City of Issaquah v. ORA Talus 90, LLC et al

Filing 138

ORDER denying Plaintiff City of Issaquah's 108 Motion for Leave to File Amended Complaint. Signed by Judge Ricardo S. Martinez. (PM)

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 1 of 14

1
2
3
4
5
6

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

7
8
9
10

CITY OF ISSAQUAH, a municipal
corporation,
Plaintiff,

11
v.

12
13
14

CASE NO. C18-00910-RSM
ORDER DENYING PLAINTIFF’S MOTION
FOR LEAVE TO FILE AMENDED
COMPLAINT

ORA TALUS 90, LLC, a Delaware limited
liability company; and RESMARK EQUITY
PARTNERS, LLC, a Delaware limited liability
company,

15

Defendants.

16
17
18

ORA TALUS 90, LLC, a Delaware limited
liability company; and RESMARK EQUITY
PARTNERS, LLC, a Delaware limited liability
company,

19
20
21

Third-Party Plaintiffs,
v.

26

TERRA TALUS LLC, a Washington limited
liability company; ELEMENT RESIDENTIAL
INC., a Washington corporation; JOSHUA
FREED, an individual; J.R. HAYES & SONS,
INC., a Washington corporation; TERRA
ASSOCIATES, INC., a Washington
corporation; TALUS MANAGEMENT
SERVICES LLC, a Washington limited
liability company; and TALUS 7&8, LLC, a
Washington limited liability company,

27

Third-Party Defendants.

22
23
24
25

28
ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 1

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 2 of 14

1
2

TALUS 7&8 INVESTMENT, LLC, a
Washington limited liability company; J.R.
HAYES & SONS, INC., a Washington
corporation,

3
4
5
6
7
8
9
10
11
12

Fourth-Party Plaintiffs,
v.
KULCHIN FOUNDATION DRILLING
COMPANY, a Washington corporation, and
BIG MOUNTAIN ENTERPRISE LLC, a
Washington limited liability company,
Fourth-Party Defendants.
AND RELATED COUNTERCLAIMS AND
CROSSCLAIMS
I.

INTRODUCTION

This matter comes before the Court on Plaintiff City of Issaquah (“the City”)’s Motion

13
14

for Leave to File Amended Complaint. Dkt. #108. Plaintiff moves the Court for leave to amend

15

its Complaint more than one year after the deadline for parties to amend their pleadings. Id.

16

Defendants, counterclaimants, and thirty-party plaintiffs ORA Talus 90, LLC (“ORA Talus”),

17

Resmark Equity Partners (“Resmark”), Terra Associates, Inc. (“Terra Associates”), Talus 7 & 8

18

Investment, LLC (“Talus 7 & 8”), J.R. Hayes & Sons, Inc. (“J.R. Hayes”), and Big Mountain

19
20

enterprises, LLC (“BME”) oppose the City’s motion. Dkts. #111, #113, #117, #115, #119. The

21

Court finds that oral argument is not necessary to resolve the issues. For the reasons set forth

22

below, the Court DENIES the City’s motion for leave to amend.

23
24

II.

BACKGROUND

This lawsuit arises out of a landslide that occurred on a section of real property, Talus

25
26
27

Parcel 9, in Issaquah, Washington in November 2015. The City filed this complaint in King
County Superior Court on June 18, 2018 against ORA Talus and Resmark, alleging common law

28
ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 2

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 3 of 14

1
2

negligence. Dkt. #1-1 at ¶¶ 27-31. Defendants removed the action to this Court on June 21,
2018. Dkt. #1.

3
4

Ora Talus and Resmark filed a third-party complaint for contractual indemnity, implied
indemnity, common law indemnity, and negligent damage to property against third-party

5
6

defendants Terra Talus LLC (“Terra Talus”), Element Residential Inc. (“Element”), Joshua

7

Freed, Hayes, and Terra Associates. Dkt. #22. Ora Talus filed an amended third-party complaint

8

adding Talus 7 & 8 and Terra Management Services LLC (“TMS”) as third-party defendants.

