Courtesy Automotive Group, Inc. v. Subaru of America, Inc.

Opinion

1 2 3 4 5 6 7 10 ----oo0oo---- 11 12 COURTESY AUTOMOTIVE GROUP, INC., No. 2:22-cv-00997 WBS DMC dba COURTESY SUBARU OF CHICO, 13 Plaintiff, v. 15 SUBARU OF AMERICA, INC. and DOES 16 1-50, inclusive, 17 Defendant. 18 SUBARU OF AMERICA, INC., 19 Counterclaimant, 20 v. 21 COURTESY AUTOMOTIVE GROUP, INC., 22 dba COURTESY SUBARU OF CHICO,

23 Counterdefendant.

24 25 ----oo0oo---- 26 Plaintiff Courtesy Automotive Group, Inc. (“Courtesy”) 27 has filed motions to dismiss defendant Subaru of America, Inc.’s 28 (“Subaru”) first amended counterclaim (Docket No. 44); to 1 retroactively extend time to file a responsive pleading to 2 Subaru’s first amended counterclaim (Docket No. 45); and to amend 3 its own first amended complaint (Docket No. 47). 4 The relevant procedural history is set forth in the 5 court’s prior orders (see Docket Nos. 30, 42), and will not be 6 recited in detail here. 7 I. Motion to Extend Time to File Responsive Pleading 8 Subaru filed its First Amended Counterclaim on May 9, 9 2024. (See FACC (Docket No. 43).) Courtesy’s deadline to file a 10 response was May 23. On May 30, Courtesy filed a motion to 11 dismiss the First Amended Counterclaim (Docket No. 44), along 12 with a motion requesting a retroactive seven-day extension to 13 file the motion (Docket No. 45). Courtesy asserts that its delay 14 was good faith excusable neglect (see Docket No. 45); Subaru 15 argues that Courtesy failed to show its delay was inadvertent 16 (see Docket No. 50). 17 The court concludes that Courtesy’s delay was excusable 18 neglect. “Excusable neglect ‘encompass[es] situations in which 19 the failure to comply with a filing deadline is attributable to 20 negligence’ and includes ‘omissions caused by carelessness.’” 21 Lemoge v. United States, 587 F.3d 1188, 1192 (9th Cir. 2009) 22 (citing Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd., 507 23 U.S. 380, 394, 388 (1993)). “The determination of whether 24 neglect is excusable is at bottom an equitable one, taking 25 account of all relevant circumstances surrounding the party's 26 omission. To determine when neglect is excusable, we conduct the 27 equitable analysis specified in Pioneer by examining at least 28 four factors: (1) the danger of prejudice to the opposing party; 1 (2) the length of the delay and its potential impact on the 2 proceedings; (3) the reason for the delay; and (4) whether the 3 movant acted in good faith.” Id. (citations omitted). 4 All four factors counsel towards excusing Courtesy’s 5 delay here. Regarding the first two factors, the court cannot 6 discern any substantial prejudice to Subaru or any delay to the 7 proceedings before the court resulting from Courtesy’s missed 8 deadline, especially since the parties, back in late May, 9 conferred about Courtesy’s motion to dismiss and agreed upon a 10 hearing date of August 5. (See Docket No. 45-1 ¶¶ 6-7.) 11 Regarding the remaining two factors, Courtesy satisfactorily 12 documents that its counsel’s delay in filing the motion to 13 dismiss was an elementary, but sincere, mistake that was not 14 caught in time.1 (See id. ¶¶ 5, 13 (counsel confusing deadlines 15 set forth by Fed. Rs. Civ. P. 12 and 15).) 16 Accordingly, the court will not deny Courtesy’s motion 17 to dismiss on this basis. 18 II. Motion to Dismiss 19 Courtesy argues that Subaru’s First Amended 20 Counterclaim should be dismissed because it is inconsistent with 21 the conditions under which the court gave Subaru leave to amend. 22

23 1 Subaru suggests that Courtesy’s instant motion for leave to amend its First Amended Complaint demonstrates 24 Courtesy’s disregard for the court’s deadlines. (See generally Docket No. 50.) A motion requesting leave to amend does no such 25 thing. Rather, it asks for permission to amend notwithstanding 26 expired deadlines to amend by right. (Cf. FACC (Subaru amending counterclaims without seeking leave to do so, in contravention of 27 court’s previously set conditions under which amendment shall be permitted).) 28 1 (See Mot. (Docket No. 44) at 7.) The court agrees. 2 Subaru previously asserted two counterclaims: a breach 3 of contract counterclaim premised on Courtesy’s alleged breach of 4 a confidentiality provision; and a cognate declaratory relief 5 counterclaim regarding the same allegations. (See Docket No. 6 35.) On April 19, 2024, the court dismissed both counterclaims. 7 (Docket No. 42.) The court gave Subaru twenty days’ leave to 8 amend its first counterclaim “if, and only if, it can properly 9 allege actual effects of [Courtesy’s alleged breach of the 10 confidentiality provision] . . . .”2 (Id. at 5.)3 11 Twenty days later, Subaru filed an amended counterclaim 12 premised on an entirely different breach of contract theory: 13 Courtesy’s failure to pay Subaru its attorneys’ fees incurred in 14 relation to a separate administrative investigation. (FACC ¶ 1.) 15 Subaru has no grounds on which to file the instant counterclaim: 16 it does not allege any effects resulting from Courtesy’s alleged 17 breach of the agreement’s confidentiality provision; its time to 18 plead a new and different counterclaim by right has long since 19 passed; and it neither sought nor was granted leave to plead the 20 new claim. See Fed. R. Civ. P. 15(a)(1)-(2). 21 Accordingly, the court will dismiss Subaru’s First 22 23

24 2 The court dismissed the declaratory relief counterclaim with prejudice because it was wholly duplicative of the breach of 25 contract counterclaim. (See Docket No. 42 at 5.) 26 3 The court’s Order of April 19 mistakenly referred to 27 Subaru’s, rather than Courtesy’s, alleged breach of the confidentiality provision. (See Docket No. 42 at 5:9.) The 28 eee RII I IERIE IRE IID IE IIE EEN EIEIO IO REIEIOEEE E

1 Amended Counterclaim.4 > While dismissal will be without 2 | prejudice at this time, Subaru is admonished to follow the 3 court’s orders carefully if it intends to move for further leave 4 to amend. 5 IT IS THEREFORE ORDERED that Courtesy’s motion to 6 extend time to file responsive pleading to first amended 7 counterclaim (Docket No. 45) be, and the same hereby is, GRANTED. 8 IT IS FURTHER ORDERED that Courtesy’s motion to dismiss 9 Subaru’s first amended counterclaim (Docket No. 44) be, and the 10 same hereby is, GRANTED. Subaru’s First Amended Counterclaim 11 (Docket No. 43) is DISMISSED without prejudice. 12 IT IS FURTHER ORDERED that Courtesy’s motion for leave 13 to amend first amended complaint (Docket No. 47) be, and the same 14 hereby is, DENIED as moot. 15 Dated: August 8, 2024 i abe thasw AS (hha bee — 18 UNITED STATES DISTRICT JUDGE

19 20 21 22 23 4 The court therefore need not address Courtesy’s other arguments in support of dismissal.

25 ° Courtesy’s remaining motion to amend its First Amended Complaint (Docket No. 47) is conditioned on the court denying 26 Courtesy’s motion to dismiss. (See Docket No. 47 at 2 (“To the extent the Court grants Courtesy’s Motion to Dismiss, Courtesy 27 withdraws this Motion.”).) Accordingly, the court will deny this motion as moot. 28