Loveland et al v. Valencia et al

Filing 62

ORDER that Plaintiffs' 48 Motion to Modify Scheduling Order is granted to the extent that the Plaintiffs shall file their second amended complaint no later than December 29, 2014. ORDERED the parties shall file a supplemental Joint Case Management Report proposing new pretrial scheduling deadlines no later than February 13, 2015. Signed by Senior Judge Paul G Rosenblatt on 12/19/2014. (See Order for details.)(LFIG)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9
10

Harold L. Loveland, Jr., et al.,
Plaintiffs,

11
12
13

vs.
Katia Valencia, et al.,
Defendants.

14
15

)
)
)
)
)
)
)
)
)
)
)

No. CV-13-02621-PHX-PGR
ORDER

16

Pending before the Court is the plaintiffs’ Motion to Modify Scheduling Order

17

and for Leave to Amend Complaint (Doc. 48), filed September 3, 2014. Having

18

considered the parties’ memoranda, the Court, in the exercise of its broad discretion

19

in supervising the pretrial phase of this action, finds that the motion should be

20

granted.1

21

Background

22

This action arises from a multi-vehicle accident on April 20, 2013 in Yuma,

23

Arizona between a car driven by defendant Katia Valencia and four motorcycles,

24

three of which the five plaintiffs were riding on. The plaintiffs’ (re-filed) Complaint

25
26

1

Although the defendants have requested oral argument, the Court
concludes that oral argument would not significantly aid the decisional process.

1

(Doc. 7) alleged two negligence claims against Katia Valencia and a negligent

2

entrustment claim against her father, Carlos Valencia. Pursuant to the Scheduling

3

Order (Doc. 28), entered on May 14, 2014, motions to amend the pleadings or to join

4

additional parties were to be filed no later than May 30, 2014. The plaintiffs are now

5

seeking leave to file a second amended complaint that adds four new defendants,

6

Emelia Valencia, Lilliana Valencia, Valencia Rentals, LLC, and Rivera Apartments,

7

LLC, and three new claims, a social joint venture claim against Katia and Carlos

8

Valencia, a fraudulent transfer claim against all of the defendants, and a family

9

purpose liability claim against Carlos Valencia. The parties held an unsuccessful

10

settlement conference on August 25, 2014.

11

Discussion

12

Because the plaintiffs’ motion was filed after the deadline set by the

13

Scheduling Order, the motion must be resolved primarily under the “good cause”

14

standard of Fed.R.Civ.P. 16(b)(4) (“A schedule may be modified only for good cause

15

and with the judge’s consent.”) Johnson v. Mammoth Recreations, Inc., 975 F.2d

16

604, 608 (9th Cir.1992). Under this standard, the Court’s primary focus is on the

17

plaintiffs’ diligence in seeking to amend their complaint and on their reasons for

18

seeking modification of the Scheduling Order. Id., at 609.

19

The plaintiffs argue that the facts underlying their proposed amendments were

20

not discovered by them until after the May 2014 deadline to amend had passed.

21

They state that in preparation for the August settlement conference, additional

22

research was completed regarding real property belonging to the defendants that

23

had the potential to be offered during settlement negotiations. They state that they

24

learned through an asset investigation report on August 14, 2014, that shortly after

25

the accident occurred the defendants created two limited liability companies and

26

-2-

1

transferred all but one of their real properties to those companies, and that they sold

2

another real property to a family member for $10. The creation of these entities and

3

the property transfers form the basis of the proposed fraudulent transfer claim and

4

the proposed addition of the family-owned LLCs and the two additional family

5

members as defendants.

6

defendants’ vehicle involved in the accident, which showed that it was jointly owned

7

by Katia and Carlos Valencia, was disclosed to them on June 2, 2014, the vehicle’s

8

title was not authenticated and legal title was not confirmed for purposes of their

9

proposed social joint venture and family purpose liability claims until the defendants

10

were deposed on June 30, 2014. The plaintiffs further state that they conducted

11

additional research into the legal and factual sufficiency of their proposed

12

amendments after the settlement conference proved to be unsuccessful.

