UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
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1 Case 8:14-cv JVS-RNB Document 51 Filed 12/23/14 Page 1 of 7 Page ID #:495 Present: The Honorable James V. Selna Karla J. Tunis Deputy Clerk Not Present Court Reporter Attorneys Present for Plaintiffs: Not Present Attorneys Present for Defendants: Not Present Proceedings: (In Chambers) Order Granting Plaintiff s Motion to Adjust Scheduling Order and For Leave to File First Amended Complaint Plaintiff BTM, LLC ( BTM ) moves to adjust the scheduling order and seeks leave to file a First Amended Complaint ( FAC ). (Mot., Docket ( Dkt. ) No. 34.) Defendants William P. Thomas, III, Frank Thomas, and Carolyn Thomas Walters (collectively, Defendants ) have not filed an opposition to BTM s Motion. For the following reasons, the Court GRANTS BTM s request for leave to file a First Amended Complaint. I. Factual and Procedural Background William Thomas, Jr. ( Bill Thomas ) designed and manufactured a car called the Cheetah from 1963 to (Compl., 7, Dkt. No. 1.) In December 2001, BTM and Bill Thomas entered into an Authorization Agreement allowing BTM to manufacture up to one hundred units of the Cheetah. (Compl., Ex. A.) The Authorization Agreement also provided that Bill Thomas was to execute authentication letters for all one hundred vehicles. (Id. at Ex. A, 2.) In exchange, BTM was to pay Bill Thomas $3,000 per letter. (Id. at Ex. A, 3.) Around the time the parties executed the Authorization Agreement, BTM provided Bill Thomas with one hundred letters for his signature and a safe to store them, after which Bill Thomas signed all one hundred letters. (Id. at 10.) From 2001 to 2009, BTM built and sold thirty Cheetahs, Bill Thomas delivered thirty authentication letters, and BTM paid Bill Thomas $90,000. (Id. at 11.) Bill Thomas passed away in October 2009 (Id. at 9), but the Authorization Agreement provides that CV-90 (06/04) Page 1 of 7
2 Case 8:14-cv JVS-RNB Document 51 Filed 12/23/14 Page 2 of 7 Page ID #:496 it inures to the benefit of the parties heirs. (Id. at Ex. A, 9.) BTM alleges that between 2010 and 2012 it received no orders for the Cheetah, but BTM continued to offer it for sale. (Id. at 13.) In 2013, BTM received three orders for the Cheetah. (Id. at 14.) BTM then requested confirmation from Frank Thomas, Bill Thomas s son, as to whom to address the cashier s check for the three needed authentication letters. (Id. at 14, Ex. C.) Defendants, who are all children of Bill Thomas, declined to provide authentication letters for the new orders and instead claimed that BTM breached the Authorization Agreement. (Id. at 15.) As a result, on March 18, 2014, BTM filed a Complaint against Defendants, seeking and alleging the following claims: (1) declaratory judgment that the Authorization Agreement remains in full force; (2) breach of contract; (3) specific performance; (4) intentional interference with contractual relations. (Id. at ) Prior to the Court s scheduling conference on July 7, 2014, the parties submitted a Joint Report pursuant to Federal Rule of Civil Procedure 26(f) in which BTM stated that it may seek to amend its Complaint to add additional parties to the extent that discovery in this action may confirm the viability of such amendments. (Joint Report, Dkt. No. 22.) The Court s Scheduling Order, issued on July 8, 2014, provides that all motions to join other parties or to amend the pleadings shall be filed by September 8, (Scheduling Order, 1, Dkt. No. 23.) On July 22, 2014, BTM served a Request for Production of Documents on each of the Defendants. (Decl. of Steven Heath ( Heath Decl. ), 5, Ex. B, Dkt. No. 36.) In that Request, BTM asked Defendants to provide the will, any trust documents, and information regarding the personal representative and/or executor of Bill Thomas. (Id.) BTM also requested the same documents and information for Bill Thomas s wife, Violet Thomas ( Violet ), who passed away in (Id.) Defendants also served a Request for Production of Documents on BTM and both sides agreed to extend the deadline for responses until September (Id. at 6.) On the basis of privacy, Defendants refused to provide any information regarding the estates of Bill Thomas and Violet. (Id. at 6; Ex. C, 19:10 21:27.) However, on October 22, 2014 Defendants agreed to provide redacted copies of Bill Thomas s will and Violet s 2009 Revocable Trust pursuant to a stipulated protective order. (Id. at 8; Stipulation and Protective Order, Dkt. No. 29.) From that information, BTM discovered that upon his passing, Bill Thomas bequeathed his entire estate to Violet, who has named John W. Thomas and Defendant Frank Thomas CV-90 (06/04) Page 2 of 7
