Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_14-cv-01889/USCOURTS-caed-1_14-cv-01889-9/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

FOR THE EASTERN DISTRICT OF CALIFORNIA

C & C PROPERTIES, INC., a California 

corporation; JEC PANAMA, LLC, a 

California limited liability company; and 

WINGS WAY, LLC, a Delaware limited 

liability company,

Plaintiffs,

v.

SHELL PIPELINE COMPANY, a 

Delaware limited partnership; ALON USA 

PETROLEUM CORPORATION, a 

Delaware Corporation; EOTT ENERGY 

OPERATING LIMITED PARTNERSHIP, 

a Delaware limited partnership; PLAINS 

ALL AMERICAN GP, LLC, a Delaware 

limited liability company; and DOES 1 

through 25, inclusive,

Defendants.

No. 1:14-cv-01889-DAD-JLT

ORDER DENYING WITHOUT PREJUDICE 

PLAINTIFFS’ MOTION FOR SANCTIONS

AND GRANTING PLAINTIFFS’ MOTION 

FOR LEAVE TO FILE A SECOND 

AMENDED COMPLAINT

(Doc. Nos. 83, 93)

Currently before the court are two motions brought by C & C Properties, Inc.; JEC 

Panama, LLC; and Wings Way, LLC (―plaintiffs‖). In the first motion—filed February 12, 

2016—plaintiffs seek an order from this court requiring that defendants Shell Pipeline Company 

(―Shell‖) and Alon USA Petroleum Corporation (―Alon‖) (collectively, ―defendants‖) remove 

certain gas and oil pipelines from plaintiffs’ land within ten (10) days. (Doc. No. 83.) In the 

same motion, plaintiffs request that this court levy sanctions against defendants Shell and Alon 

Case 1:14-cv-01889-LHR-CDB Document 102 Filed 05/03/16 Page 1 of 8
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for failing to timely remove the pipelines. (Id.) Defendants Shell and Alon filed separate 

oppositions on April 5, 2016. (Docs. No. 97, 98.) In the second motion—filed March 15, 2016—

plaintiffs seek leave to file a second amended complaint in this action. (Doc. No. 93.) 

Defendants filed an opposition to plaintiffs’ motion for leave to amend on April 5, 2016. (Doc. 

No. 96.) The court heard oral arguments with respect to both motions on April 19, 2016. 

Attorney Tom Vogele appeared on behalf of plaintiffs, and attorney Kevin Day appeared on 

behalf of defendants. 

I. Introduction

a. Motion for Sanctions

On June 28, 2013, plaintiffs’ purchased 138 acres of undeveloped land in Bakersfield, 

California from Chevron USA, Inc. (―Chevron‖) with the intent of developing the land for 

commercial and industrial use. (Doc. No. 32, First Amendment Complaint (―FAC‖) at ¶ 14.) 

Plaintiffs discovered that Chevron had granted three pipeline easements across the property to 

Shell Oil Company, which in turn transferred the easement to defendant Shell. (Id. at ¶ 15.) 

Plaintiffs also discovered several unrecorded pipeline easements across their property, one of 

which was assigned to defendant Alon. All of the easements included restrictive provisions and a 

relocation clause. Plaintiffs subsequently discovered that the pipelines materially interfered with 

their planned development of the property—a cause for removal or relocation of the pipelines 

pursuant to the terms of the easements—and sought a preliminary injunction to have the 

interfering pipelines removed or relocated. (Doc. No. 83, Motion for Sanctions at 2–3.) More 

specifically, plaintiffs sought removal or relocation of a 12‖ and 14‖ pipeline owned by defendant 

Shell and a 10‖ pipeline owned by defendant Alon. (Id. at 3.) Plaintiffs and defendants met and 

conferred on September 8, 2015, and as a result, defendant Shell agreed to remove its 12‖ 

pipeline,1and defendant Alon its 10‖ pipeline, by January 6, 2016. On September 23, 2015, 

United States Magistrate Judge Jennifer L. Thurston, issued findings and recommendations 

recommending that plaintiffs’ preliminary injunction seeking relief with respect to defendant 

 

1 Defendant Shell removed the 12‖ pipeline in December 2015. (Doc. No. 98, Def’t Shell 

Pipeline Company’s Opp’n to Pls’ Mot. for an Order Awarding Sanctions (―Shell Opp.‖) at 1.) 

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Shell be granted.2 (Doc. No. 72.) The then-assigned district judge, United States District Judge

John A. Mendez, adopted those findings and recommendations on December 3, 2015. (Doc. No. 

76.) 

