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Hometown Boys, LLC v. City of Oregon City

United States District Court, Ninth Circuit

May 28, 2013

HOMETOWN BOYS, LLC, an Oregon limited liability company, Plaintiff,
v.
CITY OF OREGON CITY, a municipal corporation, Defendant.

OPINION AND ORDER

JANICE M. STEWART, Magistrate Judge.

INTRODUCTION

This case involves a dispute over maintenance of a public water line between plaintiff, Hometown Boys, LLC ("Hometown Boys"), and defendant, the City of Oregon City ("Oregon City"). On February 6, 2013, Hometown Boys filed a Complaint in Clackamas County Circuit Court for the State of Oregon, Case No. CV13020146, asserting state law claims for Wrongful Termination of Utility Services (First Claim), Inverse Condemnation (Third Claim), Breach of Contract (Fourth Claim), Promissory Estoppel (Fifth Claim), Negligence (Sixth Claim), Nuisance (Seventh Claim), Injunctive Relief (Eighth Claim), and Declaratory Relief (Ninth Claim), as well as a federal Civil Rights Takings Claim (Second Claim). On February 20, 2013, Oregon City timely removed the case to this court, pursuant to 28 USC §§ 1441 and 1446, asserting federal question jurisdiction under 28 USC § 1331. On March 7, 2013, Oregon City filed an answer and alleged five counterclaims, three of which are compulsory counterclaims relating to Hometown Boys' federal claim. All parties have consented to allow a Magistrate Judge to enter final orders and judgment in this case in accordance with FRCP 73 and 28 USC § 636(c).

Currently before the court are Hometown Boys' Motion to Amend (docket #10) and Motion to Remand (docket #11). For the reasons set forth below, both motions are GRANTED.

DISCUSSION

Since it prefers to litigate this action in state court, Hometown Boys seeks to amend the Complaint by deleting the federal claim which will then remove any barrier to remand. Oregon City opposes both motions and, if either motion is granted, requests dismissal of the federal claim with prejudice and entry of a judgment in its favor. Oregon City also requests an award of attorney fees and expenses incurred to remove this action and oppose amendment and remand.

I. Motion to Amend

Under FRCP 15(a), once a defendant has filed a responsive pleading, "a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires." Deciding whether to grant leave to amend, the Supreme Court has offered the following guidance:

In the absence of any apparent or declared reason-such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.-the leave sought should, as the rules require, be "freely given."

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

Of these factors, 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). Whether to grant leave to amend lies within the sound discretion of the trial court. United States v. Webb, 655 F.2d 977, 979 (9th Cir 1981). In exercising this discretion, the court "must be guided by the underlying purpose of Rule 15 to facilitate decision on the merits, rather than on the pleadings or technicalities." Id.

Oregon City contends that it would be unfairly prejudiced if Hometown Boys is permitted to split its federal and state claims which would potentially result in duplicate litigation and force Oregon City to defend two lawsuits arising under the same facts. However, Hometown Boys is not seeking to split one action into two actions. Instead, it merely wants to drop the federal claim and proceed only in state court. Eliminating the federal claim would leave one action comprised only of state claims. Permitting such an amendment would actually benefit Oregon City, not prejudice it. See Duong-Tran v. Kaiser Found. Health Plan of the NW, Civil No. 08-120-AC, 2008 WL 1909221, at *4 (D Or April 28, 2008). To the extent that Oregon City fears a second lawsuit asserting the dismissed federal takings claim, this is not the type of prejudice that precludes the court from otherwise granting leave to amend. Mechmetals Corp. v. Telex Computer Prods., Inc., 709 F.2d 1287, 1294 (9th Cir. 1983).

Oregon City also argues that amendment will unduly delay resolution of its counterclaims. Oregon City does not elaborate on how such a delay will be prejudicial. Because three of the five counterclaims are compulsory counterclaims relating to Hometown Boys' federal takings claim, the amendment would presumably render them moot. Dismissal of the federal takings claim would streamline resolution of the remaining related state claims and counterclaims. While it is true that the counterclaims related to the federal takings claim would not be resolved, this is not enough to weigh against FRCP 15(a)'s directive that "leave shall be freely given when justice so requires."

Finally, Oregon City argues that Hometown Boys should not be permitted to amend to eliminate a federal claim in order to improperly manipulate the forum. In support, it cites the Supreme Court's statement that "forum manipulation concerns are legitimate and serious." Carnegie-Mellon Univ. v. Cohill, 458 U.S. 343, 356 n 12 (1898). However, there is no evidence that Hometown Boys is acting in bad faith merely by seeking to dismiss a federal claim ...


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