Pershing Pacific West, LLC v. Ferretti Group, USA, Inc. et al

Filing 59

ORDER Granting 38 Motion for Leave to File a First Amended Compliant. Accordingly, Pershing shall file its FAC by April 16, 2012. Signed by Judge M. James Lorenz on 4/3/2012. (All non-registered users served via U.S. Mail Service)(mtb)(jrd)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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PERSHING PACIFIC WEST, LLC,

) Civil No. 10-cv-1345-L(DHB)
)
Plaintiff,
) ORDER GRANTING MOTION FOR
v.
) LEAVE TO FILE FIRST AMENDED
) COMPLAINT [DOC. 38]
FERRETTI GROUP, USA, INC.,
)
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Defendant.
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)
On May 24, 2010, Plaintiff Pershing Pacific West, LLC (“Pershing”) commenced this

17 action against Defendants Ferretti Group, USA, Inc.1 (“Ferretti”), MarineMax, Inc., and MTU
18 Detroit Diesel, Inc. (“MTU”), a Delaware corporation doing business as Detroit Diesel
19 Corporation. Thereafter, Ferretti and MarineMax removed the action to this Court. Pershing
20 now moves for leave to file a First Amended Complaint (“FAC”) under Federal Rule of Civil
21 Procedure 15(a)(2). Ferretti and MarineMax filed a Statement of Non-Oopposition. However,
22 MTU opposes the motion.
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The Court found this motion suitable for determination on the papers submitted and

24 without oral argument. See Civ. L.R. 7.1(d.1). (Doc. 51.) For the following reasons, the Court
25 GRANTS Pershing’s motion for leave to file a FAC.
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1

Allied Marine, Inc. is formerly known and sued as Ferretti Group, USA, Inc. (Ferretti &
28 MarineMax Statement of Non-Opposition 1:20–23 [Doc. 49].)
10cv1345

1 I.

BACKGROUND

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This action arises from Pershing’s purchase of a 72' motor yacht, the 2009 Pershing

3 Model 72. (Compl., Ex. A [Doc. 1].) The transaction took place on August 22, 2008, when
4 Pershing and MarineMax entered into a written purchase agreement. (Compl. ¶ 7.) Pershing
5 seeks to recover damages based upon the purchase and sale of the yacht, which was allegedly in
6 defective condition at the time of the sale. It also named Ferretti as manufacturer of the yacht,
7 MarineMax as the seller, and MTU as the manufacturer and warrantor of the yacht’s engines.
8 (Compl. ¶¶ 2–4.) Pershing asserts the following claims against MTU: (1) breach of express
9 warranty, (2) breach of implied warranty, and (3) negligence.
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On November 22, 2010, United States Magistrate Judge Louisa S. Porter issued an order

11 staying the case after the parties requested the stay so they may pursue active settlement
12 negotiations. (Stay Order 1:21–28 [Doc. 32].) The stay was to remain in place for six months or
13 until the court issued an order, whichever was later. (Id. at 1:24–25.) On May 25, 2011, Judge
14 Porter continued the stay for another 120 days or until the court issued an order, whichever was
15 later. (Continue Stay Order 1:28–2:1 [Doc. 35].) The stay remained in effect until September
16 30, 2011. (Kessler Decl. ¶ 3 [Doc. 38-2].)
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At the time Pershing filed its complaint, its counsel believed that MTU was the

18 manufacturer of the engines. (Kessler Decl. ¶ 2.) However, around November 2010, and during
19 the pendency of the stay, Pershing’s counsel discovered that the actual manufacturer and
20 warrantor of the yacht’s engines was a Germany-based company called MTU Friedrichshafen
21 GmbH (“MTU GmbH”) after reviewing newly issued warranty-related information. (Id. ¶ 4.)
22 Pershing emphasizes that the discovery was made “as a result of an extended warranty issued by
23 Defendant MTU during the stay.” (Pl.’s Reply 2:11–15 (emphasis in original).) Though an
24 earlier reference by MTU’s general counsel to MTU GmbH did not indicate that it was the
25 manufacturer of the engines, a subsequent open-source investigation indicated that it likely is.
26 (Kessler Decl. ¶ 2.)
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On November 3, 2011, the day before Pershing’s deadline to file a motion to amend

28 pleadings, its counsel contacted MTU and asked whether it would stipulate to the filing of a
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1 FAC. (Kessler Decl. ¶ 5.) No stipulation was received. (Id.) Consequently, Pershing filed this
2 motion seeking leave to file a FAC in order to add MTU GmbH as a defendant in its role as
3 manufacturer of the allegedly defective engines. (Pl.’s Mot. 1:19–23 [Doc. 38].) Though
4 Ferretti and MarineMax filed a Statement of Non-Opposition, MTU opposes the motion.
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6 II.

