Stroh Ranch Development, LLC v. Cherry Creek South Metropolitan District No. 2 et al

Filing 133

ORDER granting 100 Defendants Pivotal Colorado II, LLC (PCII) andNorth Parker Investments, LLCs (North Parker) Motion to Amend Answer by Magistrate Judge Kristen L. Mix on 2/7/2012.(ervsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 10-cv-02216-WJM-KLM
STROH RANCH DEVELOPMENT, LLC, a Colorado limited liability company,
Plaintiff,
v.
CHERRY CREEK SOUTH METROPOLITAN DISTRICT NO. 2,
CHERRY CREEK SOUTH METROPOLITAN DISTRICT NO. 3,
CHERRY CREEK SOUTH METROPOLITAN DISTRICT NO. 4,
CHERRY CREEK SOUTH METROPOLITAN DISTRICT NO. 5,
CHERRY CREEK SOUTH METROPOLITAN DISTRICT NO. 6,
CHERRY CREEK SOUTH METROPOLITAN DISTRICT NO. 7,
CHERRY CREEK SOUTH METROPOLITAN DISTRICT NO. 8,
CHERRY CREEK SOUTH METROPOLITAN DISTRICT NO. 9,
CHERRY CREEK SOUTH METROPOLITAN DISTRICT NO. 10,
CHERRY CREEK SOUTH METROPOLITAN DISTRICT NO. 11,
THE PIVOTAL GROUP, INC.,
PIVOTAL PARKER INVESTMENTS, LLC, a Delaware limited liability company a/k/a Parker
Investments 2009, LLC,
PIVOTAL COLORADO II, LLC,
NORTH PARKER INVESTMENTS, LLC,
KURT WOLTER,
KIMBERLY JENSEN,
GREG MCILVAIN,
MARK EAMES,
GREG EPP,
BILLY HARRIS, and
JOHN DOES 1 through 8,
Defendants.
_____________________________________________________________________
ORDER
_____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Defendants Pivotal Colorado II, LLC (“PCII”) and
North Parker Investments, LLC’s (“North Parker”) Motion to Amend Answer [Docket No.
100; Filed November 23, 2011] (“PCII’s Motion”). Plaintiff filed a Response in opposition
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to PCII’s Motion on December 19, 2011 [#114]. On January 5, 2012, Defendants PCII and
North Parker filed a Reply [#126]. The Motion is ripe for resolution.
This matter pertains to the Metro Defendants’ alleged failure to honor agreements
with Plaintiff with respect to “the construction and maintenance of certain public
infrastructure.” See Scheduling Order [#23] at 3. Plaintiff alleges that Defendant PCII
petitioned the Metro Defendants’ Boards of Directors to exclude certain property from the
boundaries of the Metro Districts. Plaintiff further alleges that the reconfiguration of the
Metro Districts’ size reduced the number of tax-paying individuals within each “and
rendered them incapable of discharging the indebtedness [to Plaintiff].” See Am. Compl.
[#38] at 5.
Pursuant to PCII’s Motion, PCII and North Parker seek to amend their Answer [#62]
to add one additional affirmative defense: “One or more of Plaintiff’s claims are barred by
applicable privilege[ ].”

Motion [#100] at 3.

Specifically, they aver that “Plaintiff’s

interference claim may be barred, in whole or in part, by applicable constitutional privileges
under the Noerr-Pennington doctrine.”1 Id.
As a preliminary matter, the pleading amendment deadline expired on January 3,
2011. See Minute Order [#23]. The present Motion was filed on November 23, 2011, and,
therefore, is untimely. Accordingly, Defendants PCII and North Parker must provide good
cause for their failure to timely move for amendment pursuant to Fed. R. Civ. P. 16(b)(4).
If good cause is shown, the Court next considers any arguments raised by the parties
related to whether justice would be served by amendment. Specifically, the Court should
1

In general, “the Noerr-Pennington doctrine stems from federal antitrust law and exempts
from antitrust liability ‘the conduct of private individuals in seeking anticompetitive action from the
government.’” Coll v. First Am. Title Ins. Co., 642 F.3d 876, 894 (10th Cir. 2011) (emphasis in
original) (quoting City of Columbia v. Omni Outdoor Adver., Inc., 499 U.S. 365, 379-80 (1991)).

