Rezac Livestock Commission Co., Inc. v. Pinnacle Bank et al
MEMORANDUM AND ORDER denying 31 Plaintiff's Motion to alter or amend the part of its August 26 ruling where the court dismissed plaintiff's conversion claim against Pinnacle Bank. The court grants 31 Motion for Leave to Amend Complain t. The court also grants plaintiff's motion for leave to file its proposed Second Amended Complaint. Plaintiff must file this Complaint within 14 days from the date of this Order. Defendants Dinsdale Brothers, Inc. and Pinnacle Bank must file any response to the Second Amended Complaint within 21 days from the date plaintiff serves them with it. Signed by District Judge Daniel D. Crabtree on 1/10/2017. (ms)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
REZAC LIVESTOCK COMMISSION
Case No. 15-cv-04958-DDC-KGS
PINNACLE BANK and DINSDALE
MEMORANDUM AND ORDER
Plaintiff Rezac Livestock Commission Company, Inc. filed a First Amended Complaint
against defendants Dinsdale Brothers, Inc. and Pinnacle Bank. In that First Amended Complaint,
plaintiff alleged just one claim against Pinnacle Bank—for conversion. On August 26, 2016, the
court granted defendant Pinnacle Bank’s motion to dismiss that conversion claim. Doc. 30.
Three days later, plaintiff filed a Motion to Reconsider and for Leave to File an Amended
Complaint. Doc. 31. Pinnacle Bank opposes plaintiff’s Motion. Doc. 33. For reasons explained
below, the court grants plaintiff’s Motion in part and denies it in part.
Plaintiff sells cattle in St. Marys, Kansas.1 Defendant Dinsdale Brothers, Inc.
(“Dinsdale”), a Nebraska corporation, buys and sells cattle. At some point, Dinsdale hired
Charles Leonard of Leonard Cattle Company to purchase cattle for Dinsdale’s operation. On
September 29, 2015, Mr. Leonard bought 668 head of cattle for Dinsdale from plaintiff.
Altogether, the 668 head cost $980,361.45. Plaintiff shipped the cattle to two Colorado feed lots.
Like the Ceasars Palace Hotel, St. Marys, Kansas, has chosen not to use an apostrophe in its name.
Around October 1, 2015, Dinsdale wired funds to Mr. Leonard’s bank account for Mr.
Leonard to pay plaintiff with, but plaintiff claims that it never received payment for the cattle.
After Dinsdale wired him the funds, Mr. Leonard wrote a check payable to plaintiff for the full
purchase amount. The check was drawn on Mr. Leonard’s checking account with defendant
Pinnacle Bank, a Nebraska bank authorized to do business in Kansas. Although Mr. Leonard is
not a party to this case, his bank is.
The Conversion Claim
In its First Amended Complaint, plaintiff alleged a conversion claim against Pinnacle
Bank, contending that Pinnacle Bank wrongfully refused to honor Mr. Leonard’s check to
plaintiff. Pinnacle Bank filed a motion to dismiss plaintiff’s conversion claim, doc. 19, and the
court granted that motion on August 26, 2016, doc. 30. In its Order, the court explained that
plaintiff had not alleged facts to support applying either one of the two exceptions to the general
rule in Kansas law that banks are not liable for conversion of funds in a general deposit account.
Id. at 4. And so the court ruled that plaintiff had failed to state a claim upon which relief could
be granted against Pinnacle Bank. Id. Three days later, plaintiff filed this Motion to Reconsider
and for Leave to File an Amended Complaint, asking the court to reconsider its Order dismissing
the conversion claim. Doc. 31.
The Colorado Action
Before plaintiff initiated this case in Kansas, Dinsdale and another company who is not a
party to this case sued plaintiff in Colorado on October 21, 2015 (“the Colorado Action”). In
general terms, the Colorado Action arose from the same nucleus of operative facts. The
Colorado federal court dismissed that action on September 19, 2016, for lack of personal
jurisdiction. Dinsdale Bros., Inc. v. Rezac Livestock Comm’n Co., No. 1:15-cv-02422-REBKLM (D. Colo. Sept. 19, 2016), ECF No. 48. Pinnacle was not a party to the Colorado Action.
