United States Fire Insurance Company v. Foss Maritime Company

• Court: District Court, W.D. Washington
• Decided: March 16, 2023
• Docket: 2:21-cv-01506
• Status: Unknown

Opinion

1 HONORABLE RICHARD A. JONES

7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE

9 UNITED STATES FIRE INSURANCE COMPANY et al., 10 Plaintiffs, 11 CASE No. 2:21-cv-01506-RAJ v. 12 ORDER

13 FOSS MARITIME COMPANY, 14 Defendant. 15 16 This matter comes before the Court on Defendant Foss Maritime Company’s 17 (“Foss”) Motion for Summary Judgment and Dismissal of all Claims, Dkt. # 26, and 18 Plaintiffs’ United States Fire Insurance Company, Beazley Insurance Company, Inc., 19 StarStone National Insurance Company, State National Insurance Co., Inc., North of 20 England Protection and Indemnity Association Limited, Atlantic Specialty Insurance 21 Company, Starr Indemnity & Liability Company, Markel Syndicate Management 22 Limited in its capacity as manage agent for Syndicate 3000 at Lloyd’s, and Arch 23 Managing Agency, Ltd. as the managing agent for Syndicate 2012 at Lloyd’s 24 (“Plaintiffs”) Motion for Leave to File a Third Amended Complaint. Dkt. # 32. The 25 parties have not requested oral argument, and the Court finds that it is unnecessary. 26 Having considered the submissions of the parties, the relevant portions of the record, and 27 1 the applicable law, the Court GRANTS Foss’s Motion for Summary Judgment and 2 DENIES Plaintiffs’ Motion for Leave to File a Third Amended Complaint. 3 I. BACKGROUND 4 A.) The Parties 5 Plaintiffs are subscribing underwriters to Policy No. AJG-19-056 (“the Policy”) 6 that insures O’Hara Corporation (“O’Hara”) against certain hull and machinery losses to 7 its vessel F/V ENTERPRISE, O.N. 657383 (“the Vessel”). Dkt. # 23 (Second Amended 8 Complaint) at ¶ 2. On October 19, 2016, O’Hara contracted with Foss to perform repairs 9 to the Vessel, which was located at Foss’s shipyard in Seattle, Washington. Id. at ¶ 7; see 10 also Dkt. # 27 (Declaration of Steve Britton in Support of Foss Maritime Company’s 11 Motion for Summary Judgment), Ex. A (“Contract”). Both pages of the Contract (a 12 “Shipyard Customer Work Request” and “Terms and Conditions”) were signed by Keith 13 Bruton, O’Hara’s fleet manager. Contract at 1-2. In the Contract, Foss is referred to as the 14 “Shipyard,” while O’Hara is the “Customer.” Id. The repair work that Foss was to do 15 included replacing the Vessel’s stern tube and bearings and the propulsion shaft 16 arrangement. Dkt. # 23 at ¶ 7. 17 B.) The Contract 18 The Contract contains several relevant provisions, including a Limited Warranty. 19 It states: 20 LIMITED WARRANTY – Shipyard warrants to the party named above 21 (“Customer”) (but not to third parties) that the materials sold and work 22 performed hereunder will be free from defects in material and workmanship and conform to applicable express specifications, PROVIDED, HOWEVER, 23 WARRANTIES GIVEN BY THE MANUFACTURER OR SUPPLER OF ITEMS INSTALLED BY SHIPYARD OR GIVEN BY ANY 24 SUBCONTRACTOR SHALL TOTALLY REPLACE SHIPYARD’S 25 WARRANTY WITH RESPECT THERETO. This warranty shall expire six (6) months from the date of completion by the Shipyard of the work 26 described in the above Scope of Work, or upon any earlier sale or transfer of 27 the vessel, engine, or article. Shipyard shall be discharged from all liability 1 for defective workmanship or material or for loss or damage, unless 2 Customer meets both of the following conditions: 1) Customer discloses the same and makes a claim in writing to Shipyard within six (6) months of the 3 date of completion by the Shipyard of the work performed or the earlier sale or transfer of the vessel, engine, or article; and 2) Litigation is commenced 4 within one (1) year after completion by the Shipyard of the work performed 5 or the earlier sale or transfer of the vessel, engine or article.

