Nicholas et al v. Lance Camper MFG CORP et al

Filing 19

ORDER Granting 15 Motion for Leave to File First Amended Complaint. Signed by Judge Thomas J. Whelan on 3/27/2018. (jao)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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TIMOTHY NICHOLAS, et al.,

Case No.: 17-CV-1489 W (NLS)
Plaintiff,

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v.

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ORDER GRANTING MOTION FOR
LEAVE TO FILE A FIRST
AMENDED COMPLAINT [DOC. 15]

LANCE CAMPER MFG CORP.,
Defendants.

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Plaintiffs Timothy Nicholas and Kay Nicholas seek leave to file a First Amended

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Complaint (“FAC”). Defendant Lance Camper MFG Corp. opposes.
The Court decides the matter on the papers submitted and without oral argument

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pursuant to Civil Local Rule 7.1(d)(1). For the reasons discussed below, the Court

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GRANTS the motion [Doc. 15].

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I.

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DISCUSSION
This lawsuit arises from Plaintiffs purchase of a recreational vehicle (“RV”) from a

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San Diego dealer in February 2016. (See Proposed FAC 1 ¶¶ 3, 5.) In an apparent

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attempt to avoid paying California sales tax, Plaintiffs took delivery of the RV in

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Arizona. (Id. ¶¶ 8, 9, 61.) Unfortunately, after taking delivery of the vehicle, Plaintiffs

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discovered numerous defects with the vehicle, and now seek the protection of California

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law. Accordingly, on June 21, 2017, Plaintiffs filed a lawsuit against Lance Camper

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MFG, Corp., one of the defendants who was more than happy to assist Plaintiffs in

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avoiding paying California sales taxes. (See Notice of Removal [Doc. 1], Ex. A [Doc. 1-

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2].)

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On July 24, 2017, Lance Camper removed the lawsuit to this Court. Plaintiffs now

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seek to amend the Complaint to add, among other things, fraud-based causes of action

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and the dealer as a defendant. Lance Camper opposes the motion to the extent Plaintiffs

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seek to add the fraud-based causes of action. Lance Camper contends the amendment

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should be denied because the amendments would be futile and because Lance Camper

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will be prejudiced given Plaintiffs undue delay in seeking leave to amend.

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II.

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STANDARD
Federal Rule of Civil Procedure 15(a) provides that after a responsive pleading has

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been served, a party may amend its complaint only with leave of court, and leave “shall

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be freely given when justice so requires.” Fed. R. Civ. P. 15(a). Granting leave to amend

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rests in the sound discretion of the district court. Pisciotta v. Teledyne Industries, Inc., 91

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F.3d 1326, 1331 (9th Cir. 1996). Although the rule should be interpreted with extreme

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liberality, leave to amend is not to be granted automatically. Jackson v. Bank of Hawaii,

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902 F.2d 1385, 1387 (9th Cir. 1990) (citations omitted). Five factors are taken into

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The Proposed FAC is attached as Exhibit A [Doc. 15-2] to Plaintiffs’ Memorandum of Points and
Authorities (“P&A” [Doc. 15-1]). (P&A 3:24–25.)
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account to assess the propriety of a motion for leave to amend: (1) bad faith, (2) undue

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delay, (3) prejudice to the opposing party, (4) futility of amendment, and (5) whether the

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plaintiff has previously amended the complaint. Johnson v. Buckley, 356 F.3d 1067,

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1077 (9th Cir. 2004).

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III.

DISCUSSION

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A.

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Lance Camper argues that allowing Plaintiffs leave to amend to add the fraud

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claims would be futile because they cannot maintain the claims. (Opp’n [Doc. 17] 6:25–

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Futility

26.) In support of this argument, Lance Camper raises two theories. (Id. 6:28–9:16).
Lance Camper’s first argument asserts that Plaintiffs’ fraud and misrepresentation

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claims are premised on defendants attempt to deprive Plaintiffs of their rights under

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California’s Song-Beverly Consumer Warranty Act (the “Song-Beverly Act”). (Opp’n

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7:8–12.) According to Lance Camper, because Plaintiffs allege “throughout the FAC that

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title passed to them in California… and the lemon law (Song-Beverly) applies to their

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claim,” Lance Camper argues Plaintiffs were not deprived of those rights and could not

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have suffered harm. (Id. 7:2–14.) There are two problems with this argument. First, it

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remains unclear whether Plaintiffs are entitled to sue under the Song-Beverly Act given

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that they took delivery of the RV in Arizona. In short, it is unclear whether Plaintiffs

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have been “deprived” of their rights under the Song-Beverly Act. Second, and perhaps

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more importantly, Plaintiffs are allowed to plead alternative facts and theories. Lacey v.

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Maricopa Cty., 693 F.3d 896, 918 n. 10 (9th Cir. 2012). Thus, Plaintiffs’ allegation that

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title passed in California and the Song-Beverly Act applies to them does not preclude

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Plaintiffs’ fraud based claims.

