Country Fresh Batter, Inc v. Lion Raisins, Inc.

Filing 23

ORDER Granting Plaintiff's 17 Motion to Amend, signed by District Judge Dale A. Drozd on 7/13/2018. (Plaintiff shall file its First Amended Complaint within 14 days of the date of this order.) (Gaumnitz, R)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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COUNTRY FRESH BATTER, INC.,

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Plaintiff,

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No. 1:17-cv-01527-DAD-BAM

ORDER GRANTING PLAINTIFF’S MOTION
TO AMEND

v.
LION RAISINS, INC.,

(Doc. No. 17)

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Defendant.

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This matter is before the court on plaintiff’s motion to amend the complaint. (Doc. No.

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17.) On July 3, 2018, that motion came before the court for hearing. Attorney Andrew Mark

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Hutchison appeared telephonically on behalf of plaintiff Country Fresh Batter, Inc, and attorney

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Bertram Kaufmann appeared on behalf of defendant Lion Raisins, Inc. (Doc. No. 22.) Having

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considered the parties’ briefing and oral arguments, the court will grant plaintiff’s motion to

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amend.

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BACKGROUND
In its complaint, plaintiff alleges as follows. Plaintiff, doing business as Hope’s Cookies,

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has purchased raisins from defendants since 2014. (Doc. No. 1 (Compl.) at ¶ 6.) On or about

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December 16, 2016, plaintiff and defendant entered into the 2017 Raisins Contract, pursuant to

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which defendant was to supply plaintiff with 756,000 pounds of raisins for 2017. (Id. at ¶¶ 7–8.)

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From January 2017 through April 2017, plaintiff submitted purchase orders to defendant pursuant
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to the terms of the contract. (Id. at ¶ 9.) Defendant accepted plaintiff’s purchase orders and

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fulfilled those orders through August 2017. (Id.) In August 2017, plaintiff placed purchase

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orders 30093, 30094, and 30095, all of which defendant confirmed on August 25, 2017. (Id. at

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¶ 11.) On September 12, 2017, without notice or warning, defendant terminated the contract as

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well as the purchase orders. (Id. at ¶ 12.) In so doing, defendant invoked the “performance”

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clause of the contract and asserted that plaintiff breached the contract by failing to pull shipments

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evenly as required. (Id. at ¶ 20.) Because of defendant’s breach, plaintiff incurred substantial

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costs to find alternative sources of raisins. (Id. at ¶ 26.)
Plaintiff’s complaint included causes of action for breach of contract and fraud. (Doc. No.

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1.) On December 5, 2017, defendant moved to dismiss plaintiff’s fraud claim and request for

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punitive damages. (Doc. No. 5.) On February 26, 2018, this court granted the motion to dismiss

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and provided plaintiff twenty-eight days in which to either file an amended complaint or provide

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notice of its intent to proceed only on its breach of contract claim. (Doc. No. 11.) On March 26,

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2018, plaintiff provided such notice. (Doc. No. 12.) Thereafter, defendant filed its answer, in

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which it alleges that the contract at issue had been modified and asserts an affirmative defense

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that it complied with all applicable provisions of the modified contract. (See Doc. No. 13 at ¶¶

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19–21.) In response to defendant’s allegation that the contract had been modified, plaintiff

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sought to amend its complaint to include factual allegations addressing the contract modifications,

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but not to add any new causes of action. (Doc. Nos. 17 at 4; 17-1 at ¶¶ 9–14.) On June 19, 2018,

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defendant filed its opposition to the motion to amend. (Doc. No. 19.) Plaintiff filed its reply on

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June 26, 2018. (Doc. No. 20.)

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LEGAL STANDARD
“A party may amend its pleading once as a matter of course within: (A) 21 days after

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serving it or (B) if the pleading is one to which a responsive pleading is required, 21 days after

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service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f),

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whichever is earlier.” Fed. R. Civ. P. 15(a). Otherwise, a party must seek leave of court to

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amend a pleading or receive the opposing party’s written consent. Id.

