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1

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

FORD MOTOR CREDIT COMPANY,

Plaintiff,

v. NO. CIV. S-04-2344 LKK/JFM

MICHAEL DAUGHERTY,

Defendant.

 /

AND RELATED COUNTER-CLAIM AND 

THIRD-PARTY COMPLAINT.

 /

 The matter is before the court on two motions to dismiss, 

one filed by plaintiff and counter-defendant Ford Motor Credit

Company (“Ford Credit”), and one filed by third-party defendant

Ford Motor Company, Lincoln Mercury Division (“Lincoln Mercury”).

In the underlying suit, Ford Credit brings two breach of guaranty

claims against defendant Michael Daugherty, alleging that Daugherty

induced it to enter into a wholesale agreement and a capital loan

and promissory note by promising full payment, but that Daugherty

breached these guaranty agreements. Compl. at 2-6. Daugherty

answered and filed a counterclaim against Ford Credit. Daugherty

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1 In earlier rounds of briefing, Daugherty referred to Ford

Credit and Lincoln Mercury as counterclaim defendants, even though

Lincoln was not a party in the original suit. Consequently, the

court ordered defendant to file a third-party suit against Lincoln

Mercury if it wished to have Lincoln Mercury as a party to the

suit. Thus, DLMI is the third-party plaintiff. However, because

the parties continue to refer to Daugherty and DLMI as defendants,

the court will do so for purposes of this motion.

2 Claims eight and nine, brought under the California Motor

Vehicle Code, were dismissed on May 27, 2005 with prejudice because

Daugherty failed to raise any new factual allegations. See October

31, 2005 Order at 13-15. 

2

and Daugherty Lincoln-Mercury Inc. (“DLMI”) also bring a thirdparty suit against Lincoln Mercury.1 

In April 2005, Ford Credit moved to dismiss a number of causes

of actions alleged in Daugherty’s second amended counterclaim. On

May 27, 2005, the court denied Ford Credit’s motions directed to

the third, fourth, fifth, sixth, and seventh causes of action. The

court dismissed defendants’ ninth and fourteenth causes of action

without prejudice. Daugherty subsequently filed a third amended

counterclaim against Ford Credit and Daugherty and DLMI filed a

third-party action against Lincoln Mercury.

In September 2005, third-party defendant Lincoln Mercury filed

a motion for judgment on the pleadings. On October 31, 2005, the

court dismissed without prejudice claims one through six of

defendants’ counterclaim. The court dismissed with prejudice

claims eight and nine.2 Lincoln Mercury argued that Daugherty

raised identical factual allegations in their third amended

complaint as were raised and decided in an administrative hearing

before the California New Motor Vehicle Board (“NMVB”),” and were

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3 Claims one through seven are brought against both Ford

Credit and Lincoln Mercury.

4 There are no tenth and eleventh claims. 

5 Ford Credit moves to dismiss every claim brought against

it (1-7, 8, 9, 12), and Lincoln Mercury moves to dismiss every

claim brought against it (1-7). 

3

thus collaterally barred from bringing such counterclaims.

On November 14, 2005, defendants filed a fourth amended answer

and amended third-party complaint against Lincoln Mercury and

amended counterclaim against Ford Credit. The fourth amended

counterclaim reasserts a number of claims that were previously

dismissed: Breach of Contract (first claim), Breach of the

Covenant of Good Faith and Fair Dealings (second claim), Unfair

Business Practices (third claim), Interference with Contractual

Relations (fourth claim), Interference with Prospective Business

Advantage (fifth claim), and Misrepresentation/Deceit/Fraud (sixth

claim). Daugherty also alleges Negligent Misrepresentation

(seventh claim),3 which was not challenged by third-party defendant

previously, as well as three claims brought only against Ford

Credit: fraud as a release from guaranty (eighth claim), Violation

of continuing guarantees (ninth claim), and violation of California

Civil Code § 2819 (twelfth claim).4 Pending before this court are

Ford Credit’s and Lincoln Mercury’s motions to dismiss defendants’

counterclaims.5

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6 Background facts are derived primarily from the court’s

previous order.

4

I.

BACKGROUND FACTS6

The court has set forth the background facts multiple times

before, but repeats them here because they bear on the instant

motion. Suffice it to say that in 1999, Daugherty, owner of DLMI,

executed a buy-sell agreement for the purchase of a Lincoln Mercury

dealership to be operated in Sacramento, California. DLMI was

enfranchised by Lincoln Mercury as a dealer under three separate

franchise agreements. During the course of operations, DLMI

entered into various financing arrangements with Ford Credit

including an agreement for a capitalization loan and a separate

agreement for wholesale flooring for DLMI's new vehicle inventory.

