United States District Court, N.D. Illinois, Eastern Division
July 20, 2004.
CANALES JOSE INES MARQUEZ and MARIA S. MARQUEZ, Plaintiffs,
NEW CENTURY MORTGAGE CORPORATION; TAMAYO FINANCIAL SERVICES, INC. PRESIDENTIAL TITLE, INC.; JUAN TAMAYO, JR.; JOSE TAMAYO; LUIS TAMAYO; and DOES 1-5, Defendants.
The opinion of the court was delivered by: BLANCHE MANNING, District Judge
MEMORANDUM AND ORDER
Plaintiffs Canales Jose Ines Marquez and Maria S. Marquez
brought a three-count Complaint against a mortgage lender, a
mortgage broker, and related parties. Counts I and II alleged
individual and class violations of the Truth in Lending Act,
15 U.S.C. § 1601 et seq. ("TILA") and Regulation Z,
12 C.F.R. § 226, against New Century Mortgage Corporation ("New Century") and
the John Doe defendants. Count III alleged violations of the
Illinois Consumer Fraud Act, 815 ILCS 505/2 et seq., against
all of the named defendants. The court granted New Century's
Motion to Dismiss Counts I, II, and III, including the portions
of the Complaint which purported to state a claim on behalf of a
class. The court then declined to exercise supplemental
jurisdiction over the remaining state law claims under
28 U.S.C. § 1367. Before this court is the plaintiffs' Motion for
Reconsideration pursuant to Federal Rule of Civil Procedure 59(e)
and plaintiffs' Motion for Leave to Amend the Complaint pursuant to
II. MOTION FOR RECONSIDERATION
Motions under Rule 59(e) serve the limited function of allowing
the court to correct manifest errors of law or fact or consider
newly discovered material evidence. See Neal v. Newspaper
Holdings, Inc., 349 F.3d 363, 368 (7th Cir. 2003); Oto v.
Metropolitan Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000)
(manifest error is wholesale disregard, misapplication, or
failure to recognize controlling precedent). In other words,
Rule 59(e) does not allow a party the opportunity to undo its own
failures or present new evidence or arguments that should have
been presented earlier. See Moro v. Shell Oil Co., 91 F.3d 872,
876 (7th Cir. 1996). Whether to grant a Rule 59(e) motion "is
entrusted to the sound judgment of the district court." Matter
of Prince, 85 F.3d 314, 324 (7th Cir. 1996).
For purposes of this order, the court will presume familiarity
with its prior decision granting the motion to dismiss. Here, the
plaintiffs argue that the court erred by: (1) using the Chicago
Title insurance rate when calculating the tolerance for accuracy
under TILA; (2) calculating the rescission tolerance at the
motion to dismiss stage; and (3) subtracting the $285 settlement
fee when determining the rescission tolerance. The court will
address each argument in turn.
A. Chicago Title Insurance Rate
First, the plaintiffs argue that this court erred by using the
Chicago Title insurance rate of $349.50 as a "reasonable" rate
under 12 C.F.R. § 226.4(c)(7). They contend that they did not
allege that this was a reasonable and bona fide amount. Instead,
they claim that they "merely included Chicago Title's quote to
show that the amount defendants charged was much greater, and thus not bona fide or reasonable."
The court finds plaintiffs' argument disingenuous. In the
Complaint, the plaintiffs alleged: "Chicago Title, a much larger
and more substantial company, quotes a basic rate of $466.60 for
the save coverage. (Exhibit G) Furthermore, it has a
refinancing rate of about 75% of the basic rate." (Compl. ¶ 20).
Later in the Complaint, the plaintiffs refer to the Chicago Title
rate: "A fee for title insurance paid to an entity related to the
mortgage broker and nearly twice the fee quoted by a company with
greater ability to pay is not `bona fide and reasonable in
amount' and not excluded from the finance charge. On the
contrary, it is a disguised broker fee and thus a finance
charge." (Compl. ¶ 30). If the plaintiffs did not want the court
to use the Chicago Title insurance rate as a benchmark, why did
they bring it to the court's attention by alleging the rate in
their Complaint? The plaintiffs' illogical argument simply does
not satisfy the Rule 59(e) standard.
B. Rescission Tolerance Determination
Based on the premise that the plaintiffs did not invite the
court to use the Chicago Title rate to calculate the rescission
tolerance, the plaintiffs claim that this court erred by
calculating the rescission tolerance on a Rule 12(b)(6) motion.
First, the court unequivocally rejects the plaintiffs' claim that
they included the Chicago Title insurance rate merely to show
that New Century's rate was much greater. Second, courts in this
district have expressly applied and calculated the rescission
tolerance in Rule 12(b)(6) and Rule 12(c) motions. See, e.g.,
Scott v. Indymac Bank, 03 C 6489, 2004 WL 422654, at *2 (N.D.
