Escobedo v. The Hertz Corporation

• Court: District Court, D. Nevada
• Decided: September 16, 2021
• Docket: 2:21-cv-00722
• Status: Unknown

Opinion

2 UNITED STATES DISTRICT COURT 3 DISTRICT OF NEVADA 4 * * * 5 Jose Escobedo, as assignee in interest of Case No. 2:21-cv-00722-GMN-DJA 6 Treasa Casseaux,

7 Plaintiff, Order

8 v.

9 The Hertz Corporation, et al.,

10 Defendants.

11 12 After being hit by Treasa Casseaux’s rental car, Plaintiff Jose Escobedo sued Casseaux in 13 state court, obtaining a judgment against Casseaux for $90,000. Escobedo, as judicial assignee of 14 Casseaux, then sued Defendants The Hertz Corporation; ESIS, Inc.; and ACE American 15 Insurance Company, claiming that Hertz, ESIS, and ACE failed to indemnify or defend Casseaux 16 in the underlying state court action. Defendants removed the action to federal court. 17 Escobedo now moves to amend his complaint to add a fraud action against Defendants. 18 Because the Court finds that amendment is not futile, it grants Escobedo’s motion. The Court 19 finds these matters properly resolved without a hearing. LR 78-1. 20 I. Background. 21 Escobedo’s motion to amend (ECF No. 26) seeks to add a fraud claim against Defendants. 22 Escobedo claims that, while taking the deposition of Hertz’s counsel in the underlying state court 23 action, he learned that Hertz had made misrepresentations to Casseaux about the insurance 24 covering her. According to Escobedo, although Hertz represented that it would indemnify 25 Casseaux under a separate policy, Hertz did not have a separate policy covering Casseaux. 26 Escobedo attaches a proposed amended complaint with the fraud claim also alleged against ACE 27 (Hertz’s alleged insurance provider), and ESIS (ACE’s alleged insurance underwriter and/or 1 Defendants oppose Escobedo’s motion (ECF No. 27), claiming that amendment is futile 2 for three reasons. First, Defendants argue that Casseaux already claimed that she was not driving 3 the car when it hit Escobedo.1 Defendants point to Casseaux’s police statement that an unknown 4 person had stolen her rental car. Defendants argue that this means Casseaux was not entitled to 5 insurance coverage under the rental contract. They also argue that, because Escobedo has stepped 6 into Casseaux’s shoes for the purposes of this litigation, Casseaux’s statements are binding on 7 Escobedo. Second, Defendants argue that Hertz was not required to procure a separate policy for 8 Casseaux because it is authorized under Nevada law to be self-insured.2 Third, Defendants claim 9 that Escobedo’s motion does not mention amending the complaint to assert a fraud claim against 10 ESIS and ACE, only Hertz. Thus, the amended fraud claim against ESIS and ACE is improper. 11 Defendants add that, even if it was not improper, Plaintiff does not assert any allegations about 12 how ESIS or ACE committed fraud. 13 Escobedo replies (ECF No. 28) and argues that amendment is not futile. Addressing 14 Hertz’s first argument that Casseaux claimed she was not driving the car, Escobedo argues that he 15 is not bound by Cassaeux’s statements because she did not make them in court, but rather, to a 16 police officer. Escobedo does not address Hertz’s argument about being self-insured or about 17 Escobedo asserting fraud against ESIS and ACE. 18 II. Standard. 19 Under Federal Rule of Civil Procedure 15(a)(2), courts should “freely give leave [to 20 amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). The Ninth Circuit has repeatedly 21 cautioned courts to “liberally allow a party to amend its pleading.” Sonoma Cnty. Ass’n of Re. 22 Emps. v. Sonoma Cnty., 708 F.3d 1109, 1117 (9th Cir. 2013). “Courts may decline to grant leave 23 24 1 Notably, Escobedo’s original complaint in this action alleged that Casseaux—not an unknown 25 party—was driving the vehicle. (ECF No. 1). Hertz moved for Rule 11 sanctions based on this allegation two months before Escobedo moved to amend his complaint. (ECF No. 17). 26

