Spreadbury v. Bitterroot Public Library et al

Filing 24

RESPONSE to Motion re 21 MOTION for Leave to File Second Amended Complaint filed by City of Hamilton. (Leonard, Thomas)

William L. Crowley
Natasha Prinzing Jones
Thomas J. Leonard
BOONE KARLBERG P.C.
201 West Main, Suite 300
P.O. Box 9199
Missoula, MT 59807-9199
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
[e-mail]
Attorneys for Defendants Bitterroot Public Library,
City of Hamilton and Boone Karlberg P.C.
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
MISSOULA DIVISION
MICHAEL E. SPREADBURY,

Cause No. CV-11-064-M-DWM

Plaintiff,

CITY AND LIBRARY
DEFENDANTS’ BRIEF IN
OPPOSITION TO PLAINTIFF’S
MOTION FOR LEAVE TO FILE
SECOND AMENDED
COMPLAINT

v.
BITTERROOT PUBLIC LIBRARY,
CITY OF HAMILTON, LEE
ENTERPRISES, INC., and BOONE
KARLBERG P.C.
Defendants.

On behalf of Defendants Bitterroot Public Library, Dr. Robert Brophy,
Trista Smith, Nansu Roddy, City of Hamilton, Jerry Steele, Steve Snavely, Steven
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Bruner-Murphy, Ryan Oster, Kenneth S. Bell and Jennifer B. Lint, this responds to
Plaintiff Michael E. Spreadbury’s (“Spreadbury”) Second Amended Complaint,
filed without leave of court on May 4, 2011. The Court should deny leave to file
the amended pleading because the proposed amendments are futile.
DISCUSSION
I.

SPREADBURY MUST OBTAIN LEAVE OF COURT TO FILE HIS
SECOND AMENDED COMPLAINT.
Rule 15, Federal Rules of Civil Procedure, provides “[a] party may amend

its pleading once as a matter of course. . . .” Fed. R. Civ. P. 15(a)(1) (emphasis
added). Otherwise, “a party may amend its pleading only with the opposing
party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). Here,
Spreadbury amended his complaint once as a matter of course. The City and
Library Defendants oppose his latest amendments. As such, Spreadbury’s Second
Amended Complaint may only be filed with leave of Court. See id.; see also, e.g.,
Glaros v. Pense, 628 F.2d 679, 686 (1st Cir. 1980) (party entitled to only one
amendment as a matter of course); Deutsch v. Health Ins. Plan of Greater New
York, 573 F.Supp. 1443, 1445 (S.D.N.Y. 1983) (same).
Before a scheduling order is entered, leave to amend shall be “freely given.”
E.g., Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 2000). However,
that is not to say that leave to amend should be granted automatically. See Ynclan
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v. Dept. of Air Force, 943 F.2d 1388, 1391 (5th Cir. 1991). Rather, leave should
be denied where, as here, the proposed amendment is futile and subject to
dismissal. Saul v. U.S., 928 F.2d 829, 843 (9th Cir. 1991). An amendment is
“futile” when no set of facts can be proved under the amendment that would
constitute a valid claim. Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir.
1988). Such is the case with Spreadbury’s Second Amended Complaint.
II.

SPREADBURY’S PROPOSED AMENDMENTS ARE FUTILE.
The vast majority of Spreadbury’s Second Amended Complaint is identical

to his prior pleading. Spreadbury does attempt to add a new legal theory (“public
fraud”), and also includes two legal arguments, one challenging the Court’s
jurisdiction over his emotional distress claims, and one challenging the
justiciability of pending motions to dismiss. More specifically, the proposed
amendments that can be fairly characterized as “substantive” (Spreadbury makes a
number of minor editing changes) are as follows:
•

Spreadbury seeks to add a new theory entitled “public fraud,” in which he
asserts that the Bitterroot Public Library is accepting “ineligible funds as a
municipality in this cause of action” which are being paid to Boone Karlberg
PC as counsel. (Second Amended Complaint, p. 1.)

