Welch v. Centex Home Equity Co., LLC

Full title: KORY A. WELCH, Plaintiff, v. CENTEX HOME EQUITY CO., LLC, et al.…

Court: United States District Court, D. Kansas

Date published: Nov 19, 2003

No. 03-2132-JWL (D. Kan. Nov. 19, 2003)

Opinion

No. 03-2132-JWL

November 19, 2003

ORDER

DAVID WAXSE, Magistrate Judge

Pending before the Court is Defendant Centex's Motion to Amend Answer (doc. 51) and Centex's Motion to Strike Plaintiffs Memorandum in Opposition (doc. 59). In the Motion to Amend Answer, Centex seeks to add a counterclaim for foreclosure of mortgages on the property that is the subject of this litigation or, in the alternative, for claims of unjust enrichment, equitable mortgage and then foreclosure. In support of its Motion, Defendant Centex states that at the time it filed an Answer, it had not provided Plaintiff or Defendant Jordan a Notice of Default on their promissory notes and mortgages. Centex further states that Notices of Default were submitted after the Answer was served, but that to date the default has not been cured; thus, Centex is entitled to pursue an action to collect the referenced debt.

Plaintiff opposes the proposed amendment on grounds of futility and undue delay. Plaintiff also seeks fees and costs associated with the Motion. Upon consideration of the arguments presented by counsel, and for the reasons stated below, Defendant's motion to amend will be granted, Defendant's motion to strike will be denied and Plaintiffs request for fees and costs will be denied.

Discussion

Rule 15 of the Federal Rules of Civil Procedure allows one amendment of the pleadings, before a responsive pleading is served or within twenty days after service.¹ Subsequent amendments are allowed by leave of court or by written consent of an adverse party and should be "freely given when justice so requires."² "The decision to grant leave to amend a [pleading], after the permissive period, is within the trial court's discretion . . . and will not be disturbed absent an abuse of that discretion."³ The district court should deny leave to amend only when it finds "undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of amendment."⁴ A. Futility

A court may deny a motion to amend as futile if the proposed amendment would not withstand a motion to dismiss or otherwise fails to state a claim.⁵ A court will dismiss a cause of action for failure to state a claim only when "it appears beyond a doubt that [the party asserting the claim] can prove no set of facts in support of his claims which would entitle him to relief,"⁶ or when an issue of law is dispositive.⁷ The court accepts as true all well-pleaded facts, as distinguished from conclusory allegations, and all reasonable inferences from those facts are viewed in favor of the asserting party.⁸ The issue in resolving a motion such as this is "not whether [the asserting party] will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims."⁹

5 Lyle v. Commodity Credit Corp., 898 F. Supp. 808, 810 (D. Kan. 1995) (citing Ketchum v. Cruz, 961 F.2d 916, 920 (10th Cir. 1992)).

6 Poole v. Cty. of Otero, 211 F.3d 955, 957 (10th Cir. 2001) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).

7 Neitzke v. Williams, 490 U.S. 319, 326 (1989).

8 Smith v. Plati, 258 F.3d 1167, 1174 (10th Cir. 2001).

9 Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511 (2002) (quotation omitted).

In support of her assertion that Centex's proposed counterclaim fails to state a claim upon which relief can be granted as a matter of law, Plaintiff argues that recent deposition testimony establishes Plaintiffs name was forged on the relevant documents; thus, the documents are void and unenforceable against Plaintiff and the proposed counterclaim is futile.

The Court is not persuaded by Plaintiffs argument. As a preliminary matter, it generally is unacceptable for a court to look beyond the four corners of the pleadings when deciding a Rule 12(b)(6) motion to dismiss.¹⁰ "If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in [Federal Rule of Civil Procedure] 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56."¹¹

10 Dean Witter Reynolds, Inc. v. Howsam, 261 F.3d 956, 961 (10th Cir. 2001) (citing Jackson v. Integra, Inc., 952 F.2d 1260, 1261 (10th Cir. 1991) (stating court "must examine only the plaintiffs complaint . . .[and] cannot review matters outside of the complaint" when deciding Rule 12(b)(6) motion)).

11 Fed.R.Civ.P. 12(c).

Given the procedural posture of the case at this point in time, the Court declines to treat as a Motion for Summary Judgment the arguments and evidence set forth by Plaintiff in her opposition brief. Simply put, the pending motion to amend is an inappropriate procedural vehicle to resolve a dispute between the parties regarding whether various documents to which Plaintiff has admitted to signing are sufficient to constitute a writing and satisfy the Kansas Statute of Frauds and the Kansas Homestead pro visions. Again, the issue in resolving a motion to amend such as this is not whether Defendant ultimately will prevail on the counterclaim proposed, but whether Defendant is entitled to offer evidence to support the proposed counterclaim. Based on a review of the pleadings, the Court finds sufficient facts have been pled, or are in dispute, to allow Defendant Centex to file its proposed counterclaim to foreclose on the indebtedness and its alternative claim of equitable mortgage.

Finally, granting leave to amend will benefit the Court. In Plaintiff's Complaint, she includes a claim for declaratory judgment requesting the Court determine the notes or mortgage in favor of Centex are null and void and declare that Plaintiff holds clear title, free of mortgage, to the property that is the subject of this litigation. The counterclaim that Defendant Centex requests leave to file places before the Court the issues of the validity of all loan documents including the notes and mortgages and requests that in the event the Court determines the note and mortgage valid, that the same be foreclosed. Because the counterclaims are closely related to the claims already asserted, it is in the interest of judicial economy to dispose of all of the claims between the parties in one proceeding, as opposed to the possibility of a second lawsuit brought by Centex against Plaintiff in order to have its additional claims adjudicated.¹² B. Timeliness

12 See Jenn-Air Products Co. v. Penn Ventilator, Inc., 283 F. Supp. 591, 594 (E.D.Pa. 1968).

Finally, Plaintiff also argues the Motion to amend should be denied because Centex unduly delayed in requesting the proposed amendment. The Court rejects Plaintiffs claim of untimeliness and/or undue delay based on the fact that the Motion is timely under the Scheduling Order.

Conclusion

For the reasons stated above, Defendant Centex's Motion to Amend (doc. 51) is hereby granted. Centex shall electronically file and serve the Amended Answer on or before November 24, 2003. Plaintiff and the remaining Defendant shall respond to the counterclaim/cross-claim in the Amended Answer pursuant to local and federal rule.

Given the Court's ruling on the Motion to Amend, Centex's Motion to Strike Plaintiffs Memorandum in Opposition (doc. 54) is denied as moot and Plaintiff's request for fees and expenses on grounds that the pending Motion to Amend was frivolous is also denied.

IT IS SO ORDERED.