9

Dkt. #34. On October 30, 2018, third-party plaintiffs Talus 7 & 8 and J.R. Hayes filed a

10

third-party complaint for contractual indemnity, implied indemnity, common law indemnity, and

11
12

negligent damage to property against Kulchin Foundation Drilling Company (“Kulchin”) and

13

BME. Dkt. #40. The deadline to file amended pleadings expired on October 1, 2019. Dkt. #85.

14

On October 29, 2020, the City filed the instant motion for leave to amend its complaint

15

seeking to bring claims for negligence, breach of contract, and contractual indemnity against

16

Terra Talus, Terra Associates, J.R. Hayes, Talus 7 & 8, TMS, and BME (“the Prospective

17
18

Defendants”). Dkt. #108. The City moves for leave to amend pursuant to Fed. R. Civ. P.

19

15(a)(2), as well as under Fed. R. Civ. P. 16(b)(4) and LCR 16(b)(6) given that the deadline to

20

file amended pleadings expired more than a year before the City sought leave to amend.

21

Defendants ORA Talus and Resmark and Third-Party Defendants Terra Associates, Talus 7 & 8,

22
23
24

BME and J.R. Hayes filed responses opposing the City’s motion. Dkts. #111, #113, #115, #117,
#119.1

25
26
27
28

1

The Court notes that Third-Party Defendant J.R. Hayes’ Response is not in accordance with the Court’s
local rules. Dkt. #119. J.R. Hayes’ response is 18 pages, and Local Civil Rule 7(e)(4) limits responses to
12 pages. Pursuant to Local Civil Rule 7(e)(6), “[t]he court may refuse to consider any text, including
footnotes, which is not included within the page limits.” Accordingly, the Court will consider the first 12
pages of J.R. Hayes’ response.

ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 3

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 4 of 14

III.

1
2
3
4

DISCUSSION

A. Legal Standards
Pursuant to Fed. R. Civ. P. 16(b)(4) and LCR 16(b)(6), a scheduling order “may be
modified only for good cause and with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). “Rule

5
6

16(b)’s ‘good cause’ standard primarily considers the diligence of the party seeking amendment.”

7

Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992); see also In re Western

8

States Wholesale Natural Gas Antitrust Litigation, 715 F.3d 716, 737 (9th Cir. 2013).

9
10

Motions to amend a complaint are ordinarily governed by Rule 15(a)(2), which provides
that a “court should freely give leave [to amend] when justice so requires.” Fed. R. Civ. P.

11
12

15(a)(2). However, a request to add a non-diverse defendant following removal is governed by

13

28 U.S.C. § 1447(e). Sardinas v. United Airlines, Inc., No. C19-0257JLR, 2019 WL 4594600,

14

at *1–2 (W.D. Wash. Sept. 23, 2019) (citing Newcombe v. Adolf Coors Co., 157 F.3d 686, 691

15

(9th Cir. 1998)); Greer v. Lockheed Martin, No. C10-1704, 2010 WL 3168408, at *4 (N.D. Cal.

16

Aug. 10, 2010) (“[W]hen a plaintiff amends her complaint after removal to add a

17
18

diversity-destroying defendant, this Court will scrutinize the amendment pursuant to 28 U.S.C.

19

§ 1447(e).”). The City concedes that this Court’s jurisdiction is based on 28 U.S.C. § 1332 and

20

that “no independent basis of federal jurisdiction exists over the tort and contract-based claims it

21

seeks to bring against the non-diverse Prospective Defendants.” Dkt. #108 at 11-12. For that

22
23
24

reason, given that joinder of the non-diverse Prospective Defendants would destroy federal
diversity jurisdiction, Section 1447(e) applies here.

