Beck v. Am. Honda Fin. Corp.

HERBERT BECK, Plaintiff, v. AMERICAN HONDA FINANCE CORP., Defendant.

Civil Action No. 19-cv-02712-PAB-MEH

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

June 9, 2020

RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

Michael E. Hegarty, United States Magistrate Judge.

Before the Court is "Plaintiff's Motion for Leave to File [Second] Amended Complaint and Memorandum of Law in Support." ECF 114. Plaintiff requests leave to amend to "clarif[y] allegations" purportedly in an attempt to cure the defects identified in this Court's Recommendation on Defendant's Motion to Dismiss, issued on March 3, 2020. See ECF 112. Defendant counters that the proposed Second Amended Complaint "does nothing to 'cure' the deficiencies in the [Amended] Complaint." ECF 116. For the reasons that follow, the Court respectfully recommends¹ that the Honorable Philip A. Brimmer grant in part and deny in part the Plaintiff's motion.

BACKGROUND

The material facts of this case are set forth in detail in this Court's March 3, 2020 Recommendation; any additional facts proposed by the Plaintiff will be discussed in the Court's analysis.

Plaintiff filed this action on August 29, 2019 in the 2nd Judicial District Court, Denver, Colorado. ECF 4. Former defendant Equifax removed the case to this Court on September 20, 2019. ECF 1. Plaintiff filed the operative Amended Complaint on November 5, 2019, alleging the following claims against Defendant (and other former defendants): (1) negligence, (2) fraudulent concealment, (3) conversion, (4) fraudulent misrepresentation, (5) breach of express and implied contract, (6) violation of the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. ("FCRA"), (7) unjust enrichment, and (8) civil theft. Am. Compl., ECF 65. Since that time, Plaintiff voluntarily dismissed all defendants except American Honda Finance Corporation ("Defendant"), which responded to the operative pleading by filing a motion to dismiss. ECF 68.

The motion was referred to the undersigned and, on March 3, 2020, this Court recommended that Judge Brimmer either (1) grant the motion, dismiss the federal claim, and decline to exercise supplemental jurisdiction over the remaining state-law claims; or (2) exercise supplemental jurisdiction, grant in part and denied in part the motion, and dismiss Plaintiff's third, fourth, fifth, sixth, and eighth claims for relief, but permit Plaintiff to file a Second Amended Complaint to attempt to cure the deficiencies found in the operative pleading. See ECF 112. Plaintiff filed an objection to the Recommendation, along with the present motion. Defendant opposes the motion asserting both undue prejudice and futility of the amendments.

LEGAL STANDARDS

Depending on the date filed, Plaintiff's motion may necessitate an amendment of the Scheduling Order under Fed. R. Civ. P. 16(b), which would require that Plaintiff show good cause. Fed. R. Civ. P. 16(b)(4); Minter v. Prime Equip. Co., 451 F.3d 1196, 1205 n.4 (10th Cir. 2006) (citing SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1518-19 (10th Cir. 1990)). Here, the governing Scheduling Order provides that the deadline for the parties to amend their pleadings was January 11, 2020. ECF 86. The current motion was filed on March 16, 2020. Because Plaintiff seeks leave to amend his Amended Complaint after the Scheduling Order's deadline for amendment of pleadings, the motion implicates both Rules 15 and 16.

I. Fed. R. Civ. P. 16(b)

Rule 16 dictates that "[a] schedule may be modified only for good cause and with the judge's consent." Fed. R. Civ. P. 16(b)(4). "After a scheduling order deadline, a party seeking leave to amend must demonstrate (1) good cause for seeking modification under Fed. R. Civ. P. 16(b)(4) and (2) satisfaction of the Rule 15(a) standard." Birch v. Polaris Indus., Inc., 812 F.3d 1238, 1247 (10th Cir. 2015) (quoting Gorsuch, Ltd., B.C. v. Wells Fargo Nat'l Bank Ass'n, 771 F.3d 1230, 1240 (10th Cir. 2014)).

Rule 16(b)'s "good cause" standard is much different than the more lenient standard contained in Rule 15(a). Rule 16(b) does not focus on the bad faith of the movant, or the prejudice to the opposing party. Rather, it focuses on the diligence of the party seeking leave to modify the scheduling order to permit the proposed amendment. Properly construed, "good cause" means that scheduling deadlines cannot be met despite a party's diligent efforts.

