Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_09-cv-08162/USCOURTS-azd-3_09-cv-08162-11/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

 For a more detailed description of the background and facts, see the Court’s Order

of November 4, 2010. (Doc. 212). 

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

In re: Allstate Life Insurance Company

Litigation

)

)

)

)

)

)

)

)

)

)

)

)

Lead Case No. CV-09-8162-PCT-GMS

Consolidated with:

Case No. CV-09-8174-PCT-GMS

ORDER

Pending before the Court are three motions: 1) Joint Motion of Allstate Life Insurance

Company, Covin Plaintiffs and Counterclaimant Wells Fargo Bank, N.A. Requesting

Modification of Case Management Order (Doc. 373); 2) the Town of Prescott Valley’s

Motion for Leave to File Amended Counterclaims (Doc. 377); and 3) the Underwriters’

Motion to Amend Third-Party Complaint and Counterclaim (Doc. 443). As set forth below,

the Joint Motion of Allstate Life Insurance Company, the Covin Plaintiffs, and Wells Fargo

is denied. The Town’s Motion for Leave to Amend is granted. The Underwriters’ Motion to

Amend is denied.

BACKGROUND1

On February 10, 2011, the Court issued a Case Management Order which stated that

Case 3:09-cv-08162-GMS Document 462 Filed 01/23/12 Page 1 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 -

“[t]he deadline for joining parties, amending pleadings, and filing supplemental pleadings

is June 17, 2011.” (Doc. 257) (emphasis in original). On June 17, 2011, Allstate Life

Insurance Company, the Covin Plaintiffs, and Wells Fargo moved to modify the Case

Management Order to extend the deadline for amending pleadings from June 17 to October

31, 2011. (Doc. 373). Also on June 17, the Town of Prescott Valley moved for leave to

amend its Counterclaims against Wells Fargo to include newly discovered factual

information. (Doc. 377). On December 9, 2011, the Underwriters moved for leave to amend

their Third-Party Complaint and Counterclaim to add a new cause of action against Wells

Fargo. (Doc. 443).

DISCUSSION

1. Legal Standard

Although the decision whether to grant or deny a motion to amend is within the

“sound discretion of the trial court,” United States v. Webb, 655 F.2d 977, 979 (9th Cir.

1981), Rule 15(a)(2) instructs the Court to “freely give leave [to amend] when justice so

requires.” The Court may consider the following factors in determining whether to grant a

motion to amend: “(1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4)

futility of amendment and (5) whether [the party] has previously amended [the] complaint.”

Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990).

Where a scheduling order is in place, Rule 16(b) of the Federal Rules of Civil

Procedure controls. Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607–08 (9th Cir.

1992). Rule 16(b)(4) states that a “schedule may be modified only for good cause and with

the judge’s consent.” See also Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir.

2000). “Unlike Rule 15(a)’s liberal amendment policy which focuses on the bad faith of the

party seeking to interpose an amendment and the prejudice to the opposing party, Rule

16(b)’s ‘good cause’ standard primarily considers the diligence of the party seeking the

amendment.” Johnson, 975 F.2d at 609. “[C]arelessness is not compatible with a finding of

diligence and offers no reason for a grant of relief. . . . If [the party seeking to amend] was

not diligent, the inquiry should end.” Id. 

Case 3:09-cv-08162-GMS Document 462 Filed 01/23/12 Page 2 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

2. Legal Analysis

A. Joint Motion for Modification of Scheduling Order

Allstate, the Covin Plaintiffs, and Wells Fargo (collectively “Plaintiffs”) move to

modify the Case Management Order to extend the deadline for amending pleadings from

June 17, 2011 to October 31, 2011. (Doc. 373). In connection with their motion, Plaintiffs

did not propose any specific amendments. Rather, Plaintiffs requested that the Court extend

the deadline for amending pleadings because Plaintiffs “believe they may discover additional

factual information supporting their claims when document production is complete and initial

depositions are taken.” (Doc. 373 at 3). Their requested deadline of October 31, 2011 has

passed, and Plaintiffs still have not proposed any specific amendments. Plaintiffs’ motion to

modify the scheduling order is therefore denied as moot. 