25

“If after removal the plaintiff seeks to join additional defendants whose joinder would

26

destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the

27
28
ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 4

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 5 of 14

1

action to the State court.” 28 U.S.C. § 1447(e). “Section 1447(e) is permissive and ‘clearly gives

2

the district court the discretion to deny [or permit] joinder.’” Sardinas, 2019 WL 4594600, at *3

3

(quoting Newcombe, 157 F.3d at 691). In determining whether to allow joinder of a non-diverse

4

defendant under Section 1447(e), courts consider six factors: (1) whether the party sought to be

5
6

joined is needed for just adjudication and would be joined under Fed. R. Civ. P. 19(a); (2) whether

7

the statute of limitations would prevent the filing of a new action against the new defendant in

8

state court; (3) whether there has been an unexplained delay in seeking to join the new defendant;

9

(4) whether plaintiff seeks to join the new party solely to defeat federal jurisdiction; (5) whether

10

the claims against the new defendant appear valid; and (6) whether denial of joinder will

11
12

prejudice the plaintiff. Id. (citing Parris v. Jacobs Eng’g Grp., Inc., No. C19-0128, 2019 WL

13

3219422, at *2 (W.D. Wash. July 17, 2019)). “[W]hen a defendant alleges that a plaintiff seeks

14

to join another defendant solely to destroy diversity jurisdiction, the Court may look at evidence

15

outside of the pleadings.” Parris, 2019 WL 3219422, at *2 (citing Ritchey v. Upjohn Drug Co.,

16

139 F.3d 1313, 1318 (9th Cir. 1998)).

17
18

B. Good Cause to Amend Complaint under Rule 16(b)

19

The Court will first consider the City’s alleged basis for seeking leave to amend more

20

than a year after the deadline expired. The City claims that despite parties’ efforts, substantial

21

discovery did not occur until the second half of 2020. Parties waited to exchange formal written

22
23

discovery until November 2019 and, once they did, the City was faced with untimely and/or

24

incomplete discovery responses that required multiple meet and confers. Dkt. #109 at ¶¶ 4-10.

25

The City specifically cites delays by J.R. Hayes, TMS, Talus 7 & 8, Terra Talus, Element and

26

Freed that caused substantial delay in document productions, followed by multiple document

27

production errors by their respective vendors managing their electronically stored information.

28
ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 5

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 6 of 14

1

Id. at ¶¶ 6-8; see also Dkts. #109-3, #109-4, #109-5. Consequently, responsive materials were

2

not produced until July through September 2020. Dkt. #109 at ¶ 11 (Stating that 65,000

3

documents were produced since July 2020). Due to these delays, combined with the impact of

4

the COVID-19 pandemic, depositions could not begin until September 2020. Id. at ¶ 13. The

5
6

City claims that because of these delays, it had incomplete knowledge of the parties’ relationships

7

and respective scopes. Dkt. #108 at 5. Specifically, it was unaware of errors and omissions

8

relating to Talus 8 and 9’s designs and construction of nearby water lines that may have

9

potentially caused the landslide. Id.

10

The Court is not persuaded that good cause exists based on belated disclosure of facts of

11
12

which the City was previously unaware.

Several of the new factual allegations contain

13

information reasonably known or available to the City at the time it filed its complaint in 2018.

14

For example, the proposed amended complaint describes the physical characteristics of Talus

15

Parcel 8, including the parcel’s location on a steep hillside and slope down towards Talus 9. Dkt.

16

#109-1 at ¶ 18. The amended complaint also adds factual assertions related to a development

17
18

agreement (“the Talus DA”). See Dkt. #109-1 at ¶¶ 19-20. Because the City was a party to the

19

Talus DA, it did not require discovery to learn of the standards and obligations arising out of this

20

agreement. Additionally, City water technician William Catlett documented a leak from a cut

21

pipe in a letter dated September 13, 2015, Dkt. #112-6, while City employees exchanged emails

22
23

between October and December 2015 describing water main leaks in October and November

