United States District Court, D. Nevada
ORDER (MOT AMD ANS AND CONT DISC-ECF NO. 18)
A. LEEN UNITED STATES MAGISTRATE JUDGE.
the court is Defendant's Motion for Leave to File an
Amended Answer and Continue Discovery (First Request) (ECF
No. 18) filed September 25, 2017. The court has considered
the motion, plaintiff's Opposition (ECF No. 19),
Defendant's Reply (ECF No. 20), and the arguments of
counsel at a hearing conducted November 14, 2017. Sydney
Gambee appeared on behalf of plaintiff, and C.J. Barnabi
appeared on behalf of defendants.
Complaint (ECF No. 1) was filed June 27, 2017. The complaint
alleges that the plaintiff is a Michigan state chartered bank
formed under the laws of Michigan with its principle place of
business in Troy, Michigan doing business in Clark County,
Nevada. Complaint ¶1. Defendant Star Development &
Holding, LLC (“Star Development”) is a limited
liability company that was organized and exists under the law
of the State of Nevada. Id. Defendant Michael Wilson
(“Wilson”) is an individual and citizen of the
State of Nevada. This is a diversity action arising out of a
May 2, 2008 business loan agreement entered into between Star
Development and Bank of Las Vegas (“BLV”).
Id. ¶8. Star Development agreed to borrow and
BLV agreed to lend Star Development $226, 970.00.
Id. The loan was secured by a promissory note in the
same amount. Id. ¶9. Wilson guaranteed the
payment of present and future indebtedness of Star
Development to BLV. Id. ¶10. The terms of the
parties' agreement were changed from time to time
including the terms of the note, and the maturity date was
extended. Id. ¶11. BLV merged with Michigan
Commerce Bank on January 1, 2014, which resulted in the bank
known as Talmer West Bank. Id. ¶12. On August
14, 2015, Talmer West Bank merged into Talmer making Talmer
the successor-in-interest to Bank of Las Vegas. Id.
¶ 13. As a result, Talmer is the holder of the note and
entitled to enforce its rights under the note, guaranty, and
related loan documents. Id. ¶14. Defendants
have failed to make payments as required under the loan.
on these complaint allegations, Talmer has asserted claims
for breach of contract. The prayer for relief seeks actual
and compensatory damages in an amount in excess of $75,
000.00, an award of consequential and incidental damages,
prejudgment interest and costs of suit, special damages
including attorney's fees, and any other relief the court
deems just and proper.
Development filed an Answer (ECF No. 9) March 28, 2017.
Wilson filed a separate Answer (ECF No. 10) the same date.
The parties submitted a Proposed Discovery Plan and
Scheduling Order (ECF No. 12) which requested special
scheduling review and nine months to complete discovery. The
court reviewed the matter and denied the parties' request
finding the request for special scheduling review did not
establish good cause for longer or different periods than
those deemed presumptively reasonable by LR 26-1. The court
therefore entered a standard 180-day plan requiring the
parties to complete discovery by September 25, 2017.
See Order (ECF No. 15). On May 15, 2017 the parties
filed a stipulation and prosed order amend the caption to
substitute the real plaintiff party in interest as Chemical
Bank, the surviving entity after a merger with Talmer Bank
and Trust (ECF No 13) which was approved by the district
judge (ECF No 14).
current motion was filed the last day of the discovery
cutoff. Defendants seek leave to amend the complaint to
assert an affirmative defense under Nevada's
“one-action rule” codified in NRS 40.430(1).
Defendants also request an additional 120 days in which to
complete discovery. The motion argues that leave to amend the
complaint is liberally allowed under Fed.R.Civ.P. 15(a).
Under Nevada's one-action rule, a debtor can compel a
creditor foreclose on the property before enforcing a
guaranty. Plaintiff in this case has not done so although
defendants assumed it would during the course of these
proceedings. Defendants argue that only minimal discovery has
been done and plaintiff will not be prejudiced by an
extension of the discovery plan and scheduling order
deadlines. Plaintiff served a set of written discovery on
each defendant and the depositions of the defendants were
taken on September 13, 2017. Multiple Rule 26 disclosures
have been exchanged. However, defendants have been unable to
locate several key witnesses which the bank disclosed because
the Bank of Las Vegas has long since been closed. Defendants
request a 120-day extension to supplement its discovery and
to conduct follow up discovery, file expert reports for the
underlying value of the property, and file a motion to
dismiss this case until plaintiff complies with the
opposes the motion arguing this is a simple breach of
contract case. Defendants' unsubstantiated and
unwarranted assumptions that the plaintiff would seek to
exercise its rights with respect to the property securing the
loan do not justify reopening discovery. The defendants'
excuses for failing to conduct any discovery in this case do
not demonstrate excusable neglect. Defendants have known all
along that plaintiff has not foreclosed on the underlying
real property, yet they waited until the last day of the
discovery cutoff to try to amend their answers and
“scramble for additional time to complete
discovery.” Plaintiff points out that he court denied
the parties' request for special scheduling review and
entered a standard 180-day plan which established a September
25, 2017 discovery cutoff. Plaintiff served initial
disclosures and two supplements during the discovery period.
