Lucken et al v. Heritage Bank National Association et al
ORDER granting 33 Motion to Reconsider Order re 27 Order on Motion to Amend Complaint. The Court grants plaintiff's motion to amend the complaint. Signed by Magistrate Judge CJ Williams on 2/28/2017. (skm)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
THE JOHN ERNST LUCKEN
REVOCABLE TRUST, and JOHN
LUCKEN and MARY LUCKEN,
HERITAGE BANKSHARES GROUP,
INC., et al.,
This matter is before the Court pursuant to plaintiffs’ motion for reconsideration
of the order denying plaintiffs’ first motion to amend the complaint and plaintiffs’ second
motion to amend the complaint. (Doc. 33). Plaintiffs request leave of court to amend
their complaint based on new information not known to plaintiffs prior to receiving
defendants’ responses to plaintiffs’ first request for production of documents. (Doc. 33
at 5-8). Defendants do not resist this motion. (Doc. 41). For the reasons that follow,
the Court grants plaintiffs’ motion.
Plaintiffs filed the present suit on January 14, 2016, stemming from an agreement
regarding the financing of Dirks Motor Co., of which defendants were creditors, alleging:
1) fraud through affirmative representations and omissions of material fact; 2) violation
of 12 U.S.C. § 1972 for a prohibited “Tying Arrangement”; 3) liability of senior
executive officers within defendants’ bank due to sanctioning the fraudulent conduct of
the bank’s agents; 4) breach of the duty of disclosure; 5) unjust enrichment; and 6)
contract rescission. (Doc. 1).
The April 27, 2016, Scheduling Order and Discovery Plan set the deadline to
amend pleadings as August 12, 2016. (Doc. 14). On November 21, 2106, plaintiffs
filled their first motion to amend their complaint. (Doc. 24). On January 6, 2017, the
motion to amend was denied on two grounds: one procedural and one substantive. (Doc.
27). The Court denied plaintiffs’ motion because it did not comply with the procedural
requirements as set out in Local Rule 15, requiring “[a] party moving to amend or
supplement a pleading pursuant to Federal Rule of Civil Procedure 15(a)(2) or (d) must
describe in the motion the changes sought . . ..” LR 15; (Doc. 27 at 7). Plaintiffs
provided no explanation in their motion as to the changes they sought to make to their
original complaint and did not provide a copy of the amended complaint indicating the
changes. Id. Substantively, plaintiffs’ motion did not allege any facts in order to establish
good cause to amend the complaint, as required by Rule 16(b) because the deadline to
amend had passed. Id. at 9-13. Subsequently on January 18, 2017, plaintiffs moved the
Court for an order extending the trial deadlines (Doc. 28), which the Court granted in
part and denied in part (Doc. 45).
Plaintiffs seek to amend their complaint to add John Lucken and his wife Mary
Lucken individually in addition to being plaintiffs in their capacity as trustees. Plaintiffs
also seek to add Does 1-100 inclusive as defendants. (Doc 33-1 at 1). Other than their
intention to add additional parties, plaintiffs seek only to add factual allegations based on
new information learned through discovery. (Doc. 33).
As discussed above, plaintiffs’ first motion to amend suffered from both
procedural and substantive deficiencies. (Doc. 27). Plaintiffs failed to comply with
Local Rule 15 in that they did not indicate in their motion to amend nor their proposed
amended complaint the changes that had been made, and they did not meet the good cause
standard under Federal Rule 16(b) requiring they show good cause to amend their
complaint and that they missed the scheduled deadline due to “excusable neglect.” (Doc.
27, at 12). In their present motion for reconsideration of the previous order and second
motion for leave to amend the complaint, plaintiffs attempt to correct these deficiencies.
Compliance with Local Rule 15
Local Rule 15 states, “[a] party moving to amend or supplement a pleading
pursuant to Federal Rule of Civil Procedure 15(a)(2) or (d) must describe in the motion
the changes sought . . ..” LR 15; (Doc. 27 at 7). In their previous motion to amend
plaintiffs did not explain in their motion, or any document attached, the changes to the
complaint, and did not attach a copy of the amended complaint that showed the intended
changes. This gave defendants and the Court no meaningful opportunity to assess the
proposed changes without comparing side by side the two complaints.
In their motion for reconsideration of the order denying their first motion to amend
and their second motion to amend, plaintiffs attached a “redlined” version of their
amended complaint. (Doc. 33-1). The “redlined” version of the amended complaint
shows the intended changes and is accompanied by a summary of new evidence submitted
to support plaintiffs’ motion to amend. (Doc. 33-3). The summary of new evidence lays
out the new evidence and cross-references the paragraphs added in the amended complaint
to incorporate the new factual allegations. (Id.). Defendants do not resist this motion.
(Doc 33-1). Although plaintiffs’ explanation of the intended changes to the document is
not extensive and does not reflect all the changes, the “redlined” amended complaint and
accompanying summary of new evidence is sufficient to comply with Local Rule 15.
