The Trustees of the Eighth District Electrical Pension and Benefit Funds et al v. Black Ridge Energy Services, Inc.

Filing 25

ORDER ADOPTING REPORT AND RECOMMENDATIONS The Report and Recommendation entered on July 3, 2014 (Dkt. 18 ) is ADOPTED in its entirety and Defendant's Motion to Dismiss (Dkt. 5) is GRANTED. Plaintiffs' claim in the initial Complaint is DISM ISSED WITHOUT PREJUDICE. Plaintiffs' Second Motion for Leave to File Amended Complaint (Dkt. 22 ) is GRANTED. On or before August 11, 2014, Plaintiffs shall file their proposed Amended Complaint as a separate document in the record of this cas e entitled as Amended Complaint. Any motions challenging the pleading may be filed on or before August 25, 2014 with response briefs being filed no later than September 15, 2014 and reply briefs being due on September 29, 2014. Signed by Judge Edward J. Lodge. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jp)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

INTERNATIONAL BROTHERHOOD
OF ELECTRICAL WORKERS LOCAL
449,

Case No. 4:13-CV-00355-EJL-REB
ORDER ADOPTING REPORT
AND RECOMMENDATION

Plaintiff,
v.
BLACK RIDGE ENERGY SERVICES,
INC.,
Defendant.

INTRODUCTION
On July 3, 2014, United States Magistrate Judge Ronald E. Bush issued a Report and
Recommendation (“Report”), recommending that Defendant’s Motion to Dismiss be granted.
(Dkt. 18.) Any party may challenge a magistrate judge’s proposed recommendation by filing
written objections to the Report within fourteen days after being served with a copy of the
same. See 28 U.S.C. § 636(b)(1); Local Civil Rule 72.1(b). The district court must then
“make a de novo determination of those portions of the report or specified proposed findings
or recommendations to which objection is made.” Id. The district court may accept, reject,
or modify in whole or in part, the findings and recommendations made by the magistrate
judge. Id.; see also Fed. R. Civ. P. 72(b).

ORDER- 1

Plaintiffs filed objections to the Report to which the Respondent has filed its response.
(Dkt. 23, 24.) The matter is now ripe for the Court’s consideration. See Local Civil Rule
72.1(b)(2); 28 U.S.C. § 636(b)(1)(B). Plaintiffs have also filed a Second Motion for Leave
to File an Amended Complaint. (Dkt. 22.) The Court will take up these pending matters in
this Order.
STANDARD OF REVIEW
Pursuant to 28 U.S.C. § 636(b)(1)(C), this Court “may accept, reject, or modify, in
whole or in part, the findings and recommendations made by the magistrate judge.” Where
the parties object to a report and recommendation, this Court “shall make a de novo
determination of those portions of the report which objection is made.” Id. Where, however,
no objections are filed the district court need not conduct a de novo review. In United States
v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003), the court interpreted the requirements
of 28 U.S.C. § 636(b)(1)(C):
The statute [28 U.S.C. § 636(b)(1)(C)] makes it clear that the district judge
must review the magistrate judge's findings and recommendations de novo if
objection is made, but not otherwise. As the Peretz Court instructed, “to the
extent de novo review is required to satisfy Article III concerns, it need not be
exercised unless requested by the parties.” Peretz, 501 U.S. at 939 (internal
citation omitted). Neither the Constitution nor the statute requires a district
judge to review, de novo, findings and recommendations that the parties
themselves accept as correct. See Ciapponi, 77 F.3d at 1251 (“Absent an
objection or request for review by the defendant, the district court was not
required to engage in any more formal review of the plea proceeding.”); see
also Peretz, 501 U.S. at 937-39 (clarifying that de novo review not required for
Article III purposes unless requested by the parties) . . . .
See also Wang v. Masaitis, 416 F.3d 993, 1000 & n.13 (9th Cir. 2005). Furthermore, to the

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extent that no objections are made, arguments to the contrary are waived. See Fed. R. Civ.
P. 72; 28 U.S.C. § 636(b)(1) (objections are waived if they are not filed within fourteen days
of service of the Report and Recommendation). “When no timely objection is filed, the Court
need only satisfy itself that there is no clear error on the face of the record in order to accept
the recommendation.” Advisory Committee Notes to Fed. R. Civ. P. 72 (citing Campbell v.
United States Dist. Court, 501 F.2d 196, 206 (9th Cir.1974)).
In this case, the Court has conducted a de novo review of those portions of the Report
to which the parties have objected. The Court has also reviewed the entire Report as well as
the record in this matter for clear error on the face of the record and finds as follows.
DISCUSSION
The underlying procedural background and facts of this case are neatly articulated in
the Report to which neither party objects. (Dkt. 18.) The Court incorporates the Report’s
recitation of the background and facts in this Order. In short, this case involves Plaintiffs’
claim that Defendant, Black Ridge Energy Services, Inc., is liable for the debts of another
entity, Portneuf Electric, because it is the successor in interest and alter ego of that entity.
Specifically, the contributions and assessments Portneuf owes to the Plaintiffs pursuant to
an ERISA judgment entered in a separate proceeding. See Case No. 1:12-cv-00126 (Dkt. 64.)
1)

