Segal v. Brachfeld et al
Filing
35
ORDER by Judge Elizabeth D. Laporte terminating 25 Motion for Leave to File; granting 26 Motion for Leave to File (edllc2, COURT STAFF) (Filed on 8/31/2012)
<![CDATA[
1
2
3
4
5
6
7
IN THE UNITED STATES DISTRICT COURT
8
FOR THE NORTHERN DISTRICT OF CALIFORNIA
9
United States District Court
For the Northern District of California
10
MELVYN L SEGAL,
11
12
13
No. C -11-05524 EDL
Plaintiff,
ORDER GRANTING PLAINTIFF’S
MOTION TO AMEND COMPLAINT
v.
ERICA L BRACHFELD, et al.,
14
Defendants.
15
/
16
In this debt collection case, Plaintiff alleges that Defendants, and in particular the Brachfeld
17
Law Group (“BLG”), harassed him by placing calls to his home in an attempt to collect a consumer
18
debt. Plaintiff has filed a Motion to Amend the Complaint, proposing three primary amendments:
19
(1) dropping Martin Brachfeld as a Defendant; (2) adding allegations that BLG is Defendant Erica
20
Brachfeld’s alter ego; and (3) adding LVNV Finding, which is alleged to be the owner of the debt
21
and Resurgent, which is alleged to be LVNV’s agent, as Defendants. On August 28, 2012, the Court
22
held a hearing on Plaintiff’s motion. For the reasons stated at the hearing and in this Order, the
23
Court grants Plaintiff’s Motion to Amend.
24
Discussion
25
Defendants do not oppose the addition of alter ego allegations against Erica Brachfeld. In
26
addition, as stated at the hearing, the Court dismisses Martin Brachfeld without prejudice.
27
Accordingly, Plaintiff’s Motion to Amend is granted as to those proposed amendments.
28
The crux of the dispute between the parties is whether Plaintiff should be able to amend his
complaint to add BLG’s clients, LVNV Funding and Resurgent, as Defendants. A party's right to
1
2
3
4
5
amend his or her pleadings is generally governed by Rule 15(a):
(1) Amending as a Matter of Course. A party may amend its pleading once as a
matter of course within: (A) 21 days after serving it, or (B) if the pleading is one to
which a responsive pleading is required, 21 days after service of a responsive
pleading or 21 days after service of a motion under Rule 12(b), (e) or (f), whichever
is earlier. (2) Other Amendments. In all other cases, 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.
6
In Foman v. Davis, 371 U.S. 178, 182 (1962), the Supreme Court declared that the requirement of
7
Rule 15(a) that leave to amend shall be freely given when justice so requires "is to be heeded." The
8
Ninth Circuit has directed district courts to apply the rule favoring amendments to pleadings with
9
"extreme liberality." DCD Programs, Ltd. v. Leighton, 833 F.2d 183,186 (9th Cir. 1987).
United States District Court
For the Northern District of California
10
In determining whether to allow leave to amend, courts should consider: (1) any bad
11
faith/dilatory motive of the moving party; (2) any prejudice to the opposing party; (3) undue delay;
12
and (4) the futility of the proposed amendment. Jackson v. Bank of Hawaii, 902 F. 2d 1385, 1387
13
(9th Cir. 1990). Here, there is no dispute that adding LVNV and Resurgent would not be futile.
14
Ultimately, prejudice is the critical factor in considering motions for leave to amend. Howey v.
15
U.S., 481 F.2d 1187, 1190 (9th Cir. 1973). The party opposing the amendment bears the burden of
16
showing prejudice. See DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 190 (9th Cir. 1987).
17
The proposed amended complaint alleges that LVNV is a consumer debt purchaser that
18
acquires consumer debts in default and then seeks to collect on those claims. Proposed FAC ¶ 8(a).
19
Resurgent is alleged to be the master servicer for charged off consumer debt owed by LVNV,
20
servicing, administering and collecting LVNV’s charged-off receivables. Proposed FAC ¶ 8(b).
21
Plaintiff alleges that LVNV purchased the debt at issue in this case for a “tiny fraction of its alleged
22
amount” and together with other Defendants, LVNV is seeking to collect on the debt for
23
Defendants’ benefit. Proposed FAC ¶ 18.
24
1.
Bad faith/undue delay
25
Plaintiff argues that as soon as it became clear that the June 21, 2012 mediation had not
26
resolved this case, Plaintiff promptly notified Defendants that he intended to move to amend the
27
complaint. See July 2, 2012 Joint CMC Statement at 7. Defendants, however, argue that Plaintiff
28
has unduly delayed in bringing this motion. Plaintiff admits to learning of LVNV in March 2012.
2
1
See Renneisen Decl. ¶ 6; Reply at 5. Plaintiff also states that after learning that LVNV was the
2
owner of the debt, Plaintiff researched claims against LVNV and determined that LVNV and
3
Resurgent should be sued together. Renneisen Decl. ¶ 9. Plaintiff states that until March 2012,
4
Plaintiff did not know that LVNV was the owner of the alleged debt. Reply Reneissen Decl. ¶ 8.