6 Contract at 2, ¶ 4 (caps in original). The Contract also includes a disclaimer: 7 DISCLAIMER – SHIPYARD MAKES NO WARRANTY OF ANY KIND, 8 STATUTORY, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, 9 FITNESS FOR A PARTICULAR PURPOSE, USAGE OR TRADE OR 10 ANY OTHER WARRANTY, EXCEPT FOR THAT LIMITED WARRANTY PROVIDED IN PARAGRAPH 4 HEREOF WHICH IS 11 EXTENDED ONLY TO THE CUSTOMER. ALL WARRANTIES OF 12 SHIPYARD ARE VOIDED IF ANY ARTICLE OR PART THEREOF (1) IS INSTALLED, USED OR SERVICED, OTHER THAN IN 13 CONFORMANCE WITH SHIPYARD’S OR SUPPLIER’S SPECIFICATIONS, MANUALS, BULLETINS OR INSTRUCTIONS, OR 14 (2) HAS BEEN IMPROPERLY INSTALLED, USED OR MAINTAINED. 15 16 Contract at 2, ¶ 5 (caps in original). Finally, the Contract includes a paragraph 17 addressing remedies and damages: 18 EXCLUSIVITY OF REMEDY, LIMITATION OF DAMAGES – 19 Shipyard’s liability and Customer’s exclusive remedy for breach of any 20 warranty or for negligence, strict liability, or otherwise (regardless of legal theory) is limited solely to the replacement or repair at Shipyard’s option and 21 designated place of business, or any article or part thereof which is proven to be other than as warranted… SHIPYARD SHALL NOT BE LIABLE 22 UNDER ANY CIRCUMSTANES (INCLUDING BUT NOT LIMITED TO, 23 ANY CLAIM FOR BREACH OF ANY WARRANTY, INCLUDING WARRANTY OF WORKMANLIKE PERFORMANCE, NEGLIGENCE, 24 STRICT LIABILITY OR OTHERWISE) FOR ANY CONSEQUENTIAL, 25 SPECIAL, CONTINGENT OR INCIDENTAL DAMAGES ARISING OUT OF, CONNECTED WITH, OR RESULTING FROM THIS CONTRACT 26 OR THE USE OR OPERATION OF ANY ITEM COVERED OR PURCHASED HEREUNDER, INCLUDING, BUT NOT LIMITED TO, 27 ANY LIABILITY FOR LOSS OF PROFIT OR REVENUE, LOSS OF USE, 1 COST OF SUBSTITUTED EQUIPMENT, DETENTION, DEMURRAGE, 2 TOWAGE, PILOTAGE, OR CLAIMS OF THIRD PARTIES. SHIPYARD SHALL NOT BE HELD LIABLE DIRECTLY OR INDIRECTLY IN 3 CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, TO CUSTOMER, THE VESSEL’S OWNERS, CHARTERERS OR 4 UNDERWRITERS FOR ANY INJURY TO THE VESSEL, ITS CARGO, 5 EQUIPMENT, MOVABLE STORES, CREW, OR THIRD PARTIES, OR FOR ANY CONSEQUENCES THEREOF, UNLESS SUCH INJURY IS 6 CAUSED SOLELY BY THE GROSS NEGLIGENCE OF SHIPYARD OR 7 ITS EMPLOYEES AND UNLESS SHIPYARD’S LIABILITY OR THE REMEDY OF SUCH PARTY IN INTEREST FOR SUCH INJURY IS NOT 8 OTHERWISE LIMITED OR DISCLAIMED IN PARAGRAPHS 4 OR 5 HEREOF OR THIS PARAGRAPH 6. IN NO EVENT SHALL 9 SHIPYARD’S AGGREGATE LIABILITY FOR THE WORK DONE 10 UNDER THIS CONTRACT TO ALL PARTIES IN INTEREST EXCEED IN THE AGGREGATE THE SUM OF $300,000. 11

12 Contract at 2, ¶ 6 (caps in original). Finally, the Contract states that that it will be 13 “governed and construed in accordance with the general maritime law of the United 14 States, insofar as applicable, and otherwise by the laws of the State of Washington.” 15 Contract at 2, ¶ 10. 16 C.) Repair of the Vessel 17 Repairs to the Vessel were conducted during the winter of 2016-2017 and the 18 Vessel was delivered to O’Hara in January 2017. Dkt. # 23, ¶ 7. The Vessel then returned 19 to its service in the Alaskan commercial fishing industry. Id. At some point thereafter, 20 O’Hara submitted a claim under the Policy for damage to various parts of the Vessel. 21 Plaintiffs paid O’Hara $512,699.11 and became subrogated to O’Hara’s rights against 22 Foss under the Policy. Id. at ¶ 7-8. 