Court Opinion

ID: 8213035
Source: CourtListenerOpinion
Date Created: 2022-10-11 13:00:41.149+00
Date Added: 2024-06-11T16:42:18.282973
License: Public Domain

UNITED STATES DISTRICT COURT
                              FOR THE DISTRICT OF COLUMBIA

 ERICA N. HAWTHORNE,

                Plaintiff,

                                                          Civil Action No. 20-393 (RDM)
        v.

 RUSHMORE LOAN MANAGEMENT
 SERVICES, LLC,

                Defendant.

                             MEMORANDUM OPINION AND ORDER

       Early in 2020, Plaintiff Erica Hawthorne filed this lawsuit against Defendant Rushmore

Loan Management Services, LLC (“Rushmore”), a mortgage servicer, asserting a variety of

claims related to Rushmore’s alleged misconduct in servicing Hawthorne’s mortgage. Dkt. 1. In

an August 30, 2021 Memorandum Opinion and Order, the Court dismissed most of Hawthorne’s

claims but allowed two to proceed. Hawthorne v. Rushmore Loan Mgmt. Servs., LLC, No. 20-

cv-393, 2021 WL 3856626, at *17 (D.D.C. Aug. 30, 2021). After the close of discovery and

while Rushmore was preparing its summary judgment motion, Hawthorne filed a motion for

leave to amend her complaint, adding new factual allegations and additional claims for relief.

Dkt. 30. Because Hawthorne has been dilatory in seeking leave to amend and because Rushmore

would be prejudiced by the Court permitting Hawthorne to add new claims at this late hour, the

Court will DENY Hawthorne’s motion.

                                      I. BACKGROUND

       Hawthorne is the record owner and borrower for a property in the District of Columbia.

Dkt. 1-1 at 2 (Compl. ¶ 2). As the Court described in its prior Opinion, she alleges that
Rushmore acted improperly in servicing her mortgage on this property and caused her harm in

the process. Hawthorne, 2021 WL 3856626, at *1–5. Two of her claims remain pending at this

point, one brought under the Fair Credit Reporting Act and the other brought under the Fair Debt

Collection Practices Act. Id. at *14–16.

       Discovery commenced in November 2021. Min. Order (Nov. 23, 2021). The Court

extended discovery three times—once on a joint motion by the parties and twice at Hawthorne’s

request. Min. Order (Feb. 9, 2022); Min. Order (Mar. 14, 2022); Min. Order (July 14, 2022). On

July 1, 2022, as part of her final motion to extend discovery, Hawthorne sought leave to amend

her complaint. Dkt. 27 at 2. She explained:

       At the end of April, Plaintiff spoke with Defendant and was informed that her
       escrow account was not being analyzed or managed and incorrect increased
       amounts were being added to her monthly payment without prior notice to her (i.e.
       no monthly statements, no escrow disclosure specifying the change).

       Defendant has resumed negative credit reporting in 2022 despite her making timely
       payments via wire transfer to Defendant.

Id. Hawthorne did not provide a proposed amended complaint. Id. The Court, accordingly,

advised her on July 5, 2022 that “if she seeks leave to amend her complaint, she must file a

motion to do so attaching clean and redlined versions of the of the proposed amended complaint,

as required by the Court’s Standing Order.” Min. Order (July 5, 2022); see also Local Civ. R.

7(i); Dkt. 3 (Standing Order ¶ 7). Hawthorne took no action in response, so the Court denied her

request without prejudice on July 14. Min. Order (July 14, 2022). Still, Hawthorne took no

action, and discovery concluded on August 5, 2022.

       After the close of discovery, the parties appeared before the Court on August 15 for a

pre-motion conference. Min. Entry (Aug. 15, 2022). All agreed that Defendant’s motion for

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summary judgment would be due on or before September 30, 2022. At this conference,

Hawthorne did not indicate any intent to amend her complaint.

       A month later, on September 16, 2022—two weeks before Rushmore’s motion for

summary judgment was due—Hawthorne filed the instant motion, proposing to add to her

complaint new factual allegations in support of her existing claims and two new counts for

violations of regulations implementing the Real Estate Settlement Procedures Act. Dkt. 30; Dkt.

