Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-00770/USCOURTS-cand-3_07-cv-00770-1/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 Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

TRAVELERS CASUALTY AND SURETY

COMPANY OF AMERICA, a Connecticut

corporation,

Plaintiff,

 v.

J.K. MERZ CONSTRUCTION, INC.,

a California corporation, JOHN K. MERZ,

an individual, SALLY P. MERZ, an individual,

Defendants. /

No. C 07-00770 WHA

ORDER GRANTING

PLAINTIFF’S MOTION FOR

LEAVE TO FILE SECOND

AMENDED COMPLAINT AND

VACATING HEARING

INTRODUCTION

In this contract dispute, plaintiff has moved for leave to file a second amended

complaint. Defendants have filed a statement of non-opposition to this motion. This order

finds that plaintiff was diligent in seeking this amendment and defendants will not be

prejudiced. Plaintiff's motion is, therefore, GRANTED.

STATEMENT

Plaintiff Travelers Casualty and Surety Company filed suit against defendants J.K. Merz

Construction, Inc. (“JKM”), John K. Merz, and Sally P. Merz, on February 6, 2007. Plaintiff

furnished defendants with surety bonds on behalf of JKM in connection with JKM’s

performance of construction services. In the original complaint, plaintiff sought indemnity for

the reimbursement of losses, costs, and expenses incurred in connection with the resolution of

Case 3:07-cv-00770-WHA Document 28 Filed 07/03/07 Page 1 of 3
United States District Court

For the Northern District of California

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claims made by subcontractors and suppliers on the bonds. Plaintiff maintains that an

indemnity agreement obligates defendants to indemnify plaintiff from such costs (Br. 3).

Following a cross-complaint filed against plaintiff by the City of Antioch and the

Antioch Public Golf Corporation in a separate state-court action, plaintiff filed an amended

complaint. In the amended complaint, plaintiff added allegations based upon the potential

exposure to plaintiff posed by the pending state-court action (ibid.). 

A case management order was issued pursuant to Rule 16 on May 17, 2007. The order

set the deadline for seeking leave to add new parties or to amend the complaint for June 1,

2007. Plaintiff and defendants were required to exchange Rule 26 initial disclosures by June 1,

2007. 

Plaintiff filed the instant motion for leave to amend the complaint on June 1, 2007. 

Plaintiff moves to add a claim against defendants John K. Merz and Sally P. Merz, in their

capacity as trustees of the Merz Family Trust. The new claim alleges that defendants have

fraudulently transferred property and incurred obligations on their assets to avoid paying debts

to plaintiff. Plaintiff also seeks to modify the already existing allegations as follows: (1) update

the allegations relating to losses incurred by plaintiff in resolving certain claims; (2) revise

allegations made in the first amended complaint referring to then unresolved claims on the

bonds, which have since concluded; (3) supplement the amount of incurred damages; and

(4) add the name of TRM Corporation to the list of claimants to whom plaintiff issued a

payment. Plaintiff maintains that discovery has not yet started. The motion for leave to amend

is unopposed by defendants (Van Ornum Decl. ¶ 9; Br. 3–4, 6–7).

ANALYSIS

Plaintiff filed the instant motion on the last day allotted to seek such leave under the

Rule 16 scheduling order. Hence, Rule 15(a) governs the present motion. Leave to amend a

complaint “shall be freely given when justice so requires” under Rule 15(a). This standard is

applied liberally. “In the absence of any apparent or declared reason — such as undue delay,

bad faith, or dilatory motive on the part of the movant, repeated failure to cure deficiencies by

amendments previously allowed, undue prejudice to the opposing party by virtue of allowance

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For the Northern District of California

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of the amendment, etc. — the leave sought should, as the rules require, be ‘freely given.’” 

Foman v. Davis, 371 U.S. 178, 182 (1962). 

 Here, the motion is in compliance with the scheduling order. Defendants do not oppose

the motion. The proposed amendments would not add new defendants, though defendants John

K. Merz and Sally P. Merz would be sued in a new capacity. There is no showing of prejudice

or bad faith. The only burden imposed on defendants is the requirement to defend against an

additional claim. Defendants have not yet propounded discovery and will have sufficient

opportunity to prepare a defense against this additional claim prior to the trial date set for April

21, 2008. Accordingly, plaintiff will be allowed to file a second amended complaint.

CONCLUSION

For the foregoing reasons, plaintiff’s motion is GRANTED. The hearing noticed for July

12, 2007, is hereby VACATED. Plaintiff shall file and serve the second amended complaint by

JULY 10, 2007. Defendants shall respond comporting with the deadlines set forth in Rule 12.

IT IS SO ORDERED.

Dated: July 3, 2007. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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