Western Capital Partners LLC v. First American Title Insurance Company

Filing 66

ORDER granting 60 Renewed Third Motion to Amend Complaint. The Clerk of Court shall accept the Third Amended Complaint [#60-1, #60-2, #60-3, #60-4, #60-5] for filing as of the date of this Order. By Magistrate Judge Kristen L. Mix on 12/19/2014. (alowe)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 14-cv-00454-WJM-KLM
WESTERN CAPITAL PARTNERS LLC, a Colorado Limited Liability Company,
Plaintiff,
v.
FIRST AMERICAN TITLE INSURANCE COMPANY, a California Corporation,
Defendant.
_____________________________________________________________________
ORDER
_____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Plaintiff’s Renewed Third Motion to Amend
Complaint [#60].1 Defendant filed a Response [#62] in opposition to the Motion. No Reply
was filed. Pursuant to 28 U.S.C. § 636(b)(1) and D.C.COLO.LCivR 72.1(c), the Motion has
been referred to the undersigned for a recommendation regarding disposition. The Court
has reviewed the pleadings, the entire case file, and the applicable law, and is sufficiently
advised in the premises. For the reasons set forth below, the Motion [#60] is GRANTED.
In short, this matter pertains to denial of coverage under a title insurance policy (the
“Policy”) provided by Defendant to Plaintiff, as the mortgage holder of property located in
Montana. See generally Second Am. Compl. [#25]. Plaintiff now seeks leave “to add a
claim for relief related to Defendant’s breach of a certain closing instruction letter which

1

“[#60]” is an example of the convention the Court uses to identify the docket number
assigned to a specific paper by the Court’s case management and electronic case filing system
(CM/ECF). This convention is used throughout this Recommendation.

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obligated Defendant to insure Plaintiff against ‘all liens, claims, interests, and
encumbrances, of every nature . . . .’” Motion [#60] at 1-2.
As a preliminary matter, the deadline for the amendment of pleadings was August
29, 2014. Scheduling Order [#34] at 7. Plaintiff timely filed the Third Motion to Amend
Complaint [#45] on that date, although the Motion failed to comply with Local Rule 15.1(b),
which requires that “[a] party who files an opposed motion for leave to amend a pleading
shall attach as an exhibit a copy of the proposed amended pleading which strikes through
. . . the text to be deleted and underlines . . . the text to be added.” Minute Order [#58].
As a result, the Court denied the motion without prejudice.
The present Motion [#60] was filed on October 10, 2014. Normally, “[b]ecause
Plaintiff filed [its] [M]otion after the deadline for amending the pleadings, the [C]ourt
employs a two-step analysis, first determining whether Plaintiff has shown good cause to
modify the [S]cheduling [O]rder under Federal Rule of Civil Procedure 16(b), [and] then
evaluating whether Plaintiff has satisfied the standard for amendment of pleadings under
Federal Rule of Civil Procedure 15(a).” Nicastle v. Adams Cnty. Sheriff’s Office, No. 10-cv00816-REB-KMT, 2011 WL 1465586, at *1 (D. Colo. Mar. 14, 2011), adopted by 2011
WL1464588 (Apr. 18, 2011); Colo. Visionary Acad. v. Medtronic, Inc., 194 F.R.D. 684, 687
(D. Colo. 2000).

However, in this case, the Court construes Plaintiff’s request for

amendment as timely because Plaintiff timely filed the Motion, although without the proper
attachment, and immediately took steps to correct this error.
The Court has discretion to grant a party leave to amend its pleadings. Foman v.
Davis, 371 U.S. 178, 182 (1962); see Fed. R. Civ. P. 15(a)(2) (“The court should freely give
leave when justice so requires.”).