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grant leave to amend “freely . . . when justice so requires.” Fed. R. Civ. P. 15(a)(2). Leave
to amend need not be given, however, when the moving party unduly delayed, failed to
amend despite ample opportunity to do so, the nonmoving party would be unduly
prejudiced, or amendment would be futile. Foman v. Davis, 371 U.S. 178, 182 (1962).
A.

Good Cause to Modify the Pleading Amendment Deadline

Defendants PCII and North Parker have met the good-cause standard to modify the
pleading amendment deadline pursuant to Fed. R. Civ. P. 16(b)(4), because filing an
amended Answer prior to that deadline was not possible.

As noted, the pleading

amendment deadline expired on January 3, 2011. See Minute Order [#23]. On February
7, 2011, Plaintiff filed an Amended Complaint [#38] adding Defendants PCII and North
Parker to the lawsuit. Defendants PCII and North Parker waived service on February 10,
2011. See Waiver of Service [#50]. They filed their Answer [#62] on May 2, 2011.
Defendants PCII and North Parker must “show that [they were] diligent in attempting
to meet the [pleading amendment] deadline,” but this standard can be met by the provision
of “an adequate explanation for any delay.” Minter v. Prime Equip. Co., 451 F3d 1196,
1205 & n.4 (10th Cir. 2006) (explaining that lateness itself does not justify denial of a
motion to amend, but “undue” lateness does). Here, Defendants PCII and North Parker
could not have met an amendment deadline that passed before they were parties to the
case. Thus, the Court finds that they have provided good cause for requesting leave to
amend outside of the pleading amendment deadline.
B.

Rule 15(a) Requirements

The Court next turns to Rule 15(a) and whether justice would be served by
permitting amendment. As already noted, in situations where the request falls outside the

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pleading amendment deadline and assuming good cause is shown, leave should generally
be permitted unless the moving party unduly delayed or failed to cure, the opposing party
would be unduly prejudiced, or the proposed amendment would be futile. Foman, 371 U.S.
at 182. Plaintiff raises three of these arguments against Defendants PCII and North
Parker’s proposed amendment: undue delay, prejudice, and futility. See Response [#114]
at 2, 6-7.
On February 7, 2011, Plaintiff filed an Amended Complaint [#38], adding Defendants
PCII and North Parker to the lawsuit which was originally filed in state court on August 10,
2010. See Verified Notice of Removal [#1] at 2. In the Amended Complaint, Plaintiff
alleged that, “[O]n April 13, 2009, upon petition by [PCII] the Boards approved by resolution
further exclusions of property from the Metro Districts.” Am. Compl. [#38] at 5. Plaintiff
also asserted that PCII “by words or conduct, or both, intentionally caused the Metro
Districts to breach their contracts with [Plaintiff].” Id. at 9. On May 2, 2011, Defendants
PCII and North Parker filed their Answer [#62]. In their Answer, they denied Plaintiff’s
contention that they intentionally caused the Metro Defendants to breach their contracts
with Plaintiff. See Answer [#62] at 8.
On June 28, 2011, Plaintiff responded to Defendant Pivotal Group, Inc’s First Set
of Interrogatories, Requests for Admissions and Requests for Production of Documents.
See Ex. B [#126-2]. In that response, Plaintiff included a detailed recitation of the facts and
argument underlying its claim for interference with contractual relations. See id. at 4-5.
Defendants PCII and North Parker aver that this response, “in part, helped lead [them] to
conclude that the alleged petitioning activity was likely the only ‘words or conduct, or both’
of PCII that could possibly qualify as improper interference. It is this petitioning activity that

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PCII and North Parker now claim is privileged pursuant to the Noerr-Pennington
doctrine/First Amendment petitioning immunity.” Reply [#126] at 5.
1.

