Meyer v. Montessori Kingdom of Learning

Filing 63

ORDER denying 56 Second Motion for Leave to Amend Her Amended Complaint. IT IS FURTHER ORDERED that the parties submit a proposed revised case management plan, or place a call to schedule a telephonic case management conference no later that December 13, 2013. (See document for full details). Signed by Magistrate Judge David K Duncan on 11/19/13. (LAD)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Julia Meyer, 10 Plaintiff, 11 vs. 12 Montessori Kingdom of Learning, 13 Defendant. ) ) ) ) ) ) ) ) ) ) No. CV-12-1256-PHX-DKD ORDER 14 15 This Order addresses Plaintiff’s Second Motion for Leave to Amend Her Amended 16 Complaint (Doc. 56).1 Plaintiff seeks to add Count Four which seeks to pierce the veil of the 17 corporate defendant and impose liability on the proposed individual defendants who are alleged 18 to be the only members of the corporate defendant. The Court previously authorized the filing 19 of the Second Amended Complaint on July 9, 2013. 20 Plaintiff’s Motion contends that amendment is warranted because 21 Plaintiff has recently discovered Defendant’s intent to file for Chapter 7 bankruptcy and throughout the course of those discussions Defendant has disclosed certain information that Plaintiff believes would be grounds to pierce the corporate veil and pursue both Ms. Rager and Ms. Schneider personally. 22 23 24 Motion at pp. 2-3. In addition, the proposed third amended complaint specifies 25 26 27 28 1 The request for oral argument is denied because the issues have been fully briefed and oral argument will not aid the Court’s decision. See Fed.R.Civ.P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). 1 2 3 4 5 6 13. Upon information and belief based on Defendant[‘]s recent proposed bankruptcy disclosures, Suzanne Rager and Elizabeth Schneider failed to do the following upon the inception of Montessori Kingdom of Learning, LLC and/or failed to adhere to the following after its inception: (1) follow all corporate formalities required for a limited liability company in Arizona; (2) did not have proper funding for the limited liability company at its inception; (3) have commingled their own personal funds and/or monies with those of the limited liability company; and (4) they have used the limited liability company to advance personal purposes. Proposed Third Amended Complaint at p. 3. 7 To pierce the corporate veil, Plaintiff must plead facts that “allow[] the [C]ourt to draw 8 the reasonable inference” (Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009)), 9 that (1) the company is the “alter ego” of a person and (2) that observing the corporate form 10 would cause a “fraud or injustice.” See Gatecliff v. Great Republic Life Ins. Co., 170 Ariz. 34, 11 39, 821 P.2d 725, 730 (1991). Plaintiff’s proposed third amended complaint alleges facts (set 12 forth above) that the company was the alter ego of the named persons but the proposed third 13 amended complaint is completely silent as to whether observing the corporate form would cause 14 a fraud or injustice. Moreover, the “facts” in support of the alter ego status of the company as 15 set forth in the proposed third amended complaint and quoted above are the kind of conclusory 16 facts which were deemed insufficient to state a claim in Iqbal, 556 U.S. at 678-79, 129 S.Ct. at 17 1959-50. These are “legal conclusion[s] couched as [] factual allegation[s]”, Bell Atlantic Corp. 18 v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1965 (2007), which provide no basis for the 19 Court to do what Iqbal requires and make a determination that the claim is facially plausible. 20 Iqbal at 678, 129 S.Ct. at 1949. Given that the proposed amendment to the Second Amended 21 Complaint could not withstand a motion to dismiss, the proposed amendment is futile. As 22 Defendant points out, a possible bankruptcy which might potentially render a judgment 23 uncollectible is not sufficient to constitute fraud or injustice. In re BH S&B Holdings, LLC, 420 24 B.R. 112, 140 n.8 (Bankr. S.D.N.Y. 2009). 25 The standard for granting leave to amend is generous, but it is not unlimited. 26 Considering the factors set forth in Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 27 (9th Cir. 2003), and where Plaintiff has already had two opportunities to file amended complaints 28 -2- 1 and where the proposed third amended complaint does not plead a prima facie case for the claim 2 to be added, and in light of the fact that this case has been pending for nearly a year and a half, 3 the Court will decline to grant leave to amend. 4 The parties shall confer about a proposed revised case management plan and, if in 5 agreement, submit this plan to the Court for its consideration. If the parties are unable to agree, 6 then they shall contact the Court’s judicial assistant for the purpose of scheduling a telephonic 7 case management conference. 8 9 IT IS THEREFORE ORDERED denying Plaintiff’s Second Motion for Leave to Amend Her Amended Complaint (Doc. 56). 10 IT IS FURTHER ORDERED that the parties submit a proposed revised case 11 management plan, or place a call to schedule a telephonic case management conference no later 12 that December 13, 2013. 13 DATED this 19th day of November, 2013. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -3-

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