United States District Court, D. Oregon, Portland Division
OPINION AND ORDER
JOHN V. ACOSTA, Magistrate Judge.
Plaintiff Gretchen Brooks ("Brooks") loaned over five million dollars to Rip Caswell Sculptures, Inc., d/b/a Caswell Gallery ("Caswell Gallery"), and Caswell Properties ("Caswell Properties"), entities controlled by Harlon Rip Caswell ("Caswell"), to facilitate development of Caswell's sculpture business. (Compl. ¶ 1.) Caswell Gallery, Caswell Properties, and Caswell (collectively "Defendants") failed to repay the loans. (Compl. ¶ 1.) Brooks filed an action in state court against Defendants which the parties ultimately settled. (Compl. ¶ 1.) Pursuant to the settlement agreement (the "Agreement"), Caswell Gallery executed a $650, 000 promissory note payable to Brooks (the "Note"). (Compl. ¶ 1.) When Caswell Gallery defaulted on the Note, Brooks filed this action against Defendants seeking "to obtain the full settlement which defendants' wrongful actions deprived her." (Compl. ¶ 1.)
Brooks moves to amend the complaint to add Caswell Gardens, LLC ("Caswell Gardens") as an additional defendant, supplemental allegations supporting her breach of the good faith and fair dealing, and a new theory relating to the remedy provision of the Note. Defendants object to the addition of Caswell Gardens as a defendant but not to the other proposed amendments.
The court finds Brooks's attempt to amend the complaint to assert claims against Caswell Gardens is futile. Brooks is unable to assert a claim against Caswell Gardens based on representations made in 2011, more than three years before Caswell Gardens was organized; a claim for conversion in the absence of allegations Caswell Gardens had control over the allegedly converted property; or a claim for elder financial abuse based on the alleged misrepresentations or conversion of Brooks's property. Further, Brooks has not alleged the requisite involvement in, or benefit from, tortious activity to support joint liability, or the improper conduct and inability to collect necessary to support an alter ego claim. Accordingly, Brooks's motion to amend the complaint to add Caswell Gardens as a defendant is denied without prejudice. As Defendants have not objected to the remainder of Brooks's proposed amendments, the motion to amend is granted in all other respects.
After the initial pleading stage, a plaintiff may amend his "pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires." FED. R. CIV. P. 15(a) (2014). "Although the rule should be interpreted with extreme liberality, ' leave to amend should not be granted automatically." Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990) (quoting United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981)). A trial court may deny the motion if permitting amendment would prejudice the opposing party, produce an undue delay in litigation, result in futility for lack of merit, is sought by plaintiffs in bad faith or with a dilatory motive, or the plaintiffs have filed numerous amended complaints. Foman v. Davis, 371 U.S. 178, 182 (1962); DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). Prejudice to the opposing party carries the "greatest weight" in determining whether to deny leave to amend. 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. Webb, 655 F.2d at 979. In exercising this discretion, however, 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.
In the proposed amended complaint ("Proposed Complaint"), Brooks alleges Caswell Gardens is a limited liability company organized by Caswell in late 2014 and that Defendants "have transferred substantial property and money to Caswell Gardens in an attempt to shield those assets from litigation." (Fite Decl. Ex. 1 at 3, 7.) Brooks characterizes Caswell Gardens as a "mere shell and alter ego" of Defendants. (Fite Decl. Ex. 1 at 7.) Brooks further alleges Caswell Gardens "acted in concert" with Defendants with regards to all actions described in the Proposed Complaint. (Fite Decl. Ex. 1 at 7.) Brooks alleges claims for fraud and negligent misrepresentation based on representations made during settlement negotiations; a claim for conversion based on the failure to maintain the molds serving as collateral for the Note, and a claim for elder financial abuse based on the alleged misrepresentations and conversion.
Defendants argue the addition of an entirely new defendant places the current deadlines in jeopardy and is extremely prejudicial to Defendants. The current discovery deadline was April 30, 2015, and the current dispositive motion deadline is May 30, 2015. Days before filing her motion to amend the complaint, Brooks filed a motion to extend these deadlines by two and a half months. Brooks seek the production of additional documents necessary to allow her to prepare for her own deposition, as well Caswell's deposition, and additional time to complete these depositions. Some of the additional discovery relates to amended counterclaims filed by Defendants on March 12, 2015. Additionally, Brooks claims the scope of her deposition will be affected by the ruling on Defendants' pending motion to compel.
In their response, Defendants acknowledge the need to extend the fact discovery to allow for the completion of three scheduled depositions, the last of which is scheduled for June 18, 2015, and the resolution of issues relating to Defendants' financial and sales documents. Defendants propose extending the dispositive motion deadline to June 30, 2015, but represent they still hope to file their summary judgment motion on May 29, 2015.
Caswell, who has yet to be deposed, likely will provide the majority of information relating to Caswell Gardens and its assets. This may be supplemented by the discovery Brooks seeks, and has yet to receive, with regard to Defendants' financial and sales documents. Accordingly, the addition of Caswell Gardens as a defendant is unlikely to result in additional, or duplicative, discovery requests from Brooks. Defendants do not identify any additional discovery they will require if Caswell Gardens is added as a defendant and the court is hard-pressed to identify any itself. To the extent Caswell Gardens is responsible for Defendants' actions as an alter ego or conspirator, Caswell Gardens's interests have been adequately represented by Defendants in the discovery process to date.
Defendants acknowledge the need to extend the current deadlines to allow for the depositions of at least three parties and to resolve the pending and expected motions to compel. The proposed addition of Caswell Gardens as a party did not create the need for additional time to complete discovery. Accordingly, Defendants' assertion the addition of a new defendant places the existing deadlines in jeopardy is not supported by the record. Furthermore, it appears Caswell Gardens's interests are similar to Defendants and have been adequately represented in the discovery process. ...