Page 1 – OPINION AND ORDER 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

PENDLETON DIVISION 

GREG WILLIAMS and SHANE 

WILLIAMS, 

 Case No. 2:16-cv-00374-SU 

 Plaintiffs, 

 OPINION AND ORDER 

v. 

 

KEYBANK NATIONAL ASSOCIATION, 

 

 Defendant. 

_______________________________________ 

SULLIVAN, United States Magistrate Judge: 

 Plaintiffs Greg and Shane Williams have moved for leave to file an amended complaint. 

(Docket No. 24). Defendant KeyBank National Association opposes plaintiffs’ motion, on the 

Case 2:16-cv-00374-SU Document 31 Filed 12/06/16 Page 1 of 7
Page 2 – OPINION AND ORDER 

grounds that plaintiffs’ proposed amendments are futile. (Docket No. 29). For the following 

reasons, the Court GRANTS plaintiffs’ Motion for Leave to File an Amended Complaint.1

PROCEDURAL BACKGROUND 

 Plaintiffs originally commenced this action in Oregon state court, see Notice of Removal 

(Docket No. 1), Ex. A, Compl. (Docket No. 1-1), and defendant removed to this Court on the 

basis of diversity jurisdiction, 28 U.S.C. §§ 1332 & 1441. Plaintiffs’ original complaint brought 

two claims for relief, for (1) breach of the implied covenant of good faith and fair dealing, and 

(2) breach of oral contract, arising from a loan that defendant made to plaintiffs to finance the 

construction of a boat. Plaintiffs allege that defendant did not comply with the loan’s terms 

because it paid the boat manufacturer for work it never performed, without properly verifying 

that the boat was constructed. Compl. (Docket No. 1-1) ¶¶ 4-10. Plaintiffs seek to have 

defendant cancel the loan, forgive the outstanding balance, and return to plaintiffs the amount 

paid on the loan. Id.

 Plaintiffs then filed the instant Motion for Leave to File an Amended Complaint. (Docket 

No. 24).2

 Plaintiffs seek to add certain factual allegations to support their original claims for 

relief, to add a claim for tortious breach of the duty of good faith and fair dealing, and to add a 

prayer for punitive damages. (Docket No. 24-1). Because plaintiffs sought to amend more than 

21 days after defendant answered plaintiffs’ Complaint, plaintiffs required either defendant’s 

consent or the Court’s leave to amend. Fed. R. Civ. P. 15(a)(2). 

 

1

 The parties have consented to the jurisdiction of the Magistrate Judge pursuant to 28 U.S.C. 

§ 636. (Docket No. 18). 

2

 Plaintiffs also improperly filed the proposed Amended Complaint, which the Court struck. 

(Docket Nos. 25 & 26). The proposed Amended Complaint is properly attached as an exhibit to 

plaintiffs’ Motion. (Docket No. 24-1). 

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 Defendant filed a detailed Opposition memorandum to plaintiffs’ Motion. (Docket No. 

29). Defendant argues that plaintiffs’ proposed amendments are futile, for various reasons: that 

plaintiffs’ proposed claim for tortious breach fails because plaintiffs have not pled sufficient 

factual allegations to create a “special relationship” between them and defendant; that plaintiffs 

do not plead the existence of a special relationship, a necessary element of the tortious breach 

claim; that the statute of limitations bars plaintiffs’ tortious breach claim, which does not “relate 

back” under Fed. R. Civ. P. 15(c); and that certain evidence contradicts plaintiffs’ allegations, as 

defendant seeks to show through various attachments to its Opposition briefing. See Def.’s 

Opp’n (Docket No. 29), at 15-23 (indictment of Christopher Bohnenkamp), & Quest Decl. 

(Docket No. 29-1) ¶ 5, Exs. A-D. 

 Plaintiffs filed a brief Reply, asking the Court either to grant plaintiffs’ Motion for Leave 

to Amend, to permit plaintiffs to file a new amended complaint that would allege the contested 

special relationship, or to permit plaintiffs 21 days to respond to defendant’s Opposition 

memorandum. (Docket No. 30). 

LEGAL STANDARD

 When a party seeks to amend its pleadings, the Court must “freely give leave when 

justice so requires.” Fed. R. Civ. P. 15(a)(2). This standard “is to be applied with extreme 

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

(quotation omitted, emphasis added). The Court may deny 

leave to amend only if there is strong evidence of undue delay, bad faith or 

dilatory motive on the part of the movant, repeated failure to cure deficiencies by 

amendments previously allowed, undue prejudice to the opposing party by virtue 

of allowance of the amendment, or futility of amendment, etc. The consideration 

of prejudice to the opposing party carries the greatest weight. 

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Page 4 – OPINION AND ORDER 

Sonoma Cty. Ass’n of Retired Employees v. Sonoma Cty., 708 F.3d 1109, 1117 (9th Cir. 2013) 

(citations omitted, emphasis added); see also United States v. Corinthian Colls., 655 F.3d 984, 

995 (9th Cir. 2011) (“The court considers five factors in assessing the propriety of leave to 

amend—bad faith, undue delay, prejudice to the opposing party, futility of amendment, and 

whether the plaintiff has previously amended the complaint.”). “Prejudice is the touchstone of 

the inquiry under rule 15(a). Absent prejudice, or a strong showing of any of the remaining . . . 

factors, there exists a presumption under Rule 15(a) in favor of granting leave to amend.” 

Eminence Capital, 316 F.3d at 1052 (quotations omitted, italics in original). “The standard for 

granting leave to amend is generous.” Corinthian Colls., 655 F.3d at 995 (quotation omitted). 

