Opinion
CV 01-180-BR
December 2, 2002
D. Gary Christensen, Miller Nash LLP, Portland, OR, Douglas V. Thornton, Jordan M. Freeman, Motschiedler, Michaelides Wishon, LLP, Fresno, CA, for Plaintiff and Third-Party Defendants.
Albert J. Bannon, Bannon Mediation LLC, Portland, OR, for Defendants and Third-Party Plaintiff AV Finance, Inc.
OPINION AND ORDER
This matter comes before the Court on Plaintiff's Motion for Reconsideration of the Court's Order Denying Leave to File Second Amended Complaint (#87) and Third-Party Defendants' Motion for Reconsideration of their Motion to Compel Answers to Deposition Questions (#90).
For the reasons that follow, the Court GRANTS both Motions to Reconsider. After reconsidering the Court's original Orders, however, the Court adheres to its decisions denying Plaintiff Motion for Leave to File Second Amended Complaint and denying Third-Party Defendants' Motion to Compel.
PROCEDURAL HISTORY
On November 28, 2000, Plaintiff Milt's Flying Service, Inc., commenced this action for breach of contract, fraud, and conversion against Defendants AV Finance, Inc.; Randy Goering, Inc.; Randy Goering; and Phil Weigand in the United States District Court for the Eastern District of California. The controversy arises from Plaintiff's purchase of an airplane from Defendant Randy Goering, Inc., and Plaintiff's later execution of a lease agreement and an agreement concerning repair and maintenance of the airplane. On November 28, 2000, before Defendants had filed a responsive pleading, Plaintiff filed an Amended Complaint. On January 30, 2001, the parties stipulated to transfer venue of this action to the United States District Court for the District of Oregon.
On February 6, 2001, this Court accepted transfer of the case. The Clerk of Court issued the standard Discovery and Pretrial Scheduling Order on February 7, 2002, that provided in part:
(d) Pretrial and Discovery Deadlines: Not later than 120 days from the date of this Order, counsel for all parties shall:
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(3) File all pretrial, discovery, and dispositive motions.
(4) Complete all discovery.
On March 21, 2001, the Court specially admitted attorney Douglas V. Thornton pro hac vice to represent Plaintiff. On March 22, 2001, the Court granted Defendants until April 16, 2001, to answer Plaintiff's Amended Complaint. On April 16, 2001, Defendants filed a Motion to Transfer Case to Eastern Oregon Docket and Consolidate With State Court Action. On April 17, 2001, unidentified Defendants filed their Answer in which they also purported to assert a counterclaim by attaching a copy of a pleading filed in the Circuit Court for the State of Oregon for Crook County. The Court denied Defendants' Motion to Transfer by Minute Order issued April 18, 2001.
This pleading does not specify the defendants on whose behalf it was filed. The caption of the First Amended Complaint identifies "AV Finance, Inc.; Randy Goering, Inc.; Randy Goering; Phil Weigand; and DOES 1 through 100" as "Defendants."
At a Rule 16 Conference on May 23, 2001, the Court set case management dates, including a discovery completion dead-line of September 28, 2001; a dispositive motion deadline of October 5, 2001; and a jury trial to begin on April 16, 2002.
On November 14, 2001, however, Defendants filed a stipulated Motion for Continuance of Discovery Deadline and Motion for Extension of Time to File Dispositive Motions, deadlines that had long passed. Although the Court denied Defendants' Motions to extend the deadlines, Plaintiff then filed on January 17, 2002, an Unopposed Motion for Extension of Time to Continue Trial. At a Rule 16 Conference on January 25, 2002, it became clear to the Court that the parties had not made much progress in moving the case forward in the 14 months the case had been pending. The Court concluded, in the interests of justice, counsel and the parties needed additional time to ready their case for resolution by motion, settlement, or trial. The Court, therefore, granted Plaintiff's Motion. The Court again set a new case management schedule with dispositive motions due February 4, 2002, and a jury trial to begin on June 4, 2002. The Court, however, made no order authorizing additional discovery.
