Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-02527/USCOURTS-cand-3_04-cv-02527-2/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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Defendants initially moved to strike the Amended Complaint because Plaintiff failed to obtain

Defendants’ consent or the Court’s approval prior to filing the Amended Complaint. However, given

that Plaintiff has now moved for leave of Court, Defendants’ motion to strike is DENIED as moot.

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

ALLIED NORTH AMERICA INSURANCE

BROKERAGE CORP. OF CALIFORNIA,

Plaintiff,

 v.

WOODRUFF-SAWYER, et al.,

Defendants. /

No. C 04-2527 MJJ

ORDER DENYING LEAVE TO AMEND

COMPLAINT

INTRODUCTION

Before the Court is Plaintiff Allied North America Insurance Brokerage Corporation of

California’s Motion for Leave to File First Amended Complaint. Defendant the Estate of Dermond

Houweling (“the Estate”) opposes the motion.1

 For the following reasons, the Court DENIES

Plaintiff’s Motion.

FACTUAL BACKGROUND

Plaintiff employed Defendant Houweling, a successful and highly regarded executive in the

insurance and surety brokerage industry, from June 15, 1998 through June 15, 2004. Houweling and

Plaintiff executed a “Producer Agreement” (“the Agreement”) which governed the terms and

conditions of his employment with Plaintiff. The Agreement allegedly prevented Houweling from

engaging in conduct that posed a conflict of interest with his employment with Plaintiff and

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attempted to restrict him from engaging in similar activities after his employment with Plaintiff

ended. On June 15, 2004, Houweling resigned from Plaintiff and accepted employment with

Defendant Woodruff-Sawyer.

Plaintiff filed this suit against Defendants on June 24, 2004. On July 1, 2004, the Court

issued a temporary restraining order against Defendants. The Court later modified the order

following Defendants’ motion for reconsideration on July 24, 2004. Houweling filed a counterclaim

and subsequently passed away on November 20, 2004. On January 3, 2004, Houweling’s counsel

notified Plaintiff of Houweling’s death and the appointment of Mary Houweling as the Special

Administrator to Houweling’s estate. On March 30, 2005, the Estate was substituted in as

counterclaimant. The First Amended Counterclaim was filed on June 15, 2005. On June 21, 2005

Plaintiff filed a First Amended Complaint. The Estate moved to strike the complaint, prompting

Plaintiff to file the instant motion seeking leave of the Court to file its First Amended Complaint.

LEGAL STANDARD

Federal Rule of Civil Procedure 15 governs the amendment of pleadings. Where a

responsive pleading has already been filed, the party seeking amendment “may amend the party’s

pleading only by leave of court or by written consent of the adverse party; and leave shall be freely

given when justice so requires.” FED. R. CIV. PROC. 15. Once the plaintiff has provided a legitimate

reason for amending the pleading, the burden shifts to the defendant to demonstrate why leave to

amend should not be granted. Genentech, Inc. v. Abbott Laboratories, 127 F.R.D. 529, 530-31

(N.D. Cal. 1989) (citing Senza-Gel Corp. v. Seiffhart, 803 F.2d 661, 666 (Fed. Cir. 1986)); W.

Schwarzer, A. Tashima, & J. Wagstaffe, Federal Civil Procedure Before Trial, § 8:415, at 8-130

(2002). In deciding whether justice requires granting leave to amend, factors to be considered

include “the presence or absence of undue delay, bad faith, dilatory motive, repeated failure to cure

deficiencies by previous amendments, undue prejudice to the opposing party, and futility of the

proposed amendment.” Moore v. Kayport Package Express, Inc., 885 F.2d 531, 538 (9th Cir. 1989)

(citing Foman v. Davis, 371 U.S. 178, 182 (1962)). 

The decision whether to grant leave to amend remains within the Court’s discretion. See

Acri v. Int’l Ass’n of Machinists, 781 F.2d 1393, 1398 (9th Cir. 1986). Generally, leave to amend

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should be granted with “extreme liberality.” Morongo Band of Mission Indians v. Rose, 893 F.2d

1074, 1079 (9th Cir. 1990); Ascon Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir.