23 In November 2021, Plaintiffs filed the instant lawsuit, Dkt. # 1, and amended their 24 Complaint in December 2021 and February 2022. See Dkt. ## 7, 23. Plaintiffs allege that 25 after the repairs, the Vessel “experienced continuous premature failures and/or damage to 26 its propeller, tailshaft, stern tube, stern tube bearings, propulsion shaft arrangement, main 27 1 engine and other equipment well beyond normal wear and tear, which necessitated 2 extensive repairs.” Dkt. # 23 at ¶ 7. Plaintiffs allege that they investigated the damage in 3 2020, which revealed that it was caused by “[D]efendant’s failure to properly install the 4 stern tube and properly align the entire propulsion shaft arrangement… in accordance 5 with the procedures and schematics provided by O’Hara and good industry practice.” Id. 6 Plaintiffs assert three causes of action: (1) breach of contract; (2) breach of the 7 warranty of workmanlike performance; and (3) negligence. Id. at ¶¶ 9-21. Plaintiffs seek 8 damages in the amount of $562,699.11 (which is the amount Plaintiffs paid to O’Hara 9 under the Policy, as well as O’Hara’s $50,000 deductible), an award of pre-judgment 10 interest, and costs and attorney’s fees. Id. at 5. 11 On June 24, 2022, Foss filed this Motion for Summary Judgment; Plaintiffs 12 opposed, and Foss filed a Reply. Dkt. ## 26, 30, 31. On August 4, 2022, Plaintiffs filed a 13 Motion for Leave to Amend Complaint, asking the Court to allow it to file a Third 14 Amended Complaint asserting a gross negligence claim. Dkt. # 32. Foss opposed, and 15 Plaintiffs filed a Reply. Dkt. ## 34, 37. 16 II. LEGAL STANDARD 17 Summary judgment is appropriate if there is no genuine dispute as to any material 18 fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). 19 The moving party bears the initial burden of demonstrating the absence of a genuine issue 20 of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the moving 21 party will have the burden of proof at trial, it must affirmatively demonstrate that no 22 reasonable trier of fact could find other than for the moving party. Soremekun v. Thrifty 23 Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). On an issue where the nonmoving party 24 will bear the burden of proof at trial, the moving party can prevail merely by pointing out 25 to the district court that there is an absence of evidence to support the non-moving party’s 26 case. Celotex Corp., 477 U.S. at 325. If the moving party meets the initial burden, the 27 1 opposing party must set forth specific facts showing that there is a genuine issue of fact 2 for trial in order to defeat the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 3 (1986). The court must view the evidence in the light most favorable to the nonmoving 4 party and draw all reasonable inferences in that party’s favor. Reeves v. Sanderson 5 Plumbing Prods., 530 U.S. 133, 150-51 (2000). 6 However, the court need not, and will not, “scour the record in search of a genuine 7 issue of triable fact.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996); see also, 8 White v. McDonnel-Douglas Corp., 904 F.2d 456, 458 (8th Cir. 1990) (the court need not 9 “speculate on which portion of the record the nonmoving party relies, nor is it obliged to 10 wade through and search the entire record for some specific facts that might support the 11 nonmoving party’s claim”). The opposing party must present significant and probative 12 evidence to support its claim or defense. Intel Corp. v. Hartford Accident & Indem. Co., 13 952 F.2d 1551, 1558 (9th Cir. 1991). Uncorroborated allegations and “self-serving 14 testimony” will not create a genuine issue of material fact. Villiarimo v. Aloha Island Air, 15 Inc., 281 F.3d 1054, 1061 (9th Cir. 2002); T.W. Elec. Serv. V. Pac Elec. Contractors 16 Ass’n, 809 F. 2d 626, 630 (9th Cir. 1987). 