Reply Brief Motion to Amend

COMES NOW, Defendants, Nick and Donna Nickerson, reply to the Plaintiff’s response to Defendant’s motion to amend as follows:

 The Nickersons filed their amended pleadings in a timely manner and in accordance with the Court’s scheduling order and it was their understanding that since the scheduling order had a date in which amendments were required to be filed that the Court had granted leave to amend according to M.R.Civ.P. 15(a). The reason the Nickersons submitted their amendments as part of a motion to amend and did not just submit the amended pleadings is because when the Nickersons questioned how to submit the amendments to the Court they were informed they needed to be submitted via a motion. The Nickersons in their efforts of due diligence searched the rules and found no instructions on how to submit the motion or what to put in it so that is why there was nothing in the motion regarding why the amendments are warranted or state what is being amended or claims are being added and why. However, since the Nickersons original answer is a general denial and the Nickersons submitted their amended pleadings, it should be apparent what has been amended and why. The Nickersons have put forth their affirmative defenses and claims and have supported them with facts, reason, law and case law which demonstrates why the amendments are warranted. The Nickersons do not believe nor has HSBC presented any foundation, evidence or facts that demonstrate HSBC is unduly prejudiced by the amendments, so the Nickersons request this Court to grant leave to amend in order for justice to be determined on the merits. M.R.Civ.P. 15(a)(2) states, “The court should freely give leave when justice so requires.”

HSBC has cited three cases as a basis for their objection. First, HSBC cites Kearns v. McIntyre, 173 Mont. 239, 567 P.2d 433 (1997). The Kearns Court stated, “The facts in the present action do not present a case of substantial prejudice incurred by defendants.” It is important to note that in Kearns both the trial court and Supreme Court determined there was no substantial prejudice incurred and the amendments were allowed.

Second, HSBC cites Lindey’s v. Professional Consultants (1990), 244 Mont. 238, 242, 797 P.2d 920, 923. In addition to what HSBC has cited, the Lindey’s court found:

 

“Almost two months after the deadline for amended pleadings, the trial court, in accordance with Rule 15(a), M.R.Civ.P., granted Lindey’s first motion to file an amended complaint. When Lindey’s failed to file the amended complaint within the extended time granted, the trial court was well within its discretion in not granting Lindey’s motions to file second and third amended complaints. Had the trial court granted Lindey’s motion, all defendants would have been substantially prejudiced and the trial unduly delayed…Lindey’s motion was not timely and appears to be the result of Lindey’s procrastination and failure to act diligently.”

The District Court granted leave to amend after the deadline for amended pleadings and only found that Lindey’s motion to amend would cause undue delay and substantial prejudice to the opposing party because Lindey’s failed to file the amended complaint within the extended time granted due to Lindey’s failure to act diligently. In this case, the Nickersons were within the Court’s deadline to amend, and there is absolutely no undue delay, bad faith or dilatory motive on their part, nor has HSBC made any such claims. HSBC claims they would be unduly prejudiced by the Nickersons amending their pleadings. The Nickersons strongly and categorically disagree and refute HSBC’s argument in full detail in the following paragraphs.

Third, HSBC references Peuse v. Malkuch, 275 Mont. 221, 228, 911 P.2d 1153, 1157 (1996) but totally changes and expands the Peuse Court’s ruling by stating “that motions to amend should only be granted in extraordinary circumstances after summary judgment has been filed.” What the Peuse Court actually stated was, “Litigants should be allowed to change legal theories after a motion for summary judgment has been filed only in extraordinary cases.” The Peuse Court specifically limited the amendments to changing legal theories not all amendments as HSBC would lead one to believe. The Nickersons denied all of HSBC’s claims in their first answer and denied them all again in their amended answer and then added their affirmative defenses which provide the factual basis for denying HSBC’s claims and supporting the Nickersons motion for summary judgment. Further, HSBC cannot claim any prejudice because they delayed responding to the Nickersons motion by over two months and they have not been denied the opportunity to respond to the Nickersons claims and defenses. Rather, the Court extended their opportunity by order.

