Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-01291/USCOURTS-casd-3_12-cv-01291-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition For Removal--Other Contract

---

5 

10 

15 

20 

25 

16 

2 

3 

4 

ZOl 3HAY Il ~i 3:\ 

:,OU1"., 

BV\\{L­ -­

.. • ,h) d ' 

[1 0 11-' 

6 

7 

8 UNITED STATES DISTRICT COURT 

9 SOUTHERN DISTRICT OF CALIFORNIA 

11 II FREDERICK STOCCO, an individual 

and KATHLEEN STOCCO, an 

GEMOLOGICAL INSTITUTE OF 

12 II individual, 

13 

14 

vs. 

Plaintiffs, 

AMERICA, INC. a California 

Corporation; and Does 1 through 100, 

Defendant. 

17 II HAYES, Judge: 

CASE NO. 12-CV-1291 WQH (DHB) 

ORDER 

18 The matter before the Court is the Motion for Leave to File Second Amended 

19 Complaint and Add Party Plaintiff filed by Plaintiffs. (ECF No. 20). 

BACKGROUND 

21 On April 19, 2012, Plaintiffs Frederick Stocco and Kathleen Stocco filed a 

22 complaint against Defendant in San Diego Superior Court. (ECF No.1). On May 29, 

23 2012, Defendant removed the complaint to this Court. (ECF No. 1-3). 

24 On July 10, 2012, Plaintiffs filed the First Amended Complaint against 

Defendant, purporting to assert the following claims for relief: (1) fraudulent 

26 misrepresentation; (2) negligence; (3) breach of written contract; (4) fraud in the 

27 inducement; (5) failure to provide franchise offering circular, in violation ofCalifornia 

28 Corporation's Code section 31119; and (6) unfair business practices, in violation of 

- 1 ­ 12cv1291 WQH (DHB) 

Case 3:12-cv-01291-WQH-DHB Document 28 Filed 05/17/13 Page 1 of 4
1 II California Business & Professions Code section 17203. Id. 

211 On January 3,2013, the Court granted a motion to dismiss filed by Defendant 

3 II pursuant to Federal Rule ofCivil Procedure 12(b )(6), and dismissed claims three, four, 

411 five and six of the First Amended Complaint. (ECF No. 15). 

511 On February 19,2013, Plaintiffs filed the Motion for Leave to File Second 

6 II Amended Complaint and Add Party Plaintiff, accompanied by a proposed Second 

7 II Amended Complaint. (ECF No. 16). On March 11, 2013, Defendant filed an 

8 II opposition, contending that amendment would be futile and that Plaintiffs were aware 

9 II of the facts they seek to add at the time the original Complaint was filed. (ECF No. 

10 II 24). On March 18,2013, Plaintiffs filed a reply. (ECF No. 25). 

11 II DISCUSSION 

1211 Rule 15 of the Federal Rules of Civil Procedure mandates that leave to amend 

13 II "be freely given when justice so requires." Fed. R. Civ. P. 15(a). "This policy is to be 

14 II applied with extreme liberality." Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 

15 II 1048, 1051 (9th Cir. 2003) (quotation omitted). In determining whether to allow an 

16 II amendment, a court considers whether there is "undue delay," "bad faith," "undue 

17 II prejudice to the opposing party," or "futility ofamendment." Foman v. Davis, 371 U.S. 

18 II 178, 182 (1962); see also Smith v. Pac. Prop. Dev. Co., 358 F.3d 1097, 1101 (9th Cir. 

1911 2004)(citingtheFomanfactors). "Notallofthe [Foman] factors merit equal weight.. .. 

20 II [I]t is the consideration of prejudice to the opposing party that carries the greatest 

21 II weight." Eminence Capital, 316 F .3d at 1052 (citation omitted). "The party opposing 

22 II amendment bears the burden ofshowing prejudice." DCD Programs, Ltd. v. Leighton, 

23 II 833 F .2d 183, 187 (9th Cir. 1987). "Absent prejudice, or a strong showing of any of 

24 II the remaining F oman factors, there exists a presumption under Rule 15( a) in favor of 

25 II granting leave to amend." Eminence Capital, 316 F .3d at 1052. 

2611 Citing Jordan v. Los Angeles Cnty., 669 F.2d 1311,1324 (9th Cir. 1982), 

27 II Defendant contends that the Court should deny leave to amend because "[Plaintiffs] 

2811 knew or should have known ofthe facts upon which they base their amendment at the 

- 2 - 12cv1291 WQH (DHB) 

Case 3:12-cv-01291-WQH-DHB Document 28 Filed 05/17/13 Page 2 of 4
5 

10 

15 

20 

25 

1 II time they filed their original Complaint." (ECF No. 24 at 8). In Jordan, the Court of 

2 II Appeals for the Ninth Circuit found no abuse ofdiscretion in the district court's denial 

3 II of the plaintiffs motion to amend his complaint because "the district court explicitly 

4 II found that [p Jaintiff s] amendment would have prejudiced the [ defendant] by requiring 

II it to engage in further discovery." Jordan, 669 F.2d at 1324,judgment vacated on 

611 other grounds, Cnty. ofLos Angeles v. Jordan, 459 U.S. 810 (1982). "Moreover," the 

711 Ninth Circuit stated, "the liberality ofRule 15(a) does not mean that amendment will 

811 be allowed regardless ofthe diligence ofthe moving party. Where the party seeking 

9 II amendment knows or should know ofthe facts upon which the proposed amendment 

II is based but fails to include them in the original complaint, the motion to amend may 

11 II be denied." Id. 

1211 After review ofthe filings ofthe parties, the Court finds that there has been an 

13 II insufficient showing ofprejudice to Defendant or undue delay in bringing the proposed 

14 II allegations to overcome the "presumption under Rule 15( a) in favor ofgranting leave 

II to amend." Id. Assuming, without deciding, that Plaintiffs knew of the factual 

1611 allegations they seek to add at the time the First Amended Complaint was filed, the 

17 II Court would still decline to exercise its discretion to deny leave to amend under the 

18 II facts ofthis case. See Jordan, 699 F.2d at 1324 (a motion to amend "may" be denied 

1911 based on plaintiffs lack of diligence). To the extent Defendant contends that 

II amendment is futile, the Court defers consideration ofthe merits until after Plaintiffs 

21 II file the amended pleading. See Netbula v. Distinct Corp., 212 F.R.D. 534, 539 (N.D. 

22 II Cal. 2003) ("Ordinarily, courts will defer consideration of challenges to the merits of 

23 II a proposed amended pleading until after leave to amend is granted and the amended 

24 II pleading is filed."). 

CONCLUSION 

26 IT IS HEREBY ORDERED that the Motion for Leave to File Second Amended 

27 II Complaint and Add Party Plaintiff (ECF No. 20) is GRANTED. No later than ten (10) 

28 II days from the date this Order is filed, Plaintiffs may file the proposed Second Amended 

- 3 - 12cv1291 WQH (DHB) 

Case 3:12-cv-01291-WQH-DHB Document 28 Filed 05/17/13 Page 3 of 4
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 

II Complaint which is attached to the Motion for Leave to File Second Amended 

II Complaint and Add Party Plaintiff. 

DATED: ~J~X_-__ 

- 4 - 12cv1291 WQH (DHB) 

Case 3:12-cv-01291-WQH-DHB Document 28 Filed 05/17/13 Page 4 of 4