United States District Court, E.D. California
CITY OF WEST SACRAMENTO, CALIFORNIA; and PEOPLE OF THE STATE OF CALIFORNIA, Plaintiffs,
R AND L BUSINESS MANAGEMENT, a California corporation, f/k/a STOCKTON PLATING, INC., d/b/a CAPITOL PLATING, INC., a/k/a CAPITOL PLATING, a/k/a CAPITAL PLATING; CAPITOL PLATING INC., a dissolved California corporation; ESTATE OF GUS MADSACK, DECEASED; ESTATE OF CHARLES A. SCHOTZ a/k/a SHOTTS, DECEASED; ESTATE of E. BIRNEY LELAND, DECEASED; ESTATE OF FRANK E. ROSEN, DECEASED; ESTATE OF UNDINE F. ROSEN, DECEASED; ESTATE of NICK E. SMITH, DECEASED; JOHN CLARK, an individual; ESTATE OF LINDA SCHNEIDER, DECEASED; JUDY GUESS, an individual; JEFFREY A. LYON, an individual; GRACE E. LYON, an individual; THE URBAN FARMBOX LLC, a suspended California limited liability company; and DOES 1-50, inclusive, Defendants.
MEMORANDUM AND ORDER RE: MOTION FOR LEAVE OF COURT TO
AMEND THE PLEADINGS
WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE
the court is defendants R and L Business Management's
(“R&L”) and John Clark's motion for leave
of court to amend their pleadings. (Docket No. 77.) The court
held a hearing on the motion on July 1, 2019.
defendants filed this motion on May 23, 2019 for leave to (1)
add claims against two would-be third-party defendants, the
County of Yolo and Eco Green, LLC; and (2) amend their
answers to the City of West Sacramento's (“the
City”) third amended complaint. Moving defendants
contend that they only recently received documents that
provide a factual basis for claims against these third-party
defendants. Moving defendants seek to amend their answer to
add the affirmative defense that the People of the State of
California (“the People”) are not a real party of
interest to this action.
the court already issued a pretrial scheduling order (Docket
No. 54), moving defendants' ability to amend is governed
by Federal Rule of Civil Procedure 16(b). See Johnson v.
Mammoth Recreations, Inc., 975 F.2d 604, 608 (9th Cir. 1992).
Under Rule 16(b), parties seeking to amend their pleadings
must show good cause. Id. “Rule 16(b)'s
‘good cause' standard primarily considers the
diligence of the part[ies] seeking the amendment.”
Id. at 609.
moving defendants establish good cause, they must also
demonstrate that amendment is proper under Federal Rule of
Civil Procedure 15. Id. at 608. Under Rule 15, this
court may consider factors such as bad faith, undue delay,
prejudice to the opposing party, and the futility of
amendment. See Roth v. Marquez, 942 F.2d 617, 628 (9th Cir.
1991) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).
Amendment to Add Claims Against Third-Party
court finds that moving defendants have shown good cause to
add claims against the two would-be third-party defendants.
Earlier this year, and after the court issued the scheduling
order, R&L received documents in response to a
previously-submitted California Public Records Act request.
(See Decl. of Joseph Salazar (“Salazar Decl.) ¶ 5
(Docket No. 77-1).) R&L then analyzed these documents,
subpoenaed relevant reports, and determined that these
third-party defendants may have contributed to the
contamination at issue in this litigation. (See Id.
¶¶ 6-12.) R&L also spent some time determining
that Yolo County and Eco Green were and are owners of related
properties. (See Decl. of Alec Rishwain (“Rishwain
Decl.”) ¶¶ 3-5 (Docket No. 77-14).)
though R&L received the claim denial letter in response
to its Government Tort Claims Act claim against Yolo County
almost sixty days before filing this motion (see Salazar
Decl. ¶ 10), such a delay is not enough to establish
that these defendants lacked diligence. This is not a case
where defendants waited months or years after they
sufficiently fleshed out the basis for amended pleadings.
Instead, once moving defendants became aware of any possible
claims, they took appropriate efforts to identify the proper
parties and evidence to support such allegations. See
Kuschner v. Nationwide Credit, Inc., 256 F.R.D. 684, 688
(E.D. Cal. 2009) (Karlton, J.) (focusing the “good
cause” inquiry on the moving parties' actions once
they should have been aware of the need for amended
only prejudice the City identifies is the increased scope of
the litigation and some delay. However, adding these
third-party defendants would not substantially change the
scope of this lawsuit. The proposed claims merely ask for a
determination of these would-be defendants' comparative
responsibility for the contamination at issue in the
City's third amended complaint. Therefore, the City would
not be significantly prejudiced by the addition of these
parties. See Hurn v. Ret. Fund Tr. of Plumbing, Heating &
Piping Indus. of S. Cal., 648 F.2d 1252, 1254 (9th Cir. 1981)
(finding no undue prejudice where the operative facts of the
litigation would remain the same). Further, mere delay does
not constitute substantial prejudice. The discovery deadline
is August 10, 2020 (see Docket No. 54 at 3), and the parties
can always seek extensions as necessary.
also argue that granting moving defendants leave to add these
third-party defendants would be futile. However,
“[d]enial of leave to amend on futility grounds alone
is rare.” Owens v. Walgreen Co., No. 2:12-cv-419 WBS
JFM, 2012 WL 2359996, at *2 (E.D. Cal. June 20, 2012) (citing
Netbula, LLC v. Distinct Corp., 212 F.R.D. 534, 539 (N.D.
Cal. 2003)). “Ordinarily, courts will defer
consideration of challenges to the merits of a proposed
amended pleading until after leave to amend is granted and
the amended pleading is filed.” Netbula, 212 F.R.D. at
539. Accordingly, any such challenges based on this
court's prior orders are “better reserved for
subsequent motions.” See Ernst v. ZogSports Holdings
LLC, No. 2:18-CV-09043 RGK MRW, 2019 WL 1423776, at *3 (C.D.
Cal. Feb. 26, 2019); see also Wilson v. Conair Corp., No.
1:14-cv-00894 WBS SAB, 2016 WL 7742801, at *3 (E.D. Cal. Feb.
5, 2016) (Arguments that challenge the sufficiency of amended
pleadings “are more appropriate for a motion to
because moving defendants have established good cause and
otherwise satisfied the requirements of Rule 15, the court
will grant them leave to amend their pleadings to allege
claims against the County of Yolo and Eco Green, LLC.
Amendment of Moving Defendants' Answers
defendants have not shown good cause to amend their answers.
As explained previously, moving defendants seek to amend
their answers to object to the People as a real party in
interest under Federal Rule of Civil Procedure 17. Here,
however, the original complaint, which was filed on April 12,
2018, named the People as a plaintiff and specifically cited
California Code of Civil Procedure § 731 as the
statutory authority that allowed the City to bring the
lawsuit in the People's name. (See Compl. ¶ 10
(Docket No. 1).) Only now, well over a year later, do moving
defendants seek to raise this affirmative defense for the
is no compelling reason for why moving defendants could not
have included this affirmative defense in its earlier
answers. The decision moving defendants rely on for the
proposition that the People are not a real party in interest
in this type of lawsuit was issued in 2002. See ...