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UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

OAKLAND DIVISION 

NEWPORT BUILDERS, INC., a Nevada 

corporation, 

 Plaintiff, 

 vs. 

NORTH BAY CONSTRUCTION, INC., a 

California corporation, 

 Defendant. 

Case No: C 09-0184 SBA 

ORDER GRANTING DEFENDANT’S 

MOTION FOR ORDER ALLOWING 

THE FILING OF: AMENDED 

ANSWER AND COUNTERCLAIM

[Docket 93] 

The instant diversity jurisdiction action arises from a business dispute between former 

partners, Plaintiff, Newport Builders, Inc. (Plaintiff), and Defendant, North Bay Construction, 

Inc. (Defendant or North Bay). See 28 U.S.C. § 1332. The parties are presently before the 

Court on Defendant’s Motion for Order Allowing the Filing of: Amended Answer and 

Counterclaim. Having read and considered the papers filed in connection with this matter, and 

being fully informed, the Court hereby GRANTS the motion for the reasons set forth below. 

The Court, in its discretion, finds this matter suitable for resolution without oral argument. See

Fed.R.Civ.P. 78(b). 

I. BACKGROUND 

This case arises from an excessively overlitigated dispute concerning the construction of 

an 800-acre residential development known as “Fountainview,” located in Santa Rosa, 

California. The development was owned by an investment partnership known as Fountainview 

No. 3 Investors (Fountainview Investors). Fountainview Investors was organized as a limited 

partnership, with Newport Builders LP as its general partner. Newport Builders LP is a limited 

partnership in which Plaintiff is the general partner and Defendant is the limited partner. 

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On January 14, 2009, Plaintiff filed the instant action against North Bay, and 

subsequently filed a First Amended Complaint on February 9, 2009, and a Second Amended 

Complaint (SAC) on September 29, 2009. The SAC alleges six state law causes of action for: 

(1) Breach of Partnership Agreement; (2) Breach of the Implied Covenant of Good Faith and 

Fair Dealing; (3) Breach of Oral Contract; (4) Intentional Interference with Prospective 

Economic Advantage; (5) Breach of Fiduciary Duty; (6) Disassociation of North Bay from 

Newport Builders LP; and (6) Dissolution and Winding Up of Newport Builders LP. (Docket 

76.) On October 9, 2009, Defendant filed its Answer and Counterclaim in response to the 

SAC. (Docket 77.) The Counterclaim named Plaintiff and Gene Lenzi (Lenzi), who allegedly 

is in control of Plaintiff, as counter-defendants. 

On April 9, 2009, shortly after commencing this action, Plaintiff filed a separate state 

court action against Defendant alleging the same claims at issue in this case. See Newport 

Builders, Inc. v. North Bay Constr. Inc., San Francisco County Super. Ct., Case No. CGC 09-

487006; Senneff Decl. Ex. B. Defendant sought an extension of time to respond to the new 

complaint. Plaintiff refused to stipulate to an extension, and sought the entry of default against 

Defendant. Senneff Decl. ¶ 4. The state court denied the request for default, and granted 

Defendant an extension of time to file its responsive pleading. In the meantime, because of 

purported difficulties in serving Lenzi with the Counterclaim in the federal action, Defendant 

opted to dismiss its Counterclaim without prejudice, and instead, reassert those claims in the 

state court action. Senneff Decl. ¶ 4. Defendant filed a notice of voluntary dismissal of its 

Counterclaim on November 5, 2009. (Docket 89.) 

Shortly after Defendant dismissed its federal Counterclaim, Plaintiff dismissed all of its 

claims against Defendant in the state court action. As a result, Defendant requested that 

Plaintiff stipulate to allow Defendant to reassert its previously dismissed Counterclaim (only as 

to Plaintiff) in this action. Senneff Decl. Ex. F. Plaintiff expressed no concern regarding the 

proposed amendment to the Answer, but apparently took exception to the Counterclaim. Id.

¶ 4. Unable to resolve the dispute, Defendant now moves the Court for leave to file an 

amended Answer and Counterclaim. 

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II. LEGAL STANDARD 

Federal Rule of Civil Procedure 15(a)(2) provides that leave to amend a pleading should 

be “freely given when justice so requires.” Fed. R. Civ. P. 15(a)(2); Moss v. United States 

Secret Serv., 572 F.3d 962, 972 (9th Cir. 2009). Rule 15 “is to be applied with extreme 

liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (per 

curiam) (internal quotation marks omitted). The decision to grant or deny a request for leave to 

amend rests in the discretion of the trial court. See California v. Neville Chem. Co., 358 F.3d 

661, 673 (9th Cir. 2004). 

