Rife v. One West Bank, F.S.B. , 873 F.3d 17 ( 2017 )

United States Court of Appeals
For the First Circuit
No. 16-1305
JOHN RIFE,
Plaintiff, Appellant,
v.
ONE WEST BANK, F.S.B.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS,
INC.; INDY MAC MORTGAGE SERVICES; DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee/Master Servicer,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Indira Talwani, U.S. District Judge]
Before
Howard, Chief Judge,
Thompson and Kayatta, Circuit Judges.
Gershon Gulko on brief for appellant.
Marissa I. Delinks, Maura K. McKelvey, and Hinshaw &
Culbertson, LLP on brief for appellees.
September 29, 2017
Per Curiam. In 2015, John Rife filed an 8-count
complaint in state court against the servicers, holders, and
assignees of his mortgage loan which had been executed in 2006.
The pertinent defendants include: One West Bank, F.S.B.; Mortgage
Electronic Registration Systems, Inc. (MERS); Indy Mac Mortgage
Services; and Deutsche Bank National Trust Company, as
trustee/master servicer. The matter was removed to federal court.
The district judge dismissed the entirety of Rife's complaint, and
Rife now seeks redress from this court. Relevant to the sole
appellate issue is count 1, a claim predicated on the Massachusetts
Predatory Home Loan Practices Act (PHLPA), Mass. Gen. Laws ch.
183C. Rife makes two narrow arguments before this court: (1) that
the judge erred in dismissing count 1 as untimely; and (2) that
the judge abused her discretion in dismissing his complaint without
leave to amend. We affirm. Because the parties are familiar with
the underlying facts that gave rise to this dispute, we jump right
into the analysis.
The gist of the lower court's decision to dismiss the
chapter 183C claim was quite simple: that claim was filed outside
the applicable 5-year statute of limitations, see Mass. Gen. Laws
ch. 183C, § 15(b)(1), and, "because the facts underlying Rife's
claim that the loan was predatory were contained in the mortgage
documents themselves," Rife could not avail himself of any tolling
mechanism, equitable or otherwise. Section 15(b)(1) of the PHLPA
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provides that "[a] borrower may bring an original action for a
violation of this chapter in connection with the loan within 5
years of the closing of a high-cost home mortgage[.]" It is
undisputed that the mortgage was executed on May 26, 2006, and
that Rife filed his chapter 183C claim on April 28, 2015--outside
the 5-year window. Therefore, whether count 1 survives a motion
to dismiss depends on whether his claim is subject to tolling. In
other words, we must decide if Rife has "'sketch[ed] a factual
predicate' that would provide a basis for tolling the statute of
limitations." Abdallah v. Bain Capital LLC, 752 F.3d 114, 119 (1st
Cir. 2014) (quoting Trans-Spec Truck Serv., Inc. v. Caterpillar
Inc., 524 F.3d 315, 320 (1st Cir. 2008) (internal quotations
omitted)). "We review de novo the district court's dismissal of
a complaint for failure to state a claim based on statute of
limitations grounds." Santana-Castro v. Toledo-Davila, 579 F.3d
109, 113 (1st Cir. 2009).
In his opening brief, while appropriately laying out the
law on tolling, Rife completely fails to articulate how the facts
in this case support its application. Instead, Rife leaps to a
conclusion that "the trial court committed reversible error based
upon a finding that the claims . . . were time barred." In his
reply brief, however, Rife goes a step further--he claims that the
statute of limitations should be tolled until (on or about) January
11, 2013, when he first discovered that an assignment of his
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mortgage involving MERS back in 2009 had not been properly signed.
It is well-settled that arguments not raised in an opening brief,
but instead raised only in a reply, are deemed waived. Sparkle
Hill, Inc. v. Interstate Mat Corp., 788 F.3d 25, 29 (1st Cir.
2015). However, assuming that the argument was somehow preserved,
it nevertheless lacks merit. In support of his chapter 183C claim
Rife alleges that:
[s]aid Note and Mortgage were the result of predatory
lending in that Indy Mac allowed interest-only payments
for any period of time; a payment option feature where
any one of the payment options was less than the
principal and interest fully amortized over the life of
the loan; the loan did not require full documentation of
income or assets; prepayment penalties that exceeded
section 56 of chapter 183 or applicable federal law; the
loan was underwritten with a loan-to-value ratio at or
above 90 per cent and the ratio of the borrower's debt,
including all housing-related and recurring monthly debt
to the borrower's income exceeded 38 per cent; or, the
loan was underwritten as a component of a loan
transaction in which the combined loan-to-value ratio
exceeded 95 per cent.
