Zean v. Wells Fargo Bank, N.A.

Background

Samuel Zean and Eunice Zean sued Wells Fargo Bank, N.A. and other defendants in state court. Wells Fargo removed the case to federal court. The Zeans amended their complaint twice. Their lawyer later withdrew, and the Zeans chose to proceed without lawyers.

The Zeans filed two motions asking for permission to file a proposed third amended complaint. They sought to address alleged problems identified in Wells Fargo’s pending motion to dismiss, add new claims under the Fair Credit Reporting Act and the Real Estate Settlement Procedures Act, add a mortgage-contract claim, and add allegations intended to meet the heightened pleading requirement for fraud-related claims under Federal Rule of Civil Procedure 9(b).

Wells Fargo opposed the motions. It argued that the request was late under the scheduling order, that the Zeans had already amended their complaint twice, and that another amendment would delay the case and unfairly burden Wells Fargo.

Reasons for the Decision

Under Rule 15(a)(2), a court generally should allow an amended pleading when justice requires, but it may deny permission because of undue delay, repeated failure to fix earlier deficiencies, prejudice to the opposing party, or other reasons. Because the Zeans sought amendment after the scheduling-order deadline, they also needed to show good cause—meaning a sufficient reason, generally based on diligence, for changing the deadline.

The scheduling order set December 19, 2017, as the deadline for motions to amend. The Zeans filed their current motion on September 17, 2018, more than eight months after that deadline. The court found that they had not asked to extend the deadline or shown good cause. The court rejected the possible argument that their lawyer’s withdrawal justified the late filing because the court’s temporary stay after the withdrawal did not revive expired deadlines or authorize a third amendment.

The court also rejected the idea that Wells Fargo’s motion to dismiss justified another amendment. The Zeans had already seen Wells Fargo’s earlier dismissal arguments and had amended their complaint afterward. The court stated that it would not allow a potentially ongoing cycle of dismissal motions and amendments. It also found that the Zeans did not need to amend their complaint each time they alleged that Wells Fargo committed another similar credit-reporting or mortgage-contract violation.

The court found a separate lack of diligence concerning the proposed new Real Estate Settlement Procedures Act claim. The motion identified alleged conduct from August 17, 2018, but the proposed complaint did not include a violation based on that conduct. Instead, the proposed claim concerned conduct from July 2016, which the Zeans had known about and had previously addressed.

Alternatively, the court concluded that the Zeans had repeatedly failed to correct pleading deficiencies through earlier amendments. The court also found undue delay because the case had already involved two amended complaints and two motions to dismiss. Allowing a third amended complaint, which was 49 pages long and included hundreds of pages of exhibits, would require Wells Fargo to respond to another complaint and would burden both Wells Fargo and the court.

Disposition

Judge Hildy Bowbeer denied the Zeans’ motions for leave to amend and file a proposed third amended complaint. The order did not decide Wells Fargo’s pending motion to dismiss; the court stated that motion would be addressed in a separate report and recommendation.