The plaintiffs also state that while the title to the

13

The defendants argue that the plaintiffs have not exercised the due diligence

14

required by Rule 16(b) because all of the facts underlying the proposed amendments

15

were available through Arizona and California public records and reasonable

16

investigation more than nine months prior to the Scheduling Order’s deadline for

17

amending pleadings.

18

While the Court recognizes that the plaintiffs could have moved to amend

19

earlier than they did, the Court concludes that their explanation for the delay is

20

sufficiently plausible, including their desire to first see if the settlement conference

21

would be successful, and that under the circumstances they did not unduly delay in

22

filing their motion to amend. The Court also concludes that the plaintiffs’ reasons for

23

seeking to add their proposed amendments are appropriate given the

24

circumstances. They have therefore met their burden under Rule 16(b) of showing

25

good cause for the delay.

26

-3-

1

The Court further concludes that the plaintiffs are entitled to amend their

2

complaint under the liberal standard of Fed.R.Civ.P. 15(a). The record does not

3

establish any undue delay, bad faith or dilatory motive on the plaintiffs’ part, and the

4

proposed amendments do not facially constitute an exercise in futility. While the

5

defendants argue that they will suffer “incredible prejudice” if the plaintiffs are

6

allowed to amend their complaint, the Court is not persuaded. See DCD Programs,

7

Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir.1987) (Court noted that Rule 15's “policy

8

of favoring amendments to pleadings should be applied with ‘extreme liberality’” and

9

that “[t]his liberality in granting leave to amend is not dependent on whether the

10

amendment will add causes of action or parties.”)

11

Although the addition of the new parties and claims will necessarily cause a delay

12

in this action, the Court does not believe that any delay will be unduly excessive,

13

especially since all of the new proposed defendants are closely connected to the

14

existing defendants. Furthermore, the defendants will have to defend against the

15

new claims in any case as the plaintiffs state that if their motion to amend is denied

16

they will just file a separate action containing their proposed amendments and will

17

seek to consolidate it with this one. The Court will mitigate the effects of the delay

18

on the defendants by staying all deadlines in the current Scheduling Order until such

19

time as an amended scheduling order can be entered.

20

While the Court will permit the plaintiffs to file a second amended complaint,

21

the plaintiffs will be required to correct some deficiencies in their proposed amended

22

complaint. First, the caption of the second amended complaint must contain the

23

names of all parties to this action as required by Fed.R.Civ.P. 10(a). Second, the

24

second amended complaint must properly allege the citizenship of the new limited

25

liability company defendants by specifying the citizenship of each of their members.

26

-4-

1

See Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir.

2

2006). Therefore,

3

IT IS ORDERED that the plaintiffs’ Motion to Modify Scheduling Order and for

4

Leave to Amend Complaint (Doc. 48) is granted to the extent that the plaintiffs shall

5

file their second amended complaint no later than December 29, 2014. The second

6

amended complaint shall be as proposed in the plaintiffs’ motion but with the

7

exception that it corrects the pleading deficiencies noted in this Order. The plaintiffs

8

shall file separate notice of the filing of their second amended complaint in

9

conformity with LRCiv 15.1(b).

10
11
12
13

IT IS FURTHER ORDERED that the plaintiffs shall serve the second amended
complaint no later than January 9, 2015.
IT IS FURTHER ORDERED that the deadlines in the Scheduling Order (Doc.
28) are stayed pending further order of the Court.

14

IT IS FURTHER ORDERED that the parties shall file a supplemental Joint

15

Case Management Report proposing new pretrial scheduling deadlines no later than

16

February 13, 2015.

17

DATED this 19th day of December, 2014.

18
19
20
21
22
23
24
25
26

-5-