Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_03-cv-05439/USCOURTS-caed-1_03-cv-05439-13/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1961 Racketeering (RICO) Act

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

FOX HOLLOW OF TURLOCK OWNERS' )

ASSOCIATION, )

)

)

)

Plaintiff, )

)

vs. )

)

)

RICHARD SINCLAIR, et al., )

)

)

Defendant. )

)

)

No. CV-F-03-5439 OWW/DLB

ORDER GRANTING DEFENDANTS'

MOTION TO STRIKE FOR FAILURE

TO COMPLY WITH RULE 15(a)

(Doc. 275), STRIKING THIRD

AMENDED COMPLAINT (Doc.

273), DENYING PLAINTIFF

CEMG’S MOTION FOR RELIEF

UNDER RULE 60(b) FOR LEAVE

FOR LATE FILING OF CORRECTED

THIRD AMENDED COMPLAINT AS

MOOT (Doc. 288), AND

DIRECTING PLAINTIFF CEMG TO

FILE CORRECTED THIRD AMENDED

COMPLAINT WITHIN 20 DAYS OF

THE FILING DATE OF THIS

ORDER

This is a consolidated action. The lead case is Fox Hollow

of Turlock Owners’ Association v. Richard Sinclair, et al., No.

CV-F-03-5439 OWW/DLB. Consolidated with the lead case is

California Equity Management Group, Inc. v. Mauctrst LLC, et al.,

No. CV-F-03-5774 OWW/SMS, and Laitrust LLC, et al. v. Fox Hollow

Case 1:03-cv-05439-AWI-SAB Document 295 Filed 06/07/07 Page 1 of 8
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of Turlock Home Owners’ Association, et al., Stanislaus County

Superior Court Action No. 332675. Pursuant to the Stipulation

and Order to Consolidate Actions filed on October 6, 2003, (Doc.

22), all pleadings are to be filed in No. CV-F-03-5439 OWW/DLB. 

By Order filed on May 24, 2005, Plaintiff California Equity

Management Group, Inc. (“CEMG”) was given leave to file a Second

Amended Complaint. (Doc. 147). The Second Amended Complaint

filed on May 25, 2005, (Doc. 149), named as Plaintiff in the

caption Fox Hollow of Turlock Owners’ Association (“Association”)

instead of CEMG. By Stipulation and Order filed on August 5,

2005, (Doc. 244), the Second Amended Complaint filed on May 25,

2005 was stricken and CEMG ordered to file a Second Amended

Complaint by August 24, 2005. On August 26, 2005, CEMG filed a

Second Amended Complaint, (Doc. 246). Defendants filed a motion

to strike the Second Amended Complaint as untimely filed, (Doc.

247) and a motion for more definite statement, (Doc. 251). By

Order filed on March 30, 2007, (Doc. 272), the motion to strike

was denied, and the motion for more definite statement was

granted in part and denied in part. 

On April 12, 2007, a Verified Third Amended Complaint was

filed, (Doc. 273). The caption of the Third Amended Complaint

lists the Association as Plaintiff, not CEMG. The Verification,

signed by attorney Timothy M. Ryan, declares:

I am one of the attorneys for Fox Hollow of

Turlock Owners’ Association, a party to this

action. Such party is absent from the county

of aforesaid where such attorneys have their

offices, and I make this verification for and

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on behalf of that party for that reason. I

am informed and believe and on that ground

allege that the matters stated in the

foregoing document are true. 

Defendants move to dismiss the Third Amended Complaint on

the grounds (1) that CEMG did not file the Third Amended

Complaint within 10 days of the entry of the March 30, 2007 Order

as required by Rule 12(e), Federal Rules of Civil Procedure, and

(2) that the Association filed the Third Amended Complaint

without first obtaining leave of court or the consent of

Defendants as required by Rule 15(a), Federal Rules of Civil

Procedure.

