Peck et al v. Hinchey et al

Filing 368

ORDER denying 353 Plaintiffs' Motion for Leave to File Third Amended Complaint; denying as moot 354 Defendant's Motion to Strike Plaintiff's Motion for Leave to File Third Amended Complaint'; and denying 355 Defendant's Rule 12 Motion to Dismiss Second Amended Complaint. Defendant shall file an answer to the Second Amended Complaint within 10 days of this Order. Signed by Senior Judge James A Teilborg on 12/13/16.(LSP)

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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 Steven Peck, et al., Plaintiffs, 10 11 ORDER v. 12 No. CV-12-01371-PHX-JAT Margaret Hinchey, et al., 13 Defendants. 14 Pending before the Court are Plaintiffs’ Motion for Leave to File a Third 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Amended Complaint (Doc. 353), Defendant Margaret Hinchey’s Motion to Strike Plaintiffs’ Motion for Leave to File a Third Amended Complaint (Doc. 354), and Defendant’s Motion to Dismiss Second Amended Complaint (Doc. 355). The Court now rules on the motions. I. Background Steven Peck, Benjamin Sywarungsymun, Aaron Lentz, and Shannon Lentz (hereinafter “Plaintiffs”) filed a complaint against Margaret Hinchey (hereinafter “Defendant” or “Hinchey”) and numerous other defendants in June 2012. Plaintiffs were subjected to a criminal investigation in which Hinchey, a Special Agent with the Arizona Attorney General’s Office, was involved. The investigation sought to determine whether Defendants, who were employed by the Phoenix Police Department (PPD), were falsely reporting the hours worked at their off-duty job working security at the Cotton Center Townhomes. (Doc. 1 at 4). In November 2010, Plaintiffs were indicted by a grand jury on 1 felony theft of services charges. (Doc. 1 at 13). Plaintiffs also were suspended from their 2 jobs with the PPD. (Doc. 1 at 15). 3 After a review of Defendant’s investigation, Plaintiffs filed a motion to remand 4 their indictments in Maricopa County Superior Court. The motion was granted, and a 5 second grand jury declined to re-indict Plaintiffs. The Attorney General’s Office then 6 filed a motion to dismiss charges against Plaintiffs, and the charges were dismissed in 7 November 2011. 8 Subsequently, Plaintiffs filed a complaint in this Court, alleging inter alia that 9 Hinchey and the other defendants falsified evidence, presented false evidence to the 10 grand jury and prosecuting authorities, and maliciously prosecuted Defendants in 11 violation of their Constitutional rights and 42 U.S.C. § 1983. (Doc. 1). In April 2013, this 12 Court issued an order granting Plaintiffs leave to amend their complaint upon stipulation 13 of the parties. (Doc. 166). In that same order, the Court re-set the controlling Rule 16 14 deadlines and removed the previously-agreed to “floating date” for filing motions to 15 amend the complaint. The Court noted that Plaintiffs could no longer continue to amend 16 the complaint dependent upon the Court’s future rulings, and required Plaintiffs to “file 17 any further motions to amend” the complaint by May 31, 2013. (Doc. 166 at 5). Upon 18 stipulation of the parties, Plaintiffs filed a Second Amended Complaint (hereinafter “the 19 Complaint”) on May 8, 2013. (Doc. 180). 20 Later, Defendant filed a motion to dismiss the Complaint. (Doc. 197). The Court 21 granted the motion on the basis of absolute immunity under Rehberg v. Paulk, 132 S. Ct. 22 1497 (2012), and dismissed Plaintiffs’ complaint without leave to amend. (Doc. 329). 