24

2015. Dkt. #112-7. The City dismisses Defendants’ reference to the Catlett letter and email

25

exchanges as “inadmissible hearsay,” and states that the individuals who drafted these documents

26

no longer work for the City. Dkt. #123 at 6, 10. The City’s reply does not meaningfully rebut

27

Defendants’ argument that these letters and emails, drafted and circulated by City employees,

28
ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 6

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 7 of 14

1

demonstrate the City’s awareness of groundwater seepage and water line issues around Talus 9

2

before discovery in this matter took place. The fact that many of these documents were produced

3

by the City in this litigation further undermines the City’s argument that it was wholly dependent

4

on delayed discovery responses to uncover relevant information.

5
6

Furthermore, the appellate record in a 2017 state court appeal, case no. 17-2-04688-4-

7

SEA (“the LUPA appeal”), contained documents outlining inadequacies and errors in the work

8

of Terra Associates. Dkt. #112 at ¶ 5. This record was provided to the City in December 2018.

9

Id. The court’s findings of fact and conclusions of law in the LUPA appeal noted deficiencies in

10

the Critical Area Reports prepared by Terra Associates for Talus Parcels 7-9 and their inadequate

11
12

characterization of slope stability and subsurface conditions in the mapped landslide area. See

13

Dkt. #112-3 at ¶¶ 17-24, 38-47. The appellate record also includes a letter from the geotechnical

14

engineering consultants to ORA Talus dated December 15, 2016 criticizing the 2014 Critical

15

Area Reports prepared by Terra Associates for Talus Parcels 7-9. Id. at ¶ 7 (citing Dkt. #112-4).

16

As Defendants point out, the City’s proposed amended complaint repeats many of these

17
18
19
20
21

deficiencies identified in the 2017 appellate record. See Dkt. #109-1 at ¶¶ 25-29. The City’s
Reply fails to meaningfully address the LUPA appeal record. See generally Dkt. #123.
Finally, the City was put on notice as to Prospective Defendants’ potential liability in this
matter when they were named as third-party defendants in October 2018. See Dkts. #22, #34.

22
23

At that point, the City asserts, Prospective Defendants “knew or should have known that they

24

would have been named as defendants but for an error.” Dkt. #108 at 11. The City fails to

25

elaborate on this “error” besides citing production delays on the part of Defendants and

26

Prospective Defendants. The City’s amended claims allege deficiencies in the 2014 geotechnical

27

report, Dkt. #109-1 at ¶¶ 23-29, which the third-party amended complaint outlines in detail. See

28
ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 7

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 8 of 14

1

Dkt. #34 at ¶ 25 (describing report’s failure “to mention that the entire site was within a mapped

2

deep-seated landslide.”). The proposed amended complaint also alleges flaws in the grading and

3

site development on Talus 9, Dkt. #109-1 at ¶¶ 32-38, which was described in the third-party

4

amended complaint. See Dkt. #34 at ¶¶ 59-77. The Court finds no reasonable explanation for

5
6

why the City, despite notice of potential negligence and indemnity claims against J.R. Hayes,

7

Terra Management, Terra Associates, and Talus 7 & 8, waited two years to bring its own claims

8

against these entities or, at a minimum, made no apparent effort to stay the deadline for joinder

9

until parties’ discovery issues were resolved.

10

The Court is not persuaded that delayed disclosure of facts and potential claims against

11
12

the Prospective Defendants amounts to good cause for the City’s untimely motion to amend,

13

given that the City was either reasonably informed of facts related to these claims or put on notice

14

of these potential claims shortly after filing its complaint. Cf. Rain Gutter Pros, LLC v. MGP

15

Mfg., LLC, No. C14-0458 RSM, 2015 WL 6030678, at *1 (W.D. Wash. Oct. 15, 2015) (Finding

16

diligence and sufficient good cause by party seeking leave to amend after deadline). For these

17
18
19
20
21

reasons, the City’s protracted delay in seeking to add Prospective Defendants as named
defendants does not warrant good cause to grant leave to amend at this late stage.
C. Joinder of Non-Diverse Defendants
Even if sufficient good cause existed to modify the scheduling order pursuant to Rule 16,

22
23

the Court finds that the six factors under Section 1447(e) weigh against granting leave to amend

24

that would result in remand. However, before proceeding to the six-factor analysis under Section

25

1447(e), the Court finds it necessary to address the City’s arguments that the Court may grant the

26

City’s motion while maintaining federal jurisdiction.