The party opposing leave to amend carries the burden of showing why leave should not 

be granted. DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987). In assessing 

whether to grant leave to amend, the Court should consider factors such as “the presence or 

absence of undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies by 

previous amendments, undue prejudice to the opposing party and futility of the proposed 

amendment.” Moore v. Kayport Package Exp., 885 F.2d 531, 538 (9th Cir. 1989) (citing 

Foman v. Davis, 371 U.S. 178, 182 (1962)). Of these factors, prejudice to the opposing party 

is the most important. Eminence Capital, 316 F.3d at 1051. “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.” Id.

An analogous standard applies to motions to add a counterclaim. Rule 13(f) states that 

“[t]he court may permit a party to amend a pleading to add a counterclaim if it was omitted 

through oversight, inadvertence, or excusable neglect or if justice so requires.” Fed.R.Civ.P 

13(f). The same factors that are used to assess the propriety of granting leave to amend a 

pleading also apply to amendments to pleadings that assert counterclaims. See Nunes v. 

Ashcroft, 375 F.3d 805, 808 (9th Cir. 2004); Hip Hop Beverage Corp. v. Ric Representacoes 

Importacao E Comercio, Ltd., 220 F.R.D. 614, 620 (C.D. Cal. 2003) (“courts presented with 

motions for leave to amend a pleading to add an omitted counterclaim generally adhere[ ] to 

the liberal amendment policy of Rule 15 in deciding whether to grant the requested leave.”) 

(internal quotation marks omitted)). 

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III. DISCUSSION 

A. AMENDMENT OF ANSWER

Defendant seeks to amend its Answer to include a request in its prayer for relief for 

dissolution of the limited partnership or an accounting. Plaintiff has expressed no opposition to 

this proposed amendment. Given the extreme liberality of Rule 15, coupled with Plaintiff’s 

lack of opposition, the Court grants Defendant leave to amend to file an amended Answer. 

B. PROPOSED COUNTERCLAIM

Defendant’s proposed Counterclaim alleges two causes of action against Defendant for: 

(1) Dissolution of Newport Builders LP and (2) Accounting. Defendant alleges that under the 

terms of the Newport Builders LP Partnership Agreement, Newport Builders LP should already 

have wound up its business and dissolved, and that its assets should have been distributed to 

Defendant, among others. The Counterclaim further alleges that Plaintiff, as general partner of 

Newport Builders LP, is depleting the partnership’s assets by pursuing unnecessary and 

duplicative litigation in state and federal courts. Id. Defendant seeks the dissolution of 

Newport Builders LP as well as an accounting to determine what assets have been expended 

and what assets remain. 

Without citation to any relevant authority, Plaintiff characterizes Defendant’s 

Counterclaim as a claim for “waste” of partnership assets, and argues that such a claim is not 

ripe until the pending state and federal court litigation is concluded. Pl.’s Opp’n at 6-10. This 

contention lacks merit. Defendant merely seeks a “decree of dissolution” of the partnership 

and an accounting to ascertain the partnership’s assets. Senneff Decl. Ex. A ¶¶ 7, 10. Thus, to 

the extent the partnership is dissolved, its assets will be liquidated and distributed in 

accordance with each partner’s share, as determined by an accounting. See Hooper v. Barranti, 

81 Cal.App.2d 570, 578-79 (1947).1

 Notably, Plaintiff cites no authority to support its 

contention that these equitable claims are dependent on the resolution of pending litigation. 

Nor has Plaintiff articulated any particular prejudice in allowing the proposed Counterclaim. 

 1 Whether Defendant is entitled to any additional relief is not before the Court and is not 

addressed in this Order. 

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Plaintiff also argues that Defendant has not shown the requisite “inadvertence, oversight 

or excusable neglect” under Rule 13(f) to permit the proposed Counterclaim. Defs.’ Opp’n at 

12-14. Specifically, Plaintiff contends that Defendant has failed to provide any explanation for 

dismissing its Counterclaim in November 2009, and that its decision to do so was purely 

“tactical.” Id. at 13. The Court disagrees. Defendant previously dismissed its Counterclaim in 

order to pursue its claims in the state court action. It was only because of Plaintiff’s decision to 

dismiss all of its claims against Defendant in the state court case that Defendant moved to 

reassert its previously dismissed Counterclaim in this Court. The Court is thus satisfied that 

Defendant has made a sufficient showing of excusable neglect to permit the filing of its 

Counterclaim. 

IV. CONCLUSION 

For the reasons stated above, 

IT IS HEREBY ORDERED THAT Defendant’s Motion for Order Allowing the Filing 

of: Amended Answer and Counterclaim (Docket 93) is GRANTED. Defendant shall file its 

Amended Answer and Counterclaim within five days of the date this Order is filed. 

IT IS SO ORDERED. 

Dated: February 24, 2010 ____________________________________ 

SAUNDRA BROWN ARMSTRONG 

United States District Judge 

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