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Kennedy v. Protection One Alarm Monitoring, Inc.

United States District Court, D. Utah, Central Division

May 4, 2017

BRANDON KENNEDY, an individual, Plaintiff,
v.
PROTECTION ONE ALARM MONITORING, INC., a Delaware corporation doing business in Utah, BRITE ENERGY SOLAR, INC., a Delaware corporation doing business in Utah, and JOHN DOES, individual or entities 1 THROUGH 10, all whose names are unknown, Defendant.

          MEMORANDUM DECISION AND ORDER • GRANTING [25] MOTION FOR LEAVE TO AMEND COMPLAINT AND • GRANTING IN PART AND DENYING IN PART [26] MOTION TO EXTEND TIME PERIOD TO AMEND PLEADINGS

          DAVID NUFFER DISTRICT JUDGE.

         Plaintiff Brandon Kennedy moves to amend his complaint.[1] Relatedly, Kennedy moves to extend the time for amending the complaint.[2] Defendants Protection One Alarm Monitoring, Inc. and Brite Energy Solar (collectively “defendants”) oppose both motions.[3] Kennedy replies in support of both motions.[4]

         For the reasons stated below, the Motion to Extend Time is GRANTED and the Motion to Amend is GRANTED IN PART and DENIED IN PART.

         Table of Contents

         Background ___ 2

         Discussion ___ 3

1. Kennedy has demonstrated good cause to modify the schedule___ 3
2. Kennedy may make most of the amendments he proposes___ 5
A. There was no undue delay and the amendments do not cause undue prejudice___ 6
B. Some amendments are futile, but most are not.___ 7
Order___ 12

         BACKGROUND

         Defendants filed a motion to dismiss.[5] After that motion was fully briefed, a Docket Text Order was entered granting the motion and directing defendants' counsel to submit a proposed order to that effect.[6]

         On October 19, 2016, Kennedy filed a motion to reconsider the Docket Text Order and a motion for leave to amend the complaint.[7] The deadline for Kennedy to amend the complaint was October 21, 2016.[8] The Order Granting [7] Motion to Dismiss and Denying [20] Motion for Reconsideration and Motion for Leave to Amend Complaint (Order), [9] stated:

Kennedy . . . argue[s] that there should be equitable relief from the clear terms of the Earn-Out agreement . . . . This is sufficient challenge to preserve the portion of the claim for unjust enrichment relating to the Earn-Out Agreement. [This challenge] was not acknowledged in the earlier [ruling granting the motion to dismiss in Docket Text Order] because of its placement in the complaint: Kennedy was attacking the validity of the Earn-Out agreement in the very cause of action seeking to enforce it. This can easily be remedied in a future amended complaint.[10]

         Because Kennedy failed to attach the proposed amended complaint as an exhibit to his motion and failed to “give adequate notice to the district court and to the opposing party of the basis of the proposed amendment, ” the Order stated: “Kennedy's motion for leave to amend the complaint is denied without prejudice.”[11]

         DISCUSSION

         1. Kennedy has demonstrated good cause to modify the schedule.

         Kennedy argues that he should be granted leave to extend the deadline for amending the complaint because it is “[i]n the interests of justice and to simply correct a procedural error made by counsel.”[12]

         Defendants respond that an attorney's failure to follow the rules does not amount to good cause.[13]

         “[P]arties seeking to amend their complaints after a scheduling order deadline must establish good cause for doing so.”[14] That is, parties seeking to amend their complaint after a scheduling order deadline expires must first satisfy Federal Rule of Civil Procedure 16(b)(4), which states that a “schedule may be modified only for good cause and with the judge's consent.” “Rule 16's good cause requirement may be satisfied, for example, if a plaintiff learns new information through discovery or if the underlying law has changed.”[15] The Advisory Committee Notes for the 1983 Amendments to Federal Rule of Civil Procedure 16 indicate that changes to the scheduling order are considered under the lower “good cause” standard to encourage parties to expeditiously resolve litigation:

[T]he court may modify the schedule on a showing of good cause if it cannot reasonably be met despite the diligence of the party seeking the extension. Since the scheduling order is entered early in the litigation, this standard seems more appropriate than a “manifest injustice” or “substantial hardship” test. Otherwise, a fear that extensions will not be granted may encourage counsel to request the longest possible periods for completing pleading, joinder, and discovery.

