United States District Court, D. Utah, Northern Division
MEMORANDUM DECISION AND ORDER DENYING MOTION TO AMEND
NUFFER UNITED STATES DISTRICT JUDGE.
United States of America filed a motion (the
“Motion”) to amend its complaint to add a new
cause of action against two new parties. For the reasons
stated below, the Motion1 is DENIED.
February 18, 2016, the United States commenced this lawsuit
asserting two causes of action.2 The United States' first
cause of action seeks to reduce to judgment federal tax
assessments against Defendants Ronald B. Talmage and Annette
C. Talmage. The United States' second cause of
action seeks to foreclose federal tax liens against certain
real property (the “Liberty Property”) in which
Defendants Western Land & Livestock LLC and Western
Reserve Mortgage LLC (collectively, the “Western
Entities”) assert an interest.
Talmages failed to appear or defend themselves in this case,
and a default judgment was entered against them on August 26,
2016, in the principal amount of $10, 813,
740.19. As a result, “the only remaining
claim in the Complaint is whether the United States may
foreclose the Liberty Property under 26 U.S.C. § 7403 to
satisfy the Talmages' tax debts.” Also remaining is
the first cause of action of the Western Entities'
counterclaim, which seeks to quiet title to the Liberty
Property as against the United States. The Western
Entities' second cause of action, which sought civil
damages from the United States for not releasing liens
affecting the Liberty Property, was recently
18, 2018, after approximately two years of extended and
expansive discovery, the United States filed the instant Motion
seeking leave to add a cause of action to foreclose on
various promissory notes held by two newly proposed parties,
Heng Cheong Pacific Limited (“HCPL”) and New
Century Properties Limited (“NCPL”). If amendment
is not allowed, the United States acknowledges that it can
simply file a separate “lawsuit against HCPL and NCPL
to obtain the . . . same relief.”
cutoff date for filing a motion to amend the pleadings or to
join additional parties was March 8, 2017.
to amend pleadings should be given freely “when justice
so requires.” In making this determination, courts
enjoy broad discretion. Reasons for denying amendment
include, but are not limited to, “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, futility of amendment,
etc.” Because the United States' proposed
amendment is both unduly prejudicial and untimely, justice
does not require that it be allowed.
United States' proposed amendment is unduly prejudicial.
United States' proposed amendment is prejudicial because
it concerns “a subject matter different from what was
set forth in the complaint and raise[s] significant new
factual issues.” While the subject of the complaint is
the Western Entities' interest in the Liberty Property,
the proposed amendment concerns-and raises significant new
factual issues regarding-HCPL's and NCPL's interests
in various promissory notes. The amendment does not seek to
add new claims against the Western Entities. Instead, it
seeks to bring an entirely separate claim against two new
parties-which, if allowed, would substantially complicate
this proceeding, thwart the discovery schedule, add a year or
more to the duration of this case, require the parties to
backtrack and redo work already completed, and thereby unduly
prejudice the Western Entities.
United States' proposed amendment is untimely.
“[l]ateness does not of itself justify the denial of
[an] amendment, ” “denial of leave to amend is
appropriate when the party filing the motion has no adequate
explanation for the delay.”
United States' sole explanation for its delay is that its
“proposed amended complaint is the result of
information . . . gathered in discovery and expert
analysis.” While that may true, it is also true
that the United States possessed this information for more
than a year before it filed the Motion. Indeed, the
United States was aware of the Talmages' involvement with
NCPL before ...