In opposing this motion, attorneys with The Ryan Firm,

counsel for Plaintiffs Association, CEMG, and Andrew Katakis,

have submitted declarations. Timothy M. Ryan avers in pertinent

part:

3. I assigned the task of revising the

CEMG’s second amended complaint to an

associate, Barry G. Coleman.

4. He is an experienced lawyer and has

drafted numerous pleadings before, including

revising complaints after pleadings

challenges. I therefore believed he would

revise this complaint in accord with the

court’s ruling.

5. Mr. Coleman presented me with a final

draft of the third amended complaint for my

signature. I asked Mr. Coleman if this was a

final draft and if he had carefully checked

it. Mr. Coleman stated that he had carefully

reviewed the final draft and that it was

correct in all aspects. I relied upon these

representations in signing the complaint and

the verification. I was unaware that the

third amended complaint was on an incorrect

caption at the time I signed the third

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amended complaint and verification.

Barry G. Coleman avers in pertinent part:

3. I was assigned to draft and prepare a

third amended complaint on behalf of CEMG

based on this court’s March 30, 2007 order.

4. I searched our computer database for a

draft of the second amended complaint to

revise it. I located a file labeled second

amended complaint dated August 23, 2005. I

did not find any other saved draft of the

second amended complaint, and therefore, I

believed this was the correct draft from

which to work.

5. I printed a copy of the court’s order and

set it alongside the draft of the second

amended complaint I had printed from The Ryan

Firm [sic] saved files. I reviewed each of

the sections of the court’s order regarding

the various causes of action mentioned in the

order and how they corresponded to the draft

of the second amended complaint from which I

was working. Each of the causes of action

referenced in the court’s order were in the

draft of the second amended complaint I was

revising and the causes of action bore the

same number as referred to in the order.

6. Both the order and the draft I was

working from were on a Fox Hollow caption,

which fostered the belief that I was using

the correct caption.

7. I carefully checked the revisions against

the order to ensure that I was making the

proper corrections as to the allegations. As

an example, I revised the twentieth cause of

action to reflect the period for which an

accounting was sought and revised the twenty

first [sic], twenty second [sic] and twenty

third [sic] causes of action to reflect that

there was a written contract.

8. I prepared the verification to conform to

the caption I believed to be proper, thereby

improperly naming Fox Hollow instead of CEMG,

as the Plaintiff. When I reviewed the final

draft I believed that the caption was

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correct, that the verification was consistent

with what I believed was the correct caption.

9. I presented the final version to Mr. Ryan

for his signature and he asked me directly if

I had carefully reviewed it and if everything

was correct. I assured him that it was. 

Based upon my representations Mr. Ryan signed

the third amended complaint and verification

as I had prepared them. I later first

learned that I had filed CEMG’s third amended

complaint on the wrong caption when the [sic]

Ryan Firm received Defendants’ motion to

strike Fox Hollow’s third amended complaint.

10. I contacted Mr. Truax and attempted to

informally resolve this matter, but we were

unable to do so. 

Attached to the opposition to the motion is a “Notice of Errata

and Filing of Third Amended Complaint”. The “Notice of Errata

and Filing of Third Amended Complaint” lists CEMG as the

plaintiff, but the caption is stated as the Superior Court of the

State of California for the County of Stanislaus. The Notice of

Errata states:

NOTICE IS HEREBY GIVEN that the third amended

complaint of California Equity Management

Group, Inc. was inadvertently filed on the

wrong caption, with a defective verification. 

Therefore, a corrected copy of the third

amended complaint on the corrected caption

and corrected verification is hereby filed

without change to the allegations in the

previously filed third amended complaint. A

true and correct copy of the corrected third

amended complaint is attached hereto as

Exhibit ‘A.’

The Verified Third Amended Complaint attached to the Notice of

Errata as Exhibit A lists CEMG as the plaintiff but the caption

is stated as the Superior Court of the State of California for

the County of Stanislaus.