23 Plaintiffs appealed the dismissal, and the Ninth Circuit Court of Appeals reversed this 24 Court’s grant of absolute immunity to Hinchey. (Doc. 351; Doc. 351-2; see also Doc. 25 352). On appeal, Plaintiffs also argued this Court erred when it denied them leave to 26 amend the Complaint after the May 31, 2013 deadline. (Doc. 354 at Exhibit 1). The 27 Circuit Court disagreed and affirmed this Court’s denial of leave to amend, determining 28 that Plaintiffs “did not demonstrate ‘good cause’ to amend past the deadline.” (Doc. 351- -2- 1 2 at 4). The Circuit Court also explained that as a result of its ruling, this Court “need 2 only consider the allegations in the Second Amended Complaint on remand.” (Id.) 3 After the Circuit Court’s ruling, this Court entered an Order clarifying the case’s 4 procedural posture. That Order explained that the Complaint, as limited by the Ninth 5 Circuit’s decision on appeal, now represents the “totality of the claims” remaining in the 6 case. (Doc. 352 at 3). The Court also required Defendant to respond to Counts I, II, and 7 III of the Complaint either by answer or by a “completely new” motion. (Doc. 352 at 3 8 n.2). Defendant did so by filing a motion to dismiss the Complaint. (Doc. 355). Plaintiffs 9 also filed a motion for leave to file a third amended complaint (Doc. 353), and Defendant 10 moved to strike Plaintiffs’ motion to amend (Doc. 354). 11 II. Motion for Leave to File Third Amended Complaint 12 A. 13 Plaintiffs’ request leave to file a third amended complaint was filed in August 14 2016 — well after the expiration of the May 31, 2013 deadline set by this Court in its 15 April 2013 ruling. (Doc. 166). Accordingly, the Court must evaluate Plaintiffs’ motion 16 under Rule 16(b) to determine if good cause exists for the delay in filing. Coleman v. 17 Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 2000); see also Taylor ex rel. Thomson 18 v. Zurich Am. Ins. Co., 2013 WL 1340014 at *5 (D. Ariz. Aug. 3, 2010). If the Court 19 finds good cause for granting leave to amend under Rule 16(b), it must then determine 20 whether leave to amend is also warranted under Rule 15(a). Johnson v. Mammoth 21 Recreations, 975 F.2d 604, 607–08 (9th Cir. 1992) (explaining that “a motion seeking to 22 amend pleadings is governed first by Rule 16(b), and only secondarily by Rule 15(a)”). 23 Whether to grant leave to amend a complaint is a decision “within the Court’s sound 24 discretion.” In re Mortg. Elec. Registration Sys. Litig., 744 F.Supp.2d 1018, 1033 (D. 25 Ariz. 2010); see also Ascon Prop., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 26 1989) (describing this Court’s discretion to deny further leave to amend as “particularly 27 broad” when the plaintiff has already had an opportunity to amend the complaint). Legal Standard 28 -3- 1 B. Good Cause under Rule 16(b) 2 Federal Rule of Civil Procedure (“Rule”) 16(b) states that the Court’s scheduling 3 order “may be modified only for good cause and with the judge’s consent.” Fed. R. Civ. 4 P. 16(b). The primary consideration under Rule 16(b) is the “diligence of the party 5 seeking the amendment.” Johnson, 975 F.2d at 609. Although the Court may consider 6 whether an amendment would prejudice the non-moving party, the “focus of the inquiry 7 is upon the moving party’s reasons for seeking modification.” Id. To show good cause 8 under Rule 16(b), the moving party must prove: (1) that its need to seek a late 9 amendment of the complaint was not reasonably foreseeable or anticipated at the time of 10 the Rule 16 scheduling conference, and (2) that it was diligent in seeking to extend the 11 time for amending the complaint once it became apparent that amendment was necessary. 12 Taylor, 2013 WL 1340014 at *3. 13 Plaintiffs argue a third amended complaint is necessary to “remove reference to 14 dismissed Defendants and to further define earlier allegations.” (Doc. 353 at 4:2, 4:21). 15 Under the facts of this case, the Court does not find Plaintiffs’ argument compelling. 16 Plaintiffs assert the need to redefine the Complaint’s allegations arose based on 17 information learned during Defendant Hinchey’s depositions. (Doc. 353 Exhibit 1 at ¶ 18 101, 104–05). But Hinchey’s depositions were completed as early as August 2013. (Doc. 19 95, Doc. 100, Doc 110, Doc. 116, Doc. 234). Plaintiffs therefore had reason to know of 20 the facts necessitating redefinition of their claims for seven months before this Court 21 ruled on Defendant’s motion to dismiss in March 2014. And although Hinchey’s 22 depositions concluded after the Court’s deadline for seeking leave to amend, waiting 23 three years to file such a motion was not diligent. 