17 III. DISCUSSION 18 Foss argues that they are entitled to summary judgment as a matter of law because 19 each of Plaintiffs’ claims are barred by the Contract. Dkt. # 26 at 6. Plaintiffs 20 acknowledge that their breach of warranty claim is not actionable because Foss’s limited 21 warranty has expired. Dkt. # 37 at 6, n.6. The parties do not disagree as to the general 22 facts outlined in their briefing. Their dispute concerns the interpretation of the Contract 23 and whether the terms bar Plaintiffs’ claims as a matter of law. Therefore, the Court will 24 consider Foss’s arguments in support of dismissing the remaining two causes of action: 25 breach of contract and negligence. 26 A.) Applicable Law 27 1 Contracts for ship repair are governed by admiralty law. Point Adams Packing Co. 2 v. Astoria Marine Constr. Co., 594 F.2d 763, 765 (9th Cir. 1979) (citing New Bedford 3 Dry Dock Co. v. Purdy, 258 U.S. 96, 99 (1922)). This includes claims regarding vessels 4 undergoing repairs in a drydock. Crowley Marine Serv., Inc. v. Vigor Marine LLC, 17 F. 5 Supp. 3d 1091, 1094 (W.D. Wash. 2014) (citing North Pac. S.S. Co. v. Hall Bros. Marine 6 R. & Shipbuilding Co., 249 U.S. 119, 128 (1919)). “When a contract is a maritime one, 7 and the dispute is not inherently local, federal law controls the contract interpretation.” 8 Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 22-23 (2004) (citing Kossick v. United States 9 Fruit Co., 365 U.S. 731, 735 (1961)). “Courts, however, may use state law to interpret 10 maritime contracts, provided that it does not clearly conflict with federal maritime law.” 11 DeForge Maritime Towing, LLC v. Alaska Logistics, LLC, 591 F. Supp. 3d 939, 948 12 (W.D. Wash. 2022) (citing Aqua-Marine Constructors, Inc. v. Banks, 110 F.3d 663, 671 13 (9th Cir. 1997)). In addition, here, “admiralty law is in agreement with the parties’ choice 14 of law provision.” Offshore-Inland Services of Ala., Inc. v. R/V DEEPOCEAN QUEST, 15 Nos. C06-0183-JCC, C06-1114-JCC, 2007 WL 2908584, at *6 (W.D. Wash. Oct. 2, 16 2007) (citing Point Adams Packing Co. v. Astoria Marine Constr. Co., 594 F.2d 763, 766 17 (9th Cir. 1979)). “Basic principles in the common law of contracts readily apply in the 18 maritime context.” Clevo Co. v. Hecny Transp., Inc., 715 F.3d 1189, 1194 (9th Cir. 2013) 19 (citing Kirby, 543 U.S. at 23). 20 B.) Foss Disclaims Liability for Loss or Damage in Paragraph 4 21 In their Complaint, Plaintiffs allege that Foss “materially and substantially 22 breached the [Contract] through various acts and omissions, including but not limited to, 23 its failure to properly install the Vessel’s stern tube and properly align the Vessel’s entire 24 propulsion shaft arrangement.” Dkt. # 23, ¶ 11. Foss argues that summary judgment is 25 appropriate because the Contract discharges Foss from all liability unless the Customer: 26 1) lodges a complaint in writing within six (6) months, and 2) commences litigation 27 1 within one (1) year. Plaintiffs counter that the claim and suit time limitations only apply 2 to breach of warranty claims1 because this disclaimer is included in the paragraph named 3 “LIMITED WARRANTY,” and the paragraph does not reference negligence or contract 4 claims or use broad language to encompass those claims. 5 The Court does not find Plaintiffs’ arguments persuasive. Paragraph 4 of the 6 Contract does in fact use broad language to disclaim “all liability for defective 7 workmanship or material or for loss or damage,” unless the Customer makes a claim in 8 writing within six months of the completion of the work and commences litigation within 9 one year of completion. Contract at 2, ¶ 4. It is uncontested that O’Hara did not take these 10 steps during the delineated time period. Further, the Court does not find persuasive 11 Plaintiffs’ argument that the time limitations provided for in Paragraph 4 apply only to 12 breach of warranty claims because the paragraph is titled “LIMITED WARRANTY.” As 13 Foss notes, Plaintiffs