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Avarden Investments, LLC. v. Deutsche Bank National Trust Co.

United States District Court, D. New Hampshire

September 15, 2016

Avarden Investments, LLC
v.
Deutsche Bank National Trust Company Opinion No. 2016 DNH 162

          ORDER

          Landya McCafferty United States District Judge.

         Avarden Investments, LLC brings suit against Deutsche Bank National Trust Company, after Deutsche Bank terminated their real estate purchase agreement. Avarden alleges that Deutsche Bank wrongfully terminated the agreement on the eve of the closing. Deutsche Bank moves to dismiss the lawsuit, arguing that the parties' agreement expressly permits the termination and limits Avarden's relief to the return of its security deposit, which both parties agree Deutsche Bank returned to Avarden shortly following the termination. Avarden objects.

         Avarden has also moved to amend its complaint. Deutsche Bank objects, arguing that the proposed amended complaint is futile for the same reasons presented in its motion to dismiss.

         Procedural Background

         Avarden, proceeding pro se, brought suit in state court against Deutsche Bank, alleging claims for breach of contract, breach of the implied covenant of good faith and fair dealing, violation of New Hampshire's Consumer Protection Act, and fraud. Deutsche Bank removed the suit to this court and moved to dismiss Avarden's suit for failure to state a claim. Avarden then obtained counsel and through that counsel filed an objection to Deutsche Bank's motion to dismiss. Avarden's objection also requested the opportunity to amend its complaint.

         In a procedural order, the court granted Avarden leave to move to amend its complaint and held Deutsche Bank's motion to dismiss in abeyance, pending the outcome of Avarden's anticipated motion to amend. Doc. no. 17. In its order, the court observed that Avarden's request to amend was procedurally improper under the local rules of this district. The court recognized the request, however, based on equitable factors, including that Avarden was pro se when it filed its complaint. The court also required that “Avarden's motion to amend shall comply with the local rules of this district.” Doc. no. 17 at 2.

         In June 2016, Avarden moved to amend its complaint. Doc. no. 18. The proposed amended complaint, which Avarden has filed with its motion, asserts the same claims as those contained in Avarden's original complaint. Deutsche Bank objected to the motion to amend, and Avarden filed a reply to that objection.

         Discussion

         I. Motion to Amend

         Avarden moves to amend its complaint to include “specific details and the particular circumstances constituting the fraud claim.” Doc. no. 18. Deutsche Bank objects. In support, Deutsche Bank contends that Avarden's motion is futile and does not comply with the local rules of this district.

         In response to a motion to amend a complaint, “[t]he court should freely give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2). To decide if justice requires leave to amend, the court considers all of the circumstances to “balance [] pertinent considerations.” Palmer v. Champion Mortg., 465 F.3d 24, 30-31 (1st Cir. 2006). Generally, the motion should be allowed in the absence of “any apparent or declared reason-such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of amendment.” Foman v. Davis, 371 U.S. 178, 182 (1962).

         An amendment is futile if it cannot survive the standard applicable to motions to dismiss under Federal Rule of Civil Procedure 12(b)(6). Platten v. HG Bermuda Exempted Ltd., 437 F.3d 118, 132 (1st Cir. 2006). In considering a motion under Rule 12(b)(6), the court assumes the truth of the properly pleaded facts and takes all reasonable inferences from the facts that support the plaintiff's claims. Mulero-Carrillo v. Roman-Hernandez, 790 F.3d 99, 104 (1st Cir. 2015). Based on the properly pleaded facts, the court determines whether the plaintiff has stated “a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

         A. Factual Background[1]

         Gabrielle Bilc is the former resident and mortgagor of a property located at 95 Jenkins Road in Bedford, New Hampshire (“the property”). In May 2011, Deutsche Bank, who had acquired the mortgage, foreclosed on the property. Deutsche Bank then recorded a foreclosure deed on the property. About two years after recording that deed, Deutsche Bank offered the property for sale at auction.

         At that auction, Avarden made the successful bid. Deutsche Bank and Avarden then entered into a purchase agreement governing the sale of the property. Bilc, serving as Avarden's manager, [2] signed the purchase agreement on Avarden's behalf on July 1. Doc. no. 5-3 at 24. On July 24, JP Morgan Chase Bank, acting as Deutsche Bank's attorney-in-fact, executed the purchase agreement and delivered the executed agreement to Avarden. Avarden alleges that before the execution of the purchase agreement it disclosed to Deutsche Bank that it had agreed to lease the property to Bilc and that Deutsche Bank approved this disclosure in mid-July.

         The purchase agreement set the closing date for the sale as July 31, 2014. In addition, pursuant to the purchase agreement, Avarden was required to pay a $13, 500 earnest money deposit, which it did.

         The purchase agreement contains three provisions that are central to the parties' dispute. First, the cover page of the purchase agreement contains a provision limiting Avarden's remedy to the return of its deposit in the event of a Deutsche Bank breach or default before the sale's closing. That provision provides, in pertinent part:

NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN THIS AGREEMENT, SELLER'S LIABILITY AND BUYER'S SOLE AND EXCLUSIVE REMEDY IN ALL CIRCUMSTANCES AND FOR ALL CLAIMS (AS THE TERM IS DEFINED IN SECTION 9 OF THIS AGRREEMENT . . .) . . . ARISING OUT OF OR RELATING IN ANY WAY TO THIS AGREEMENT OR THE SALE OF THE PROPERTY TO BUYER, INCLUDING . . . SELLER'S BREACH OR TERMINATION OF THIS AGREEMENT . . . SHALL BE LIMITED TO NO MORE THAN . . . A RETURN OF BUYER'S EARNEST MONEY DEPOSIT IF THE SALE TO BUYER DOES NOT CLOSE . . . .

Doc. no. 5-3 at 1.[3] Second, the next page of the purchase agreement contains a provision in which Avarden agreed to “waive[]. . . all rights to file and maintain an action against the seller for specific performance.” Id. at 2.

         Finally, Avarden and Deutsche Bank also executed a “seller's auction addendum” to the purchase agreement. Id. at 28. That addendum contains a termination option granting Deutsche Bank the power to terminate the purchase agreement under certain enumerated circumstances. One of the circumstances in which Deutsche Bank can terminate the agreement is if the buyer is the former mortgagor or is affiliated with the former mortgagor. The termination option provides, in pertinent part, that Deutsche Bank has:

the right, in its sole discretion, to . . . terminate the Agreement if . . . Buyer is the former mortgagor of the Property whose interest was foreclosed . . . or is related to or affiliated in any way with the former mortgagor, and Buyer has not disclosed this fact to Seller in writing ...

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