Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_13-cv-00915/USCOURTS-azd-2_13-cv-00915-0/pdf.json

Parties Involved:
Green Tree Servicing LLC
Defendant
Maria Veloz
Plaintiff

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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Maria Veloz, 

Plaintiff, 

v. 

 Green Tree Servicing LLC, 

Defendant.

No. CV-13-00915-PHX-DGC

ORDER 

Plaintiff Maria Veloz has filed a motion to amend her complaint. Doc. 23. The 

motion has been fully briefed. Docs. 23, 24, 27. No party has requested oral argument. 

For the reasons set forth below, the Court will grant Plaintiff’s motion. 

Plaintiff’s original complaint alleged violations of the Real Estate Settlement 

Procedures Act (“RESPA”), 12 U.S.C. § 2605 et seq., and the Arizona Consumer Fraud 

Act (“ACFA”) A.R.S. § 44-1521 et seq. Doc. 23 at 6. Specifically, Plaintiff alleged that 

Defendant, a servicer of mortgage loans to whom the Plaintiff’s Deed of Trust was 

assigned, failed to make timely payments on an insurance policy, resulting in 

cancellation of coverage and subsequent denial of a claim for water damage by Plaintiff. 

Id. 

In her proposed amended complaint, Plaintiff seeks to add a claim of negligence 

against Defendant. Doc. 23 at 12. The additional claim asserts that Defendant’s failure 

to pay the insurance premium on time was a breach of Defendant’s duty to Plaintiff, and 

that Defendant acted negligently and unreasonably in servicing Plaintiff’s loan. Id. 

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I. Rule 15 Standard Regarding Amendments to Pleadings. 

 Under Rule 15, the Court “should freely give leave [to amend pleadings] when 

justice so requires.” Fed. R. Civ. P. 15(a)(2). The policy in favor of leave to amend must 

not only be heeded, see Foman v. Davis, 371 U.S. 178, 182 (1962), it must be applied 

with extreme liberality, see Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 

(9th Cir. 2001). This liberality “is not dependent on whether the amendment will add 

causes of action or parties.” DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th 

Cir. 1987). 

 Motions to amend should be granted unless the district court determines that there 

has been a showing of: (1) undue delay, (2) bad faith or dilatory motives on the part of 

the movant, (3) repeated failure to cure deficiencies by previous amendments, (4) undue 

prejudice to the opposing party, or (5) futility of the proposed amendment. Foman v. 

Davis, 371 U.S. 178, 182 (1962). “Generally, this determination should be performed 

with all inferences in favor of granting the motion.” Griggs v. Pace Am. Grp., Inc., 170 

F.3d 877, 880 (9th Cir. 1999) (citing DCD Programs, 833 F.2d at 186). The party 

opposing amendment bears the burden of showing a reason for denying a motion to 

amend. DCD Programs, 833 F.2d at 187. 

II. Futility. 

Defendant argues that Plaintiff’s proposed amendment is futile. Doc. 24 at 4. A 

motion for leave to amend is futile only “if no set of facts can be proved under the 

amendment to the pleadings that would constitute a valid and sufficient claim or 

defense.” Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988); see also

Gabrielson v. Montgomery Ward & Co., 785 F.2d 762, 766 (9th Cir. 1986). 

Defendant argues that Plaintiff’s new negligence claim is futile because Plaintiff 

has failed to identify any duty owed Plaintiff by Defendant. Doc. 24 at 5. Defendant 

argues that no “special relationship” exists between Plaintiff and Defendant that could 

form the basis of a duty. Id. As a result, Defendant argues that Plaintiff’s amended 

claim cannot meet the requirements of Rule 8 and the pleading standards articulated in 

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Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) and Bell Atlantic Corp. v. Twombly, 550 

U.S. 544, 555 (2007). The absence of a duty would make any claim for negligence 

futile and subject to dismissal. Gipson v. Kasey, 150 P.3d 228, 230 (2007). 

Contractual relationships can give rise to duties of care. Gilbert Tuscany Lender, 

LLC v. Wells Fargo Bank, 307 P.3d 1025, 1028 (App. 2013), citing Gipson, 150 P.3d at 

232. Here, Plaintiff asserts that its Deed of Trust provides that Plaintiff would pay to 

Defendant “Funds” for taxes and insurance. Doc. 23, ¶ 14. This allegation is a 

sufficient statement of a contractual relationship to allege a duty by Defendant to pass 

the funds on to the insurer. 

Additionally, no “special relationship” is required between Plaintiff and 

Defendant to create a duty of care. Gipson, 150 P.3d at 232. Rather, “when public 

policy has supported the existence of a legal obligation, courts have imposed duties for 

the protection of persons with whom no preexisting ‘relationship’ existed.” Id. at 232. 

Statutes may be an appropriate expression of public policy upon which a duty of care 

can be based, id. at 233, and Plaintiff’s claim of negligence in her amended complaint 

rests on the timeliness of Defendant’s insurance premium payments, an obligation 

required under RESPA, 12 U.S.C. § 2605(g) (“the servicer shall make payments from 

the escrow account for such taxes, insurance premiums, and other charges in a timely 

manner as such payments become due”). Plaintiff asserts that Defendant was assigned 

the Deed of Trust to Plaintiff’s residential real estate, that Defendant is a servicer under 

RESPA, and that Defendant failed to make payments on time. Doc. 23 at 7. 

These factual allegations are sufficient to state a claim that Defendant owed a 

duty of care to Plaintiff, and that the duty was breached. Iqbal, 556 U.S. at 678 (noting 

that a complaint must “contain sufficient factual matter, accepted as true,” to allow the 

court to draw reasonable inference that defendant is liable”). 

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 IT IS ORDERED that Plaintiff’s motion to amend (Doc. 23) is granted. 

 Dated this 21st day of November, 2013. 

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