The opinion of the court was delivered by: The Honorable David O. Carter, Judge
Julie Barrera Not Present Courtroom Clerk Court Reporter
ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS: NONE PRESENT NONE PRESENT PROCEEDING (IN CHAMBERS): PLAINTIFF'S MOTION TO ALTER SCHEDULING ORDER AND FOR LEAVE TO FILE SECOND AMENDED COMPLAINT
Before the Court is Plaintiff Neighborhood Assistance Corporation of America's Motion to Alter Scheduling Order and For Leave to File Second Amended Complaint (Dkt. 67), along with Defendants' Opposition (Dkt. 73) and Plaintiff's Reply (Dkt. 75). The Court finds the matter appropriate for decision without oral argument. Fed R. Civ. P. 78; Local R. 7-15. After consideration of all moving papers, the Court GRANTS Plaintiff's Motion.
The underlying facts of this case are well-known to the parties and are summarized in previous orders of this Court. See, e.g., Order Denying Defendants' Motion to Dismiss and Granting Plaintiff's Motion for Preliminary Injunction (Dkt. 41). In brief, Plaintiff (NACA) is a national nonprofit corporation that offers free assistance to homeowners seeking housing counseling and mortgage-related services. Plaintiff brought suit based on allegations that defendant corporation First One Lending and individual defendants John Vescera, Bill Mariner, and Randa El-Farra illegally misled homeowners into believing that First One was affiliated with NACA, then charged homeowners fees for services provided by NACA for free. Pursuant to this Court's Scheduling Order, the deadline for amending pleadings was October 7, 2012. See Scheduling Order (Dkt. 49).
Plaintiff's motion seeks leave to amend its First Amended Complaint (FAC) (Dkt. 53) to add alter ego allegations against Defendant John Vescera. A party seeking to amend a pleading after a date specified in scheduling order "must first show 'good cause' for amendment under Rule 16(b), then, if 'good cause' be shown, the party must demonstrate that amendment was proper under Rule 15." Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 608 (9th Cir. 1992) (citations omitted).
Rule 16(b)'s "good cause" standard "primarily considers the diligence of the party seeking the amendment." Id. at 609("The district court may modify the pretrial schedule 'if it cannot reasonably be met despite the diligence of the party seeking the extension.'") (citing Fed.R.Civ.P. 16 advisory committee's notes (1983 amendment); Harrison Beverage Co. v. Dribeck Importers, Inc., 133 F.R.D. 463, 469 (D.N.J.1990); Amcast Indus. Corp. v. Detrex Corp., 132 F.R.D. 213, 217 (N.D.Ind.1990); 6A Wright, Miller & Kane, Federal Practice and Procedure § 1522.1 at 231 (2d ed. 1990) ("good cause" means scheduling deadlines cannot be met despite party's diligence)).
Here, there is good cause to amend the Court's scheduling order, since Plaintiff only became aware of facts suggesting alter ego liability existed after November 13, 2012, when corporate defendant First One produced bank statements (requested by Plaintiff on June 8, 2012) allegedly showing that individual defendant Vescera was using First One's corporate structure to serve his personal interests and pay his personal debts. See Pl's Mot. at 4-5. Courts have found that seeking to amend a complaint based on facts uncovered during discovery provides good cause to seek leave to See Nucal Foods, Inc. v. Quality Egg LLC, 2012 U.S. Dist. LEXIS 10067 (E.D. Cal. 2012) ("Because plaintiff moves to amend [its] complaint based on facts uncovered during discovery, the court finds that plaintiff has good cause to seek leave to amend. Plaintiff could not have exercised a greater degree of diligence in order to amend at an earlier state in litigation." (internal citations omitted)). It is clear to the Court that the deadline for amending pleadings could not be met "despite the diligence of" Plaintiff, since Plaintiff could only amend the pleading after learning of specific financial facts necessary to suggest that a claim for alter ego liability against Vescera existed. See , 975 F.2d at 609.
Since good cause exists to amend the scheduling order, the Court turns to its Rule 15 analysis. A Rule 15 policy favoring amendments "is applied liberally" by the Ninth Circuit. Johnson, 975 F.2d at 607 (citing Ascon Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir.1989); DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 185-87 (9th Cir.1987)). After responsive pleadings have been filed, as is the case here, permission to amend "should be granted unless amendment would cause prejudice to the opposing party, is sought in bad faith, is futile, or creates undue delay." Id.
Here, the Court finds that none of the Ninth Circuit's grounds for denying leave to amend apply. First, the addition of an alter ego claim would not cause prejudice to the Defendants, since it would not result in significant additional discovery, nor would it affect the scheduled trial date. Because Vescera is already a party to this action, and his profits have always been an issue relevant to the Lanham Act claims against him, an alter ego claim would not expand the ...