United States District Court, D. Utah
IBC ADVANCED TECHNOLOGIES, INC. & STEVEN R. IZATT, Plaintiffs,
UCORE RARE METALS, INC., JIM MCKENZIE, and PETER MANUEL, Defendants. Dismissed Utah State Court Complaint Proposed Amended Complaint
C. Nielson, Jr. District Judge
MEMORANDUM DECISION AND ORDER DENYING MOTION FOR
LEAVE TO FILE AMENDED COMPLAINT
B. Pead United States Magistrate Judge
case is referred to the undersigned pursuant to 28 U.S.C.
§ 636(b)(1)(A) from District Judge Howard C. Nielson.
(ECF No. 26.) This matter is before the court on
Plaintiffs' Motion for Leave to File Amended Complaint.
(ECF No. 43.) Plaintiffs have added a party to its
Amended Complaint as well as several additional causes of
action. The motion is fully briefed and the court has
carefully reviewed the moving papers submitted by the
parties. Pursuant to DUCivR 7-1(f), oral argument is
unnecessary and the court will determine the motions on the
basis of the written papers.
IBC Advanced Technologies, Inc., a privately held corporation
incorporated under the laws of Utah, and Defendant Ucore Rare
Metals, Inc., a company incorporated under the laws of
Alberta, Canada, entered into a series of contracts to
explore business interests.Among these agreements were a
confidentiality agreement, a research agreement, a
cooperating agreement and an option agreement. See
Complaint pp. 8-26. As is sometimes the case, things did not
go as planned between the parties and they ended up in court
in Nova Scotia, Canada. Plaintiffs challenged jurisdiction in
the Canadian court and after losing that challenge,
Plaintiffs filed two suits in the Utah state courts against
Defendants. One complaint is based in tort and the other
based in contract. On April 3, 2019, Ucore removed the
contract action to federal court. The other suit remains in
state court (Utah state court case). In the federal action
here, Plaintiff brings multiple causes of action including,
breach of contract, breach of the implied covenant of good
faith and fair dealing, negligent misrepresentation, multiple
fraud claims, unjust enrichment and breach of fiduciary
duties. Ucore allegedly breached the parties' contracts
by among other things, disclosing confidential information
and using trademarks without authorization.
February 27, 2019, Defendants sought to dismiss the Utah
state court case for lack of personal jurisdiction.
Defendants argued the claims were based on non-Utah conduct
and therefore, Utah lacked jurisdiction over the claims. Utah
state court judge Laura Scott agreed with Defendants and
found the Utah state court lacked general and specific
jurisdiction over the individual defendants. The Utah court
also found it lacked general jurisdiction and specific
jurisdiction over Ucore. Following Judge Scott's oral
ruling that the Utah courts lacked jurisdiction, Plaintiffs
requested leave to file an amended complaint. Judge Scott
denied this motion. In rejecting the state court motion to
amend, Judge Scott found it was untimely, that Plaintiffs
failed to offer any justification for not including the
proposed claims in the original Complaint, and that
Defendants would be prejudiced by allowing the amended
complaint. Judge Scott also cited to this case as reasoning
for denying the Motion to Amend. The “proposed claims -
or similar versions of these claims - were already being
asserted in the Federal Action.” Utah State Court
decision p. 13, attached as Ex. C to Def.s' Op, ECF
No. 58-3. Additionally, Judge Scott found Defendants
were prejudiced because they were already “defending
the Federal Action, where Plaintiffs have asserted similar
claims against the same parties based on the same alleged
wrongdoing.” Id. p. 13-14. Judge Scott
determined that justice is not served by forcing Defendants
to “defend the same claims at the same time in two
different forums.” Id. p. 14. And finally, the
proposed Amended Complaint would still be futile because the
Utah state court lacked jurisdiction over any of the
Defendants. Plaintiff's state case was accordingly
dismissed without prejudice and on October 18, 2019,
Plaintiffs appealed Judge Scott's decision to the Utah
Court of Appeals. That appeal is still pending.
relevant to this case is Plaintiffs representation.
Plaintiffs state that if they “are permitted to amend
their claims in this Court, … Plaintiffs plan to
withdraw their appeal and fully litigate all claims in one
court before one judge, just as Plaintiffs had planned before
Ucore decided to litigate the first case in state court and
remove this case to federal court.” Reply pp. 6-7,
ECF No. 61.
15(a)(2) provides that “[t]he court should freely give
leave [to amend] when justice so requires.”
Fed.R.Civ.P. 15(a)(2). “The district court has
‘wide discretion to recognize a motion for leave to
amend in the interest of a just, fair or early resolution of
litigation.'” Bylin v. Billings, 568 F.3d
1224, 1229 (10th Cir. 2009) (quotingCalderon v. Kan.
