Bank of the West v. Whitney et al

Filing 122

MEMORANDUM DECISION AND ORDER DENYING MOTION TO AMEND-For the reasons listed in the Order the court DENIES Plaintiff's Motion for Leave to Amend. IT IS SO ORDERED. Signed by Magistrate Judge Brooke C. Wells on 1/30/17. (jmr)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
BANK OF THE WEST,

MEMORANDUM DECISION AND ORDER
DENYING MOTION TO AMEND

Plaintiff,
v.

Case No. 2:15-cv-622 CW

NEWELL K. WHITNEY, et al.,

District Judge Clark Waddoups

Defendants.

Magistrate Judge Brooke Wells

Plaintiff Bank of the West (BOTW) moves the court under Rule 15(a) to file an Amended
Complaint. 1 BOTW also seeks an order vacating the existing Scheduling Order so that “a new
scheduling order can be entered after the newly-added defendants have been served.” 2
This matter involves an effort to collect on a $2 million judgment entered against Newell
Whitney in 2012. Mr. Whitney claims to have no personal assets that BOTW can pursue to
satisfy this judgment. In the original Complaint BOTW alleges claims for resulting trust, reverse
piercing of the corporate veil, fraudulent transfer and seeks declaratory judgment regarding the
debt from Whitney Trust to the Whitney Limited Partnership. 3
DISCUSSION
Federal Rule 15(a)(2) provides that “[t]he court should freely give leave when justice so
requires.” 4 “The district court has ‘wide discretion to recognize a motion for leave to amend in

1

Docket no. 104.

2

Mtn. p. 2.

3

Complaint p. 13-18, docket no. 2.

4

Fed. R. Civ. P. 15(a)(2).

the interest of a just, fair or early resolution of litigation.’” 5 “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.” 6
The Supreme Court in Foman cited “undue delay” as one of the justifications for denying
a motion to amend. 7 Lateness, however, “does not of itself justify the denial of the
amendment.” 8 But, 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.’” 9 In determining whether a movant has
unduly delayed in bringing a motion to amend, the Tenth Circuit “focuses primarily on the
reasons for the delay.” 10 For example, courts may deny leave to amend when the movant “has
no adequate explanation for the delay.” 11 In addition, courts may deny leave to amend for lack
of excusable neglect “where the moving party was aware of the facts on which the amendment
was based for some time prior to the filing of the motion to amend.” 12
Under the Amended Scheduling Order entered June 2, 2016 the last day to amend the
pleadings and add parties is April 29, 2016. 13 BOTW seeks leave to amend nearly six months

5

Bylin v. Billings, 568 F.3d 1224, 1229 (10th Cir. 2009) (quoting Calderon v. Kan. Dep't of Soc. & Rehab. Servs.,
181 F.3d 1180, 1187 (10th Cir. 1999)).

6

Id. (quoting Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993)).

7

Foman v. Davis, 371 U.S. 178, 182 (1962).

8

R.E.B., Inc. v. Ralston Purina Co., 525 F.2d 749, 751 (10th Cir. 1975).

9

Minter v. Prime Equipment Co. 451 f.3d 1196, 1205 (10th Cir. 2006) (quoting Steir v. Girl Scouts, 383 F.3d 7, 12
(1st Cir. 2004)).

10

Id. at 1206.

11

Id. (quoting Frank v. U.S. West, 3 F.3d 1357, 1365-66 (10th Cir. 1993)).

12

Fed. Ins. Co. v. Gates Learjet Corp., 823 F.2d 383, 387 (10th Cir. 1987).

13

Docket no. 85.

2

later in November 2016. BOTW argues that the “information supporting the claims set forth in
the Amended Complaint was not discovered by BOTW (or, at least, its significance was not
appreciated), until the end of September, when BOTW conducted the depositions of defendants
Newel Whitney and Connie Whitney, their son Kyle Whitney, and also their accountant and
estate planning/asset protection lawyer.” 14 BOTW acknowledges that in early May 2016,
Defendants produced “transaction reports” that set forth in detail the distributions made by
Defendant Fox Run, LLC to its members and partners. But it was not until September 2016
when Plaintiff’s counsel was preparing for depositions that it noticed the distributions were made
around the same time that summary judgment was entered against Defendant Newell Whitney
individually in 2011.
Defendants argue this failure by Plaintiff’s attorney to review the documents until shortly
before the depositions does not justify the delay in seeking to amend the complaint. Further,
such a delay is prejudicial.
The Court is persuaded by Defendants arguments. Courts may deny leave to amend for
lack of excusable neglect “where the moving party was aware of the facts on which the
amendment was based for some time prior to the filing of the motion to amend.” 15 Here, the
court finds Plaintiff should have been aware of the facts that give rise to its proposed Amended
Complaint months before it sought leave to amend. Plaintiff has failed to show such neglect was
excusable and has failed to offer an adequate explanation for the delay. Indeed the depositions
that prompted review of the documents were postponed twice at Plaintiffs request.

14

Mtn. p. 3.

15

Fed. Ins. Co. 823 F.2d at 387.

3

In addition, the court finds allowing Plaintiff to amend this late in the case is prejudicial
to Defendants. Fact discovery has concluded and the deadline for filing dispositive or potentially
dispositive motions is fast approaching.
Finally, the court declines Plaintiff’s invitation to enter an amended scheduling order
because it denies the motion to amend. 16
ORDER
For these reasons the court DENIES Plaintiff’s Motion for Leave to Amend.
IT IS SO ORDERED.
DATED this 30 January 2017.

Brooke C. Wells
United States Magistrate Judge

16

The court notes an Amended Scheduling Order was already entered on January 3, 2017.

4