Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-01225/USCOURTS-casd-3_09-cv-01225-2/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

LARRY V. OLDHAM, et al.,

Plaintiffs,

CASE NO. 09cv1225 DMS (WVG)

ORDER DENYING PLAINTIFFS’

MOTION FOR LEAVE TO FILE

AMENDED COMPLAINT

vs.

TRAVELERS INC., et al,

Defendants.

Pending before the Court is Plaintiffs’ motion for leave to file an amended complaint. For the

reasons set forth below, Plaintiffs’ motion is denied.

I.

BACKGROUND

Plaintiffs’ claims stem from a black toxic mold and bed bug infestation which rendered their

apartment uninhabitable. (FAC ¶ 17.) Plaintiffs allege that they became physically ill due to the

condition of the apartment and that they suffered economic loss by being forced to move out and find

a new residence. (FAC ¶¶ 24-29.) Plaintiffs allege that Defendants Travelers Property Casualty

Insurance Company and Standard Fire Insurance Company (“Defendants”) wrongfully denied their

insurance claim, which then forced Plaintiffs into a settlement with the property management

company. 

Plaintiffs, acting in pro se, initially filed suit in state court on November 10, 2008. (Doc. 1,

Ex. A.) Defendants answered on January 8, 2009. (Doc. 1, Ex. B.) Plaintiffs thereafter sought leave

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to file an amended complaint. Defendants agreed not to oppose the motion if Plaintiffs dropped their

proposed claims under California’s unfair competition law. (Pl. Reply, Ex. 5.) Plaintiffs then filed

a first amended complaint in state court on April 28, 2009, which included claims for breach of

contract and “bad faith.” The amended complaint did not include an unfair competition claim. (Doc.

1, Ex. C.) Defendants filed an answer on June 4, 2009. (Doc. 1, Ex. E.)

Thereafter, on June 5, 2009, Defendants removed the case to this Court. (Doc. 1.) Magistrate

Judge Brooks issued a scheduling order on July 14, 2009. (Doc. 12.) Plaintiffs filed the instant motion

on November 16, 2009. (Doc. 17.) Defendants opposed the motion (Doc. 24), and Plaintiffs filed a

reply. (Doc. 26.)

II.

DISCUSSION

Initially, the Court notes that according to the scheduling order, all motions to amend had to

be filed and heard by December 8, 2009. (Doc. 12 at 2.) Although the hearing date on the instant

motion is past the December 8 deadline, part of the delay was due to this Court’s calendar. Thus, the

Court will address the motion on the merits.

Plaintiffs seek to amend their complaint in two ways: (1) by adding third party defendants

Rosemary Raya, Robert Raya, Michael Raya, and Willin Properties; and (2) by adding a claim under

California’s unfair competition law, California Business and Professions Code section 17200, et seq.

(“UCL”). A court should freely grant leave to amend “when justice so requires.” Fed. R. Civ. P.

15(a). Four factors are considered when deciding whether leave to amend should be granted: “(1) bad

faith on the part of the plaintiffs; (2) undue delay; (3) prejudice to the opposing party; and (4) futility

of the proposed amendment.” Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 986

(9th Cir. 1999).

A. Bad Faith

Defendants argue Plaintiffs acted in bad faith in connection with their motion to amend because

they misrepresented the scope of their proposed amendment. The Court agrees. Prior to filing the

subject motion, Plaintiffs contacted Defendants and discussed a possible stipulation regarding the

proposed amendment. Defendants agreed not to oppose an amendment to add Willin Properties.

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(Zhordania Dec., Ex. B.) Consistent with the parties’ discussions, Plaintiffs proposed a “Stipulation

to Amend Pleading to Add Claim Against Third Party Defendant.” (Pl. Mot. Ex. 1.) While the

stipulation is not signed by Defendants, it is accompanied by a letter from Defendants indicating they

would not oppose the motion. (Id.) The amended complaint, however, not only adds Willin Properties

but also purports to state a claim for unfair competition. Defendants therefore refused to sign the

stipulation and opposed the motion. (Zhordania Dec., Ex. C.) 

Plaintiffs do not dispute this version of facts. Rather, Plaintiffs argue that the unfair

competition claim is not new to Defendants because Plaintiffs tried to add the claim in state court.