provide no authority for their assertion that Paragraph 4’s liability 14 disclaimer should be limited by the title of the paragraph. Further, the parties’ intent to 15 broadly limit liability is underscored by the language that the parties agreed to: under the 16 Contract, Foss is discharged from “all liability” for “defective workmanship or material” 17 or “loss” or “damage” unless O’Hara took the required actions within the specified time 18 frame. “Contract terms are to be given their ordinary meaning and whenever possible, the 19 plain language of the contract should be considered first.” Starrag v. Maersk, Inc., 486 F. 20 3d 607, 616 (9th Cir. 2007) (citing Chembulk Trading LLC v. Chemex Ltd., 393 F.3d 550, 21 555 (5th Cir. 2004)) (quotations omitted). Read as a whole, the plain language is 22 unambiguous—once the specified time frame has passed, Foss is discharged from all 23 liability for any loss or damage. This language bars Plaintiffs’ claims. 24 C.) Paragraph 6’s Broad Exculpatory Clauses Further Disclaim All Liability 25 However, even if the limiting language of Paragraph 4 did not apply to Plaintiffs’ 26

27 1 As noted, Plaintiffs concede that their breach of warranty claim is not actionable. 1 breach of contract and negligence claims, Paragraph 6 of the Contract limits Foss’s 2 liability under those, and other, legal theories. Foss argues that Paragraph 6, which 3 concerns remedies and damages, provides that Plaintiffs’ exclusive remedy for injury 4 under any legal theory is limited to replacement of parts or repair by the Shipyard. Dkt. # 5 26 at 3. Because Plaintiffs have not sought to have Defendant repair the Vessel, Foss 6 argues that the breach of contract claim and claim for damages should be dismissed as a 7 matter of law. Id. 8 Plaintiffs counter that repair or replacement is the sole remedy only where loss 9 stems from defective materials and not defective workmanship, as Plaintiffs allege here. 10 Plaintiffs cite to Paragraph 6, which refers to replacement or repair “of any article or part 11 thereof.” Paragraph 6 also includes references to “defective item[s],” and “article[s] or 12 part[s]” that have been installed, but not to “workmanship” specifically. In an instance of 13 breach of contract due to defective workmanship, Plaintiffs argue, damages are the 14 appropriate remedy. Dkt. # 30 at 8-9. 15 The Contract provides, “Shipyard’s liability, and Customer’s exclusive remedy for 16 breach of any warranty or for negligence, strict liability, or otherwise (regardless of legal 17 theory) is limited solely to the replacement or repair… of any article or part thereof 18 which is proven to be other than as warranted.” Contract at 2, ¶ 6. Although the 19 Paragraph does not refer to “workmanship,” it strains credulity to read the Contract 20 provision indicating that “repair” or “replacement” is the “exclusive remedy” for liability 21 “regardless of legal theory” would specifically exclude defective workmanship. “A basic 22 principle of contract interpretation in admiralty law is to interpret, to the extent possible, 23 all the terms in a contract without rendering any of them meaningless or superfluous.” 24 Starrag, 486 F. 3d at 616 (citing Chembulk Trading LLC v. Chemex Ltd., 393 F.3d 550, 25 555 (5th Cir. 2004)). The Court rejects such a strained interpretation of the Contract. 