Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_13-cv-02621/USCOURTS-azd-2_13-cv-02621-0/pdf.json

Nature of Suit Code: 350
Nature of Suit: Motor Vehicle Personal Injury
Cause of Action: 28:1332 Diversity-Personal Injury

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Although the defendants have requested oral argument, the Court

concludes that oral argument would not significantly aid the decisional process.

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Harold L. Loveland, Jr., et al.,

 Plaintiffs,

vs.

Katia Valencia, et al.,

 Defendants.

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No. CV-13-02621-PHX-PGR 

 ORDER

 

 

Pending before the Court is the plaintiffs’ Motion to Modify Scheduling Order

and for Leave to Amend Complaint (Doc. 48), filed September 3, 2014. Having

considered the parties’ memoranda, the Court, in the exercise of its broad discretion

in supervising the pretrial phase of this action, finds that the motion should be

granted.1

 

Background

This action arises from a multi-vehicle accident on April 20, 2013 in Yuma,

Arizona between a car driven by defendant Katia Valencia and four motorcycles,

three of which the five plaintiffs were riding on. The plaintiffs’ (re-filed) Complaint

Case 2:13-cv-02621-PGR Document 62 Filed 12/19/14 Page 1 of 5
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(Doc. 7) alleged two negligence claims against Katia Valencia and a negligent

entrustment claim against her father, Carlos Valencia. Pursuant to the Scheduling

Order (Doc. 28), entered on May 14, 2014, motions to amend the pleadings or to join

additional parties were to be filed no later than May 30, 2014. The plaintiffs are now

seeking leave to file a second amended complaint that adds four new defendants,

Emelia Valencia, Lilliana Valencia, Valencia Rentals, LLC, and Rivera Apartments,

LLC, and three new claims, a social joint venture claim against Katia and Carlos

Valencia, a fraudulent transfer claim against all of the defendants, and a family

purpose liability claim against Carlos Valencia. The parties held an unsuccessful

settlement conference on August 25, 2014.

Discussion

Because the plaintiffs’ motion was filed after the deadline set by the

Scheduling Order, the motion must be resolved primarily under the “good cause”

standard of Fed.R.Civ.P. 16(b)(4) (“A schedule may be modified only for good cause

and with the judge’s consent.”) Johnson v. Mammoth Recreations, Inc., 975 F.2d

604, 608 (9th Cir.1992). Under this standard, the Court’s primary focus is on the

plaintiffs’ diligence in seeking to amend their complaint and on their reasons for

seeking modification of the Scheduling Order. Id., at 609. 

The plaintiffs argue that the facts underlying their proposed amendments were

not discovered by them until after the May 2014 deadline to amend had passed.

They state that in preparation for the August settlement conference, additional

research was completed regarding real property belonging to the defendants that

had the potential to be offered during settlement negotiations. They state that they

learned through an asset investigation report on August 14, 2014, that shortly after

the accident occurred the defendants created two limited liability companies and

Case 2:13-cv-02621-PGR Document 62 Filed 12/19/14 Page 2 of 5
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transferred all but one of their real properties to those companies, and that they sold

another real property to a family member for $10. The creation of these entities and

the property transfers form the basis of the proposed fraudulent transfer claim and

the proposed addition of the family-owned LLCs and the two additional family

members as defendants. The plaintiffs also state that while the title to the

defendants’ vehicle involved in the accident, which showed that it was jointly owned

by Katia and Carlos Valencia, was disclosed to them on June 2, 2014, the vehicle’s

title was not authenticated and legal title was not confirmed for purposes of their

proposed social joint venture and family purpose liability claims until the defendants

were deposed on June 30, 2014. The plaintiffs further state that they conducted

additional research into the legal and factual sufficiency of their proposed

amendments after the settlement conference proved to be unsuccessful.

The defendants argue that the plaintiffs have not exercised the due diligence

required by Rule 16(b) because all of the facts underlying the proposed amendments

were available through Arizona and California public records and reasonable

investigation more than nine months prior to the Scheduling Order’s deadline for

amending pleadings.

While the Court recognizes that the plaintiffs could have moved to amend

earlier than they did, the Court concludes that their explanation for the delay is

sufficiently plausible, including their desire to first see if the settlement conference

would be successful, and that under the circumstances they did not unduly delay in

filing their motion to amend. The Court also concludes that the plaintiffs’ reasons for

seeking to add their proposed amendments are appropriate given the

circumstances. They have therefore met their burden under Rule 16(b) of showing

good cause for the delay.

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The Court further concludes that the plaintiffs are entitled to amend their

complaint under the liberal standard of Fed.R.Civ.P. 15(a). The record does not

establish any undue delay, bad faith or dilatory motive on the plaintiffs’ part, and the

proposed amendments do not facially constitute an exercise in futility. While the

defendants argue that they will suffer “incredible prejudice” if the plaintiffs are

allowed to amend their complaint, the Court is not persuaded. See DCD Programs,

Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir.1987) (Court noted that Rule 15's “policy

of favoring amendments to pleadings should be applied with ‘extreme liberality’” and

that “[t]his liberality in granting leave to amend is not dependent on whether the

amendment will add causes of action or parties.”)

Although the addition of the new parties and claims will necessarily cause a delay

in this action, the Court does not believe that any delay will be unduly excessive,

especially since all of the new proposed defendants are closely connected to the

existing defendants. Furthermore, the defendants will have to defend against the

new claims in any case as the plaintiffs state that if their motion to amend is denied

they will just file a separate action containing their proposed amendments and will

seek to consolidate it with this one. The Court will mitigate the effects of the delay

on the defendants by staying all deadlines in the current Scheduling Order until such

time as an amended scheduling order can be entered. 

While the Court will permit the plaintiffs to file a second amended complaint,

the plaintiffs will be required to correct some deficiencies in their proposed amended

complaint. First, the caption of the second amended complaint must contain the

names of all parties to this action as required by Fed.R.Civ.P. 10(a). Second, the

second amended complaint must properly allege the citizenship of the new limited

liability company defendants by specifying the citizenship of each of their members.

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See Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir.

2006). Therefore,

IT IS ORDERED that the plaintiffs’ Motion to Modify Scheduling Order and for

Leave to Amend Complaint (Doc. 48) is granted to the extent that the plaintiffs shall

file their second amended complaint no later than December 29, 2014. The second

amended complaint shall be as proposed in the plaintiffs’ motion but with the

exception that it corrects the pleading deficiencies noted in this Order. The plaintiffs

shall file separate notice of the filing of their second amended complaint in

conformity with LRCiv 15.1(b).

IT IS FURTHER ORDERED that the plaintiffs shall serve the second amended

complaint no later than January 9, 2015.

IT IS FURTHER ORDERED that the deadlines in the Scheduling Order (Doc.

28) are stayed pending further order of the Court.

IT IS FURTHER ORDERED that the parties shall file a supplemental Joint

Case Management Report proposing new pretrial scheduling deadlines no later than

February 13, 2015.

DATED this 19th day of December, 2014.

Case 2:13-cv-02621-PGR Document 62 Filed 12/19/14 Page 5 of 5