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Vegas Diamond Properties, LLC, A Nevada v. La Jolla Bank

July 5, 2011

VEGAS DIAMOND PROPERTIES, LLC, A NEVADA LIMITED LIABILITY COMPANY; AND JOHNSON INVESTMENTS, LLC, A NEVADA LIMITED LIABILITY COMPANY, PLAINTIFFS,
v.
LA JOLLA BANK, FSB, A CALIFORNIA CORPORATION; ACTION FORECLOSURE SERVICES, INC., A CALIFORNIA CORPORATION; AND DOES I-X, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Hayes, Judge:

ORDER

The matters before the Court are the Motion for Leave to File First Amended Complaint, filed by Plaintiffs (ECF No. 82); the Motion to Amend Answer, filed by Federal Deposit Insurance Corporation, Receiver for Defendant La Jolla Bank, FSB ("FDIC") (ECF No. 81); and the Objection to Order Denying Joint Motion to Extend Discovery Cutoff, filed the FDIC and Plaintiffs (ECF No. 92).

BACKGROUND

On January 8, 2010, Plaintiffs initiated this action by filing a Complaint in Nevada state court. (ECF No. 1, Ex. A). The Complaint alleges six causes of action: (1) fraudulent concealment against La Jolla Bank; (2) negligence against La Jolla Bank; (3) civil conspiracy against La Jolla Bank; (4) breach of the covenant of good faith and fair dealing against La Jolla Bank; (5) aiding and abetting deceit against La Jolla Bank; and (6) "preliminary injunction against all Defendants." Id. at 15. The Complaint's prayer for relief requests compensatory and punitive damages, attorney's fees and costs, and "an order granting a preliminary injunction against the Defendants immediately restraining Defendants from proceeding on any Trustee's Sale of the Plaintiffs' real properties." Id.

On January 13, 2010, La Jolla Bank removed this action to the United States District Court for the District of Nevada. (ECF No. 1).

On April 21, 2010, the FDIC filed a motion to substitute the FDIC as receiver and to change venue to the Southern District of California. (ECF No. 15). On June 3, 2010, the FDIC's motion was granted, and this action was transferred to this Court. (ECF No. 24).

On October 4, 2010, this Court granted in part and denied in part the Motion to Dismiss the Complaint filed by the FDIC. (ECF No. 44).

On October 18, 2010, the FDIC filed an Answer to the Complaint. (ECF No. 48). On April 8, 2011, Plaintiffs filed the Motion for Leave to File First Amended Complaint. (ECF No. 82). Plaintiffs state that they "seek to amend their Complaint to add additional Defendants and new causes of action, both of which were unknown and/or had not yet transpired as of the date of the filing of the original Complaint...." Id. at 3. The proposed first amended complaint "adds La Jolla Bank's Officers, Frank Warren, Rick Hall, Martin Rodriguez, R.W. Loveless and Lynn Hein whose identities were unknown as at the time of filing of the original Complaint," as well as "non-party, Robert Dyson's accountant/ bookkeeper, Omar Benjamin Wiggins." Id. at 7. The proposed first amended complaint adds causes of action for negligence and equitable relief against Defendant Action Foreclosure Services and La Jolla Bank related to the March 2011 trustee's sale of the real properties at issue. The proposed first amended complaint seeks damages, attorney's fees and "equitable relief in the form of cancellation of the Trustee's Sales of the Properties." (ECF No. 82-1 at 25).

On April 8, 2011, the FDIC filed the Motion to Amend Answer. (ECF No. 81). The FDIC seeks to amend its Answer to add three new affirmative defenses. The FDIC asserts: "[I]f Plaintiffs are granted leave to file the [proposed first amended complaint] where new and equitable relief is sought against [La Jolla Bank], FDIC-Receiver will have to file another responsive pleading and this motion would be rendered moot. This motion [for leave to amend the Answer] was brought as a protective measure in case leave to file the [proposed first amended complaint] is denied." (ECF No. 81-1 at 2).

On May 2, 2011, the FDIC filed an opposition to the Motion to Amend Complaint. (ECF No. 85). The FDIC contends that "leave to amend to assert new claims against [La Jolla Bank] should be denied as futile." Id. at 3.

On June 20, 2011, the FDIC and Plaintiffs filed a Joint Motion to Extend Discovery Cutoff. (ECF No. 90). The FDIC and Plaintiffs "agreed that, until the Motion to Amend is adjudicated, any depositions would be a waste of resources because they could be re-noticed by the new defendants [named in the proposed first amended complaint]." Id. at 2. The FDIC and Plaintiffs requested that "all dates in the Case Management Conference Order be stayed until a new Case Management Conference Order is issued in the instant action, or in the alternative that the discovery cutoff be continued for six (6) months." Id. at 3.

On June 20, 2011, the Magistrate Judge issued an Order denying the Joint Motion to Extend Discovery Cutoff without prejudice. (ECF No. 91). The Magistrate Judge stated:

The Court does not find the proposed addition of new defendants in this case is good cause to extend fact discovery and denies the parties' joint motion without prejudice. If Plaintiffs are permitted to amend the complaint to add the proposed new defendants and those defendants answer, the Court will address any need for additional discovery at that time. Currently it is uncertain whether these parties will be added and what discovery the parties may need on any claims and defenses relating to the proposed new parties. It is also uncertain whether any of the proposed new defendants will seek to depose the same witnesses. When and if it becomes appropriate, the Court will tailor any additional discovery and deadlines to the claims and defenses related to the proposed new defendants. Id. at 1-2.

On June 24, 2011, the FDIC and Plaintiffs filed the Objection to Order Denying Joint Motion to Extend Discovery Cutoff. (ECF No. 92). The FDIC and Plaintiffs contend that the June 20, 2011 Order of the Magistrate Judge is clearly erroneous because it could ...


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