•

Spreadbury adds allegations supporting the jurisdiction of this Court, which
are unnecessary following removal. Spreadbury then asserts that while the
Court has jurisdiction over most of his claims, the claims for infliction of
emotional distress are state law causes of action over which this Court does
not have jurisdiction. (Second Amended Complaint, p. 2.)
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•

Speadbury asserts that Defendants’ motions to dismiss are “improper”
because they were submitted before he amended his complaint “for Federal
jurisdiction.” (Second Amended Complaint, p. 2.)

•

On pages 19 and 20 of the Second Amended Complaint, Spreadbury adds a
series of allegations of additional defamatory statements by Defendants.

•

Spreadbury increases the amount of damages sought by $5 million ($2
million additional in compensatory damages, $3 million additional in
punitive damages), for a grand total of $27,055,000.
Each of Spreadbury’s proposed amendments is futile, and is addressed in

turn below.
A.

“Public Fraud”

Spreadbury seeks to add the following theory in his Second Amended
Complaint: “Public fraud is being committed by Defendant Bitterroot Public
Library by accepting ineligible funds as a municipality in this cause of action,
Defendant Boone Karlberg PC is accepting these funds as counsel.” (Second
Amended Complaint, p. 1 (emphasis in original).) Spreadbury cannot prove any
set of facts that would entitle him to relief under the “public fraud” theory.
Article III of the Constitution limits the judicial power of the United States
to the resolution of “Cases” and “Controversies,” and “‘Article III standing ...
enforces the Constitution's case-or-controversy requirement.’” DaimlerChrysler
Corp. v. Cuno, 547 U.S. 332, 342 (2006). “No principle is more fundamental to
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the judiciary's proper role in our system of government than the constitutional
limitation of federal-court jurisdiction to actual cases or controversies.” Raines v.
Byrd, 521 U.S. 811, 818 (1997).
Standing is one of the controlling elements in the definition of case or
controversy under Article III. ASARCO Inc. v. Kadish, 490 U.S. 605, 613 (1989).
To establish standing, “[a] plaintiff must allege personal injury fairly traceable to
the defendant's allegedly unlawful conduct and likely to be redressed by the
requested relief.” Allen v. Wright, 468 U.S. 737, 751(1984) (emphasis added); see
also Hein v. Freedom From Religion Found., Inc., 551 U.S. 587, 597-603 (2007).
Here, Spreadbury claims the Bitterroot Public Library is committing a fraud
on the public by accepting coverage in its defense of this lawsuit. (Second
Amended Compliant, p. 1.) The only interest Spreadbury may have as to the
alleged “public fraud,” therefore, is as a taxpayer. (Of course, taking Spreadbury’s
Motion To Proceed In Forma Pauperis at face value, Spreadbury does not appear to
be a taxpayer either.) To the extent Spreadbury can claim any interest as a
taxpayer, his interest is too generalized and attenuated to support Article III
standing.
Because the interests of the taxpayer are, in essence, the interests of the
public at large, deciding a constitutional claim based solely on taxpayer standing
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“would be[,] not to decide a judicial controversy, but to assume a position of
authority over the governmental acts of another. . . .” Frothingham v. Mellon, 262
U.S. 447, 489 (1923); see also Doremus v. Board of Ed. of Hawthorne, 342 U.S.
429, 434 (1952). “[A] plaintiff raising only a generally available grievance about
government-claiming only harm to his and every citizen's interest in proper
application of the Constitution and laws, and seeking relief that no more directly
and tangibly benefits him than it does the public at large-does not state an Article
III case or controversy.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 573-574
(1992).
The same is true under Montana law. The Montana Supreme Court has
noted that “standing is a threshold jurisdictional question, especially in cases where
a statutory or constitutional violation is claimed to have occurred.” Fleenor v.
Darby School Dist., 128 P.2d 1048, ¶ 7 (Mont. 2008). It is “well established” in
Montana “that all persons who fail to allege any personal interest or injury, beyond
that common interest of all citizens and taxpayers, lack standing.” See id., ¶ 9
(citing Flesh v. Bd. of Tr. Of J. School Dist. 2, 786 P.2d 4, 7 (Mont. 1990)). Thus,
the injury alleged must be personal to the plaintiff as distinguished from the
community in general. Id.

