Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-01184/USCOURTS-caed-2_06-cv-01184-0/pdf.json

Parties Involved:
Bankers Life and Casualty Company
Defendant
Lois Patterson
Plaintiff

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1 Plaintiff erroneously filed her motion under Federal

Rule of Civil Procedure 15(a). However, as detailed below, once

a PSO has been issued pursuant to Federal Rule of Civil Procedure 

(continued...)

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

LOIS PATTERSON, by and through

her Guardian Ad Litem, SHARON

COBB,

NO. CIV. S-06-1184 FCD KJM

Plaintiff,

v. MEMORANDUM AND ORDER

BANKERS LIFE AND CASUALTY

COMPANY, INC.,

Defendant.

----oo0oo----

This matter is before the court on plaintiff Lois

Patterson’s (“plaintiff”) motion to modify the Pretrial

Scheduling Order (“PSO”) to permit plaintiff to file an amended

complaint, naming an additional defendant and asserting a new

cause of action under state law against defendant Bankers Life

and Casualty Company, Inc. (“Bankers”).1 Bankers opposes the

Case 2:06-cv-01184-FCD-KJM Document 16 Filed 11/22/06 Page 1 of 8
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1(...continued)

16(b), any motion to amend the pleadings must be brought under

Rule 16(b). A PSO was filed in this case on August 7, 2006. 

Therefore, the court construes plaintiff’s motion as a motion to

modify the PSO pursuant to Rule 16(b).

2 Because oral argument will not be of material

assistance, the court orders this matter submitted on the briefs. 

See E.D. Cal. L.R. 78-230(h).

2

motion.2

For the reasons set forth below, plaintiff’s motion is

GRANTED in part with respect to the new defendant, and as that

defendant destroys complete diversity, the case is remanded to

the Superior Court of California, County of Butte.

BACKGROUND

Plaintiff Lois Patterson is a California resident over the

age of 65. (Pl.’s Compl. [“Compl.”], filed March 30, 2006, ¶¶ 1-

2.) In May 2003, plaintiff was contacted by Donna Borden, a

sales unit manager for Bankers. (Compl. ¶ 10.) Ms. Borden sold

plaintiff an annuity policy for which plaintiff paid over

$157,000.00. (Compl. ¶ 11.) In addition, Ms. Borden

fraudulently procured from plaintiff checks totaling $39,000.80,

which Ms. Borden then converted for her own personal use. 

(Compl. ¶¶ 11, 16, 17, 31, 32.) Plaintiff’s friend and guardian

ad litem in this case, Sharon Cobb, reported Ms. Borden’s

activities to local law enforcement in June 2004. (Compl. ¶ 30.) 

Following an investigation, Ms. Borden pled no contest to

felony elder theft (Cal. Penal Code § 368) on October 12, 2005. 

(Compl. ¶ 37.) As a result of the conviction, plaintiff obtained

a restitution judgment against Ms. Borden in the amount of

$39,001.00. (Pl.’s Mot., Exh. 1, filed Oct. 12, 2006.) Ms.

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Borden has been paying this restitution to plaintiff in

increments of $500.00 per month since March 2006. (Decl. of

Shannon Thompson in Supp. Of Pl.’s Mot. [“Thompson Decl.”], filed

Oct. 12, 2006, ¶ 3.) 

Plaintiff filed the instant suit against Bankers on March

30, 2006 in state court. She seeks, inter alia, return of the

$157,000.00 annuity premium, and alleges claims against Bankers

for negligent hiring, retention, and supervision; general

negligence; conversion; theft; fraud; misrepresentation;

negligent infliction of emotional distress; breach of fiduciary

duty; breach of implied covenant of good faith and fair dealing;

breach of contract; and statutory elder abuse. Plaintiff alleges

Bankers is liable both directly and under the doctrine of

respondeat superior. Bankers, an Illinois corporation, removed

the action to this court on May 31, 2006, on the basis of

diversity jurisdiction. The court issued its PSO on August 7,

2006. 