LEGAL STANDARD

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Rule 15(a) of the Federal Rules of Civil Procedure provides that after a responsive

8 pleading has been served, a party may amend its complaint only with the opposing party’s
9 written consent or the court’s leave. Fed. R. Civ. P. 15(a). “The court should freely give leave
10 when justice so requires,” and apply this policy with “extreme liberality.” Id.; DCD Programs,
11 Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). However, leave to amend is not to be
12 granted automatically. Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002)
13 (citing Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990)). Granting leave to
14 amend rests in the sound discretion of the district court. Pisciotta v. Teledyne Indus., Inc., 91
15 F.3d 1326, 1331 (9th Cir. 1996).
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The Court considers five factors in assessing a motion for leave to amend: (1) bad faith,

17 (2) undue delay, (3) prejudice to the opposing party, (4) futility of the amendment, and (5)
18 whether the plaintiff has previously amended the complaint. Johnson v. Buckley, 356 F.3d 1067,
19 1077 (9th Cir. 2004); see also Foman v. Davis, 371 U.S. 178, 182 (1962). The party opposing
20 amendment bears the burden of showing any of the factors above. See DCD Programs, 833
21 F.2d at 186. Of these factors, prejudice to the opposing party carries the greatest weight.
22 Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). However, absent
23 prejudice, a strong showing of the other factors may support denying leave to amend. See id.
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“Futility of amendment can, by itself, justify the denial of a motion for leave to amend.”

25 alone can justify the denial of a motion to amend.” Bonin v. Calderon, 59 F.3d 815, 845 (9th
26 Cir. 1995). Futility is a measure of the amendment’s legal sufficiency. “[A] proposed
27 amendment is futile only if no set of facts can be proved under the amendment . . . that would
28 constitute a valid and sufficient claim or defense.” Miller v. Rykoff-Sexton, Inc., 845 F.2d 209,
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1 214 (9th Cir. 1988). Thus, the test of futility is identical to the one applied when considering
2 challenges under Rule 12(b)(6) for failure to state a claim upon which relief may be granted.
3 Baker v. Pac. Far E. Lines, Inc., 451 F. Supp. 84, 89 (N.D. Cal. 1978); see Saul v. United States,
4 928 F.2d 829, 843 (9th Cir. 1991) (“A district court does not err in denying leave to amend . . .
5 where the amended complaint would be subject to dismissal.” (citation omitted)).
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7 III.

DISCUSSION

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MTU bases its opposition on three reasons: (1) “nearly two years have passed since this

9 action was filed,” (2) “[Pershing] has known that MTU GmbH was the manufacturer and
10 warrantor of the engines at issue for well over a year,” and (3) “[Pershing] does not (and cannot)
11 provide a compelling explanation for its delay in filing this motion.” (Def.’s Opp’n 2:18–22
12 [Doc. 47].) Based on these reasons, MTU argues in its scant four-page opposition brief that
13 Pershing fails to justify its “substantial” delay in filing its motion, that it would be “severely”
14 prejudiced by allowing the amendment, and that any amendment would be futile. The Court
15 disagrees.
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MTU contends that Pershing’s failure to apply to lift the stay or move for leave to amend

