Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_17-cv-05433/USCOURTS-cand-4_17-cv-05433-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

FEDERAL SOLUTIONS GROUP, INC.,

Plaintiff,

v.

H2L1-CSC, JV,

Defendant.

Case No. 4:17-cv-05433-KAW 

ORDER GRANTING PLAINTIFF'S 

MOTION FOR LEAVE TO FILE FIRST 

AMENDED COMPLAINT

Re: Dkt. No. 42 & 43

On March 28, 2019, Plaintiff Federal Solutions Group, Inc. filed a motion for leave to file 

the first amended complaint to add a single claim for breach of the implied covenant of good faith 

and fair dealing.

Upon review of the moving papers, the Court finds this matter suitable for resolution 

without oral argument pursuant to Civil Local Rule 7-1(b), and, for the reasons set forth below, 

GRANTS Plaintiff’s motion for leave to amend.

I. BACKGROUND

On September 19, 2017, Plaintiff Federal Solutions Group, Inc. (“FSG”) filed a complaint 

against Defendant H2L1-CSC, JV (“H2L1”) for breach of contract and unjust enrichment and 

quantum meruit arising out of a construction project (“Project”) through the United States Army 

Corps of Engineers (“USACE”), located at Fort Hunter Liggett in Monterey County, California.

Defendant was the Project’s prime contractor, and Plaintiff was a subcontractor. H2L1 terminated 

FSG from the Project, allegedly for cause, which FSG denies was proper. FSG instituted this 

action to recover damages it incurred due to H2L1’s conduct, including, but not limited to, H2L1’s 

allegedly wrongful termination of FSG from the Project.

On January 18, 2018, the Court issued the case management scheduling order, and gave 

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the parties two weeks to amend their pleadings, through February 2, 2018, and set a trial date of 

April 1, 2019. (Dkt. No. 25.) On October 4, 2018, the Court adopted a joint stipulation to continue 

the trial date to December 16, 2019, which was sought, in part, because the parties were still 

meeting and conferring on discovery, including the production of documents. (Dkt. Nos. 33 & 34.) 

The deadline to amend pleadings remained unchanged. See ids.

On March 28, 2019, Plaintiff filed a motion for leave to file the first amended complaint to 

add a single claim for breach of the implied covenant of good faith and fair dealing. (Pl.’s Mot., 

Dkt. No. 42.) Plaintiff also filed a request for judicial notice. (Pl.’s RJN, Dkt. No. 43.) On April 

11, 2019, Defendant filed an opposition. (Def.’s Opp’n, Dkt. No. 44.) On April 18, 2019, Plaintiff 

filed a reply. (Pl.’s Reply, Dkt. No. 45.)

II. LEGAL STANDARD

A. Motion for Leave to Amend

Federal Rule of Civil Procedure 16(b)(4) provides that, after the deadline has passed, a 

scheduling order “may be modified only for good cause and with the judge's consent.” Fed. R. 

Civ. P. 16(b)(4). Unlike Rule 15(a), the “‘good cause’ standard primarily considers the diligence 

of the party seeking the amendment.” In re W. States Wholesale Nat. Gas Antitrust Litig., 715 F.3d 

716, 737 (9th Cir. 2013), aff'd sub nom. Oneok, Inc. v. Learjet, Inc., 135 S. Ct. 1591, 191 L. Ed. 2d 

511 (2015) (quoting Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992) 

(internal quotations omitted).

Rule 15(a)(2) provides that leave to amend a complaint should be “freely given when 

justice so requires.” Fed. R. Civ. P. 15(a)(2). “This policy is to be applied with extreme 

liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003). Five 

factors are commonly used to determine the propriety of a motion for leave to amend: “(1) bad 

faith, (2) undue delay, (3) prejudice to the opposing party, (4) futility of amendment; and (5) 

whether plaintiff has previously amended his complaint.” In re W. States Wholesale Natural Gas 

Antitrust Litig., 715 F.3d 716, 738 (9th Cir. 2013) (quoting Allen v. City of Beverly Hills, 911 F.2d 

367, 373 (9th Cir. 1990)). The factors are not to be given equal weight. Eminence Capital, 316 

F.3d at 1052. Prejudice to the opposing party must be given the greatest weight. Id. Absent 

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prejudice, or a strong showing of bad faith, undue delay, or futility of amendment, there exists a 

presumption under Rule 15(a) in favor of granting leave to amend. Id.

