Mueller v. San Diego Entertainment Partners, LLC et al

Filing 34

ORDER Granting 30 Plaintiff's Motion for Leave to File a Second Amended Complaint. Plaintiff shall file the proposed second amended complaint within three days of the filing of this order. The hearing set for March 2, 2018 shall be vacated. Signed by Judge Gonzalo P. Curiel on 2/21/18. (dlg)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

SOUTHERN DISTRICT OF CALIFORNIA

10

MATTHIAS MUELLER,

11
12
13
14
15
16

v.

CASE NO. 16cv2997-GPC(NLS)
Plaintiff,

SAN DIEGO ENTERTAINMENT
PARTNERS, LLC, a California
Limited Liability Company; DAVE
DEAN, an individual and DOES 1
through 25, inclusive,

ORDER GRANTING PLAINTIFF’S
MOTION FOR LEAVE TO FILE A
SECOND AMENDED COMPLAINT
[Dkt. No. 30.]

Defendants.

17
18

Before the Court is Plaintiff’s motion for leave to file a second amended

19 complaint. (Dkt. No. 30.) An opposition as well as a reply were filed. (Dkt. Nos. 32,
20 33.) Based on the reasoning below, the Court GRANTS Plaintiff’s motion for leave
21 to file a second amended complaint.
22
23

Background
On December 9, 2016, Plaintiff Matthias Mueller (“Plaintiff”) filed a complaint

24 against Defendants San Diego Entertainment Partners, LLC (“SDEP”) and Dave Dean
25 (“Dean”) (collectively “Defendants”) for securities violations and related causes of
26 action. (Dkt. No. 1.) On May 22, 2016, the Court granted Defendants’ motion to
27 dismiss with leave to amend. (Dkt. No. 14.) On June 4, 2017, Plaintiff filed a first
28 amended complaint (“FAC”) alleging violations of § 10b and Rule 10b-5 of the
-1-

[16cv2997-GPC(NLS)]

1 Securities Exchange Act of 1934, violation of Section 20(a) of the Securities Exchange
2 Act of 1934, fraudulent inducement, negligent misrepresentation, California securities
3 fraud, rescission pursuant to California Corporations Code section 25501, and violation
4 of California’s Business & Professions Code section 17200 et seq. (Dkt. No. 15, FAC.)
5 On August 7, 2017, the Court denied Defendant’s motion to dismiss. (Dkt. No. 20.)
6

In his motion, Plaintiff seeks to add John Lyons, one of the two managing

7 members and officers of Defendant SDEP, who Plaintiff discovered recently, was
8 highly involved in the day-to-day management of SDEP and the events leading up to
9 the filing of this case. Defendant opposes.
10

Discussion

11 A.

Legal Standard Under Federal Rule of Civil Procedure 15(a)

12

Under Federal Rule of Civil Procedure (“Rule”) 15(a), leave to amend a

13 complaint after a responsive pleading may be allowed by leave of the court and such
14 leave “shall be freely given when justice so requires.” Fed. R. Civ. P. 15(a). Granting
15 leave to amend rests in the sound discretion of the trial court. Internat’l Ass’n of
16 Machinists & Aerospace Workers v. Republic Airlines, 761 F.2d 1386, 1390 (9th Cir.
17 1985). This discretion must be guided by the strong federal policy favoring the
18 disposition of cases on the merits and permitting amendments with “extreme liberality.”
19 DCD Programs Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987).
20

Because Rule 15(a) favors a liberal policy, the nonmoving party bears the burden

21 of demonstrating why leave to amend should not be granted. Genentech, Inc. v. Abbott
22 Labs., 127 F.R.D. 529, 530-31 (N.D. Cal. 1989). “Five factors are taken into account
23 to assess the propriety of a motion for leave to amend: bad faith, undue delay, prejudice
24 to the opposing party, futility of amendment, and whether the plaintiff has previously
25 amended the complaint.” Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004)
26 (citing Nunes v. Ashcroft, 348 F.3d 815, 818 (9th Cir. 2003)). These factors are not
27 equally weighted; the possibility of delay alone, for instance, cannot justify denial of
28 leave to amend, DCD Programs, 833 F.2d at 186, but when combined with a showing
-2-

[16cv2997-GPC(NLS)]

1 of prejudice, bad faith, or futility of amendment, leave to amend will likely be denied.
2 Bowles v. Reade, 198 F.2d 752, 758 (9th Cir. 1999). Of these considerations, “it is the
3 consideration of prejudice to the opposing party that carries the greatest weight.”
4 Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (per
5 curiam). “Absent prejudice, or a strong showing of any of the remaining [four] factors,
6 there exists a presumption under Rule 15(a) in favor of granting leave to amend.” Id.
7

Of the five factors, Defendants solely argue that Plaintiff unreasonably delayed

8 in seeking to add Lyons. They contend that Plaintiff always knew the existence of
9 Lyons yet waited for more than a year to seek leave to add him. Plaintiff explains that
10 he did not know the extent of Mr. Lyons involvement in Avalon San Diego until
11 Lyons’ deposition was taken on December 11, 2017. (Dkt. No. 33-1, Sharif Decl. ¶
12 3; id., Ex. A.) While Plaintiff was aware that Lyons was the other managing member
13 of SDEP, all his communications were with Defendant Dean and he did not have
14 sufficient facts to assert claims against Lyons.
15

The Court concludes that there has been no undue delay in filing this motion.

16 As Plaintiff explains, he did not know the extent of Lyons’ involvement until his
17 deposition on December 11, 2017, and when he did, he promptly filed a motion for
18 leave to amend which is also within the prescribed time in the court’s scheduling order.
19 Moreover, this case is still in its early stages. Defendants have not articulated any
20 reasons why they are prejudiced or that Plaintiff acted in bad faith. Furthermore, even
21 if there was undue delay, that alone, is not sufficient to deny a motion to amend. See
22 DCD Programs, 833 F.2d at 186. Accordingly, the Court GRANTS Plaintiff’s motion
23 for leave to file a second amended complaint.
24 / / / /
25 / / / /
26 / / / /
27 / / / /
28 / / / /
-3-

[16cv2997-GPC(NLS)]

1
2

Conclusion
Based on the above, the Court GRANTS Plaintiff’s motion for leave to file a

3 second amended complaint. Plaintiff shall file the proposed second amended complaint
4 within three (3) days of the filing of this order. The hearing set for March 2, 2018 shall
5 be vacated.
6

IT IS SO ORDERED.

7
8 DATED: February 21, 2018
9
10

HON. GONZALO P. CURIEL
United States District Judge

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-4-

[16cv2997-GPC(NLS)]