Olmos v. Well Path

• Court: District Court, D. Arizona
• Decided: July 21, 2020
• Docket: 3:19-cv-08036
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Timothy Paul Olmos, No. CV-19-08036-PCT-GMS (JFM)

10 Plaintiff, ORDER

11 v.

12 Well Path, et al.,

13 Defendants. 14 15 Pending before the Court is a Report and Recommendation (“R&R”) (Doc. 97) 16 issued by Magistrate Judge James F. Metcalf recommending that this Court deny Plaintiff 17 Timothy Olmos’s Motion to Amend Complaint (Doc. 55). Plaintiff timely objected to the 18 R&R. (Doc. 102.) For the following reasons the R&R is rejected in part and adopted in 19 part and Plaintiff’s Motion to Amend will be granted in part and denied in part. 20 BACKGROUND 21 The Plaintiff had no objection to the factual and procedural background in the R&R. 22 (Doc. 97 at 1-5.). Thus, the Court need not detail that history here. See Thomas v. Arn, 474 23 U.S. 140, 149, 106 S.Ct. 466 (1989) (The relevant provision of the Federal Magistrates 24 Act, 28 U.S.C. § 636(b)(1)(C), “does not on its face require any review at all . . . of any 25 issue that is not the subject of an objection.”). 26 In pertinent part, Plaintiff originally filed a complaint against Well Path LLC 27 (“Well Path”), Clayborn Taylor, Crystal Bitz, and Arizona Department of Corrections 28 Director Charles Ryan (“Ryan”) asserting claims for (1) violating his Fifth Amendment 1 rights, (2) violating his Fourteenth Amendment rights, and (3) denying him his right to 2 dental care. On screening, the Court ordered Ryan to answer Counts I and II and ordered 3 Well Path and Taylor to answer the Eighth Amendment claims in Count III. Defendant 4 Bitz and the state law portions of Count III were dismissed for various deficiencies, 5 including a lack of allegations to support supplemental jurisdiction. 6 Defendants have since been served and answered. Defendant Well Path has filed a 7 Motion for Summary Judgment based on Plaintiff’s failure to exhaust administrative 8 remedies. After the dispositive motion was filed, Plaintiff attempted to amend his 9 complaint to replead the state law claim within Count III that was dismissed at screening 10 and to add a fourth count alleging deprivation of property in violation of the Fifth 11 Amendment against Defendant Ryan. The amendment was denied without prejudice for 12 failure to comply with LRCiv 15.1. Plaintiff later filed the instant Motion to Amend to 13 incorporate the previously attempted amendments. After Well Path responded to the instant 14 motion, Plaintiff filed a Notice of Errata further amending the proposed complaint. 15 Additional briefing was ordered to respond to the amendments incorporated by the Notice 16 of Errata. As a result, the magistrate judge deemed the Motion to Amend and proposed 17 amended complaint to be modified by the Notice of Errata. In reviewing the R&R and 18 Motion to Amend, this Court will similarly consider the proposed amended complaint as 19 modified by the Notice of Errata and each of the briefs submitted in response to the Motion. 20 As amended, the proposed complaint includes the following amendments: (1) 21 Defendant Ryan is named in his official capacity1; (2) dismissed Defendant Bitz; (3) 22 various terminology modifications to Counts I, II, and III with no substantive effect; (4) 23 Count III now includes common law claims of negligence and “rendition” and the failure 24 to train Eight Amendment claim is deleted; (5) the supplemental jurisdiction statute is cited; 25 and (6) Count IV, asserting a takings claim based upon the taking of a portion of Plaintiff’s 26 1 In his proposed amendment, Plaintiff adds claims against Ryan in his official capacity. 27 Because Defendant Ryan is no longer the Arizona Department of Corrections Director, his successor Director David Shinn is automatically substituted as Defendant with respect to 28 claims against the Director in his official capacity. See Fed. R. Civ. P. 25(d). Defendant Ryan remains a defendant for the individual capacity claims. 1 inmate trust funds for the repair of ADOC buildings and infrastructure is added. 