17 the complaint at the time it discovered that MTU GmbH was a potential defendant shows that
18 there was undue delay. However, MTU wholly misses the point. To begin, a “stay” is defined
19 as “[t]he postponement or halting of a proceeding, judgment, or the like.” Black’s Law
20 Dictionary (9th ed. 2009). The proceedings in this case had been completely halted. A
21 noteworthy fact is that all of the parties—which included MTU—requested the stay. (Stay
22 Order 1:18–22.) And this stay was not without purpose. Its purpose was to allow the parties to
23 pursue active settlement negotiations. (Id.) During the stay, the parties apparently agreed that
24 the yacht should be sold, and Pershing proceeded to try to sell it. If resolution of this dispute
25 was on track, there was little urgency in adding a defendant to this action. To place the
26 expectation on Pershing to apply to lift the stay just to add a potential defendant while on track
27 towards a resolution is absurd. Thus, there was no undue delay.
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Prejudice to the opposing party carries the greatest weight when determining whether to
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1 grant leave to amend. Eminence Capital, 316 F.3d at 1052. MTU attempts to show in a single
2 paragraph that consists of four sentences that it would be prejudiced if amendment is allowed.
3 (Def.’s Opp’n 3:22–4:2.) The Court first notes that the word “prejudice” is not used anywhere in
4 the four sentences that make up the body of this single paragraph. Moving on, MTU appears to
5 be confused. It states that adding MTU GmbH would result in additional discovery and motions
6 leading to increased litigation costs, and also curiously adds that “[MTU GmbH] will
7 undoubtedly require time to investigate this matter, locate and retain experts, and review the
8 significant amount of documents which have been produced in this matter to date.”2 (Id. at
9 3:27–4:2.) As Pershing astutely points out, MTU fails to assert any facts that show what
10 additional discovery or motions would be required of it, and MTU is actually arguing that the
11 newly added defendant would incur litigation costs. (Pl.’s Reply 5:1–2, 7–10.) Pershing is
12 completely right. MTU is more successful showing that MTU GmbH would be prejudiced than
13 itself. Needless to say, MTU’s four sentences fail to show any prejudice to any degree. See
14 DCD Programs, 833 F.2d at 187 (“The party opposing amendment bears the burden of showing
15 prejudice.”).
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Though prejudice is the factor that carries the greatest weight, futility can be a dispositive

17 issue when considering whether to grant leave to amend. See Bonin, 59 F.3d at 845. In yet
18 another single paragraph, this time comprised of five sentences, MTU argues that the proposed
19 amendment is futile because Pershing “fails to allege a proper basis for personal jurisdiction
20 over a foreign entity which merely manufactured a component of the Yacht.” (Def.’s Opp’n
21 4:7–9.) It goes on that Pershing’s allegation in the Proposed FAC “fails to satisfy even the most
22 lax interpretation of California’s standard for personal jurisdiction.” (Id. at 4:9–16.) A long
23 string cite to three California cases, and the conclusion that the leave should not be granted
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This quote is excerpted from a longer sentence. That whole sentence reads as follows:
26 “Moreover, in the event MTU GmbH is joined as a defendant (which is unlikely, as discussed
below), it will undoubtedly require time to investigate this matter, locate and retain experts, and
27 review the significant amount of documents which have been produced in this matter to date.”
(Def.’s Opp’n 3:26–4:2.) In this order, the Court altered “it” to mean MTU GmbH. Viewing the
28 sentence as a whole, it is clear that the only antecedent for the pronoun “it” is MTU GmbH.
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1 follow. (Id. at 4:13–17.) MTU provides nothing further. Given that the test of futility is
2 identical to the one applied when considering challenges under Rule 12(b)(6), the analysis that
3 MTU provides regarding personal jurisdiction would clearly not satisfy any challenge under
4 Rule 12(b)(6) because that analysis is entirely non-existent here. See Baker, 451 F. Supp. at 89.
5 Whether opposing a motion for leave to amend or a motion to dismiss, merely stating something
6 does not make it so. And here, merely stating that Pershing fails to satisfy California’s personal7 jurisdiction standards does not make it so. Consequently, MTU fails to sufficiently show that
8 Pershing’s proposed amendment would be futile.
In sum, all of the factors favor granting Pershing leave to amend its complaint. Johnson,

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10 356 F.3d at 1077. MTU’s meager four-page brief at best provides a disingenuous attempt to
11 oppose Pershing’s motion. Moreover, there appears to be no dispute that MTU GmbH is the
12 manufacturer of the yacht’s engines. (Def.’s Opp’n 4:7–9 (describing MTU GmbH as “a foreign
13 entity which merely manufactured a component of the Yacht”); Ferretti & MarineMax Statement
14 of Non-Opposition 1:27–2:3.) Therefore, justice also compels the Court to allow amendment in
15 order to add MTU GmbH as a party that is potentially liable for manufacturing allegedly
16 defective engines for Pershing. See Fed. R. Civ. P. 15(a)(2).
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18 IV.

CONCLUSION & ORDER

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In light of the foregoing, the Court GRANTS Pershing’s motion for leave to file a FAC.

20 (Doc. 38.) Accordingly, Pershing shall file its FAC by April 16, 2012.
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IT IS SO ORDERED.

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23 DATED: April 3, 2012
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COPY TO:

M. James Lorenz
United States District Court Judge

HON. DAVID H. BARTICK
27 UNITED STATES MAGISTRATE JUDGE
28 ALL PARTIES/COUNSEL
10cv1345

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