Opinion ID: 673040
Heading Depth: 2
Heading Rank: 1

Heading: Denial of Leave to File an Amended Complaint

Text: 14 Leave to amend a complaint should be freely granted by a district court when justice so demands. Fed.R.Civ.P. 15(a); DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir.1987). Nonetheless, a district court may deny a motion for leave to amend a complaint when it finds that the amendment constitutes an exercise in futility. Id. To the extent that Faust was motivated by a desire to cite additional legal authority in support of his defenses against liability to the government, he was free to cite whatever legal authority he wanted to cite without amending his complaint. To the extent that he sought to plead a claim against MarAd, he had no right to do so. 15 Faust sought to assert two types of claims against MarAd: contract claims and tax claims. The contract claims essentially allege that MarAd is liable to Faust in the amount of the unpaid taxes because it breached its loan agreement with Faustug. The district court could not have asserted jurisdiction over those claims because they are contract claims against the United States that exceed $10,000. 28 U.S.C. Sec. 1346(a)(2); see 46 U.S.C. Secs. 1601-1610 (MarAd is a United States agency); DSI Corp. v. Secretary of Hous. & Urban Dev., 594 F.2d 177, 180 (9th Cir.1979). 16 The court also could not have asserted jurisdiction over Faust's tax claim against MarAd. Before it can be sued, the United States must waive its sovereign immunity. E.J. Friedman Co., Inc. v. United States, 6 F.3d 1355, 1357 (9th Cir.1993). Under 26 U.S.C. Sec. 3505, the government may collect an employer's unpaid withholding taxes from the employer's lenders under certain circumstances. See Jersey Shore State Bank v. United States, 479 U.S. 442, 448-49, 107 S.Ct. 782, 786, 93 L.Ed.2d 800 (1987). The statute does not, however, provide for a waiver of sovereign immunity in the event that the lender is a United States agency. Without a waiver, the district court had no subject matter jurisdiction over Faust's tax claims. E.J. Friedman, 6 F.3d at 1357. Because the district court could not have asserted jurisdiction over any of Faust's proposed new claims, adding them to his complaint would have been an exercise in futility. The district court did not abuse its discretion.