Defendants filed their Motion for Summary Judgment on February 4, 2002. In response to the Court's March 8, 2002, request for supplemental briefing to address procedural irregularities, Defendants filed a Motion for Leave to File an Amended Answer. In a telephone conference on March 29, 2002, the Court pointed out procedural deficiencies in the Defendants' pleadings, denied Defendants' Motion for Summary Judgment, granted Defendants' Motion to File an Amended Answer, and again ordered all existing case management dates stricken pending the filing of Defendants' new pleading and Plaintiff's response.
On April 4, 2002, Defendants filed their Amended Answer and a Third-Party Complaint against Milt Taylor and Jimmie Taylor, principals in Plaintiff Milt's Flying Service, Inc. Third-Party Defendants filed an Answer to the Third-Party Complaint on May 16, 2002.
At another case management conference on May 24, 2002, the Court set September 6, 2002, as a new discovery deadline in light of the parties added to the Third-Party Complaint. The Court also set a new dispositive motion deadline of September 27, 2002, and a jury trial to begin March 25, 2003.
The Court heard nothing from counsel between May 24, 2002, and September 16, 2002, when Defendants filed their Motion for Summary Judgment. On September 27, 2002, the third deadline for filing dispositive motions, Plaintiff filed a Motion for Leave to File Second Amended Complaint and Third-Party Defendants filed a Motion to Compel Answers to Deposition Questions.
On October 15, 2002, the Court denied both Motions by Minute Order as follows:
Third-party Defendant's Notice of Motion and Motion (#71) to Compel is DENIED for failure to comply with LR 6, because the Motion was filed after the close of discovery and no motion was made to extend that deadline before it passed. Plaintiff's Notice of Motion and Motion (#67) for Leave to File Second Amended Complaint is, in the exercise of discretion pursuant to Fed.R.Civ.P. 15(a), DENIED because justice does not require granting of leave at this late stage of the case.
DISCUSSION 1. The Court adheres to its decision to deny Third-Party Defendants' Motion to Compel.
Third Party-Defendants concede the Court set repeated deadlines for the completion of discovery and they filed their Motion to Compel Answers to Deposition Questions after the expiration of the latest deadline for completion of discovery.According to Third-Party Defendants, however, there was no deadline for the filing of discovery motions. They contend, therefore, this Court erred when it denied their Motion to Compel as untimely, and they urge the Court to reconsider what they call a "manifestly unjust" ruling. Although the Court acknowledges it did not set a separate, explicit deadline for the filing of discovery motions when it set the several deadlines for the completion of discovery, the Court finds Third-Party Defendants' arguments wholly without merit. Local Rule (LR) 16.2(d) provides in part:
Completion of Discovery Defined
The initial case scheduling order establishes the time for completion of discovery. Unless otherwise directed by the court, the following discovery related events must be completed by the completion of discovery date:
(1) All depositions must be taken, . . .;
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(4) The Court will not require a response to a discovery request that is made with insufficient time for a party to respond prior to the completion of discovery date.
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(Emphasis added.)
Third-Party Defendants' Motion to Compel Answers to Deposition Questions involves the depositions of Defendants Randy Goering and Phil Weigand, which were scheduled by Notice for September 5 and 6, 2002, the last two days within the latest discovery period set by the Court. The depositions did not occur on September 5, 2002, however, apparently because Defendants' counsel, Al Bannon, was ill. On September 6, 2002, the last day to complete discovery, Mr. Bannon produced only Mr. Goering for deposition, and it appears Mr. Bannon improperly instructed Mr. Goering not to answer certain questions during that proceeding. No party, however, contacted the Court for assistance pursuant to LR 30.6(a) concerning the discovery difficulties that occurred on September 5 and 6, 2002.
It is undisputed the depositions that are the subject of Third-Party Defendants' Motion to Compel Answers to Deposition Questions were not "taken" by the "completion of discovery date" as required by LR 16.2(d)(1). In addition, the Court construes Third-Party Defendants' Motion to Compel, which was filed 14 days after the close of discovery, as a "discovery request" that was "made with insufficient time for a party to respond prior to the completion of discovery date" as required by LR 16.2(d)(4). Under the circumstances, the Court did not even have to require Defendants to respond to the Motion.