In the eleven or so months while the Colorado Action was pending, Dinsdale and plaintiff
conducted some discovery. Scheduling Order, Dinsdale Bros., No. 1:15-cv-02422-REB-KLM
(D. Colo. Mar. 2, 2016), ECF No. 28. During that discovery, plaintiff claims that it found
communications between Dinsdale and Pinnacle Bank that provide additional support for a
conversion claim against Pinnacle Bank. Doc. 32 at 4–5. Plaintiff never informed our court
about this additional information, or even advised that it recently had come to possess new
information that buttressed its conversion action against Pinnacle Bank. But, plaintiff’s
reconsideration motion relies heavily on the assertion that this new information exists.
The court views plaintiff’s Motion as two separate motions: (1) a motion to reconsider
its August 26 Order dismissing plaintiff’s conversion claim against Pinnacle Bank (“Motion to
Reconsider”) and (2) a motion for leave to amend plaintiff’s First Amended Complaint (“Motion
to Amend”). The court considers both motions, separately, below.
Motion to Reconsider
Plaintiff correctly brings its Motion to Reconsider under our D. Kan. Rule 7.3(a),2 which
states that “[p]arties seeking reconsideration of dispositive orders or judgments must file a
motion pursuant to” Federal Rules of Civil Procedure 59(e) or 60. Rules 59(e) and 60 apply only
after a court enters judgement. But not all dispositive orders require the court to enter judgment.
So, “[n]either the Federal Rules of Civil Procedure nor this court’s local rules recognize a motion
for reconsideration when it contemplates a dispositive order” before judgment is entered, which
The court references the Rules of Practice of the United States District Court for the District of Kansas throughout
this Order as “D. Kan. Rule __,” followed by the relevant rule number.
is exactly what plaintiff’s Motion to Reconsider contemplates. Ferluga v. Eickhoff, 236 F.R.D.
546, 548–49 (D. Kan. 2006) (citing Nyhard v. U.A.W. Int’l, 174 F. Supp. 2d 1214, 1216 (D. Kan.
2001)). Luckily, our court has faced this conundrum before. In such situations, our court has
relied on its “discretion to revise an interlocutory order at any time prior to the entry of final
judgment” and treated the motion as one for reconsideration. Id. at 549 (citations omitted). In
doing so, our court applies “the legal standards applicable to a Rule 59(e) motion to alter or
amend and/or a motion to reconsider a non-dispositive order under D. Kan. Rule 7.3, which are
essentially identical.” Id.
D. Kan. Rule 7.3(b) requires a movant to base its motion for reconsideration on “(1) an
intervening change in controlling law; (2) the availability of new evidence; or (3) the need to
correct clear error or prevent manifest injustice.” A motion to reconsider “is not appropriate to
revisit issues already addressed or advance arguments that could have been raised in prior
briefing.” Ferluga, 236 F.R.D. at 549 (citing Servants of Paraclete v. Does, 204 F.3d 1005,
1012 (10th Cir. 2000)). So, “a motion for reconsideration is appropriate [only] where the court
has misapprehended the facts, a party’s position, or the controlling law.” Id. (citing Servants of
Paraclete, 204 F.3d at 1012). “The decision whether to grant a motion to reconsider is
committed to the district court’s discretion.” Coffeyville Res. Ref. & Mktg., LLC v. Liberty
Surplus Ins. Corp., 748 F. Supp. 2d 1261, 1264 (D. Kan. 2010) (citing In re Motor Fuel
Temperature Sales Practices Litig., 707 F. Supp. 2d 1145, 1166 (D. Kan. 2010)); Brumark Corp.
v. Samson Res. Corp., 57 F.3d 941, 944 (10th Cir. 1995).
Plaintiff contends that two factors in our Rule 7.3(b) require the court to reconsider its
August 26 Order: the need to correct a clear error and newly discovered evidence. The court
considers both, below.