3 Case 8:14-cv JVS-RNB Document 51 Filed 12/23/14 Page 3 of 7 Page ID #:497 as her successor trustees. (Heath Decl., 8; Confidential Exs. E F.) Violet also named John W. Thomas and the Defendants as among her heirs. (Id.) Upon discovery of this information, BTM now seeks to amend its Complaint to: (1) name Frank Thomas in his capacity as successor trustee to Violet s 2009 Revocable Trust in addition to his existing capacity as an individual; (2) add John W. Thomas as a defendant to BTM s first three claims; and (3) name all Defendants under a successor theory of liability. (Mot., 6:4 10.) On December 4, 2014, the Court granted Defendants former counsel their motion to withdraw as counsel for Defendants. (Amended Minutes, Dkt. No. 49.) On December 9, 2014, Defendants new counsel filed a notice of appearance with this Court. (Not. of Appearance, Dkt. No. 50.) II. Legal Standard A. Adjusting Scheduling Order and Granting Leave to File Amended Complaint A party seeking to amend pleadings after a scheduling deadline must satisfy the standard for modifying the scheduling order under Rule 16(b) of the Federal Rules of Civil Procedure. Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, (9th Cir. 1992). A party must show good cause for relief from a scheduling order. Fed. R. Civ. P. 16(b)(4). The good cause standard primarily considers the diligence of the party seeking the amendment. Johnson, 975 F.2d at 609. The court may grant relief from a scheduling deadline if the deadline could not reasonably be met despite the diligence of the party seeking the extension. Id. While a court may consider prejudice to the opposing party, the focus of the inquiry is upon the moving party s reasons for seeking modification. Id. If that standard is met, then the moving party must still meet the general limitations on the filing of amended pleadings. A party may amend its pleading once as a matter of course within: (A) 21 days after serving it, or (B) if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f), whichever is earlier. Fed. R. Civ. P. 15(a)(1). In all other cases, a party may amend its pleading only with written consent from the opposing party or the CV-90 (06/04) Page 3 of 7
4 Case 8:14-cv JVS-RNB Document 51 Filed 12/23/14 Page 4 of 7 Page ID #:498 court s leave, which should be freely give[n]... when justice so requires. Fed. R. Civ. P. 15(a)(2); see Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990) (requiring that policy favoring amendment be applied with extreme liberality ). In the absence of an apparent reason, such as undue delay, bad faith, dilatory motive, prejudice to defendants, futility of the amendments, or repeated failure to cure deficiencies in the Complaint by prior amendment, it is an abuse of discretion for a district court to refuse to grant leave to amend a complaint. Foman v. Davis, 371 U.S. 178, 182 (1962); Moore v. Kayport Package Express, Inc., 885 F.2d 531, 538 (9th Cir. 1989). Consideration of prejudice to the opposing party carries the greatest weight. Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). [T]he nonmovant bears the burden of showing why amendment should not be granted. Senza-Gel Corp. v. Seiffhart, 803 F.2d 661, 666 (Fed. Cir. 1986). B. Joining a New Defendant BTM does not make a specific motion to join a new defendant, but one of the amendments it seeks to make to its Complaint includes adding a new defendant. Thus, BTM must also meet the requirements of Federal Rule of Civil Procedure 20(a)(2). Rule 20(a)(2) provides that defendants may be joined in an action if: Fed. R. Civ. P. 20(a)(2). (A) any right to relief is asserted against them... with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and (B) any question of law or fact common to all defendants will arise in the action. III. Discussion A. BTM Meets Rule 16(b) BTM seeks to amend its Complaint and join a new defendant despite that the Scheduling Order required that such actions be done by September 8, Thus, BTM must first meet the good cause standard of Rule 16(b). BTM argues that good cause CV-90 (06/04) Page 4 of 7
5 Case 8:14-cv JVS-RNB Document 51 Filed 12/23/14 Page 5 of 7 Page ID #:499 exists and that it acted with diligence for two reasons. First, the parties stipulation to extend the deadline for document production requests to September 2014 resulted from two factors that were not attributable to a lack of diligence by BTM. (Mot., 5:4 18.) The first factor is that BTM only has three employees, thus more time was required for BTM to respond to Defendants Request for Production of Documents because of the time needed to retrieve archived documents relating to the 2001 Authorization Agreement. (Id.; Decl. of Robert Auxier, 4, Dkt. No. 35.) The second factor was that during the period leading up to September 2014, BTM s president, Robert