Daugherty executed personal guarantees for these financial

commitments of DLMI. 

According to DLMI, on or about December 1, 2001, as a result

of the fraudulent actions of Lincoln Mercury and Ford Credit, DLMI

was forced to cease its Lincoln and Mercury sales operations. 

Daugherty claims that DLMI relied upon the representations of

Lincoln Mercury to order a number of vehicles to be built and

delivered by Lincoln Mercury. Lincoln Mercury, however, contends

that DLMI ordered an excess number of cars to sell and the demise

of DLMI’s credit line as well as the termination of the franchise

was due to DLMI’s conduct, not Lincoln Mercury. 

////

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5

On January 23, 2002, Lincoln Mercury notified DLMI that it

intended to terminate DLMI's Lincoln and Mercury franchise

agreements. DLMI then filed a protest with the California New

Motor Vehicle Board, pursuant to the provisions of California

Vehicle Code Section 3060, protesting the proposed termination of

its franchises. On or about April 17, 2002, DLMI filed a separate

petition with the Board, pursuant to the provisions of Section

3050(c), alleging that DLMI sustained damage as a result of the

conduct of Lincoln Mercury in delivering unwanted and unordered

vehicles to DLMI. The petition included claims that Lincoln

Mercury was liable to DLMI on several causes of action.

The hearing on the protest and petition was scheduled to

commence on January 6, 2003, before an administrative law judge

("ALJ"). The ALJ discussed the impact of the then recent opinion

from the First District Court of Appeal in the matter of

Greenlining Institute vs. Public Utilities Commission, 103

Cal.App.4th 1324 (2002). The ALJ determined that the Greenlining

case cast serious doubt upon whether the Board had jurisdiction to

consider the issues raised by the petition and granted DLMI's

motion to sever the protest and petition and proceed to hearing on

the protest only. The ALJ reasoned that this decision suspended

the proceedings initiated by the petition “pending the outcome of

whatever action Daugherty chose to pursue in civil court as to the

allegations contained in the petition.” NMVB Decision at 5.

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7 In making this determination, the ALJ considered factors

such as the amount of business transacted by the franchisee, the

permanency of the investment, whether it is injurious to the public

for the franchise to be modified, and whether the franchisee failed

to fulfill the warranty obligations, to name a few. 

6

A. THE DECISION OF THE NEW MOTOR VEHICLE BOARD 

The ALJ heard evidence on the termination protest on January

7 and 9, 2003. On April 24, 2003, the Board adopted the proposed

decision of the ALJ. The specific issue pending before the Board

was “whether Lincoln Mercury has good cause for the termination of

Daugherty’s Lincoln and Mercury Franchises.” NMVB Decision at 5.7

Pursuant to section 3066(b), Lincoln Mercury had the burden of

establishing good cause for the termination of the franchise. 

The ALJ made two findings of fact. First, the ALJ determined

that Daugherty did in fact order the additional cars to sell (a

fact DLMI contests in this litigation). Specifically, the ALJ

concluded that there was no doubt that Daugherty was aware that the

vehicles were being ordered to be built and delivered and that

Daugherty not only desired them but required them in order to stay

operational. NMVB Decision at 24. Second, the ALJ concluded

that Lincoln Mercury had “established that Daugherty was not and

is not conducting an adequate amount of business as compared to the

business available to it.” Id. at 26. The ALJ explicitly stated

that “the cessation of business by Daugherty was not caused by

conduct of representatives of Lincoln Mercury.” Id at 27. Once

the Board found that good cause had been established for the

termination of the DLMI franchise, DLMI petitioned the Sacramento

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7

County Superior Court for a writ of administrative mandamus

pursuant to Code of Civil Procedure Section 1094.5. This writ was

denied by the Superior Court.

II.

DISMISSAL STANDARDS UNDER FED. R. CIV. P. 12(b)(6)

On a motion to dismiss, the allegations of the complaint must

be accepted as true. See Cruz v. Beto, 405 U.S. 319, 322 (1972).

The court is bound to give the plaintiff the benefit of every

reasonable inference to be drawn from the "well-pleaded"

allegations of the complaint. See Retail Clerks Intern. Ass'n,

Local 1625, AFL-CIO v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963).