The Peuse case cited by HSBC must be considered within the entire context of the case and, in fact, the Montana Supreme Court clarified the reasoning in the Peuse case in First Sec. Bank v. Ranch Recovery Ltd., 1999 Mont. 43, 976 P.2d 956 (1999) by stating:

 

“While favored, amendment can be inappropriate when the party opposing the amendment would incur substantial prejudice as a result of the amendment. See Peuse, 275 Mont. at 227, 911 P.2d at 1156. In Peuse, the defendants sought leave to amend their answer after a motion for summary judgment was made and more than two years after the original pleadings were filed, to reflect claims of which they had knowledge much earlier. The analysis of whether justice requires leave to amend is essentially an equitable one, and the defendants in Peuse fell victim to the following maxim: Vigilantibus non dormientibus aequitas subvenit, or ‘equity aids the vigilant, not those who sleep on their rights.’” Id.

Regarding the case at hand, the Court went on to say:

 

“In this case, Ranch Recovery sought leave to amend its counterclaim as soon as newly discovered evidence came to light. We conclude that the interests of justice and judicial efficiency favor the amendment of Ranch Recovery’s pleadings so that all claims arising from the same transaction may be resolved in the same action. This policy, which underlies the rules of civil procedure, outweighs any prejudice to the Bank. Therefore, we conclude that the District Court abused its discretion when it failed to allow Ranch Recovery to amend its counterclaim.” Id.

In this same case the Court overturned the District Court’s granting of summary judgment in favor of the Bank. The Court found:

 

“The newly discovered evidence which Ranch Recovery has offered, and should have been allowed to present in support of an amended counterclaim, raises genuine issues of fact regarding First Security’s compliance with the standby agreement upon which it relies for foreclosure against Ranch Recovery’s interest and, therefore, we conclude that summary judgment was inappropriate.” Id.

The First Sec. Bank case has much more in common with this case than does Peuse. The Bank filed for summary judgment prior to discovery and prior to the Defendants filing of their answer and counterclaim in which the Defendants put forth new evidence raising genuine issues of fact regarding the Bank’s claim for foreclosure. The Montana Supreme Court not only granted the defendants their right to amend they overturned the District Courts granting of summary judgment as well. Additionally, the maxim set forth by the Court regarding Peuse is most favorable to the Nickersons because the Nickersons have been vigilant by presenting their amended pleadings in a timely manner and “equity aids the vigilant”.