2 The magistrate judge recommends the Motion to Amend be denied because it was 3 made as a bad faith attempt to avoid summary judgment and will prejudice Defendants 4 Well Path and Taylor. Plaintiff objects to these findings and the magistrate judge’s 5 reasoning that Plaintiff’s state law claim lacks a common nucleus of operative facts with 6 his federal claims to support supplemental jurisdiction. 7 DISCUSSION 8 I. Standard of Review 9 A “district judge may refer dispositive pretrial motions, and petitions for writ of 10 habeas corpus, to a magistrate, who shall conduct appropriate proceedings and recommend 11 dispositions.” Arn, 474 U.S. at 141; see also 28 U.S.C. § 636(b)(1)(B); Estate of Connors 12 v. O’Connor, 6 F.3d 656, 658 (9th Cir. 1993). Any party “may serve and file written 13 objections” to the R&R. 28 U.S.C. § 636(b)(1). “A judge of the court shall make a de novo 14 determination of those portions of the report or specified findings or recommendations to 15 which objection is made.” Id. District courts, however, are not required to conduct “any 16 review at all . . . of any issue that is not the subject of an objection.” Arn, 474 U.S. at 149. 17 A district judge “may accept, reject, or modify, in whole or in part, the findings or 18 recommendations made by the magistrate.” 28 U.S.C. § 636(b)(1). 19 II. Leave to Amend 20 Federal Rule of Civil Procedure 15(a)(2) provides that the “court should freely give 21 leave [to amend] when justice so requires.” “In assessing the propriety of a motion for leave 22 to amend, we consider five factors: (1) bad faith; (2) undue delay; (3) prejudice to the 23 opposing party; (4) futility of amendment; and (5) whether the plaintiff has previously 24 amended his complaint.” Nunes v. Ashcroft, 375 F.3d 805, 808 (9th Cir. 2004). 25 A. Bad Faith 26 Plaintiff objects to the magistrate judge’s conclusion that the Motion to Amend was 27 filed as a bad faith attempt to evade summary judgment. “In the context of a motion for 28 leave to amend, ‘bad faith’ means acting with intent to deceive, harass, mislead, delay, or 1 disrupt. . . . ‘[B]ad faith’ means more than acting with bad judgment or negligence, but 2 rather it implies the conscious doing of wrong because of dishonest purpose or moral 3 obliquity . . .” Wizards of the Coast LLC v. Cryptozoic Entm’t LLC, 309 F.R.D. 645, at 4 *651 (W.D. Wash. 2015) (internal quotations and citations omitted). When considering if 5 bad faith favors denying leave to amend, “the court must indulge all inferences in favor of 6 allowing amendment and must therefore impute benign motives to [Plaintiff] where . . . it 7 is plausible to do so.” Id. (citing Griggs v. Pace Am. Grp., Inc., 170 F.3d 877, 880 (9th Cir. 8 1999)). 9 Here, Defendants argue that Plaintiff’s proposed amendment is an attempt to gain 10 the benefit of escaping the exhaustion requirement under Jackson v. Fong, 870 F.3d 928 11 (9th Cir. 2017). In Jackson, the Ninth Circuit concluded that the exhaustion requirement 12 under the Prison Litigation Reform Act (42 U.S.C. § 1997e(a)) is determined at the time 13 of the filing of the operative complaint, not an action, and thus a prisoner who first raises 14 unexhausted claims while incarcerated, but is subsequently granted leave to file an 15 amended complaint for damages after his release from prison, is not subject to the 16 exhaustion requirement. Jackson, 870 F.3d at 935 (“Exhaustion requirements apply based 17 on when a plaintiff files the operative complaint, in accordance with the Federal Rules of 18 Civil Procedure.”). Thus, the amendment, if permitted, allows Plaintiff to escape potential 19 summary judgment for failure to exhaust his administrative remedies. Notably, Plaintiff 20 cannot file a new action, as opposed to amendment, because Plaintiff’s current claims 21 would be barred by the statute of limitations. 22 Defendants argue that the timing of Plaintiff’s attempt to add de minimus claims to 23 his complaint supports an inference of bad faith. Plaintiff filed this action the day before 24 the statute of limitations would have barred his claims. At the time the action was filed, 25 Plaintiff knew he was going to be released from prison just months later. Defendants 26 contend that Plaintiff waited to bring this action until the last possible moment in hopes of 27 later amending his complaint to invoke Jackson after he was released. Defendants support 28 this theory by pointing to Plaintiff’s attempt to amend his complaint shortly after he was 1 released from prison and directly following Defendant Well Path and Taylor’s motion for 2 summary judgment based on Plaintiff’s failure to exhaust his administrative remedies. 