Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-01256/USCOURTS-azd-2_12-cv-01256-0/pdf.json

Parties Involved:
Julia Meyer
Counter Defendant
Montessori Kingdom of Learning
Counter Claimant

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The request for oral argument is denied because the issues have been fully briefed and

oral argument will not aid the Court’s decision. See Fed.R.Civ.P. 78(b); Partridge v. Reich, 141

F.3d 920, 926 (9th Cir. 1998).

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Julia Meyer,

Plaintiff,

vs.

Montessori Kingdom of Learning,

Defendant. 

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No. CV-12-1256-PHX-DKD

ORDER

This Order addresses Plaintiff’s Second Motion for Leave to Amend Her Amended

Complaint (Doc. 56).1

 Plaintiff seeks to add Count Four which seeks to pierce the veil of the

corporate defendant and impose liability on the proposed individual defendants who are alleged

to be the only members of the corporate defendant. The Court previously authorized the filing

of the Second Amended Complaint on July 9, 2013.

Plaintiff’s Motion contends that amendment is warranted because

Plaintiff has recently discovered Defendant’s intent to file for Chapter 7

bankruptcy and throughout the course of those discussions Defendant has

disclosed certain information that Plaintiff believes would be grounds to pierce

the corporate veil and pursue both Ms. Rager and Ms. Schneider personally.

Motion at pp. 2-3. In addition, the proposed third amended complaint specifies

Case 2:12-cv-01256-DKD Document 63 Filed 11/19/13 Page 1 of 3
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13. Upon information and belief based on Defendant[‘]s recent proposed

bankruptcy disclosures, Suzanne Rager and Elizabeth Schneider failed to do the

following upon the inception of Montessori Kingdom of Learning, LLC and/or

failed to adhere to the following after its inception: (1) follow all corporate

formalities required for a limited liability company in Arizona; (2) did not have

proper funding for the limited liability company at its inception; (3) have

commingled their own personal funds and/or monies with those of the limited

liability company; and (4) they have used the limited liability company to

advance personal purposes.

Proposed Third Amended Complaint at p. 3.

To pierce the corporate veil, Plaintiff must plead facts that “allow[] the [C]ourt to draw

the reasonable inference” (Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009)),

that (1) the company is the “alter ego” of a person and (2) that observing the corporate form

would cause a “fraud or injustice.” See Gatecliff v. Great Republic Life Ins. Co., 170 Ariz. 34,

39, 821 P.2d 725, 730 (1991). Plaintiff’s proposed third amended complaint alleges facts (set

forth above) that the company was the alter ego of the named persons but the proposed third

amended complaint is completely silent as to whether observing the corporate form would cause

a fraud or injustice. Moreover, the “facts” in support of the alter ego status of the company as

set forth in the proposed third amended complaint and quoted above are the kind of conclusory

facts which were deemed insufficient to state a claim in Iqbal, 556 U.S. at 678-79, 129 S.Ct. at

1959-50. These are “legal conclusion[s] couched as [] factual allegation[s]”, Bell Atlantic Corp.

v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1965 (2007), which provide no basis for the

Court to do what Iqbal requires and make a determination that the claim is facially plausible.

Iqbal at 678, 129 S.Ct. at 1949. Given that the proposed amendment to the Second Amended

Complaint could not withstand a motion to dismiss, the proposed amendment is futile. As

Defendant points out, a possible bankruptcy which might potentially render a judgment

uncollectible is not sufficient to constitute fraud or injustice. In re BH S&B Holdings, LLC, 420

B.R. 112, 140 n.8 (Bankr. S.D.N.Y. 2009).

The standard for granting leave to amend is generous, but it is not unlimited.

Considering the factors set forth in Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052

(9th Cir. 2003), and where Plaintiff has already had two opportunities to file amended complaints

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and where the proposed third amended complaint does not plead a prima facie case for the claim

to be added, and in light of the fact that this case has been pending for nearly a year and a half,

the Court will decline to grant leave to amend.

The parties shall confer about a proposed revised case management plan and, if in

agreement, submit this plan to the Court for its consideration. If the parties are unable to agree,

then they shall contact the Court’s judicial assistant for the purpose of scheduling a telephonic

case management conference.

IT IS THEREFORE ORDERED denying Plaintiff’s Second Motion for Leave to

Amend Her Amended Complaint (Doc. 56).

IT IS FURTHER ORDERED that the parties submit a proposed revised case

management plan, or place a call to schedule a telephonic case management conference no later

that December 13, 2013.

DATED this 19th day of November, 2013.

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