Opinion ID: 2377553
Heading Depth: 2
Heading Rank: 1

Heading: the district court abused its discretion when it denied mr. hudgens leave to amend his complaint because the court failed to set forth any reasons for the denial

Text: ¶ 18 Rule 15(a) of the Utah Rules of Civil Procedure sets forth the standard for granting leave to amend a complaint. It states that leave shall be freely given when justice so requires. Underlying rule 15(a) is the court's ultimate goal [of having] the `real controversy between the parties presented, their rights determined, and the cause decided.' [10] But the liberal standard underlying rule 15(a) is not without boundaries. Where an amended complaint is sought as the result of a dilatory motive, bad faith, or unreasonable neglect, a district court has discretion to deny leave to amend. [11] Because a district court is best positioned to evaluate the motion to amend in the context of the scope and duration of the lawsuit, we will reverse denial of leave to amend only if the district court abused its discretion. [12] ¶ 19 But to guarantee that the purposes underlying rule 15 are served, such deference is not appropriate where the district court's order denying leave to amend does not permit meaningful appellate review. [13] When a district court denies leave to amend without adequately explaining its reasons for doing so, this court has no way of knowing whether the district court properly balanced the purposes underlying rule 15's liberality with competing, but nevertheless legitimate, reasons for denying leave to amend. [14] Accordingly, we will treat a district court's order as an abuse of discretion when the district court fails to articulate its reasoning for denying leave to amend, unless the court's reasoning is apparent from the record. [15] With regard to a similar rule adopted by federal courts, the Supreme Court has stated the grant or denial of an opportunity to amend is within the discretion of the District Court, but outright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely abuse of that discretion and inconsistent with the spirit of the ... [r]ules. [16] Thus, when a district court does not provide any reasons for denying leave to amend, the denial is a per se abuse of discretion. [17] ¶ 20 In this case, the district court's order denying Mr. Hudgens leave to amend contains virtually no reasoning. The only reasoning given in the order is that the district court denied leave based on the oral arguments, the briefs, and for good cause. This level of detail is simply insufficient to permit meaningful appellate review. In a prior case on this point, we acknowledged the possibility that the rule we apply here would not prevent review of the district court's judgment if the reasons supporting dismissal of the complaint were apparent from the record. [18] But there is no basis for upholding the district court's decision that is apparent on this record. As discussed, Mr. Hudgens's first attempt at obtaining leave to amend was unsuccessful because he failed to formally move the court for leave to amend. [19] The reasons that supported that decision no longer applied when the district court denied Mr. Hudgens leave to amend the second time. By the second time leave was denied, Mr. Hudgens had corrected his earlier mistake by correctly filing a formal motion for leave to amend. ¶ 21 Thus, the district court's earlier rationale simply no longer applied at the time it signed the order from which Mr. Hudgens appeals. Nor was it sufficient for the district court merely to cite the arguments set forth in the briefs and oral arguments as support for its decision. Like the reasoning set forth in the court's prior order, it is not clear that all of the arguments set forth in the parties' motions and at oral arguments would provide legitimate justification for the district court's decision. And without any indication in the court's order of the precise reasoning it adopted, we cannot meaningfully review whether that reasoning was correct. ¶ 22 The district court's failure to state reasons for denying Mr. Hudgens leave to amend requires both this court and the parties to speculate as to the district court's reasons for the denial. This makes it impossible for us to determine whether the district court properly complied with rule 15. In such circumstances, consistent with the liberal standard underlying rule 15(a), the district court's decision is deemed to be an abuse of discretion. ¶ 23 In the past, when this court has reversed a district court's denial of leave to amend for failure to adequately explain its reasoning, we have remanded the case to the district court with instructions to provide the omitted reasoning. [20] In this case, we find it appropriate to instruct the district court to grant Mr. Hudgens the leave he seeks and to proceed with the case based on Mr. Hudgens's amended complaint. ¶ 24 We adopt this course of action for two reasons. First, one consequence of the district court's failure to set forth its reasoning is that there is no indication that the district court found Mr. Hudgens's actions to be the result of a dilatory motive, bad faith, or unreasonable neglect. [21] In our own review of the record, we have found no evidence that denying leave on these grounds would have been appropriate. Second, and more importantly, it is unclear that Mr. Hudgens was even required to seek leave to amend prior to filing his motion. Under rule 15(a), Mr. Hudgens was entitled to amend his pleading once as a matter of course at any time before a responsive pleading [was] served. [22] A motion to dismiss is not a responsive pleading. [23] Thus, no action by Prosper had cut off Mr. Hudgens's right to amend as a matter of course. Accordingly, on remand, the district court is instructed to grant Mr. Hudgens leave to amend his initial complaint. ¶ 25 Finally, we pause to note the somewhat unique timing of the events in this case. In February 2009, we issued an opinion in Helf v. Chevron, U.S.A., Inc . [24] In that case, we addressed in some detail the intentional injury exception to the exclusivity provision of the Workers Compensation Act. [25] The issues addressed in Helf are of crucial importance to many of Mr. Hudgens's claims. [26] But because Helf was issued after the district court dismissed Mr. Hudgens's complaint, his substantive claims were evaluated without the benefit of our most recent consideration of these issues. Mr. Hudgens points out that we have the ability to independently evaluate the legal sufficiency of the claims he set forth in his initial complaint and to consider Helf in doing so. ¶ 26 We choose not to reach the merits of Mr. Hudgens's claims because of the posture of this case. Specifically, the briefing before this court has focused on the merits of two different complaints and on various reasons why both of those complaints either were or were not sufficient. Thus, the status of the law since Helf was decided has been presented to us in the context of this case's unique procedural background. In these circumstances, we conclude that, if the legal sufficiency of the complaint is challenged again on remand, examination of that complaint will best be accomplished by the district court. On remand, the parties will be able to focus their attention solely on the meritoriousness of the claims in light of the facts the parties are able to prove, instead of on how the claims relate to the district court judge's exercise of discretion. We are confident that, on remand, the district court's treatment of Mr. Hudgens's claims will appropriately account for our holding in Helf and any other developments in the relevant law.