30-1 at 23–28. Much as she did in her July 1 request to amend, Hawthorne asserts that in April

2022 she learned that Rushmore “was continuing to report negatively on her credit report despite

the fact that she had not missed any payments” and that Rushmore “had again failed to conduct

an annual escrow re-analysis of her account to determine the proper amount to increase/decrease

her monthly mortgage payment by.” Dkt. 30 at 1. According to Hawthorne, discovery

“confirmed the[se] . . . allegations.” Id. Hawthorne further states that “no additional evidence or

other discovery [is] needed from the Defendant” and that granting her motion will cause “no

prejudice to the parties.” Id. at 2. Rushmore opposes Hawthorne’s motion, arguing that the

motion comes too late, that granting leave to amend now would prejudice Rushmore, and that

Hawthorne’s motion, “filed . . . two weeks before the commencement of the summary judgment

deadlines and filed without informing the Court when directly asked, borders on bad faith.” Dkt.

31 at 2, 5. Hawthorne has not filed a reply.

       On September 30, 2022 Rushmore filed its motion for summary judgment, addressing

only the remaining claims from Hawthorne’s original complaint. Dkt. 32-1.

                                   II. LEGAL STANDARD

       A plaintiff may amend her complaint once as a matter of right within 21 days of serving

it or within 21 days of being served a responsive pleading. See Fed. R. Civ. P. 15(a)(1).

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Otherwise, a plaintiff must seek consent from the defendant or leave from the court. See Fed. R.

Civ. P. 15(a)(2). In this latter circumstance, the Court should “freely” grant leave to amend

“when justice so requires.” Id. This standard is permissive, but certain factors nevertheless can

provide a basis for denying leave to amend, including “undue delay, bad faith or dilatory motive

on the part of the movant, repeated failure to cure deficiencies by amendments previously

allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and]

futility of amendment.” Foman v. Davis, 371 U.S. 178, 182 (1962). “Although the grant or

denial of leave to amend is committed to a district court’s discretion, it is an abuse of discretion

to deny leave to amend unless there is sufficient reason.” Firestone v. Firestone, 76 F.3d 1205,

1208 (D.C. Cir. 1996). “Under Rule 15(a), the non-movant generally carries the burden in

persuading the court to deny leave to amend.” Petworth Holdings, LLC v. Bowser, 333 F.R.D.

297, 299 (D.D.C. 2019) (internal quotation marks omitted).

                                          III. ANALYSIS

       Rushmore contends that Hawthorne has been unjustifiably dilatory in seeking leave to

amend her complaint and that permitting amendment now would prejudice Rushmore. The

Court agrees.

       First, Hawthorne has been dilatory, unduly delaying her request to amend. “Undue delay

is a valid reason to reject a party’s attempt to add a new theory of liability to a complaint.”

Elkins v. District of Columbia, 690 F.3d 554, 565 (D.C. Cir. 2012). When assessing whether

delay is undue, “the reason for the delay is pertinent,” Petworth Holdings, LLC, 333 F.R.D. at

299, as is “the possibility of any resulting prejudice,” Atchinson v. District of Columbia, 73 F.3d

418, 426 (D.C. Cir. 1996). Accordingly, “[c]ourts that have found an undue delay in filing have

generally confronted cases in which the movant[] failed to promptly allege a claim for which

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they already possessed evidence.” United States ex rel. Westrick v. Second Chance Body Armor,

Inc., 301 F.R.D. 5, 9 (D.D.C. 2013); see also Williamsburg Wax Museum, Inc. v. Historic

Figures, Inc., 810 F.2d 243, 247 (D.C. Cir. 1987) (“[D]enial [of a motion for leave to amend] is

permitted if the amendment would result in delay or undue prejudice to the opposing party, or if

a party has had sufficient opportunity to state a claim and has failed to do so.”); Anderson v.