24 Neither does the more recent dismissal of several defendants serve as a compelling 25 reason for Plaintiffs to file a third amended complaint. Multiple defendants have 26 previously been dismissed from this lawsuit without Plaintiffs seeking leave to file an 27 entirely new complaint removing references to dismissed parties. (See Doc. 266, Doc. 28 299, Doc. 306 (voluntarily dismissing defendants)). The Court therefore finds Plaintiffs -4- 1 were not diligent in seeking leave to amend the Complaint after they became aware that 2 such an amendment may be prudent. 3 C. 4 The Ninth Circuit’s decision on appeal also has some bearing on whether this 5 court should grant Plaintiffs leave to amend. This Court must take care to follow the 6 terms of the Circuit Court’s mandate and may not issue an order “counter to the spirit of 7 the circuit court’s decision.” Wininger v. SI Management L.P., 244 Fed.Appx. 156, 157– 8 58 (9th Cir. 2007) (quoting United States v. Perez, 475 F.3d 1110, 1113 (9th Cir. 2007)). The Rule of Mandate 9 The Court finds that the spirit of the Ninth Circuit’s mandate is better sustained by 10 denying Plaintiffs leave to amend. 1 The Circuit Court determined that leave to amend the 11 Complaint was not warranted in this case, even in light of the dismissal of several 12 defendants and all but three of Plaintiff’s claims. Put another way, the Circuit Court 13 found the Complaint sufficient to outline Plaintiffs’ claims and explained that this court 14 “need only consider the allegations” contained in the Complaint upon remand. For this 15 Court to hold now that a third amended complaint is necessary and warranted, despite the 16 Circuit Court’s contrary conclusion, would run afoul of the spirit of the Circuit Court’s 17 directive. See id. 18 D. 19 Because Plaintiffs have not shown good cause for granting leave to amend, and in 20 keeping with the spirit of the Circuit Court’s holding, Plaintiffs’ motion for leave to file a 21 third amended complaint is denied. Defendant’s motion to strike is therefore denied as 22 moot. 23 III. Disposition Motion to Dismiss Plaintiff’s Second Amended Complaint 24 A. 25 Next, the Court addresses Defendant’s motion to dismiss the Complaint for failure Legal Standard 26 1 27 28 Defendant argues the Ninth Circuit’s decision on appeal categorically prohibits considering Plaintiffs’ motion for leave to amend. The Court disagrees. The Circuit Court’s decision was permissive, explaining that this Court “need only consider the allegations” in the Complaint; it did not hold that this Court “may only consider,” “should only consider,” or “must only consider.” (Doc. 351-2 at 4). -5- 1 to state a claim under Rule 12(b)(6). (Doc. 355). Rule 8(a)(2) requires a complaint to 2 include “a short and plain statement of the claim showing that the pleader is entitled to 3 relief.” In order to survive a challenge under Rule 12(b)(6), a complaint must contain 4 more than “a formulaic recitation of the elements of [the] cause of action.” Bell Atlantic 5 Corp. v. Twombly, 550 U.S. 544, 555–56 (2007). Instead, it must plead facts sufficient to 6 “raise a right to relief above the speculative level.” Id. The Court construes the facts as 7 alleged in the light most favorable to the Plaintiffs and accepts all well-pleaded factual 8 allegations (and reasonable inferences to be drawn therefrom) as true. Doe v. United 9 States, 419 F.3d 1058, 1062 (9th Cir. 2005); Shwarz v. United States, 234 F.3d 428, 435 10 (9th Cir. 2000). 11 B. 12 Counts I and II of the complaint claim Defendant’s actions violated Plaintiffs’ 13 right to be free from criminal charges based upon “false evidence that was deliberately 14 fabricated by the government.” See Deveraux v. Abbey, 263 F.3d 1070, 1074–75 (9th Cir. 15 2001). Claims that the government deliberately fabricated evidence must be supported by 16 proof of either: (1) an investigation against the plaintiff that continued despite the fact 17 that the government knew or should have known of the plaintiff’s innocence; or (2) the 18 government’s use of coercive and abusive investigative techniques that it should have 19 known would yield false information. Id. at 1076. 