3 Defendants also point to the nature of the proposed amendments as evidence of Plaintiff’s 4 bad faith. For example, Plaintiff’s proposed takings claim, of which he has long been 5 aware, warrants a reward of less than $15.00 if Plaintiff prevails. Plaintiff also proposes to 6 amend his complaint to include Defendant Ryan in his official capacity, in addition to his 7 individual capacity. While this amendment would entitle Plaintiff to declaratory relief, 8 Plaintiff is no longer in prison, so any declaratory relief obtained would no longer impact 9 him. Moreover, the majority of the other amendments in the proposed complaint are 10 superficial and do nothing to add to the substance of the action. 11 Plaintiff does not dispute the objective description of his conduct, and the inference 12 of subjective bad faith that Defendants and the magistrate judge draw from Plaintiff’s 13 actions is not unfair. But it is not the only inference capable of being drawn from these 14 facts. In his objection, Plaintiff offers an alternative explanation for the amendment. He 15 asserts that reviving the state law portion of Count III will “provide a simplified path to 16 victory” because “it does not require him to make a subjective showing in the manner that 17 is required by an Eighth Amendment analysis.” (Doc. 102 at 8.) Plaintiff further suggests 18 that adding the takings claim, which is not subject to a statute of limitations defense if the 19 amendment is denied, relieves him of an additional filing fee and relieves the Court of a 20 separate action. Moreover, Plaintiff believes “declaratory relief will stop the director from 21 continuing his illegal action . . . for the existence of a declaratory judgment would serve to 22 make it easy for an inmate to successfully sue him.” Id. These proffered motives are not so 23 absurd as to be rejected out of hand, particularly considering Plaintiff’s pro se status. 24 Moreover, in addition to seeking leave to amend, Plaintiff responded to the summary 25 judgment on the merits and asserted that administrative remedies were not available to him. 26 Plaintiff claims to believe that his defense has merit and his exercise of Jackson is purely 27 academic. 28 / / / 1 While the Court remains dubious of Plaintiff’s subjective intent in seeking the 2 amendment, and it understands why Defendants and the magistrate judge draw inferences 3 of bad faith, the Court cannot deny the motion to amend on bad faith grounds where 4 Plaintiff’s alternative explanations of his subjective intent are at least plausible. See 5 ecoNugenics, Inc. v. Bioenergy Life Sci., Inc., 355 F. Supp. 3d 785, 793 (D. Minn. 2019) 6 (declining to deny a motion to amend on grounds of bad faith where counsel’s actions were 7 suspect and reasonably gave rise to an inference of bad faith, but counsel’s alternative 8 explanation of its conduct was plausible) (citing Wizards of the Coast, 309 F.R.D. at 651). 9 B. Prejudice 10 Plaintiff further objects to the magistrate judge’s conclusion that prejudice would 11 result to Defendants Well Path and Taylor from the proposed amendment because it would 12 “greatly expand the relevant issues and discovery in Count III” and “unfairly eviscerate 13 Defendants’ exhaustion defense.” (Doc. 97 at 7.) With respect to the expansion of 14 discovery, there is no evidence that the discovery deadlines would have to be extended as 15 a result of the amendment because discovery concerning Defendants Well Path and Taylor 16 has been stayed pending the resolution of the motion for summary judgment—no discovery 17 requests have been submitted or answered. As a result, this Court is not persuaded that 18 expanding the scope of discovery is sufficiently prejudicial to deny the amendment. 