The opinion of the court was delivered by: Sheila K. Oberto United States Magistrate Judge
FINDINGS AND RECOMMENDATIONS THAT PLAINTIFFS' MOTION FOR RELIEF BE GRANTED AND THE CASE BE REOPENED (Docket No. 24) OBJECTIONS DUE: 21 days
This Court must determine whether to recommend that judgment in the case of Garcia, et al. v. Allstate Insurance, case no. 1:12-cv-00609-AWI-SKO ("Garcia I") be set aside and the case reopened.
On December 6, 2012, Plaintiffs Efrain Garcia and Ofelia Garcia ("Plaintiffs") filed a response to Defendant Allstate Insurance's ("Defendant") Motion to Dismiss in related case Garcia, et al. v. Allstate Insurance, case no. 1:12-cv-01762-AWI-SKO ("Garcia II"). On December 13, 2012, District Judge Anthony W. Ishii issued an order construing Plaintiffs' response as a Motion for Relief in this action, Garcia I, and referring the matter to Magistrate Judge Sheila K. Oberto to issue Findings and Recommendations on whether relief from judgment is warranted. (Doc. 25.)
For the reasons set forth below, the Court RECOMMENDS that Plaintiffs' Motion for Relief be granted, that judgment in Garcia I be set aside, and that Plaintiffs' be permitted to file a first amended complaint.
On March 14, 2012, Plaintiffs, represented by attorney Joseph Todd Armas ("Armas"), filed a lawsuit in Tulare County Superior Court against Defendant alleging a single cause of action for malicious prosecution. (Garcia I, Doc. 1, pp. 5-7.) On April 17, 2012, Defendant removed the Garcia I action to this Court. (Garcia I, Doc. 1.) Plaintiffs' complaint alleged that in October 2004, Defendant instituted a wrongful subrogation lawsuit against Plaintiffs, which Defendant dismissed in November 2011. (Garcia I, Doc. 1, pp. 5-7.) Plaintiffs' complaint states in relevant part:
Defendant acted without probable cause in bringing the [prior action in] that they did not honestly and reasonabl[y] believe that there were grounds for the action because DMV [Department of Motor Vehicle] records clearly showed that Plaintiffs were not the owners of the vehicle that Defendant was seeking subrogation for. Defendant[,] furthermore, continued to prosecute the action even after Plaintiffs asserted this fact. (Garcia I, Doc. 1, p. 6, ¶ 7.) Plaintiffs allege that Defendant "acted maliciously" in bringing the prior suit due to Defendant's refusal to "dismiss the [prior] lawsuit against Plaintiffs even after Plaintiffs on numerous attempts communicated that they did not own the subject vehicle, and showed sufficient proof of this." (Garcia I, Doc. 1, p. 6, ¶ 8.)
On June 21, 2012, Defendant filed a motion pursuant to California's anti-Strategic Lawsuits Against Public Participation ("anti-SLAPP") statute, California Code of Civil Procedure Section 425.16. (Garcia I, Doc. 13.) Plaintiffs, represented by attorney Armas, did not file an opposition.
On August 17, 2012, Plaintiffs, representing themselves pro se, filed another action in Tulare County Superior Court against Defendant. (Garcia II, Doc. 1, pp. 5-14.) The parties are identical to those in Garcia I. The complaint in Garcia II is on a pre-printed state court form and, while the box for "general negligence" is checked, the title of the first (and only) cause of action is for "Intentional Tort"; Plaintiffs allege that "Defendant Allstate Insurance Company filed a lawsuit against Plaintiffs . . . with full knowledge that Plaintiffs were not liable for the damage caused to their insured . . . who was involved in an auto accident . . . ." (Garcia II, Doc. 1, pp. 10, 11.)
On September 18, 2012, Magistrate Judge Oberto issued Findings and Recommendations ("F&R") in Garcia I that Defendant's anti-SLAPP motion be granted without prejudice to Plaintiffs' ability to amend the complaint. (Garcia I, Doc. 16.) No objections to the F&R were filed, and on October 17, 2012, District Judge Ishii issued an order adopting the F&R and allowing Plaintiffs 21 days to file an amended complaint. (Garcia I, Doc. 18.)
On October 29, 2012, Defendant removed Garcia II, Plaintiffs' pro se action, to this Court, asserting that it was related to Garcia I. (Garcia II, Doc. 1, 2:10-20.) On November 5, 2012, Defendant filed a Motion to Dismiss in Garcia II contending that Garcia II was duplicative of Garcia I. (Garcia II, Doc. 10.)
On November 21, 2012, the Court closed Garcia I and entered judgment in favor of Defendant due to Plaintiffs' failure to file an amended complaint. (Garcia I, Docs. 20, 21.) Plaintiffs were still represented by attorney Armas in Garcia I at the time the case was closed, as Armas had neither filed a request for substitution of counsel nor sought to withdraw from representation. (See generally Garcia I docket.)
On December 3, 2012, Defendant filed a Motion for Attorney's Fees in Garcia I. (Garcia I, Doc. 22.) On December 6, 2012, Plaintiffs filed their opposition to Defendant's Motion to Dismiss in Garcia II, and on December 10, 2012, Defendant filed its reply. (Garcia II, Docs. 12, 13.)