The Court also notes Third-Party Defendants requested oral argument on their Motion for Reconsideration of Their Motion to Compel Answers to Deposition Questions. Plaintiff also requested oral argument on its Motion for Reconsideration of the Court's Order Denying Leave to File Second Amended Complaint. Pursuant to LR 7.1(f)(1), the Court denies both requests for oral argument.
Finally, the Court concludes it is hardly manifest injustice to deny a discovery motion that was first filed 14 days after the close of discovery, particularly when the parties previously had received three successive extensions of case management dates and the moving party's counsel was attorney of record since the inception of the case almost 22 months earlier.
In summary, the Court has reconsidered its denial of Third Party-Defendants' Motion to Compel and, to that extent, the Court grants Third-Party Defendants' Motion for Reconsideration of Their Motion to Compel Answers to Deposition Questions. After reconsidering the Motion and the underlying reasons for its initial denial, the Court adheres to its original ruling.
2. The Court adheres to its decision to deny Plaintiff's Motion for Leave to File Second Amended Complaint. A. The merits of Plaintiff's Motion for Leave to File Second Amended Complaint.Plaintiff filed a Motion for Leave to File Second Amended Complaint on September 27, 2002, the third deadline this Court had set for the filing of dispositive motions and nearly 19 months after the action was transferred to this District. In its Memorandum in support of the Motion, Plaintiff asserted:
This motion is made on the grounds that MFS recently discovered that Defendants obtained a large insurance settlement for the airplane which is the subject of this action MFS contends that it is entitled to a portion of the insurance settlement under Oregon law. Federal law allows for the liberal amendment of pleadings when justice so requires. Defendants will not suffer any undue prejudice from the granting of this motion.
In its proposed Second Amended Complaint, Plaintiff alleges Defendants wrongfully converted the airplane, and, "in the early part of 2000," an agent of Defendant AV Finance, Inc., "crashed the Plane." Plaintiff also alleges AV Finance, Inc., "received a check in the amount of $235,000" from its insurer as a settlement for the damaged aircraft. Plaintiff also seeks to add a Fourth Claim for "Accounting of Surplus after Disposition of Collateral Against All Defendants."
In its Motion for Leave to File Second Amended Complaint, Plaintiff asserted it first learned of the insurance payment during the deposition of Randy Goering that took place on September 6, 2002. Plaintiff also represented it filed its Motion to for Leave to File Second Amended Complaint
within weeks of discovering information relating to the insurance proceeds. Prior to this time, Plaintiff had no knowledge that the Plane had been declared a complete loss and that AV Finance received a check in excess of $230,000.
Defendants, however, opposed the Motion for Leave to File Second Amended Complaint and argued
[t]he information regarding the insurance proceeds has been available to the Plaintiff from the beginning of this lawsuit and could easily have been discovered either by way of a document request or in the depositions that were taken. This case is nearing completion and is ready for disposition by motion or trial. The motion comes too late.
In its Memorandum in Support of its Motion for Reconsideration, Plaintiff asserts
Defendants withheld evidence which would have allowed Plaintiff to discover the facts upon which the underlying motion is based one year earlier. . . . Plaintiff was led to believe that after the accident, the insurance carrier paid for the necessary repairs after the deduction of the deductible.
According to Plaintiff, it specifically requested the documents that would have led to the eventual discovery of the insurance check. Plaintiff asserts, however, Defendants did not provide discovery of any documents relating to the insurance carrier's decision to declare the plane a salvage, the salvage title, the sale of the aircraft from the insurance Company to Defendants, the insurance check in the amount of $235,000, or any other documents that would have provided notice to Plaintiff that they had received a check for $235,000 from their insurance carrier.
The Court notes the discovery responses to which Plaintiff refers are dated August 2001. Contrary to Plaintiff's representations, the record shows Plaintiff first learned the plane had been wrecked and there was some type of insurance claim when Plaintiff's counsel deposed Mr. Goering in October 2001, nearly a year before Plaintiff moved for leave to file its Second Amended Complaint. Mr. Goering specifically disclosed in his October 2001 deposition that the airplane had been "totaled" in a wreck, and Plaintiff's counsel explicitly acknowledged seeing "paperwork" about the claim at that deposition as follows:
[By Mr. Thornton:] And I've seen paperwork that your attorney has produced relating to the claim and everything like that. Was the plane eventually fixed?