Good Cause Showing
In their previous motion to amend (Doc. 24), plaintiffs did not allege any facts to
demonstrate diligence in meeting the scheduled deadline to amend pleadings necessary to
prove good cause or demonstrate excusable neglect. (Doc. 24, at 1-3). As this Court
discussed in the prior order denying leave to amend the complaint (Doc. 27), the
applicable standard when a party seeks to amend a pleading after the deadline to amend
has expired is the good cause standard set out in Rule 16(b). (Doc. 27, at 12); see
Sherman v. Winco Fireworks, Inc., 532 F.3d 709, 715-16 (8th Cir. 2008). “The primary
measure of good cause is the movant’s diligence in attempting to meet the order’s
requirements.” Id. at 716 (quoting Rahn v. Hawkins, 464 F.3d 813, 822 (8th Cir. 2006)).
Additionally, “Federal Rule of Civil Procedure 6(b)(1)(B) permits a district court to
extend the time for a party to submit a filing ‘if the party failed to act because of excusable
neglect.’” Chorosevic v. MetLife Choices, 600 F.3d 934, 946 (8th Cir. 2010).
This Court has held “that good cause for an untimely amendment under Rule 16(b)
‘requires a showing that, despite the diligence of the movant, the belated amendment
could not reasonably have been offered sooner.’” Catipovic v. Turley, 295 F.R.D. 302,
307 (N.D. Iowa 2013) (citing Transamerica Life Ins. Co. v. Lincoln Nat’l Life Ins. Co.,
590 F.Supp.2d 1093, 1100 (N.D. Iowa 2008)); see also Stanczyk v. Prudential Ins. Co.
of Am., No. 15-CV-0097-LTS, 2016 WL 6304453, at *5 (N.D. Iowa Oct. 26, 2016)
(finding movant did not establish good cause or excusable neglect where movant failed
to move to amend the complaint more than seven months after the deadline); Martinez v.
U.S. Bank, No. C12-0077, 2013 WL 5565502, at *2 (N.D. Iowa Oct. 8, 2013) (citing
McCormack v. United States, 2011 WL 2669447 (E.D. Mo. 2011) (granting leave to
amend complaint four months after the deadline when the delay was “at least partially
caused” by the nonmovant); Schwend v. U.S. Bank, 2011 WL 5039812 (E.D. Mo. 2011)
(granting leave to amend complaint four months after the deadline due to discovery
obtained from the defendant)); Younie v. City of Hartley, No. C14-4090-CJW, 2016 WL
2864442, at *4 (N.D. Iowa May 13, 2016) (finding that moving to amend one year after
the deadline weighed against movant).
Defendants do not resist the motion to amend the complaint. Plaintiffs must
nevertheless show good cause under Rule 16(b), as 15(a) no longer applies, which
would allow plaintiffs to amend with defendants’ consent. See Sherman, 532 F.3d at
715-16. Plaintiffs argue that they could not have met the August 12, 2016, deadline to
amend pleadings, because at least some of the new information was obtained in July
and September of 2016. (Doc. 33 at 5). This new information came in the form of
documents received in response to plaintiffs first request for production of documents
from defendants and the Small Business Administration. Id. The documents received
from the SBA were produced in response to a FOIA request. Id. The FOIA request
response was received in July 2016, and defendants provided responses on July 1 and
September 7, 2016, which contained the new information upon which the amendments
to the complaint are based. (Doc. 33 at 5-8). Plaintiffs also allege that the volume of
the produced documents, over 2,000 pages, required time to organize and after
organization were sent to experts who analyzed the documents and crafted the amended
complaint. Id. at 8.
It is generally recognized that new information obtained through discovery,
which continues after the deadline to amend pleadings, can be grounds for a finding of
good cause, where the moving party could not have been previously aware of the
information. See Hartis v. Chicago Title Ins. Co., 694 F.3d 935, 948 (8th Cir. 2012)
(listing “newly discovered facts” as a basis for a good cause finding). There is no
indication in the record, and defendants do not contend, that plaintiffs were previously
aware of the facts they now seek to incorporate into their complaint. Based on the
timing of the receipt of the documents, including some after the deadline in September,
and the volume of documents required to be analyzed, the Court finds plaintiffs have
established good cause and excusable neglect to extend the deadline.
The Court need not address the second prong of the good cause inquiry to
determine whether the nonmoving party would suffer undue prejudice as defendants
have consented to the amendment of the complaint. See Vails v. United Cmty. Health
Ctr., Inc., 283 F.R.D. 512, 514 (N.D. Iowa 2012) (citing Sherman, 532 F.3d at 717))
(conducting the good cause analysis where after a finding of good cause the court will
consider prejudice to the nonmoving party). The Court will take their consent as an
indication defendants do not allege they will be prejudiced by the amendment of the
Because plaintiffs have cured the procedural and substantive deficiencies in their
prior motion and produced an explanation to support a finding of good cause, the Court
has reconsidered its previous order denying leave to amend the complaint and now
grants plaintiffs leave to amend the complaint to the proposed complaint (Doc. 33).
The Court does not grant any other changes to the scheduling order or the trial date of
September 18, 2017.
The Court grants plaintiff’s motion to amend the complaint. (Doc. 33).
IT IS SO ORDERED this 28th day of February, 2017.
Chief United States Magistrate Judge
Northern District of Iowa
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