27 2 ACE and ESIS have made this argument in their Rule 11 sanctions motion, explaining that neither ACE nor ESIS were involved because “no policy was issued as Hertz is self-insured.” 1 to amend only if there is strong evidence of ‘undue delay, bad faith or dilatory motive on the part 2 of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue 3 prejudice to the opposing party by virtue of allowance of the amendment or futility of 4 amendment, etc.’” Id. (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). 5 III. Discussion. 6 The Court grants Escobedo’s motion to amend because Defendants have not convinced 7 the Court that amendment is futile. A motion to amend a complaint is futile where the motion 8 offers no new set of facts or legal theory or fails to state a cognizable claim. See Gardner v. 9 Martino, 563 F.3d 981, 991-92 (9th Cir. 2009). Futility alone is grounds to deny a motion 10 seeking leave to amend. See Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). Causes of 11 action are futile if they cannot satisfy the Rule 12(b)(6) threshold. See Boorman v. Nevada 12 Memorial Cremation Society, Inc., 772 F.Supp.2d 1309, 1317 (D. Nev. 2011). 13 Here, Defendants have not convinced the Court that amendment is futile. Defendants’ 14 first argument—that Casseaux’s statements that she was not driving the car are binding on 15 Escobedo—without more, do not show that amendment is futile. Defendants have not pointed to 16 any evidence or fleshed out their argument that, because Casseaux was not the driver, she was not 17 entitled to a separate insurance policy. They have also not pointed to any evidence or fleshed out 18 their argument that, because Casseaux was not the driver, Hertz did not make any 19 misrepresentations to her that Escobedo cannot assert on her behalf. Moreover, Escobedo is not 20 amending his complaint to add assertions that Casseaux was the driver. Those statements were 21 already in his original complaint. And Defendants have filed Rule 11 sanctions motions on those 22 statements. Defendants’ argument is more appropriately raised and litigated in the Rule 11 23 motions. The Court will not reach them here. 24 Defendants’ second argument—that Hertz did not need to provide Casseaux insurance 25 because it was self-insured—is not sufficiently argued to allow this Court to find that amendment 26 is futile. Even if Hertz is self-insured, it has not pointed to any evidence or sufficiently argued 27 that it did not make any false statements to Casseaux about the insurance it would provide to her. 1 Although Escobedo did not address this argument in reply, the Court does not find Defendants’ 2 argument convincing enough to deviate from the requirement to liberally allow leave to amend. 3 Defendants’ third argument—that Escobedo’s motion does not mention adding a fraud 4 claim against ESIS or ACE—does not convince the Court that amendment is futile. Defendants 5 have cited no case law for the proposition that a motion to amend must include each proposed 6 amendment in detail, especially when a party has attached that proposed amendment to the 7 motion. Additionally, Defendants’ arguments that Escobedo has not alleged sufficient facts to 8 assert fraud against ESIS or ACE is more suited to a motion to dismiss or for summary judgment, 9 rather than an opposition to amendment. Defendants have shown that Escobedo’s allegations 10 may be deficient but have not shown them to be entirely futile. 11 While Defendants’ arguments establish that Escobedo’s claims are questionable, they do 12 not convince the Court that Escobedo’s proposed amendment is futile. Defendants are also not 13 prejudiced. They are free to bring their arguments, and more fully develop them, in a separate 14 motion. The Court grants Escobedo’s motion to amend. 15 IT IS THEREFORE ORDERED that Escobedo’s motion to amend (ECF No. 26) is 16 granted. Escobedo shall file and serve the amended pleading in accordance with Local Rule 15- 17 1. 18 19 DATED: September 16, 2021 20 DANIEL J. ALBREGTS 21 UNITED STATES MAGISTRATE JUDGE 22 23 24 25 26 27