Colo. Visionary Acad. v. Medtronic, Inc., 194 F.R.D. 684, 687 (D. Colo. 2000) (quoting Dilmar Oil Co., v. Federated Mut. Ins. Co., 986 F. Supp. 959, 980 (D.S.C. 1997)). "Rule 16's good cause requirement may be satisfied, for example, if a plaintiff learns new information through discovery or if the underlying law has changed." Gorsuch, 771 F.3d at 1240. However, "[a] litigant's failureto assert a claim as soon as he could have is properly a factor to be considered in deciding whether to grant leave to amend." Perez v. Denver Fire Dep't, 243 F. Supp. 3d 1186, 1200 (D. Colo. 2017) (emphasis added). "To demonstrate good cause pursuant to Rule 16, the moving party must . . . 'provide an adequate explanation for any delay.'" Lehman Bros. Holdings Inc. v. Universal Am. Mortg. Co., LLC, 300 F.R.D. 678, 681 (D. Colo. 2014) (quoting Strope v. Collins, 315 F. App'x 57, 61 (10th Cir. 2009)); D.R. Horton, Inc.-Denver v. Travelers Indem. Co. of Am., 281 F.R.D. 627, 630 (D. Colo. 2012). Further, a court may consider the procedural posture of a case in a Rule 16(b) "good cause" analysis. See Nicastle v. Adams Cty. Sheriff's Office, No. 10-cv-00816-REB-KMT, 2011 WL 1465586, at *3 (D. Colo. Mar. 14, 2011), R. & R. adopted by 2011 WL 1464588 (D. Colo. Apr. 18, 2011).

II. Fed. R. Civ. P. 15(a)

Rule 15 states that after the deadline for amending a pleading as a matter of course, "a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires." Fed. R. Civ. P. 15(a)(2). The grant or denial of an opportunity to amend is within the discretion of the Court, "but outright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely abuse of that discretion and inconsistent with the spirit of the Federal Rules." Maloney v. City of Pueblo, 323 F.R.D. 358, 360 (D. Colo. 2018) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). "Refusing leave to amend is generally only justified upon a showing of undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of amendment." Id. (quoting Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993)).

Prejudice in this context arises when the amendment unfairly affects the opposing party "'in terms of preparing their defense to the amendment.'" Minter, 451 F.3d at 1208 (quoting Patton v. Guyer, 443 F.2d 79, 86 (10th Cir. 1971)). Prejudice occurs most often "when the amended claims arise out of a subject matter different from what was set forth in the complaint and raise significant new factual issues." Id. Moreover, "[i]f a party opposes a motion to amend or to supplement on the grounds of futility, the court applies the same standard to its determination of the motion that governs a motion to dismiss under Fed. R. Civ. P. 12(b)(6)." Conkleton v. Zavaras, No. 08-cv-02612-WYD-MEH, 2010 WL 6089079, at *3 (D. Colo. Oct. 6, 2010), R. & R. adopted by 2011 WL 839282 (D. Colo. Mar. 7, 2011).

III. Dismissal Pursuant to Fed. R. Civ. P. 12(b)(6)

The purpose of a motion to dismiss under Fed. R. Civ. P. 12(b)(6) is to test the sufficiency of the plaintiff's complaint. Sutton v. Utah State Sch. For the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 2008). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plausibility, in the context of a motion to dismiss, means that the plaintiff pled facts which allow "the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Twombly requires a two-prong analysis. First, a court must identify "the allegations in the complaint that are not entitled to the assumption of truth," that is, those allegations which are legal conclusions, bare assertions, or merely conclusory. Id. at 679. Second, the Court must consider the factual allegations "to determine if they plausibly suggest an entitlement to relief." Id. at 681. If the allegations state a plausible claim for relief, such claim survives the motion to dismiss. Id. at 680.

Plausibility refers "to the scope of the allegations in a complaint: if they are so general that they encompass a wide swath of conduct, much of it innocent, then the plaintiffs have not nudged their claims across the line from conceivable to plausible." S.E.C. v. Shields, 744 F.3d 633, 640 (10th Cir. 2014) (quoting Khalik v. United Air Lines, 671 F.3d 1188, 1191 (10th Cir. 2012)). "The nature and specificity of the allegations required to state a plausible claim will vary based on context." Safe Streets All. v. Hickenlooper, 859 F.3d 865, 878 (10th Cir. 2017) (quoting Kan. Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1215 (10th Cir. 2011)). Thus, while the Rule 12(b)(6) standard does not require that a plaintiff establish a prima facie case in a complaint, the elements of each alleged cause of action may help to determine whether the plaintiff has set forth a plausible claim. Khalik, 671 F.3d at 1191.

However, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678. The complaint must provide "more than labels and conclusions" or merely "a formulaic recitation of the elements of a cause of action," so that "courts 'are not bound to accept as...