Defendants served their initial disclosures and responses to
plaintiff's written discovery, but served no written
discovery of their own and noticed no depositions during the
opposition acknowledges that although leave to amend is
liberally allowed under Rule 15(a), once the deadline
established by the court's scheduling order for filing a
motion to amend the pleadings has passed, leave to amend is
governed by Rule 16, not Rule 15. Defendants have not
established good cause to modify the scheduling order.
However, even if good cause existed, the movant must
demonstrate it is entitled to amend under Rule 15(a). Citing
United States v. Corinthian Colleges, 655 F.3d 984,
995 (9th Cir, 2011), defendants point out that in the Ninth
Circuit, the court considers five factors in assessing the
propriety of leave to amend. The court should deny the motion
for leave to amend because defendants have not established
good cause or that their failure to timely move is the result
of excusable neglect. Additionally, defendants have not shown
good cause to reopen the discovery deadlines.
defendants argue that leave to amend should be denied because
of plaintiff's undue delay and because allowing amendment
would be futile at this point. Defendants have not identified
the specific discovery they intend to complete during the
extended discovery cutoff if granted. Plaintiff completed all
of its discovery within the time the court allowed and should
not be forced to wait while defendants complete the discovery
they should have completed before the cutoff. Plaintiff cites
Hefetz v. Bavor, 397 P.3d 472, 474, 478 (Nev. 2017)
for the proposition that the Nevada Supreme Court has held
that the one-action rule must be timely interposed as an
affirmative defense in a party's responsive pleading or
it is waived. The defendants have never before attempted to
raise the one-action rule as an affirmative defense and
should not be permitted to do so on the last day of
reply that at its core the defendants are seeking to assert
an affirmative defense under Nevada law. This is a
fundamental right afforded by the Nevada Legislature. While
plaintiff may claim prejudice or carelessness “such
arguments are immaterial since they have elected not to
proceed as an ordinary secured lender.” If this is such
a simple contract case as plaintiff claims, they should
mitigate their damages just like any other contract case.
Defendants should be allowed to file an amended answer
because plaintiff has failed to comply with the one-action
rule or mitigate its damages. Therefore, good cause for
amendment exists. There is no basis for denying the motion to
amend because the Ninth Circuit has held that leave to amend
should be granted with “extreme liberality.” The
discovery deadline should be extended and additional
discovery undertaken for plaintiff to be able to pursue its
one-action rule affirmative defense. Therefore, the court
should grant the motion to file an amended answer and extend
discovery for an additional 120 days.
of the Federal Rules of Civil Procedure provides that a party
may amend a pleading once “as a matter of course”
within 21 days after serving it. Fed.R.Civ.P. 15(a)(1)(A).
After that, a party may amend its pleading only by leave of
the court or with the opposing party's written consent.
Fed.R.Civ.P. 15(a)(2). The court has discretion to grant
leave and should freely do so “when justice so
requires.” Id. See also Zivkovic v. S. Cal.
Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002)
(district courts have broad discretion in supervising the
pretrial phase of litigation). However, when a pretrial
scheduling order has been entered pursuant to Rule 16, a
request for leave to amend the pleadings is controlled by
Rule 16(b), rather than Rule 15(a). Johnson v. Mammoth
Recreations, Inc., 975 F.2d 604, 608-09 (9th Cir. 1992);
see also Crockett & Myers, Ltd. v. Napier, Fitzgerald
& Kirby, LLP., 430 F.Supp.2d 1157, 1163 (D. Nev.
2006) (noting that after a court has entered a scheduling
order, “a request to amend the pleadings no longer is
governed by Rule 15; rather, Rule 16 controls”) (citing
Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th
Cir. 2000)). Only if a movant establishes good cause to
modify the scheduling order under Rule 16 does the court
consider whether amendment is proper under Rule 15. See
Johnson, 975 F.2d at 609.
16(b) and Local Rules 6-1 and 26-4 require a showing of
“good cause” before modifying a scheduling order.
Fed.R.Civ.P. 16(b); LR 6-1; LR 26-4. “Unlike Rule
15(a)'s liberal amendment policy which focuses on the bad
faith of the party seeking to interpose an amendment and the
prejudice to the opposing party, Rule 16(b)'s ‘good
cause' standard primarily considers the diligence of the
party seeking the amendment.” Johnson, 975
F.2d at 609 (good cause to extend a discovery deadline exists
“if it cannot reasonably be met despite the diligence
of the party seeking the extension”). A party's
carelessness cannot support a finding of diligence.
Id. Although the court may consider prejudice to an
opposing party, if the moving party was not diligent in
seeking to modify a scheduling order, “the inquiry
should end.” Coleman, 232 F.3d at 1294-95
(citing Johnson, 975 F.2d at 609); see also U.S.
Dominator, Inc. v. Factory Ship Robert E. Resoff, 768
F.2d 1099, 1104 (9th Cir.1985) (court may deny as ...