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Lance Camper next alleges that leave to amend should be denied because the

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proposed FAC is not plead with sufficient particularity. Federal Rule of Civil Procedure

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Rule 9(b) provides that “[i]n alleging fraud or mistake, a party must state with

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particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge,
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and other conditions of a person's mind may be alleged generally.” Fed. R. Civ. P. 9(b).

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The rule applies to all causes of action based in fraud. Vess v. Ciba-Geigy Corp. USA,

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317 F.3d 1097, 1102–5 (9th Cir. 2003). It requires “the circumstances constituting the

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alleged fraud [to] be specific enough to give defendants notice of the particular

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misconduct so that they can defend against the charge and not just deny that they have

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done anything wrong.” Id. at 1106 (internal citations and quotation marks omitted).

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Thus, to survive a challenge based on Rule 9(b), a complaint must allege the “who, what,

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when, where, and how” of the misrepresentation. Id. The complaint must also explain

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why the representation complained of was false. Id.

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Here, Plaintiffs’ fraud cause of action omits any information regarding the who,

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when, where and what was said. However, although the fraud-based claims are

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insufficiently pled, leave to amend should only be denied if the court “determines that the

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pleading could not possibly be cured by the allegation of other facts.” Ebner v. Fresh,

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Inc., 838 F.3d 958, 968 (9th Cir. 2016) (overruled on other grounds) (citing Doe v.

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United States, 58 F.3d 494, 497 (9th Cir. 1995). That is not the case here. Nothing

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prevents Plaintiffs from being able to plead their fraud-based claims with the particularity

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required by Rule 9(b). Because Plaintiffs may be able to plead sufficient facts to support

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their fraud-based claims, Lance Camper has failed to establish that allowing Plaintiffs

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leave to amend would be futile.

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B.

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Lance Camper contends that it will suffer prejudice if Plaintiffs are granted leave

Prejudice

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to amend to add the fraud claims. Specifically, Lance Camper contends that because

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Plaintiffs delayed in seeking leave to amend, it will have “little to no time to file a

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responsive pleading and defend against the new fraud claims” based on the current

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pretrial deadlines in the scheduling order. (Opp’n 9:19–21.) Additionally, Lance

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Camper complains that the new fraud claims would expand the scope the litigation and

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delay proceedings by requiring additional discovery. (Id. 10:3–23.)
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Generally, the most important factor in evaluating leave to amend is whether there

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will be prejudice to the opposing party. Eminence Capital, L.L.C. v. Aspeon, Inc., 316

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F.3d 1048, 1052 (9th Cir. 2003). The party opposing leave to amend has the burden of

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showing prejudice. DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987).

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Thus, Lance Camper bears the burden of demonstrating prejudice.

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In support of the contention that Plaintiffs unduly delayed in bringing the motion to

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amend, Lance Camper cites Ascon Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149 (9th

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Cir. 1989). That case, however, involved a delay of several years, and two previous

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amendments to the complaint. Id. at 1161. In contrast, here, the scheduling order was

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issued on October 13, 2017. (See Scheduling Order [Doc. 14].) Plaintiffs’ motion to

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amend was filed just one month later, and only four months after the case was removed.

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Moreover, when Plaintiffs filed the motion, several months remained before the

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discovery deadline, the pretrial motion deadline is not until July 27, 2018, and the pretrial

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conference is not scheduled to occur until November 26, 2018. (Id. ¶¶ 2, 8, 18.) In short,

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Lance Camper’s claim of undue delay lacks merit.

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Moreover, although Lance Camper complains that the addition of the fraud claims

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will expand the scope of discovery, there is no dispute that even before the scheduling

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order was issued, Plaintiffs indicated their plans to conduct fraud-related discovery.

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(Opp’n 10:3–14.) Thus, since the start of discovery Lance Camper has known about

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Plaintiffs desire to pursue the fraud related claims. This is not the case where a defendant

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is being asked to defend against a new theory introduced late in the litigation.

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Finally, it is also worth noting that Lance Camper does not oppose Plaintiffs

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addition of a new defendant to the lawsuit, which by itself will require a delay in the

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proceedings. For all these reasons, the Court finds allowing Plaintiffs leave to amend the

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Complaint to add the fraud claims will not prejudice Lance Camper.

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IV.

CONCLUSION & ORDER
For the reasons stated above, Plaintiff’s motion for leave to amend is GRANTED

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[Docs. 15]. Plaintiffs, however, are cautioned that the current proposed FAC fails to

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adequately plead the fraud claims. To the extent Plaintiffs intend to pursue those claims,

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they must amend the allegations to comply with Federal Rule of Civil Procedure 9(b).

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Additionally, the FAC must be filed on or before April 10, 2018.

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IT IS SO ORDERED.
Dated: March 27, 2018

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