USAir, Inc., 818 F.2d 49, 57 (D.C. Cir. 1987) (affirming the denial of a motion for leave to

amend made after discovery closed and where the new counts the plaintiff sought to add were

“based on facts known prior to the completion of discovery”); Onyewuchi v. Gonzalez, 267

F.R.D. 417, 420 (D.D.C. 2010) (“Leave to amend is properly denied when the plaintiff was

aware of the information underlying the proposed amendment long before moving for leave to

amend the complaint.”). The decision is ultimately case-specific and depends in significant part

on the parties’ actions. Compare Unique Industries, Inc. v. 965207 Alberta Ltd., 764 F. Supp. 2d

191, 207–08 (D.D.C. 2011) (holding that plaintiff’s delay in moving for leave to amend was

undue where plaintiff discovered new, relevant evidence after discovery, but exhibited a “lack of

diligence in investigating its case,” and summary judgment briefing had already concluded), and

Equity Grp., Ltd. v. Painewebber, Inc., 839 F. Supp. 930, 932 (D.D.C. 1993) (denying leave to

amend where, although a plaintiff learned of new facts after the close of discovery, it “waited

several additional months until after the filing of defendant’s dispositive motion to raise them”),

with 2910 Georgia Avenue LLC v. District of Columbia, 312 F.R.D. 205, 208, 212–15 (D.D.C.

2015) (finding no undue delay where plaintiff indicated an intention to move for leave to amend

at a post-discovery, pre-motion status conference, filed its motion five weeks before motions for

summary judgment were due, and the amendment was based on evidence obtained for the first

time in discovery).

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       The totality of Hawthorne’s conduct justifies a finding of undue delay. Hawthorne

became aware of the factual predicate for her new claims in April of this year, approximately

five months before filing the instant motion. Dkt. 30 at 1. She had ample time to seek leave to

amend her complaint while discovery was still ongoing and before summary judgment briefing

commenced. Moreover, it is clear that by July 1 at the latest Hawthorne had contemplated

seeking leave to amend her complaint in light of the information she learned in April. Dkt. 27 at

2. Yet Hawthorne did nothing for over two months after the Court (1) instructed her that, “if she

seeks leave to amend her complaint, she must file a motion to do so attaching clean and redlined

versions of the proposed amended complaint,” Min. Order (July 5, 2022), and then (2) denied her

“request for leave to amend the complaint . . . without prejudice for failure to comply with Local

Civil Rule 7(i) and the Court’s Standing Order,” Min. Order (July 14, 2022).

       The Court does not know the reason for Hawthorne’s inaction. But if she had questions

about a potential amendment or required additional time to file her motion, she could have raised

those issues at any point. The pre-motion conference provided an obvious opportunity to do so,

or at least to alert the Court and the parties that a new complaint was in the works. This

information might have altered the schedule the Court set for summary judgment briefing, and if

additional discovery was required, the Court could have considered yet another request to extend

the discovery schedule. But Hawthorne gave no indication that she still intended to seek leave to

file an amended complaint, and the parties proceeded accordingly. Yet another month passed

before Hawthorne filed the instant motion, at which point discovery had long since closed and

four of the six weeks that Rushmore was provided to prepare its motion for summary judgment

had elapsed. Hawthorne’s motion for leave to amend does not acknowledge any of this history,

much less attempt to explain it. See Williamsburg Wax Museum, Inc., 810 F.2d at 247 (affirming

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denial of leave to amend and finding it relevant that plaintiff “offered no explanation for its

tardiness”). In light of Hawthorne’s repeated missed opportunities to file a timely motion or to

provide notice of her intentions, the Court finds that her motion is dilatory.

       Second, permitting Hawthorne to amend her complaint would prejudice Rushmore. The

prejudice inquiry dovetails with the undue delay analysis: whether delay is undue depends in part

on “the possibility of any resulting prejudice,” Atchinson, 73 F.3d at 426, and, by the same token,

the amount of prejudice a non-movant reasonably can be expected to accept must be assessed in

light of the strength of the justification for delay. Prejudice takes different forms in this context.