Thus, the plaintiff need not necessarily plead a particular fact

if that fact is a reasonable inference from facts properly alleged.

See id.; see also Wheeldin v. Wheeler, 373 U.S. 647, 648 (1963)

(inferring fact from allegations of complaint).

In general, the complaint is construed favorably to the

pleader. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). So

construed, the court may not dismiss the complaint for failure to

state a claim unless it appears beyond doubt that the plaintiff can

prove no set of facts in support of the claim which would entitle

him or her to relief. See Hishon v. King & Spalding, 467 U.S. 69,

73 (1984) (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).

In spite of the deference the court is bound to pay to the

plaintiff's allegations, however, it is not proper for the court

to assume that "the [plaintiff] can prove facts which [he or she]

has not alleged, or that the defendants have violated the . . .

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8 The court notes that third-party defendant Ford Credit is

able to enforce the findings from the NMVB’s ruling. As it points

out, the California Supreme Court has held that collateral estoppel

may be applied in favor of a party who was not involved in the

prior action. See Bernhad v. Bank of America, 19 Cal.2d 807

(1942). Although Ford Credit was not a party in the NMVB

proceedings, they were directly implicated in the NMVB’s findings,

and the proceedings involved the same transactions. As put by the

California Supreme Court in Bernhard, “it would be unjust to permit

one who has had his day in court to reopen identical issues by

merely switching adversaries.” 19 Cal.2d at 812.

8

laws in ways that have not been alleged." Associated General

Contractors of California, Inc. v. California State Council of

Carpenters, 459 U.S. 519, 526 (1983).

III.

ANALYSIS

Daugherty and DLMI have filed an amended counterclaim and

third-party complaint subsequent to the court’s previous

application of collateral estoppel which resulted in the dismissal

of six of their claims. Although Ford Credit and Lincoln Mercury

argue that Daugherty’s new allegations are barred by collateral

estoppel, some claims must be sustained because Daugherty and DLMI

have alleged new facts which fall outside the purview of the NMVB’s

decision.8

A. CLAIMS ONE THROUGH SIX (AGAINST FORD CREDIT AND 

LINCOLN MERCURY)

The court’s October 2005 order explained that collateral

estoppel applied to decisions made by administrative agencies,

including the NMVB decision. October 31, 2005 Order at 8. As to

the six causes of action, the court explained that each claim

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9

“rel[ied] on the allegation that Lincoln Mercury and Ford Credit

secretly arranged for ordering and shipping an excess number of

cars and that it was those actions of Lincoln Mercury and Ford

Credit that caused the DLMI franchise to fail.” Id. Ford Credit

and Lincoln Mercury urge the court to dismiss Daugherty’s and

DLMI’s claims here because they contend that Daugherty and DLMI

raise issues related to unordered and unwanted vehicles which the

NMVB already adjudicated. 

Daugherty and DLMI, on the other hand, argue that their

counterclaims and third-party claims should not be dismissed

because even though the Board determined that Daugherty was aware

of the additional vehicles being built and delivered, the Board

never made findings as to “the reason that these vehicles were

ordered.” Opp’n at 4. Defendants cite to various paragraphs in

the fourth amended counterclaim where they allege that they ordered

the vehicles because they “relied on representations” of Lincoln

Mercury regarding the market share for Lincoln Mercury vehicles

which were false and “in excess of the potential for sales.” Opp’n

at 4, citing FAC ¶¶ 54, 58, 59. Defendants’ arguments are welltaken.

The court has closely examined DLMI’s and Daugherty’s fourth

counterclaim and third-party complaint and there are new

allegations relating to Lincoln Mercury’s misrepresentation of the

market share, which the NMVB did not consider. These allegations

are contained in the general allegations and in claims two, three,

and six. 

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9 The transcript indicates that the sales forecasts were

generated, in part, by considering Daugherty’s inventory and

previous sales figure. Tr. at 328:13-19. Daugherty also testified

that based on these meetings, where he was present, both the dealer

and manufacturer could determine the appropriate number of vehicles

to be built by the manufacturer. Tr. at 328-329. The issue here,

however, is estoppel, not the merits. 

10

Specifically, Daugherty and DLMI allege that:

“[R]epresentatives of Lincoln Mercury . . . made a

number of representations concerning the expected sales

of new Lincoln and Mercury vehicles in the Sacramento

Market.” See ¶ 54.

“ [R]epresentations proved to be far in excess of the

potential for sales of new Lincoln and Mercury vehicles

in the Sacramento market.” See ¶ 59.

