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The John Ernst Lucken Revocable Trust v. Heritage Bankshares Group, Inc.

United States District Court, N.D. Iowa, Western Division

February 28, 2017

THE JOHN ERNST LUCKEN REVOCABLE TRUST, and JOHN LUCKEN and MARY LUCKEN, Trustees, Plaintiffs,
v.
HERITAGE BANKSHARES GROUP, INC., et al., Defendants.

          ORDER

          C.J. Williams, Chief United States Magistrate Judge

         I. INTRODUCTION

         This matter is before the Court pursuant to plaintiffs' motion for reconsideration of the order denying plaintiffs' first motion to amend the complaint and plaintiffs' second motion to amend the complaint. (Doc. 33). Plaintiffs request leave of court to amend their complaint based on new information not known to plaintiffs prior to receiving defendants' responses to plaintiffs' first request for production of documents. (Doc. 33 at 5-8). Defendants do not resist this motion. (Doc. 41). For the reasons that follow, the Court grants plaintiffs' motion.

         II. PROCEDURAL HISTORY

         Plaintiffs filed the present suit on January 14, 2016, stemming from an agreement regarding the financing of Dirks Motor Co., of which defendants were creditors, alleging: 1) fraud through affirmative representations and omissions of material fact; 2) violation of 12 U.S.C. § 1972 for a prohibited “Tying Arrangement”; 3) liability of senior executive officers within defendants' bank due to sanctioning the fraudulent conduct of the bank's agents; 4) breach of the duty of disclosure; 5) unjust enrichment; and 6) contract rescission. (Doc. 1).

         The April 27, 2016, Scheduling Order and Discovery Plan set the deadline to amend pleadings as August 12, 2016. (Doc. 14). On November 21, 2106, plaintiffs filled their first motion to amend their complaint. (Doc. 24). On January 6, 2017, the motion to amend was denied on two grounds: one procedural and one substantive. (Doc. 27). The Court denied plaintiffs' motion because it did not comply with the procedural requirements as set out in Local Rule 15, requiring “[a] party moving to amend or supplement a pleading pursuant to Federal Rule of Civil Procedure 15(a)(2) or (d) must describe in the motion the changes sought . . ..” LR 15; (Doc. 27 at 7). Plaintiffs provided no explanation in their motion as to the changes they sought to make to their original complaint and did not provide a copy of the amended complaint indicating the changes. Id. Substantively, plaintiffs' motion did not allege any facts in order to establish good cause to amend the complaint, as required by Rule 16(b) because the deadline to amend had passed. Id. at 9-13. Subsequently on January 18, 2017, plaintiffs moved the Court for an order extending the trial deadlines (Doc. 28), which the Court granted in part and denied in part (Doc. 45).

         III. DISCUSSION

         Plaintiffs seek to amend their complaint to add John Lucken and his wife Mary Lucken individually in addition to being plaintiffs in their capacity as trustees. Plaintiffs also seek to add Does 1-100 inclusive as defendants. (Doc 33-1 at 1). Other than their intention to add additional parties, plaintiffs seek only to add factual allegations based on new information learned through discovery. (Doc. 33).

         As discussed above, plaintiffs' first motion to amend suffered from both procedural and substantive deficiencies. (Doc. 27). Plaintiffs failed to comply with Local Rule 15 in that they did not indicate in their motion to amend nor their proposed amended complaint the changes that had been made, and they did not meet the good cause standard under Federal Rule 16(b) requiring they show good cause to amend their complaint and that they missed the scheduled deadline due to “excusable neglect.” (Doc. 27, at 12). In their present motion for reconsideration of the previous order and second motion for leave to amend the complaint, plaintiffs attempt to correct these deficiencies.

         A. Compliance with Local Rule 15

         Local Rule 15 states, “[a] party moving to amend or supplement a pleading pursuant to Federal Rule of Civil Procedure 15(a)(2) or (d) must describe in the motion the changes sought . . ..” LR 15; (Doc. 27 at 7). In their previous motion to amend plaintiffs did not explain in their motion, or any document attached, the changes to the complaint, and did not attach a copy of the amended complaint that showed the intended changes. This gave defendants and the Court no meaningful opportunity to assess the proposed changes without comparing side by side the two complaints.

         In their motion for reconsideration of the order denying their first motion to amend and their second motion to amend, plaintiffs attached a “redlined” version of their amended complaint. (Doc. 33-1). The “redlined” version of the amended complaint shows the intended changes and is accompanied by a summary of new evidence submitted to support plaintiffs' motion to amend. (Doc. 33-3). The summary of new evidence lays out the new evidence and cross-references the paragraphs added in the amended complaint to incorporate the new factual allegations. (Id.). Defendants do not resist this motion. (Doc 33-1). Although plaintiffs' explanation of the intended changes to the document is not extensive and does not reflect all the changes, the “redlined” amended complaint and accompanying summary of new evidence is sufficient to comply with Local Rule 15.

         B. Good Cause Showing

         In their previous motion to amend (Doc. 24), plaintiffs did not allege any facts to demonstrate diligence in meeting the scheduled deadline to amend pleadings necessary to prove good cause or demonstrate excusable neglect. (Doc. 24, at 1-3). As this Court discussed in the prior order denying leave to amend the complaint (Doc. 27), the applicable standard when a party seeks to amend a pleading after the deadline to amend has expired is the good cause standard set out in Rule 16(b). (Doc. 27, at 12); see Sherman v. Winco Fireworks, Inc., 532 F.3d 709, 715-16 (8th Cir. 2008). “The primary measure of good cause is the movant's diligence in attempting to meet the order's requirements.” Id. at 716 (quoting Rahn v. Hawkins, 464 F.3d 813, 822 (8th Cir. 2006)). Additionally, “Federal Rule of Civil Procedure ...


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