BNSF Railway Company v. San Joaquin Valley Railroad Company, No. 1:2008cv01086 - Document 193 (E.D. Cal. 2010)

Court Description: ORDER Denying Defendant's Motion for Leave to File Supplemental Counterclaims 179 , signed by Magistrate Judge Sandra M. Snyder on 12/14/2010. (Herman, H)
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BNSF Railway Company v. San Joaquin Valley Railroad Company Doc. 193 1 2 3 4 5 UNITED STATES DISTRICT COURT 6 7 EASTERN DISTRICT OF CALIFORNIA 8 9 BNSF RAILWAY COMPANY, 10 CASE NO. 1:08-cv-01086-AWI-SMS Plaintiff, 11 ORDER DENYING DEFENDANT’S MOTION FOR LEAVE TO FILE SUPPLEMENTAL COUNTERCLAIMS v. 12 13 SAN JOAQUIN VALLEY RAILROAD COMPANY, et al., (Doc. 179) 14 Defendants. 15 / 16 17 Defendant San Joaquin Valley Railroad (“SJVR”) seeks leave to amend its pleadings to 18 19 20 incorporate two new tort claims for fraud and misrepresentation. Plaintiff BNSF Railway Company opposes the motion. Following a review of the parties’ arguments, the record as a 21 22 23 24 25 26 whole, and applicable law, this Court denies SJVR’s motion. I. Procedural and Factual Background In 1992, Tulare Valley Railroad (“TVRR”) purchased certain railroad tracks that Plaintiff formerly owned and operated, and entered into a contract granting Plaintiff the right to set the rates to be paid to TVRR (through-rates) for handling through-routes of Plaintiff’s rail cars on the 27 1 1 2 conveyed lines.1 TVRR purchased the lines intending to demolish and sell for scrap many of the conveyed lines; it contracted with SJVR to conduct rail operations on those that remained in 3 service. 4 5 Although Plaintiff’s payments were initially passed through TVRR to its agent, SJVR, at 6 some point thereafter, the through rates began to be paid directly from Plaintiff to SJVR. 7 Plaintiff contends that this was accomplished through a 1994 letter agreement between Plaintiff 8 and SJVR that was identified in the course of discovery. SJVR contends that the payments are 9 governed solely by the 1992 contract. In any event, the parties do not dispute that TVRR 10 11 12 conveyed the operating rail lines to SJVR late in the 1990's. On July 25, 2008, Plaintiff filed its complaint in this action, seeking declaratory judgment 13 regarding certain terms of its 1992 contract with TVRR and damages for SJVR’s breach of the 14 1992 contract. Doc. 1. Counterclaiming for declaratory judgment and breach of contract 15 damages, SJVR answered on September 2, 2008. Doc. 9. Plaintiff answered SJVR’s 16 17 18 counterclaims on September 19, 2008. Doc. 17. With SJVR’s consent, Plaintiff filed its First Amended Complaint on November 6, 2009. 19 Docs. 83, 84, and 85. Among other things, the First Amended Complaint included allegations 20 relating to subsequent agreements between the parties, including the 1994 letter agreement that 21 fixed compensation due as through-rates to SJVR, superseding the provisions for reporting and 22 23 periodic adjustment of through-rates that were part of the 1992 contract. 24 25 26 27 1 “Through routes and rates are set to allow shippers to ship from one location to another without having to piece together multiple carriers’ routes and rates. In other words, a single through route can span multiple carriers’ lines but only one rate–the through rate–is quoted and charged for transportation services provided by two or more carriers.” Doc. 85. 2 1 2 3 On November 20, 2009, Plaintiff deposed Mike Haeg, assistant vice-president for sales for the central region of RailAmerica, a holding company that has owned SJVR since 2002. TR 9.2 In the 1990's, Haeg had been employed in similar positions by Kyle Railways, Inc., which 4 5 owned SJVR until January 1997, and by States Rail, which owned SJVR until January 2002, 6 when RailAmerica acquired States Rail. TR 8. Haeg admitted to uncertainty regarding 7 Plaintiff’s compensation to SJVR, candidly indicating that he was speculating regarding his 8 understanding of the arrangement. TR 16-17. He could not remember the rate provision 9 included in the 1992 contract. TR 77. Because the dispute between Plaintiff and RailAmerica 10 11 was not Haeg’s responsibility, Haeg did not “d[i]ve into it,” although he understood the dispute 12 to involve “rates and the contract.” TR28. Haeg acknowledged the existence of multiple 13 agreements between