27
28
ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 8

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 9 of 14

1

First, the City argues that a “principled reason” exists for Court to grant leave to amend

2

while maintaining diversity jurisdiction. Dkt. #123 at 7 (citing Owen Equip. & Erection Co. v.

3

Kroger, 437 U.S. 365 (1978)). Owen is inapposite here, as it addressed whether a district court

4

may exercise ancillary jurisdiction over claims asserted by plaintiffs against third-party

5
6

defendants in diversity cases. See id. at 383. The City fails to explain how its proposed claims

7

against the Prospective Defendants are ancillary. Furthermore, even if ancillary jurisdiction were

8

at issue here, the City fails to explain how its argument comports with 28 U.S.C. § 1367, which

9

superseded Owen. See K.C. ex rel. Erica C. v. Torlakson, 762 F.3d 963, 964 (9th Cir. 2014)

10

(“The common-law doctrine of ancillary jurisdiction over related claims, [is] codified as part of

11
12

a federal court’s supplemental jurisdiction under 28 U.S.C. § 1367.”) (emphasis in original).

13

Section 1367 provides that in actions where original jurisdiction lies solely in diversity

14

jurisdiction under 28 U.S.C. § 1332, district courts “shall not have supplemental jurisdiction

15

under subsection (a) over claims by plaintiffs against persons made parties under Rule 14, 19,

16

20, or 24 of the Federal Rules of Civil Procedure . . . when exercising supplemental jurisdiction

17
18
19
20
21

over such claims would be inconsistent with the jurisdictional requirements of section 1332.” 28
U.S.C. § 1367(b). Accordingly, the City’s position is unsupported by current law.
The City also argues that remand is not inevitable under the “realignment doctrine,” given
that the Court “could conclude that diversity jurisdiction remains with the City’s amended

22
23

complaint, despite the City’s direct claims against non-diverse defendants.” Dkt. #108 at 12 (“It

24

is the duty of the court to ‘look beyond the pleadings, and arrange the parties according to their

25

sides in the dispute.’”) (citing 20 Fed. Prac. & Proc. Deskbook § 32 (Realignment of Parties) (2d

26

ed.)). Here, the application of the realignment doctrine is not readily apparent. To the extent

27

that courts apply the doctrine, “[t]he generally accepted test for the proper alignment of parties

28
ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 9

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 10 of 14

1

employed by the federal courts is whether the parties with the same ‘ultimate interests’ in the

2

outcome of the action are on the same side of the litigation.” § 3607 Realignment of Parties, 13E

3

Fed. Prac. & Proc. Juris. § 3607 (3d ed.). Notably, “the court will not realign parties who are

4

citizens of the same state simply to preserve subject matter jurisdiction if they actually belong on

5
6

opposite sides of the controversy.” Id. (emphasis added). The City has offered no coherent

7

explanation on how, pursuant to the realignment doctrine, federal diversity jurisdiction could be

8

preserved in the instant matter where the plaintiff seeks to bring direct claims for negligence,

9

breach of contract, and contractual indemnity against non-diverse defendants.

10

Finally, when considering what law to apply when a plaintiff seeks to join non-diverse

11
12

third-party defendants, “courts presented with this very issue have applied § 1447(e).” Parrish

13

v. JCI Jones Chemicals, Inc., No. CV 17-00518 JAO-RLP, 2019 WL 383994, at *4 (D. Haw.