[By Mr. Goering:] Yes.
Defendants note Plaintiff's counsel failed to pursue that line of questioning in the October 2001 deposition and did not make any follow-up discovery requests specific to the insurance claim. Defendants dispute Plaintiff's counsel was "led to believe" the insurer paid for repairs as opposed to a total loss.
The Court concludes there is no evidence in the record that indicates Defendants failed to make an appropriate discovery response in August 2001 or somehow misled Plaintiff about the insurance claim between then and the latest discovery deadline of September 6, 2002. The Court concludes Plaintiff's "surprise" in learning on September 6, 2002, there had been a significant insurance payment is due to Plaintiff's own lack of diligence in pursuing its claim for the many months it has been pending in federal court.
B. Reasons for the Court's denial of Plaintiff's Motion for Leave to File Second Amended Complaint.
As noted, the Court denied Plaintiff's Motion for Leave to File Second Amended Complaint "in the exercise of discretion pursuant to Fed.R.Civ.P. 15(a) . . . because justice does not require granting of leave at this late stage of the case." The Court acknowledges it should have articulated more explicitly its reasons for exercising its discretion to deny Plaintiff's Motion for Leave to File Second Amended Complaint. The Court now does so and adheres to its denial of Plaintiff's Motion.
In Zivkovic v. Southern California Edison Co., the Ninth Circuit recently stated:
Although leave to amend "shall be freely given when justice so requires," Fed.R.Civ.P. 15(a), it "is not to be granted automatically." Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990). The district court may deny a motion for leave to amend if permitting an amendment would, among other things, cause an undue delay in the litigation or prejudice the opposing party.302 F.3d 1080, 1087 (9th Cir. 2002). In Solomon v. North Am. Life Cas. Ins. Co., the Ninth Circuit affirmed the district court's denial of a motion to amend pleadings filed on the eve of the discovery deadline because of undue delay. 151 F.3d 1132, 1139 (9th Cir. 1998). In earlier decisions, however, the Ninth Circuit has noted undue delay alone is not a sufficient ground for denying leave to amend and must be accompanied by prejudice. Hurn v. Ret. Fund Trust of the Plumbing, Heating and Piping Indus., 648 F.2d 1252, 1254 (9th Cir. 1981). Another factor occasionally considered when reviewing the denial of a motion for leave to amend is whether the plaintiff has previously amended her complaint. Mir v. Fosburg, 646 F.2d 342 (9th Cir. 1980).
Here when the Court denied Plaintiff's Motion for Leave to File Second Amended Complaint and stated justice did not require granting Plaintiff leave to amend "at this late stage of the case," the Court only referenced generally what it now finds explicitly: Granting Plaintiff leave to amend would result in undue delay in the resolution of this case and prejudice to Defendants because Plaintiff's Motion was made on the eve of the latest completion-of-discovery deadline, time has otherwise expired on the numerous case management extensions previously permitted, Defendants' Motion for Summary Judgment is pending against Plaintiff's First Amended Complaint, and Plaintiff knew or should have discovered a year before Plaintiff filed the Motion the "newly discovered" information that purportedly warrants the amendment. Although the Court also has questioned the diligence of Defendants in moving this case forward, the Court, nevertheless, finds Plaintiff's proposed amendment at this late date would result in prejudice to Defendants, who timely filed their latest summary judgment motion in response to the Court's third extension in the case. The Court concludes it properly exercised its discretion when it denied Plaintiff's Motion for Leave to File Second Amended Complaint. On reconsideration, the Court, therefore, adheres to its decision.
CONCLUSION
For these reasons, the Court GRANTS Plaintiff's Motion for Reconsideration of the Court's Order Denying Leave to File Second Amended Complaint (#87) and Third-Party Defendants' Motion for Reconsideration of their Motion to Compel Answers to Deposition Questions (#90). After reconsidering the merits of the Court's original Orders, however, the Court adheres to its decisions denying Plaintiff leave to file its Second Amended Complaint and denying Third-Party Defendants' Motion to Compel.
IT IS SO ORDERED.