Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_09-cv-02147/USCOURTS-azd-2_09-cv-02147-0/pdf.json

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

---

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

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Idearc Media, LLC, 

Plaintiff, 

vs.

Palmisano & Associates, P.C., Palmisano

Law, PLLC, 

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

No. CV 09-2147-PHX-JAT

ORDER

Pending before the Court is Plaintiff’s Motion to Vacate Order Dismissing Palmisano

Law, PLLC without Prejudice or, in the alternative, for Leave to File Second Amended

Complaint (Doc. 22). The Court now rules on the Motion.

I. BACKGROUND

On October 13, 2009, Plaintiff filed a Complaint against Palmisano and Associates,

P.C. (“Palmisano and Associates”) and Palmisano Law PLLC (“Palmisano Law”) alleging,

among other things, breach of contract, breach of the implied covenant of good faith and fair

dealing, and unjust enrichment. (Doc. 1). The Complaint was amended and filed on

November 17, 2009 to adequately plead jurisdiction. (Doc. 11). On November 19, 2009,

Defendants filed a Notice of Filing Bankruptcy. (Doc. 12). On December 3, 2009, the

Parties stipulated to dismiss Defendant Palmisano Law from this action without prejudice.

(Doc. 14). The Stipulation was premised on Joseph P. Palmisano’s Declaration, as the

Manager and sole member of Palmisano Law, that Palmisano Law was not an operating

entity and had no assets or revenue. (Doc. 14-1). The same day, this Court entered an Order

Case 2:09-cv-02147-JAT Document 30 Filed 04/13/12 Page 1 of 6
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

- 2 -

granting the stipulation and dismissing Defendant Palmisano Law, without prejudice. (Doc.

15). The case has remained pending against Defendant Palmisano & Associates and the

Court has held several status conferences regarding the status of Palmisano & Associates’

bankruptcy case. (Doc. 16, 17, 18, 19, and 20). The bankruptcy proceedings have now

terminated without discharge of any of the claims in this lawsuit. (Doc. 22 at 2). 

Plaintiff seeks an Order vacating this Court’s December 3, 2009 Order granting the

Stipulation to Dismiss Palmisano Law without prejudice or, in the alternative, requests leave

to amend its Complaint. Plaintiff asserts that, when it contacted Joseph Palmisano

(“Palmisano”) to discuss reinitiating the current litigation, Palmisano informed it that

Palmisano and Associates was no longer operating and had no assets, but that Palmisano was

now practicing law at Palmisano Law. (Doc. 22 at 2). Plaintiff argues that, because

Palmisano Law is a successor in interest to Palmisano & Associates and is now an operating

entity contrary to the stipulation entered into by the Parties, the Court should vacate the

Order dismissing Palmisano Law or grant Plaintiff leave to amend to assert claims against

Palmisano Law that were previously dismissed without prejudice. (Id.). 

II. ANALYSIS

A. Whether Plaintiff’s Claims are Time-Barred

Plaintiff’s allegations against Defendants arise from an alleged breach of contract.

Palmisano Law argues that Plaintiff’s Complaint is time-barred because it does not relate back

to the dates of the original Complaint because the “New Entity” (presumably Palmisano Law)

was not in business at the time of the filing of the Complaint. (Doc. 23 at 9-10). In response,

Plaintiff argues that its Complaint does relate back because Palmisano Law had notice of the

claims in the original Complaint, as it was named as a defendant and served with that

Complaint. (Doc. 26 at 8). Further, Plaintiff argues that even if its claims against Palmisano

Law did not relate back, its contract claim would still be timely because it is within the six

year statute of limitations. (Doc. 26 at 8).

Federal Rule of Civil Procedure 15(C) provides:

Case 2:09-cv-02147-JAT Document 30 Filed 04/13/12 Page 2 of 6
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

- 3 -

An amendment to a pleading relates back to the date of the

original pleading when . . . (B) the amendment asserts a claim or

defense that arose out of the conduct, transaction, or occurrence

set out--or attempted to be set out--in the original pleading; or

(C) the amendment changes the party or the naming of the party

against whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied

and if, within the period provided by Rule 4(m) for serving the

summons and complaint, the party to be brought in by

amendment: (i) received such notice of the action that it will not

be prejudiced in defending on the merits; and (ii) knew or should

have known that the action would have been brought against it,

but for a mistake concerning the proper party's identity. 