         In that spirit, courts have considered various factors for determining whether to grant a motion to extend deadlines. Though the primary “consideration is whether the moving party can demonstrate diligence, ” other factors include “whether allowing the amendment of the pleading at this stage of the litigation will prejudice defendants, ”[16] and whether the non-moving party has had sufficient notice of the asserted claim before the deadline expired.[17]

         Kennedy should have attached the proposed amended complaint as an exhibit to his Motion to Reconsider. Nevertheless, failure to do so does not justify denying his Motion to Extend Time. The defendants had notice of Kennedy's intention to bring the claim for promissory estoppel before the deadline for amending the pleadings expired. In the Motion to Reconsider, Kennedy stated, “If permitted to amend his Complaint, Plaintiff could add an additional claim for promissory estoppel.” And the defendants will experience little if any prejudice from granting this extension. The litigation is still relatively young.[18]

         Defendants cite numerous cases they claim show the deadline should not be extended.[19]The facts in each case are distinguishable.[20] The plaintiffs in those cases either waited an excessive amount of time to file their motion to amend or failed to timely amend due to strategically relying on the defendant's counterclaim that the defendant eventually dismissed. Here, Kennedy filed the original motion to amend two days before the deadline.[21] After the Order was entered denying the motion to amend, [22] Kennedy filed this motion within ten days.[23]This is not the delay or strategy experienced in the cited cases. This is a prompt effort to correct a blunder. Defendants had sufficient notice of Kennedy's intention to amend the complaint. And, defendants were on sufficient notice of Kennedy's intention to amend the complaint to include a cause of action for promissory estoppel before the deadline to amend actually expired.

         2. Kennedy may make most of the amendments he proposes.

         The defendants argue that most of the proposed amendments should be denied because they were unduly delayed, [24] they unduly prejudice defendants, [25] or they are futile.[26]

         Kennedy responds that there is necessarily no undue delay if the motion to extend the deadline to amend the complaint is granted;[27] that defendants will not be prejudiced because he is not rotating through theories to avoid dismissal;[28] and that the amendments are not futile.[29]

         Federal Rule of Civil Procedure 15(a)(2) states that “a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.” A motion for leave to amend should be denied if there is “a showing of undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of amendment.”[30]

         A. There was no undue delay and the amendments do not cause undue prejudice.

         Though Kennedy may have been aware of the facts underlying the claim for promissory estoppel from the beginning, “[t]he court should freely give leave when justice so requires.”[31]Kennedy could have avoided most of the work involved in this case thus far if the original complaint were better crafted. But “litigation is messy.”[32] Stuff happens. Or sometimes it does not.

         The defendants will not be prejudiced by allowing these amendments. Most of the amendments were made simply to conform with the prior Order. And though promissory estoppel is an entirely new cause of action, as discussed more below, the defendants had notice that that the complaint would be amended to include it. Contrary to defendants' assertion, [33] it does not yet appear that Kennedy is “sequentially rotat[ing] through alternate claims in order to find viable ones.”[34] This is essentially the first motion to amend the complaint, and Kennedy is only adding one cause of action.

         B. Some amendments are futile, but most are not.

         “A proposed amendment is futile if the complaint, as amended, would be subject to dismissal.”[35]

         Three new paragraphs in the claim for unjust enrichment are futile.

         Kennedy adds several new paragraphs to the first cause of action for unjust enrichment.[36]Defendants oppose adding ...


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