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Kuschner v. Nationwide Credit

March 30, 2009



Plaintiff Joel Kuschner has brought suit against defendant Nationwide Credit Inc. alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692. Defendant has answered and the court has issued a Scheduling Order in the case. Pending before the court is defendant's motion for leave to file a counterclaim. For the reasons stated herein, the court grants the motion.


Plaintiff filed suit in this court in May 2008. His complaint alleges that defendant has engaged in unlawful debt collection practices in violation of the Fair Debt Collection Practices Act ("FDCPA"). Among other allegedly unlawful conduct, plaintiff alleged that defendant called him several times a day for at least two months, causing the phone to ring so as to annoy plaintiff. According to plaintiff, during some of these calls defendant's agents spoke to plaintiff's mother about the purported debt and sought payment from her. Plaintiff alleges that defendant's conduct constituted harassment and abuse under 15 U.S.C. § 1692d. Plaintiff seeks a declaratory judgment, compensatory and statutory damages, and attorneys' fees. Defendant answered in July 2008, asserting no counterclaims. In August 2008, the court held a scheduling conference, after which a Scheduling Order was issued. The order provides that no amendment of the pleadings will be permitted without a showing of good cause per Johnson v. Mammoth Recreations, Inc., 975 F.2d 604 (9th Cir. 1992). It also provides that the deadline for completion of discovery and for hearing all Law and Motion matters is April 27, 2009.*fn1

Defendant now moves for leave to file a counterclaim under California Penal Code §§ 632, 632.7, and 637.2. According to defendant, in its December 2008 deposition of the plaintiff, defendant became aware that plaintiff recorded certain phone conversations between defendant's employees and himself. As those were purportedly done without consent, defendant alleges that plaintiff's conduct gives rise to an action for damages under the Penal Code.



Federal Rule of Civil Procedure 16(b) provides in part: (b) [The district court] ... shall, after consulting with the attorneys for the parties and any unrepresented parties, by a scheduling conference, ... enter a scheduling order that limits the time, (1) to join other parties and to amend the pleadings; (2) to file and hear motions; and (3) to complete discovery.

See also Johnson v. Mammoth Recreations, Inc., 975 F.2d 604 (9th Cir. 1992). Unlike Rule 15(a)'s liberal amendment policy, Rule 16(b)'s "good cause" standard primarily considers the diligence of the party seeking the amendment. Id.; Engleson v. Burlington Northern R.R. Co., 972 F.2d 1038, 1043 (9th Cir. 1992) (carelessness not a ground for relief under Rule 60(b)); Martella v. Marine Cooks & Stewards Union, 448 F.2d 729, 730 (9th Cir. 1971) (same), cert. denied, 405 U.S. 974, 92 S.Ct. 1191, 31 L.Ed.2d 248 (1972); 6A WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND PROCEDURE § 1522.1 at 231 (2d ed. 1990) ("good cause" means scheduling deadlines cannot be met despite party's diligence). If the moving party was not diligent, the inquiry should end. Zivkovic v. S. California Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002); Johnson, 975 F.2d at 609. Good cause may be found to exist where the moving party shows that it diligently assisted the court with creating a workable scheduling order, that it is unable to comply with the scheduling order's deadlines due to matters that could not have reasonably been foreseen at the time of the issuance of the scheduling order, and that it was diligent in seeking an amendment once it became apparent that the party could not comply with the scheduling order. Jackson v. Laureate, Inc., 186 F.R.D. 605, 6 0 8 ( E . D . C a l . 1999)(citations omitted). If good cause is found, then the court turns to Rule 15 to determine whether the amendment sought should be granted. Johnson, 975 F.2d at 608.


The Federal Rules provide that leave to amend pleadings Ashall be freely given when justice so requires. Fed. R. Civ. P. 15(a); see also DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). The court should be guided by consideration of whether the amendment would prejudice the opposing party, whether it is sought in bad faith, whether the proposed amendment would be futile, and whether the amendment would cause undue delay. Loehr v. Ventura County Community College Dist., 743 F.2d 1310, 1319 (9th Cir. 1984). Prejudice to the opposing party is the most important of these considerations. DCD Programs, 833 F.2d at 186; see also Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990)(citing Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 320, 330-31 (1971)). While delay alone is insufficient to deny amendment, Loehr, 743 F.2d at 1319-20, undue delay should be considered. See Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990)(affirming district court's denial of motion for leave to amend to add new claims made two years into litigation). Leave to amend should not be granted where amendment would be futile. Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988); Kiser v. General Electric Corp., 831 F.2d 423, 428 (3d Cir. 1987), cert. denied, 485 U.S. 906 (1988). The test for futility is identical to the one used when considering the sufficiency of a pleading challenged under Rule 12(b)(6). Miller, 845 F.2d at 214.

Accordingly, a proposed amendment is futile only if no set of facts can be proved under the amendment to the pleading that would constitute a valid and sufficient claim or defense. Id.


Defendant moves for leave to amend its pleadings to assert a counterclaim based on facts that it contends it learned in December 2008. Defendant argues that the counterclaim should be permitted because it arises from the same transaction or occurrence as the facts on which plaintiff's ...

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