SJVR and Plaintiff. AR 32. When presented with Table 1 of an unspecified 14 agreement designated as “exhibit 2,” Haeg testified that it was the type of document that he 15 would have reviewed in his role as vice president of marketing, although he did not remember 16 17 18 seeing it before. TR 32-35. Asked whether he recalled what freight weights were doing between 1991 and 2002, 19 Haeg candidly dismissed any answer he might give as “speculation,” explaining that he knew 20 anecdotally that some rates went up and some went down during that time period. TR 35. He 21 could not remember whether rates were generally going up or going down in California in that 22 23 24 time period. TR 35. Haeg was not privy to Plaintiff’s, or its predecessor’s, through-rates, but had heard through “general talk in the industry” that rates had decreased. TR 37. He was 25 26 27 2 The transcript of Haeg’s deposition (“TR”) is included in the record as Exhibit D to Doc. 116, filed February 12, 2010. 3 1 2 generally unfamiliar with published reports that addressed aggregate rate in the United States. TR 50-52. He was unaware of any rate increases between 1992 and 1997. Tr 61. 3 Haeg testified that, on one occasion, he approached Mike Galassi, Plaintiff’s shortline 4 5 marketing representative, requesting an increase in rates.3 TR 38-39. Haeg was uncertain when 6 the conversation occurred, suggesting “the late ‘90s, ‘98 or ‘99.” TR 39. (Galassi left Plaintiff’s 7 employ in the early 2000's. TR 41.) Haeg testified: 8 9 I recall a conversation with him and it’s a – as I recall, it’s a conversation I initiated asking for an increase in rates, and I can’t recall if it was on the same conversation where he called me back or I called him back at a later date. 10 11 12 13 14 But we did talk about–we did talk about rates in respect to raising our rates because I was asking for an increase in monies that were paid to us. And he said, There’s been rate–There’s been rate compression or rate decreases–I can’t remember what term he used–and, therefore, I’m not going to–I’m not going to let you have an increase because we–we’ve actually had rate decreases. 15 TR 38-39. 16 According to Haeg, Galassi referred to the contract, saying if Plaintiff’s rates went up, 17 18 SJVR got an increase, and if rates went down, SJVR got a decrease. TR 40. Haeg did not recall any references to Table 1 or any other rate table. TR 90-91. Haeg was shocked, thinking Galassi 19 20 “was threatening a decrease.” TR 43. Haeg took no further action, since he had no way of 21 verifying or disproving Galassi’s representations. TR 48. Haeg did not recall whether SJVR’s 22 share of revenue increased, decreased, or remained the same after 1998. TR 43. 23 24 Pursuant to the scheduling order, discovery ended on November 30, 2009. Doc. 32. Also on November 30, 2009, SJVR answered the First Amended Complaint and filed supplemental 25 26 27 3 Haeg generally recalled having other conversations with Plaintiff’s employees and managers, but recalled clearly only his conversation with Galassi. TR 42, 67. 4 1 2 counterclaims. Doc. 91. Plaintiff answered the supplemental counterclaims on December 14, 2009. Doc. 96. 3 On January 11, 2010, based on Haeg’s deposition testimony, SJVR filed a pleading 4 5 entitled “First Amended Supplemental Counterclaim,” which included two new tort claims, fraud 6 and negligent misrepresentation. Doc. 100 (stricken). On January 25, 2010, Plaintiff moved to 7 strike the supplemental counterclaims as violative of F.R.Civ.P. 15. Doc. 107. SJVR argued 8 that, under the 2009 amendment to Rule 15, it was entitled to amend its counterclaims once as a 9 matter of right. Doc. 114. The District Court disagreed, granting Plaintiff’s motion and striking 10 11 the new counterclaims in an order filed September 16, 2010. Doc. 178. Accordingly, on 12 September 30, 2010, SJVR filed this motion for leave to amend the counterclaim to add the two 13 new tort claims. Doc. 179. 14 II. 15 Discussion A. Leave to Amend (F.R.Civ.P. 15) 16 17 Under F.R.C.P. 15(a)(2), the court should freely give leave to amend when justice 18 requires. See Foman v. Davis, 371 U.S. 178, 182 (1962). This policy should “‘be applied with 19 extreme liberality.’” Owens v. Kaiser Foundation Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 20 2001), quoting Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990). 