14

Jan. 30, 2019) (collecting cases). Consequently, notwithstanding that the City prefers to maintain

15

the action in this Court rather than remanding it, the fact that diversity jurisdiction would not

16

survive the amended complaint warrants application of the six-factor test under Section 1447(e).

17
18

For the reasons set forth below, the Court finds that the Section 1447(e) factors weigh

19

against granting leave to amend.

20

i.

21

Necessary for Just Adjudication

The first factor considers whether the party sought to be joined is needed for just

22
23

adjudication and would be joined under Fed. R. Civ. P. 19(a). Rule 19(a) requires joinder if “in

24

that person’s absence, the court cannot accord complete relief among existing parties.” Fed. R.

25

Civ. P. 19(a). Here, the Prospective Defendants are already parties to the suit given that they

26

were added as third-party defendants in October 2018. Dkts. #22, #34. For that reason, the Court

27
28
ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 10

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 11 of 14

1

agrees with Defendants that it “already has before it all parties against whom recovery may or

2

may not be had,” thereby diminishing any need for the City’s untimely joinder. Dkt. #111 at 6.

3

The City argues that despite Prospective Defendants being added to the case as third-party

4

defendants, denial of leave to amend would prevent the City “from achieving complete relief or

5
6

increase or change the City’s right to recovery—especially in the event ORA Talus is not found

7

liable.” Dkt. #123 at 11. The City also argues that failure to permit claims against the Prospective

8

Defendants as direct defendants, rather than third-party defendants, “will undoubtedly lead to

9

separate and redundant actions.” Id. These arguments are unavailing, given that just resolution

10

of the existing claims against ORA Talus and Resmark does not require consideration of the

11
12

City’s direct claims against the Prospective Defendants. See Temple v. Synthes Corp., 498 U.S.

13

5, 7 (1990) (holding that “it is not necessary [under Rule 19] for all joint tortfeasors to be named

14

in a single lawsuit”). Accordingly, this factor weighs against joinder.

15
16

ii.

Statute of Limitations

The second factor considers whether the statute of limitations would prevent the filing of

17
18

a new action against the new defendants in state court. The City agrees that its breach of contract

19

and indemnity claims against the Prospective Defendants are not time-barred. Dkt. #123 at 14.

20

However, because its proposed negligence claims are barred by the statute of limitations, it

21

cannot commence a new negligence action in state court. Accordingly, given that some of the

22
23
24

proposed claims are time-barred while others are not, the Court finds this factor neutral.
iii.

Unexplained Delay

25

Next, the Court considers whether there has been an unexplained delay in seeking to join

26

the new defendants. Delay is measured from the time of removal, and courts have denied joinder

27

where the delay was comparable to or shorter than the 28-month delay in this case. See, e.g.,

28
ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 11

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 12 of 14

1

ARE Sikeston Ltd. P’ship v. Weslock National, Inc., 120 F.3d 820, 833 (8th Cir.1997) (Finding

2

delay of 16 months after removal and 5 months after impleader too long); In re Rezulin Products

3

Liability Litig., 2002 WL 31466455, at *1 (S.D.N.Y.2002) (Delay of 6 months too long); DiNardi

4

v. Ethicon, 145 F.R.D. 294, 298 (N.D.N.Y.1993) (24-month delay after removal too long). The

5
6

extensive delay in this case therefore warrants a thorough explanation.

7

Here, the City’s explanation that untimely and incomplete discovery requests caused its

8

substantial delay is insufficient. As the Court observed in its LCR 16(b) analysis, the City

9

reasonably had knowledge of several key facts that form the bases of its new claims against

10

Prospective Defendants. See supra at 5-8. Furthermore, given that Prospective Defendants were

11
12

added as third-party defendants to this matter in October 2018 for alleged errors and omissions

13

regarding Talus 8 and 9’s designs and construction of nearby water lines, the City was alerted to

14

potential claims against Prospective Defendants more than two years before it attempted to join

15

them as Defendants. While the City argues that it could only bring claims against Prospective

16

Defendants in good faith after September 2020, it made no apparent effort to stay case deadlines

17
18
19
20
21

while awaiting Defendants’ and Prospective Defendants’ delayed responses. For these reasons,
the Court cannot conclude that the City’s delay is sufficiently explained.
Given the City’s significant delay in seeking joinder, the Court finds the City’s
explanation insufficient. Accordingly, this factor weighs strongly against joinder.