 In addition, although the Nickersons are fully within the guidelines of the Montana Rules of Civil Procedure, the courts scheduling order and case law which permit them to amend their pleadings, the Nickersons contend this case also contains extraordinary circumstances which further validate and allow their amendment for, among other issues, the following reasons; 1) the Nickersons have been forced to represent themselves in this fraudulent foreclosure action and are not aware of any nuances to the timing of pleadings that are not plainly set forth in the rules of civil procedure and this Court’s scheduling order, 2) the Nickersons amended pleadings are timely and in accordance with the Court’s scheduling order, 3) summary judgment was initiated by the Nickersons regarding standing, fraud and breach of contract, 4) HSBC submitted a cross-motion for summary judgment prior to any discovery being sought which would have demonstrated the facts and provided evidence the Nickersons have put forth in their amended pleadings, 5) the Nickersons have discovered new evidence which is presented in their amended pleadings, 6) this is a case regarding a judicial foreclosure which is a rare occurrence in Montana and Montana law requires the foreclosing entity on a contract action to prove standing, 7) this case is about the Nickersons potentially losing their family home and ranch to an entity that has refused to provide any admissible evidence regarding their claims or proof that they have standing – HSBC alleges in their reply brief regarding summary judgment “A verified pleading is thus the equivalent of an affidavit in support of or opposition to summary judgment.” See HSBC’s Reply Brief page 3. However, M.R.Civ.P. 56(e)(1) states “A supporting or opposing affidavit must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated. If a paper or part of a paper is referred to in an affidavit, a sworn or certified copy must be attached to or served with the affidavit.” HSBC’s claimed verified complaint is signed by their attorney, and thus, does not qualify as a summary judgment supporting affidavit because an attorney has no personal knowledge of the alleged facts, account history or default and is not an affiant competent to testify on the matter stated, and the supporting papers HSBC relies upon to allege default are neither sworn to nor certified, and thus, HSBC submitted no affidavit to validate or substantiate any of their claims or evidence or prove possession of the Nickersons Note, and therefore, as a matter of law, is not entitled to summary judgment, 8) this case is about the Nickersons potentially losing their family home and ranch to an entity that has claimed default as of March 1, 2012 when even their inadmissible account history irrefutably validates the Nickersons March 1, 2012, payment was credited to the account on March 1, 2012, 9) this case was initiated by improper service (process server climbing a locked gate and trespassing upon the Nickersons property in order to serve them), 10) this case was initiated by an entity the Nickersons knew nothing about and had actually never heard of, 11) HSBC has admitted that by contract they are not responsible nor do they have the authority for foreclosing, 12) after initiating this case HSBC has stated to multiple parties they are not foreclosing on the Nickersons property, 13) HSBC solely created any alleged default through prevention of performance and the actions and inactions of their alleged servicer Wells Fargo, 14) HSBC denied their involvement with this litigation, refused to work with the Nickersons to validate or cure any alleged default and failed to mitigate damages, 15) the Nickersons deny the existence of any default based on, among other issues, breach of contract, 16) the Nickersons amended pleadings plead fraud with specificity, 17) the Nickersons amended pleadings include matters that were objected to by HSBC because they were not pled, and 18) objections to pleadings occurred during briefing on summary judgment. M.R.Civ.P. 15(b)(1) “Based on an Objection at Trial. If, at trial, a party objects that evidence is not within the issues raised in the pleadings, the court may permit the pleadings to be amended. The court should freely permit an amendment when doing so will aid in presenting the merits and the objecting party fails to satisfy the court that the evidence would prejudice that party’s action or defense on the merits. The court may grant a continuance to enable the objecting party to meet the evidence.” Clearly, according to this rule, amendments are permitted even during trial so the case may be decided on its merits, and HSBC is well within their rights to reply to the Nickersons answer and should have, as the rules require, responded to the Nickersons amended pleadings within 14 days of being served with them (M.R.Civ.P. 15(a)(3)). The extraordinary circumstances surrounding this case are numerous, and according to the Peuse Court cited by HSBC, the Nickersons amendment should be granted.

In conclusion, the Nickersons contend 1) HSBC has not been prejudiced by any undue delay, 2) HSBC will experience no undue prejudice by allowing the Nickersons amended meritorious defenses and claims to stand because they had both the opportunity and responsibility to respond to them, 3) the Nickersons have demonstrated the extraordinary circumstances surrounding this case, and thus, any new legal theories HSBC claims the Nickersons are presenting should be allowed to stand according to sound discretion, law and the Peuse Court, 4) the Nickersons amended pleading is adding to the facts regarding the Nickersons denial of HSBC’s claims and supporting their motion for summary judgment and their meritorious claims and defenses, 5) the Nickersons have supported their pleadings with new evidence raising genuine issues of fact which according to the First Sec. Bank case reverses the order granting summary judgment to the Bank, 6) it is the judicial policy of Montana that the interests of justice and judicial efficiency favor the amendment of pleadings so that all claims arising from the same transaction may be resolved in the same action. This policy, which underlies the rules of civil procedure, outweighs any prejudice to the Bank, First Sec. Bank, Id., and 7) M.R.Civ.P. 15(b)(1) instructs the trial court to allow the parties to amend the pleadings based on the merits even during the trial if a party objects that the evidence is not within the issues of the pleadings. Further, “Montana follows the general rule that leave to amend pleadings should be freely given when justice so requires (citation omitted). Refusal to permit an amendment offered at an opportune time and which should be made in the furtherance of justice is an abuse of discretion. (citation omitted)” Village Bank v. Cloutier, 249 Mont. 25, 813 P.2d 971 (1991). Given the facts, evidence, rules, statutes and case law in support of the Nickersons amended pleadings the amendment “should be made in the furtherance of justice.” Therefore, as a matter of law, HSBC’s objection to the Nickersons amended pleadings is without merit and must be denied, and the Nickersons amended pleadings should be allowed to stand as pled.