The Need to Correct Clear Error or Prevent Manifest Injustice
In its August 26 Order, the court held that plaintiff’s First Amended Complaint did not
allege “any facts that would qualify the conversion claim for either” exception to the general rule
in Kansas law that banks cannot be held liable for conversion of funds in a general deposit
account. Doc. 30 at 4. Plaintiff contends that this holding is clear error, and so the court should
change its previous ruling. Plaintiff bases its argument on three things. First, that the court, in
its August 26 Order, added “a technical requirement that [plaintiff] use specific words” to allege
a conversion claim against Pinnacle Bank. Doc. 36 at 5. Second, that plaintiff’s allegations were
sufficient to “fairly advise” Pinnacle Bank of the claim against it. Doc. 32 at 10. And third, that
plaintiff’s allegation that “Dinsdale Bros. and Pinnacle Bank together obtained almost a million
dollars' worth of cattle from [plaintiff] for their mutual benefit and profit” was sufficient to
satisfy the motion to dismiss standard. Id. at 9–10. None of plaintiff’s arguments persuade the
court to reverse its August 26 decision.
First, the court’s August 26 Order did not require plaintiff to allege that Pinnacle Bank
used Mr. Leonard’s funds to set off a debt by using the term “set off.” The court simply held that
the facts alleged in plaintiff’s First Amended Complaint did not suffice to provide a basis for a
reasonable inference that Pinnacle Bank had set off a debt with funds from Mr. Leonard’s
account. See Doc. 30 at 4. The court did not require plaintiff to use specific words to satisfy the
motion to dismiss standard.
Second, plaintiff’s argument that it need only allege facts sufficient to “fairly advise”
Pinnacle Bank of the claim against it is unpersuasive. Simply alleging facts that fairly advise a
defendant of the claim against it is no longer sufficient to satisfy the motion to dismiss standard.
See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 561–62 (2007) (rejecting the liberal, literal reading
of the Conley v. Gibson, 355 U.S. 41 (1957), fair-notice/any-basis standard). Today, courts
require the plaintiff—at minimum—to allege facts sufficient to “give the defendant fair notice of
what the . . . claim is and the grounds upon which it rests.” Khalik v. United Air Lines, 671 F.3d
1188, 1192 (10th Cir. 2012) (emphasis added) (quoting Erickson v. Pardus, 551 U.S. 89, 93
(2007)). So, the question before the court in its August 26 Order was not whether plaintiff
alleged facts sufficient to fairly advise Pinnacle Bank that plaintiff was asserting a conversion
claim. Instead, the court considered whether plaintiff had alleged facts sufficient, if true, to state
a conversion claim against Pinnacle Bank, giving Pinnacle Bank fair notice of the grounds upon
which plaintiff’s conversion claim rested. See id. at 1190–91; Twombly, 550 U.S. at 555–56.
The court thus rejects plaintiff’s reliance on a pleading standard that the Supreme Court has
Third, plaintiff’s allegation that Pinnacle Bank benefited and profited from refusing to
pay Mr. Leonard’s check does not satisfy the motion to dismiss standard. To state a claim for
conversion, plaintiff must allege facts that, if true, support an exception to the Kansas rule—
announced in Moore v. State Bank of Burden—that “money deposited in a bank ordinarily
cannot be the subject of an action for conversion.” 729 P.2d 1205, 1210 (Kan. 1986) (citing
Baker v. Brial, 341 P.2d 987, 988 (Kan. 1959)). The exception that plaintiff invoked in its First
Amended Complaint was established in Iola State Bank v. Bolan, 679 P.2d 720 (Kan. 1984).
Bolan’s exception requires allegations sufficient to support a reasonable inference that Pinnacle
Bank took funds from Mr. Leonard’s account to pay a debt that Mr. Leonard owed Pinnacle
Bank, even though the bank knew that the funds belonged to plaintiff. See Iola State Bank, 679
P.2d at 732. Plaintiff’s allegation that Pinnacle Bank benefited and profited from refusing to pay
Mr. Leonard’s check will not—without more—permit a plausible inference that Pinnacle Bank
refused to pay Mr. Leonard’s check because the bank kept the funds to pay itself on a debt that
Mr. Leonard owed the bank. To be sure, plaintiff might have pleaded facts that could support
such an inference. But a court must judge a complaint’s sufficiency by what it actually alleges—
and not by what it might have alleged. This limitation is particularly important when, as here,
the plaintiff never asserted that it had newly found the capacity to enhance its allegations.
The court concludes that it did not commit clear error when granting Pinnacle Bank’s
motion to dismiss. The court based its decision on the absence of any allegations asserting why
Pinnacle Bank refused to honor Mr. Leonard’s check. The court’s August 26 decision
dismissing plaintiff’s conversion claim against Pinnacle Bank was not clearly erroneous.