22
23

iv.

Basis for Joinder

24

The fourth factor considers whether the plaintiff seeks to join the new party solely to

25

defeat federal jurisdiction. “[W]hen a defendant alleges that a plaintiff seeks to join another

26

defendant solely to destroy diversity jurisdiction, the Court may look at evidence outside of the

27
28
ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 12

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 13 of 14

1
2
3
4

pleadings.” Parris, 2019 WL 3219422, at *2 (citing Ritchey v. Upjohn Drug Co., 139 F.3d 1313,
1318 (9th Cir. 1998)).
The City insists that it “strongly prefers to remain in federal court” and denies that it has
any ulterior motive for seeking an untimely joinder. See Dkt. #123 at 3. However, it concedes

5
6

that should joinder destroy federal jurisdiction, “the City accepts the admitted inopportuneness

7

of being remanded to King County Superior Court so that it may pursue all of its claims on their

8

merits.” Id. While Defendants and Prospective Defendants ask the Court to conclude that the

9

City merely seeks to destroy diversity jurisdiction and remand the case to a more favorable

10

jurisdiction, they provide no support for this proposition. Indeed, the City has litigated this action

11
12
13
14
15
16

in federal court since June 2018 without any effort to seek remand. The Court finds no basis to
infer an improper motive by the City. Accordingly, this factor weighs in favor of joinder.
v.

Validity of Claims

Next, the Court considers whether the claims against the new defendants appear valid.
Here, Defendants do not dispute that the claims against the third-party defendants are valid—

17
18
19
20
21

indeed, they have brought similar claims in their third-party complaint. See Dkt. #34. For that
reason, this factor weighs in favor of joinder.
vi.

Prejudice to Plaintiff

Finally, the Court considers whether denial of joinder will prejudice the plaintiff. Id.

22
23

(citing Parris v. Jacobs Eng’g Grp., Inc., No. C19-0128, 2019 WL 3219422, at *2 (W.D. Wash.

24

July 17, 2019)). The Court finds that the City would suffer minimal prejudice, given that the

25

Prospective Defendants are already parties to the lawsuit, thereby providing avenues for relief

26

and allowing for recovery if they are found liable. Furthermore, the only claim that cannot be

27

brought in a separate action is negligence. The City may still pursue its claims for breach of

28
ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 13

Case 2:18-cv-00910-RSM Document 138 Filed 02/23/21 Page 14 of 14

1
2
3
4

contract and contractual indemnity through separate litigation. For these reasons, this factor
weighs against joinder.
vii.

Analysis of Section 1447(e) Factors

The necessity of just adjudication and prejudice to plaintiff weigh against joinder, while

5
6

the length of unexplained delay weighs heavily against joinder. The City’s basis for joinder and

7

validity of claims weigh in favor, while the statute of limitations factor is neutral. Accordingly,

8

having considered the balance of the Section 1447(e) factors, the Court concludes that the City

9

should not be permitted to join the Prospective Defendants at this late stage.

10

IV.

CONCLUSION

11
12

Having reviewed the relevant briefing, the declarations and exhibits attached thereto, and

13

the remainder of the record, the Court hereby finds and ORDERS that Plaintiff City of Issaquah’s

14

Motion for Leave to File Amended Complaint, Dkt. #108, is DENIED.

15
16

DATED this 23rd day of February, 2021.

17
18
19
20
21

A

RICARDO S. MARTINEZ
CHIEF UNITED STATES DISTRICT JUDGE

22
23
24
25
26
27
28
ORDER DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE AMENDED
COMPLAINT - 14