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An individual may seek recovery for a fraud allegedly perpetrated against
the individual, but the same individual may not generally seek to recover damages
on the basis of a “public fraud.” Thus, as to the allegations the Bitterroot Library is
accepting “ineligible funds as a municipality,” Spreadbury’s interest is that of a
member of the general public only. He has no standing to pursue this claim under
state or federal law.
Moreover, on a closely-related question, Spreadbury has not alleged an
interest upon which to base a viable civil rights claim. See, e.g., Inyo County,
California v. Paiute-Shoshone Indians of Bishop Community of the Bishop Colony,
538 U.S. 701, 712 (2003) (“42 U.S.C. § 1983 was designed to secure private rights
against government encroachment”). To state a claim under Section 1983, a
plaintiff must allege that a state actor has violated “a right secured by the
Constitution and the laws of the United States.” West v. Atkins, 487 U.S. 42, 48
(1988). Here, Spreadbury has not alleged, nor could he, that the Bitterroot Public
Library’s acceptance of “ineligible funds” somehow violates his rights under the
U.S. Constitution. See, e.g., Paul v. Davis, 424 U.S. 693, 701 (1976) (holding a
due process violation must be based on a real liberty or property interest of the
individual asserting the violation).

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Also, with respect to the acceptance of insurance coverage, there is no act or
omission of the Bitterroot Public Library upon which to base a claim. There is no
allegation that the Bitterroot Public Library determines whether insurance coverage
is available for a particular claim. Nor is there support for the dubious proposition
that accepting insurance coverage is somehow wrongful. In fact, based on its
information, MMIA has determined that coverage exists for the defense of this
claim. In other words, even if Spreadbury could claim he has sustained personal
harm by way of the Bitterroot Public Library’s insurance coverage, no wrongful
act or omission has been alleged that could lead to liability under any set of facts.
Similarly, if Spreadbury wishes to allege an action for “public fraud,” he
must not only identify a wrongful act or omission, he must plead the action with
particularity. Fed. R. Civ. P. 9(b) (“In alleging fraud or mistake, a party must state
with particularity the circumstances constituting fraud or mistake.”). In order to
plead fraud with particularity, “[e]very element of the cause of action for fraud
must be alleged…with sufficient specificity to allow defendant to understand fully
the nature of the charge made.” Miron v. Herbalife Int’l, Inc., 2001 WL 564338
(9th Cir. 2001). In order for the defendant to fully understand the nature of the
charge, the plaintiff must set forth exactly what statements were made that were
false, and precisely why the statements were false. See In re Glenfed, Inc. Sec.
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Litig. 42 F.3d 1541, 1547-48 (9th Cir. 1994). Needless to say, Spreadbury’s
allegations do not come close to meeting this standard. If the Bitterroot Public
Library made false statements to the public regarding insurance coverage,
Spreadbury needs to identify them and state how they were false. Fed. R. Civ. P.
9(b).
In sum, Spreadbury’s “public fraud” claim is futile for a number of reasons.
He has no standing to bring the claim. There is no constitutional right to base the
claim upon. There is no wrongful act or omission of the Bitterroot Public Library.
Also, Spreadbury has failed to plead fraud with particularity. For these reasons,
the Court should deny leave to file the Second Amended Complaint.
B.

Jurisdiction Over Emotional Distress Claims

Spreadbury asserts this Court does not have jurisdiction over his emotional
distress claims because they arise under state law. (Second Amended Complaint,
p. 2.) Spreadbury is incorrect. The Court has supplemental jurisdiction over
Plaintiff’s state law claims, including his infliction of emotional distress claims. 28
U.S.C. § 1367. As such, the amendment is futile.
C.