Recently, Ms. Borden contacted plaintiff’s counsel and

stated that she was having difficulty maintaining employment and

anticipated that she would be unable to continue making

restitution payments. (Thompson Decl. ¶¶ 5,6.) Consequently,

plaintiff wishes to amend her complaint to add Ms. Borden, a

California resident, as a defendant in this case. Plaintiff

seeks to allege the following causes of action against Ms.

Borden: negligent infliction of emotional distress; breach of

fiduciary duty; breach of implied covenant of good faith and fair

dealing; statutory elder abuse; and violation of California

Business and Professions Code section 17200 (“Section 17200"). 

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(Pl.’s Mot., Exh. 2 (Pl.’s Proposed First Am. Compl.).) 

Additionally, plaintiff moves to amend her complaint to add a

claim against Bankers for violation of Section 17200, based on

recently discovered facts. (Pl.’s Mot., Exh. 2, ¶¶ 111-118.)

STANDARD

Once the court has entered a pretrial scheduling order

pursuant to Rule 16, the standards of Rule 16 rather than Rule 15

govern amendment of the pleadings. See Johnson v. Mammoth

Recreations, Inc., 975 F.2d 604, 607-08 (9th Cir. 1992); Eckert

Cold Storage, Inc. v. Behl, 943 F. Supp. 1230, 1232-33 (E.D. Cal.

1996).

A scheduling order is not “a frivolous piece of paper, idly

entered, which can be cavalierly disregarded by counsel without

peril.” Gestetner Corp. v. Case Equip. Co., 108 F.R.D. 138, 141

(D. Me. 1985). The pretrial scheduling order is designed to

allow the district court to better manage its calendar and to

facilitate more efficient disposition of cases by settlement or

by trial. See Mammoth Recreations, 975 F.2d at 610-11; Fed. R.

Civ. P. 16 advisory committee notes (1983 amendment). 

Orders entered before the final pretrial conference may be

modified only “upon a showing of good cause.” Fed. R. Civ. P.

16(b). The good cause requirement of Rule 16 primarily considers

the diligence of the party seeking the amendment. Mammoth

Recreations, 975 F.2d at 609. The pretrial scheduling order can

only be modified “if it cannot reasonably be met despite the

diligence of the party seeking the extension.” Id. 

When evaluating whether a party was diligent, the Ninth

Circuit has determined that “the focus of the inquiry is upon the

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3 Ms. Borden has since stipulated to extend the statute

of limitations for all claims which plaintiff may have against

her until December 1, 2006. (Pl.’s Mot., Exh. 5.) Ms. Borden

executed this stipulation on September 29, 2006. 

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moving party’s reasons for modification. If that party was not

diligent, the inquiry should end.” Id. at 610; see also

Gestetner, 108 F.R.D. at 141. Only after the moving party has

demonstrated diligence under Rule 16 does the court apply the

standard under Rule 15 to determine whether the amendment is

proper. See Mammoth Recreations, 975 F.2d at 608; Eckert Cold

Storage, 943 F. Supp. at 1232 n.3.

ANALYSIS

Plaintiff moves to add Ms. Borden as a defendant in order to

protect all of plaintiff’s interests and ensure full recovery. 

Defendant contends that plaintiff’s motion does not show good

cause to add Ms. Borden, particularly in light of the fact that

plaintiff already has an enforceable judgment against Ms. Borden

in the amount of $39,001.00. Additionally, defendant points to

the parties’ joint status report, submitted to the court on July

7, 2006, in which plaintiff stated that she had no intention of

adding any additional parties.

Plaintiff first sought to add Ms. Borden as a defendant on

September 27, 2006, when she requested defendant stipulate to

such an amendment. (Pl.’s Mot. Exh. 3.) Plaintiff believed the

statute of limitations would run on her claims against Ms. Borden

on October 12, 2006; therefore, she requested a response from

defendant by September 29, 2006.3

 Defendant did not respond, and

plaintiff thereafter filed the instant motion on October 12,

2006. Although plaintiff acknowledges that adding Ms. Borden as

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a defendant will destroy diversity jurisdiction, she states that

she has “no intention of filing for remand” if the amendment is

granted.

