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Thomas v. Green Tree Loan Servicing, LLC

United States District Court, W.D. Washington

May 23, 2019



          Robert S. Lasnik, United States District Judge

         This matter comes before the Court on plaintiff Michael Thomas's “Motion for Relief from Case Schedule Deadline, for Joinder of Defendant Federal Home Loan Mortgage Corp. and for Leave to Amend Complaint.” Dkt. #77.


         The action pertains to a residence located at 27546 254th Way SE, Maple Valley, WA 98038 (“the Property”). Dkt. #68 (Compl.) at ¶ 1. Plaintiff obtained a loan in the amount of $398, 000 secured against the Property on June 11, 2008 (“the Loan”). Id. at ¶ 4. The Federal Home Loan Mortgage Corporation (“Freddie Mac”) is the owner of the beneficial interest in the Loan. Dkt. #77 at 3. While Flagstar Bank (“Flagstar”) was servicing the Loan, plaintiff fell behind on his mortgage payments and sought a loan modification. Id. at ¶ 5. Flagstar offered him a Trial Period Plan (TPP) under the federal Home Affordable Modification Program (“HAMP”). Id at ¶ 6. Plaintiff claims that he completed all three trial payments on time, but Flagstar revoked the offer in February 2013. Id. at ¶ 7. The trustee ordered a title report for the Property in March 2013, which contained details regarding three payroll federal tax liens recorded against it in connection with a house painting business that plaintiff owned and operated until 2010. Plaintiff was unaware of the existence of these liens. Id. at ¶¶ 8-9. Flagstar initiated foreclosure proceedings in April 2013. Id. at ¶ 10. Servicing of the Loan was transferred to Green Tree Loan Servicing LLC (“Green Tree”) on January 16, 2014. Id. at ¶ 12.

         As part of the Foreclosure Fairness Act (“FFA”) mediation process, see RCW 61.24.163, Green Tree offered plaintiff another TPP. Id. at ¶¶ 11-14. Plaintiff claims that he accepted the offer and made all three payments as agreed. Id. at ¶¶ 15-16. Green Tree obtained a title report for the Property in October 2014, which again showed the three federal tax liens. It did not inform plaintiff of their existence. Id. at ¶¶ 17-18. Green Tree then sent plaintiff a Notice of Default on November 7, 2014, stating that it intended to foreclose on the Property if he did not cure the default. Plaintiff claims that he continued to make payments in December 2014 and January 2015 according to the terms of the loan modification, and Green Tree accepted both payments. Id. at ¶ 19. He was informed of the liens for the first time on January 21, 2015 at his final FFA mediation session. Id. at ¶ 20. Plaintiff filed a complaint against Flagstar1[1] and Green Tree on July 23, 2015. Dkt. #1-1 at 2-8. He asserted three claims for violations of the Washington Consumer Protection Act (“CPA”), see RCW 19.86.010 et seq, breach of contract, and negligent misrepresentation. Id. at 8. On August 17, 2015, Green Tree filed a Notice of Removal with this Court. Dkt. #1 at 1-5; see 28 U.S.C. §§ 1332, 1441(c).

         Plaintiff was deposed on June 29, 2016. Dkt. #80 (Fig Decl.) at ¶ 4. Green Tree's first corporate representative under Federal Rule of Civil Procedure 30(b)(6) was deposed on September 20, 2016. Id. A second corporate representative was deposed on October 11, 2016, with specific regard to Green Tree's application of Freddie Mac's guidelines to plaintiffs loan modification application. Id On November 2, 2016, plaintiff and Green Tree entered into another mediation. Id at ¶ 31. In an “Amended Order Setting Trial Date and Related Dates” dated November 7, 2016, the Court set deadlines of December 2, 2016[2] for joining additional parties and March 15, 2017 for amending pleadings. Dkt. #36 at 1. Plaintiff received another HAMP loan modification offer on February 28, 2017 and made timely payments under it. Id at ¶¶ 31-33. Green Tree approved the loan modification on June 30, 2017. Id at ¶ 34.