20 Devereaux Claims 1. Adequacy of Allegations 21 Defendant first contends the Complaint does not state an adequate Devereaux 22 claim against her because it also alleges that former Attorney General Terry Goddard 2 23 was the driving force behind Plaintiffs’ indictments. Defendant argues the complaint’s 24 factual allegations show that Goddard’s actions, independent of Hinchey’s investigation, 25 “subjected [Plaintiffs] to criminal charges.” (Doc. 355 at 7). Therefore, Defendant 26 contends the complaint cannot also support a conclusion that Hinchey’s actions were the 27 28 2 Goddard was dismissed from this action by stipulation of the parties. (Doc. 162). The dismissal was entered on April 15, 2013. (Doc. 166). -6- 1 driving force behind the filing of criminal charges. (Id.) 2 This argument discounts the Federal Rule of Civil Procedure allowing for 3 inconsistent arguments within a party’s pleadings. Under Rule 8, “[a] party may state as 4 many separate claims or defenses as it has, regardless of consistency.” Fed. R. Civ. P. 5 8(d)(3). The Court allows such pleadings, even if the inconsistencies presented therein 6 are mutually exclusive. See PAE Gov’t Servs., Inc. v. MPRI, Inc., 514 F.3d 856, 859–60 7 (9th Cir. 2007). Accordingly, so long as the claims against this Defendant are sufficient 8 to establish a prima facie case against her, Plaintiffs’ claims regarding the actions of other 9 defendants do not vitiate the adequacy of their complaint. 10 Read independently, Plaintiffs’ allegations against Defendant herself are sufficient 11 to state a claim. The complaint sets forth facts alleging that Hinchey relied on unreliable 12 and incomplete sources in her investigation (Doc. 180 at ¶¶ 163, 222–23), did not take 13 steps to verify the information she received (id. at ¶¶ 159–63), discovered but did not 14 disclose potentially exculpatory evidence (id. at ¶¶ 192–96, 225), made false reports 15 regarding the extent of her investigation (id. at ¶¶ 160–62, 190), and disregarded or failed 16 to ascertain crucial information about the timekeeping and time reporting systems (id. at 17 ¶¶ 182–83, 187, 192–95). These are not mere formulaic recitations. See Twombly, 550 18 U.S. at 555–56. These are sufficient allegations from which the Court is able to draw 19 reasonable inferences that Defendant should have known either that Plaintiffs were not 20 guilty or that her investigation tactics would yield false results. See Devereaux, 263 F.3d 21 at 1074–75. 22 2. Plausibility of Allegations 23 Defendant also argues the facts do not give rise to a plausible Devereaux claim. A 24 plausible claim is one alleging “enough factual matter (taken as true) to suggest” the truth 25 of the purported conclusions. Twombly, 550 U.S. at 556. A claim has “facial plausibility” 26 when the plaintiff pleads factual content sufficient to allow the Court to “draw the 27 reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. 28 Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). Plausibility does not -7- 1 require that the allegations give rise to a probability of relief, but it does require sufficient 2 “factual enhancement” to push the claims over the line of “naked legal conclusions.” Id. 3 at 697 (quoting Twombly, 550 U.S. at 557). 