Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_07-cv-01065/USCOURTS-azd-2_07-cv-01065-1/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 28:1331 Fed. Question

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Global Building Systems, Inc.; and

James L. Beavers,

Plaintiffs/Counterdefendants, 

vs.

Donald J. Brandes,

Defendant/Counterclaimant. 

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No. CV-07-1065-PHX-DGC

ORDER

Plaintiffs have filed a motion for leave to file a supplemental complaint pursuant to

Rule 15(d) of the Federal Rules of Civil Procedure. Dkt. #42. A response and reply have

been filed. Dkt. ##44-45. The Court will deny the motion.

I. Background.

Donald Brandes and James Beavers formed Global Building Systems, Inc. (“GBS”)

to manufacture and sell an affordable, energy-efficient building system. An application

regarding the building system, Application No. 10/101,549, was filed with the United States

Patent and Trademark Office in March 2002, and continuing applications currently are

pending (“‘549 Applications”). One of the claims in the ‘549 Applications issued as Patent

No. 6,796,093 (“‘093 Patent”) in September 2004. Brandes is listed as the sole inventor of

the inventions disclosed in the ‘549 Applications and the ‘093 Patent.

In September 2005, GBS and Brandes entered into an Assignment and Royalty

Case 2:07-cv-01065-DGC Document 47 Filed 02/19/08 Page 1 of 5
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Agreement under which Brandes assigned to GBS his interest in the ‘549 Applications and

the ‘093 Patent. The Agreement grants Brandes the right to terminate the Agreement on or

after August 31, 2007, if GBS did not meet certain financing and business activity conditions

by that date.

GBS and Beavers filed the instant suit against Brandes on May 25, 2007. Dkt. #1.

The complaint alleges that Beavers and Brandes jointly invented the building system and the

‘549 Applications and ‘093 Patent therefore incorrectly list Brandes as the sole inventor. Id.

¶¶ 7, 21. The complaint asserts four claims for relief: a claim to correct the named inventor

on the ‘549 Applications and the ‘093 Patent, a claim for a declaratory judgment that Beavers

is a co-inventor, a claim to enjoin Brandes from terminating the Agreement, and an unjust

enrichment claim. Id. ¶¶ 20-44.

II. Analysis.

Plaintiffs seek to add a breach of contract claim based on Brandes’ refusal to execute

certain documents necessary to correct the alleged inventorship error. See Dkt. #43 ¶¶ 17-19,

45-48. The Case Management Order filed on August 15, 2007, contains the following

paragraph:

2. Deadline for Joining Parties and Amending Pleadings. The

deadline for joining parties and amending pleadings is 60 days from the date

of this Order. 

Dkt. #25 ¶ 2 (emphasis in original). The deadline for filing motions for leave to amend the

complaint was therefore October 15, 2007. Plaintiffs’ motion was filed on January 23, 2008.

See Dkt. #42.

Plaintiffs contend that their motion is not untimely and that leave to file a supplemental

complaint should be liberally granted under Rule 15(d) because the facts supporting the

proposed breach of contract claim did not occur until after the complaint was filed. Dkt. #42.

Brandes argues that Rule 16(b)’s “good cause” standard applies to the motion because

Plaintiffs could have asserted a breach of contract claim when they filed the complaint.

Dkt. #44.

Rule 15(d) provides that a court may permit a party to file “a supplemental pleading

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setting out any transaction, occurrence, or event that happened after the date of the pleading

to be supplemented.” Fed. R. Civ. P. 15(d). Thus, “‘Rule 15(d) permits the filing of a

supplemental pleading which introduces a cause of action not alleged in the original complaint

and not in existence when the original complaint was filed.’” Cabrera v. City of Huntington

Park, 159 F.3d 374, 382 (9th Cir. 1998) (citation omitted).

This Circuit has not addressed whether a party seeking to file a supplemental

complaint under Rule 15(d) must meet Rule 16(b)’s good cause standard to modify the

scheduling order where the motion to supplement is filed after the deadline for amending the

complaint. The district courts that have addressed the question are split. Compare Ohio

Valley Envtl. Coalition v. U.S. Army Corps of Eng’rs, 243 F.R.D. 253, 256 (S.D. W. Va.

2007) (Rule 16 does not apply to motions to supplement), and Fremont Inv. & Loan v.

Beckley Singleton, Chtd., No. 2:03-CV-1406-PMP-RJJ, 2007 WL 1213677, at *7 (D. Nev.