19 Oushana v. Lowe’s Home Centers, LLC, No. 116CV01782AWISAB, 2017 WL 2417198, 20 at *2 (E.D. Cal. June 5, 2017) (explaining that “the added expense of conducting discovery 21 regarding valid claims in inherent in litigation and not a basis for denial of a motion to 22 amend”). 23 Defendants will suffer some prejudice as a result of the amendment by having to 24 reassess its dispositive arguments as the proposed amendment renders the fully briefed 25 Motion for Summary Judgment moot. This prejudice, however, is mitigated by the fact that 26 the parties will have a full and fair opportunity to conduct discovery in this action. 27 Moreover, by Defendants Well Path and Taylor’s own admission, most of the amendments 28 do little to add to the substance of the action. The Court recognizes that prejudice to the 1 opposing party carries the greatest weight when considering whether an amendment is 2 appropriate. Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990). Defendants, 3 however, have simply failed to satisfy their burden of demonstrating “undue difficulty” or 4 an “unfair disadvantage” sufficient to overcome the federal policy of freely granting leave 5 to amend. C.f. id. (finding severe prejudice would result from an amendment where it 6 would require re-litigation on indemnification and additional discovery on new legal 7 theories). 8 Defendant Ryan, however, is subject to different circumstances in the present 9 action. His deadline for discovery requests has passed. Moreover, Plaintiff previously 10 litigated an action against Defendant Ryan involving the trust account at issue in proposed 11 Count IV. Plaintiff and Defendant Ryan conducted extensive discovery in that matter. 12 Thus, unlike Defendants Well Path and Taylor who have not yet begun discovery, 13 Defendants Ryan and Shinn will be unfairly required to reopen discovery on a new 14 unrelated legal issue that Plaintiff could have raised in an earlier action. Thus, Defendant 15 Ryan has established substantial prejudice will result from adding Count IV to the present 16 action. 17 C. Futility 18 Lastly, Plaintiff seems to object to the R&R’s alleged finding that the proposed 19 common law rendition claim does not share a common nucleus of operative fact with the 20 existing Eighth Amendment claim sufficient to warrant supplemental jurisdiction. This 21 objection, however, is misplaced because the R&R does not make such a recommendation. 22 The R&R merely describes the grounds on which the common law claims were originally 23 dismissed at the screening stage—one such basis was a lack of allegations sufficient to 24 establish supplemental jurisdiction. The R&R goes on to suggest that the amendment to 25 reinstate the state law claim “may be arguably futile, inasmuch” as the amendment 26 continues to lack sufficient factual allegations to establish supplemental jurisdiction, but 27 ultimately concludes that the amendment “as a whole” is not futile. (Doc. 97 at 15.) 28 Because Plaintiff’s objection is rooted in a recommendation that is not present in the R&R, 1 || the objection is overruled. 2 CONCLUSION 3 Plaintiff is not permitted to add Count IV because it will result in substantial 4|| prejudice to Defendant Ryan. However, because the Court is required to impute every 5 || inference in favor of benign motives and Defendants Well Path and Taylor will not be || overly prejudiced by prolonged or additional discovery in light of the stay currently in place, Plaintiff is permitted to make the remaining amendments. 8 IT IS HEREBY ORDERED that the R&R (Doc. 97) is REJECTED in part and ADOPTED in part, as follows: 10 1. Plaintiff's Motion to Amend was not made in bad faith. 11 2. Plaintiff's proposed amendment will not result in substantial prejudice to 12 || Defendant Well Path or Defendant Taylor. 13 3. Plaintiff's proposed amendment will not result in substantial prejudice to Defendant Ryan. 15 IT IS FURTHER ORDERED that Plaintiff's Motion to Amend (Doc. 55) is GRANTED in part and DENIED in part. The proposed amendment is permitted except || for the allegations adding Count IV. Plaintiff shall file his amended complaint within 18 || fourteen (14) days of the date of this Order. 19 Dated this 21st day of July, 2020. 20

79 Chief United states District Judge 23 24 25 26 27 28

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