Pending Motions To Dismiss

Contrary to Spreadbury’s argument, his decision to file a Second Amended
Complaint does not moot pending motions to dismiss or render them “improper.”
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Defendants were not required to wait for Spreadbury to amend his pleading “for
Federal jurisdiction” before filing motions under Rule 12(b)(6). Indeed,
Spreadbury was under no obligation to amend his complaint at all after removal to
federal court. Fed. R. Civ. P. 81(c)(2) (“After removal, repleading is unnecessary
unless the court orders it.”).
Moreover, the motions to dismiss should be decided even if Spreadbury is
granted leave to file his amended pleading. As set forth above, very little of
substance has been changed in the Second Amended Complaint. For example,
none of the new allegations affect any part of Boone Karlberg’s pending motion.
Although Plaintiff has added new allegations that “Boone Karlberg defames
Plaintiff in Defendants April 26, 2011 Answer to this court. . . .” (Second
Amended Complaint, ¶ 92), and “alleges false information of crime in writing
Defendants answer. . . .” (Second Amended Complaint, ¶ 93), these allegations
only add to a list of allegedly defamatory statements made by Boone Karlberg in
various court records. The allegations fail for the same reasons already set forth in
Boone Karlberg’s motion – Spreadbury’s claims against Boone Karlberg are based
exclusively on statements which are privileged as a matter of law. See, e.g.,
Montana Bank of Circle, N.A. v. Ralph Meyers & Son, Inc., 769 P.2d 1208, 1213
(Mont. 1989) (“It has long been held that statements made in a judicial proceeding
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are absolutely immune and a cause of action for defamation cannot be predicated
thereon.”). Thus, the new factual allegations have no bearing on the legal issues
now before the Court, and Spreadbury’s procedural manoeuver should not delay
the Court’s disposition of the pending motions to dismiss.
D.

Increased Damages

In his latest complaint, Spreadbury seeks an additional $5 million in
damages. This brings his grand total to $27,055,000. There is no requirement to
plead a specific amount of damages. Fed. R. Civ. P. 8(a). Moreover, if a
complaint alleges damages in excess of the federal amount-in-controversy
requirement, as here, then the amount-in-controversy requirement is presumptively
satisfied unless “it appears to a ‘legal certainty’ that the claim is actually for less
than the jurisdictional minimum.” Lowdermilk v. U.S. Bank Natl. Ass'n, 479 F.3d
994, 998 (9th Cir. 2007). Thus, Spreadbury’s amendment is unnecessary and
futile.

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CONCLUSION
For the reasons stated, the Court should deny leave to file the Second
Amended Complaint.
DATED this 9th day of May, 2011.

/s/Thomas J. Leonard
Thomas J. Leonard
BOONE KARLBERG P.C.
Attorneys for Defendants
Bitterroot Public Library, City of
Hamilton and Boone Karlberg P.C.

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CERTIFICATE OF COMPLIANCE
Pursuant to Rule 7(d)(2)(E), Local Rules of the United States District Court,
District of Montana, I hereby certify that the textual portion of the foregoing brief
uses a proportionally spaced Times New Roman typeface of 14 point; is double
spaced; and contains approximately 2,227 words, excluding the parts of the brief
exempted by L.R. 7(d)(2)(E).
DATED this 9th day of May, 2011.
/s/ Thomas J. Leonard
Thomas J. Leonard
BOONE KARLBERG P.C.
Attorneys for Defendants Bitterroot
Public Library, City of Hamilton and
Boone Karlberg P.C.

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CERTIFICATE OF SERVICE
I hereby certify that, on the 9th day of May, 2011, a copy of the foregoing
document was served on the following persons by the following means:
__1____

CM/ECF

_______

Hand Delivery

__2____

Mail

_______

Overnight Delivery Service

_______

Fax

_______

E-Mail

1.
2.

Clerk, U.S. District Court
Michael E. Spreadbury
700 South Fourth Street
Hamilton, MT 59840

/s/ Thomas J. Leonard
Thomas J. Leonard
BOONE KARLBERG P.C.
Attorneys for Defendants Bitterroot Public
Library, City of Hamilton,
and Boone Karlberg P.C.

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