The opinion of the court was delivered by: RICARDO URBINA, District Judge
GRANTING THE PLAINTIFF'S MOTION FOR LEAVE TO AMEND THE
COMPLAINT AND DENYING WITHOUT PREJUDICE THE PENDING
MOTIONS TO DISMISS
The plaintiff National City Mortgage Co., a mortgage lender, brings
suit against defendants Laila Navarro ("Navarro"), Obafemi Olybuyimo
("Olybuyimo"), Olutoyin Oladosu ("Oladosu"), Dee-Ladok Investments, Inc.
("Dee-Ladok"), Olugbenga Adeyale ("Adeyale"), Devon Investments, Inc.
("Devon"), Mary Haley ("Haley"), and Brenita Young ("Young") for fraud,
conspiracy to defraud, negligent misrepresentation and negligence. The
plaintiff also alleges a claim for unjust enrichment against defendant
Preferred Investments, Inc. ("Preferred") and Admark Investments, Inc.
("Admark"). This matter is currently before the court on the plaintiff's
unopposed motion for leave to file an amended complaint pursuant to
Federal Rule of Civil Procedure 15(a) and defendants Adeyale, Devon and
Preferred's motions to dismiss. First, the court grants the plaintiff's
unopposed motion to amend because the plaintiff's proposed amendment is
as of right in relation to some of the defendants, and there is no reason
warranting denial of the plaintiff's proposed amendment as to the
defendants that have already filed a
responsive pleading. Second, the court denies without prejudice the
pending motions to dismiss because they pertain to the original
complaint, now superseded by the amended complaint.
The plaintiff alleges that each of the defendants was involved in a
complex scheme to defraud it through submission of false or fraudulent
information in connection with mortgage loan applications. Compl. ¶¶
1-2. The plaintiff claims that, beginning in April 2001 and continuing
until March 2002, defendants Olybuyimo, Oladosu, Adeyale, Devon and
Dee-Ladok (collectively "the seller defendants") made material
misrepresentations or omitted facts in connection with loan applications
on which the plaintiff relied to approve mortgage loans. Id.
¶ 2. Specifically, the plaintiff contends that the seller defendants
made misrepresentations regarding borrowers' alleged identities,
employment, income and assets. Id. ¶ 172. The plaintiff
further claims that defendants Haley and Young prepared and submitted
false and fraudulent appraisals and that defendant Navarro facilitated
the submission of false and fraudulent documentation to the plaintiff.
Id. ¶ 2. Finally, the plaintiff asserts that defendants
Preferred and Admark were the recipients of improper disbursements and
were thereby unjustly enriched. Id.
According to the plaintiff, the fraudulent scheme involved the seller
defendants purchasing properties and then recruiting or creating straw
buyers to obtain loans from the plaintiff by using the properties as
collateral. Id. ¶¶ 2, 22-26. The straw buyers would then
allegedly use the loans to purchase those properties from the seller
defendants. See, e.g., id. ¶¶ 97-101, 111-115 The defendants,
however, exaggerated the price of the properties in order to
trick the plaintiff into providing larger than necessary loans to
the straw buyers. Id. Defendants Haley and Young allegedly
prepared false appraisals that overstated the properties' value to
justify the inflated prices. Id. ¶ 3. The plaintiff claims
that the seller defendants, assisted by defendant Navarro, then submitted
phony credit and income information to the plaintiff in support of the
straw buyers' loan applications. Id. The plaintiff asserts that
after it approved the loans, a title company participating in the fraud
closed the loans. See, e.g., id. ¶¶ 100, 114. The plaintiff
further states that the buyers then stopped making payments on the loans,
which then went into default. See, e.g., id. ¶¶ 101, 105,
110, 114. As a result, the defendants allegedly reaped the profit that
resulted from the difference between the actual value of the property and
the inflated loan amount. Id. ¶ 2. Finally the plaintiff
alleges that, defendants Admark and Preferred received the proceeds of
the fraudulent transactions. Id. ¶¶ 6, 11.