The Court agrees with Plaintiff that the claims against Palmisano Law clearly relate

back to the original Complaint. As the Complaint was originally served on Palmisano Law

and Palmisano Law was originally a party, the claims arise out of the same conduct,

transaction, or occurrence as the original Complaint and Palmisano Law had notice of the

claims Plaintiff asserted against it. 

Because amendment would not be time barred, the Court will consider that merits of

Plaintiff’s Motion to Amend. 

B. Motion to Amend

Plaintiff moves for leave to amend its Complaint pursuant to Federal Rule of Civil

Procedure 15(a). While the decision to grant or deny a motion to amend is within the

discretion of the district court, it is necessary for the Court to heed Rule 15(a)’s mandate that

“leave to amend ‘shall be freely given when justice so requires.’” Foman v. Davis, 371 U.S.

178, 182 (1962) (internal citation omitted). “In exercising its discretion with regard to the

amendment of the pleadings, ‘a court must be guided by the underlying purpose of

Rule 15—to facilitate decision on the merits rather than on the pleadings or technicalities.’”

Eldridge v. Block, 832 F.2d 1132, 1135 (9th Cir. 1987) (quoting United States v. Webb, 655

F.2d 977, 979 (9th Cir. 1981)). This “‘policy of favoring amendments to pleadings should be

applied with extreme liberality.” Id. (quoting Webb, 655 F.2d at 979). 

A Court must consider the following factors in determining whether a motion to amend

should be granted: (1) whether the pleading at issue has been previously amended, (2) futility

of the amendment, (3) bad faith, (4) undue delay, and (5) prejudice to the opposing party.

Case 2:09-cv-02147-JAT Document 30 Filed 04/13/12 Page 3 of 6
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

- 4 -

Foman, 371 U.S. at 182; see also Texaco, Inc. v. Ponsoldt, 939 F.2d 794, 798 (9th Cir. 1991);

W. Shoshone Nat’l Council v. Molini, 951 F.2d 200, 204 (9th Cir. 1991). “Generally, this

determination should be performed with all inferences in favor of granting the motion.”

Griggs v. Pace Am. Group, Inc., 170 F.3d 877, 880 (9th Cir. 1999) (citing DCD Programs,

Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987)). “Significantly, ‘[t]he party opposing

amendments bears the burden of showing prejudice,’ futility, or one of the other permissible

reasons for denying a motion to amend.” Farina v. Compuware Corp., 256 F.Supp.2d 1033,

1060 (D. Ariz. 2003) (quoting DCD Programs, 833 F.2d at 187).

In this case, the Complaint has only been amended once to adequately plead

jurisdiction, and there is no showing of bad faith or undue delay. Thus, the Court will

consider whether the amended complaint is futile and whether allowing the amendment would

prejudice Palmisano Law.

1. Futility

A proposed amendment is futile when no set of facts can be proven under the

amendment that would establish a valid and sufficient claim or defense. Miller v. RykoffSexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988); see also DCD Programs, 833 F.2d at 186

(stating that an amendment should be liberally granted where from the underlying facts or

circumstances, the moving party may be able to state a claim).

Palmisano Law argues allowing Plaintiff to amend would be futile because Palmisano

Law is not a successor in interest to Palmisano and Associates and the Court should consider

summary judgment-type-evidence in deciding the Motion to Vacate/Motion to Amend since

Palmisano Law will ultimately be entitled to summary judgment on the successor-in-interest

issue. In response, Plaintiff argues that it would be inappropriate for the Court to decide

whether amendment is warranted on a summary judgment standard and Plaintiff is entitled

to discovery before the Court decides summary judgment on this issue.