Defendant’s Motion to Dismiss
Here, the Defendant’s Motion to Dismiss argued that subject matter is lacking and the

case should be dismissed pursuant to Rule 12(b)(1). The Report agreed concluding that the
Complaint’s sole claim “resembles a judgment-enforcement action based on a retroactive
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alter ego claim...and, as such, requires its own basis for federal jurisdiction separate from the
extant judgment against Portneuf.” (Dkt. 18 at 10.) Because the Complaint had failed to
allege a jurisdictional basis for the claim against the Defendant here, the Report concludes
that the Motion to Dismiss should be granted. This Court agrees.
Having fully considered the Petitioner’s objections, the response to the objections, and
the entire record herein, the Court finds the Report’s conclusions and findings are consistent
with this Court’s own view of the record. For the reasons stated in the Report, this Court
finds that the Plaintiffs Complaint has not shown a proper basis for subject matter jurisdiction
and the Motion to Dismiss is granted. Because this Court is in full agreement with the
analysis and conclusions of the Report, the Court incorporates and adopts the Report in its
entirety.
In so finding, the Court rejects Plaintiffs’ argument that the Motion to Dismiss should
be deemed moot in light of their subsequently filed motion requesting leave to amend their
complaint. (Dkt. 23.) The Motion to Dismiss is correct as it applies to the original Complaint
in this case and, as such, will be granted. That being said, the Court considers below
Plaintiffs’ Motion to Amend the Complaint.
2)

Plaintiffs’ Second Motion for Leave to File Amended Complaint
As to the Plaintiffs’ subsequently filed Second Motion for Leave to File Amended

Complaint, the Court too finds that request should be granted.
In general, leave to amend pleadings “shall be freely given when justice so requires.”
Fed. R. Civ. P. 15(a). The granting or denying of a request for leave to amend lies within the
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sound discretion of the trial court, which “must be guided by the underlying purpose of Rule
15 to facilitate decisions on the merits, rather than on the pleadings or technicalities.” United
States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981). Thus, courts apply Rule 15 with “extreme
liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003)
(citations omitted).
In determining whether a motion to amend should be granted, the court generally
considers five factors: (1) undue delay; (2) bad faith; (3) futility of amendment; (4) prejudice
to the opposing party; and (5) whether the plaintiff has previously amended the complaint.
United States v. Corinthian Colls., 655 F.3d 984, 995 (9th Cir. 2011) (citation omitted).
These factors are not weighted equally: “futility of amendment alone can justify the denial
of a motion” to amend. Ahlmeyer v. Nev. Sys. of Higher Educ., 555 F .3d 1051, 1055 (9th Cir.
2009). A proposed amended pleading is futile “only if no set of facts can be proved under the
amendment to the pleadings that would constitute a valid and sufficient claim or defense.”
Miller v. RykoffSexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988).
Here, the Court has reviewed the proposed Amended Complaint and compared it to
the initial Complaint filed in this case. (Dkt. 1 and Dkt. 22, Ex. A.) Having done so, the Court
finds that it cannot be said at this stage that the proposed Amended Complaint is futile. The
Amended Complaint sets forth two claims, as opposed to the one found in the initial
Complaint, against the Defendant and contains some slight variations to the allegations. (Dkt.
22, Ex. A.) Whether those changes are enough for Plaintiffs to have cured the prior
jurisdictional shortcomings, is not decided here. At this stage, the Court concludes only that
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leave to amend should be granted because none of the aforementioned factors weigh against
doing so. The Defendant may file a motion challenging the new pleading in accordance with
the time frame set forth below.
ORDER
NOW THEREFORE IT IS HEREBY ORDERED as follows:
1)

The Report and Recommendation entered on July 3, 2014 (Dkt. 18) is
ADOPTED in its entirety and Defendant’s Motion to Dismiss (Dkt. 5) is
GRANTED. Plaintiffs’ claim in the initial Complaint is DISMISSED
WITHOUT PREJUDICE.

2)

Plaintiffs’ Second Motion for Leave to File Amended Complaint (Dkt. 22) is
GRANTED. On or before August 11, 2014, Plaintiffs shall file their proposed
Amended Complaint as a separate document in the record of this case entitled
as “Amended Complaint.” Any motions challenging the pleading may be filed
on or before August 25, 2014 with response briefs being filed no later than
September 15, 2014 and reply briefs being due on September 29, 2014.

DATED: August 6, 2014

Honorable Edward J. Lodge
U. S. District Judge

ORDER- 6