26 Because the exclusive remedy for breach of contract (whether or not it stems from a 27 1 claim of defective workmanship) is repair or replacement, and Plaintiffs seek damages 2 (and do not and have not sought repair), their breach of contract claim is barred as a 3 matter of law. 4 Similar exculpatory language bars Plaintiffs’ negligence claim. The Contract 5 provides for damages only in the event of injury caused by gross negligence on the part 6 of the Shipyard and when other portions of the Contract do limit Foss’s liability. Contract 7 at 2, ¶ 6. Although the liability disclaimers of Paragraph 6 are broad and seem to shield 8 Foss from nearly all liability, the Court is under no obligation to invalidate them when the 9 parties have “assented without complaint to the terms of the agreement.” Royal Ins. Co. 10 of America v. Southwest Marine, 194 F.3d 1009, 1014 (9th Cir. 1999) (quoting M/V 11 American Queen v. San Diego Marine Constr. Corp., 708 F.2d 1483, 1488 (9th Cir. 12 1983)). 13 The Ninth Circuit has held that exculpatory clauses in maritime contracts stand on 14 “strong footing,” and “absent evidence of overreaching, clauses limiting liability in ship 15 repair contracts will be enforced.” Arcwel Marine, Inc. v. Sw. Marine, Inc., 816 F.2d 468, 16 471 (9th Cir. 1987) (quoting M/V American Queen, 708 F.2d at 1488); see also Royal Ins. 17 Co. of America, 194 F.3d at 1014 (“…[E]xculpatory clauses are enforceable even when 18 they completely absolve parties from liability for negligence…). Plaintiffs put forth no 19 evidence that Foss has overreached. As such, the Court will uphold the validity of the 20 exculpatory clauses. See Marr Enterprises, Inc. v. Lewis Refrigeration Co., 556 F.2d 951, 21 956 (9th Cir. 1977) (“The contract expressly disclaims liability for negligence. We 22 therefore hold that these limitations are enforceable against both the tort and contract 23 claims of [Plaintiff].”). Plaintiffs’ claims are barred as a matter of law. 24 D.) Plaintiffs’ Request to File a Third Amended Complaint 25 Plaintiffs request leave to file a Third Amended Complaint adding a fourth cause 26 of action of gross negligence. Dkt. # 32. Plaintiffs allege that on August 4, 2022, 27 1 Plaintiffs’ counsel learned from Frank O’Hara, President of the O’Hara Corporation, that 2 Foss representatives told him that “Foss knowingly disregarded the Stern Tube 3 Installation Procedure prepared by O’Hara’s naval architect….” Dkt. #33, ¶ 2. Plaintiffs 4 seek to assert that Foss intentionally disregarded explicit written instructions, resulting in 5 gross negligence, and note that they filed their Motion to Amend on the same date that 6 Plaintiffs’ counsel learned this new information from Mr. O’Hara. 7 Foss opposes Plaintiffs’ request because Plaintiffs filed their motion to amend 8 after the July 27, 2022 deadline to file amended pleadings and did not seek to amend the 9 parties’ scheduling order. See Dkt. # 19 at 1 (Order Setting Trial Date and Related Dates). 10 Foss argues that Plaintiffs cannot establish reasonable diligence and good cause to amend 11 their Complaint, and further, amendment would be futile because the Contract bars a 12 gross negligence claim. Plaintiffs ask that the Court treat their motion to amend as a de 13 facto motion to amend the case schedule and note that parties to maritime contracts 14 cannot shield themselves contractually from liability for gross negligence. See Royal Ins. 15 Co. of America, 194 F.3d at 1015-16. 16 If the time for amendment as a matter of right has passed, a party may amend its 17 pleading with the opposing party’s written consent or the court’s leave. Fed. R. Civ. P. 18 15(a)(2). “The court should freely give leave when justice so requires.” Id. Under Rule 19 15, the policy favoring amendments should be applied liberally. Johnson v. Mammoth 20 Recreations, Inc., 975 F.2d 604, 607 (9th Cir. 1992). “[L]eave to amend should be 21 granted unless amendment would cause prejudice to the opposing party, is sought in bad 22 faith, is futile, or creates undue delay.” Id. Between these factors, “the consideration of 23 prejudice to the opposing party [] carries the greatest weight.” Eminence Capital, LLC v. 24 Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). In the absence of prejudice or a strong 25 showing of the other factors, “there exists a presumption under Rule 15(a) in favor of 26 27 1 granting leave to amend.” Id. “Undue delay by itself [] is insufficient to justify denying a 2 motion to amend.” Bowles v. Reade, 198 F.3d 752, 758 (9th Cir. 1999). 