Krogstad v. Nationwide Biweekly Administration, Inc. ( 2019 )

1 2 3 UNITED STATES DISTRICT COURT 4 DISTRICT OF NEVADA 5 * * * 6 DEAN KROGSTAD, Case No. 2:16-cv-00465-APG-CWH 7 Plaintiff, ORDER 8 v. 9 NATIONWIDE BIWEEKLY ADMINISTRATION, INC., et al., 10 Defendants. 11 12 This matter is before the Court on Plaintiff’s Motion for Leave to File Amended 13 14 Complaint (ECF No. 100), filed on April 10, 2019, Defendants’ Opposition (ECF No. 102), filed 15 on April 23, 2019, and Plaintiff’s Reply (107), filed on April 30, 2019. 16 This matter is also before the Court on Defense Counsel’s Motion to Withdraw (ECF No. 17 #114), filed July 29, 2019, Defendants’ Motion for Extension of Time to Submit Discovery Plan 18 (ECF No. 115), filed on July 29, 2019, Plaintiff’s Opposition (ECF No. 117), filed on August 1, 19 2019, and Defendants’ Reply (ECF No. 119), filed on August 7, 2019, along with Defendants’ 20 21 Motion for Sixty Days Within New Counsel for Defendants May Enter An Appearance (ECF No. 22 116), filed July 29, 2019. 23 I. DISCUSSION 24 Rule 15(a)(2) of the Federal Rules of Civil Procedure, regarding the amendment of 25 pleadings, directs that “[t]he court should freely give leave when justice so requires.” The Ninth 26 Circuit Court of Appeals has repeatedly cautioned courts in this circuit to “liberally allow a party 27 to amend its pleading.” Sonoma Cnty. Ass'n of Ret. Emps. v. Sonoma Cnty., 708 F.3d 1109, 1117 1 (9th Cir. 2013). “Courts may decline to grant leave to amend only if there is strong evidence of 2 ‘undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure 3 deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue 4 of allowance of the amendment, or futility of amendment, etc.’” Id. at 1117 (quoting Foman v. 5 Davis, 371 U.S. 178, 182 (1962)). 6 When leave to amend is sought after the amendment deadline in the court’s scheduling 7 order has expired, the movant must also show good cause to reopen the amendment period and 8 excusable neglect for the delay. See Fed. R. Civ. P. 6(b)(1)(B) (stating “the court may, for good 9 10 cause, extend the time . . . on motion made after the time has expired if the party failed to act 11 because of excusable neglect.”). In evaluating excusable neglect, the court weighs: “(1) the 12 danger of prejudice to the non-moving party, (2) the length of the delay and its potential impact 13 on judicial proceedings, (3) the reason for the delay, including whether it was within the 14 reasonable control of the movant, and (4) whether the moving party’s conduct was in good faith.” 15 Pincay v. Andrews, 389 F.3d 853, 860 (9th Cir. 2004) (citing Pioneer Investment Services Co. v. 16 Brunswick Associates Limited Partnership, 507 U.S. 380, 395 (1993)). The weight assigned to 17 18 these factors is left to the court’s discretion. Id. 19 Here, the deadline to amend and add a party expired on May 13, 2017, almost two years 20 prior to the date of the filing of the instant motion to amend. (ECF No. 75). Defendants argue the 21 expiration of such amount of time and the fact that the deadline was extended several times prior 22 to that deadline warrants denial of Plaintiff’s request. However, shortly after the expiration of the 23 subject deadline, a stay of the case was ordered on July 10, 2017 (ECF No. 83). Plaintiff 24 25 contends that it was not until February 2019 that it became aware of the need to amend and 26 promptly moved for leave to amend after the stay was lifted on April 5, 2019. (ECF No. 96). 27 Because Plaintiff was not fully aware of the basis for the amendment until after the deadline 1 passed and the stay was in effect, Plaintiff could not have filed a timely motion to enlarge the 2 deadline before it expired. There is no basis for a finding that the timing of Plaintiff’s motion to 3 amend shows undue delay, bad faith, or dilatory motive on its part. Plaintiff has sufficiently 4 demonstrated that the delay was the result of deposition testimony during the stay and a court 5 finding in another action issued on September 8, 2017. 6 Defendants also argue they will be prejudiced by the amendment, but the burden rests on 7 Defendant to demonstrate such and they have not met that burden. Plaintiff represents that no 8 discovery has taken place to date with no depositions and no dispositive motions filed. (ECF no. 9 10 100, 11-12). Indeed, the parties have yet to file a new discovery plan subsequent to the stay being 11 lifted. Defendants place emphasis on the time period between the filing of the case and the 12 entering of the stay as the basis for them being prejudiced. The passage of time is not reason 13 enough to preclude amendment. See, e.g., Roberts v. Arizona Bd. of Regents, 661 F.2d 796, 798 14 (9th Cir. 1981) (“Ordinarily, leave to amend pleadings should be granted regardless of the length 15 of time of delay by the moving party absent a showing of bad faith by the moving party or 16 prejudice to the opposing party.”). Moreover, the statute of limitations has not expired on 17 18 Plaintiff’s breach of contract claim. 