B. Town’s Motion for Leave to Amend

The Town of Prescott Valley moves for leave to amend its Counterclaim against Wells

Fargo to include newly discovered factual information. (Doc. 377). The Town’s motion and

proposed amendment were submitted by the June 17, 2011 deadline set by the Court for

amending pleadings, and the Wells Fargo has expressly stated that it does not oppose the

amendment. (Doc. 401) (“Wells Fargo . . . does not oppose the Motion of the Town of

Prescott Valley to amend its purported counterclaim against the Trustee. Wells Fargo

concedes the proposed amendment does not add new claims.”). The Court therefore gives the

Town leave to file its proposed amended Counterclaims. The new factual allegations do not,

however, affect the Court’s determination in its November 18, 2011 Order that the Town has

failed to state a claim for contribution. (See Doc. 433).

C. Underwriters’ Motion for Leave to Amend

The Underwriters move for leave to amend their First Amended Complaint to add a

securities violation claim against Wells Fargo. (Doc. 443). The sole claim in the

Underwriters’ initial complaint against Wells Fargo was a contribution claim. On March 24,

2011, the Underwriters moved to amend this complaint to add a negligent misrepresentation

Case 3:09-cv-08162-GMS Document 462 Filed 01/23/12 Page 3 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

claim against Wells Fargo. (Doc. 281). On November 18, 2011, the Court granted the

Underwriters’ motion. (Doc. 433). This resulted in the Underwriters filing a First Amended

Complaint which included their new negligent misrepresentation claim. (Doc. 441). Also on

November 18, 2011, the Court dismissed the Underwriters’ contribution claim, in part

because the Underwriters failed to allege qualifying substantive violations of law for which

the Underwriters were seeking contribution. (Doc. 433). On December 9, 2011, the

Underwriters moved for leave to amend their First Amended Complaint to add a substantive

securities violation claim against Wells Fargo under Arizona Revised Statutes § 44-

1991(A)(2)–(3) (20023). (Doc. 443). 

This December 9th motion to amend was filed nearly six months after the June 17,

2011 deadline set by the Court for amending pleadings. Accordingly, to give the

Underwriters leave to amend, the Court would have to modify its scheduling order, which

it may only do “for good cause.” FED. R. CIV. P. 16(b)(4). “Unlike Rule 15(a)’s liberal

amendment policy which focuses on the bad faith of the party seeking to interpose an

amendment and the prejudice to the opposing party, Rule 16(b)’s ‘good cause’ standard

primarily considers the diligence of the party seeking the amendment.” Johnson v. Mammoth

Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). The Underwriters have not

demonstrated diligence. They do not claim to have recently discovered facts that were

previously unavailable to them, nor do they provide any other reason for why they could not

have included the Arizona securities claim in their earlier complaints. As stated by the

Underwriters, they seek to add the substantive securities claim to “address the deficiencies”

outlined in the Court’s November 18 order dismissing their contribution claim. (Doc. 443 at

3). The Underwriters, however, offer no explanation that suggests that their failure to

previously allege a violation of Arizona securities law was consistent with a diligent pursuit

of their case. The Court, therefore, will not modify the scheduling order to allow the

Underwriters leave to amend.

CONCLUSION

The Court will not amend the scheduling order. The Town is granted leave to file its

Case 3:09-cv-08162-GMS Document 462 Filed 01/23/12 Page 4 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 -

proposed amended counterclaims.

IT IS THEREFORE ORDERED:

1. The Joint Motion of Allstate Life Insurance Company, Covin Plaintiffs and

Counterclaimant Wells Fargo Bank, N.A. Requesting Modification of Case Management

Order (Doc. 373) is DENIED.

2. The Town of Prescott Valley’s Motion for Leave to File Amended

Counterclaims (Doc. 377) is GRANTED.

3. The Underwriters’ Motion to Amend Third-Party Complaint and Counterclaim

(Doc. 443) is DENIED.

DATED this 23rd day of January, 2012.

Case 3:09-cv-08162-GMS Document 462 Filed 01/23/12 Page 5 of 5