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Davis Moreno Construction, Inc. v. Frontier Steel Buildings Corp.

November 9, 2009

DAVIS MORENO CONSTRUCTION, INC., PLAINTIFF,
v.
FRONTIER STEEL BUILDINGS CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Oliver W. Wanger United States District Judge

MEMORANDUM DECISION AND ORDER DENYING PLAINTIFF'S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT WITHOUT PREJUDICE

(Doc. 44)

Plaintiff Davis Moreno Construction, Inc. ("Davis" or "DMCI") moves for leave to file a Second Amended Complaint to name additional defendants:

! NCI Group, Inc., a Nevada corporation dba NCI Building Systems, and MBCI with its principal place of business in Texas; ! Package Industries, Inc., a Massachusetts corporation with its principal place of business in Massachusetts; ! Ramakanto Adhikary, an individual domiciled in Colorado.

Davis asserts that it has independent claims against these third parties and subcontractors to Defendant Frontier Steel Buildings Corporation (hereafter referred to as Frontier). This action concerns a public works project for the Kern Unified School District for the construction of a Records Retention Facility (the Project). Davis submitted a bid and was awarded the prime contract. Davis, a licensed contractor, contracted with subcontractors and suppliers including Frontier as to the job. The proposed Second Amended Complaint alleges that Davis and Frontier entered into a contract "for FRONTIER to provide certain supplies to DMCI for the Project;" that "the contract specifically required in paragraph (3) strict time requirements for the submission and performance of the terms of the DMCI/FRONTIER Contract;" that Frontier is approximately six months late in "the performance of its submittals;" that, on June 16, 2008, Frontier "announced its position was to stop work on the project altogether;" and that Frontier has not performed pursuant to the contract deadlines and has caused significant delays to the Project. The proposed Second Amended Complaint then alleges:

16. DMCI is informed and believes and thereon alleges that contemporaneous with the formation of the DMCI/FRONTIER Contract, FRONTIER entered into a written contract(s) or other contractual or legal relationship(s) with the other defendants in this action.

17. DMCI is informed and believes and thereon alleges, the written contract(s) or other contractual or legal relationship(s) between FRONTIER and the other Defendants: a) were intended to benefit DMCI; b) were formed for the purpose of providing FRONTIER with certain steel materials, steel fabrication, design and related services necessary for FRONTIER's performance of the DMCI/FRONTIER Contract; and c) obligated Defendants to supply FRONTIER with steel related materials and services for DMCI's benefit.

18. DMCI is further informed and believes and thereon alleges the [sic] each of the Defendants made express or implied warranties concerning the merchantability and fitness of the goods and services they were to provide and that these warranties were intended to benefit DMCI and the Project.

19. DMCI is further informed and believes and thereon alleges, that the existence of the Contract(s), the business relationship between FRONTIER and Defendants in connection with this Project as well as related facts and circumstances made it foreseeable to the Defendants that DMCI would be damaged in the event Defendants breached their warranty obligations and/or duty of care associated with its respective performance and imposed by law.

20. DMCI is informed and believes and thereon alleges that the Defendants have breached their warranty obligations in connection with the Project, and failed to meet the applicable standard of care, both of which were intended to benefit DMCI and the Project.

21. As a result of Defendants' breaches of contract, warranty and/or other acts and omissions related to the Project, DMCI has suffered liquidated damages at $1,000 per day for approximately 150 days; anticipated additional liquidated damages at a cost to DMCI at $1,000 per day; extended performance costs at the rate of $600 per day charged directly to DMCI by the project owner; and anticipated additional liquidated damages at a cost to DMCI of $600 per days with possible extended performance costs and other impact costs; as well as extended costs for DMCI to mitigate its damages by contracting with others to perform the Defendants' dues on the Project at an estimated cost fo $70,000.

22. In addition to the foregoing and as a direct and proximate result of the acts and omissions of Defendants' and each of them as alleged herein above, DMCI has suffered, or will suffer, damages by penalties from the Project's owner for extended performance costs and other impact costs by other subcontractors of DMCI; costs for excessive administrative and support activities for failed performance pursuant to the prime contract on the Project; and for recovery of payments previously made to FRONTIER to date. The Proposed Second Amended Complaint adds causes of action against all Defendants for negligence and breach of express and/or implied warranties.

Rule 15(a) of the Federal Rules of Civil Procedure provides that a party may amend its pleadings "by leave of court" and that "leave shall be freely given when justice so requires." Fed.R. Civ.P. 15(a). This rule should be applied with "extreme liberality" in favor of allowing amendments. See Jones v. Bates, 127 F.3d 839, 847 n. 8 (9th Cir. 1997). The Ninth Circuit has also held that a court should consider four factors in determining whether to grant leave to amend. They are (1) undue delay; (2) bad faith; (3) futility of amendment; and (4) prejudice to the opposing party. See United States v. Pend Oreille Pub. Util. Dist. No.1, 926 F.2d 1502, 1511-151212 (9th Cir. 1991) (leave to amend should have been granted in the absence of prejudice and bad faith and where amendment was not frivolous); DCD Programs Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). "These factors, however, are not of equal weight in that delay, by itself, is insufficient to justify denial of leave to amend." DCD Programs, 833 F.2d at 186; see also Jones, 127 F.3d at 847 n.8. "[I]t is the consideration of prejudice to the opposing party that carries the greatest weight... Absent prejudice, or a strong showing of any of the remaining Foman factors, there exists a presumption under Rule 15(a) in favor of granting leave to amend." Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir.2003). "While Fed. R. Civ. P. 15(a) encourages leave to amend, district courts need not accommodate futile amendments." Newland v. Dalton, 81 F.3d 904, 907 (9th Cir. 1996) (citing Klamath-Lake Pharm. Ass'n v. Klamath Med. Serv. Bureau, 701 F.2d 1276, 1293 (9th Cir. 1983).

Frontier opposes the motion to amend. Frontier submits the Declaration of Terry Burk, a Frontier employee, who avers that he is personally familiar with ...


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