However, when Plaintiffs sought leave to amend in state court, Defendants informed Plaintiffs they

would oppose the motion unless Plaintiffs dropped the unfair competition claim. (Pl. Reply, Ex. 5.)

Plaintiffs then filed a first amended complaint without an unfair competition claim. Thus, Plaintiffs

knew Defendants would oppose the instant motion if it contained an unfair competition claim; yet, it

appears Plaintiffs attempted to gain Defendants’ consent by misrepresenting the nature of the proposed

amendment.

B. Undue Delay

Defendants argue undue delay because the proposed amendment is not based on discovery of

new facts, but rather is an attempt to add parties and claims that Plaintiffs have known about since the

inception of the lawsuit. Plaintiffs argue they are adding Willin Properties because Defendants raised

the existence of the settlement agreement with Willin in their motion to compel and because Plaintiffs

desire discovery of documents in Willin’s possession. 

“[L]ate amendments to assert new theories are not reviewed favorably when the facts and the

theory have been known to the party seeking amendment since the inception of the cause of action.”

Acri v. International Ass’n. of Machinists & Aerospace Workers, 781 F.2d 1393, 1398 (9th Cir. 1986).

Although Plaintiffs filed the instant motion within the time frame set out by the scheduling order, the

motion was filed more than one year after the filing of the original complaint. The proposed

amendments are not based on information Plaintiffs learned during discovery. Plaintiffs knew of the

identities of the property owners when they filed their complaint. They also were aware of potential

unfair competition claims as early as April 2009, when they filed theirfirst amended complaint in state

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court. Further, Plaintiffs need not amend their complaint to obtain discovery from Willin Properties

as they may subpoena the records in question. Plaintiffs delay of more than one year since the filing

of the original complaint to advance the proposed amendments is, therefore, undue.

C. Futility

Defendants argue the proposed amendments are futile because Plaintiffs released Defendants

from liability in an earlier settlement agreement. Defendants also argue the unfair competition claim

fails because Plaintiffs cannot recover damages under the UCL for unpaid insurance contract benefits.

The Court agrees. The proposed new parties are property owners and the management

company (Willin Properties) of Plaintiffs’ apartment. While Plaintiffs have added these parties to the

caption of the complaint, no allegations are stated in the text of the amended complaint against these

parties. Thus, the present allegations and claims relate to Defendants’ denial of the insurance claim,

not to any conduct by the property owners or management company. Further, Plaintiffs previously

brought suit against these parties and entered into a settlement agreement. (FAC ¶ 10.) Plaintiffs

settled for $13,000 and released Rosemary Raya, Robert Raya, Michael Raya, and Willin Properties,

all of the newly named defendants, from any and all actions. (Zhordania Dec., Ex. E.) Accordingly,

Plaintiffs cannot now state a claim against these parties.

In addition, Plaintiffs’ UCL claim purports to state a class action claim for false advertising.

Plaintiffs, acting in pro se, cannot represent a class and therefore cannot pursue class-wide relief.

Further, damages are not available under the UCL. Bank of the West v. Superior Court, 2 Cal. 4th

1254, 1266 (1992). Plaintiffs, using form language, state they seek injunctive relief or restitution for

alleged UCL violations; however, they claim injury based upon the denial of their insurance claim,

which ultimately is a claim for damages. Plaintiffs proposed claim is therefore futile.

D. Prejudice

Defendants argue they will suffer prejudice from the proposed amendment because it will

require additional discovery and discovery motions, and the discovery deadline is fast approaching.

Plaintiffs do not specifically respond to this argument. Under the current scheduling order, discovery

must be completed by March 8, 2010, although the deadline for serving written discovery is this week.

Given that discovery is still ongoing, Defendants have not established prejudice. Nevertheless, after

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careful consideration of the above factors, the Court finds that three of the four factors weigh heavily

against leave to amend. 

III.

CONCLUSION

For these reasons, Plaintiffs’ motion for leave to amend the complaint is respectfully denied.

IT IS SO ORDERED.

DATED: January 6, 2010

HON. DANA M. SABRAW

United States District Judge

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