Opinion ID: 685627
Heading Depth: 2
Heading Rank: 5

Heading: Dismissal of Midwest

Text: 109 The Becherer plaintiffs filed their original complaint on August 21, 1989. Between that date and December 17, 1990, the parties actively pursued this litigation, taking depositions and filing numerous motions seeking both discovery and dismissal of various claims. On December 17, 1990, the District Court issued an order requiring the Becherer plaintiffs to file an amended complaint, but limited the amendment to possible breach of contract claims against the defendants. 8 110 On February 1, 1991, the Becherer plaintiffs filed their amended complaint. This complaint, however, was not limited to breach of contract actions against the then-existing defendants. Rather, the Becherer plaintiffs added a new party, Midwest, and raised breach of contract actions against Midwest for its part in the premature sale closing. On April 3, 1991, Midwest filed a motion to be dismissed as a misjoined party. 111 Due to various delays apparently connected with the proposed settlement proceedings, the District Court did not rule on this motion until August 7, 1992. On that date, as part of an omnibus opinion and order, the District Court granted Midwest's motion to dismiss, stating: 112 Plaintiff class 9 added Midwest to their amended complaint in violation of FRCP 15(a); without leave of this court as required by FRCP 21; and in contravention to my January 7, 1991 Order. Furthermore, they knew as early as April, 1991 that Midwest objected to being added as a defendant, yet took no corrective action until May, 1992. At this stage of the litigation it would simply be unjust to add Midwest as a defendant. This case is nearly three years old, and the paperwork submitted thus far has surely decimated a small forest. Nothing suggests the claim against Midwest is newly discovered; indeed, an escrow closing is a normal part of any real estate transaction. Last, the claims against Midwest, if any remain viable after this Opinion, are discrete and severable. 113 Becherer, 799 F.Supp. at 775. The District Court dismissed the claim without prejudice. 114 The Becherer plaintiffs argue that this decision was in error. In support of this argument, they first contend that, under Fed.R.Civ.P. 15(a), they are allowed to amend as a matter of course as to defendants who have not yet filed a responsive pleading. According to the Becherer plaintiffs, as of February 1, 1991, Midwest had not filed a responsive pleading, so the Becherer plaintiffs could add them without prior court permission. 115 This argument is specious. Midwest was not a party to the suit before the Becherer plaintiffs filed their amended complaint. If we accept this interpretation of Rule 15(a), a plaintiff could always add a new party, at any point in the litigation, without court permission. 116 The Becherer plaintiffs also attempt to refute the rest of the District Court's reasons by arguing that they did not unduly delay in responding to Midwest's motion to dismiss, that adding Midwest did not prejudice Midwest, and that the joinder served judicial economy. The Becherer plaintiffs argue that Midwest was present at almost all proceedings after it was joined as a party, and thus would not have been prejudiced. 117 We first note, as did the District Court, that the Becherer plaintiffs joined Midwest as a party without seeking prior court permission, as is required under either Rules 15(a) or 21. If they had been denied such permission, we would review the denial for an abuse of discretion. Thus, it logically follows that we use the same standard in reviewing the district judge's decision to dismiss Midwest. 118 We find that the District Court did not abuse its discretion. The claims against Midwest are related to, but easily divisible from, the claims against the other defendants. The District Court also explicitly found that allowing the Becherer plaintiffs to add Midwest would be prejudicial to Midwest. As the Ninth Circuit has stated, [a]mending a complaint to add a party poses an especially acute threat of prejudice to the entering party. DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir.1987). Accordingly, the major objective of courts faced with this situation should be to avoid prejudice to the party to be added. Id. 119 The Becherer plaintiffs argue that Midwest would not be prejudiced because its attorneys attended almost every proceeding after it was added. This is not, however, the proper inquiry. Instead, our focus should be on the degree to which Midwest took an active role in the litigation and whether its attorneys were simply observers or whether they actually invested substantial amounts of time in preparing Midwest's case. Simply acting as an observer and monitor would not have prepared Midwest to jump into complicated commercial litigation at this late stage in the proceedings. The District Court was in the best position to make this determination, and it found that Midwest would be prejudiced if it were not dismissed. The Becherer plaintiffs have presented us with no reason to conclude that this was an abuse of discretion.