The opinion of the court was delivered by: M. James Lorenz United States District Court Judge
ORDER GRANTING MOTION FOR
LEAVE TO FILE FIRST AMENDED COMPLAINT [DOC. 38]
On May 24, 2010, Plaintiff Pershing Pacific West, LLC ("Pershing") commenced this action against Defendants Ferretti Group, USA, Inc.*fn1 ("Ferretti"), MarineMax, Inc., and MTU Detroit Diesel, Inc. ("MTU"), a Delaware corporation doing business as Detroit Diesel Corporation. Thereafter, Ferretti and MarineMax removed the action to this Court. Pershing now moves for leave to file a First Amended Complaint ("FAC") under Federal Rule of Civil Procedure 15(a)(2). Ferretti and MarineMax filed a Statement of Non-Oopposition. However, MTU opposes the motion.
The Court found this motion suitable for determination on the papers submitted and without oral argument. See Civ. L.R. 7.1(d.1). (Doc. 51.) For the following reasons, the Court GRANTS Pershing's motion for leave to file a FAC.
This action arises from Pershing's purchase of a 72' motor yacht, the 2009 Pershing Model 72. (Compl., Ex. A [Doc. 1].) The transaction took place on August 22, 2008, when Pershing and MarineMax entered into a written purchase agreement. (Compl. ¶ 7.) Pershing seeks to recover damages based upon the purchase and sale of the yacht, which was allegedly in defective condition at the time of the sale. It also named Ferretti as manufacturer of the yacht, MarineMax as the seller, and MTU as the manufacturer and warrantor of the yacht's engines. (Compl. ¶¶ 2--4.) Pershing asserts the following claims against MTU: (1) breach of express warranty, (2) breach of implied warranty, and (3) negligence.
On November 22, 2010, United States Magistrate Judge Louisa S. Porter issued an order staying the case after the parties requested the stay so they may pursue active settlement negotiations. (Stay Order 1:21--28 [Doc. 32].) The stay was to remain in place for six months or until the court issued an order, whichever was later. (Id. at 1:24--25.) On May 25, 2011, Judge Porter continued the stay for another 120 days or until the court issued an order, whichever was later. (Continue Stay Order 1:28--2:1 [Doc. 35].) The stay remained in effect until September 30, 2011. (Kessler Decl. ¶ 3 [Doc. 38-2].)
At the time Pershing filed its complaint, its counsel believed that MTU was the manufacturer of the engines. (Kessler Decl. ¶ 2.) However, around November 2010, and during the pendency of the stay, Pershing's counsel discovered that the actual manufacturer and warrantor of the yacht's engines was a Germany-based company called MTU Friedrichshafen GmbH ("MTU GmbH") after reviewing newly issued warranty-related information. (Id. ¶ 4.) Pershing emphasizes that the discovery was made "as a result of an extended warranty issued by Defendant MTU during the stay." (Pl.'s Reply 2:11--15 (emphasis in original).) Though an earlier reference by MTU's general counsel to MTU GmbH did not indicate that it was the manufacturer of the engines, a subsequent open-source investigation indicated that it likely is. (Kessler Decl. ¶ 2.)
On November 3, 2011, the day before Pershing's deadline to file a motion to amend pleadings, its counsel contacted MTU and asked whether it would stipulate to the filing of a FAC. (Kessler Decl. ¶ 5.) No stipulation was received. (Id.) Consequently, Pershing filed this motion seeking leave to file a FAC in order to add MTU GmbH as a defendant in its role as manufacturer of the allegedly defective engines. (Pl.'s Mot. 1:19--23 [Doc. 38].) Though Ferretti and MarineMax filed a Statement of Non-Opposition, MTU opposes the motion.
Rule 15(a) of the Federal Rules of Civil Procedure provides that after a responsive pleading has been served, a party may amend its complaint only with the opposing party's written consent or the court's leave. Fed. R. Civ. P. 15(a). "The court should freely give leave when justice so requires," and apply this policy with "extreme liberality." Id.; DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). However, leave to amend is not to be granted automatically. Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002) (citing Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990)). Granting leave to amend rests in the sound discretion of the district court. Pisciotta v. Teledyne Indus., Inc., 91 F.3d 1326, 1331 (9th Cir. 1996).
The Court considers five factors in assessing a motion for leave to amend: (1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4) futility of the amendment, and (5) whether the plaintiff has previously amended the complaint. Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004); see also Foman v. Davis, 371 U.S. 178, 182 (1962). The party opposing amendment bears the burden of showing any of the factors above. See DCD Programs, 833 F.2d at 186. Of these factors, prejudice to the opposing party carries the greatest weight. Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). However, absent prejudice, a strong showing of the other factors may support denying leave to amend. See id.
"Futility of amendment can, by itself, justify the denial of a motion for leave to amend." alone can justify the denial of a motion to amend." Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). Futility is a measure of the amendment's legal sufficiency. "[A] proposed amendment is futile only if no set of facts can be proved under the amendment . . . that would constitute a valid and sufficient claim or defense." Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988). Thus, the test of futility is identical to the one applied when considering challenges under Rule 12(b)(6) for failure to state a claim upon which relief may be granted. Baker v. Pac. Far E. Lines, Inc., 451 F. Supp. 84, 89 (N.D. Cal. 1978); see Saul v. United States, 928 F.2d 829, 843 (9th Cir. 1991) ("A district court does not err in denying leave to amend . . . where the amended complaint would be subject to dismissal." (citation omitted)).
MTU bases its opposition on three reasons: (1) "nearly two years have passed since this action was filed," (2) "[Pershing] has known that MTU GmbH was the manufacturer and warrantor of the engines at issue for well over a year," and (3) "[Pershing] does not (and cannot) provide a compelling explanation for its delay in filing this motion." (Def.'s Opp'n 2:18--22 [Doc. 47].) Based on these reasons, MTU argues in its scant four-page opposition brief that Pershing fails to justify its "substantial" delay in filing its ...