Newly Discovered Evidence
Plaintiff next asks the court to reconsider its Order on the motion to dismiss based on
newly discovered evidence. Plaintiff contends that this new evidence makes “Rule 59(e) relief . .
. appropriate” and thus the court should “consider the newly discovered evidence and determine
this case on the merits.” Doc. 36 at 5–6.
A party may seek Rule 59(e) relief to submit new evidence only when it can show “either
that the evidence is newly discovered [or] if the evidence was available at the time of the
decision being challenged, that counsel made a diligent yet unsuccessful effort to discover the
evidence.” Somerlott v. Cherokee Nation Distributors, 686 F.3d 1144, 1153 (10th Cir. 2012)
(quoting Comm. for First Amendment v. Campbell, 962 F.2d 1517, 1523 (10th Cir. 1992)); see
also Comeau v. Rupp, 810 F. Supp. 1172, 1175 (D. Kan. 1992) (reciting similar rule for
evaluating motions to reconsider based on newly discovered evidence). “At the time of the
decision” means evidence that “was available at the time . . . [the motion] was granted”; in other
words, when the court entered its order. Monge v. RG Petro-Mach. (Grp.) Co., 701 F.3d 598,
611 (10th Cir. 2012); see also In re Cook, No. 7-04-17704-NLJ, 2013 WL 2477273, at *1
(D.N.M. June 11, 2013) (explaining that counsel must have made a diligent attempt to obtain the
evidence “if the evidence was available at the time of the ruling” (citing Monge, 701 F.3d at
611)). And, “[m]erely claiming that one did not previously know the importance of the evidence
is not sufficient to support a motion to reconsider.” Farmland Indus., Inc. v. Nat’l Union Fire
Ins. Co. of Pittsburgh, Pa., No. 02-4135-JAR, 2004 WL 2958458, at *1 (D. Kan. Dec. 16, 2004)
(citing Webber v. Mefford, 43 F.3d 1340, 1345 (10th Cir. 1994)). But, even when a plaintiff can
satisfy this standard, “newly discovered evidence must be ‘of such a nature as would probably
produce a different result’. . . [and] the aggrieved party [must] demonstrate ‘how [the] newly
discovered evidence [would have] warranted relief from dismissal.’” Devon Energy Prod. Co.,
L.P. v. Mosaic Potash Carlsbad, Inc., 693 F.3d 1195, 1213 (10th Cir. 2012) (citations and
footnote omitted). Otherwise, reconsideration is not warranted. See id.
Here, plaintiff contends that—through discovery in the Colorado Action—it found
evidence that Pinnacle Bank is Mr. Leonard’s secured and unsecured creditor, and that Pinnacle
Bank applied the funds intended for plaintiff to his debts to the bank. Doc. 32 at 4, 11. Plaintiff
also asserts that it learned that Dinsdale and Pinnacle Bank were in close contact about Mr.
Leonard’s financial status, and that they even discussed whether Dinsdale should pay plaintiff
directly instead of through Mr. Leonard. Id. Had plaintiff alleged these facts in its First
Amended Complaint, the court likely would have reached a different conclusion when ruling on
Pinnacle Bank’s motion to dismiss. Plaintiff thus satisfies the second half of the newlydiscovered-evidence test. But, whether this evidence is newly discovered evidence such that the
court can grant plaintiff relief under Rule 59(e) or Local Rule 7.3(b) is a closer question.
Our court’s decision in Farmland Industries, Inc. v. National Union Fire Insurance Co.
of Pittsburgh, Pennsylvania provides a helpful comparison here. In that case, the court denied a
plaintiff’s motion to reconsider based on newly discovered evidence. 2004 WL 2958458, at *1–
2. The court did so because the “newly discovered evidence” that the plaintiff relied on actually
was evidence the parties had “generated during ‘pretrial discovery.’” Id. at *1. So the evidence
was not new; the plaintiff simply “did not realize the importance of the documents until after
the [c]ourt issued its summary judgment ruling.” Id. Denying the plaintiff’s motion to
reconsider, the court held that a plaintiff’s failure to recognize the importance of evidence “does
not transform otherwise previously available evidence into newly discovered evidence.” Id.
