United States District Court, S.D. California
ORDER GRANTING PLAINTIFF'S MOTION FOR LEAVE TO
FILE A SECOND AMENDED COMPLAINT [DKT. NO. 30.]
GONZALO P. CURIEL, UNITED STATES DISTRICT JUDGE
the Court is Plaintiff's motion for leave to file a
second amended complaint. (Dkt. No. 30.) An opposition as
well as a reply were filed. (Dkt. Nos. 32, 33.) Based on the
reasoning below, the Court GRANTS Plaintiff's motion for
leave to file a second amended complaint.
December 9, 2016, Plaintiff Matthias Mueller
(“Plaintiff”) filed a complaint against
Defendants San Diego Entertainment Partners, LLC
(“SDEP”) and Dave Dean (“Dean”)
(collectively “Defendants”) for securities
violations and related causes of action. (Dkt. No. 1.) On May
22, 2016, the Court granted Defendants' motion to dismiss
with leave to amend. (Dkt. No. 14.) On June 4, 2017,
Plaintiff filed a first amended complaint (“FAC”)
alleging violations of § 10b and Rule 10b-5 of the
Securities Exchange Act of 1934, violation of Section 20(a)
of the Securities Exchange Act of 1934, fraudulent
inducement, negligent misrepresentation, California
securities fraud, rescission pursuant to California
Corporations Code section 25501, and violation of
California's Business & Professions Code section 17200
et seq. (Dkt. No. 15, FAC.) On August 7, 2017, the
Court denied Defendant's motion to dismiss. (Dkt. No.
motion, Plaintiff seeks to add John Lyons, one of the two
managing members and officers of Defendant SDEP, who
Plaintiff discovered recently, was highly involved in the
day-to-day management of SDEP and the events leading up to
the filing of this case. Defendant opposes.
A.Legal Standard Under Federal Rule of Civil Procedure
Federal Rule of Civil Procedure (“Rule”) 15(a),
leave to amend a complaint after a responsive pleading may be
allowed by leave of the court and such leave “shall be
freely given when justice so requires.” Fed.R.Civ.P.
15(a). Granting leave to amend rests in the sound discretion
of the trial court. Internat'l Ass'n of
Machinists & Aerospace Workers v. Republic Airlines, 761
F.2d 1386, 1390 (9th Cir. 1985). This discretion must be
guided by the strong federal policy favoring the disposition
of cases on the merits and permitting amendments with
“extreme liberality.” DCD Programs Ltd. v.
Leighton, 833 F.2d 183, 186 (9th Cir. 1987).
Rule 15(a) favors a liberal policy, the nonmoving party bears
the burden of demonstrating why leave to amend should not be
granted. Genentech, Inc. v. Abbott Labs., 127 F.R.D.
529, 530-31 (N.D. Cal. 1989). “Five factors are taken
into account to assess the propriety of a motion for leave to
amend: bad faith, undue delay, prejudice to the opposing
party, futility of amendment, and whether the plaintiff has
previously amended the complaint.” Johnson v.
Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004) (citing
Nunes v. Ashcroft, 348 F.3d 815, 818 (9th Cir.
2003)). These factors are not equally weighted; the
possibility of delay alone, for instance, cannot justify
denial of leave to amend, DCD Programs, 833 F.2d at
186, but when combined with a showing of prejudice, bad
faith, or futility of amendment, leave to amend will likely
be denied. Bowles v. Reade, 198 F.2d 752, 758 (9th
Cir. 1999). Of these considerations, “it is the
consideration of prejudice to the opposing party that carries
the greatest weight.” Eminence Capital, LLC v.
Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (per
curiam). “Absent prejudice, or a strong showing of any
of the remaining [four] factors, there exists a presumption
under Rule 15(a) in favor of granting leave to amend.”
five factors, Defendants solely argue that Plaintiff
unreasonably delayed in seeking to add Lyons. They contend
that Plaintiff always knew the existence of Lyons yet waited
for more than a year to seek leave to add him. Plaintiff
explains that he did not know the extent of Mr. Lyons
involvement in Avalon San Diego until Lyons' deposition
was taken on December 11, 2017. (Dkt. No. 33-1, Sharif Decl.
¶ 3; id., Ex. A.) While Plaintiff was aware
that Lyons was the other managing member of SDEP, all his
communications were with Defendant Dean and he did not have
sufficient facts to assert claims against Lyons.
Court concludes that there has been no undue delay in filing
this motion. As Plaintiff explains, he did not know the
extent of Lyons' involvement until his deposition on
December 11, 2017, and when he did, he promptly filed a
motion for leave to amend which is also within the prescribed
time in the court's scheduling order. Moreover, this case
is still in its early stages. Defendants have not articulated
any reasons why they are prejudiced or that Plaintiff acted
in bad faith. Furthermore, even if there was undue delay,
that alone, is not sufficient to deny a motion to amend.
See DCD Programs, 833 F.2d at 186. Accordingly, the
Court GRANTS Plaintiff's motion for leave to file a
second amended complaint.
on the above, the Court GRANTS Plaintiffs motion for leave to
file a second amended complaint. Plaintiff shall file the
proposed second amended complaint within three (3) days of
the filing of ...