Undue Delay

Turning to Plaintiff’s first argument, the Court may deny a motion to amend based
on undue delay. See Minter, 451 F.3d at 1205. “The important inquiry is not simply
whether Plaintiff has delayed, but whether such delay is undue.” Id. at 1206. The Tenth
Circuit “focuses primarily on the reason for the delay.” Id. A motion to amend is untimely
if, among other reasons, the moving party has made the complaint a “moving target,” is
trying to “salvage a lost case by untimely suggesting new theories of recovery,” is trying to
present more theories to avoid dismissal, or is knowingly waiting until the eve of trial to
assert new claims. Id. at 1206 (citations omitted). Other common reasons for finding
undue delay include lack of adequate explanation for the delay or when a moving party
knows or should have known of the facts in the proposed amendment but did not include
them in the original complaint or any prior attempts to amend. Id. (citations omitted).
Both parties erroneously conflate their Fed. R. Civ. P. 16(b) diligence arguments with
their Fed. R. Civ. P. 15(a) undue-delay arguments. Defendants PCII and North Parker filed
their Answer [#62] on May 2, 2011. They contend that they first learned of the applicability
of the privilege upon examination of Plaintiff’s discovery responses received on June 28,
2011. They first conferred with opposing counsel about the present Motion on November
10, 2011. See Reply [#126] at 8. They filed this Motion shortly thereafter, on November
23, 2011. The parties do not specifically address the delay between receipt of the relevant
discovery material and conferral on the Motion. Defendants PCII and North Parker do note
that they spent that time “investigating the underlying facts at issue in this case,” that they

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“retained an expert witness and have had an opportunity to review the pleadings and
discovery conducted to date, “and that they were then able to review “legal research on
potential defenses to the claims asserted against them.” Motion [#100] at 2-3.
The Court notes that Defendants PCII and North Parker conferred with Plaintiff
about assertion of the additional defense more than three months before expiration of the
discovery deadline. Moreover, as Plaintiff notes, the addition of a privilege defense was
not a surprise to Plaintiff, because other Defendants had already raised this defense. See,
e.g., Answer of Defendant Pivotal Group, Inc. [#48] at 20. Further, during the delay,
Defendant PCII and North Parker were attempting to obtain evidence related to the
defense. Although Defendants clearly delayed, the Court does not find that this history
evidences undue delay.
2.

Undue Prejudice

Plaintiff next briefly argues that it would be prejudiced at this stage of the proceeding
if Defendants PCII and North Parker were permitted to add a new defense. As previously
noted, the Court may deny a motion to amend based on undue prejudice to the nonmoving
party. See Minter, 451 F.3d at 1205. Plaintiff states that it would be prejudiced because:
(1) the deadline for expert disclosures has passed without Plaintiff’s expert’s consideration
of the new defense; and (2) Plaintiff has not propounded any written discovery regarding
Defendants PCII and North Parker’s defenses because it decided that there was no need
to do so based on the defenses listed in their current Answer. Response [#114] at 6-7.
The Court notes that, according to Defendants PCII and North Parker, Plaintiff had not
propounded any written discovery, on any issue, to Defendants PCII and North Parker as
of January 5, 2012. See Reply [#126] at 9. The Court also notes that, according to

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Defendants PCII and North Parker, Plaintiff has not disclosed any experts with respect to
the defense of privilege raised by any other Defendant in this lawsuit.
All things considered, under these circumstances the Court finds that Plaintiff has
not demonstrated that undue prejudice will result from assertion of the new defense. See
Foman, 371 U.S. at 182 (stating that the opposing party must be unduly prejudiced by the
proposed amendment).2
3.