The plaintiff filed the complaint on January 21, 2003. Defendant
Navarro filed an answer on February 26, 2003 and defendant Olybuyimo
filed an answer on December 8, 2003. On April 6, 2003, defendants
Preferred and Devon filed motions to dismiss. The next day, defendant
Adeyale filed his own motion to dismiss. On January 27, 2004, the
plaintiff filed a motion for leave to file an amended complaint. The
court now addresses these pending motions.
A. The Plaintiff's Motion For Leave to Amend
The plaintiff moves the court for leave to amend the complaint because
six of the original 28 loans are no longer at issue. Pl.'s Mot. ¶ 2.
In addition, the plaintiff states that the
occurrences that have mooted the six loans also have eliminated the
need for five of the original 15 defendants to participate in this
case.*fn1 Id. Lastly, the plaintiff states that as a result of
the passage of time, its losses in connection with each loan can now be
alleged with greater specificity. Id.
Under Federal Rule of Civil Procedure 15(a), a party may amend its
pleading once as a matter of course at any time before a responsive
pleading is served. FED. R. CIV. P. 15(a). According to our court of
appeals, Rule 15(a) "guarantee[s] a plaintiff an absolute right" to amend
the complaint once at any time so long as the defendant has not served a
responsive pleading and the court has not decided a motion to dismiss.
James V. Hurson Assocs., Inc. v. Glickman, 229 F.3d 277, 282-83
(D.C. Cir. 2000) (citing FED. R. CIV. P. 15(a)). If there is more than
one defendant, and not all have served responsive pleadings, the
plaintiff may amend the complaint as a matter of course with regard to
those defendants that have yet to answer. 6 FED. PRAC. & PROC.2d
§ 1481. Motions to dismiss and for summary judgment do not qualify as
responsive pleadings for the purposes of Rule 15. James V. Hurson
Assocs., 229 F.3d at 283; Bowden v. United States,
176 F.3d 552 (D.C. Cir. 1999); U.S. Info. Agency v. Krc, 905 F.2d 389,
399 (D.C. Cir. 1990).
Once a responsive pleading is served, however, a party may amend its
complaint only by leave of the court or by written consent of the adverse
party. FED. R. CIV. P. 15(a); Foman v. Davis, 371 U.S. 178, 182
(1962). The grant or denial of leave to amend is committed to the sound
discretion of the district court. Firestone v. Firestone,
76 F.3d 1205, 1208 (D.C. Cir.
1996). The court must, however, heed Rule 15's mandate that leave
is to be "freely given when justice so requires." Id.;
Caribbean Broad. Sys., Ltd. v. Cable & Wireless P.L.C.,
148 F.3d 1080, 1083 (D.C. Cir. 1998). Indeed, "[i]f the underlying
facts or circumstances relied upon by a plaintiff may be a proper
subject of relief, he ought to be afforded an opportunity to test his
claim on the merits." Foman, 371 U.S. at 182. Denial of leave
to amend therefore constitutes an abuse of discretion unless the court
gives sufficient reason, such as futility of amendment, undue delay,
bad faith, dilatory motive, undue prejudice, or repeated failure to cure
deficiencies by previous amendments. Id.; Caribbean Broad.
Sys., 148 F.3d at 1083.
In the case at hand, defendants Navarro and Olybuyimo answered the
plaintiff's original complaint. Defendants Oladsu, Dee-Ladok, Haley,
Young, and Admark have not filed responsive pleadings. Finally,
defendants Adeyale, Devon and Preferred have filed motions to dismiss.
The plaintiff, thereafter, sought leave to amend the complaint. The
plaintiff has an "absolute right" to amend the complaint with regard to
defendants Oladsu, Dee-Ladok, Haley, Young and Admark. James V.
Hurson Assocs., 229 F.3d at 282-83. The plaintiff also has an
"absolute right" to amend the complaint with regard to defendants
Adeyale, Devon and Preferred because their motions to ...