         However, on January 29, 2018, Green Tree sent plaintiff a letter stating that there were discrepancies in the 2017 agreement. Id at ¶ 39. It requested plaintiff to execute and return a revised agreement by February 7, 2018. Otherwise, it stated, Green Tree might revoke the modification entirely. Id at ¶ 39. Plaintiffs wife was visiting family in Alaska at the time. Id at ¶ 40. Plaintiff received a statement from Green Tree on February 16, 2018, stating the amount owed according to post-modification terms. Id at ¶ 42. On March 16, 2018, plaintiff sent Green Tree a Notice of Error (“NOE”), see 12 C.F.R § 1024.35, and a Request for Information (“RFI”), see 12 C.F.R § 1024.36. Id at ¶¶ 45-46. He received another statement from Green Tree on March 27, 2018, stating the amount owed according to pre-modification terms. Id at ¶ 47. On April 19, 2018, in response to his NOE and RFI, Green Tree stated that “a recalculation of the proposed totals found an error in the amortization of the account, which would have left a portion of the principal balance unpaid and owed at the maturity date.” Id at ¶ 48. It stated that “because the corrected agreement was not executed and returned to [Green Tree] within the required time-frame, the process of removing the terms of the Home Affordable Modification Agreement began on March 20, 2018 and was completed on March 27, 2018.” Id at ¶ 48.

         Plaintiff filed his Amended Complaint on June 29, 2018, bringing claims of breach of contract, id at ¶¶ 61-65, breach of good faith and fair dealing, id at ¶¶ 66-75, unfair and deceptive acts and practices in violation of the CPA, id at ¶¶ 76-83, negligent misrepresentation, id at ¶¶ 84-90, tort of outrage, id at ¶¶ 91-102, and violations of the Equal Credit Opportunity Act (“ECOA”), id at ¶¶ 103-118, see 15 U.S.C. §§ 1691-1691f (2006). The Amended Complaint also added allegations that Green Tree improperly withdrew the Freddie Mae HAMP loan modification agreement dated February 28, 2017. Id at ¶¶ 31-50; see Fig. Decl. at ¶ 6. On August 30, 2018, plaintiff deposed a Green Tree representative regarding the 2017 loan modification. Plaintiff was deposed on October 19, 2018. Fig. Decl. at ¶ 7.

         On December 17, 2018, the parties filed a “Stipulated Motion to Extend Remaining Case Management Deadlines.” Dkt. #75. This states that the parties had agreed to mediate the matter on December 12, 2018. Id at 1. However, on December 5, 2018, Green Tree's counsel was informed that Green Tree could not meaningfully participate in the mediation due to serious financial constraints. Id at 2. Green Tree is a solely owned subsidiary of Ditech Holding Corporation (“Ditech”) which, “accordingly to its most recent investor's report, [was] in the process of being delisted from the NYSE and [was] considering reentering Chapter 11.” Id The parties stated that if Ditech reentered bankruptcy, “it would most likely involve Green Tree and, therefore, continuing to litigate this matter would be a waste of the parties['] and court's time and resources.” Id They requested that all deadlines be reset to dates 90 days out. Id These were reset in the Court's order dated December 18, 2018. Dkt. #76.

         Plaintiff now requests relief from the deadlines for amending pleadings and joining additional parties, and an “order granting leave to amend the complaint to clarify that [Green Tree] (now [Ditech]) is now and at all times was in fact acting as agent for [Freddie Mac].” Dkt. #77 at 1. Green Tree does not object to being identified as Ditech, [3] but otherwise objects to plaintiff's motions. Dkt. #79 at 1.

         After the filing of this motion, Ditech filed a Chapter 11 petition on February 11, 2019 in the District Court for the Southern District of New York. Dkt. #82; see Dkt #82-1. The Court has since stayed this action as to Green Tree. Dkt. #83; see 11 U.S.C. § 362(a).


         A. Legal Standard

         “The district court is given broad discretion in supervising the pretrial phase of litigation.” Zivkovic v. S. California Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002) (quoting Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607 (9th Cir. 1992)). Other than an amendment as a matter of course, “a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2). However, a case scheduling order may be modified “only for good cause and with the judge's consent.” Fed.R.Civ.P. 16(b)(4). “Although Rule 15 generally provides for liberal amendment to pleadings, once a pretrial scheduling order has been entered pursuant to Rule 16(b)(1), an additional showing of ‘good cause' for amendment must be made if the scheduling order's deadline for amending pleadings has passed.” Paz v. City of Aberdeen, No. C13-5104 RJB, 2013 WL 6163016, at *2 (W.D. Wash. Nov. 25, 2013) (citing Johnson, 975 F.2d at 608). A party seeking to amend a pleading after the date specified in the scheduling order ...

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