Here, discovery began in the Colorado Action around March 2, 2016. Scheduling Order,
Dinsdale Bros., No. 1:15-cv-02422-REB-KLM (D. Colo. Mar. 2, 2016), ECF No. 28. The court
ruled on Pinnacle Bank’s motion to dismiss on August 26, 2016. Doc. 30. So, discovery in the
Colorado Action had been underway for nearly six months before the court ruled on Pinnacle
Bank’s motion to dismiss—meaning that plaintiff had knowledge of the facts needed to make its
new allegations before the court ruled on Pinnacle Bank’s motion to dismiss. Plaintiff does not
indicate, however, exactly when it discovered the new evidence, so the court cannot determine
just how long plaintiff knew about the evidence before the court’s Order dismissing plaintiff’s
conversion claim. That plaintiff had this evidence before the court’s Order, however, is certain.
Also, it is telling that plaintiff filed this Motion to Reconsider only three days after the court’s
Order dismissing plaintiff’s claims. See Doc. 31.
The allegations plaintiff asks the court to reconsider thus are not based on “newly
discovered evidence” but are, instead, allegations based on evidence that plaintiff possessed
when the court granted Pinnacle Bank’s motion. So, like in Farmland Industries, the evidence
plaintiff relies on is not newly discovered. Indeed, plaintiff asks the court to reconsider its Order
for the same reason as the plaintiff in Farmland Industries: plaintiff did not recognize the
importance of the evidence it discovered in the Colorado Action to the issue presented by
Pinnacle Bank’s motion to dismiss until after the court had ruled on the motion. The court thus
cannot grant plaintiff’s request to alter its dismissal Order based on newly discovered evidence.
But, the court, in its discretion, does not deny plaintiff’s Motion to Reconsider in its
entirety. The court construes plaintiff’s Motion to Reconsider as one asking the court to
reconsider (and reverse) its August 26 decision based on newly discovered evidence or,
alternatively, to amend its August 26 Order “to provide that [plaintiff] be granted leave to file” a
second amended complaint. Doc. 32 at 1. Although the court cannot grant the former—for
reasons already explained—it can grant the latter. E.g., Ferluga, 236 F.R.D. at 550 (denying a
plaintiff’s motion to reconsider but amending the court’s order to grant the plaintiff leave to
Because the “Federal Rules of Civil Procedure state that leave to amend is to ‘be freely
given when justice so requires[,]’” the most appropriate course of action is to allow plaintiff the
opportunity to amend its First Amended Complaint for reasons explained in greater detail below.
Id. (quoting Fed. R. Civ. P. 15(a)). Courts are leery to grant motions to reconsider because the
“[i]mproper use of motions to reconsider ‘can waste judicial resources and obstruct the efficient
administration of justice.’” Edwards v. U.S. Office of Pers. Mgmt., No. 07-2550-KHV-DJW,
2008 WL 4381978, at *3 (D. Kan. Sept. 26, 2008) (quoting Resolution Tr. Corp. v. Williams,
165 F.R.D. 639, 642 (D. Kan. 1996)). This is why movants must shoulder such a substantial
burden to succeed on a motion to reconsider. But here, not granting plaintiff’s request to amend
the court’s dismissal Order would waste judicial resources and very well could obstruct the
efficient administration of justice. The court has not entered any judgment. Discovery has not
yet started. See Doc. 39 (scheduling a planning conference for January 11, 2017). And, perhaps
most importantly, not allowing plaintiff to file an amended complaint could produce an injustice.
Among others, D. Kan. Rule 7.3(b) requires the court to avoid this result if at all possible. The
court thus upholds its Order granting Pinnacle Bank’s motion to dismiss, but grants plaintiff’s
Motion to Reconsider to this extent: the court grants plaintiff’s request to amend its August 26
Order to grant plaintiff leave to file an amended complaint. E.g., Ferluga, 236 F.R.D. at 550
(denying motion to reconsider a previous order but amending that order to allow plaintiff to file a
third amended complaint). In other words, the court amends its August 26, 2016 Order to rule
that the court dismisses plaintiff’s conversion claim against Pinnacle Bank but without prejudice
to plaintiff filing an amended complaint.
