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Ri Ky Roofing & Sheet Metal LLC v. DTL Builders, Inc.

United States District Court, D. Oregon

May 23, 2018

RI KY ROOFING & SHEET METAL LLC, an Oregon limited liability company, Plaintiff,
v.
DTL BUILDERS, INC., a Utah corporation, and THE CINCINATTI INSURANCE COMPANY, an Ohio surety, Defendants. DTL BUILDERS, INC., a Utah corporation, Plaintiff,
v.
RI KY ROOFING & SHEET METAL LLC, an Oregon limited liability company, Defendant.

          OPINION AND ORDER

          JOLIE A. RUSSO, United States Magistrate Judge

         DTL Builders, Inc. (“DTL”) moves for leave to file a second amended counterclaim pursuant to Fed.R.Civ.P. 15(a). For the reasons set forth below, DTL's motion is granted.

         BACKGROUND

         On June 13, 2017, Ri Ky Roofing & Sheet METAL LLC (“Ri Ky”) commenced a lawsuit in Linn County Circuit Court against DTL, Waverly Land Management, and Winco Foods, asserting claims for breach of contract, quantum meruit, and foreclosure of a construction lien. First Am. Compl. Ex. A, at ¶¶ 3-31 (No. 6:17-01592-JR, Doc. 1). Ri Ky's claims are premised on allegedly unpaid construction services provided to DTL between January and March 2017, pursuant to a subcontract for improvements to a Winco Foods store located in Albany, Oregon. Id.

         On August 11, 2017, DTL filed a complaint against Ri Ky alleging breach of contract, negligence, and breach of the duty of good faith and fair dealing based on the same construction project and underlying subcontract. Compl. ¶¶ 5-20 (No. 6:17-cv-01251-JR, Doc. 1).

         On September 11, 2017, Ri Ky amended its complaint, reasserting the same three claims against DTL and The Cincinnati Insurance Company. Second Am. Compl. Ex. C, at ¶¶ 4-29 (No. 6:17-01592-JR, Doc. 1). On October 10, 2017, DTL removed Ri Ky's case to this Court.

         On October 18, 2017, the Court granted DTL's and Ri Ky's stipulated motion to consolidate. On December 21, 2017, DTL filed an amended complaint. See generally First Am. Countercl. (No. 6:17-cv-01592-JR, Doc. 18). That same day, Ri Ky moved to dismiss DTL's breach of the duty of good faith and fair dealing claim (“good faith claim”). Mot. to Dismiss (No. 6:17-cv-01592-JR, Doc. 19).

         On February 7, 2018, the Court issued a Findings and Recommendation (“F&R”) recommending that DTL's good faith claim be dismissed without prejudice. F&R (No. 6:17-cv-01592-JR, Doc. 26). On March 28, 2018, Judge Aiken adopted the F&R. Order (Case No. 6:17-cv-01592-JR, Doc. 31). DTL moved for leave to file a second amended counterclaim and Ri Ky objected. Mot. for Leave to File Second Am. Countercl. (No. 6:17-cv-01251-JR, Doc. 23); Response Objections to Motion for Leave to File Second Am. Countercl. (No. 6:17-cv-01251-JR, Doc. 28).

         STANDARD OF REVIEW

         Leave to amend pleadings shall be “freely give[n] when justice so requires.” Fed.R.Civ.P. 15(a). Courts apply Rule 15 with “extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (citations omitted). In determining whether a motion to amend should be granted, the court generally considers five factors: (1) bad faith; (2) undue delay; (3) prejudice to the opposing party; (4) futility; and (5) whether the plaintiff has previously amended the complaint. Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004).

         These factors are not weighted equally: “futility of amendment alone can justify the denial of a motion [to amend].” Ahlmeyer v. Nev. Sys. of Higher Educ., 555 F.3d 1051, 1055 (9th Cir. 2009). A proposed amendment is futile if it would be immediately “subject to dismissal.” Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1298 (9th Cir. 1998). In making this determination, the complaint is liberally construed in favor of the plaintiff and its allegations are taken as true. Rosen v. Walters, 719 F.2d 1422, 1424 (9th Cir. 1983). The proposed complaint must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). That is, a plaintiff must present allegations that are “enough to raise a right to relief above the speculative level.” Id. at 555 (citation omitted).

         DISCUSSION

         DTL argues that leave to amend its counterclaim should be granted pursuant to Rule 15(a). Ri Ky asserts that the second amended counterclaim should not be allowed because it fails to state a claim for breach of the duty of good faith and fair dealing upon which relief can be granted.

         In Oregon, “[t]he law imposes a duty of good faith and fair dealing in the performance and enforcement of every contract.” Hampton Tree Farms, Inc. v. Jewett, 320 Or. 599, 615, 892 P.2d 683 (1995) (citations omitted). The purpose of this duty “is to prohibit improper behavior [and] ensure that the parties will refrain from any act that would have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.” Klamath Off-Project Water Users, Inc. v. Pacificorp, 237 Or.App. 434, 445, 240 P.3d 94 (2010) (citation and internal quotations omitted). The good faith doctrine is ...


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