Hall v. Apartment Investment and Management Company

Filing 214

ORDER by Judge Claudia Wilken GRANTING PLAINTIFFS 209 MOTION FOR LEAVE TO AMEND COMPLAINT. (ndr, COURT STAFF) (Filed on 5/24/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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No. C 08-03447 CW

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GREGORY HALL, et al.,

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Plaintiffs,

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United States District Court
For the Northern District of California

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v.
APARTMENT INVESTMENT AND MANAGEMENT
COMPANY; AIMCO CAPITAL, INC.; FORTNEY
& WEYGANDT, INC.; IMR CONTRACTOR
CORPORATION; BAY BUILDING SERVICES;
BAY AREA CONSTRUCTION FRAMERS, INC.;
ALL HALLOWS PRESERVATION, LP; BAYVIEW
PRESERVATION, LP; LA SALLE
PRESERVATION, LP; and SHOREVIEW
PRESERVATION, LP,

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ORDER GRANTING
PLAINTIFFS’
MOTION FOR LEAVE
TO AMEND
COMPLAINT
(Docket No. 209)

Defendants.
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Plaintiffs Gregory Hall, Fausto Aguilar, Gonzalo Aguilar,

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Charles Chilton, Douglas Givens, Quincy Mouton, Richard Rankin,

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Hector Rodriguez, Arnulfo Carranza-Rivas and Terry Mackey1 move for

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leave to amend their complaint to add Moises Avila and Ismael Avila

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(collectively, the Avilas) as Defendants.

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Corporation opposes the motion, even though Plaintiffs’ claims

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against it are stayed because of its bankruptcy.

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Defendant joined IMR’s opposition.

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the papers.

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the Court GRANTS Plaintiffs’ motion.

Defendant IMR Contractor

No other

The motion will be decided on

Having considered the papers submitted by the parties,

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Although twenty-eight Plaintiffs were at one time a part of
this case, the parties’ April 11, 2011 stipulation states that
these ten individuals are the remaining Plaintiffs asserting
claims.

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BACKGROUND

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Because the Court’s previous orders amply summarize this case,

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only the background necessary to resolve this motion is provided

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below.

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This action arises from alleged unlawful labor and employment

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practices of entities involved in the rehabilitation of four

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apartment communities in the Bayview-Hunter’s Point neighborhood of

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San Francisco, California.

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their alleged former employer, with multiple violations of

Specifically, Plaintiffs charge IMR,

United States District Court
For the Northern District of California

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California’s wage-and-hour laws and Fair Employment and Housing Act

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(FEHA).

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Plaintiffs seek to amend their complaint to add allegations

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that support alter ego liability against the Avilas for IMR’s

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conduct.

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was a corporation wholly owned, managed and controlled by MOISES

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AVILA and ISMAEL AVILA” and that the Avilas “did not maintain

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adequate corporate records” and treated “IMR’s assets as their

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own.”

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“IMR did not hold corporate meetings and did not keep minutes for

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the corporation” and that “IMR has been undercapitalized, does not

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own any real property, and has threatened bankruptcy while the

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AVILAS own several real properties.”

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Plaintiffs wish to aver that the failure to pierce the corporate

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veil would allow “the AVILAS to avoid payment of wages to their

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employees and to avoid any liability for discriminating against

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Plaintiffs.”

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Their proposed amendments include allegations that “IMR

Pls.’ Mot. at 2-3.

Plaintiffs also intend to allege that

Id. at 3.

Finally,

Id. at 2.

On May 19, 2011, after briefing on Plaintiffs’ motion closed,
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IMR filed for bankruptcy protection.

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Plaintiffs’ claims against IMR are stayed.

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Thus, as noted above,

Currently, there are no non-defaulting Defendants against

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which Plaintiffs have active claims.

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was entered against Defendant Bay Building Services (BBS).

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No. 80.)

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in favor of Defendant Fortney & Weygandt on the claims brought

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against it.

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stipulation, Plaintiffs’ claims against Defendant Bay Area

On April 26, 2010, default
(Docket

On February 18, 2011, the Court granted summary judgment

(Docket No. 182.)

On April 11, 2011, pursuant to

United States District Court
For the Northern District of California

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Construction Framers were dismissed from this action.

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208.)

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Defendants Apartment Investment and Management Company; AIMCO

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Capital, Inc.; All Hallows Preservation, L.P.; Bayview

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Preservation, L.P.; La Salle Preservation, L.P.; and Shoreview

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Preservation, L.P. (collectively, AIMCO) were settled.2

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No. 210.)

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(Docket No.

Finally, on May 10, 2011, all remaining claims against

(Docket

Under the case management order, the deadline to add claims
and parties was March 16, 2009.

(Docket No. 35.)

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DISCUSSION

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Because the deadline to add claims and parties has passed,

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Plaintiffs must satisfy Federal Rule of Civil Procedure 16(b)(4),

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which provides that a scheduling order “may be modified only for

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good cause and with the judge’s consent.”

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been ordered, a party’s ability to amend its pleading is governed

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by this good cause standard, not the more liberal standard of Rule

Where a schedule has

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The parties have not yet stipulated to the dismissal of the
remaining claims against AIMCO.
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15(a)(2).

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(9th Cir. 1992).

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courts primarily consider the diligence of the party seeking the

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modification.

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F.3d 1271, 1294 (9th Cir. 2000).

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Rule 15(a)(2), courts consider five factors in deciding whether to

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grant leave to amend: undue delay, bad faith, futility of

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amendment, prejudice to the opposing party and whether the

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plaintiff has previously amended the complaint.

Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 608
In order to determine whether good cause exists,

Id. at 609; see also Coleman v. Quaker Oats Co., 232
If good cause is shown, under

Ahlmeyer v. Nev.

United States District Court
For the Northern District of California

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Sys. of Higher Educ., 555 F.3d 1051, 1055 n.3 (9th Cir. 2009).

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IMR opposes Plaintiffs’ motion on multiple grounds.

IMR

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contends that Plaintiffs have not established good cause to amend

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their complaint and that they unduly delayed seeking leave to

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amend.

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desire to collect any judgment against IMR, which constitutes good

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cause.

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California law, a plaintiff may move to amend a complaint -- even

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after judgment -- to add a defendant for the purpose of executing a

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judgment.

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F.3d 1143, 1148 (9th Cir. 2004) (stating that Rule 69(a), in

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conjunction with California Code of Civil Procedure § 187, grants

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courts authority to “amend a judgment to add additional judgment

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debtors”); NEC Elecs., Inc. v. Hurt, 208 Cal. App. 3d 772, 778-81

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(1989).

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even after the entry of judgment, any delay in naming them as

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Defendants does not warrant denying their motion for leave to

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amend.

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However, Plaintiffs’ proposed amendments stem from their

Further, under the Federal Rules of Civil Procedure and

See Katzir’s Floor & Home Design, Inc. v. M-MLS.com, 394

Because Plaintiffs could have sought to add the Avilas

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IMR also contends that it will suffer prejudice because it

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will be required to expend additional resources if the Avilas are

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added to this action.

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claims against IMR are currently stayed pending resolution of its

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bankruptcy petition.

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This argument is unavailing.

Plaintiffs’

Finally, IMR argues that amendment would be futile.

First, it

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contends that the relevant statutes of limitations bar any recovery

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against the Avilas.

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claim against a defendant, based on the alter ego theory,
is not itself a claim for substantive relief, e.g.,
breach of contract or to set aside a fraudulent
conveyance, but rather, procedural, i.e., to disregard
the corporate entity as a distinct defendant and to hold
the alter ego individuals liable on the obligations of
the corporation where the corporate form is being used by
the individuals to escape personal liability, sanction a
fraud, or promote injustice.

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Shaoxing Cnty. Huayue Import & Export v. Bhaumik, 191 Cal. App. 4th

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1189, 1199 (2011) (citation and internal quotation marks omitted).

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Plaintiffs are not seeking to add new substantive claims for relief

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against the Avilas for conduct that occurred outside the

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limitations period.

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alter ego liability against the Avilas for the claims brought

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against IMR, which IMR does not contend are time-barred.

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United States District Court
For the Northern District of California

However, a

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Instead, Plaintiffs are seeking to impose

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IMR also argues that amendment would be futile because

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Plaintiffs’ allegations are not sufficient to support alter ego

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liability against the Avilas.3

For alter ego liability to be

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3

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IMR also points to evidence that it contends contradicts or
undercuts Plaintiffs’ allegations. However, whether Plaintiffs
have sufficient evidence to support their claims against the Avilas
is not at issue on this motion. The futility analysis tests the
legal sufficiency of Plaintiffs’ pleadings. See Kendall v. Visa
U.S.A., Inc., 518 F.3d 1042, 1051-52 (9th Cir. 2008).

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imposed, two requirements must be met: (1) “there must be such a

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unity of interest and ownership between the corporation and its

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equitable owner that the separate personalities of the corporation

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and the shareholder do not in reality exist” and (2) “there must be

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an inequitable result if the acts in question are treated as those

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of the corporation alone.”

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83 Cal. App. 4th 523, 538 (2000).

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include the commingling of funds and assets, “inadequate

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capitalization,” and the “disregard of corporate formalities.”

Sonora Diamond Corp. v. Superior Court,
Factors a court may consider

Id.

United States District Court
For the Northern District of California

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at 538-39.

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undercapitalized and did not observe corporate formalities or

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maintain adequate corporate records.

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the failure to pierce the corporate veil would permit the Avilas to

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escape liability for their alleged failure to comply with state

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wage-and-hour laws and the FEHA.

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both requirements for alter ego liability.

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Plaintiffs intend to plead that IMR was

Plaintiffs also contend that

These proposed amendments satisfy

Because their proposed amendments are supported by good cause

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and would not be futile, Plaintiffs will be permitted to amend

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their complaint to add the Avilas as Defendants and assert claims

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against them based on an alter ego theory of liability.

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CONCLUSION

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For the foregoing reasons, Plaintiffs’ motion for leave to

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amend their complaint is GRANTED.

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days of the date of this Order, Plaintiffs shall file an amended

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complaint that reflects the amendments proposed in their motion.

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Plaintiffs’ amended pleading shall be served on the Avilas within

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seven days of the date it is filed.

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(Docket No. 209.)

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Within three

Within twenty-one days of the

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date it is served on them, the Avilas shall respond.

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intend to file any dispositive motion, such as a motion to dismiss,

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motion for judgment on the pleadings or a motion for summary

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judgment, it must be filed at that time.

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is filed, Plaintiffs’ opposition shall be due fourteen days

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thereafter.

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Any dispositive motion will be taken under submission on the

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papers, unless the Court indicates otherwise.

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If a dispositive motion

The Avilas’ reply shall be due seven days after that.

A final pretrial conference will be held on August 9, 2011 at

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United States District Court
For the Northern District of California

If the Avilas

2:00 p.m.

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8:30 a.m.

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A jury trial is expected to begin on August 22, 2011 at

IT IS SO ORDERED.

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Dated: 5/24/2011
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CLAUDIA WILKEN
United States District Judge

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