Auxier ( Auxier ), focused his time on securing a visa for his fiancee to travel from Ukraine to the United States. (Id. at 5.) As BTM s president, Auxier s focus elsewhere also increased the time it took for BTM to collect the necessary documents to respond to Defendants requests. (Id.; Mot., 5:8 18.) Second, even though Defendants served their responses in late September 2014, their objections to providing information regarding the estates of Bill Thomas and Violet to BTM prevented it from obtaining that information until October 22, (Heath Decl., 6, 8, Ex. C, 19:10 21:27.) The three amendments that BTM seeks in this Motion all arise from information in those documents. Moreover, BTM acted upon that information only two days after receiving it when BTM requested to meet and confer with Defendants counsel regarding this Motion pursuant to Local Rule 7-3. (Id. at 10, Ex. I.) Based on these foregoing reasons, the Court concludes that the September 8 deadline could not have been reasonably met despite BTM s diligence. 1 The Court determines that BTM s reasons for adjusting the Scheduling Order meet Rule 16(b) s good cause standard B. BTM Meets Rule 15(a)(2) Although BTM meets Rule 16(b) s good cause standard, it must still obtain the 1 Even though Auxier s need to focus his efforts on obtaining a visa for his fiancee appear to be unknown at the time the Court issued the Scheduling Order, the minimal number of BTM employees should have been known by BTM s counsel and thus should have been raised by BTM during the Scheduling Conference on July 7, CV-90 (06/04) Page 5 of 7
6 Case 8:14-cv JVS-RNB Document 51 Filed 12/23/14 Page 6 of 7 Page ID #:500 Court s leave to file an amended pleading pursuant to Rule 15(a)(2). In arguing for leave to file an amended complaint, BTM relies on the arguments it made with regards to Rule 16(b). (Mot., 8:17 10:8.) These justifications reveal no apparent reason why the Court should refuse to grant BTM leave to amend its Complaint. Moreover, BTM has shown that no or minimal prejudice will result from its proposed amendments. Two of the amendments involve existing defendants and the other amendment adds a defendant who is allegedly a sibling of the current defendants. The case is also in an early stage of litigation. Only requests for production of documents have been served on and responded to by the opposing parties and neither party has taken a deposition. (Heath Decl. 5 6, 13.) Furthermore, the non-expert discovery cut-off is not until May 5, (Scheduling Order.) Even though Defendants only recently appointed new counsel on December 9, 2014 (Not. of Appearance), their new counsel has had sufficient time to take up the Court s offer to extend the response deadline for this Motion. (Amended Minutes, at 2 ( Accordingly, the Court GRANTS counsel s Motion to Withdraw, but to avoid any prejudice on Defendants that may be imposed by the deadline of BTM s motion, the Court is willing to grant Defendants an extension on the response date... if they request one. ) Therefore, the Court grants BTM leave to amend its Complaint pursuant to Rule 15(a)(2). C. BTM Meets Rule 20(a)(2) Although BTM does not specifically mention Rule 20(a)(2) in its Motion, it must meet the requirements of that rule because it seeks to add a new defendant, John W. Thomas, to the first three claims in its Complaint. (Mot., 6:4 8.) The Authorization Agreement provides that it inures to the benefit of the parties heirs, which BTM has shown through Confidential Exhibits E and F, includes John W. Thomas. (Heath Decl., Confidential Exs. E F.) Because BTM s first three claims are based on the Authorization Agreement, BTM s alleged right to relief arises out of the same transaction already at the heart of this case. Moreover, BTM s rights under the Authorization Agreement is a question of law and fact common to all defendants because the current defendants and John W. Thomas are all siblings as well as heirs to Bill Thomas. See id. BTM has thus met the Rule 20(a)(2) requirements to add John W. Thomas as a defendant for its claims of declaratory relief, breach of contract, and specific CV-90 (06/04) Page 6 of 7
7 Case 8:14-cv JVS-RNB Document 51 Filed 12/23/14 Page 7 of 7 Page ID #:501 performance. IV. Conclusion For the foregoing reasons, the Court GRANTS BTM s request for leave to file a First Amended Complaint that includes its three proposed amendments. Plaintiffs shall have 7 days to e-file an amended complaint in accordance with this Order. The Court finds that oral argument would not be helpful in this matter and vacates the January 5, 2015 hearing. Fed. R. Civ. P. 78; L.R IT IS SO ORDERED. : 00 Initials of Preparer kjt CV-90 (06/04) Page 7 of 7
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