United States District Court, S.D. California
ORDER DENYING DEFENDANTS’ MOTION FOR LEAVE TO
AMEND ANSWER TO THE THIRD AMENDED COMPLAINT [DKT. NO.
GONZALO P. CURIEL UNITED STATES DISTRICT JUDGE
the Court is Defendants’ motion for leave to amend
their answer to the third amended complaint. (Dkt. No. 213.)
An opposition was filed by Plaintiffs and
Defendants filed a reply. (Dkt. Nos. 222, 225.) After
a review of the briefs, supporting documentation, and the
applicable law, the Court DENIES Defendants’ motion for
leave to file an amended answer to the third amended
August 17, 2011, this proposed class action was removed from
state court to this Court. (Dkt. No. 1.) On April 18, 2013,
Plaintiffs Dean Beaver, Laurie Beaver, Steven Adelman, Abram
Aghachi, Dinesh Gauba, Kevin Kenna and Veronica Kenna
(collectively “Plaintiffs”) filed a third amended
putative class action complaint against the developers,
sellers and agents of the Hard Rock Hotel & Condominium
Project. (Dkt. No. 69, TAC.) Defendants filed their answer to
the third amended complaint on June 14, 2013. (Dkt. No. 106.)
multiple motions by both parties, including summary judgment,
the Court granted summary judgment as to Defendants on nearly
all causes of action except the Court granted
Plaintiffs’ motion for summary judgment on the unlawful
prong of the UCL alleging that Defendants failed to disclose
and intentionally concealed purchasers’ right to
rescind their purchase contracts within two years of the date
of signing the contracts in violation of ILSA. On October 29,
2014, the Court, inter alia, sua sponte certified
certain issues in its orders of October 16, 2013, July 2,
2014, and October 29, 2014 for interlocutory appeal. (Dkt.
No. 177.) On March 10, 2016, the Ninth Circuit issued its
opinion affirming the Court’s orders. Beaver v.
Tarsadia Hotels, 816 F.3d 1170 (9th Cir. 2016). The stay
was lifted on April 4, 2016. (Dkt. No. 192.)
10, 2016, Defendants filed a motion seeking leave to amend
their answer to the third amended complaint to assert one
affirmative defense of res judicata/collateral estoppel.
(Dtk. No. 213.) Defendants seek to assert the affirmative
defense of preclusion based on three prior litigation
concerning the purchase and sale of the Hard Rock units that
were dismissed in favor of Defendants. See Salameh v.
Tarsadia Hotels, No. 09cv2739 DMS(CAB), 2011 WL 1044129
(S.D. Cal. Mar. 22, 2011), aff’d, 726 F.3d
1124 (9th Cir. 2013); Bell v. Tarsadia Hotels, Case
No. 37-2010-00096618-CU-BT-CTL (S.D. Super. Ct. 2010);
5th & K Parcel 2 Owners’ Assoc., Inc. v.
Salameh, D066096, 2015 WL 5601555 (Cal.Ct.App. September
23, 2015), review denied on December 16, 2015. Plaintiffs
oppose asserting that liability has already been established
by the Court which was affirmed by the Ninth Circuit. They
also argue that Defendants waived the affirmative defense,
there was undue delay and any amendment would be futile.
Rule of Civil Procedure (“Rule”) 15(a) provides
that leave to amend shall be freely given when justice so
requires and the standard is applied liberally. Fed.R.Civ.P.
15(a). Once a district court has established a deadline for
amended pleadings, and that deadline has passed, Rule 16
applies. Coleman v. Quaker Oats Co., 232 F.3d 1271,
1294 (9th Cir. 2000); Johnson v. Mammoth Recreations,
Inc., 975 F.2d 604, 607-608 (9th Cir.1992). Subsequent
amendments are not allowed without a request to first modify
the scheduling order. At that point, any modification must be
based on a showing of good cause. Coleman v. Quaker Oats
Co., 232 F.3d 1271, 1294 (9th Cir. 2000). Rule 16's
good cause standard is more stringent that the liberal
amendment standard under Rule 15. AmerisourceBergen Corp.
v. Dialysis West, Inc., 465 F.3d 946, 952 (9th Cir.
pretrial scheduling order can only be modified “upon a
showing of good cause.” Fed.R.Civ.P. 16(b). “Good
cause” focuses on the diligence of the party seeking an
amendment. Johnson, 975 F.2d at 609. The pretrial
schedule may be modified “if it cannot reasonably be
met despite the diligence of the party seeking the
extension.” Id. In general, the focus of the
diligence inquiry is on the time between the moving
party’s discovery of new facts and its asking leave of
the court to file an amended pleading. See Zivkovic v. S.