21 “If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of 22 23 relief, he ought to be afforded an opportunity to test his claims on the merits. In the absence of 24 apparent or declared reason–such as undue delay, bad faith or dilatory motive on the part of the 25 movant, repeated failure to cure deficiencies by amendment previously allowed, undue prejudice 26 to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.–the 27 5 1 2 3 leave sought should, as the rules require, be ‘freely given.’” Foman, 371 U.S. at 182. A court must be guided by the purpose of Rule 15, which is facilitating decisions on their merits. United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981). 4 “[A] district court may deny leave to amend where there is any apparent or declared 5 6 reason for doing so, including undue delay, undue prejudice to the opposing party or futility of 7 the amendment.” Lockman Foundation v. Evangelical Alliance Mission, 930 F.2d 764, 772 (9th 8 Cir. 1991), quoting Foman, 371 U.S. at 182 (internal quotation marks omitted). “Not all of the 9 factors merit equal consideration,” however, “it is the consideration of prejudice to the opposing 10 11 party that carries the greatest weight.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 12 1052 (9th Cir. 2003). Leave to amend is within the trial court’s discretion. Swanson v. U.S. 13 Forest Service, 87 F.3d 339, 343 (9th Cir. 1996); United States v. County of San Diego, 53 F.3d 14 965, 969 n. 6 (9th Cir.); cert. denied, 516 U.S. 867 (1995). 15 “[C]ontrolling the pace and scope of discovery, being a matter of case management rather 16 17 than of the application of hard and fast rules, is also within the district judge’s discretion.” 18 Cowen v. Bank United of Texas, FSB, 70 F.3d 937, 944 (7th Cir. 1995). When a motion to amend 19 is made after the discovery period has closed, granting the amendment may require the court to 20 re-open discovery. Id. In such cases, the nature of the requested amendment may rightly demand 21 more or less judicial indulgence. Id. “A need to reopen discovery and therefore delay the 22 23 proceedings supports a district court’s finding of prejudice from a delayed motion to amend the 24 complaint.” Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 986 (9th Cir. 1999) 25 (citation omitted). 26 /// 27 6 1 2 When a party moves to amend during the pendency of a summary judgment motion, a party “may be maneuvering desperately to stave off immediate dismissal of the case.” Id. See 3 also Lamon v. Director, California Department of Corrections, 2010 WL 3448593 at *7 (E.D. 4 5 Cal. September 1, 2010) (No. CIV-06-0156-GEB-KJM); Tate v. Board of Prison Terms, 2010 6 WL 1980141 at *3 n. 4 (C.D.Cal. April 9, 2010), report and recommendation adopted by 2010 7 WL 1980149 (C.D.Cal. May 13, 2010) (No. CV 06-04505-AHM). When faced with this 8 possibility, as the Court is here, courts reasonably may require stronger evidence that the 9 amendment is appropriate. Cowen, 70 F.3d at 944. In the First Circuit, for example, if a party 10 11 moves to amend after its opponent has moved for summary judgment, the party seeking to amend 12 its pleadings must establish that the amendment is supported by “substantial and convincing 13 evidence.” Id. See Resolution Trust Corp. v. Gold, 30 F.3d 251, 253 (1st Cir. 1994); Torres- 14 Matos v. St. Lawrence Garment Co., 901 F.2d 1144, 1146 (1st Cir. 1990). See also PowerAgent, 15 Inc. v. U.S. District Court for the Northern District of California, 210 F.3d 385 (table), 2000 WL 16 17 18 19 20 21 32073 (text) (9th Cir. January 14, 2000) (No. 99-70560) (observing the impropriety of granting a motion to amendment intended to stave off termination of a lawsuit). The Ninth Circuit permits district courts to grant leave to amend after a summary judgment motion has been filed. Ferris v. Santa Clara County, 891 F.2d 715, 718-19 (9th Cir. 1989), cert. denied, 498 U.S. 850 (1990). Nonetheless, district courts in the Ninth Circuit should 22 23 deny motions to amend when the moving party has failed to support its amendment through a 24 “substantial showing.” See Oncology Therapeutics Network Connection v. Virginia Hematology 25 Oncology PLLC, 2006 WL 334532 at *13 (N.D. Cal. February 10, 2006) (No. C 05-3033 WDB); 26 Maldonado v. City of Oakland, 2002 WL 826801 at *4 (N.D.Cal. April 29, 2002) (No. C 01 27 7 1 2 1970 MEJ). In Oncology Therapeutics, Magistrate Brazil suggested that a party’s moving to amend during the pendency of a summary judgment motion may indicate undue delay, prejudice 3 to the opposing party, or both. 4 5 Rule 15 imposes no time limit for amendment of pleadings. In the Ninth Circuit, a 6 district court may not deny a motion for leave to amend solely based on the moving party’s delay. 