Bakersfield Pipe & Supply, Inc., v. Cornerstone Valve, LLC

Filing 22

ORDER VACATING the Hearing Date of May 29, 2015; ORDER GRANTING 21 Plaintiff's Motion to File an Amended Complaint, signed by Magistrate Judge Jennifer L. Thurston on 5/2/2015. (Hall, S)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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BAKERSFIELD PIPE & SUPPLY, Inc.,
Plaintiff,

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v.
CORNERSTONE VALVE, LLC, et al.,
Defendants.

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Case No.: 1:14-cv-01445- JLT
ORDER VACATING THE HEARING DATE OF
MAY 29, 2015
ORDER GRANTING PLAINTIFF’S MOTION TO
FILE AN AMENDED COMPLAINT (Doc. 21)

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Plaintiff alleges it entered into agreements to sell pipes, valves, fittings, and industrial supplies

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to Cornerstone Valve, LLC. When the items were delivered, Plaintiff alleges Cornerstone did not

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accept the shipment. Plaintiff reports that in the course of discovery, documents were produced that

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indicated Nitesh Gupta, the owner of Cornerstone, made misrepresentations related to the financial

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strength of his company, the viability of the project for which the supplies were purchased, and

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Cornerstone’s customers. Therefore, Plaintiff seeks leave to amend the complaint pursuant to Rule 15

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of the Federal Rules of Procedure to add a deceit/concealment claim for relief and to name Gupta as a

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defendant. (Doc. 21.)

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Defendant has not filed an opposition. Having reviewed the motion and supporting documents,

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the Court finds the matter suitable for decision without oral arguments pursuant to Local Rule 230(g).

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Accordingly, the hearing date of May 29, 2015 is VACATED. For the reasons set forth below,

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Plaintiff’s motion for leave to amend is GRANTED.
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I.

Legal Standards
Under Fed. R. Civ. P. 15(a), a party may amend a pleading once as a matter of course within 21

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days of service, or if the pleading is one to which a response is required, 21 days after service of a

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motion under Rule 12(b), (e), or (f). “In all other cases, a party may amend its pleading only with the

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opposing party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). Here, Defendant filed

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an Answer on September 22, 2014. (Doc. 7.) Therefore, Plaintiff requires either consent of Defendant

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or leave of the Court to file an amended complaint.
Granting or denying leave to amend a complaint is in the discretion of the Court, Swanson v.

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United States Forest Service, 87 F.3d 339, 343 (9th Cir. 1996), though leave should be “freely give[n]

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when justice so requires.” Fed. R. Civ. P. 15(a)(2). “In exercising this discretion, a court must be

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guided by the underlying purpose of Rule 15 to facilitate decision on the merits, rather than on the

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pleadings or technicalities.” United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981). Thus, the

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policy to grant leave to amend is applied with extreme liberality. Id. There is no abuse of discretion “in

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denying a motion to amend where the movant presents no new facts but only new theories and provides

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no satisfactory explanation for his failure to fully develop his contentions originally.” Bonin v.

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Calderon, 59 F.3d 815, 845 (9th Cir. 1995); see also Allen v. City of Beverly Hills, 911 F.2d 367, 374

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(9th Cir. 1990).

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II.

Discussion and Analysis

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In evaluating a motion to amend under Rule 15, the Court may consider (1) whether the plaintiff

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has previously amended the complaint, (2) undue delay, (3) bad faith, (4) futility of amendment, and (5)

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prejudice to the opposing party. Foman v. Davis, 371 U.S. 178, 182 (1962); Loehr v. Ventura County

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Community College Dist., 743 F.2d 1310, 1319 (9th Cir. 1984). These factors are not of equal weight

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as prejudice to the opposing party has long been held to be the most critical factor to determine whether

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to grant leave to amend. Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003);

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Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990).

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A.

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The Court’s discretion to deny an amendment is “particularly broad” where a plaintiff has

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Prior amendments

previously amended her complaint. Allen, 911 F.2d at 373; Fidelity Fin. Corp. v. Fed. Home Loan
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Bank, 79 F.3d 1432, 1438 (9th Cir. 1986). Here, Plaintiff has not previously amended the complaint.

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Thus, this factor does not weigh against amendment.

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B.