“Lincoln Mercury “represent[ed] to DLMI the market

potential for the sales of . . . vehicles . . . in an

amount far in excess of the actual sales potential.” See

¶ 78, second claim (breach of covenant of good faith and

fair dealing)

“Lincoln Mercury deliberately misrepresent[ed] to DLMI

the sales potential for Lincoln Mercury vehicles in the

Sacramento area.” See ¶ 86, third claim (Business & Prof

Code)

“Lincoln Mercury “engaged in a course of conduct . . .

designed to deceive DLMI as to the number of vehicles it

could reasonably be expected to sell”)6. See ¶ 116,

sixth claim (Misrepresentation/Deceit/Fraud)

Lincoln Mercury and Ford Credit point out that the NMVB

considered the ordering process when they concluded that Daugherty

did order the vehicles. The record reflects that the Board heard

evidence suggesting that Daugherty and Lincoln Mercury

representatives met and that the representatives presented sales

forecasts to DLMI. Hearing Tr. at 328.9 As Daugherty and DLMI

assert, however, the Board focused on whether Lincoln Mercury had

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10 The court wishes to be clear as to why it previously

dismissed the third claim brought by Daugherty and DLMI under

California Business and Professions Code § 17200 in its October 31,

2005 order. The court recognizes that the administrative law judge

severed the protest of the termination of the franchise from the

petition, in part because Greenlining Institute v. The Public

Utilities Commission of the State of California, 103 Cal.App.4th

1324 (2002), called into doubt whether the Board could properly

adjudicate the 17200 claim. The court dismissed the Section 17200

claim in its previous order because that claim contained

allegations only relating to whether the cessation of Daugherty’s

business was caused by Lincoln Mercury and Ford, an issue that was

previously decided by the NMVB. In this round of briefing, DLMI

and Daugherty allege in the 17200 claim that Lincoln Mercury

misrepresented the market share to them, new claims that were not

before the NMVB.

11

good cause for the termination of Daugherty’s Lincoln and Mercury

franchises. NMVB Decision at 5, 27. The Board did not consider

any alleged fraud or misrepresentations concerning sales potentials

which may have led Daugherty to order excess vehicles from Lincoln

Mercury. Nor did the parties tender such evidence to the Board.

As Daugherty and DLMI point out, the Board’s findings were confined

to “the vehicle ordering system and claims made by DLMI that

Lincoln Mercury delivered vehicles that were never ordered,” not

whether Lincoln Mercury made representations which resulted in

vehicles being ordered far in excess of the potential for sales in

the Sacramento market. Opp’n at 4-5. 

Accordingly, the court sustains claims two, three, and six as

to Lincoln Mercury, which contain allegations concerning false

representations made by Lincoln Mercury that caused Daugherty and

DLMI to order excess vehicles.10 Claims one, four, and five must

be dismissed with prejudice because they do not contain any

allegations which distinguish them from the claims which the court

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11 While DLMI and Daugherty assert in these six claims that

Ford Credit illegally increased DLMI’s credit line without its

consent, these factual allegations are foreclosed by the NMVB’s

decision. See October 31, 2005 Order.

12

previously dismissed. Claims one through six must be dismissed as

to Ford Credit because they do not contain allegations relating to

Ford Credit making any misrepresentations to Daugherty and DLMI

about the market potential of the vehicles.11

B. SEVENTH CLAIM - NEGLIGENT MISREPRESENTATION (AGAINST 

FORD CREDIT AND LINCOLN MERCURY)

In the previous motion for judgment on the pleadings, Lincoln

Mercury did not move to dismiss this claim. In this round of

briefing, both Ford Credit and Lincoln Mercury argue that this

claim, too, necessarily contradicts factual findings determined by

the NMVB. Their argument does not lie.

According to DLMI and Daugherty, Lincoln Mercury “represented

to DLMI inflated sales forecasts” and “Ford Credit knew or should

have known . . . that the representations . . . were false when

made.” FAC ¶¶ 127, 129. Defendants allege that these

representations were made so that Lincoln Mercury could

“enfranchise” another dealer to replace DLMI. Id. at ¶ 130. DLMI

and Daugherty maintain that Ford Credit and Lincoln Mercury

“inflat[ed] the estimates of potential sales to dealer candidates.”

The court must sustain the negligent misrepresentation claim

because, as noted above, such allegations concerning Lincoln

Mercury’s representations about the market share were not issues

pending before the Board.