Ill. Feb. 3, 2004); Quinn v. Ameriquest Mortgage Co., 03 C
5059, 2004 WL 316408, at *3-4 (N.D. Ill. Jan. 26, 2004); Walker
v. Gateway Fin. Corp., 286 F. Supp.2d 965, 967 (N.D.Ill. 2003).
Further, the plaintiffs' argument that this court erred by calculating the rescission tolerance
without "the reception of evidence" is simply incorrect. The
court based its calculations on materials provided by the
plaintiffs, including the mortgage documents that were attached
as exhibits to their Complaint. As such, plaintiffs' argument
C. Settlement Fees
Finally, the plaintiffs argue that the court erred by
subtracting the cost of settlement fees when calculating the
tolerance for accuracy. They also contend that such a calculation
was not appropriate at the motion to dismiss stage of the
proceedings. Plaintiffs are merely rehashing the same arguments
made in their memorandum opposing New Century's motion to
dismiss. See Oto, 224 F.3d at 606 (Rule 59 motions not vehicle
to reargue rejected motions). In any event, even if the $285 was
not subtracted from charges, the alleged understatement was still
in the permissible range of the tolerance for accuracy. See
12 C.F.R. § 226.23(g)(1).
In sum, because the plaintiffs have failed to establish that
this court disregarded, misapplied, or failed to recognize
controlling precedent or facts or that there is newly discovered
material evidence, this court, in its discretion, denies the
plaintiffs' Motion for Reconsideration. See Oto, 224 F.3d at
606. One final note, the court reminds plaintiffs' counsel that
district court orders are not "mere first drafts, subject to
revision and reconsideration at a litigant's pleasure", see
Quaker Alloy Casting Co. v. Gulfco Indus., Inc., 123 F.R.D. 282,
288 (N.D.Ill. 1985), and that the undertaking of such a motion
must be done with care and concern for judicial resources.
III. MOTION FOR LEAVE TO AMEND THE COMPLAINT
Federal Rule of Civil Procedure 15(a) provides that leave to
amend a complaint shall be freely given when justice requires.
The right to amend, however, is not absolute. See Brunt v. Service Employees Int'l Union, 284 F.3d 715, 720 (7th Cir.
2002). Before a judgment has been entered, a district court may
deny a plaintiff's leave to amend if there is undue delay, bad
faith, dilatory motive, undue prejudice, or if the amendment is
futile. See Park v. City of Chicago, 297 F.3d 606, 612 (7th
Pursuant to this standard, New Century argues that the
plaintiffs' proposed amendment would be futile. This court,
however, need not decide whether the plaintiffs' mended complaint
would be futile because after a court has entered a final
judgment, "a plaintiff may amend a complaint under 15(a) only
with leave of court after a motion under Rule 59(e) or 60(b) has
been made and the judgment has been set aside or vacated."
Figgie Int'l, Inc. v. Miller, 966 F.2d 1178, 1179 (7th Cir.
1992); see also Sparrow v. Heller, 116 F.3d 204, 205 (7th Cir.
1997) (court can deny plaintiff's motion to amend complaint after
judgment entered on the ground that the plaintiff did not first
move to set aside judgment). Because this court has rejected the
plaintiffs' claims in their Rule 59(e) motion, and thus has not
vacated or set aside the judgment, the court denies the
plaintiffs' request to amend the complaint.
Even if the plaintiffs had established a basis for relief under
Rule 59(e), their motion for leave to amend would still be denied
under Rule 15(a) on the ground of undue delay because they failed
to explain why they did not move to amend the complaint prior to
judgment. See Figgie, 966 F.2d at 1181. Here, the plaintiffs'
amended complaint contains additional allegations that were known
to the plaintiffs before the judgment was entered, yet the
plaintiffs give no explanation as to why they did not allege
these facts in the first instance. (See Amend. Compl. ¶ 21).
Thus, the plaintiffs' attempt to amend the allegations
constitutes undue delay and possible prejudice to the defendants.
See id. In essence, the plaintiffs are attempting to cure the
deficiencies of their Complaint by removing the Chicago Title
insurance rate information and alleging that the fees charged
were not "bona fide" after this court highlighted the Complaint's
deficiencies when granting the motion to dismiss. "Trying to
change the rules when the game seems to be going badly is not a
tactic that district judges are obliged to facilitate." Archer
Daniels Midland Co. v. Hartford Fire Ins. Co., 243 F.3d 369, 374
(7th Cir. 2001). Therefore, the court, in its discretion, denies
the plaintiffs' Rule 15(a) motion.
For the foregoing reasons, the court denies the plaintiffs'
Motion for Reconsideration [R. 28-1]. The court also denies the
plaintiff's Motion for Leave to Amend the Complaint [R. 28-2].
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