United States District Court, D. Idaho
MEMORANDUM DECISION AND ORDER RE: PLAINTIFFS'
MOTION FOR LEAVE TO AMEND COMPLAINT (DKT. 28)
HONORABLE RONALD E. BUSH U.S. MAGISTRATE JUDGE.
is Plaintiffs' Motion for Leave to Amend Complaint and
Extend the Deadline to Amend Pleadings for Good Cause (Dkt.
28) (“Mot. to Amend”). Having carefully
considered the record, heard oral argument, and otherwise
being fully advised, the Court enters the following
Memorandum Decision and Order:
BACKGROUND Plaintiffs sued Defendant in Idaho state court on
February 9, 2016. Compl. (Dkt. 1, pp. 9-13). Defendant
removed the action to U.S. District Court on April 4, 2016.
Notice of Removal of Action (Dkt. 1). On June 14, 2016, U.S.
District Judge Edward J. Lodge referred all matters in the
case to this Court. Order of Reference (Dkt. 7). Thereafter,
Judge Lodge entered a Scheduling Order on July 11, 2016.
(Dkt. 14.) That order set November 30, 2016 as the deadline
for amending pleadings. Id. By stipulation, the
scheduling order was modified twice with respect to deadlines
other than the deadline to amend pleadings. (Dkts. 15, 19
(stipulations); Dkts. 16, 20 (modified scheduling orders).)
Eleven months later, on May 10, 2017, Plaintiffs moved to
amend their Complaint. Mot. for Leave to File First Am.
Compl. (Dkt. 22). The Defendant filed a notice of
non-opposition (Dkt. 21), this Court granted Plaintiffs'
motion (Dkt. 25), and Plaintiffs' First Amended Complaint
was filed (Dkt. 26).
August 29, 2017, Plaintiffs filed a motion to amend the
already amended complaint. Mot. to Amend (Dkt. 28).
Plaintiffs seek to add a claim to pierce the corporate veil
of Defendant and to join three new individual defendants who
Plaintiffs allege are Defendant's shareholders.
Id. The amendment deadline has passed. See
Scheduling Order (Dkt. 14). The case has not yet been set for
trial. See Order Adopting 3/21/17 Stipulation to Modify
Scheduling Order (Dkt. 20).
previously filed a Counterclaim and Third-Party Complaint,
but that filing is not relevant to the instant motion and
will not be further discussed in this memorandum decision.
Answer, Countercl., Third-Party Compl. and Demand for Jury
Trial (Dkt. 3).
15(a) of the Federal Rules of Civil Procedure provides in
relevant part that “[t]he court should freely give
leave” to amend “when justice so requires.”
However, after a scheduling order has been entered, the court
may modify the schedule only for good cause. Fed.R.Civ.P.
16(b)(4). Thus, a “party seeking to amend [a] pleading
after [the] date specified in [a] scheduling order must first
show ‘good cause' for amendment under Rule 16(b),
then, if ‘good cause' be shown, the party must
demonstrate that amendment [is] proper under Rule 15.”
Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 608 (9th
Cir. 1992) (citation omitted). Rule 16's good cause
inquiry focuses primarily on the diligence of the party
requesting the amendment. Id. at 609. “Rule 16
was designed to facilitate more efficient disposition of
cases by settlement or by trial. If disregarded it would
‘undermine the court's ability to control its
docket, disrupt the agreed-upon course of the litigation, and
reward the indolent and the cavalier.'” Walker v.
City of Pocatello, 2017 WL 1650014 at *1 (D. Idaho May 1,
2017) (quoting Johnson, 975 F.2d at 610); see also Rule 16
Advisory Committee Notes (1983 Amendment). As explained in
Unlike Rule 15(a)'s liberal amendment policy which
focuses on the bad faith of the party seeking to interpose an
amendment and the prejudice to the opposing party, Rule
16(b)'s “good cause” standard primarily
considers the diligence of the party seeking the amendment.