3 Once the district court has set a schedule, however, it may be modified only for 4 good cause and with the judge’s consent. Fed. R. Civ. P. 16(b)(4). The “good cause” 5 standard under Rule 16 focuses primarily on the diligence of the party seeking the 6 amendment. See Johnson, 975 F.2d at 608. A court may find good cause if the pretrial 7 deadline “cannot reasonably be met despite the diligence of the party seeking the 8 extension.” Fed. R. Civ. P. 16 Advisory Committee’s Notes (1983 Amendment). If a 9 party seeks to amend a pleading after the deadline for amending pleadings in the 10 scheduling order has passed, the party must first show good cause under Rule 16, and if 11 successful, it must then demonstrate that amendment is proper under rule 15. Id. 12 Because Plaintiffs’ proposed Third Amended Complaint is untimely under the 13 Court’s scheduling order, Plaintiffs must establish good cause under Rule 16. The Court 14 finds that Plaintiffs cannot establish good cause because they were not diligent in seeking 15 an extension of the Court’s scheduling order (let alone seeking leave to file a Third 16 Amended Complaint). The Court finds the timing of Plaintiffs’ request to amend the 17 complaint curious. Weeks after the parties filed their summary judgment briefing (in 18 which Foss moved for judgment as to all of Plaintiffs’ claims and both parties at least 19 obliquely referenced Plaintiffs’ ability to sustain a gross negligence claim), Plaintiffs 20 allege that they learned totally new information that gives rise to a new cause of action— 21 one that may or may not barred under the Contract. 22 Plaintiffs’ allegation that in Fall 2020 Foss employees told Mr. O’Hara that in 23 2016 Foss knowingly disregarded written instructions is information that should have 24 become known to Plaintiffs earlier. Given that Plaintiffs brought a negligence claim in 25 their Complaint (Dkt. # 1), Amended Complaint (Dkt. # 7), and Second Amended 26 Complaint (Dkt. # 23), there is no reason why Plaintiffs could not have alleged gross 27 1 negligence at an earlier date. Indeed, the parties began to engage in written discovery and 2 third-party discovery in February 2022, around the same time that Plaintiffs filed their 3 Second Amended Complaint. See Dkt. # 35, ¶ 4 (Declaration of Colin Folawn in 4 Opposition to Plaintiffs’ Motion to Amend). There is no reason why Plaintiffs could not 5 have discovered this new information (and brought it to the Court’s and Foss’s attention) 6 earlier. Either Plaintiffs were not diligent in determining whether a gross negligence 7 claim was proper, or they are making a last-ditch effort to avoid dismissal on summary 8 judgment. Either way, they do not meet the good cause standard. The Court therefore 9 DENIES Plaintiffs’ request to file a Third Amended Complaint. Dkt. # 32. 10 11 IV. CONCLUSION 12 For all the foregoing reasons, the Court GRANTS Defendant’s Motion for 13 Summary Judgment, Dkt. # 26, and DENIES Plaintiffs’ Motion for Leave to File a Third 14 Amended Complaint. Dkt. # 32. Plaintiffs’ Second Amended Complaint is dismissed. 15 16 Dated this 16th day of March, 2023. 17 A 18

19 The Honorable Richard A. Jones 20 United States District Judge 21

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