nor addresses the applicable standard that a complaint must meet to successfully allege a cause of action against a party based upon an alter ego theory of liability. Nor has the defendant provided sufficient factual support for its position. In fact, Hoffman's affidavit, which states that New Jersey Spear Hoffman and Florida Spear Hoffman "are two distinct legal entities," with separate places of incorporation, does not directly contradict plaintiffs' theory. (Exhibit "B" to Mot. to Dismiss at 2). To be sure, the legal basis behind an alter ego theory of liability is not that a parent and its subsidiary are independently incorporated, but that this formal legal distinction should be ignored both because the parties have ignored it, such as by failing to observe corporate formalities, and because the corporate owner should be held liable to prevent fraud or injustice. See, e.g., Advanced Telephone Systems, Inc. v. Com-net Professional Mobile Radio, Inc., 846 A.2d 1264, 1278 (Pa.Super.Ct. 2004) (listing factors for alter ego theory of liability under Pennsylvania law).
Plaintiffs' motion to amend sets forth the reasoning behind its allegation that New Jersey Spear Hoffman is the mere instrumentality of its controlling corporation, Florida Spear Hoffman. (Mot to Am. at ¶ 10). In support of this argument, plaintiff evidences that Florida Spear Hoffman held itself out as a single entity, that the firm letterhead includes addresses in different states but does not differentiate between the Florida and New Jersey corporation, that the website states that it "provides direct default services to residential mortgage lenders in Florida," and that New Jersey Spear Hoffman is merely a facade to satisfy Rule 1:21-1(a) of the New Jersey Court Rules that an out-of-state law firm maintain a bona fide office in the state of New Jersey. (Mot. to Am. at ¶¶ 4-10). Spear Hoffman does not address any of these assertions.
Because Spear Hoffman's second argument against the filing of an amended complaint is based solely on its passing comment concerning the inappropriateness of an alter ego theory of liability, which, in turn, is based solely on the Hoffman affidavit, this Court will reject this argument. In so doing, this Court passes no judgment as to whether the theories of liability expressed in the amended complaint against Florida Spear Hoffman, or, for that matter, New Jersey Spear Hoffman, will withstand a motion to dismiss at a later stage in the proceedings, when such a motion provides clearly articulated reasoning with citations to controlling cases. See Fed.R.Civ.P. 12(h)(2) (preserving motion to dismiss for failure to state claim if not raised with other Rule 12(b) motions). Accordingly, in the interest of justice, this Court will grant plaintiffs' motion to file an amended complaint that includes allegations related to an alter ego theory of liability.
B. Motion to Dismiss
Spear Hoffman advances two arguments in favor of its motion to dismiss. First, defendant argues that plaintiffs' section 1983 claim fails to state a claim upon which relief can be granted. (Mot. to Dismiss at 5). Second, defendant argues that plaintiffs' original complaint fails for insufficiency of process, which was served on New Jersey Spear Hoffman rather than Florida Spear Hoffman. (Mot. to Dismiss at 3). Both of these arguments are mooted by this Court's decision to permit plaintiffs to file, and then to serve upon all defendants, an amended complaint that includes the section 1983 claim. Accordingly, defendant's motion to dismiss will be denied as moot.
IV. Conclusion
Based upon the foregoing reasons, Plaintiffs' Motion for Leave to File an Amended Complaint is granted and Defendant's Motion to Dismiss is denied as moot. An appropriate Order follows.