Bear, LLC v. Marine Group Boat Works, LLC

          ORDER GRANTING MOTION FOR LEAVE TO FILE AMENDED COMPLAINT

          BARRY TED MOSKOWITZ, CHIEF JUDGE

         Plaintiff Bear, LLC, has filed a motion to file a First Amended Complaint. For the reasons discussed below, Plaintiff’s motion is GRANTED.

         I. FACTUAL BACKGROUND

         This case arises out of fire damage to the motor yacht M/V POLAR BEAR (“POLAR BEAR”), owned by Plaintiff Bear, LLC (“Plaintiff” or “Bear”). The vessel caught on fire when it was undergoing repairs at Defendant Marine Group Boat Works, LLC’s (“Defendant” or “Marine Group”) boat yard in Chula Vista.

         Plaintiff filed suit on December 16, 2014. Plaintiff contends that the fire was caused by hot work repairs that were being performed on the vessel’s steel hull. Plaintiff alleges that Defendant failed to take adequate safety precautions and breached the contract by retaining a third party to perform the hot work repairs. The original complaint asserts the following causes of action: (1) breach of contract; (2) negligence; (3) gross negligence; (4) breach of the implied warranty of workmanlike performance; and (5) bailment.

         In a Case Management Conference Order [Doc. 28] filed on April 27, 2015, Magistrate Judge Major ordered that any motion to amend the pleadings be filed on or before September 30, 2015. Judge Major also ordered that any fact discovery be completed by the parties on or before February 26, 2016, and that all expert discovery be completed on or before June 17, 2016.

         On May 19, 2016, Plaintiff filed the instant motion.

         II. DISCUSSION

         Plaintiff seeks leave to file a First Amended Complaint (“FAC”) that adds additional facts supporting its negligence and gross negligence claims and adds a new cause of action for promissory fraud. As discussed below, the Court finds that there is good cause for modifying the scheduling order and that the amendment of the complaint is appropriate under Fed.R.Civ.P. 15(a).

         A motion for leave to amend that is filed after the cut-off date for amendment set forth in a scheduling order, is governed by Rule 16(b). Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 608-09 (9th Cir. 1992). The scheduling order can be modified for "good cause." Fed.R.Civ.P. 16(b)(4). Under Rule 16(b), the "good cause" standard "primarily considers the diligence of the party seeking the extension." Johnson, 975 F.2d at 609. "Carelessness is not compatible with a finding of diligence and offers no reason for a grant of relief." Id. Although prejudice to the opposing party may provide additional reasons to deny the motion, the focus of the inquiry is upon the moving party's reasons for seeking the modification; if the moving party was not diligent, the inquiry should end. Id.

         If good cause is shown for modifying the scheduling order, the Court must then consider whether amendment is appropriate under the more liberal standard of Rule 15(a). Although the policy of allowing amendment under Rule 15(a) “is to be applied with extreme liberality, ” a court may deny amendment if there is bad faith, undue delay, prejudice to the opposing party, and/or the amendment would be futile. Owens v. Kaiser Foundation Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001).

         The Court finds that there is “good cause” for modifying the scheduling order. Plaintiff seeks to amend the complaint based on facts that it discovered after the motion cut-off date. Plaintiff learned new details about the circumstances surrounding the fire, including facts indicating that Universal Steel Fabrication, Inc. (“USF”) employees inadvertently set fire to insulation while welding and that Defendant failed to obtain a necessary Marine Chemist Certificate before doing the hot repair work, from depositions of (1) Chula Vista fire investigator Margarita Greene on February 18, 2016; (2) marine chemist Leland Pitt on February 22, 2016; and (3) Marine Group’s Health and Safety Compliance employee Francisco Garay-s on February 26, 2016. (Exs. E, F to Wright Decl., Ex. B to Supp. Wright Decl.)

         Plaintiff also learned new facts in support of its promissory fraud claim from depositions of Ryan McAloney, Marine Group’s welding project manager, on February 17, 2016, and Eric Lundeen, Marine Group production manager, on January 20, 2016. McAloney testified that at the time he was asked to provide an estimate for the Marine Group to repair the steel plating on the POLAR BEAR, the Marine Group already knew that it was too busy to do the work itself and would have to use a subcontractor. (Wright Decl. ¶ 32.) Lundeen testified that at the direction of Todd Roberts, President of the Marine Group, he misrepresented the bid from subcontractor USF as $110, 000 (allegedly, the actual bid was $21, 300), and included a bid estimate of $140, 000 if Marine Group did the work itself. (Id. at ¶ 29.) On May 14, 2014, the Captain of the POLAR BEAR, Roger Trafton, told Lundeen that Bear wanted the Marine Group, not a subcontractor, to perform the steel replacement work on the POLAR BEAR. (Id. at ¶ 30.) Lundeen agreed. (Id. at ¶ 31.)

         With respect to the promissory fraud claim, Defendant protests that it produced documents in July 2015, including a purchase order showing that Magana Yachts had been subcontracted for interior protection and foam removal, and a May 14, 2014 quote from Universal Steel, stating that the price to remove and replace damage plating on the POLAR BEAR was $21, 300. But, as ...