To be clear, the court considers this case to present exceptional circumstances and
cautions parties against following plaintiff’s example. When a plaintiff discovers new evidence
that permits it to enhance or supplement its allegations in light of a motion to dismiss, it should
inform the court sooner, not later. The court now explains why plaintiff is entitled to leave to
Motion to Amend
Plaintiff asks the court to grant it leave to amend its First Amended Complaint.
Plaintiff’s proposed Second Amended Complaint realleges its conversion claim against Pinnacle
Bank—now labeled Count IV—adding new factual allegations, and asserts three new claims: (1)
quantum meruit against Dinsdale, (2) unjust enrichment against Pinnacle Bank and Dinsdale, and
(3) civil conspiracy against Pinnacle Bank and Dinsdale. Doc. 31-1 at 7, 9, 11, 13. These three
new claims are, respectively, Counts III, V, and VI of the Proposed Complaint. The court
considers plaintiff’s Motion to Amend under Fed. R. Civ. P. 15. See Jones v. Norton, 809 F.3d
564, 579 (10th Cir. 2015) (applying Rule 15 to motions for leave to amend).
Rule 15(a)(2) provides that courts should “freely give leave when justice so requires.”
The decision whether to grant leave to amend is within the court’s discretion. Zenith Radio
Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330 (1971); Minter v. Prime Equip. Co., 451
F.3d 1196, 1204 (10th Cir. 2006). “Refusing leave to amend is generally only justified upon a
showing of undue delay, undue prejudice to the opposing party, bad faith or dilatory motive,
failure to cure deficiencies by amendments previously allowed, or futility of amendment.”
Frank v. U.S. W., Inc., 3 F.3d 1357, 1365 (10th Cir. 1993) (citations omitted). “A proposed
amendment is futile if the complaint, as amended, would be subject to dismissal for any reason
. . . .” Watson ex rel. Watson v. Beckel, 242 F.3d 1237, 1239–40 (10th Cir. 2001) (citations
Pinnacle Bank asks the court to deny plaintiff’s Motion to Amend for two reasons:
undue delay and futility.3 Doc. 33 at 7–11. The court responds to each issue separately, below.
Though undue delay is one justification for denying a motion for leave to amend,
“[l]ateness does not of itself justify the denial of the amendment.” Minter, 451 F.3d at 1205
(quoting R.E.B., Inc. v. Ralston Purina Co., 525 F.2d 749, 751 (10th Cir. 1975)). But, as the
Tenth Circuit has explained, “[a] party who delays in seeking an amendment is acting contrary to
the spirit of the rule and runs the risk of the court denying permission because of the passage of
time.” Id. (quoting 6 Charles Alan Wright et al., Federal Practice and Procedure § 1488 (2d ed.
Dinsdale did not respond to plaintiff’s Motion to Amend despite plaintiff having served it on all counsel involved
in this litigation. If a party does not respond to a motion, the court “will consider and decide the motion as an
uncontested motion” under D. Kan. Rule 7.4(b), and so may “grant the motion without further notice.” Dinsdale
thus has waived any argument against plaintiff’s Motion to Amend. See D. Kan. Rule 7.4(b) (“[A] party or attorney
who fails to file a responsive brief or memorandum . . . waives the right to later file such a brief or memorandum.”).
1990)). “The longer the delay, ‘the more likely the motion to amend will be denied, as
protracted delay, with its attendant burdens on the opponent and the court, is itself a sufficient
reason for the court to withhold permission to amend.’” Id. (quoting Steir v. Girl Scouts of the
USA, 383 F.3d 7, 12 (1st Cir. 2004)). This is especially true “when the party filing the motion
has no adequate explanation for the delay.” Frank, 3 F.3d at 1365–66 (citing Woolsey v. Marion
Labs., Inc., 934 F.2d 1452, 1462 (10th Cir. 1991)). Indeed, courts in our Circuit “focus
primarily on the reasons for the delay” when considering whether to deny a motion for leave to
amend for undue delay. Minter, 451 F.3d at 1206. Denial is proper when the moving party “is
using Rule 15 to make the complaint a ‘moving target,’ to ‘salvage a lost case by untimely
suggestion of new theories of recovery,’ to present ‘theories seriatim’ in an effort to avoid
dismissal, or to ‘knowingly delay[ ] raising [an] issue until the “eve of trial.”’” Id. (internal
Although the court does not believe that plaintiff has tried to abuse Rule 15, it is reluctant
to find plaintiff’s proffered reason for delay adequate. Plaintiff contends that it could not amend
its First Amended Complaint before now because this case was stayed “for over eleven months
while motions to dismiss were pending,” and that this stay was not lifted until sometime before
September 26, 2016, when plaintiff filed its Reply. Doc. 36 at 1–2. Neither characterization is
accurate. Though the court did issue a stay in this case, the stay only applied to Count II of
plaintiff’s First Amended Complaint—a claim asserted only against Dinsdale. Doc. 34. And,
the stay was in place for just two months—from September 19, 2016 to November 18, 2016.