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The Federal Rules of Civil Procedure provide that “[t]he court should freely give leave [to

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amend pleadings] when justice so requires.” Id. Nevertheless, leave to amend need not be

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granted when the amendment: (1) prejudices the opposing party; (2) is sought in bad faith; (3)

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produces an undue delay in litigation; or (4) is futile. See AmerisourceBergen Corp. v. Dialysist

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W. Inc., 465 F.3d 946, 951 (9th Cir. 2006) (citing Bowles v. Reade, 198 F.3d 752, 757 (9th Cir.

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1999)). “Prejudice to the opposing party is the most important factor.” Jackson v. Bank of Haw.,

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902 F.3d 1385, 1397 (9th Cir. 1990) (citing Zenith Radio Corp. v. Hazeltine Research Inc., 401

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U.S. 321, 330–31 (1971)). “The party opposing leave to amend bears the burden of showing

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prejudice.” Serpa v. SBC Telecomms., 318 F. Supp. 2d 865, 870 (N.D. Cal. 2004) (citing DCD

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Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987)); see Clarke v. Upton, 703 F. Supp.

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2d 1037, 1041 (E.D. Cal. 2010); see also Alzheimer’s Inst. of Am. v. Elan Corp., 274 F.R.D. 272,

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276 (N.D. Cal. 2011).

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Further, in determining futility, “[t]he proper test to be applied when determining the legal

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sufficiency of a proposed amendment is identical to the one used when considering the

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sufficiency of a pleading challenged under Rule 12(b)(6) or (f): if there is no set of facts which

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could be proved under the amendment to the pleadings which would constitute a valid and

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sufficient claim or defense, leave should be denied.” Baker v. Pac. Far E. Lines, Inc., 451 F.

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Supp. 84, 89 (N.D. Cal. 1978) (citing 3 MOORE’S FEDERAL PRACTICE P. 15.08(4) (2d ed. 1974)).

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Amendment is therefore proper “if the deficiencies can be cured with additional allegations that

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are ‘consistent with the challenged pleading’ and that do not contradict the allegations in the

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original complaint.’” United States v. Corinthian Colls., 655 F.3d 984, 955 (9th Cir. 2011)

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(citing Reddy v. Litton Indus., Inc., 912 F.2d 291, 296–97 (9th Cir. 1990)).

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ANALYSIS
As stated, the court may deny leave to amend where the amendment would prejudice the

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opposing party, is sought in bad faith, produces undue delay, or is futile. In considering the

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pending motion, the court examines each of these possibilities in turn.

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“Absent prejudice, there is a presumption under Rule 15(a) in favor of granting leave to
amend.” Serpa, 318 F. Supp. 2d at 870 (citing Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d
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1048, 1052 (9th Cir. 2003)). The party opposing amendment bears the burden of showing such

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prejudice. Eminence Capital, 316 F.3d at 1052 (citing DCD Programs, 833 F.2d at 186).

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Defendant does not contend that it would face prejudice if plaintiff were permitted to amend its

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complaint. Therefore, the court finds that prejudice provides no basis to deny leave to amend.

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The court next examines whether plaintiff has acted in bad faith in moving to amend.

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According to plaintiff’s motion, plaintiff’s counsel emailed defendant’s counsel on May 24, 2018,

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seeking a stipulation permitting plaintiff to amend its complaint. (Doc. No. 17 at 2.) After

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receiving no response, plaintiff’s counsel called defendant’s counsel on the morning of May 25,

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2018 to again request such a stipulation. (Id.) Defendant’s counsel advised that he had not yet

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received client authorization to sign the stipulation. (Id. at 2–3.) Later that same day, plaintiff’s

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counsel again contacted defendant’s counsel, and defendant’s counsel provided the same

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response. (Id. at 3.) Plaintiff’s counsel thereupon filed the instant motion, explaining that he

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could not wait any longer because the deadline for seeking amendment to the pleadings was that

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same day. (See Doc. No. 16.) The court does not find that plaintiff engaged in any bad faith.