4 Defendant asserts the claims are not plausible because they are equally as 5 suggestive of “carelessness or inaccurate investigation” as they are of deliberate 6 fabrication of evidence as required under Devereaux. See 263 F.3d at 1074–75. But as 7 outlined above, the facts in the complaint allege more than mere carelessness. Drawing 8 the reasonable factual inferences in the light most favorable to the Plaintiffs, the Court 9 finds the Plaintiffs set forth facts suggesting Hinchey had reason to know her 10 investigation was yielding or likely to yield false results. (See Doc. 180 at ¶¶ 159–63; 11 182–83; 187; 190; 192–95; 222–25). This is sufficient to satisfy Devereaux’s “stringent 12 test” for supporting a deliberate fabrication of evidence claim. See Gausvik v. Perez, 345 13 F.3d 813, 817 (9th Cir. 2003) (finding that careless investigation alone is insufficient to 14 support a Devereaux claim). Plaintiffs’ claims are therefore plausible. 15 C. 16 Finally, Defendant argues Count III does not set forth a cognizable claim for 17 malicious prosecution. A malicious prosecution claim under 42 U.S.C. § 1983 requires a 18 showing that the defendant “prosecuted [Plaintiffs] with malice and without probable 19 cause, for the purpose of denying [them] equal protection” under the Constitution. 20 Awabdy v. City of Adelanto, 368 F.3d 1062, 1066 (9th Cir. 2004) (quoting Freeman v. 21 City of Santa Ana, 68 F.3d 1180, 1189 (9th Cir. 1995)). 22 Malicious Prosecution Claims 1. Causation 23 First, Defendant argues the malicious prosecution claims do not demonstrate 24 causation because the Complaint does not demonstrate how Hinchey was “actively 25 instrumental” in initiating legal proceedings against Plaintiffs. See Awabdy, 368 F.3d at 26 1067. (Doc. 355 at 6). Defendant argues the Complaint’s factual allegations render her 27 actions irrelevant by supporting a conclusion that Goddard would have filed charges 28 against Plaintiffs irrespective of Defendant’s investigation. Accordingly, Defendant -8- 1 asserts the complaint’s allegations against her are “dispositively undermined” by the 2 complaint’s other factual assertions. (Doc. 355 at 7). This argument fails again to take 3 into account the provisions for alternative and inconsistent pleadings contained in Rule 4 8(d)(3). And, because the complaint sets forth factual allegations specific to Defendant, 5 and from which the Court can reasonably infer Defendant should have known that 6 probable cause did not exist, it is sufficient to give rise to a plausible claim for malicious 7 prosecution. (See Doc. 180 at ¶¶ 159–63; 182–83; 187; 190; 192–95; 222–25). 8 2. Malice 9 Second, Defendant argues Plaintiffs did not sufficiently plead malice because they 10 did not allege that Defendant’s conduct was undertaken for the purpose of violating 11 Plaintiffs’ constitutional rights. (Doc. 355 at 7–8). But the existence of malice may be 12 inferred when there is no probable cause or a reckless disregard for the truth. Lacy v. 13 Cnty. of Maricopa, 631 F.Supp.2d 1197, 1211 (D. Ariz. 2008); Donahoe v. Arpaio, 986 14 F.Supp.2d 1091, 1128–29 (D. Ariz. 2013) (malice may be inferred when there is no 15 probable cause). As explained above, the complaint alleges Hinchey had reason to know 16 the evidence was insufficient to give rise to probable cause against Plaintiffs, yet 17 continued her investigation. The Complaint also alleges Defendant fabricated evidence 18 and made false reports to prosecuting authorities. Accordingly, the complaint sets forth 19 sufficient facts from which malice may be inferred. 20 IV. Conclusion 21 For the reasons outlined above, 22 IT IS ORDERED denying Plaintiffs’ Motion for Leave to File Third Amended 23 Complaint. (Doc. 353). Defendant’s Motion to Strike Plaintiff’s Motion for Leave to File 24 Third Amended Complaint” is therefore denied as moot. (Doc. 354). 25 26 27 28 IT IS FURTHER ORDERED denying Defendant’s Rule 12 Motion to Dismiss Second Amended Complaint. (Doc. 355). IT IS FURTHER ORDERED that Defendant shall file an answer to the Second Amended Complaint within ten (10) days of this Order. -9- 1 IT IS FURTHER ORDERED that within 7 days of Defendant Hinchey’s filing 2 in response to the Second Amended Complaint, an order setting a Rule 16 scheduling 3 conference will follow. 4 Dated this 13th day of December, 2016. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 10 -

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