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12 See also Lawrence v. Bank of America 163 Cal.App.3d 431,

437 (1985) (where a bank customer alleged his bank owed him a

fiduciary duty, "under ordinary circumstances the relationship

between a bank and its depositor is that of debtor-creditor, and

is not a fiduciary one”). 

13

Ford Credit argues that the negligent misrepresentation claim

must be dismissed as to it because it did not make any

misrepresentations. Mot. at 13. This argument is unavailing. 

First, this is a merits dispute. Moreover, under California

law, misrepresentation may also include "concealment" or

"nondisclosure." Small v. Fritz Companies, Inc., 30 Cal.4th 167,

173 (2003). Secondly, Ford Credit argues that the negligent

misrepresentation claim must be dismissed because, as a commercial

lender, it owes no fiduciary duty to Daugherty or DLMI. It cites

Price v. Wells Fargo Bank, 213 Cal.App.3d 465, 471 (1989) for this

proposition. Although the court in Price explained that the

relationship between Price and Wells Fargo Bank constituted a

debtor/creditor relationship and that a “debt is not a fiduciary

relation between debtor and creditor,”12 that case is

distinguishable from the instant matter. It is not clear that this

general proposition applicable between a bank and borrower/customer

would apply to Ford Credit. Even assuming, without deciding, that

Ford Credit’s flooring agreement is identical to a banker’s

obligation to his creditor, the motion must be denied. Even if

Ford Credit had no fiduciary duty to Daugherty, it had a general

obligation not to engage in misrepresentation, which simply arises

out of its business relationship. Accordingly, the court denies

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Ford Credit’s and Lincoln Mercury’s motion to dismiss as to this

claim. 

C. EIGHTH AND NINTH CLAIMS (FRAUD AS A RELEASE FROM GUARANTY

AGAINST FORD CREDIT AND VIOLATION OF CONTINUING

GUARANTEES)(Against Ford Credit)

In their fourth amended counterclaim and third-party

complaint, Daugherty and DLMI allege these two new causes of

action. Defendants seek declaratory relief releasing them from

Ford Credit’s Wholesale Guaranty and Promissory Guaranty, because

they allege that they have been defrauded. 

Daugherty alleges that he executed a Wholesale Guaranty and

Promissory Guaranty with Ford Credit which “ma[d]e Daugherty

personally responsible for certain indebtedness allegedly owed by

DLMI to Ford Credit.” Id. DLMI and Daugherty contend that the

alleged indebtedness of DLMI was “generated by and through a common

scheme to raise DLMI’s flooring line with Ford Credit, and to have

Lincoln Mercury build and deliver vehicles against this increased

flooring line, even after the credit had been suspended.” Id. at

23. These two causes of action redescribe a “common scheme”

wherein Ford Credit allegedly acted illegally to “raise DLMI’s

flooring line credit without DLMI’s consent or knowledge.” The

“fraud” alleged in these two claims relate not to alleged

misrepresentations of the market share made by Lincoln Mercury, but

about the ordering process of the vehicles that the Board

previously addressed. The court must dismiss these two causes of

action with prejudice because they are a clear attempt to repackage

claims that “Lincoln Mercury and Ford Credit secretly arranged for

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15

ordering and shipping an excess number of cars” and that such

actions “caused the DLMI franchise to fail.” Significantly, the

NMVB previously found not credible Daugherty’s denial that he did

not request an increase from Ford Motor Credit in his flooring

line. See NMVB Decision at 19. Rather, the Board explicitly found

that Daugherty was “aware that [his credit line] was being

increased due to the shipment of vehicles which were being received

and billed to Daugherty’s account by Ford Motor Credit” Id. at 19-

20. 

Finally, as the court explained in its October order,

allegations relating to a “common scheme” between Ford Credit and

Lincoln Mercury to defraud defendants implicate and contradict the

facts determined by the NMVB. October 31, 2005 Order at 10-11.

Although the scheme is restated within the context of a new legal

theory, defendants are collaterally barred from asserting them.

See Sutphin v. Speik, 99 P.2d 652, 656 (1940) (collateral estoppal

is a bar to a party presenting a new thory with respect to the same

issue previously litigated). These two claims alleging fraud with

respect to the guarantees between Ford Credit and defendants are

dismissed with prejudice. 

