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Sims v. Carrington Mortgage Services, L.L.C.

United States Court of Appeals, Fifth Circuit

August 14, 2013

FRANKIE SIMS, on behalf of himself and all others similarly situated;
v.
CARRINGTON MORTGAGE SERVICES, L.L.C., Defendant-Appellee PATSY SIMS, on behalf of herself and all others similarly situated, Plaintiffs-Appellants,

Appeal from the United States District Court for the Northern District of Texas USDC No. 4:12-CV-87

Before OWEN and HAYNES, Circuit Judges, and LEMELLE, District Judge.[*]

PER CURIAM: [**]

Frankie and Patsy Sims (the Simses) appeal the dismissal of their complaint against Carrington Mortgage Services, L.L.C. (CMS), as well as the district court's refusal to allow the Simses to amend their complaint to add additional legal theories and its denial of their motion for reconsideration. We affirm the district court's denial of leave to amend and its denial of the motion for reconsideration. Because the remaining issues in this case raise important and determinative questions of Texas law as to which there are no controlling Supreme Court of Texas precedents, we certify those unresolved questions to the Supreme Court of Texas.

We first address the Simses' motion for leave to amend and their motion for reconsideration. The relevant facts are as follows. The Simses filed a class action lawsuit against CMS in federal district court, alleging that during the course of modifying their home equity loan, CMS violated several provisions of section 50 of Article XVI of the Texas Constitution. CMS filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that the Simses had not stated a claim. After CMS filed its motion to dismiss, the Simses filed a response that included a request for leave to amend their complaint; they did not file a proposed amended complaint as required under the local rules.[1] The Simses later filed a motion for leave to file a sur-reply to argue new legal theories or, in the alternative, for leave to amend their complaint; that motion set forth the Simses' new theory—namely, that CMS had capitalized not only past-due interest but also past-due property taxes and insurance premiums. In its response, CMS pointed out that the Simses' complaint already contemplated that property taxes and insurance premiums were capitalized along with past-due interest and that CMS's motion to dismiss addressed those claims. Noting that it had "considered all of the parties' filings, as well as the applicable legal authorities, " the district court granted the motion and dismissed the Simses' claims with prejudice. The Simses moved for reconsideration, arguing that the district court had not considered their new legal arguments; the district court denied that motion.

The Simses contend that the district court erred in (1) dismissing the case without allowing them to amend their complaint to add additional theories of liability, and (2) refusing to reconsider the dismissal. We hold that the district court did not abuse its discretion in denying the Simses leave to amend or in refusing to reconsider the dismissal.

"We review the district court's denial of a leave to amend for abuse of discretion."[2] The district court never expressly ruled on the Simses' motion to amend; however, we have held that "[t]he denial of a motion by the district court, although not formally expressed, may be implied by the entry of a final judgment or of an order inconsistent with the granting of the relief sought by the motion."[3]Here, the district court's dismissal of the Simses' claims with prejudice was sufficiently inconsistent with the Simses' motion to amend that it constituted an implicit denial of that motion.

Although Federal Rule of Civil Procedure 15(a) "requires a trial court to grant leave to amend freely, and the language of this rule evinces a bias in favor of granting leave to amend, " we have emphasized that whether to grant or deny a motion to amend is "entrusted to the sound discretion of the district court."[4]Because the district court did not formally deny the motion to amend, it did not provide any reasoning.[5] A district court, however, may properly deny a motion to amend when the amendment would be futile.[6] As CMS points out, the Simses' first amended complaint expressly contemplated that other fees and costs may have been capitalized in addition to past-due interest. Additionally, CMS discussed these fees and costs in its brief supporting its motion to dismiss. Therefore, the Simses' allegedly "new" legal theory was already before the district court. The Simses have failed to establish that the district court abused its discretion in denying their motion for leave to amend.

Similarly, we review a district court's denial of a motion to reconsider for abuse of discretion.[7] The Simses argue that the district court should have granted their motion to reconsider for essentially the same reasons that they argue that the court should have granted their motion to amend. For the reasons we have already stated, the district court did not abuse its discretion.

The remaining issues in this case implicate important and determinative, but unresolved, questions of Texas law; we therefore certify those questions to the Supreme Court of Texas.

CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT TO THE SUPREME COURT OF TEXAS, PURSUANT TO ARTICLE 5, SECTION 3-C OF THE TEXAS CONSTITUTION AND RULE 58 OF THE TEXAS RULES OF APPELLATE PROCEDURE.
TO THE SUPREME COURT OF TEXAS AND THE HONORABLE JUSTICES THEREOF:

I. STYLE OF THE CASE

The style of the case is Frankie Sims, on behalf of himself and all others similarly situated, Patsy Sims, on behalf of herself and all others similarly situated, Plaintiffs–Appellants v. Carrington Mortgage Services, L.L.C., Defendant–Appellee, Case No. 12-10978, in the United States Court of Appeals for the Fifth Circuit, on appeal from the judgment of the United States District Court for the Northern District of Texas, Fort Worth Division. Federal jurisdiction is based on diversity of citizenship.[8]

II. STATEMENT OF THE CASE

As we have already noted, this case involves a class action filed by the Simses against CMS, in which the Simses contend that CMS violated various provisions of section 50 of Article XVI of the Texas Constitution. The facts alleged by the Simses are as follows. In 2003, the Simses obtained a home equity loan from CMS for $76, 000. In 2009, the Simses were behind on their payments and entered into an agreement (the 2009 Agreement) with CMS which added approximately $2, 200 of past-due interest and other charges, including fees and unpaid property taxes and insurance premiums, to the principal of the loan, leading to a new balance of $74, 345.50. At that time, the Simses' ...


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