Clearly, the heart of count 1 are the terms contained in
the mortgage loan. In Massachusetts, "equitable tolling only
applies 'if a plaintiff exercising reasonable diligence could not
have discovered information essential to the suit.'" Abdallah, 752
F.3d at 120 (citing Bernier v. Upjohn Co., 144 F.3d 178, 180 (1st
Cir. 1998) (citations omitted)). We are not persuaded that the
facts of this case render tolling appropriate where the terms of
the loan themselves were in Rife's possession in 2006, and where,
with the exercise of reasonable diligence, he could have discovered
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and initiated his chapter 183C claim within the 5-year window.
Moreover, to the extent that Rife alleges unlawful practices
outside the terms of the loan themselves (i.e., unlawful
assignments and foreclosure proceedings) he makes no argument as
to why these actions fall within the purview of the PHLPA--a
statute primarily concerned with loan origination and lending
terms. See Mass. Gen. Laws ch. 183C. Ultimately, because Rife
"knew" or "should have known" about the alleged chapter 183C claim
in 2006, we find no reason to toll the applicable statute of
limitations. See Tagliente v. Himmer, 949 F.2d 1, 4 (1st Cir.
1991); see also Trans-Spec Truck Serv., Inc., 524 F.3d at 320
("Where the dates included in the complaint show that the
limitations period has been exceeded and the complaint fails to
'sketch a factual predicate' that would warrant the application of
either a different statute of limitations period or equitable
estoppel, dismissal is appropriate."). Therefore, Rife's chapter
183C claim is time-barred and its dismissal is affirmed.1
1 In his reply brief, Rife also argues that his proposed
second-amended complaint should "relate back" to a previous
complaint he had filed in the Massachusetts Land Court in 2010.
However, because Rife did not raise this argument until his reply
brief, we deem it waived. See Mills v. U.S. Bank, NA, 753 F.3d
47, 54 (1st Cir. 2014). We also treat as waived Rife's undeveloped
argument that the defendants violated Rule 8 of the Federal Rules
of Civil Procedure by first raising the affirmative defense of
statute of limitations "in a dispositive motion, rather than in a
responsive pleading . . . ." See id. (treating as waived
"embryonic arguments").
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We move on to the motion for leave to amend the
complaint, which Rife argues should have been granted before his
case was dismissed. The district court denied his motion on the
basis that Rife's proposed additions could not "save any cause of
action in Rife's [complaint] nor assert a new cause of action that
is viable." The district court reasoned that the proposed
amendment to count 1 "would be futile," as "Rife's allegations as
to why his loan was predatory [did] not save his Chapter 183C cause
of action from the applicable 5-year statute of limitations."
"Although we ordinarily review a district court's denial of leave
to amend for abuse of discretion, we review de novo the district
court's determination of futility." Mills v. U.S. Bank, 753 F.3d
47, 54 (1st Cir. 2014) (citations omitted). Rule 15 of the Federal
Rules of Civil Procedure allows an amendment to a pleading "once
as a matter of course within . . . 21 days after serving it,
or . . . if the pleading is one to which a responsive pleading is
required, 21 days after service of a responsive pleading or 21
days after service of a motion under Rule 12(b), (e), or (f),
whichever is earlier." Fed. R. Civ. P. 15(a)(1). Rule 15 also
provides that "[i]n all other cases, a party may amend its pleading
only with the opposing party's written consent or the court's
leave." Fed. R. Civ. P. 15(a)(2). Leave to amend should be
"freely given . . . when justice so requires[,]" id., absent an
apparent or declared reason such as "futility of amendment." Foman
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v. Davis, 371 U.S. 178, 182 (1962). "'Futility' means that the
complaint, as amended, would fail to state a claim upon which
relief could be granted." Glassman v. Computervision Corp., 90
F.3d 617, 623 (1st Cir. 1996).
Rife argues that because defendants had previously
agreed to his request for an extension of time to file a response
to the defendant's motion to dismiss, "the Rule 15(a) one-time
right to amend [his complaint] should be allowed." Rife further
contends that if he is required to show "good cause" to amend his
complaint, he has done so because the proposed amendment has a
valid chapter 183C claim against defendants. We disagree. Rife's
proposed second-amended complaint raises new allegations which go
solely to the merits of his predatory loan claim such as additional
facts regarding his income at the time the mortgage was executed
in 2006. The proposed amendment does not, however, include any
factual allegations that would either plausibly place count 1
inside the 5-year window or support a tolling argument. The
precise avenue of his proposed amendment (as a one-time right or
with leave of the court) is immaterial because Rife is unable to
dodge the applicable statute of limitations. Accordingly, we agree
with the trial justice's decision to deny Rife leave to amend his
complaint because "the complaint, as amended, would fail to state
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a claim upon which relief could be granted." See Glassman, 90
F.3d at 623.2
Affirmed.
2 In his reply brief, Rife also argues that his sought-after
second amendment to his complaint should have been allowed as any
alleged "futility" of such amendment should have been properly
tested through a motion to dismiss. This argument, too, has been
waived. See Mills, 753 F.3d at 54.
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