Allstate Insurance Company et al v. Balle et al

Filing 61

ORDER that Plaintiffs file a sealed and amended complaint curing the deficiencies in their pleadings within fifteen (15) days, after which, Defendants may re-file their motions to dismiss. Defendants Motions to Dismiss 7 , 9 , 13 , 59 are DENIED as moot. Signed by Judge Kent J. Dawson on 7/26/11. (Copies have been distributed pursuant to the NEF - ECS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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ALLSTATE INSURANCE COMPANY, et
al.,

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Case No. 2:10-CV-02205-KJD-GWF
Plaintiffs,

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ORDER
v.

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PETER MARIO BALLE, D.C., et al.,
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Defendants.
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Presently before the Court are Defendants’ Motions to Dismiss (##7, 9, 13, 59). Plaintiffs

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filed Oppositions (##12, 19, 20, 60) to which Defendants replied. Specifically, Defendants request

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that the Court dismiss Plaintiffs’ cause of action pursuant to Fed. R. Civ. P. 12(b)(6) and 9(b) for

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failure to state a claim upon which relief can be granted.

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Plaintiffs filed their initial Complaint (#1) on December 20, 2010. The initial Complaint (#1)

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and Amended Complaint (#17) allege violations of federal and state Racketeering and Corrupt

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Organizations Acts with various fraud-based activities as the predicate crimes. Plaintiffs also include

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counts of common-law fraud and conspiracy to defraud.

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I. Legal Standard

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Rule 9(b) states that a party asserting a claim for fraud “must state with particularity the

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circumstances constituting fraud.” Fed. R. Civ. P. 9(b). This heightened requirement may be met

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by making allegations “specific enough to give defendants notice of the particular misconduct which

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is alleged to constitute the fraud charged so that they can defend against the charge and not just deny

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that they have done anything wrong.” Bly-Magee v. California, 236 F.3d 1014, 1018 (9th Cir. 2001)

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(quoting Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993)). Such allegations must “state the

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time, place, and specific content of the [fraud] as well as the identities of the parties to the [fraud].”

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Schreiber Distrib. Co. v. Serve-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986).

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II. Analysis

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A. Heightened Pleading Standard

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Defendants correctly note that Plaintiffs’ complaint fails to meet the heightened pleading

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standard of cases involving fraud under Rule 9(b) since Plaintiffs’ Amended Complaint (#17) fails to

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state with particularity the circumstances constituting fraud. However, Plaintiffs aver in their

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Opposition (#12) that they possess sufficient information to meet the heightened pleading standard of

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Rule 9(b), but refrained from including the information in their pleadings because of its confidential

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nature. Specifically, Plaintiffs refrained from including in their pleadings information regarding the

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identities, medical treatments, and dates of medical treatments of the patients that Defendants

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allegedly used to commit the alleged fraud.

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Plaintiffs requested that the Court grant a protective order so they could furnish the Court

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with confidential facts that would allow them to state, with particularity, the circumstances

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constituting fraud. Magistrate Judge George Foley, Jr. entered a Protective Order Governing

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Confidentiality of Documents (#52) on June 13, 2011. The Protective Order provides that, with the

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Court’s leave, the parties may seal documents that are deemed to contain confidential or secret

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information. Plaintiffs further request that, in the event that the Court finds Plaintiffs’ pleadings

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insufficient to meet Rule 9(b) standards, the Court grant them leave to amend.

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B. Leave to Amend

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“After a party has amended a pleading once as a matter of course, it may only amend further

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after obtaining leave of the court, or by consent of the adverse party.” Fed. R. Civ. P. 15(a). Rule

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15(a)(2) provides that courts “should freely give leave [to amend] when justice so requires.” Fed. R.
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Civ. P. 15(a)(2). Under this standard, there is a general “policy to permit amendment with ‘extreme

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liberality.’” Chodos v. West Publ’g Co., 292 F.3d 992, 1003 (9th Cir. 2002) (quoting Morongo Band

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of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990)). This “extreme liberality” is

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tempered, however, by other considerations. Thus, “[w]hen considering a motion for leave to

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amend, a district court must consider whether the proposed amendment results from undue delay, is

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made in bad faith, will cause prejudice to the opposing party, or is a dilatory tactic.” Id. (citing

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Foman v. Davis, 371 U.S. 178, 182 (1962)); see also Forsyth v. Humana, Inc., 114 F.3d 1467, 1482

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(9th Cir. 1997). The reviewing court should also consider the futility of the proposed amendment.

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See Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (citing Foman,

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371 U.S. at 182). Where there is undue prejudice to the opposing party, see Eminence, 316 F.3d at

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1052, or futility of amendment, see Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995), such factors

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can, by themselves, “justify the denial of a motion for leave to amend,” Id. Additionally, where there

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is “a strong showing of any of the remaining . . . factors,” denial of a motion for leave to amend is

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also justified. Eminence, 316 F.3d at 1052.

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The Court finds that Plaintiffs’ request for leave to amend was not made in bad faith or as an

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attempt to cause delay. Additionally, granting Plaintiffs leave to amend would not unduly prejudice

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the Defendants. The Court finds that Plaintiffs’ request for leave to amend is not futile and should

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therefore be granted. Due to the sensitive nature of the information required to cure the defects in

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Plaintiffs’ pleadings, Plaintiffs have leave of the Court to seal the newly-amended complaint

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pursuant to the Protective Order Governing Confidentiality of Documents (#52).

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III. Conclusion

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Accordingly, IT IS HEREBY ORDERED that Plaintiffs file a sealed and amended

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complaint curing the deficiencies in their pleadings within fifteen (15) days, after which, Defendants

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may re-file their motions to dismiss.

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IT IS FURTHER ORDERED that Defendants’ Motions to Dismiss (##7, 9, 13, 59) are
DENIED as moot.
Dated this 26th day of July 2011.

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__________________________
Kent J. Dawson
United States District Judge

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