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Oldham v. Travelers Inc.

January 6, 2010

LARRY V. OLDHAM, ET AL., PLAINTIFFS,
v.
TRAVELERS INC., ET AL, DEFENDANTS.



The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge

ORDER DENYING PLAINTIFFS' MOTION FOR LEAVE TO FILE AMENDED COMPLAINT

Pending before the Court is Plaintiffs' motion for leave to file an amended complaint. For the reasons set forth below, Plaintiffs' motion is denied.

I. BACKGROUND

Plaintiffs' claims stem from a black toxic mold and bed bug infestation which rendered their apartment uninhabitable. (FAC ¶ 17.) Plaintiffs allege that they became physically ill due to the condition of the apartment and that they suffered economic loss by being forced to move out and find a new residence. (FAC ¶¶ 24-29.) Plaintiffs allege that Defendants Travelers Property Casualty Insurance Company and Standard Fire Insurance Company ("Defendants") wrongfully denied their insurance claim, which then forced Plaintiffs into a settlement with the property management company.

Plaintiffs, acting in pro se, initially filed suit in state court on November 10, 2008. (Doc. 1, Ex. A.) Defendants answered on January 8, 2009. (Doc. 1, Ex. B.) Plaintiffs thereafter sought leave to file an amended complaint. Defendants agreed not to oppose the motion if Plaintiffs dropped their proposed claims under California's unfair competition law. (Pl. Reply, Ex. 5.) Plaintiffs then filed a first amended complaint in state court on April 28, 2009, which included claims for breach of contract and "bad faith." The amended complaint did not include an unfair competition claim. (Doc. 1, Ex. C.) Defendants filed an answer on June 4, 2009. (Doc. 1, Ex. E.)

Thereafter, on June 5, 2009, Defendants removed the case to this Court. (Doc. 1.) Magistrate Judge Brooks issued a scheduling order on July 14, 2009. (Doc. 12.) Plaintiffs filed the instant motion on November 16, 2009. (Doc. 17.) Defendants opposed the motion (Doc. 24), and Plaintiffs filed a reply. (Doc. 26.)

II. DISCUSSION

Initially, the Court notes that according to the scheduling order, all motions to amend had to be filed and heard by December 8, 2009. (Doc. 12 at 2.) Although the hearing date on the instant motion is past the December 8 deadline, part of the delay was due to this Court's calendar. Thus, the Court will address the motion on the merits.

Plaintiffs seek to amend their complaint in two ways: (1) by adding third party defendants Rosemary Raya, Robert Raya, Michael Raya, and Willin Properties; and (2) by adding a claim under California's unfair competition law, California Business and Professions Code section 17200, et seq. ("UCL"). A court should freely grant leave to amend "when justice so requires." Fed. R. Civ. P. 15(a). Four factors are considered when deciding whether leave to amend should be granted: "(1) bad faith on the part of the plaintiffs; (2) undue delay; (3) prejudice to the opposing party; and (4) futility of the proposed amendment." Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 986 (9th Cir. 1999).

A. Bad Faith

Defendants argue Plaintiffs acted in bad faith in connection with their motion to amend because they misrepresented the scope of their proposed amendment. The Court agrees. Prior to filing the subject motion, Plaintiffs contacted Defendants and discussed a possible stipulation regarding the proposed amendment. Defendants agreed not to oppose an amendment to add Willin Properties.

(Zhordania Dec., Ex. B.) Consistent with the parties' discussions, Plaintiffs proposed a "Stipulation to Amend Pleading to Add Claim Against Third Party Defendant." (Pl. Mot. Ex. 1.) While the stipulation is not signed by Defendants, it is accompanied by a letter from Defendants indicating they would not oppose the motion. (Id.) The amended complaint, however, not only adds Willin Properties but also purports to state a claim for unfair competition. Defendants therefore refused to sign the stipulation and opposed the motion. (Zhordania Dec., Ex. C.)

Plaintiffs do not dispute this version of facts. Rather, Plaintiffs argue that the unfair competition claim is not new to Defendants because Plaintiffs tried to add the claim in state court. However, when Plaintiffs sought leave to amend in state court, Defendants informed Plaintiffs they would oppose the motion unless Plaintiffs dropped the unfair competition claim. (Pl. Reply, Ex. 5.) Plaintiffs then filed a first amended complaint without an unfair competition claim. Thus, Plaintiffs knew Defendants would oppose the instant motion if it contained an ...


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