“In the absence of any apparent or declared
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reason—such as undue delay, bad faith or dilatory motive on the part of the movant,
repeated failure to cure deficiencies by amendments previously allowed, undue prejudice
to the opposing party by virtue of allowance of the amendment, futility of the amendment,
etc.—the leave sought should, as the rules require, be ‘freely given.’” Id. (quoting Fed. R.
Civ. P. 15(a)(2)). Here, Defendant argues that the proposed amendment is prejudicial,
untimely, and futile, and that the Motion [#60] should be denied on these bases.
Defendant first argues that it would be prejudiced if Plaintiff were permitted to
amend. Response [#62] at 3-4. Prejudice to the opposing party is the single most
important factor in deciding whether to allow leave to amend. Minter v. Prime Equip. Co.,
451 F.3d 1196, 1207 (10th Cir. 2006). Thus, an opposing party’s failure to “argue [that it]
face[s] any—let alone undue—prejudice” if the Court grants leave to amend the complaint
“grievously weaken[s]” its opposition to amendment. Stender v. Cardwell, No. 07-cv02503-WJM-MJW, 2011 WL 1235414, at *3 (D. Colo. Apr. 1, 2011). Here, Defendant does
not demonstrate any undue prejudice it will experience if Plaintiff is permitted to amend.
Defendant mentions that it agreed to proposed deadlines and discovery limits for the
Scheduling Order, served written discovery requests on Plaintiff, and filed an Early Motion
for Partial Summary Judgment all on the basis of the Second Amended Complaint.
Response [#62] at 3. Defendant also asserts that additional discovery will be required if
an additional claim is permitted in this lawsuit.

Id. at 4.

However, while these

considerations may slightly prejudice Defendant, deadlines and discovery limitations may
be altered for good cause shown. See Fed. R. Civ. P. 16(b). Thus, the Court cannot find
that Defendant will be unduly prejudiced.
Defendant next argues that Plaintiff’s amendments are untimely. Id. at 3-4. The
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Court may deny a motion to amend based on undue delay. Minter, 451 F.3d at 1205.
Delay is “undue” only if it will place an unwarranted burden on the Court or become
prejudicial to the opposing party. Id. 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). Defendant is correct that the Court may deny
leave to amend if the movant “knows or should have known of the facts upon which the
proposed amendment is based but fails to include them in the original complaint.”
Pallottino v. City of Rio Rancho, 31 F.3d 1023,1027 (10th Cir. 1994). However, this
argument ignores the fact that “[t]he Federal Rules reject the approach that pleading is a
game of skill in which one misstep by counsel may be decisive to the outcome and accept
the principle that the purpose of pleading is to facilitate a proper decision on the merits.”
Conley v. Gibson, 355 U.S. 41, 48 (1957). Here, the delay was not so egregious as to
allow the Court to find that it was undue, especially considering that the request was initially
made prior to the expiration of the deadline for joinder of parties and amendment of
pleadings.
Finally, the Court addresses Defendant’s futility argument. An amendment is futile
if it would not survive a motion to dismiss. Innovatier, Inc. v. CardXX, Inc., No. 08-cv-4-

00273-PAB-KLM, 2010 WL 148285, at *2 (D. Colo. Jan. 8, 2010) (citing Bradley v.
Val–Mejias, 379 F.3d 892, 901 (10th Cir. 2004)). Plaintiff seeks to add a fourth claim to this
lawsuit for breach of a closing instruction letter sent by Plaintiff’s counsel to Defendant’s
agent on June 14, 2007 (the “Letter”). Proposed Third Am. Compl. [#60-6] ¶¶ 56-61.
Plaintiff also seeks to add the Letter to its already-existing first claim for declaratory
judgment as to its obligations under the Policy. Id. ¶¶ 30-39.
The parties do not address the issue of under which state’s law the new claims
should be determined, i.e., Colorado or Montana. Defendant, in fact, has cited no case law
and no portion of the proposed Third Amended Complaint in support of its argument that
Plaintiff’s proposed amendment is futile. See Response [#62] at 4-6. Defendant merely
argues that the Policy is the entire agreement with Plaintiff, and that the Letter does not
bind it to any additional obligations. Id. Defendant's bare-bones recitation fails to include
even the disputed elements of the proposed breach of contract claim. Defendant has
simply failed to provide more than mere conclusory argument as to why Plaintiff's proposed
amendment cannot succeed on the merits, and has therefore failed to show why Plaintiff's
allegations are insufficient to demonstrate an actionable claim. See Innovatier, 2010 WL
148285, at *2. The Court therefore finds, based on the limited argument before the Court
in Defendant's Response [#62], that leave to amend the complaint should not be denied
on the basis of futility.
Accordingly, the Motion [#60] is GRANTED. The Clerk of Court shall accept the
Third Amended Complaint [#60-1, #60-2, #60-3, #60-4, #60-5] for filing as of the date of
this Order. Defendant shall respond to the Third Amended Complaint in accordance with
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Fed. R. Civ. P. 15(a)(3).

Dated: December 19, 2014

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