Plaintiffs contend that, as of February 12, 2016, defendant Alon has failed to adhere to the 

course of action agreed upon at the September 8, 2015 meet and confer and defendant Shell has 

not abided by the terms of the preliminary injunction. (Motion for Sanctions at 4–8.) As a result, 

plaintiffs ask this court to exercise its inherent power to levy sanctions against both defendants 

and to issue an order requiring removal of the pipelines within ten (10) days. 

Both defendants argue that sanctions are not warranted because any delay in removing the 

pipelines in question was not the product of bad-faith or indifference on their part. Rather, 

according to defendants, the delays can be attributed to acts of plaintiffs and third parties, 

including plaintiffs’ own delay in posting the requisite bond as well as difficulty encountered in 

obtaining project approval from multiple parties, including city and county agencies. Defendant 

Alon also argues that plaintiffs’ request for an order requiring removal of its pipeline has been 

rendered moot because that pipeline has since been removed. (Doc. No. 97, Defendant Alon 

USA Paramount Petroleum Corporation’s Opposition to Plaintiffs’ Motion for an Order 

Awarding Sanctions (―Alon Opp.‖) at 2.) In their opposition, defendant Shell states that it will 

now begin removing its 14‖ pipeline on April 5, 2016. (Shell Opp. at 5.)

In their reply, plaintiffs argued for the first time that defendant Alon caused additional 

interference with plaintiffs’ land by backfilling the trench which was dug to remove the 10‖ 

pipeline with one-sack concrete slurry. (Doc. No. 100, Reply to Motion for Sanctions (―Reply‖) 

at 5.) Plaintiffs argue that the concrete backfill interferes with their ability to lay utility lines, and 

estimates the cost of the concrete removal to be approximately $16,974.00. (Id. at 5–6.) 

Plaintiffs request that the court order defendants to remove the backfill or to reimburse plaintiffs 

for doing so. (Id. at 6.) 

///// 

 

2

 Apparently because it agreed to remove its pipeline, defendant Alon was dropped from the 

motion for preliminary injunction by plaintiff.

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b. Motion for Leave to Amend Plaintiffs’ FAC

As noted above, plaintiffs also seek leave to file a second amended complaint. (Doc. No. 

93, Plaintiffs’ Motion for Leave to File Seconded Amended Complaint (―Mot. for Leave‖).) 

According to plaintiffs, they wish to amend their pleadings to clarify that their breach of contract 

cause of action includes the unrecorded easements, as opposed to merely the recorded easements. 

(Id. at 2.) Plaintiffs are motivated to make this amendment because of an observation in 

Magistrate Judge Thurston’s findings and recommendations that plaintiffs’ failed to provide 

adequate notice to defendants that the breach of contract cause of action also included the 

unrecorded easements. (Doc. No. 72, Findings and Recommendations Granting in Part Plaintiffs’ 

Motion for a Preliminary Injunction (―F&Rs‖) at 7.) Plaintiffs also seek to add claims for 

restitution and disgorgement, accounting and tracing, constructive trust, and equitable lien 

remedies to their pleadings. (Mot. for Leave at 110.) Plaintiffs filed their motion for leave to 

amend on March 15, 2016, approximately six months after Magistrate Judge Thurston issued her 

findings and recommendations (September 23, 2015) and four months after the order adopting the 

findings and recommendations (December 3, 2015). (Doc. No. 76.) Defendants contend 

plaintiffs have unreasonably delayed seeking leave to amend their breach of contract cause of 

action, and plaintiffs’ request to add equitable remedies to their trespass cause of action is futile. 

(Doc. No. 96, Defendants Shell Pipeline Company and Alon USA Paramount Petroleum’s 

Opposition to Plaintiffs’ Motion for Leave to Filed Second Amended Complaint (―Amend Opp.‖) 

at 4, 5.)

Below, the court will address each of the motions in turn.

II. Motion for Sanctions

a. Legal Standard

Courts possess the inherent power ―to sanction a litigant for bad-faith conduct.‖ 

Chambers v. NASCO, Inc., 501 U.S. 32, 35 (1991). But, inherent powers must be exercised with 

―restraint and discretion‖ and with the aim of ―achiev[ing] the orderly and expeditious disposition 

of [a] case[ ].‖ Id. at 43, 44. Generally, to be deserving of such sanctions, a litigant must have 

engaged in ―willful disobedience of a court order‖ or ―acted in bad faith, vexatiously, wantonly, 

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or for oppressive reasons.‖ Id. at 45–46 (quoting Alyeska Pipeline Service Co. v. Wilderness 

Society, 421 U.S. 240, 257–58, 258–59 (1975)). Mere recklessness is not enough to warrant the 

imposition of sanctions, and a court must ―specifically find bad faith or conduct tantamount to 

bad faith . . . [or] improper purpose[.]‖ Fink v. Gomez, 239 F.3d 989, 994 (9th Cir. 2001).

