Zurich American Ins. Co. of Illinois v. VForce Inc.

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 ZURICH AMERICAN INSURANCE No: 2:18-cv-02066-TLN-CKD COMPANY OF ILLINOIS, 12 Plaintiffs, 13 ORDER v. 14 VFORCE INC., doing business as VForce 15 Staffing Solutions; CORTECH, LLC, 16 Defendants. 17 18 This matter is before the Court on Defendant and Cross Claimant VForce Inc.’s 19 (“VForce”) Motion for Modification of the Initial Pretrial Scheduling Order and to Amend Its 20 First Amended Third-Party Complaint. (ECF No. 80.) Defendant and Cross Defendant CorTech, 21 LLC (“CorTech”) opposes the motion. (ECF No. 81.) VForce has filed a reply. (ECF No. 82.) 22 For the reasons set forth below, the Court GRANTS VForce’s motion. 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 1 I. FACTUAL BACKGROUND 2 Plaintiff Zurich American Insurance Company of Illinois (“Zurich”) filed its First 3 Amended Complaint (“FAC”) on January 30, 2019. (ECF No. 6.) The FAC alleges that Zurich 4 entered into a contract requiring it to provide workers compensation insurance to VForce, and that 5 VForce breached the contract by failing to pay Zurich $612,669.00. (Id. at ¶ 10.) Zurich also 6 filed suit against CorTech. (Id. at 1.) On March 12, 2019, VForce filed its Answer denying 7 liability and concurrently filed a Crossclaim and Third-Party Complaint seeking indemnity and 8 damages for breach of contract from CorTech and Third-Party Defendants Bean Team Network 2 9 LLC; Accuire, LLC; Capserve, Inc.; Kaiserkane Consulting, LLC; Michael DiManno; Richard 10 Gardner; Charles Musgrove; and Melissa Oglesby. (ECF Nos. 12, 15.) 11 VForce alleges that on December 22, 2014, it entered into a contract with Third-Party 12 Defendant Bean Team Network 2, LLC under which Bean Team Network 2 agreed to indemnify 13 VForce for additional amounts due under the workers compensation insurance contract between 14 VForce and Zurich. (ECF No. 15 ¶¶ 17–24.) VForce further alleges that following a merger, 15 CorTech and Accuire became responsible for the Bean Team Network 2’s liabilities. (Id. ¶ 7.) 16 VForce alleges that pursuant to this Court’s Pretrial Scheduling Order, amendments to the 17 pleadings were to be made before April 6, 2019. (ECF No. 80-1 at 3.) VForce filed the instant 18 motion on November 4, 2020, alleging that “[i]n recent months, VForce discovered that it has 19 claims for indemnity against Amazing Insurance and Alex Campos.” (Id. at 3.) VForce now 20 seeks to add Alex Campos and Amazing Insurance, Inc. as Third-Party Defendants in this action. 21 (Id. at 2.) 22 II. STANDARD OF LAW 23 Granting or denying leave to amend a complaint rests within the sound discretion of the 24 trial court. Foman v. Davis, 371 U.S. 178, 182 (1962). Under Rule 15(a)(2), a party may amend 25 its pleading only with the opposing party’s written consent or the Court’s leave. However, “[t]he 26 court should freely give leave [to amend] when justice so requires,” bearing in mind “the 27 underlying purpose of Rule 15 . . . [is] to facilitate decision on the merits, rather than on the 28 pleadings or technicalities.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc). 1 Whether leave to amend should be granted is generally determined by considering the 2 following factors: (1) undue delay; (2) bad faith or dilatory motive on the part of the movant; (3) 3 repeated failure to cure deficiencies by amendments previously allowed; (4) undue prejudice to 4 the opposing party by allowing amendment; and (5) futility of amendment. See Foman, 371 U.S. 5 at 182; Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990)). Of these considerations, 6 “it is the consideration of prejudice to the opposing party that carries the greatest weight.” 7 Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (per curiam). 8 “Absent prejudice, or a strong showing of any of the remaining Foman factors, there exists a 9 presumption under Rule 15(a) in favor of granting leave to amend.” Id. (emphasis in original). 10 “[A] district court should grant leave to amend . . . unless it determines that the pleading could not 11 possibly be cured by the allegation of other facts.” Watison v. Carter, 668 F.3d 1108, 1117 (9th 12 Cir. 2012) (citing Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)). 13 III. ANALYSIS 14 VForce alleges it could not have amended its complaint by April 6, 2019, as required by 15 the Pretrial Scheduling Order because it was unaware of Amazing Insurance, Inc. and Alex 16 Campos’s liability at the time. (ECF No. 80-1 at 4.) VForce states it only became aware of 17 potential liability in July 2020, and soon after filed the instant motion. (Id.) 18 The only Foman factor at issue is undue delay. CorTech opposes VForce’s request 19 arguing VForce unduly delayed its attempt to amend and further claims VForce knew of the 20 additional parties for eleven months prior to filing its motion. (ECF No. 81 at 3–4.) VForce 21 contests this stating “[l]ittle more than three months elapsed between VForce and its counsel 22 learning of the facts underlying the claims it seeks to add” and filing its motion. (ECF No. 82 at 23 5.) 24 Having reviewed the parties briefing, as well as the declaration of Sean M. Stowers 25 outlining that VForce first became aware of Alex Campos and Amazing Insurance Inc.’s 26 liabilities on or after July 27, 2020, (ECF No. 82-1), the Court finds no reason to disbelieve 27 28 1 || VForce’s assertions.' Though CorTech vaguely asserts it will be prejudiced by amendment, it 2 | offers no argument as to why. As such, the Court finds CorTech will not be prejudiced by 3 | amendment. Absent prejudice or a strong showing of any of the remaining Foman factors, there 4 | exists a presumption under Rule 15(a) in favor of granting leave to amend. Accordingly, the 5 | Court grants VForce’s motion. 6 IV. CONCLUSION 7 For the foregoing reasons, Defendant and Cross Claimant VForce Inc.’s Motion for 8 || Modification of the Initial Pretrial Scheduling Order and to Amend Its Third-Party Complaint 9 | (ECF No. 80) is GRANTED. VForce shall file its Second Amended Cross Complaint and Third- 10 | Party Complaint not later than fourteen (14) days after the electronic filing date of this Order. 11 | Cross-Defendants and Third-Party Defendants shall file a response to the Second Amended 12 | Cross-Complaint and Third-Party Complaint not later than thirty (30) days after the electronic 13 | filing date of the Amended Complaint. 14 All parties are further ordered to meet and confer and submit a joint statement within 15 | fourteen (14) days regarding the remaining pending motion(s) in this case and whether, if at all, 16 | this Order impacts the resolution of such motion(s). 17 IT IS SO ORDERED. 18 19 | DATED: January 31, 2022 20 () jf 4 / ) bbw 22 Troy L. Nunley 53 United States District Judge 24 25 76 | CorTech attached a series of emails, as evidence, allegedly displaying that VForce knew 27 || of Alex Campos and Amazing Insurance Inc.’s involvement sooner. (See ECF No. 80-1.) The attached emails failed to include an authenticating declaration and are accordingly not competent 28 | evidence. See Fed. R. Civ. Proc. 43; E.D. Cal. Re.