Docs. 34, 43. So, no stay ever prevented plaintiff from amending its claims against Pinnacle
Bank. Indeed, Pinnacle Bank was no longer a party to this action when the court’s stay took
effect. See Doc. 30 (dismissing claim against Pinnacle Bank on August 26, 2016).
Nonetheless, plaintiff contends that all the parties believed this case had been stayed
since March 2016. On March 1, 2016, plaintiff “attempted to submit a Report of Parties[’]
Planning Meeting” in this case. Doc. 32 at 3. That same day, a law clerk for the assigned
Magistrate Judge corresponded with plaintiff’s counsel, explaining that “[t]he court has not set a
scheduling conference in this case because of the pending motions to dismiss, transfer, or stay
the case,” and that the court would not “enter an initial order setting deadlines” for the parties to
confer and draft a planning report until those pending motions were resolved. Id. at 3–4. This
email, plaintiff contends, “effectively stayed” the case and so precluded plaintiff from amending
its claims against Pinnacle Bank. Doc. 36 at 1; Doc. 32 at 3–4.
An email from a judge’s law clerk—alone—cannot stay a case. See Landis v. N. Am.
Co., 299 U.S. 248, 254 (1936) (explaining that the power to stay a case is “inherent in every
court”); Scriptpro LLC v. Wal-Mart Stores, Inc., No. 05-2244-CM-JPO, 2006 WL 2294859, at
*2 (D. Kan. Aug. 8, 2006) (staying case and requiring counsel to communicate with magistrate
judge). And, the fact that “[c]ounsel for [plaintiff], Dinsdale Bros., and Pinnacle Bank conferred
and agreed that . . . [the] email meant [this case] was stayed,” does not transform an explanatory
email into a stay.
The court cannot find plaintiff’s reason for delay wholly adequate. Still, the overall
purpose of Rule 15 is “to provide litigants ‘the maximum opportunity for each claim to be
decided on its merits rather than on procedural niceties.’” Minter, 451 F.3d at 1204 (quoting
Hardin v. Manitowoc-Forsythe Corp., 691 F.2d 449, 456 (10th Cir. 1982)). Here, discovery has
not begun and so allowing plaintiff to amend its First Amended Complaint will not prejudice
Pinnacle Bank. The court thus concludes that the broader interests served by Rule 15 are
sufficiently weighty to overcome any perceived shortcomings in plaintiff’s proffered reason for
delay. The court thus finds plaintiff’s reason for delay excusable, but cautions against any
thinking that the court would follow the same course in the future.
Pinnacle Bank also asserts that Counts IV, V, and VI of plaintiff’s proposed Second
Amended Complaint are subject to dismissal under Rule 12(b)(6) for failing to state a claim upon
which relief may be granted. Plaintiff contends that its conversion claim—Count IV—is not
futile, but does not address Pinnacle Bank’s arguments against Counts V and VI. Nonetheless,
the court grants plaintiff’s Motion to Amend.