b. Analysis

The court finds that the imposition of sanctions is not warranted in this instance. Plaintiffs 

argue that such a course of action is called for because defendants have missed deadlines—either 

agreed upon by the parties or imposed by the court—to remove their pipelines from plaintiffs’ 

property. Such behavior, in and of itself, does not justify the exercise of the court’s inherent 

powers to levy sanctions against litigants. As both the Supreme Court and Ninth Circuit have 

explained, inherent power sanctions are appropriate only when a litigant has acted in ―bad faith‖ 

or with ―improper purpose.‖ Chambers, 501 U.S. at 44; Fink, 239 F.3d at 994. Defendants have 

shown through declarations that the delays in removing the pipelines in question were not due to 

bad faith—or even recklessness or negligence—but, rather, the inherent difficulty of removing 

underground, pressurized gas and oil pipelines as well as garnering approval for such a project 

from both private and public parties. 3 (Doc. No. 97, Declaration of Mohsen Ahmadi (―Ahmadi 

 

3 A recap of the chronology of this case reflects that defendants have not acted in bad faith or with 

improper purpose. Defendant Alon agreed to remove its pipeline from plaintiffs’ land within 120 

days on September 8, 2015. (Motion for Sanctions at 3.) Throughout October and November 

2015, Alon met with Kern County officials regarding possibly relocating the pipeline across or 

underneath Merle Haggard Drive. (Ahmadi Decl. at ¶ 5.) Defendant Alon employed a design 

engineering firm in November and December of 2015 to review routing and design for the 

project. (Id. at ¶ 6.) Alon began the process of removing the pipeline in February 2016, a process 

which required it to isolate and then purge the pipeline, as directed by the Eastern Kern Air 

Pollution Control District, and which was eventually completed in the beginning of March 2016. 

(Id. at ¶ 7.) Defendant Shell pursued a somewhat similar course of conduct. Upon the district 

judge’s adoption of the findings and recommendations on December 3, 2015, Shell prepared a 

submittal package for the Kern County Planning Department (―KCP‖) detailing the removal plan 

and delivered that package on January 11, 2016. (Doc. No. 98 at 36.) KCP informed defendant 

Shell on January 19, 2016 that the plan would not be approved because the resulting disruption in 

traffic and advising that Shell would instead need to abandon and fill a portion of the pipeline that 

ran under the surface of Merle Haggard Drive. (Id. at 36–37.) Shell then worked with KCP to 

determine a demarcation point (i.e., where the pipeline would be abandoned and filled); however, 

a demarcation point that was agreed upon on February 1, 2016 was subsequently abandoned when 

plaintiffs notified Shell and KCP that they preferred a point further west. (Id. at 37.) According 

to Shell, a decision regarding the demarcation point was further delayed when plaintiffs failed to 

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Decl.‖) at ¶¶ 5–8; Doc. No. 98 at 35–38.) 

Under these circumstances, the court declines to impose sanctions against defendants 

pursuant to its inherent powers to do so.

III. Leave to Amend Pursuant to Fed. R. Civ. P. 15

a. Legal Standard

Federal Rule of Civil Procedure 15 governs amendments to pleadings. The rule 

encourages courts to ―freely give leave [to amend] when justice so requires.‖ Fed. R. Civ. P. 

15(a)(2). The Supreme Court has explained that Rule 15’s objective is to give a plaintiff ―an 

opportunity to test his claim on the merits.‖ Foman v. Davis, 371 U.S. 178, 182 (1962). District 

courts are to consider the following factors in deciding whether to grant leave to amend: (1) 

undue delay; (2) evidence of the movant’s bad faith or dilatory motive; (3) repeated failures to 

cure deficiencies by previous amendments; (4) undue prejudice to the opposing party; and (5) 

futility of amendment. Id. District courts need not give all of these factors equal weight. 

Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). Prejudice to the 

opposing party is the touchstone of any Rule 15 inquiry and carries the greatest weight. Id. 

(citing and quoting Lone Star Ladies Inv. Club v. Schlotzsky’s, Inc., 238 F.3d. 363, 368 (5th Cir. 

2001)). The party opposing amendment bears the burden of demonstrating prejudice. DCD 

Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987). 

―Absent prejudice, or a strong showing of any of the remaining Foman factors, there 

exists a presumption under Rule 15(a) in favor of granting leave to amend.‖ Eminence Capital, 

316 F.3d at 1052. All inferences should be in favor of granting the motion. Griggs v. Pace Am. 

Grp., Inc., 170 F.3d 877, 880 (9th Cir. 1999) (citing DCD Programs, Ltd., 833 F.2d at 186). 