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Plaintiff sought to obtain a stipulation on several occasions, which would have obviated the need

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for the present motion.

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The third factor that the court must consider is whether granting leave to amend would

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cause undue delay in the litigation. In answering this question, a court will “not merely ask

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whether a motion was filed within the period of time allotted by the district court in a Rule 16

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scheduling order.” AmerisourceBergen Corp., 465 F.3d at 953. Instead, a court must also inquire

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“whether the moving party knew or should have known the facts and theories raised by the

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amendment in the original pleading.” Jackson, 902 F.2d at 1388.

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Plaintiff’s motion complied with the court’s scheduling order—it was filed on May 25, 2018, the

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deadline for filing amendments to the pleadings. (See Doc. No. 16.) However, as defendant

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points out, that fact alone does not end the court’s inquiry. Defendant argues that the facts giving

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rise to the motion to amend were known to plaintiff, or at least obviously should have been

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known, and that there is therefore no reason for allegations with respect to those facts to have

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been left out of the original complaint. (Doc. No. 19 at 3.) Defendant therefore contends that

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plaintiff has unduly delayed by failing to include them in the complaint. (Id.)

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In its answer, defendant’s first affirmative defense asserts that the contract was modified

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on March 7, 2017, and that defendant performed all the required conditions under the modified

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contract. (Doc. No. 13 at ¶¶ 19–21.) The modified contract was signed by both parties, meaning

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that plaintiff was actually aware or else obviously should have been aware of its existence. (Doc.

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No. 19 at 3.) The court therefore finds that consideration of this factor weighs against the

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granting of plaintiff’s motion to amend.

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Finally, the court addresses whether leave to amend would be futile. “An amendment is

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futile when ‘no set of facts can be proved under the amendment to the pleadings that would

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constitute a valid and sufficient claim or defense.’” Mo. ex rel. Koster v. Harris, 847 F.3d 646,

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656 (9th Cir. 2017) (quoting Miller v. Rykoff–Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988)).

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The court has reviewed plaintiff’s proposed amended complaint and finds that the

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granting of leave to amend would not be futile here. Plaintiff does not propose to add any causes

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of action to its complaint, and instead seeks only to add additional factual allegations in support

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of its breach of contract theory. (See Doc. No. 17 at 14–15.) Such an amendment could bolster a

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valid claim and is in no way futile.

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The court acknowledges that plaintiff’s motion to amend comes more than six months

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after its original complaint was filed and therefore may result in some slight delay in the

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resolution of this action. See Texaco, Inc. v. Ponsoldt, 939 F.2d 794, 798–99 (9th Cir. 1991)

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(finding that a district court did not abuse its discretion in denying leave to amend where the

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plaintiff delayed filing an amended complaint for eight months). Nonetheless, delay by a party in

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seeking leave to amend is only one of several factors for the court’s consideration, and it is not

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the most important. See Jackson, 902 F.2d at 1387. At oral argument, plaintiff’s counsel

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explained that the failure to include allegations related to the modified contract was caused by a

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simple miscommunication between attorney and client. Having found that defendant has made

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no showing of prejudice, bad faith, or futility, and in light of this Circuit’s policy of granting

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leave to amend “with extreme liberality,” Eminence Capital, 316 F.3d at 1048 (quoting Owens v.
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Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001)), the court is satisfied that the

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granting of leave to amend is warranted here.

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CONCLUSION
For these reasons, plaintiff’s motion to amend (Doc. No. 17) is granted. Plaintiff shall file

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its First Amended Complaint within 14 days of the date of this order.

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IT IS SO ORDERED.

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Dated:

July 13, 2018
UNITED STATES DISTRICT JUDGE

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