Undue delay

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By itself, undue delay is insufficient to prevent the Court from granting leave to amend

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pleadings. Howey v. United States, 481 F.2d 1187, 1191(9th Cir. 1973); DCD Programs v. Leighton,

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833 F.2d 183, 186 (9th Cir. 1986). Evaluating undue delay, the Court considers “whether the moving

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party knew or should have known the facts and theories raised by the amendment in the original

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pleading.” Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990); see also Eminence Capital,

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316 F.3d at 1052. Further, the Court should examine whether “permitting an amendment would …

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produce an undue delay in the litigation.” Id. at 1387. Here, Plaintiff requested amendment prior to the

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deadline imposed by the Court. (See Doc. 20.) Thus, this factor does not weigh against granting

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Plaintiff’s motion to amend.

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C.

Bad faith

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There is no evidence that Plaintiff has acted in bad faith in seeking to file an amended

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complaint to raise an additional cause of action and identify a new defendant. Thus, this factor does

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not weigh against an amendment.

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D.

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“Futility of amendment can, by itself, justify the denial of a motion for leave to amend.”

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Bonin, 59 F.3d at 845; see also Miller v. Rykoff-Sexton, 845 F.2d 209, 214 (9th Cir. 1988) (“A motion

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for leave to amend may be denied if it appears to be futile or legally insufficient”). “To determine

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whether the proposed amendment is futile, the Court should evaluate whether the facts alleged would

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be sufficient to withstand a motion to dismiss pursuant to Rule 12(b)(6). See Townsend v. University

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of Alaska, 543 F.3d 478, 486 n.6 (9th Cir. 2008) (noting that the “basis for futility is more accurately

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characterized as a failure to state a claim for relief”).

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Futility of amendment

In the amendment, Plaintiff seeks to add a third cause of action for deceit and concealment and

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seeks to add Nitesh K. Gupta as a defendant. (Doc. 21 at 5, 7-10) Toward this end, Plaintiff claims

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that it and Gupta, though his company, Cornerstone, were in a contractual relationship. (Id.) Plaintiff

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claims that Gupta made certain representations to Plaintiff knowing the statements were untrue to
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entice Plaintiff into the contractual relationship and order the products at issue in the contract to be

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manufactured and to cause Plaintiff to forego requiring a personal guarantee from Gupta to pay for the

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products. (Id.) Plaintiff alleges that it relied upon the false statements and, as a result, it suffered

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damages. (Id.)
Concealment may be proven in several ways including that the defendant intentionally

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concealed facts from the plaintiff, with whom the defendant was in a financial relationship, and that

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this was a substantial factor in causing the plaintiff harm. Judicial Council Of California Civil Jury

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Instruction 1901. An intentional misrepresentation is demonstrated when the defendant represented a

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fact to be true knowing it was false or represented the fact to be true in reckless disregard for its truth,

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that the defendant intended the plaintiff to rely upon the representation and that the false representation

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was a substantial factor in causing the plaintiff’s harm. Judicial Council Of California Civil Jury

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Instruction 1900. While the factual allegations in the proposed amended complaint are not tied closely

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to the specific elements of the torts, the Court does not find the amendment would be futile. (See

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Doc. 21 at 4-10.) Therefore, this factor does not weigh against granting leave to amend.

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E.

Prejudice to the opposing party

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Generally, the most critical factor in determining whether to grant leave to amend is prejudice

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to the opposing party. Eminence Capital, 316 F.3d at 1052 (“Prejudice is the touchstone of the inquiry

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under rule 15(a)”) (internal quotes omitted). The burden of showing prejudice is on the party opposing

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an amendment to the complaint. DCD Programs, 833 F.2d at 187. There is a presumption under Rule

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15(a) in favor of granting leave to amend where prejudice is not shown. Eminence Capital, 316 F.3d

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at 1052. Because Defendant does not oppose motion to amend, this factor does not weigh against

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amendment.

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III.

Conclusion and Order

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Based upon the foregoing, the factors set forth by the Ninth Circuit weigh in favor of allowing

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Plaintiff to file the Amended Complaint. See Madeja, 310 F.3d at 636. Therefore, the Court is acting

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within its discretion in granting the motion to amend. See Swanson, 87 F.3d at 343.

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Accordingly, IT IS HEREBY ORDERED:

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1.

The hearing date of May 29, 2015 is VACATED;
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Plaintiff’s motion to amend (Doc. 21) is GRANTED; and

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Plaintiff SHALL file the amended complaint within three days of the date of service of
this Order.

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IT IS SO ORDERED.
Dated:

May 27, 2015

/s/ Jennifer L. Thurston
UNITED STATES MAGISTRATE JUDGE

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