In cases that have been removed on the basis of diversity

jurisdiction, “if a plaintiff seeks to join a defendant whose

joinder would destroy complete diversity, the court may deny the

joinder or permit the joinder and remand the case to state

court.” Boon v. Allstate Insurance Co., 229 F. Supp. 2d 1016,

1019 (C.D. Cal. 2002); 28 U.S.C. 1447(e). The court does not

have the option of permitting the joinder but retaining

jurisdiction. See Yniques v. Cabral, 985 F.2d 1031, 1035 (9th

Cir. 1993). Additionally, a diversity-destroying amendment is

scrutinized more closely than a general amendment. IBC Aviation

Svcs, Inc. v. Compania Mexicana De Aviacion, S.A. De C.V., 229 F.

Supp. 2d 1008, 1011 (N.D. Cal. 2000). In determining whether to

allow the amendment, the court should consider the necessity of

the party sought to be joined, whether the statute of limitations

would prevent the filing of a separate action in state court, the

timeliness of the motion, and the prejudice to the parties. 

Boon, 229 F. Supp. 2d at 1020. 

Here, plaintiff contends that she may not obtain complete

relief in this action unless Ms. Borden is added as a defendant. 

While plaintiff has an enforceable judgment against Ms. Borden

for the $39,001.00 that Ms. Borden converted for her own use,

plaintiff does not have a judgment for the $157,000.00 she paid

for the annuity policy. Without evaluating the merits of her

claims, it appears plaintiff has articulable claims against Ms.

Borden for her part in the sale of the annuity policy to

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plaintiff. Moreover, plaintiff proceeds under a theory of

respondeat superior in several of her causes of action against

Bankers. The doctrine of respondeat superior “clearly

contemplates that the negligent employee whose conduct is sought

to be attributed to the employer at least be specifically

identified, if not joined as a defendant.” Munoz v. City of

Union City, 120 Cal. App. 4th 1077, 1113 (2004). 

In addition, although plaintiff has procured a waiver of the

statute of limitations from Ms. Borden, extending the time to

bring claims against her to December 1, 2006, the court notes

that if the instant motion were denied, the statute of

limitations will, in all likelihood, have run on plaintiff’s

claims against Ms. Borden by the time she could re-file in state

court. 

Furthermore, plaintiff’s motion, while not filed immediately

upon removal, is nonetheless timely and should not result in

substantial prejudice to either party. The initial complaint in

this case was filed March 30, 2006. Bankers removed the case on

May 31, 2006, and filed an answer on June 5, 2006. A delay of

approximately four months between the filing of Bankers’ answer

and the motion to amend is not substantial enough to render

plaintiff’s motion untimely. C.f. Lopez v. General Motors Corp.,

697 F.2d 1328, 1332 (9th Cir. 1983) (holding that a delay of six

months was unreasonable, where the motion to amend was filed on

the eve of a hearing on a motion for summary judgment). 

Given these considerations, the court finds good cause to

permit plaintiff to amend her complaint to add Ms. Borden as a

defendant. Because Ms. Borden is a California resident, her

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4 The court deems plaintiff’s proposed First Amended

Complaint filed as of the date of this order, with the exception

of her Thirteenth Cause of Action against Bankers for violation

of Section 17200.

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joinder destroys diversity and deprives this court of

jurisdiction. See Strawbridge v. Curtiss, 7 U.S. 267 (1806);

Yniques, 985 F.2d at 1034 fn. 1. The case is therefore remanded

to the state court in which it was initially filed. 

Consequently, the court does not reach the issue of whether

plaintiff may further amend her complaint to state a claim for

violation of California’s Business and Professions Code section

17200 against Bankers.4

CONCLUSION

The court finds plaintiff has demonstrated good cause to

modify the PSO and permit plaintiff to amend her complaint to add

Donna Borden as a defendant. The court GRANTS plaintiff’s motion

to amend as to the addition of Ms. Borden only. Because Ms.

Borden’s joinder destroys complete diversity and thereby divests

this court of jurisdiction, this case is REMANDED to the Superior

Court of California, County of Butte.

IT IS SO ORDERED.

DATED: November 22, 2006

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