 “A proposed amended complaint is futile if it would be immediately subject to 

dismissal.” Nordyke v. King, 644 F.3d 776, 788 n.12 (9th Cir. 2011) (quotation omitted), aff’d on 

reh’g en banc on other grounds, 681 F.3d 1041 (9th Cir. 2012). “Thus, the proper test to be 

applied when determining the legal sufficiency of a proposed amendment is identical to the one 

used when considering the sufficiency of a pleading challenged under Rule 12(b)(6).” Id. 

(quotation omitted). An amendment is futile only if “it is clear . . . that the complaint could not 

be saved by any amendment.” Thinket Ink Info. Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 

1053, 1061 (9th Cir. 2004). 

 Whether to grant leave lies within “the sound discretion of the trial court.” United States 

v. Webb, 655 F.2d 977, 979 (9th Cir. 1981). 

DISCUSSION

 This is plaintiffs’ first attempt to amend their Complaint. Defendant relies entirely on its 

argument that plaintiffs’ proposed amendments are futile, and has not argued any of the other 

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Page 5 – OPINION AND ORDER 

factors that the Court considers in determining whether to grant leave to amend—bad faith, 

undue delay, or prejudice to defendant. Defendant’s failure to attempt a showing of these 

factors, especially prejudice, weighs heavily in favor of the Court’s granting plaintiffs leave to 

amend. 

 While “[f]utility of amendment can, by itself, justify the denial of a motion for leave to 

amend,” Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995), “denial of leave to amend on this 

ground is rare,” Larios v. Nike Retail Servs., Inc., No. 11CV1600-GPC-NLS, 2013 WL 4046680, 

at *5 (S.D. Cal. Aug. 9, 2013). There is a “general preference against denying a motion for leave 

to amend based on futility,” Green Valley Corp. v. Caldo Oil Co., No. 09-CV-04028-LHK, 2011 

WL 1465883, at *6 (N.D. Cal. Apr. 18, 2011), and “[o]rdinarily, courts will defer consideration 

of challenges to the merits of a proposed amended pleading until after leave to amend is granted 

and the amended pleading is filed,” Fair Hous. Council of Cent. Cal., Inc. v. Nunez, No. 

1:10CV02073 LJO DLB, 2012 WL 217479, at *4 (E.D. Cal. Jan. 24, 2012). 

 Because the futility standard mirrors the Fed. R. Civ. P. 12(b)(6) standard, defendant’s 

arguments against plaintiffs amending to add their tortious breach claim are essentially the same 

as defendant would argue had it moved to dismiss the proposed amended complaint for failure to 

state a claim upon which relief can be granted. That is, defendant argues that plaintiffs have not 

pleaded the necessary elements of, nor factual support for, the tortious breach claim, and also 

argues that the tortious breach claim is time-barred. Defendants do not appear to oppose 

plaintiffs’ proposed amendment to the extent it seeks to add certain factual allegations to the 

operative complaint, or add a prayer for punitive damages, and thus amendment would 

presumably not be futile at least as to those proposed amendments. 

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Page 6 – OPINION AND ORDER 

 Thus, four of the relevant factors strongly support granting leave to amend: whether 

plaintiff previously amended, bad faith, undue delay, and prejudice to the opposing party. The 

fifth, futility, could in part weigh against amendment, because, if defendant’s arguments are 

correct, then adding the tortious breach claim (but not plaintiffs’ other desired amendments) 

would be futile. Nonetheless, the Court finds that it would be preferable to consider the futility 

arguments in the context of a motion to dismiss for failure to state a claim, whereby the parties 

could fully brief the sufficiency of plaintiffs’ allegations under the appropriate briefing schedule, 

through a procedural mechanism that would allow optimal focus on those arguments (instead of 

their being first raised only in opposition briefing). The Court therefore will allow plaintiffs 

leave to amend. Defendant may challenge the amended allegations through a motion to dismiss, 

under the applicable time limitations of the Federal Rules of Civil Procedure and the Local 

Rules. See, e.g., Sweet v. Oregon, No. 6:13-cv-0657-AA, 2013 WL 5936386, at *3 (D. Or. Oct. 

30, 2013) (deciding, where plaintiff had moved for leave to amend at the same time defendant 

had moved to dismiss, and defendant had opposed amendment on futility grounds, to grant 

plaintiff leave to amend and to consider defendant’s futility arguments in the context of its 

motion to dismiss); Larios, 2013 WL 4046680, at *5 (“declin[ing] to indulge [defendant’s] 

attempt to convert Plaintiff’s motion to amend into a premature motion to dismiss,” and so 

granting leave to amend while “defer[ring] consideration of challenges to the merits of Plaintiff’s 

[proposed amended complaint] until it has been filed”); Lillis v. Apria Healthcare, No. 12-CV52-IEG KSC, 2012 WL 4760908, at *1 (S.D. Cal. Oct. 5, 2012) (“Defendants fail to justify any 

break from the ordinary here; their arguments to the sufficiency of the proposed pleadings, even 

if merited, remain better left for full briefing on a motion to dismiss.”); Pilavskaya v. Henderson, 

Case 2:16-cv-00374-SU Document 31 Filed 12/06/16 Page 6 of 7
Page 7 – OPINION AND ORDER 

No. CV 11-4075 CAS EX, 2012 WL 3279517, at *5 (C.D. Cal. Aug. 9, 2012) (“Whether [the 

proposed amended] claims are properly pled is better left for a motion to dismiss.”). 

CONCLUSION

 For the foregoing reasons, the Court GRANTS plaintiffs’ Motion for Leave to File an 

Amended Complaint. 

IT IS SO ORDERED. 

 DATED this 6th day of December, 2016. 

 /s/ Patricia Sullivan 

 PATRICIA SULLIVAN 

 United States Magistrate Judge 

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