Apr. 24, 2007) (same), with McGrotha v. Fed Ex Ground Package Sys., Inc., No. 5:05-CV391 (CAR), 2007 WL 640457, at *2 (M.D. Ga. Feb. 24, 2007) (“When a motion to

supplement is filed after the scheduling order’s deadline, . . . a party must first demonstrate

good cause under Rule 16(b) before a court can consider whether supplementation is proper

under Rule 15(d).”).

The Court need not decide the issue. As explained more fully below, the proposed

breach of contract claim predates the complaint. Thus, while brought as a motion to file a

supplemental complaint under Rule 15(d), Plaintiffs’ motion actually seeks to amend the

original complaint under Rule 15(a). Plaintiffs must therefore show good cause to modify the

Case Management Order before the Court may consider whether leave to amend should be

granted under Rule 15(a).

A. The Breach of Contract Claim Predates the Complaint.

On August 17, 2007, about three months after the complaint was filed, Plaintiffs’

counsel sent Brandes a letter requesting that he execute certain documents necessary to correct

the alleged inventorship error. Dkt. #42-3 at 11-12. Plaintiffs claim that Brandes’ refusal to

execute the documents as requested in the August 17 letter constitutes a breach of the

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Agreement. Dkt. #42 at 4.

In response to Plaintiffs’ motion, Brandes has submitted a declaration in which he

avers that the August 17 letter simply renewed Plaintiffs’ prior demands that he execute

documents necessary to correct the alleged inventorship error. Dkt. #44 at 13-19, ¶ 2.

Brandes states that on three occasions between late 2004 and early 2007, Plaintiffs asked him

to sign documents listing Beavers as a co-inventor and on each occasion he told them no.

Id. ¶¶ 7, 11. Plaintiffs do not address this evidence in their reply. They assert that their

counsel made no requests of Brandes until months after the complaint was filed (Dkt. #45

at 7), but present no evidence in support of this assertion. The uncontroverted evidence thus

shows that, prior to the filing of the complaint, Brandes refused Plaintiffs’ requests to sign

documents listing Beavers as a co-inventor. This evidence is consistent with the allegation

in the complaint that “Brandes disputes that Beavers is a joint inventor to the inventions

contained in the ‘093 Patent and the [‘549] Applications[.]” Dkt. #1 ¶ 19. 

The Court concludes that the proposed breach of contract claim predates the complaint.

Plaintiffs’ motion therefore is properly construed as a motion to amend the complaint under

Rule 15(a), not a motion to file a supplemental complaint under Rule 15(d). See Hutchins v.

UPS, Inc., No. 01 CV 1462 WJM, 2005 WL 1793695, at *3 (D.N.J. July 26, 2005)

(distinguishing between motions to amend and motions to supplement).

B. Have Plaintiffs Shown Good Cause to Modify the Case Management

Order?

Because Plaintiffs’ motion to amend was filed after the deadline set by the Court

pursuant to Rule 16, Plaintiffs must first demonstrate good cause to modify the deadline

before the Court will consider whether the proposed amendment is proper under Rule 15(a).

See Fed. R. Civ. P. 16(b) (a deadline established under Rule 16 “shall not be modified except

upon a showing of good cause”); Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 608

(9th Cir. 1992) (“The scheduling order ‘controls the subsequent course of the action’ unless

modified by the court.”) (quoting Fed. R. Civ. P. 16(a)). “Good cause” exists when a deadline

“cannot reasonably be met despite the diligence of the parties seeking the extension.” Fed.

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R. Civ. P. 16 Advisory Comm.’s Notes (1983 Am.); see Johnson, 975 F.2d at 609. 

Plaintiffs contend that good cause exists because the breach of contract claim arose

only recently. Dkt. #45 at 6-7. But as explained above, the breach of contract claim was

in existence when Plaintiffs filed the complaint in May 2007. Plaintiffs had ample time

to amend the complaint to assert the breach of contract claim prior to the deadline of

October 15, 2007. Plaintiffs have not shown good cause to modify the Rule 16 schedule set

in the Case Management Order. The Court accordingly need not address whether leave to

amend should be granted under Rule 15(a).

Plaintiffs argue that Brandes will not be prejudiced by the untimely amendment.

Whether or not this is true, prejudice is not the relevant inquiry. “Rule 16(b)’s ‘good cause’

standard primarily considers the diligence of the party seeking the amendment.” Johnson, 975

F.2d at 609. “Although the existence or degree of prejudice to the party opposing the

modification might supply additional reasons to deny a motion, the focus of the inquiry is

upon the moving party’s reasons for seeking modification [of the Rule 16 schedule]. If that

party was not diligent, the inquiry should end.” Id. (citation omitted).

IT IS ORDERED that Plaintiffs’ motion to file a supplemental complaint (Dkt. #42)

is denied.

DATED this 19th day of February, 2008.

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