Courts retain discretion to deny leave to amend, but any such denial must include a specific 

 

bring certain plans to a field meeting between plaintiffs, KCP, and Shell. (Id.) Eventually, a 

demarcation point was agreed upon, plans were submitted, and defendant Shell was ready to 

begin work on March 28, 2016 when, according to Shell, plaintiffs issued new removal 

requirements. (Id. at 37–38.) Shell revised its plans again to meet plaintiffs’ new requirements 

and was ready to begin removal on April 5, 2016 as of the filing of their opposition to the pending 

motion. (Id. at 38.) Absent from this chronology, in the undersigned’s view is any sign of badfaith or purposeful undue delay on the part of defendants. 

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finding of prejudice, bad faith, or futility of amendment. DCD Programs, Ltd., 833 F.2d at 186–

87.

b. Analysis

Defendants argue that this court should deny leave to amend for two reasons. First, 

defendants contend plaintiffs’ request for leave to amend is untimely, coming eight months after a 

magistrate judge first pointed out the deficiencies in plaintiffs’ pleading. Second, defendants 

oppose plaintiffs’ motion on the grounds that plaintiffs’ proposed amendment to its trespass cause 

of action as well as to the relief sought are futile. More specifically, defendants assert that 

equitable remedies, such as unjust enrichment and restitution, are ―not allowed in cases of 

wrongful dispossession of land because the remedy of tort damages is adequate.‖ (Amend Opp. 

at 6.) Neither argument is persuasive.

First, this court finds that plaintiffs did not unduly delay in seeking leave to amend. 

Defendants claim that the Ninth Circuit’s holding in Texaco, Inc. v. Ponsoldt supports their 

contention that an eight month gap in time constitutes an unreasonable delay in filing an amended 

complaint. 939 F.2d 794 (1991). However, in that case, Texaco waited eight months ―after the 

district court granted summary judgment against it, and nearly two years after filing the initial 

complaint.‖ Id. at 798-99. Here, the need to amend the complaint did not become fully realized 

until the magistrate judge’s findings and recommendations—observing that plaintiffs’ first cause

of action was not expansive enough to include the unrecorded pipeline easements—were adopted 

by the district judge on December 7, 2015. (Doc. No. 77.) Using this date as the starting point, 

plaintiffs waited no more than three months to file the motion to amend currently before the court. 

Cf. Jackson v. Bank of Hawaii, 902 F.2d 1385, 1388 (9th Cir. 1990) (finding undue delay when 

plaintiffs waited a year to file an amended complaint after first announcing their intent to do so). 

Here, the court finds there has been no undue delay by plaintiffs.

Second, the court finds that plaintiffs proposed amendments to the relief sought section of 

their complaint are not futile. California Civil Code § 3334 states:

(a) The detriment cause by the wrongful occupation of real property 

. . . is deemed to include the value of the use of the property for the 

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time of that wrongful occupation . . . (b)(1) [e]xcept as provided in 

paragraph (2), for purposes of subdivision (a), the value of the use 

of the property shall be the greater of the reasonable rental value of 

that property or the benefits obtained by the person wrongfully 

occupying the property by reason of that wrongful occupation.

Thus, the plain language of the statute would appear to undermine defendants’ argument that 

plaintiffs are limited to ―tort damages‖ with respect to their trespass cause of action. Bailey v. 

Outdoor Media Group, 155 Cal. App. 4th 778, 787-88 (2007) (holding that landowner was 

entitled to profits obtained by trespassing billboard operator pursuant to § 3334). 

Finally, this court notes that there is an absence here of ―strong evidence of . . . bad faith . 

. . [or] undue prejudice to the opposing party.‖ Sonoma Cty. Ass’n of Retired Employees v. 

Sonoma Cty., 708 F.3d 1109, 1117 (9th Cir. 2013) (quoting Foman, 371 U.S. at 182) (quotation 

marks omitted). Discovery in this action is not only ongoing, it is in the preliminary stages. 

Plaintiffs do not appear to be engaging in eleventh hour maneuvering. Thus, because there is no 

strong evidence warranting denial of plaintiffs’ motion to amend, and because district courts are 

instructed to ―liberally allow a party to amend its pleadings,‖ id., plaintiffs’ motion to amend their 

complaint will be granted.

IV. Conclusion

For the reasons set forth above:

(1) Plaintiffs’ motion for sanctions (Doc. No. 83) is denied without prejudice;

(2) The parties shall file a joint status report regarding the status of the removal of the 14‖ 

pipeline by defendant Shell within 10 days of the issuance of this order; and

(3) Plaintiffs’ motion for leave to amend (Doc. No. 93) is granted and plaintiffs’ are 

directed to electronically file the proposed second amended complaint attached as Exhibit 

5 to the Motion to Amend within seven days of the date of this order.

IT IS SO ORDERED.

Dated: May 2, 2016 

UNITED STATES DISTRICT JUDGE

 

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