7 Hurn v. Retirement Fund Trust, 648 F.2d 1252, 1254 (9th Cir. 1981). Denial requires a 8 demonstration of “prejudice to the opposing party, bad faith by the moving party, or futility of 9 amendment.” Bowles v. Reade, 198 F.3d 752, 758 (9th Cir. 1999). Nonetheless, delay remains a 10 11 relevant consideration to be weighed in the determination of whether to grant a motion to amend. 12 Loehr v. Ventura County Community College District, 743 F.2d 1310, 1320 (9th Cir. 1984). 13 “[L]ate amendments to assert new theories are not reviewed favorably when the facts and the 14 theory have been known to the party seeking amendment since the inception of the cause of 15 action.” Acri v. International Association of Machinists & Aerospace Workers, 781 F.2d 1393, 16 17 18 1398 (9th Cir.), cert. denied, 479 U.S. 816, 479 U.S. 821 (1986). If the proposed amendment is insufficient in law and would be a futile act, it is proper to 19 deny leave to amend. Baker v. Pacific Far East Lines, Inc., 451 F.Supp. 84, 89 (N.D.Cal. 1978). 20 “A motion for leave to amend may be denied if it appears to be futile or legally insufficient.” 21 Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988). Futility alone can justify denial 22 23 of a motion for leave to amend. Nunes v. Ashcroft, 375 F.3d 810, 813 (9th Cir. 2004), cert. 24 denied, 543 U.S. 1188 (2005). See also Gabrielson v. Montgomery Ward & Co, 785 F.2d 762, 25 766 (9th Cir. 1986) (opining that a motion to amend should not be granted when the amendment 26 could be defeated on summary judgment). 27 8 1 B. 2 Sufficiency of Pleadings (F.R.Civ.P. 8 and 9) “Rule 8(a)’s simplified pleading standard applies to all civil actions, with limited 3 exceptions,” none of which applies to this action. Swierkiewicz v. Sorema N. A., 534 U.S. 506, 4 5 512 (2002). A complaint must contain “a short and plain statement of the claim showing that the 6 pleader is entitled to relief . . . .” Fed. R. Civ. P. 8(a). “Such a statement must simply give the 7 defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.” 8 Swierkiewicz, 534 U.S. at 512. Detailed factual allegations are not required, but “[t]hreadbare 9 recitals of the elements of the cause of action, supported by mere conclusory statements, do not 10 11 suffice.” Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949 (2009), citing Bell Atlantic Corp. 12 v. Twombly, 550 U.S. 544, 555 (2007). See also Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 13 1985); In re Worlds of Wonder Securities Litigation, 694 F.Supp. 1427, 1433 (N.D. Cal. 1988); 14 Hokama v. E.F.Hutton & Co., Inc., 566 F.Supp. 636, 645-46 (C.D. Cal. 1983). 15 Although accepted as true, “[f]actual allegations must be [sufficient] to raise a right to 16 17 relief above the speculative level.” Twombly, 550 U.S. at 555 (citations omitted). A claimant 18 must set forth “the grounds of his entitlement to relief,” which “requires more than labels and 19 conclusions, and a formulaic recitation of the elements of a cause of action.” Id. at 555-56 20 (internal quotation marks and citations omitted). To adequately state a claim, a party must set 21 forth the legal and factual basis of its claim. A claimant must set forth sufficient factual matter 22 23 accepted as true, to ‘state a claim that is plausible on its face.’” Iqbal, 129 S.Ct. at 1949, quoting 24 Twombly, 550 U.S. at 555. While factual allegations are accepted as true, legal conclusions are 25 not. Iqbal, 129 S.Ct. at 1949. 26 /// 27 9 1 2 In addition, when “alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” F.R.Civ.P. 9(b). In the Ninth Circuit, the rule is 3 interpreted to require the party to plead “the time, place, and specific content of the false 4 5 representations as well as the identities of the parties to the misrepresentation.” Schreiber 6 Distributing Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1400-01 (9th Cir. 1986). 