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Diehl v. Money Source, Inc.

United States District Court, S.D. Alabama, Southern Division

June 13, 2018

ANASTASIA P. DIEHL, Plaintiff,
v.
THE MONEY SOURCE, INC., et al., Defendants. ANASTASIA P. DIEHL, Plaintiff,
v.
PAYMAP, INC., Defendant.

          ORDER

          WILLIAM H. STEELE UNITED STATES DISTRICT JUDGE

         These matters come before the Court on plaintiff's Motion for Leave to Amend Complaint and Renewed Motion to Consolidate (doc. 124) filed in Civil Action 17-0125-WS-B, as well as her Notice of Filing of Renewed Motion to Consolidate (doc. 27) filed in Civil Action 18-0017-WS-B. Defendants have filed responses opposing all or substantial portions of the Motion, which submissions are found at doc. 127 in Civil Action 17-0125 and at doc. 33 in Civil Action 18-017. Plaintiff filed a consolidated reply at doc. 129 in Civil Action 17-0125. The Motion is now ripe.

         I. Procedural History.

         A. Civil Action 17-0125 against TMS and LoanCare.

         This litigation arises from servicing and collections activity relating to a residential mortgage loan. Back on March 20, 2017, plaintiff, Anastasia P. Diehl, filed her Complaint in Civil Action 17-0125 against various defendants, including The Money Source, Inc. (“TMS”), LoanCare, LLC (“LoanCare”), and multiple credit reporting agencies. She did not name Paymap, Inc., as a defendant. Pursuant to the Amended Complaint (doc. 58) filed with leave of court on September 13, 2017, Diehl asserts the following claims against TMS and/or LoanCare: (i) violation of the Real Estate Settlement Procedures Act (“RESPA”) by TMS in failing to conduct a reasonable investigation in response to Diehl's notice of servicing error relating to a pair of mortgage payments that were not applied to her loan balance; (ii) breach of the mortgage agreement by TMS in not applying or misapplying mortgage payments for the months of January 2016, March 2016 and August 2016; (iii) fraud by TMS and LoanCare based on LoanCare's alleged misrepresentations regarding the benefits and features of the Equity Accelerator Program (the “EAP”) in which Diehl voluntarily enrolled; (iv) invasion of privacy by TMS and LoanCare relating to TMS's purportedly unreasonable, harassing collection activity directed at Diehl; and (v) violation of the Fair Credit Reporting Act (“FCRA”) by TMS in failing to conduct a reasonable investigation of Diehl's dispute of information TMS reported to credit bureaus.

         Civil Action 17-0125 is governed by a Rule 16(b) Scheduling Order (doc. 40) entered by Magistrate Judge Bivins on June 14, 2017, as amended on November 15, 2017 (see doc. 76). Of critical importance to the instant Motion, the Scheduling Order provides as follows: “Any motion for leave to amend the pleadings or to join other parties must be filed by July 31, 2017.” (Doc. 40, ¶ 5.)[1] The July 31 deadline came and went with no request by Diehl or anyone else to extend the allotted period for amending pleadings and joining additional defendants.[2]

         Civil Action 17-0125 has proceeded normally through the discovery and pretrial phases. Discovery closed on January 17, 2018. Defendants TMS and LoanCare filed multifaceted Motions for Summary Judgment (docs. 86 & 91) on February 28, 2018. Following multiple extensions, briefing finally closed on the Rule 56 Motions on May 11, 2018, with the filing of a consolidated reply brief by TMS and LoanCare. (See doc. 126.) Adjudication of these Motions for Summary Judgment is being made by separate order entered contemporaneously with this Order. The effect of the summary judgment order is to dismiss all of Diehl's claims against LoanCare, but to allow certain causes of action (i.e., the RESPA failure-to-investigate claim, the FCRA failure-to-investigate claim, the claim for breach of contract predicated on misallocation of the August 2016 mortgage payment to late fees first, and the invasion of privacy claim relating to TMS's collection activities) against TMS to proceed to trial. Civil Action 17-0125 is set for Final Pretrial Conference on July 10, 2018, with jury trial to follow during the August 2018 civil term. (See doc. 76.)

         B. Civil Action 18-0017 against Paymap.

         On January 16, 2018, nearly ten months after commencing Civil Action 17-0125 against TMS and LoanCare, Diehl initiated Civil Action 18-0017, a second, related action in this District Court leveled solely against Paymap, Inc. Diehl's Complaint in Civil Action 18-0017 alleged that Paymap managed the EAP (a program marketed by LoanCare) in which Diehl had enrolled, and that Diehl's mortgage payments were routed to Paymap, which then failed to direct such payments to TMS (the servicer of Diehl's mortgage loan) to be credited to her loan balance. Based on these allegations, Diehl advances claims against Paymap for fraud (concerning alleged misrepresentations about the EAP), money had and received, conversion, wantonness, and negligence.

         In stark contrast to Civil Action 17-0125, Civil Action 18-0017 remains in its infancy, procedurally speaking. Following an unsuccessful Rule 12(b)(6) motion directed at Counts Four and Five of the Complaint, Paymap filed its Answer (doc. 25) on May 3, 2018. The parties submitted their Rule 26(f) Report (doc. 30) last month, and a Rule 16(b) Scheduling Order (doc. 35) was entered by Magistrate Judge Bivins earlier this week, fixing a trial date of May 2019. No discovery appears to have taken place.

         C. The March 16 Order.

         On February 27, 2018, Diehl, LoanCare, and TMS filed a Joint Motion to Consolidate and Extend Certain Scheduling Order Deadlines (doc. 84) in Civil Action 17-0125. In that Motion, Diehl, LoanCare and TMS argued that consolidation of Civil Actions 17-0125 and 18-0017 was appropriate because they “both address a common set of facts (the collection and application (or lack thereof) of the mortgage payments) and the legal issues regarding liability for the alleged mismanagement of those payments.” (Doc. 84, ¶ 5.) At no time in this initial Motion to Consolidate did Diehl seek leave to amend her Complaint against TMS and LoanCare to assert further or different causes of action or legal theories against LoanCare.

         For its part, Paymap opposed consolidation based on (i) the stark difference in procedural posture of the two actions; and (ii) the significant differences in factual and legal issues joined, such that the uncommon issues outweighed the common ones. Upon careful analysis and application of Rule 42(a), Fed.R.Civ.P., this Court concluded that Paymap had the better argument. In an Order (doc. 102) entered on March 16, 2018, the undersigned denied the Motion to Consolidate, reasoning as follows:

“[T]he Rule 42(a) balancing test requires a federal district court to weigh the benefits and burdens of the proposed consolidation. … It is true that efficiency gains could be realized by consolidating the two matters, given the overlapping factual and legal issues. It is also true, however, that such efficiency gains would likely be modest, given the limited commonalities between the two cases and the significant areas of factual and legal divergence. Balanced against that consideration are the certainty that [Civil Action 17-0125] would be substantially delayed if consolidation were granted, and the risk that Paymap might incur prejudice as a result of undue pressure to constrict applicable pretrial deadlines as a means of forcing [Civil Action 18-0017] to catch up to [Civil Action 17-0125]. … After weighing the ...

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