B. Request for Judicial Notice

A district court may take notice of facts not subject to reasonable dispute that are “capable 

of accurate and ready determination by resort to sources whose accuracy cannot reasonably be 

questioned.” Fed. R. Evid. 201(b); United States v. Bernal–Obeso, 989 F.2d 331, 333 (9th Cir. 

1993). “[A] court may take judicial notice of ‘matters of public record,’” Lee, 250 F.3d at 689 

(citing Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986)), and may also consider 

“documents whose contents are alleged in a complaint and whose authenticity no party questions, 

but which are not physically attached to the pleading.” Branch v. Tunnell, 14 F.3d 449, 454 (9th 

Cir. 1994), overruled on other grounds by Galbraith v. Cnty. of Santa Clara, 307 F.3d 1119 (9th 

Cir. 2002). The court need not accept as true allegations that contradict facts which may be 

judicially noticed. See Mullis v. United States Bankruptcy Ct., 828 F.2d 1385, 1388 (9th Cir. 

1987).

III. DISCUSSION

A. Request for Judicial Notice

As a preliminary matter, Plaintiff asks that the Court take judicial notice of four documents 

in support of its motion: 1) the January 18, 2018 initial case management scheduling order issued 

in this action; 2) the parties’ October 3, 2018 joint stipulation and proposed order to continue the 

trial date and related deadlines; 3) the Court’s order adopting the joint stipulation, dated October 4, 

2018; and 4) the Court’s civil minutes from the March 22, 2019 case management conference. 

(Req. for Judicial Notice, “RJN,” Dkt. No. 43,” Exs. 1-4.) 

Defendant did not object to the request for judicial notice. All of the exhibits are court 

records in this case.1 Generally, court records are subject to judicial notice, because they are true 

and correct copies of a court record. United States v. Wilson, 631 F.2d 118, 119 (9th Cir. 1980); 

 

1 Going forward, the parties are advised that a request for judicial notice is unnecessary if the 

documents originated in the instant case. Instead, a citation to the ECF docket number (Dkt. No. 

__) would suffice.

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see also Fed. R. Evid. 201(b) (Public records, whose authenticity is capable of accurate and ready 

determination by resort to sources whose accuracy cannot reasonably be questioned, are also 

subject to judicial notice.)

Accordingly, the Court GRANTS Plaintiff’s request for judicial notice.

B. Motion for Leave to Amend

In making this motion, Plaintiff contends that good cause exists, because it was diligent in 

bringing the motion, and that Defendant will not suffer prejudice if leave to amend is granted. 

(Pl.’s Mot. at 7.)

In opposition, Defendant argues only that Plaintiff has not shown good cause to amend the 

complaint, because FSG failed to propound discovery prior to the deadline to amend the 

pleadings; the key document that forms the basis of the new claim has been in FSG’s possession 

since 2014; and FSG waited several months after discovering its desire to amend before filing the 

motion, such that it lacked diligence in seeking amendment. (Def.’s Opp’n at 3-5.) 

i. Plaintiff’s failure to propound discovery prior to the deadline to amend the 

pleadings is irrelevant.