The district court may modify the pretrial schedule if it
cannot reasonably be met despite the diligence of the party
seeking the extension. . . Although the existence or degree
of prejudice to the party opposing the modification might
supply additional reasons to deny a motion, the focus of the
inquiry is upon the moving party's reasons for seeking
modification. If that party was not diligent, the inquiry
Id. (quotation marks and citations omitted). In
addition, district courts are “given broad discretion
in supervising the pretrial phase of litigation, ”
including with respect to “decisions regarding the
preclusive effect of a pretrial order.” Johnson, 972
F.2d at 607. If good cause exists under Rule 16(b),
“leave to amend should be granted unless amendment
would cause prejudice to the opposing party, is sought in bad
faith, is futile, or creates undue delay.”
Id.; see also Branch Banking and Trust Co. v.
D.M.S.I., LLC, 871 F.3d 751, 764 (9th Cir. 2017) (applying
Johnson and demonstrating it is still controlling law).
motion seeks to add a claim to pierce Defendant's
corporate veil. Mot. to Amend 1 (Dkt. 28). Because this is a
diversity action over which the Court exercises original
jurisdiction pursuant to 28 U.S.C. § 1332, Idaho law
applies to the claim. Piercing the corporate veil under Idaho
law requires “(1) a unity of interest and ownership to
a degree that the separate personalities of the [company] and
individual no longer exist and (2) if the acts are treated as
acts of the [company] an inequitable result would
follow.” Wandering Trails, LLC v. Big Bite Excavation,
Inc., 329 P.3d 368, 376 (Idaho 2014) (alterations in
original) (citation omitted).
instant motion turns on whether Plaintiffs were diligent in
seeking an otherwise untimely amendment to bring a claim to
pierce Defendant's corporate veil.
dealings between Plaintiffs and Defendant began with the
execution of a Cattle Feeding, Finance, and Security
Agreement (the “Agreement”) in June of 2014,
under which Plaintiff Simplot Livestock Co.
(“Feedlot”) was obligated to feed and care for
Defendant Sutfin Land & Livestock's
(“SLL”) feeder cattle and SLL was obligated to pay
Feedlot for the goods and services supplied. Compl.
¶¶ 5-6 (Dkt. 1 p. 10); Agreement ¶¶ 2, 5
(Dkt. 3-2). Feedlot's related company, Plaintiff J.R.
Simplot Company (“Simplot”), was also a party to
the Agreement. Agreement 1 (Dkt. 3-2). Simplot's role was
to finance advances to SLL upon request, conditioned upon
Simplot satisfying itself that Defendant was sufficiently
creditworthy and met other requirements. Id. at
¶ 9. Feedlot claimed a lien upon Defendant's cattle
and Defendant granted Simplot a security interest in the
cattle and related property. Id. at ¶¶ 8,
11. The Agreement specified how proceeds from the sale of
Defendant's cattle would be distributed - broadly,
Feedlot and Simplot were to be paid in full before Defendant
received any proceeds. Id. at ¶ 10. Plaintiffs
allege in the First Amended Complaint that a substantial
deficit remains owing after all of Defendant's cattle
were sold and the proceeds applied to pay debts owed under
the Agreement to Plaintiffs. First Am. Compl. ¶ 11 (Dkt.
26). More specifically, Plaintiffs allege that Defendant owes
them over one million dollars under the Agreement.
Id. ¶¶ 12-14.
First Amended Complaint, like the original Complaint, names
only SLL as a Defendant. Id. at p. 1; Compl. 1 (Dkt.
1 p. 9). SLL is a California corporation. First Am. Compl.
¶ 3 (Dkt. 26); Answer ¶ 2 (Dkt. 27). Notably,
Defendant's owners (allegedly Dan, Arthur, and Joan
Sutfin) are not named as Defendants in the original Complaint
or the First Amended Complaint. See Compl. (Dkt. 1 p. 9);