Palmisano Law does not argue, nor could it, that no set of facts can be proven under

the amendment that would establish a valid and sufficient claim. Rather, it argues that once

the Court considers all of the disputed facts, it will be entitled to summary judgment on

Case 2:09-cv-02147-JAT Document 30 Filed 04/13/12 Page 4 of 6
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

1

 Palmisano Law cites to Walls v. Arizona Dep’t of Public Safety, 826 P.2d 1217,

1222 (Ariz. Ct. App. 1991) to support its argument that a Court should consider summaryjudgment- type evidence when considering a Motion to Amend. In Walls, the Arizona Court

of Appeals noted that the trial court did not state its reasons for denying a motion to amend

the complaint after the trial court had already received a motion for summary judgment. Id.

The Court of Appeals assumed that “futility of the amendment” was the reason the trial court

considered the merits of the issue raised by the motion for summary judgment, rather than

granting leave to amend. Id. Walls is inapposite to the situation before the Court. In this

case, no motions for summary judgment have been filed, the parties have not had the

opportunity to engage in discovery, and the facts underlying whether Palmisano Law is a

successor in interest to Palmisano & Associates are disputed. It would not be appropriate for

the Court to determine summary judgment at this stage of the proceedings. 

2

 The Court notes that, at oral argument, Palmisano Law argued that allowing

amendment of the Complaint would be futile because the Complaint does not meet the

requirements of Ashcroft v. Iqbal, 556 U.S. 662, ___, 129 S.Ct. 1937, 1949 (2009) and Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The Court does not equate futility

with whether the factual allegations of a complaint are sufficient to raise the right to relief

above a speculative level or put Defendant on notice of Plaintiff’s claims. Such arguments

are properly made in a motion to dismiss for failure to state a claim upon which relief can be

granted. 

- 5 -

Plaintiff’s claims. In this case, it would be inappropriate to consider summary-judgment-type

evidence1

 in deciding the Motion to Amend and Palmisano Law has not otherwise shown that

amendment would be futile. Accordingly, amendment would not be futile in this case.2

 

2. Prejudice

Palmisano Law relies on futility alone to dispute Plaintiff’s Motion to Amend.

Palmisano Law has not met its burden of showing that it will be prejudiced by an amendment

in this case and, thus, the Court is unable to find that allowing the amendment would prejudice

Palmisano Law. 

C. Motion to Vacate

Plaintiff requests that the Court either Vacate its Order granting the Stipulation to

Dismiss Palmisano Law without prejudice or, in the alternative, grant Plaintiff leave to amend.

The Court has already found that amendment is appropriate in this case. In the unique

circumstances of this case, whether the Court vacates its order granting the stipulation or

Case 2:09-cv-02147-JAT Document 30 Filed 04/13/12 Page 5 of 6
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

- 6 -

requires Plaintiff to file an amended Complaint, the result would be exactly the same.

Defendants have not yet filed a Response to the original Complaint and the original Complaint

names Palmisano Law as a Defendant. 

Rule 60(b)(6) provides that relief from a final judgment may be granted for any reason

“that justifies relief” other than those listed in 60(b)(1)-(5). Rule 60(b)(6) is thus a catch-all

provision that “‘has been used sparingly as an equitable remedy to prevent manifest injustice’

and ‘is to be utilized only where extraordinary circumstances prevented a party from taking

timely action to prevent or correct an erroneous judgment.’” United States v. Washington,

394 F.3d 1152, 1157 (9th Cir. 2005) (quoting United States v. Alpine Land & Reservoir Co.,

984 F.2d 1047, 1049 (9th Cir. 1993)). Because Rule 60 should be used sparingly and Rule

15(a) provides the same essential relief in this case, Plaintiff’s Motion to Vacate is denied and

Plaintiff’s Motion to Amend is granted. 

III. CONCLUSION

Based on the foregoing, 

IT IS ORDERED that Plaintiff’s Motion to Vacate Order Dismissing Palmisano Law,

PLLC without Prejudice or, in the alternative, for Leave to File Second Amended Complaint

(Doc. 22) is granted in part and denied in part as set forth herein.

Plaintiff shall comply with LRCiv 15.1, which requires that Plaintiff file and serve the

amended complaint on all parties within fourteen days of this Order. 

IT IS FURTHER ORDERED that Defendants shall answer or otherwise respond to

Plaintiff’s amended complaint within ten days of being served.

DATED this 12th day of April, 2012.

Case 2:09-cv-02147-JAT Document 30 Filed 04/13/12 Page 6 of 6