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Michael P. O'banion and Patricia R. Bradley v. Select Portfolio Services

November 16, 2011



RE: Docket No. 95 Docket No. 119 Docket No. 120 Docket No. 123 Docket No. 124 Docket No. 125 Docket No. 126 Docket No. 129


Before the Court are eight pending motions filed by pro se Plaintiffs Patricia Bradley and Michael O'Banion.*fn1 Upon review, the Court finds that the facts and legal arguments are adequately presented in the briefs and record without the need for additional briefing. Accordingly, in the interest of avoiding further delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, the motions will be decided on the record before this Court without oral argument. Dist. Idaho L. Rule 7.1(d).


Over two years ago, on May 22, 2009, Plaintiffs Michael O'Banion and Patricia Bradley filed this lawsuit against Defendants Select Portfolio Services, Inc. ("Select") Litton Loan Servicing, LP ("Litton") Just Law, Inc. ("Just Law") Mortgage Electronic Registration Systems, Inc. ("MERS"), Discover Lending Group ("Discover") and Ownit Mortgage Solutions, Inc. ("Ownit"). The thirty-nine page Complaint included six causes of action, all based upon a contract for a "refinance mortgage loan on their residential real property" that the Plaintiffs entered into on July 7, 2006. (Compl. ¶ 35, Dkt. 1.)

On October 14, 2009, and January 13, 2010, Defendants Select, MERS, and Litton filed motions to dismiss the Complaint. (Dkt. 28, 45.) The Court issued its Report and Recommendation on August 13, 2010, recommending that the motions be granted in part and denied in part. The Report and Recommendation was adopted in its entirety by District Judge Edward J. Lodge on September 23, 2010, after both sides filed objections. The Court's order allowed Plaintiffs time to file an amended complaint to cure the deficiencies it found. Specifically, the Court's Order stated: (1) Count one alleging violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et. seq. ("FDCPA") was dismissed to the extent the Complaint could be interpreted to assert a claim against Select or MERS. The claim against Just Law remained; (2) Count two alleging violation of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1602(f) against Ownit, Litton, and Select was dismissed with respect to Litton. With respect to Plaintiffs' claim for damages under TILA, the Court found that the statute of limitations bared Plaintiffs' claims unless Plaintiffs asserted facts in their Complaint to support a claim for equitable tolling.*fn2 With respect to Plaintiffs' claim for rescission under TILA, the Court dismissed Plaintiffs' claim for rescission unless Plaintiffs alleged an ability to tender payment in full of their loan; (3) Count three alleging that Defendants aided and abetted fraud was dismissed because Plaintiffs had not correctly plead fraud under Fed. R. Civ. P. 9(b); (4) Count four alleging fraudulent misrepresentation against all Defendants was dismissed because it, too, lacked the specificity required by Fed. R. Civ. P. 9(b); (5) Count five alleging unjust enrichment against all Defendants was adequately plead, and therefore, the motion to dismiss Count five was denied; and (6) Count six, alleging civil conspiracy, was dismissed because it also did not rise to the heightened pleading standards since it failed to include allegations regarding how any alleged agreement or conspiracy came about or when it was created.

After granting one extension, the Court gave Plaintiffs until November 19, 2010, to file an amended complaint. Plaintiffs timely filed their Amended Complaint on November 19, 2010. (Dkt. 63.) Plaintiffs Amended Complaint alleged violation of TILA against Ownit, Discovery, and Select; "misrepresentation and concealment and fraud in the factum" against Discover and Ownit; "abuse of process and fradulent [sic] misrepresentation" against Select and Just Law; unlawful default and unlawful foreclosure against Just Law and Select; unlawful default and unlawful foreclosure and fraudulent misrepresentation against MERS, Select, and Just Law; and unjust enrichment against all Defendants except MERS. Thus, Plaintiffs no longer alleged violation of the FDCPA, but they also added three claims for "misrepresentation, concealment and fraud in the factum," abuse of process, and "unlawful default, unlawful foreclosure." Defendants filed timely answers to the Amended Complaint. (Dkt. 64, 65, 66, 74.)

Plaintiffs filed motions for joinder, default, for a more definite statement, and to strike, while Defendant Select filed a motion requesting a scheduling and planning conference. With the exception of Select's motion, all of Plaintiffs' motions were denied. (Dkt. 90, 100, 101.) After a telephonic hearing, the Court issued its Case Management Order on June 8, 2011. (Dkt. 103.) In its order, the Court required the parties to schedule a Voluntary Case Management Conference with Magistrate Judge Larry M. Boyle, to occur by August 1, 2011. The Court believed the parties would benefit from a VCMC, which is designed to encourage the parties to meet informally and "identify areas of agreement, clarify and focus the issues, and encourage the parties to enter procedural and substantive stipulations." Dist. Idaho Loc. Civ. R. 16.1(A)(1). The goals of the conference are to: (1) assist in the reduction of expense and delay; and (2) enhance direct communication between the parties about their claims. (Id.)