7 “[M]ere recitation of the content of the alleged misrepresentations and the context in which they 8 were made is [not] sufficient to satisfy Rule 9(b).” Comwest, Inc. v. American Operator 9 Services, Inc., 765 F.Supp. 1467, 1470-71 (C.D. Cal. 1991). The pleading party must identify the 10 11 allegedly fraudulent circumstances that sufficiently to allow the responding party to prepare an 12 adequate answer. Walling v. Beverly Enterprises, 476 F.2d 393, 397 (9th Cir. 1973). The 13 allegations must set forth the time, date, and specific content or nature of the fraudulent 14 representations or omissions. Miscellaneous Service Workers, Drivers & Helpers, Teamsters 15 Local # 427 v. Philco-Ford Corp., WDL Division, 661 F.2d 776, 782 (9th Cir. 1981). 16 17 18 C. SJVR’s Claims Are Futile SJVR’s first additional counterclaim charges fraud. Under California law, the “elements 19 of fraud are: (1) a misrepresentation (false representation, concealment, or nondisclosure); (2) 20 knowledge of falsity (scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable 21 reliance; and (5) resulting damage.” Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 22 23 979, 990 (2004). To satisfy the requirements set forth in F.R.Civ.P. 9(b), SJVR must plead each 24 of the elements of fraud with particularity. Conrad v. Bank of America, 45 Cal.App.4th 133, 156 25 (1996). This means that SJVR must allege particular facts that explain the circumstances of the 26 fraud including time, place, persons, statements made, and an explanation of why each statement 27 10 1 2 is false or misleading. Baggett v. Hewlett-Packard Co., 582 F.Supp.2d 1261, 1265 (C.D. Cal. 2007). “The absence of any one of these required elements will preclude recovery.” Wilhelm v. 3 Pray, Price, Williams & Russell, 186 Cal.App.3d 1324, 1332 (1986). 4 SJVR must plead and prove that Plaintiff intended to induce SJVR to act to its detriment 5 6 in reliance on the false representation. Conrad, 45 Cal.App.4th at 156. Because Plaintiff is a 7 corporation, SJVR must “allege the names of the persons who made the allegedly fraudulent 8 representations, their authority to speak, what they wrote or said, and when it was said or 9 written.” Tarmann v. State Mutual Auto. Ins. Co., 2 Cal.App.4th 153, 157 (1991). The 10 11 allegations must give Plaintiff specific notice of the alleged fraud sufficient to enable it to defend 12 against the charge specifically and not simply to be able to protest that it has done nothing wrong. 13 Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). 14 15 In a case alleging mortgage fraud, for example, the plaintiffs sufficiently stated their fraud claim by identifying “a specific individual (Defendant Niraj Maharaj), specific 16 17 misrepresentations (that [the d]efendants would finance the entire project for 75% of the 18 appraised value and that condominium financing would be available a week after the execution 19 of the loans on the commercial plaza and the off-site developments), an exact date on which the 20 alleged misrepresentations were made (September 12, 2007), an intent to defraud (that [the 21 d]efendants had no intention of delivering on the third loan but wanted to obtain fees, 22 23 commissions, and the right to seize property under the first two loans), justifiable reliance ([the 24 p]laintiffs obtained financing and incurred substantial design and construction costs based on 25 Defendant Maharaj’s misrepresentations), and damages (costs and lost profits).” Errico v. 26 /// 27 11 1 2 Pacific Capital Bank, N.A., ___ F.Supp.2d ___, 2010 WL 4699394 at *12 (N.D. Cal. November 9, 2010) (No. 09-CV-04072-LHK). 