Courts often consider whether a non-moving party would be “deni[ed] . . . the opportunity to

present facts or evidence which would have been offered had the amendment been timely,”

Gilliard v. Gruenberg, 302 F. Supp. 3d 257, 273 (D.D.C. 2018) (internal quotation marks

omitted), but permitting a party to assert new claims after the close of discovery and thereby

“protract the litigation” can also be prejudicial, particularly where the moving party had

knowledge of the facts giving rise to the claims for several months before raising them, Equity

Group, Ltd., 839 F. Supp. at 932; see also Anderson, 818 F.2d at 57; Hollinger-Haye v. Harrison

Western/Franki-Denys, 130 F.R.D. 1, 2 (D.D.C. 1990); Yager v. Carey, 910 F. Supp. 704, 732

(D.D.C. 1994); LaPrade v. Abramson, No. 97-cv-10, 2006 WL 3469532, at *5–6 (D.D.C. Nov.

29, 2006) (“A motion to amend may be denied as prejudicial where a defendant would have to

conduct additional discovery and a plaintiff has filed an untimely motion to amend without

demonstrating a good reason for the delay.”). All the same, “an amendment is not automatically

deemed prejudicial [just because] it causes the non-movant to expend additional resources.”

United State ex rel. Westrick, 301 F.R.D. at 9. The Court’s task is to draw the line where “justice

so requires.” Fed. R. Civ. P. 15(a)(2).

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       Granting Hawthorne’s motion would subject Rushmore to at least one form of prejudice.

Rushmore has represented that it will require additional discovery in order adequately to

investigate and respond to Hawthorne’s new claims. Dkt. 31 at 7. If the Court were to grant

leave to amend but decline to reopen discovery, as Hawthorne requests, Dkt. 30 at 2, Rushmore

would be prejudiced by having to litigate the merits of late-asserted claims without receiving a

fair opportunity (or, indeed, any opportunity) to investigate them, see Gruenberg, 302 F. Supp.

3d at 273. But if the Court were to reopen discovery in order to avoid that prejudice, Rushmore

would face the additional expense and delay of further discovery.

       Under these circumstances, the interests of justice would be disserved by requiring that

Rushmore either litigate claims without adequate discovery or bear the cost and delay of

additional discovery, simply because Hawthorne—without any stated justification—failed to file

her motion in a timely manner. As explained, Hawthorne was aware of the facts giving rise to

her new claims approximately four months before discovery closed. She could have asserted

them then with minimal prejudice to Rushmore. That did not happen. And it did not happen

because of Hawthorne’s own lack of diligence: her failure to comply with the Court’s Local

Rules and the Standing Order entered in this case on her first attempt to amend; failure to

respond to the Court’s minute order reminding her of the requirements of the Standing Order, see

Min. Order (July 5, 2022); failure to take prompt action after the Court subsequently denied her

request for leave to amend “without prejudice” in mid-July, see Min. Order (July 14, 2022);

failure to make a second attempt for months; failure to make any mention of an intent to seek

leave to amend at the pre-motion conference, see Min. Order. (Aug. 15, 2022); and decision to

file a new motion for leave to amend only after Rushmore had almost certainly incurred

significant expense in connection with its summary judgment briefing and without prior notice.

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        That Hawthorne signaled her potential interest in amending her complaint in early July

does not mitigate these concerns, and, indeed, merely highlights her unexplained delay. After

Hawthorne declined to act in response to the Court’s denial of her initial request, it was

reasonable for Rushmore to assume that she had decided not to pursue an amendment. At the

very least, after the pre-motion conference Rushmore had no reason to suspect that the complaint

would be re-opened. Taken together, then, these facts demonstrate that although the prejudice

facing Rushmore is not overwhelming, it is certainly undue. It is therefore sufficient, when

combined with Hawthorne’s unexplained and lengthy delay, to establish that this is one of those

rare cases in which the liberal standard for permitting a party to amend its pleading is not

satisfied.

                                         CONCLUSION

        For the foregoing reasons, Plaintiff’s motion for leave to file an amended complaint, Dkt.

30, is DENIED.

        SO ORDERED.

                                                      /s/ Randolph D. Moss
                                                      RANDOLPH D. MOSS
                                                      United States District Judge

Date: October 10, 2022

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