In addition to the VCMC deadline, the Court established the following additional deadlines: (1) August 31, 2011, for joinder of parties and amendment of pleadings; (2) October 31, 2011, completion of factual discovery and expert witness discovery; (3) December 31, 2011, for filing dispositive pretrial motions; (4) September 9, 2011, for submission of an ADR Plan;*fn3 and (5) July 24, 2012, for the commencement of a four day jury trial.

Judge Boyle held a VCMC Conference, at which Plaintiffs were represented by counsel appearing both pro bono and for the limited purpose of assisting Plaintiffs, on August 12, 2011.*fn4 According to the minute order, the parties agreed on informal discovery, and adjourned. (Dkt. 113.) Thereafter, Plaintiffs filed a motion on August 19, 2011, both seeking to file a second amended complaint, and thirty days within which to do so, considering the deadline set by the Court was August 31, 2011. (Dkt. 116.) In their motion, Plaintiffs represented that:

The VCMC and the temporary appointment of Pro Bono Counsel, has been extremely important and helpful to the Plaintiffs, in understanding important issues of law and procedure; Consequently, the enlargement of time, if granted by the Court, will allow the Plaintiffs to continue to 1.) correct deficiencies in this instant case; 2.) dismiss Defendants that no longer need to be involved; 3.) offer a reconsideration for mediation and or settlement; and in the alternative introduce defendants that need to be present to defend and explain their interests as to this instant case.

Plaintiffs further represented that Litton, MERS, and Ownit did not oppose the filing of a second amended complaint.

Considering the purpose of a VCMC is to encourage resolution and consolidation of complex issues, the Court found good cause existed and granted Plaintiffs' request to enlarge the period of time to file a second amended complaint. The Court allowed Plaintiffs until Friday, September 30, 2011, within which to file one. (Dkt. 118.) Plaintiffs did not file anything until Monday, October 3, 2011, attaching their proposed Second Amended Complaint to a Motion for Extension of Time to File. (Dkt. 120.) The Motion for Extension sought an additional three days after the deadline, because "Plaintiffs were late and unable to meet the 5 p.m. closing time of the Federal Building" on Friday, September 30, 2011.

On October 5, 2011, Select filed an opposition to the Motion for Extension arguing the extension request should be denied, because: (1) Plaintiffs were previously granted an extension of time; (2) Plaintiffs did not demonstrate excusable neglect; (3) no leave was granted to Plaintiffs to add or join additional parties; and (4) prejudice existed considering the discovery deadline of October 31, 2011, was less than thirty days away, and the litigation had already become protracted. Plaintiffs responded that Defendants were being less than cooperative during discovery, and therefore any prejudice was of their own doing. Relying upon their pro se status, Plaintiffs argued that a three day delay was inconsequential considering they were unable to file their documents by the close of business on Friday.*fn5

The proposed Second Amended Complaint attached to the Motion for Extension is ninety-two pages long, purports to add "U.S. Bank National Association, as Trustee, on Behalf of the Holders of the Credit Suisse First Boston Mortgage Securities Corp.," "Home Equity Pass Through Certificates, Series 2007-1," and LeeAnn Clark as "owner, President and CEO of Discover Lending Group, fka, Discover Mortgage Company," as well as LeeAnn Clark as an individual, as new defendants to this litigation. The proposed Second Amended Complaint also contains "MERSCORP" in addition to MERS as a named party in the caption.

The proposed pleading seeks to significantly alter the claims as plead in both the Complaint and First Amended Complaint. For instance, count one alleging TILA violations is asserted against Ownit, Discover, CSMC Mortgage Backed Trust Series 2007-1, and Select. Count two is for "misrepresentation and concealment and fraud in the factum," and is asserted against Discover, LeeAnn Clark, and Ownit. Count three is for "invalid enforceable endorsement, note and assignment defendant trust is without status as holder in due course and is without standing to foreclose," asserted against U.S. Bank and Home Equity Pass Through Certificates. Count four asserts a claim for "abuse of process; fraudulent [sic] misrepresentation; intentional interference" against Select and as agent for CSMC Series 2007-1 Trust, and against Just Law. Count five is for "unlawful default; fraudulent misrepresentation and intentional malfeasonance [sic]" against MERS, Select, Just Law, and CSMC Trust. The final count, Count six, is for unjust enrichment, asserted against all Defendants except MERS. The proposed Second Amended Complaint was accompanied by two compact discs as well as a voluminous paper exhibit from the Securities and Exchange Commission.

In addition to the pending Motion for Extension of Time, Plaintiffs have filed four motions to compel (Dkt. 119, 123, 125, and 126), a "Motion for Amendment," (Dkt. 123), seeking to allow them to add the additional named parties identified in the proposed Second Amended Complaint, and a motion for entry of default against Discover (Dkt. 95). The Court will first address the Motion for Extension and Motion for Amendment; next the discovery motions; ...

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