5
Defendants argue that Plaintiff must have known about both LVNV and Resurgent because
6
they were likely included on the “countless letters” sent to Plaintiff before litigation. Defendants,
7
however, do not produce any such letter, and so there has been no evidentiary showing that Plaintiff
8
should have known about LVNV/Resurgent before March 2012 when Defendants told Plaintiff.
It is clear that Plaintiff knew about LVNV as early as March 2012, so there has been some
10
United States District Court
For the Northern District of California
9
delay in bringing this motion to amend. However, the delay of about four months was not undue,
11
and there has been no showing of bad faith.1 See Abels v. JBC Legal Group, 229 F.R.D. 152, 156
12
(N.D. Cal. 2005) (finding that there was no undue delay where a plaintiff sought to amend the
13
complaint to add a defendant ten months after the original complaint was filed and one month after
14
finding out about the additional defendant, particularly where the discovery deadline had not yet
15
passed). The parties attended a mediation in June 2012, and it was reasonable and not in bad faith
16
for Plaintiff to wait to bring in new parties until the case had been through mediation. Further, there
17
are no pretrial or trial dates set in this case.
18
2.
Prejudice to Defendants
19
Ultimately, prejudice is the critical factor in considering motions for leave to amend. Howey
20
v. U.S., 481 F.2d 1187, 1190 (9th Cir. 1973); Eminence Capital LLC v. Aspeon, Inc., 316 F.3d
21
1048, 1052 (9th Cir. 2003) (“Not all of the factors merit equal weight. As this circuit and others
22
have held, it is the consideration of prejudice to the opposing party that carries the greatest weight.
23
Prejudice is the ‘touchstone of the inquiry under rule 15(a).’”) (internal citations omitted). The party
24
opposing the amendment bears the burden of showing prejudice. See DCD Programs, Ltd. v.
25
Leighton, 833 F.2d 183, 190 (9th Cir. 1987). To deny leave to amend, the prejudice must be
26
substantial. Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir.1990).
27
1
28
Defendants’ argument regarding bad faith appears to rest on their characterization of
events that occurred at the mediation in this case. The Court disregards Defendants’ arguments based
on conduct at the mediation as they violate ADR Local Rule 6-12.
3
1
In general, Defendants argue that they would be prejudiced by the amendment adding LVNV
2
and Resurgent because Defendants took strategic steps based on the original complaint, such as
3
“admitting liability” (while also asserting a complete defense to liability) by acknowledging making
4
continued phone calls after receiving Plaintiff’s cease and desist letter, and tendering fees and
5
damages, which they would not have taken had BLG been in a position of having also to defend its
6
client LVNV/Resurgent simultaneously. At the hearing, the Court noted that any facts that
7
Defendants have admitted would not be different even if LVNV and Resurgent were in this case.
8
Defendants claimed, however, that they would have taken different steps in this case because
9
LVNV/Resurgent might not have wanted current Defendants’ attorneys, who are sometimes also
United States District Court
For the Northern District of California
10
their attorneys, to make certain factual concessions. But the facts of what phone calls were made by,
11
or on behalf of, Defendants BLG and Brachfeld are not subject to dispute, and the admission was
12
only made on their behalf. Moreover, as discussed at the hearing, the only issue with respect to
13
LVNV/Resurgent is whether they could be vicariously liable for BLG’s conduct. Defendants have
14
not demonstrated that substantial prejudice would result if the amendment is permitted. Defendants
15
may file an answer to the amended complaint. There are no pretrial or trial dates in this case. Thus,
16
for these reasons and because motions for leave to amend are freely granted, Plaintiff’s Motion to
17
Amend the Complaint to add LVNV and Resurgent is granted.
18
Plaintiff stated at the hearing that he intended to conduct expansive discovery about
19
Plaintiff’s theory that the business model of Defendants and LVNV/Resurgent depends entirely on
20
violating the FDCPA, and that he would conduct this discovery whether or not LVNV and
21
Resurgent were in this case. The Court cautions Plaintiff that this type of discovery may not be
22
relevant if the only basis for liability against LVNV and Resurgent is vicarious, and notes that the
23
only conduct of which Plaintiff complains in this case is phone calls made to Plaintiff by, or on
24
behalf of, Defendants BLG and Brachfeld with respect to Plaintiff’s alleged consumer debt.
25
Conclusion
26
Plaintiff’s Motion to Amend the Complaint is granted. Plaintiff shall file the amended
27
complaint no later than September 7, 2012. A case management conference is set for October 30,
28
2012. The parties shall file a joint case management conference statement no later than October 23,
4
1
2
3
2012.
IT IS SO ORDERED.
Dated: August 31, 2012
ELIZABETH D. LAPORTE
United States Magistrate Judge
4
5
6
7
8
9
United States District Court
For the Northern District of California
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
5
]]>
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?
