Healthcare Ventures, LLC et al v. Ornstein et al

Filing 27

ORDER denying 19 Plaintiffs' Motion for Leave to File Amended Complaint, by Magistrate Judge Michael J. Watanabe on 1/14/2014.(mjwcd)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

Civil Action No. 13-cv-01769-REB-MJW
HEALTHCARE VENTURES, LLC, a Colorado limited liability company,
NEXUS OUTSOURCE GROUP, LLC, a Colorado limited liability company, and
ARI KRAUSZ,
Plaintiffs,
v.
ALEXANDER ORNSTEIN and
SILVER LEAF CONSULTING, INC., a New York corporation,
Defendants.
ORDER ON
PLAINTIFFS’ MOTION FOR LEAVE TO FILE AMENDED COMPLAINT
(Docket No. 19)
MICHAEL J. WATANABE
United States Magistrate Judge
This case is before this court pursuant to an Order Referring Case (Docket No. 6)
issued by Judge Robert E. Blackburn on July 8, 2013.
Now before the court is Plaintiffs’ Motion for Leave to File Amended Complaint
(Docket No. 19). The court has carefully considered the subject motion (Docket No.
19), defendants’ response (Docket No. 22), and plaintiffs’ reply (Docket No. 26). In
addition, the court has taken judicial notice of the court’s file, and has considered the
applicable Federal Rules of Civil Procedure and case law. The court now being fully
informed makes the following findings of fact, conclusions of law, and order.
Plaintiffs’ Complaint (Docket No. 1) was filed on July 5, 2013. Defendants
responded to plaintiffs’ Complaint by filing a Motion to Dismiss (Docket No. 9) on August

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26, 2013. On November 7, 2013, the court issued a Recommendation (Docket No. 17)
recommending that defendants’ Motion to Dismiss be granted and plaintiffs’ Complaint
be dismissed without prejudice for lack of personal jurisdiction. Specifically, the court
found that plaintiffs had failed to demonstrate sufficient contacts with Colorado to
warrant specific or general jurisdiction over defendants. On November 21, 2013,
plaintiffs filed an Objection (Docket No. 18) to the court’s Recommendation, and on
December 9, 2013, defendants filed a Response (Docket No. 21) to plaintiffs’ Objection.
The court’s Recommendation is currently pending before Judge Blackburn. On
November 21, 2013, plaintiffs file the subject Motion for Leave to Amend (Docket No.
19).
Although the Federal Rules of Civil Procedure provide that a court should grant
leave to amend “freely . . . when justice so requires,” see Fed. R. Civ. P. 15(a), the court
must first determine whether the amendment is within the deadline prescribed by the
Scheduling Order. Here, the Scheduling Order (Docket No. 13) set the deadline for
amendment of pleadings as October 18, 2013. Thus, the deadline to amend pleadings
was expired at the time plaintiffs filed the subject motion.
Because plaintiffs’ motion is untimely, plaintiffs are first required to show “good
cause” under Fed. R. Civ. P. 16(b)(4) for modifying the Scheduling Order. See, e.g.,
Colo. Visionary Acad. V. Medtronic, Inc., 194 F.R.D. 684, 688 (D. Colo. 2000) (denying
an untimely motion to amend solely on the basis of a failure to establish “good cause”
within the meaning on Rule 16(b)(4)).
Rule 16(b)’s “good cause” standard is much different than the more lenient
standard contained in Rule 15(a). Rule 16(b) does not focus on the bad