Futility

Finally, Plaintiff argues that the proposed amendment is futile because the NoerrPennington doctrine does not apply to the facts of this litigation. Response [#114] at 7.
More specifically, Plaintiff asserts that the doctrine “does not apply outside the antitrust
context where the fact pattern involves illegal activity by the ‘petitioner,’ and it does not
apply where the party invoking immunity has contractually agree to give up its petitioning
rights.” Id. at 10.
The Court may deny leave to amend on the basis of futility if the proposed
amendment “would be subject to dismissal for any reason.” Watson v. Beckel, 242 F.3d
1237, 1239-40 (10th Cir. 2001). The appropriate standard for determining the viability of an
affirmative defense is found in Fed. R. Civ. P. 12(f). See Layne Christensen Co. v. BroTech Corp., No. 09-cv-2381-JWL-GLR, 2011 WL 3847076, at *6 (D. Kan. Aug. 29, 2011).
Pursuant to Fed. R. Civ. P. 12(f), the Court “may strike from a pleading an insufficient
defense . . . .” “An affirmative defense is insufficient if, as a matter of law, the defense
cannot succeed under any circumstance.” Unger v. U.S. West, Inc., 889 F. Supp. 419, 422
(D. Colo. 1995).
2

The parties are warned that any request to extend the discovery deadline in light of the new defense
must be made promptly and with a showing of good cause.

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As noted earlier, the Noerr-Pennington doctrine exempts from antitrust liability “the
conduct of private individuals in seeking anticompetitive action from the government.” City
of Columbia, 499 U.S. at 379-80. However, the Tenth Circuit has held that this doctrine
may be used outside of the antitrust context, but only on the basis of the First Amendment
right to petition. See Cardtoons, L.C. v. Major League Baseball Players Assoc., 208 F.3d
885, 889 (10th Cir. 2000).
At this stage of the litigation, Plaintiff asserts that Defendants PCII and North Parker
are responsible for the alleged breach of contract by the Metro Defendants because
Defendant PCII petitioned the Metro Defendants to exclude certain property from their
boundaries. See Reply [#126] at 10; Am. Compl. [#38] at 5. Plaintiff first argues that the
Noerr-Pennington doctrine does not apply “where the fact pattern involves illegal activity
by the ‘petitioner.’” Response [#114] at 10. Plaintiff contends that Kurt Wolter was “a selfdescribed ‘independent contractor of [PCII],’ [who] was elected to the Board of Directors
for Metro Districts 2 through 11, while retaining his various positions with PCII and other
Pivotal-related entities.” Id. at 8. Plaintiff argues that the Noerr-Pennington defense would
not apply “if [Plaintiff] were to prove Mr. Wolter engaged in illegal action by aiding and
abetting a breach of fiduciary duty by his fellow directors . . . .” Id. at 9.
Plaintiff also argues that the Noerr-Pennington doctrine does not apply “where the
party invoking immunity has contractually agreed to give up its petition rights.” Id. at 10.
Plaintiff argues that:
[Plaintiff] will seek to prove [that] Mr. Wolter was elected to be a director on
the Metro District Boards and thereby [became] subject to statutory fiduciary
and other duties . . . and that PCII employed him to use his influence to get
the Boards to ignore the Reimbursement Agreements. Because PCII
employed an agent who was already statutorily and legally obligated to act
in the best interests of the Metro Districts, it implicitly agreed he could not
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‘petition’ the Boards on its behalf in any manner which would violate the
District’s previous contractual obligations.
Id.
Plaintiff’s arguments rely on providing proof of a number of facts in support of certain
legal positions, neither of which are fully formed at this juncture. Moreover, Plaintiff has not
addressed application of the Noerr-Pennington doctrine in the absence of proof of Mr.
Wolter’s alleged dual role. Thus, Plaintiff has failed to demonstrate that “the defense
cannot succeed under any circumstance.” Unger, 889 F. Supp. at 422. Without taking a
position as to whether the defense will succeed, the Court finds that adding it may not be
futile under the circumstances of this case. Accordingly,
IT IS HEREBY ORDERED that the Motion [#100] is GRANTED.
IT IS FURTHER ORDERED that the Court accepts Defendants PCII and North
Parker’s Answer [#100-1] for filing as of the date of this Order.

Dated: February 7, 2012

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