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CEMG and Fox Hollow recognize that the Third Amended

Complaint is defective and seek to correct it, relying on Rule

60(b)(1), Federal Rules of Civil Procedure. 

Rule 60(b) provides in pertinent part:

On motion and upon such terms as are just,

the court may relieve a party or a party’s

legal representative from a final ... order

... for the following reasons: (1) mistake,

inadvertence, surprise or excusable neglect;

....

Resolution of a motion to vacate judgment under Rule 60(b)(1) is

within the court’s discretion.

In Pioneer Investment v. Brunswick, 507 U.S. 380 (1993), the

Supreme Court addressed the meaning of “excusable neglect” for

purposes of the Bankruptcy Rules in a situation where the

creditors’ attorney failed to file documents within the time

required by the rules. The Supreme Court stated in pertinent

part:

Because Congress has provided no other

guideposts for determining what sorts of

neglect will be considered ‘excusable,’ we

conclude that the determination is at bottom

an equitable one, taking account of all

relevant circumstances surrounding the

party’s omission. These include ... the

danger of prejudice to the debtor, the length

of the delay and its potential impact on

judicial proceedings, the reason for the

delay, including whether it was within the

reasonable control of the movant, and whether

the movant acted in good faith.

507 U.S. at 395. The Ninth Circuit holds that the equitable test

set out in Pioneer applies to Rule 60(b)(1). Bateman v. U.S.

Postal Service, 231 F.3d 1220, 1223-1224 (9 Cir.2000); th

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Briones v. Riviera Hotel & Casino, 116 F.3d 379 (9 Cir. 1997). th

Here, the declarations submitted on behalf of CEMG

demonstrate that the failure to name CEMG in the caption of the

Third Amended Complaint and the incorrect verification was the

result of the mistake and carelessness of counsel. Counsel

represents three different parties in this consolidated action. 

“The Ninth Circuit has adopted a forgiving approach to excusable

neglect, accepting even ‘weak’ reasons if they reveal mere

‘negligence and carelessness, not ... deviousness or

willfulness.’” E. & J. Gallo Winery v. Cantine Rallo, S.p.A., 430

F.Supp.2d 1064, 1088 (E.D.Cal.2005), citing Bateman v. United

States Postal Service, supra, 231 F.3d at 1225. 

Defendants note that the “Notice of Errata and Filing of

Third Amended Complaint” and the pleading attached to it as

Exhibit A demonstrates continued carelessness by counsel. 

However, Defendants have not articulated any prejudice, the delay

in filing an appropriately captioned Third Amended Complaint on

behalf of CEMG has not been long, and the mistakes in the

captions clearly are the result of simple mistake and oversight. 

Defendants further contend: “Fox Hollow’s request that CEMG

be allowed to file the proposed corrected Third Amended Complaint

should be denied because Fox Hollow cannot make said request on

behalf of CEMG, CEMG has not sought leave to file the Amended

Complaint and the proposed Third Amended Complaint is still

defective.” 

Defendants’ contentions exalt form over substance. The Ryan

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On June 1, 2007, Plaintiff CEMG filed a motion for relief 1

under Rule 60(b) for leave to file its corrected Third Amended

Complaint, noticing the motion for hearing on July 23, 2007.

Plaintiff’s motion is denied as moot.

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Firm represents both the Association and CEMG in this

consolidated litigation. The Third Amended Complaint attached as

as Exhibit A to the Notice of Errata must be corrected to reflect

filing in this Court, but that is easily remedied.

 CONCLUSION 

For the reasons stated above:

1. Defendants’ motion to strike the Third Amended Complaint

filed on April 12, 2007 is GRANTED.

2. Plaintiff CEMG shall file a Third Amended Complaint

within 20 days of the filing date of this Order.1

IT IS SO ORDERED.

Dated: June 4, 2007 /s/ Oliver W. Wanger 

668554 UNITED STATES DISTRICT JUDGE

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