As an initial matter, the fact that Plaintiff did not propound discovery prior to the deadline 

to amend the pleadings is irrelevant. (See Def.’s Opp’n at 4.) The deadline to amend the pleadings 

is a date by which the parties may do so without leave of court. The fact that Rule 16 permits 

amendment after the deadline upon a showing of good cause shows that granting leave to amend 

in this instance is not giving Plaintiff a “mulligan,” particularly given that, as Defendant 

acknowledges, breach of the implied covenant of good faith and fair dealing is a common claim in

a breach of contract case. See id. Thus, Plaintiff’s failure to propound discovery prior to the 

deadline to amend the pleadings has no bearing on the instant motion.

ii. Whether Plaintiff was diligent in seeking amendment

In seeking amendment, Plaintiff contends that it was diligent in doing so, given that H2L1 

produced two rounds of documents, totaling over 3,500 pages, in January 2019, which took weeks 

to review. (Pl.’s Mot; at 7; Decl. of John A. Castro, “Castro Decl.,” Dkt. No. 42-1 ¶ 5.) These 

were produced in response to requests propounded in May 2018. (See Castro Decl. ¶ 6.) Plaintiff 

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notified Defendant of the basis for its new claim in late-February 2019, and produced a copy of the 

proposed first amended complaint on March 25, 2019, and requested H2L1’s consent in filing the 

amended pleading. (Pl.’s Mot. at 7; Castro Decl. ¶¶ 8, 12.) The parties met and conferred on 

March 28, 2019, and Defendant refused to stipulate, so Plaintiff filed the instant motion on that 

same date. (Castro Decl. ¶ 13.) The Court finds that this timeline is reasonable given the 

voluminous document production made in January 2019.

In opposition, Defendant argues that Plaintiff was not diligent, because its agent created 

the “key” document that forms its basis of the claim and emailed it from an FSG email address. 

(Def.’s Opp’n at 4.) Moreover, Defendant contends that Plaintiff has had the document since 2014. 

Id.

In its reply, FSG argues that that the document emailed from an FSG email address was 

only a draft, and that H2L1 failed to produce the actual schedule of values utilized on the Project. 

(Pl.’s Reply at 4.)2 Furthermore, the individual who created the document was a former employee 

of both parties, and Defendant concedes that this former employee is in sole possession of certain 

documents, including some of Defendant’s. (Pl.’s Reply at 3-4.) Additionally, Plaintiff argues that 

this was only one of three exemplar documents that were produced in January 2019 that provide a 

basis for the new claim. Id. at 3. The other two documents were a two-page email chain and 

correspondence from USACE, neither of which Defendant disputes were first produced in 

January. Id. This explanation is reasonable, and is not a basis to find that Plaintiff was not diligent 

in bringing this new claim.

Accordingly, the Court finds that Plaintiff was diligent in seeking amendment. 

iii. Defendant will not suffer prejudice if leave to amend is granted.

Defendant does not argue that it will suffer prejudice if leave to amend is granted. Instead, 

as Plaintiff contends, the addition of the new claim does not add any additional parties nor 

 

2 Plaintiff also states that Defendant has produced over 20,000 pages of documents that have been 

in its possession since the case’s inception, and has been withholding metadata. (Pl.’s Reply at 4.) 

Currently, there is no discovery dispute before the undersigned regarding this document 

production, but the parties are directed to review the district’s ESI Guidelines and Checklist, 

available at https://www.cand.uscourts.gov/eDiscoveryGuidelines, to assist them in future meet 

and confer efforts.

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increase the complexity of the litigation. (Pl.’s Reply at 4.) The Court notes that the trial date has 

been continued to December 2019, and that the fact and expert discovery deadlines are not until 

July and August 2019, which provides sufficient time to engage in any additional discovery to the 

extent that it is necessary.

Additionally, the Court notes that there is no appearance of bad faith, undue delay or 

futility of amendment, and Plaintiff has not previously amended the complaint, which all weigh in 

favor of amendment.

Accordingly, all factors weigh in favor of amendment. 

IV. CONCLUSION

In light of the foregoing, Plaintiff’s motion for leave to amend is GRANTED. Plaintiff 

shall file its first amended complaint within seven days of this order.

IT IS SO ORDERED.

Dated: May 1, 2019

__________________________________

KANDIS A. WESTMORE

United States Magistrate Judge

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