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United States, For the Use and Benefit of: Technica LLC v. Carolina Casualty Insurance Company; Candelaria Corporation; Otay Group

May 14, 2012

UNITED STATES, FOR THE USE AND BENEFIT OF: TECHNICA LLC,
PLAINTIFF,
v.
CAROLINA CASUALTY INSURANCE COMPANY; CANDELARIA CORPORATION; OTAY GROUP, INC.; AND DOES 1 THROUGH 10, INCLUSIVE, DEFENDANTS



The opinion of the court was delivered by: Marilyn L. Huff, District Judge United States District Court

ORDER DENYING DEFENDANT'S MOTION FOR RECONSIDERATION

Plaintiff filed a complaint against Defendants Carolina Casualty Company ("Carolina Casualty"), Candelaria Casualty Insurance Company ("Candelaria"), and Otay Group, Inc. ("Otay") on September 12, 2008. (Doc. No. 1.) The Court issued a scheduling order on January 27, 2009, setting the deadline to amend pleadings as February 27, 2009. (Doc. No. 19.) Defendant Candelaria filed its motion for leave to file third amended answer and counterclaim on December 22, 2011, almost three years after the deadline to amend pleadings passed. (Doc. No. 124.) Plaintiff objected to Defendant's motion, asserting that it would be prejudiced by the amendment. (Doc. No. 131.) The period for discovery had closed on August 3, 2009. (Doc. No. 19.) The pre-trial conference had been scheduled for March 15, 2012. (Doc. No. 143.) The Court determined that Defendant Candelaria did not demonstrate good cause for leave to amend, required under Rule 16(b), and denied Defendant's motion. (Doc. Nos. 146, 152.)

On April 10, 2012, Defendant Candelaria Corporation filed its motion for reconsideration of the Court's order denying Defendant's motion for leave to file third amended answer and counterclaim. (Doc. No. 157; see Doc. No. 146.) On April 30, 2012, Plaintiff Technica filed its opposition to Defendant's motion. (Doc. No. 162.) On May 7, 2012, Defendant filed its reply. (Doc. No. 164.) The Court held a hearing on the matter on May 14, 2012. Jack Reynolds Leer and James Scott Scheper appeared on behalf of Plaintiff Technica. Attorney Robert J. Berens appeared telephonically on behalf of Defendant Candelaria. For the following reasons, the Court denies Defendant's motion for reconsideration.

Background

Plaintiff/Counterdefendant Technica, LLC's complaint alleged two causes of actions:

(1) a Miller Act, 50 U.S.C. § 3131 et seq., claim on the payment bond against Defendant/Counterclaimant Candelaria Corporation and its payment bond surety, Defendant Carolina Casualty Insurance Company; and (2) a breach of contract claim against Defendant Otay Group, Inc. (Doc. No. 1.) Candelaria was the general contractor on the project. (Doc. Nos. 1, 43.) Otay was Candelaria's subcontractor. (Doc. Nos. 1, 43.) Technica entered into an agreement with Otay to provide labor for the project. (Doc. Nos. 1, 43.)

Defendants Candelaria and Carolina Casualty filed an answer on October 23, 2008. (Doc. No. 10.) Defendant Otay filed its answer on October 29, 2008, raising an affirmative defense that Plaintiff was not properly licensed to perform contracting work on the project. (Doc. No. 12, at 4, ll. 11-12.) On November 4, 2008, Defendants Candelaria and Carolina Casualty filed an amended answer, alleging a cross-claim against Defendant Otay by Defendant Candelaria. (Doc. No. 14.) Defendants Candelaria and Otay settled the cross-claim, and Defendant Otay assigned to Defendant Candelaria, for $7500, any and all claims it had, or may acquire, against Plaintiff Technica. (Doc. Nos. 29, 43, 157, 162.) Therefore, on May 4, 2009, Defendant Candelaria, as assignee of Defendant Otay, filed its second amended answer and counterclaim against Plaintiff Technica, alleging that Plaintiff Technica breached its agreement with Defendant Otay by failing to perform work properly and in a timely and efficient manner. (Doc. No. 43.)

On June 29, 2010, the Court granted Defendants Carolina Casualty, Candelaria, and Otay's motion for summary judgment on both of Plaintiff Technica's causes of action in its complaint, finding that Plaintiff Technica was not properly licensed in California and therefore was barred from bringing its claims. (Doc. No. 76; see also Doc. No. 1.) On July 27, 2010, Plaintiff Technica filed a motion to amend or for relief from summary judgment pursuant to Rules 59(e) and 60(b). (Doc. Nos. 86, 90.) On March 21, 2011, the Court denied Plaintiff's motion to amend or for relief from summary judgment. (Doc. No. 107.)

On December 22, 2011, Defendant Candelaria filed a motion for leave to file third amended answer and counterclaim in which Defendant Candelaria requested leave of the Court to amend its counterclaim to assert a claim against Plaintiff Technica under California Business and Professions Code section 7031(b), to disgorge the amounts paid to Technica by Otay. (Doc. No. 124.) Plaintiff Technica opposed the motion. (Doc. No. 137.) On March 13, 2012, the Court denied Defendant Candelaria's motion for leave to file third amended answer and counterclaim. (Doc. No. 146.)

On April 10, 2012, Defendant Candelaria filed a motion to reconsider the Court's order denying Defendant's motion for leave to file third amended answer and counterclaim, citing Federal Rules of Civil Procedure 59(e) and 60(b). (Doc. No. 157.) Plaintiff opposed the motion on April 30, 2012. (Doc. No. 162.) Defendant replied on May 7, 2012. (Doc. No. 164.)

Discussion

Defendant Candelaria's motion requests reconsideration of the Court's order, citing Federal Rules of Civil Procedure 59(e) and 60(b). (Doc. No. 157.) A motion for reconsideration should not be granted unless: (1) the movant presents the court with newly discovered evidence, (2) the court committed clear error or the initial decision was manifestly unjust, or (3) there is an intervening change in controlling law. Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 880 (9th Cir. 2009). Whether to grant or deny a motion for reconsideration is within the sound discretion of the district court. Navajo Nation v. Norris, 331 F.3d 1041, 1046 (9th Cir. 2003) (citing Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000)).

Rule 60(b)(6) permits a court to relieve a party from an order for "any . . . reason that justifies relief." Fed. R. Civ. P. 60(b)(6). Rule 60(b)(6) "is to be used sparingly as an equitable remedy to prevent manifest injustice and is to be utilized only where extraordinary circumstances" exist. Harvest v. Castro, 531 F.3d 737, 749 (9th Cir. 2008). Relief under Rule 60(b) is not a matter of right. See Carter v. United States, 973 F.2d 1479, 1589 (9th Cir. 1992); Price v. Seydel, 961 F.2d 1470, 1473 (9th Cir. 1992). Rather, it rests in the trial court's sound discretion. See Carter, 973 F.2d at 1589; Price, 961 F.2d at 1473. After reviewing the parties' arguments, the Court concludes that Defendant Candelaria has not met its burden to show newly discovered evidence, clear error or manifest injustice, an intervening change in controlling law, or extraordinary circumstances that would warrant altering or amending its order denying Defendant's motion for leave to file third amended answer and counterclaim.

When a case management scheduling order sets a deadline for amending pleadings and the deadline has passed, the liberal policy regarding amendment of pleadings under Rule 15(a) no longer applies. See Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 2000); Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 608 (9th Cir. 1992). To allow the amendment, the scheduling order must be modified, requiring leave of court and a showing of good cause. Coleman, 232 F.3d at 1294; Johnson, 975 F.2d at 608. The good cause ...


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