3 In contrast, SJVR fails to set forth the required allegations of time, place, persons, 4 5 statements made, and an explanation of why each statement is false or misleading. It does no 6 more than generally contend, in paragraph 42, that BNSF affirmatively misrepresented rate 7 information. Doc 100. Its only specific allegations appear in paragraph 43: 8 15 For example, in or about the 1998 to 2001 time frame, BNSF through its officer and managing agent Mike Galassi represented to SJVR through its officer and managing agent Mike Haeg that the applicable BNSF rates had been subject to decreases, when that was not true, in response to Mr. Haeg’s request for a rate increase for SJVR under the Contract. Upon information and belief, Mr. Galassi’s representation was false in that the applicable rates had in fact substantially increased, and Mr. Galassi knew such representation was false at the time he made it, and he intended to mislead SJVR and have it rely on such representation. Mr. Haeg reasonably believed Mr. Galassi’s misrepresentation, and as a proximate result thereof, he did not pursue asking for an increase in BNSF’s payment obligations to SJVR at that time under the Contract in reasonable reliance upon such representation, even though SJVR was entitled to such an increase. 16 Doc. 100. 17 SJVR alleges that, by “information and belief,” Galassi falsely represented that rates had 9 10 11 12 13 14 18 increased. A claim based on information and belief is “fundamentally defective.” Comwest, 765 19 20 F.Supp. at 1471. An allegation based on information and belief can only satisfy Rule 9(b)’s 21 particularity requirement by setting for the facts on which the information and belief are founded. 22 Worlds of Wonder, 694 F.Supp. at 1432-33. See also Laron, Inc. v. Construction Resource 23 Services, LLC, 2007 WL 1958732 at * 5 (D. Ariz. July 2, 2007) (No. CV-07-01510PCT-NVW) 24 (“”[T]he Complaint does not comply with Rule 9(b) because it makes allegations on information 25 and belief without setting forth the facts on which the belief is founded.”). 26 27 12 1 2 In Comwest, for example, the plaintiff alleged that the defendants misrepresented the actual and projected rates of usage of, and revenue from, telephones that subscribed to a 3 defendant’s service, but failed to allege the accurate revenues for each telephone or any other 4 5 6 evidence that would establish that the defendants’ representations were false when they were made. 765 F.Supp. at 1471. 7 “Given that allegations of fraud are particularly injurious to business and professional 8 reputations, a fraud claim may withstand a Rule 9(b) challenge only if it states ‘the manner in 9 which [the alleged misrepresentations] are false and the facts that support an inference of fraud 10 11 by each defendant.’” Comwest, 765 F.Supp. at 1471, quoting McFarland v. Memorex Corp., 493 12 F.Supp. 631, 639 (N.D.Cal. 1980). SJVR fails to plead its fraud claim with the specificity 13 required by Rules 8 and 9. Accordingly, granting leave to amend the counter-claim to include 14 the fraud claim is inappropriate. 15 Although the elements of a cause of action for fraud and a cause of action for negligent 16 17 misrepresentation are similar, the state of mind requirements differ. Negligent misrepresentation 18 “sounds in fraud” and is also subject to F.R.Civ.P.’s heightened pleading standard. Errico, 2010 19 WL 4699394 at *13. Negligent misrepresentation differs from fraud in that it does not require 20 “intent to deceive or defraud,” but only an “assertion, as a fact, of that which is not true, by one 21 who has no reasonable ground for believing it to be true” (Cal. Civ. Code §1710(2), or a 22 23 “positive assertion, in a manner not warranted by the information of the person making it, of that 24 which is not true, though he believes it to be true” (Cal. Civ. Code § 1572(2)). Oakland Raiders 25 v. Oakland-Alameda County Coliseum, Inc., 144 Cal.App.4th 1175, 1184 (2006). If a party 26 alleges sufficient facts to establish a fraud claim, it also alleges sufficient facts to establish a 27 13 1 2 negligent misrepresentation claim. Errico, 2010 WL 4699394 at *13. Having failed to specifically allege facts supporting its fraud claim, SJVR also fails to specifically allege facts 3 supporting its claim for negligent representation. Accordingly, granting leave to amend the 4 5 6 counter-claims to include a claim for negligent misrepresentation is also inappropriate. III. 7 8 9 Conclusion and Order Because SJVR failed to allege its fraud and misrepresentation claims with sufficient specificity, granting leave to amend would be inappropriate. Accordingly, SJVR’s motion for leave to amend its counterclaims to include supplemental tort claims for fraud and negligent 10 11 misrepresentation is hereby DENIED. 12 13 IT IS SO ORDERED. 14 Dated: icido3 15 December 14, 2010 /s/ Sandra M. Snyder UNITED STATES MAGISTRATE JUDGE 16 17 18 19 20 21 22 23 24 25 26 27 14