1989). Nonetheless, certain types of motions to amend are less favored than others. “[L]ate

amendments to assert new theories are not reviewed favorably when the facts and the theory have

been known to the party seeking amendment since the inception of the cause of action.” Acri, 781

F.2d at 1398. However, amendments seeking to add claims are to be granted more freely than

amendments adding parties. Union Pac. R.R. Co. v. Nevada Power Co., 950 F.2d 1429, 1432 (9th

Cir. 1991). 

ANALYSIS

Here, Plaintiff seeks to amend the complaint to allege separately the breach of the five-year

employment term from the breach of the non-competition provision. Plaintiff contends that the

separate allegations will allow the parties to file an early motion for summary judgment on the

breach of the five-year employment term. 

To determine whether the proposed amendment should be granted here, only two of the

Moore factors are relevant: undue delay and prejudice.

A. Undue Delay

The Estate asserts that Plaintiff’s attempt to amend its Complaint should be denied as it

constitutes undue delay, and that Plaintiff has failed to explain its delay in seeking to amend. See

Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 986 (9th Cir. 1999) (“Although

delay is not a dispositive factor in the amendment analysis, it is relevant . . . especially when no

reason is given for the delay[.]”) (internal citations omitted). The Estate contends that Plaintiff’s

delay in seeking to amend its compliant is inexcusable because the factual and legal predicate of

Plaintiff’s new claim was well known to Plaintiff at the time the original Complaint was filed. 

The Court agrees with the Estate. Plaintiff has failed to adequately explain why it waited

such a long period of time to file the motion to amend. See Bonin v. Calderon, 59 F.3d 815, 845

(9th Cir. 1995) (finding that the district court did not abuse its discretion in denying leave to amend

“where the movant presents no new facts but only new theories and provides no satisfactory

explanation for his failure to fully develop his contentions originally”). There is no reason why

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The Court also DENIES Plaintiff’s motion for all of the reasons articulated by the Court during

oral argument on August 30, 2005 

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Plaintiff would not have known about the issue concerning the Agreement’s alleged five-year term

at the time the original Complaint was filed. Furthermore, the record demonstrates that this issue

was raised during the Case Management Conference on May 10, 2005, yet Plaintiff failed to file the

instant motion to amend until July 15, 2005. 

B. Prejudice

The Estate contends that Plaintiff’s delay is prejudicial to Defendants and the Court because

the deadline for fact discovery and the filing of dispositive motions has passed. Plaintiff responds

that the proposed First Amended Complaint raises no new facts, but only new legal theories based

upon the same operative facts. Plaintiff also asserts that the Estate was made aware of the potential

claim during the mediation on April 15, 2005.

An amendment’s potential prejudice to the opposing party “carries the most weight” among

the four factors in deciding whether to grant leave to amend. Eminence Capital, LLC v. Aspeon,

Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). To deny leave to amend, the prejudice must be

substantial. Morongo, 893 F.3d at 1079. “A need to reopen discovery and therefore delay

proceedings supports a . . . finding of prejudice from a delayed motion to amend the complaint.” 

Lockheed Martin, 194 F.3d at 986; see also Solomon v. North American Life and Casualty Ins. Co.,

151 F.3d 1132, 1139 (9th Cir. 1998) (finding no abuse of discretion in denial of leave to amend

where motion to amend was made on the eve of discovery cut-off and motion would have required

reopening discovery).

In the instant action, the Court finds that Plaintiff’s motion was made on the eve of the

discovery cut-off and granting of the motion would require reopening discovery. See Solomon, 151

F.3d at 1139. Plaintiff filed the instant motion on July 1, 2005, and the discovery cut-off for this

matter was on July 15, 2005. Furthermore, the pre-trial conference is currently set for October 11,

2005, and the trial is scheduled to begin on October 24, 2005. In light of these considerations, the

Court finds that the Estate will be prejudiced if the Court allows Plaintiff to amend at this late date. 

Accordingly, Plaintiff’s Motion for Leave to File First Amended Complaint is DENIED.

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CONCLUSION

The Court hereby DENIES Plaintiff’s Motion for Leave to File First Amended Complaint. 

This order terminates docket no. 176 and no. 183.

IT IS SO ORDERED.

Dated: September _1_, 2005 

MARTIN J. JENKINS

UNITED STATES DISTRICT JUDGE

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