If a party opposes a motion for leave to amend solely on the basis that the amendment
would be futile, the court may exercise its discretion to “allow the amendment . . . [so long as]
the party opposing it will have an opportunity to challenge the sufficiency of newly added claims
through a motion to dismiss.” Koehler v. Freightquote.com, Inc., No. 12-2505-KHV-GLR, 2013
WL 3878170, at *4 (D. Kan. July 26, 2013) (citing Tommey v. Comp. Scis. Corp., No. 11-2214EFM, 2012 WL 646022, at *2 (D. Kan. Feb. 28, 2012)); accord Monge v. St. Francis Health
Ctr., Inc., No. 12-2269-EFM, 2013 WL 328957, at *3 (D. Kan. Jan. 10, 2013), adopted by 2013
WL 328986 (D. Kan. Jan. 29, 2013). The same is true when a party opposes an amended on
multiple grounds. If the court finds the party’s other grounds of opposition unpersuasive, it
“may properly exercise its discretion to allow the amended complaint” as if the party had
opposed the amendment only on the basis of futility. Monge, 2013 WL 328957, at *3 (citing
Tommey, 2012 WL 646022, at *2). Courts especially favor this approach if the party opposing a
motion for leave to amend only opposes part of the proposed amended complaint. See Koehler,
2013 WL 3878170, at *4 (granting motion for leave to amend complaint because the defendant
did not “alleg[e] that the amended complaint would be subject to dismissal, but rather that one of
the new claims . . . [was] subject to dismissal”).
Here, the court found Pinnacle Bank’s undue-delay argument unpersuasive and Pinnacle
Bank will be able to challenge the sufficiency of plaintiff’s new claims in a motion to dismiss.
See Fed. R. Civ. P. 15(a)(3). Moreover, Pinnacle Bank opposes only part of the proposed
Second Amended Complaint and does not contend that it will be prejudiced if the court grants
plaintiff’s Motion to Amend. E.g., Teran v. GB Int’l, S.P.A., No. 11-2236-JAR, 2013 WL
3878160, at *3 (D. Kan. July 26, 2013) (allowing amendment despite four months’ delay and
futility argument in part because the defendants did not contend that allowing the proposed
amendment would prejudice them in any way).
Granting plaintiff’s Motion to Amend and allowing plaintiff to file its proposed Second
Amended Complaint under these circumstances “comports with the liberal amendment policy of
Fed. R. Civ. P. 15(a) without creating prejudice against the opposing party.” Id. So, at this early
stage of the litigation, the court concludes that “the better course is to allow the amended
complaint and address any contention of futility upon a dispositive motion.” Koehler, 2013 WL
3878170, at *4; Monge, 2013 WL 328957, at *3; Tommey, 2012 WL 646022, at *2.
The court thus grants plaintiff’s Motion to Amend. Plaintiff must file its proposed
Second Amended Complaint within 14 days of the date of this Order. D. Kan. Rule 15.1(b).
Pinnacle Bank and Dinsdale then have 21 days from the date that plaintiff serves its Second
Amended Complaint to respond. See Fed. R. Civ. P. 15(a)(3) (stating “[u]nless the court orders
otherwise” and so granting the court power to set a different deadline than the 14 days provided
for in Rule 15(a)(3)); see also Gen. Mills, Inc. v. Kraft Foods Glob., Inc., 495 F.3d 1378, 1380
(Fed. Cir. 2007) (“Rule 15(a) permits a district court to ‘otherwise order[ ]’ a different deadline
for responding to an amended complaint, and where a party may be prejudiced by being forced
to answer an amended complaint that the party also moves to dismiss, we expect that most
district courts would otherwise order a different deadline on the party’s motion.” (citations
omitted)); id. at 1379 (explaining that Rule 12(a)(4)(A) does not apply when an amended
complaint is filed after the time to respond to the original pleading has elapsed, and so Rule
15(a)(3)’s 14-day deadline controls).
IT IS THEREFORE ORDERED BY THE COURT THAT plaintiff Rezac Livestock
Commission Company, Inc.’s Motion to Reconsider and for Leave to File an Amended
Complaint (Doc. 31) is granted in part and denied in part. The court denies plaintiff’s motion to
alter or amend the part of its August 26 ruling where the court dismissed plaintiff’s conversion
claim against Pinnacle Bank. But, the court grants plaintiff’s motion to amend its August 26
ruling to allow plaintiff to seek leave to amend its First Amended Complaint. The court also
grants plaintiff’s motion for leave to file its proposed Second Amended Complaint. Plaintiff
must file this Complaint within 14 days from the date of this Order. Defendants Dinsdale
Brothers, Inc. and Pinnacle Bank must file any response to the Second Amended Complaint
within 21 days from the date plaintiff serves them with it.
IT IS SO ORDERED.
Dated this 10th day of January, 2017, at Topeka, Kansas.
s/ Daniel D. Crabtree
Daniel D. Crabtree
United States District Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?