Dep't of Soc. & Rehab. Servs., 181 F.3d 1180,
1187 (10th Cir. 1999)). “Refusing leave to amend is
generally only justified upon 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.”
Id.(quoting Frank v. U.S. West, Inc., 3
F.3d 1357, 1365 (10th Cir. 1993)).
procedural posture of this case creates a fairly unique
situation. Seemingly at odds here are legal doctrines that
seek to aid the integrity of the legal process: jurisdiction,
res judicata, collateral estoppel and judicial estoppel.
Defendants argue leave to amend is futile here because of
Judge Scott's decision in the state case regarding
personal jurisdiction. “Judge Scott's ruling that
Utah lacks jurisdiction over IBC's claims is res judicata
on the issue of personal jurisdiction over these claims in
Utah.” (ECF No. 60 p. 5.) Defendants argue the
factors for res judicata are satisfied here. Defendants
further take issue with the timeliness of Plaintiffs motion,
argue it evidences bad faith, is prejudicial and poses a risk
of duplicative litigation because Plaintiff “appealed
Judge Scott's Order” (ECF No. 60 p. 11.)
and that appeal is still pending.
stark contrast to Defendants reliance on res judicata,
Plaintiffs rely on the doctrine of judicial estoppel, arguing
Defendants should be estopped from taking contrary positions.
In the state court proceedings Defendants argued the state
court “should defer to the federal district court where
the newly alleged facts have been pending for nearly six
months” and “plaintiffs can walk across the
street and ask for leave in the already pending case to amend
their complaint to account for any non-duplicative
claims.” Def.s' Op p. 8 filed in the state case,
attached as exhibit 1 to Plaintiffs' reply, ECF No.
61-1. Now, presumably according to Plaintiffs, this is
exactly what they have done-walked across the street and
sought to amend their complaint. Thus, the court should
reject Defendants contrary arguments. The court now turns to
the parties' arguments.
Judicial Estoppel is not appropriate in this case
estoppel “is an equitable doctrine invoked by a court
at its discretion.” Russell v. Rolfs, 893 F.2d
1033, 1037 (9th Cir. 1990). “'[W]here a party
assumes a certain position in a legal proceeding, and
succeeds in maintaining that position, he may not thereafter,
simply because his interests have changed, assume a contrary
position, especially if it be to the prejudice of the party
who has acquiesced in the position formerly taken by
him.'” New Hampshire v. Maine, 532 U.S.
742, 749 (2001) (quoting Davis v. Wakelee, 156 U.S.
680, 689, 15 S.Ct. 555, 39 L.Ed. 578 (1895)). Judicial
estoppel, “generally prevents a party from prevailing
in one phase of a case on an argument and then relying on a
contradictory argument to prevail in another phase.”
Pegram v. Herdrich, 530 U.S. 211, 227, n. 8 (2000);
see 18 Moore's Federal Practice § 134.30,
p. 134-62 (3d ed. 2000) (“The doctrine of judicial
estoppel prevents a party from asserting a claim in a legal
proceeding that is inconsistent with a claim taken by that
party in a previous proceeding”); 18 C. Wright, A.
Miller, & E. Cooper, Federal Practice and Procedure
§ 4477, p. 782 (1981) (hereinafter Wright)
(“absent any good explanation, a party should not be
allowed to gain an advantage by litigation on one theory, and
then seek an inconsistent advantage by pursuing an
incompatible theory”). Judicial estoppel “is most
commonly applied to bar a party from making a factual
assertion in a legal proceeding which directly contradicts an
earlier assertion made in the same proceeding or a prior
one.” Russell, 893 F.2d at 1037.
the circumstances under which judicial estoppel is invoked
are unlikely to be reducible to a general formulation or
principle, seeAllen v. Zurich Ins. Co.,
667 F.2d 1162, 1166 (4th Cir. 1982), several factors provide
guidance. First, a party's later position must be
“clearly inconsistent” with its earlier position.
SeeNew Hampshire, 532 U.S. at 750;
United States v. Hook, 195 F.3d 299, 306 (7th Cir.
1999). Second, “courts regularly inquire whether the
party has succeeded in persuading a court to accept that
party's earlier position, so that judicial acceptance of
an inconsistent position in a later proceeding would create
'the perception that either the first or the second court
was misled.'” New Hampshire, 532 U.S. at
750 (quoting Edwards v. Aetna Life Ins. Co., 690
F.2d 595, 599 (6th Cir. 1982)). In essence, the second factor
is concerned with the threat to judicial integrity. Third,
courts look to “whether the party seeking to assert an
inconsistent position would ...