19 Defendants’ futility arguments are also unpersuasive. When a court can “conceive of 20 facts that would render plaintiff’s claim viable,” or “it appears at all possible that the plaintiff can 21 correct the defect,” an amendment should not be found futile. Balistreri v. Pacifica Police Dep't, 22 901 F.2d 696, 701 (9th Cir. 1988) (internal quotation marks and citations omitted). Defendants 23 have not shown that Plaintiff could not state a plausible claim, just that they expect Plaintiff 24 25 cannot ultimately prove them. Plaintiff includes sufficiently detailed factual allegations regarding 26 Nevada’s alter-ego statute at this stage to permit amendment and add Mr. Lipsky as a defendant. 27 1 (ECF No. 100-1, 11-12). Thus, the court finds good cause to reopen the amendment period and 2 excusable neglect for the delay. 3 In addition, defense counsel requests leave to withdraw as counsel of record for 4 Defendants Nationwide Biweekly Administration, Inc. and Loan Payment Administration, LLC, 5 due to Defendants’ representation that they will be unable to pay counsel. Pursuant to Local Rule 6 IA 11-6(b), “[n]o attorney may withdraw after appearing in a case except by leave of the court 7 after notice has been served on the affected client and opposing counsel.” All affected parties, 8 including Plaintiff,1 have been made aware of the motion, and there is good cause for withdrawal. 9 10 However, Defendants are corporate entities must retain new counsel if they intend to continue to 11 litigate this matter. A corporation may appear in federal court only through licensed counsel. 12 U.S. v. High Country Broad. Co., Inc., 3 F.3d 1244, 1245 (9th Cir. 1993). 13 Given the request to withdraw, Defendants also request an extension of 60 days to the July 14 29, 2019 deadline to submit a proposed discovery plan and scheduling order as required by the 15 Court’s Order (ECF No. 110). Plaintiff opposes this request due to the substantial time already 16 elapsed in this case (ECF No. 117). Defendants reply that they are attempting to coordinate the 17 18 new deadline with the opportunity to retain new counsel. However, LR IA 11-6(d) clearly states, 19 “[W]ithdrawal . . . of an attorney will not alone be reason for delay of . . . discovery . . . in the 20 case.” Section (e) reemphasizes this principle by stating, “no withdrawal . . . will be approved if 21 it will result in delay of discovery.” 22 23 24 25 26 27 1 Plaintiff “takes no position” with respect to Defense counsel’s request to withdraw. (ECF No. 1 Accordingly, 2 IT IS HEREBY ORDERED that Plaintiff’s Motion for Leave to File Amended 3 Complaint (ECF No. 100) is granted. Plaintiff shall file and serve the amended pleading in 4 accordance with Local Rule 15-1. 5 IT IS HEREBY ORDERED that Defense counsel’s Motion to Withdraw (ECF No. 6 #114) is granted. Attorneys Elizabeth A. Skane and Sarai L. Brown of the law firm of Skane 7 Wilcox LLP shall no longer represent Defendants in this matter. 8 IT IS FURTHER ORDERED that withdrawing counsel shall serve a copy of this order 9 10 on Defendants and file proof of service by Monday, August 26, 2019. 11 IT IS FURTHER ORDERED that Defendants’ Motion for Sixty Days Within New 12 Counsel for Defendants May Enter an Appearance (ECF No. 116) is granted in part and denied 13 in part. Defendants shall have until Monday, September 9, 2019, to advise the Court if they 14 will retain new counsel by filing a status report or new counsel entering a notice of appearance. 15 IT IS FURTHER ORDERED that Defendants’ Motion for Extension of Time to Submit 16 Discovery Plan (ECF No. 115) is granted in part and denied in part. The parties shall have 17 18 until Monday, September 16, 2019, to file a proposed discovery plan and scheduling order that 19 complies with Local Rule 26-1. 20 IT IS FURTHER ORDERED that the Clerk of the Court shall: 21 1. Add the last known address of Defendants Nationwide Biweekly Administration, 22 Inc. and Loan Payment Administration, LLC to the civil docket: 23 855 Lower Bellbrook Road 24 25 Xenia, Ohio 45385 26 2. Mail a copy of this order to Defendants at their last known address listed above. 27 1 DATED: August 19, 2019. 2 3 DANIEL J. ALBREGTS UNITED STATES MAGISTRATE JUDGE 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27