Cal. Edison Corp., 302 F.3d 1080, 1087-88 (9th Cir.
2002). Prejudice to the non-moving party, though not required
under FRCP 16(b), can supply additional reasons to deny a
motion. Coleman, 232 F.3d at 1295. The Ninth Circuit
noted that “[c]arelessness is not compatible with a
finding of diligence and offers no reason for a grant of
relief.” Id.; see Sugita v. Parker,
13cv118-AWI-MJS(PC), 2015 WL 5522078, at *2 (E.D. Cal. Sept.
16, 2015) (counsel’s carelessness or inadvertence fails
to establish “good cause”).
Defendants seek leave to amend their answer to assert the
affirmative defenses of res judicata and collateral estoppel.
(Dkt. No. 213.) Defendants explain that after the case was
remanded back to this Court following the interlocutory
appeal, they re-evaluated the case and discovered that their
answer inadvertently did not plead the affirmative defense of
res judicata/collateral estoppel as to the Salameh
and Bell actions. (Dkt. No. 213-1, Galuppo
Decl.¶¶ 2, 3.) They argue that given the
disposition of the case at this time, they believe that
amending the answer is necessary and appropriate and that the
delay was in part due to the appeal. (Id. ¶ 3.)
They further argue that Plaintiff will not be prejudiced
because they were aware of the potential defense in April
2013 when the parties filed a joint motion for approval of
stipulation regarding members of putative class and reserved
their right to various defenses as outlined in the table
attached as Exhibit A to the Joint Motion. (Dkt. Nos. 72,
73.) The table provides a list of purchasers with numerous
columns concerning their purchase of the Hard Rock unit and
includes a column entitled “subject to Bell or Salameh
Defense.” Therefore, Defendants assert Plaintiff had
notice of these defenses and cannot claim prejudice. As to
the 5th & K action, Defendants argue they could not
assert the affirmative defense until now since it did not
ripen until review was denied on December 16, 2015.
scheduling order was first filed on September 5, 2012 which
set the deadline to amend the pleadings by September 27,
2012. (Dkt. No. 42.) A first amended scheduling order which
did not extend the deadlines for amended pleadings was then
filed on October 10, 2012. (Dkt. No. 50.) Because the
pleading amendment deadline has long passed, Defendants bear
the burden of showing "good cause” to amend the
answer under Rule 16(b). See Zivkovic v. Southern
California Edison Co., 302 F.3d 1080, 1087 (9th Cir.
2002). In their motion, Defendants do not address or satisfy
the “good cause” standard. Instead, they assert
that leave to amend should be freely granted under Rule
15(a). Therefore, the Court DENIES Defendants’ motion
to modify the scheduling order to seek leave to file an
amended answer for failing to demonstrate “good
Court declines to exercise its discretion to modify its Rule
16 Scheduling Order, an analysis under Rule 15(a) is not
necessary. See Sosa v. Airprint Sys., Inc., 133 F.3d
1417, 1419 (11th Cir. 1998) (holding that the Court need not
evaluate Rule 15(a) unless the movant first meets the
“good cause” requirement of Rule 16); MMMT
Holdings Corp. v NSGI Holdings, Inc., No. C12-1570 RSL,
2014 WL 2573290, at *4 (W.D. Wash June 9, 2014) (because
plaintiff cannot satisfy Rule 16(b), it is not necessary to
evaluate the plaintiff’s motion to amend under Rule
even if Defendants satisfied the “good cause”
standard, the Court finds that leave to amend ...