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faith of the movant, or the prejudice to the opposing party. Rather, it
focuses on the diligence of the party seeking leave to modify the
scheduling order to permit the proposed amendment. Properly construed,
“good cause” means that the scheduling deadlines cannot be met despite
a party’s diligent efforts. In other words, this court may “modify the
schedule on a showing of good cause if [the deadline] cannot be met
despite the diligence of the party seeking the extension.”
Pumpco, Inc. v. Schenker Int’l, Inc., 204 F.R.D. 667, 668 (D. Colo. 2001) (citations
omitted). As such, the movant must “show that [he or she was] diligent in attempting to
meet the deadline, which means [he or she] must provide an adequate explanation for
any delay.” Minter v. Prime Equip. Co., 451 F.3d 1196, 1205 n.4 (10th Cir. 2006). If the
movant fails to show good cause under Rule 16(b)(4), there is no need for the court to
move on to the second step of the analysis, i.e., whether the movant satisfied the
requirements of Rule 15(a). Nicastle v. Adams Cnty. Sheriff’s Office, No. 10-cv-00816REB-KMT, 2011 WL 1465586, at *3 (D. Colo. Mar. 14, 2011).1
Defendants point to the procedural history in this case and argue plaintiffs have
not shown good cause. Specifically, defendants note that after they filed their motion to
dismiss, [“u]nder Rule 15(a)(1)(A) (as extended by Rule 6(d)), plaintiffs had until
September 19, 2013 to exercise their right without leave of the Court to withdraw their

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It is the practice in this District to utilize the two-step analysis even though the Court of
Appeals for the Tenth “[C]ircuit has not yet decided whether a party seeking to amend its
pleadings after the scheduling order deadline must show ‘good cause’ under Rule 16(b)[(4)] in
addition to the Rule 15(a) requirement.” Strope v. Collins, 315 Fed. Appx. 57, 62 n.4 (10th Cir.
2009) (unpublished decision) (internal quotation omitted).

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original Complaint, file an amended pleading, and allege any facts that they had to
support their contention that the Court has personal jurisdiction over defendants.
Instead of filing an Amended Complaint that day, however, plaintiffs chose to respond to
defendants’ motion to dismiss, believing that their arguments would carry the day.”
Docket No. 22, at 4. Accordingly, defendants contend plaintiffs made a strategic
litigation decision not to seek to amend their complaint based on the assumption that
the motion to dismiss would be denied. Plaintiffs only sought to amend their complaint
once they realized the motion to dismiss may be granted. Defendants argue that they
should not have to pay for plaintiffs’ unsuccessful strategic decision by prolonging this
case further.
In response, plaintiffs argue that they have shown good cause and point to the
short time given in the Scheduling Order to amend the complaint. Plaintiffs contend that
they moved to amend the complaint “shortly after becoming aware of the jurisdictional
issues.”
The court finds that plaintiffs have failed to show good cause. Plaintiffs are
required to show that the scheduling deadline could not have been met despite their
diligent efforts. Defendants’ motion to dismiss (Docket No. 9) was filed on August 26,
2013. The motion to dismiss fully set forth the jurisdictional issues at play in this case.
Plainly, plaintiffs became aware of the jurisdictional issues, at the latest, at that time.
On September 3, 2013, the court held a Scheduling Conference and set an
amendment of pleadings deadline of October 18, 2013. Plaintiffs, at that time having
been aware of the jurisdictional issues for over a week, could have requested a later
deadline for amendment of pleadings. Plaintiffs failed to do so. Regardless, plaintiffs

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still had a full forty-five days until the deadline expired.
In addition, as pointed out by defendants, plaintiffs had until September 19, 2013
to file an amended complaint without leave of the court. Again, plaintiffs failed to do so.
Instead, plaintiffs chose to file a response to the motion to dismiss on September 19,
2013. Further, the October 18, 2013 deadline date came and went without plaintiffs
seeking any kind of extension to the deadline.
Not until this court issued its Recommendation on November 7, 2013, and
plaintiffs realized that the motion to dismiss may be granted, did plaintiffs seek to amend
their complaint. They did so two weeks later on November 21, 2013.
Under these circumstances, the court cannot find that plaintiffs acted in a diligent
manner. Plaintiffs took eighty-seven days to move to amend their complaint after they
became aware of the jurisdictional issues. As outlined above, it is abundantly clear that
plaintiffs could have met the original scheduling deadline had they acted with diligence.
Accordingly, the court finds that plaintiffs have failed to show good cause.

WHEREFORE, for the foregoing reasons, it is hereby
ORDERED that Plaintiffs’ Motion for Leave to File Amended Complaint (Docket
No. 19) is DENIED.

Date: January 14, 2014
Denver, Colorado

s/ Michael J. Watanabe
Michael J. Watanabe
United States Magistrate Judge