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National City Mortgage Co. v. Navarro

March 11, 2004


The opinion of the court was delivered by: Ricardo M. Urbina United States District Judge

Document Nos.: 25, 27, 30, 61



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the court denies without prejudice the pending motions to dismiss because they pertain to the original complaint, now superseded by the amended complaint.


A. Factual Background

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.

B. Procedural History

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 ยง 1481. Motions to dismiss and for summary judgment do not qualify as ...

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