On December 13, 2012, District Judge Ishii issued an order in Garcia II (Doc. 16 (also docketed in Garcia I as Doc. 25)), finding that the complaints in Garcia I and Garcia II were impermissibly duplicative with identical parties. (Garcia II, Doc. 16, 3:27-28.) The order noted that Garcia I alleged a malicious prosecution claim and, while the precise cause of action in Garcia II was not clear, "[n]evertheless, the two cases appear to infringe on the same rights of Plaintiffs[;] it appears that substantially the same evidence would be used in . . . both cases, it appears that the rights established in one case would impair or destroy the rights in the other, and the two cases share the same nucleus of facts." (Garcia II, Doc. 16, 4:3-6.) Accordingly, the Court dismissed Garcia II, noting that "[g]iven the considerable work that has already occurred in Garcia I, and the fact there is a pending motion in that case, the Court sees no utility in maintaining [Garcia II]." (Garcia II, Doc. 16, 4:11-13.)
The Court also ordered further proceedings in Garcia I, finding that "Plaintiffs' opposition [to the Motion to Dismiss in Garcia II] suggests that they were abandoned by their attorney in Garcia I. Plaintiffs' opposition indicates that they were never properly informed about the consequences of filing a substitution of attorney, that the substitution was never filed, or that Garcia I had been removed." (Garcia II, Doc. 16, 5:20-23.) Further, it appeared that Plaintiffs were not aware of Defendant's anti-SLAPP motion or the 21-day deadline to file an amended complaint. (Garcia II, Doc. 16, 5:23-24.) As such, District Judge Ishii found that further proceedings were warranted and that possible relief may be justified. (Garcia II, Doc. 16, 5:24-28.) The Court ordered that Plaintiffs' opposition to the Motion to Dismiss in Garcia II be filed as a Motion for Relief in Garcia I, and referred the matter to Magistrate Judge Oberto to issue findings and recommendations on whether relief from judgment is appropriate due to attorney abandonment under Rules 59 and/or 60 of the Federal Rules of Civil Procedure. (Garcia II, Doc. 16, 6:10-13.)
On December 14, 2012, District Judge Ishiidenied without prejudice Defendant's Motion for Attorney's Fees in Garcia I pending the resolution of Plaintiffs' Motion for Relief. (Garcia I, Doc. 26.)
On December 20, 2012, Plaintiffs filed a "Letter to the Court"setting forth issues they had encountered with attorney Armas. The Court notes that Armas neither filed a substitution of counsel form nor a motion seeking to withdraw as counsel, and is thus still attorney of record for Plaintiffs in Garcia I.
District Judge Ishii directed the Magistrate Judge to consider whether Plaintiffs should be granted relief pursuant to Rules 59(e) and 60(b) of the Federal Rules of Civil Procedure, which permit a court to alter, amend, or grant relief from judgment. (Garcia II, Doc. 16, 5:6-8 (citing Fed. Rs. Civ. Pro. 59(e), 60(b); Sch. Dist. No. 1J, Multnomah County, Or. v. ACandS, Inc., 5 F.3d 1255, 1262-63 (9th Cir. 1993)). District Judge Ishii's order indicated that "Plaintiffs' opposition suggests that they were abandoned by their attorney during Garcia I." (Garcia II, Doc. 16, 5:20-21.)
Federal Rule of Civil Procedure 59(e) allows parties to file a motion to alter or amend judgment within 28 days after the entry of judgment. See Fed. R. Civ. P. 59(e). A motion to alter or amend the judgment under Rule 59(e) may be granted where "(1) the district court is presented with newly discovered evidence, (2) the district court committed clear error or made an initial decision that was manifestly unjust, or (3) there is an intervening change in controlling law." Zimmerman v. City of Oakland, 255 F.3d 734, 740 (9th Cir.2001). However, a Rule 59(e) motion is not an opportunity for parties to "raise arguments or present evidence for the first time when they could reasonably have been raised earlier in the litigation." Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000). Rule 59(e) is an "extraordinary remedy, to be used sparingly in the interests of finality and conservation of judicial resources." Id. A judgment is not properly reopened "absent highly unusual circumstances." Weeks v. Bayer, 246 F.3d 1231, 1236 (9th Cir. 2001); see also Weeks v. Fresh-Pic Produce Co., Inc., No. 08CV02058 BTM WVG, 2013 WL 990827, at *3 (S.D. Cal. Mar. 12, 2013); United States v. Uptergrove, No. 1:06-CV-01630-AWIGSA, 2009 WL 840607, at *5 (E.D. Cal. Mar. 26, 2009) objections overruled, 1:06-CV-01630-AWIGSA, 2009 WL 1156506 (E.D. Cal. Apr. 29, 2009).
Pursuant to Federal Rule of Civil Procedure 60(b), the court may relieve a party from a final judgment, order, or proceeding based on: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence; (3) fraud; (4) a void judgment; (5) a satisfied or discharged judgment; or (6) "extraordinary circumstances" which would justify relief. Fed. R. Civ. Pro. 60(b); Sch. Dist. No. 1J, 5 F.3d at 1263; Uptergrove, 2009 WL 840607, at *5. A motion filed under Rule 60(b) allows for relief from a judgment or order and "must be made within a reasonable time -- and ...