D. TWELFTH COUNTERCLAIM - VIOLATION OF CALIFORNIA CIVIL CODE

SECTION 2819 (Against Ford Credit)

California Civil Code § 2819 states in pertinent part:

A surety is exonerated, except so far as he or she may

be indemnified by the principal, if by any act of the

creditor, without the consent of the surety the original

obligation of the principal is altered in any respect,

or the remedies or rights of the creditor against the

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principal, in respect thereto, in any way impaired or

suspended.

In their twelfth counterclaim, defendants allege that they are

no longer liable under their continuing guarantees because Ford

Credit “unilaterally, and in violation of the terms of the finance

agreement with DLMI, raised the maximum credit limit available to

DLMI, and financed vehicles which were delivered to DLMI with this

additional and unauthorized extension of credit.” FAC ¶ 147. The

counterclaim alleges that Ford Credit was required to “amend” the

“finance agreement with DLMI,” and to have such agreement “signed

by both parties.” Id. at ¶ 149.

This claim cannot stand because it contradicts the findings

of the NMVB, which found that Daugherty ordered the vehicles and

that the credit line was increased with his consent. According to

the NMVB decision:

The claim that there was “no viable funding source” at

the time [the vehicles] were delivered is not tenable .

. . . Although Mr. Daugherty denies that he requested

an increase from Ford Motor Credit in Daugherty’s

flooring line, he was aware that it was being increased

due to the vehicles which were being received and billed

to Daugherty’s account by Ford Motor Credit. 

NMVB Decision at ¶¶ 74-75.

The Board went on to say that:

There is no doubt that Daugherty was aware that these

vehicles were being ordered to be built and delivered 

. . . Daugherty was also aware that they and been 

financed through Ford Motor Credit as Daugherty 

received itemized flooring statements showing the 

deliveries. 

NMVB Decision at ¶ 91.

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The Board has already adjudicated this issue and found that

Daugherty was aware and most likely consented to the credit

increase. The Board explicitly considered and rejected Daughtery’s

contention that he did not request an increase from Ford Credit.

Defendants are collaterally barred from raising this claim now.

Finally, it is worth nothing that under California law, the

Board’s findings would preclude defendant from bringing this claim.

The California Supreme Court has explained that the logical

corollary to Section 2819 is that “where the surety consents to an

alteration of the original obligation of the principal, or the

impairment or suspension of any of the creditor's rights or

remedies against the principal, the surety is not exonerated.”

Bloom v. Bender, 48 Cal.2d 793, 800 (1957). The Board’s factual

findings make clear that Daugherty knew of, and consented to, the

increase in the credit line by Ford Credit, and thus defendants may

not be exonerated from his obligations under the guaranty

agreements. Defendants’ twelfth claim must be dismissed.

IV.

CONCLUSION

Ford Credit’s and Lincoln Mercury’s motions to dismiss are

GRANTED in part, and DENIED in part, as follows:

1. Lincoln Mercury’s motion to dismiss as to claims one,

four, and five is GRANTED;

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13 The court dismisses these claims with prejudice. In doing

so, the court recognizes that the standard for granting leave to

amend is generous. In Scott v. Eversole Mortuary, 522 F.2d 1110

(9th Cir. 1975), the Ninth Circuit reversed the district court's

dismissal of plaintiff's count insofar as it denied leave to amend

because the court could “conceive of facts” that would render

plaintiff's claim viable and could “discern from the record no

reason why leave to amend should be denied.” Similarly, in Breier

v. Northern California Bowling Proprietors' Ass'n, 316 F.2d 787,

789-90 (9th Cir.1963), the court held that leave to amend should

be granted if underlying facts provide proper grounds for relief

or if the complaint can be saved by amendment. “[L]eave to amend

should be granted ‘if it appears at all possible that the plaintiff

can correct the defect.’” Id. at 790 (quoting 3 James Wm. Moore,

et al., Moore’s Federal Practice § 15.10 at 838 (2d ed. 1948)).

In the case at bar, however, the court has been more than generous

in allowing DLMI and Daugherty to amend twice before. The court

is confident in concluding that DLMI and Daugherty have been given

ample opportunities to save any claims for which underlying facts

allow proper grounds for relief.

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2. Ford Credit’s motion to dismiss as to claims one through

six, eight, nine, and twelve is GRANTED.13

3. In all other respects, the motions are DENIED.

IT IS SO ORDERED. 

DATED: February 21, 2006.

/s/Lawrence K. Karlton 

LAWRENCE K. KARLTON

SENIOR JUDGE

UNITED STATES DISTRICT COURT

Case 2:04-cv-02344-LKK -JFM Document 77 Filed 02/23/06 Page 18 of 18