Bowles v. Reade
| Decision Date | 13 December 1999 |
| Docket Number | Nos. 98-16107,98-16142,PROFIT-SHARING,s. 98-16107 |
| Citation | 198 F.3d 752 |
| Parties | (9th Cir. 1999) MARIA BOWLES, Plaintiff, And BRAD WHITNEY SPORTSWEARPLAN; BRAD WHITNEY SPORTSWEAR DEFINED BENEFIT PENSION PLAN; MARVIN STONE, as Trustee of the Brad Whitney Sportswear Defined Benefit Pension Plan, Plaintiffs-Appellants, v. ROBERT READE, JR., Defendant, And DEIRDRE READE, individually and as Executrix/Administratrix of the Estate of Robert B. Reade, Sr., Defendant-Appellee. MARIA BOWLES, Plaintiff, And BRAD WHITNEY SPORTSWEARPLAN; BRAD WHITNEY SPORTSWEAR DEFINED BENEFIT PENSION PLAN; MARVIN STONE, as Trustee of the Brad Whitney Sportswear Defined Benefit Pension Plan, Plaintiffs-Appellants-Cross-Appellees, v. ROBERT READE, JR., Defendant, and DEIRDRE READE, individually and as Executrix/Administratrix of the Estate of Robert B. Reade, Sr., Defendant-Appellee-Cross-Appellant |
| Court | U.S. Court of Appeals — Ninth Circuit |
COUNSEL: Anthony T. Karachale, Horan, Lloyd, Karachale, Dyer, Schwartz & Law & Cook, Inc., Monterey, California, for the plaintiffs-appellants-cross-appellees.
R. Bradford Huss and Robert S. Unger, Trucker & Huss, San Francisco, California, for the defendant-appellee-cross-appellant.
Appeal from the United States District Court for the District of Northern California; James Ware, District Judge, Presiding. D.C. No. CV-93-20956-JW
Before: Alfred T. Goodwin, Mary M. Schroeder, and Arthur L. Alarcon, Circuit Judges.
Brad Whitney Sportswear Profit-Sharing Plan, Brad Whitney Sportswear Defined Benefit Pension Plan ("The Plans"), and Marvin Stone, Trustee of the Brad Whitney Sportswear Defined Benefit Pension Plan (collectively "Appellants"), appeal from the denial of the motion for leave to amend their complaint to reflect that Deirdre Reade ("Ms. Reade") is the trustee of the Robert B. Reade Trust in this action for breach of fiduciary duty under the Employee Retirement Income Security Act of 1974 ("ERISA"). Appellants also appeal from the final judgment dismissing this action following the November 14, 1997 order granting summary judgment in favor of Ms. Reade.
Ms. Reade cross-appeals from the February 7, 1997, order denying her motion to dismiss all claims filed by Maria Bowles pursuant to a release agreement. Ms. Reade also seeks reversal on jurisdictional grounds of the order realigning The Plans as plaintiffs and the order denying Ms. Reade's motion to dismiss the first amended complaint joining Stone as a plaintiff. We have jurisdiction to hear this timely appeal pursuant to 28 U.S.C. S 1291.
On the appeal, we vacate the order denying the motion for leave to amend the complaint because the motion was not futile and no finding was made by the district court that such amendment would be prejudicial to Ms. Reade or that the motion was made in bad faith. We also vacate the judgment dismissing the action because the entry of summary judgment was based solely on the district court's erroneous denial of the motion to amend the complaint to reflect that Ms. Reade was the trustee of the Robert B. Reade Trust. On the cross appeal, we affirm the district court's denial of Reade's motion to dismiss all of Bowles's claims filed against her because Bowles's claims were not truly individual claims. We also affirm the district court's ruling allowing Stone to be joined as a plaintiff to represent the plan participants' interests, but on remand, direct the district court to dismiss The Plans as plaintiffs for lack of standing.
Maria Bowles, a retired employee of Brad Whitney Sportswear Manufacturing Company, filed a complaint against Robert B. Reade Jr., Christopher B. Reade, Brad Whitney Sportswear Manufacturing Company, BWS Brands, Inc., and The Plans on December 15, 1993. She asserted claims for breach of fiduciary duty under ERISA. On May 13, 1994, she filed a complaint against Deirdre Reade, individually and as "Executrix/Administratrix of the Estate of Robert B. Reade, Sr.," and against The Plans. The 1994 complaint alleged causes of action for breach of fiduciary duty under sections 502(a)(1)(A) and (B) and 502(a)(3) of ERISA. Bowles alleged that Robert B. Reade, Sr. breached his fiduciary duties as trustee of The Plans by causing The Plans to be underfunded and paying excessive benefits to himself. She prayed for a restoration to The Plans of all losses incurred, and any profits gained, through a breach of fiduciary duty, so that they may be allocated to the accounts of all participants in The Plans. On January 27, 1995, the 1993 and 1994 complaints were consolidated for trial. In a separate state action filed by Ms. Reade for breach of contract, The Brad Whitney Sportswear Manufacturing Company filed a cross complaint on May 2, 1994, against Deirdre Reade individually, and as trustee of the Robert B. Reade Trust, in the Superior Court of California.1
On May 10, 1996, Bowles signed a settlement agreement with Ms. Reade. The agreement stated that Bowles, "for herself and her respective attorneys, trustees, fiduciaries, administrators, conservators, guardians, representatives, heirs, successors and assigns, present and future, hereby fully and forever releases and discharges each of the parties included in the term `Defendant' . . . ." The agreement defined "Defendant" to include Ms. Reade in her capacity as both executrix and administratrix of the Estate of Robert B. Reade, Sr., and trustee of the Robert B. Reade Trust. In the agreement, Bowles warranted that she was "the true owner of all claims that [were] released by her in this Agreement."
Thereafter, on November 29, 1996, The Plans filed a motion to realign The Plans as plaintiffs in the consolidated actions. The Plans also requested that the court appoint Marvin Stone as trustee of The Brad Whitney Sportswear Defined Benefit Pension Plan in place of Robert B. Reade, Sr. Robert B. Reade, Sr. had been trustee of The Plans from his appointment on January 13, 1988, until his death on February 19, 1992. On December 3, 1996, Bowles filed a motion to dismiss "this action with prejudice" pursuant to the settlement agreement. Bowles's motion stated that "[a]lthough the Plaintiff and Defendant Reade have executed such a Stipulation for Dismissal, the remaining parties to this action have refused to agree to it, thus necessitating the present motion." Also on December 3, 1996, Ms. Reade filed a motion to dismiss all claims filed against her pursuant to the settlement agreement. Stone was appointed a trustee on January 8, 1997.
On February 7, 1997, the district court dismissed all claims against Ms. Reade belonging to Bowles. The court concluded, however, that the agreement released "only those claims legally brought by Plaintiff Bowles and that Bowles[could not] and did not release the Plans' claims against Defendant Reade." The court ordered that The Plans be realigned as plaintiffs "to reflect the proper remedies sought in this action."
The Plans filed the first amended complaint on April 18, 1997. In that complaint, The Plans joined Stone as a plaintiff in the action against Ms. Reade for breach of fiduciary duty. The amended complaint was filed against Deirdre Reade both individually and as executrix and administratrix of the Estate of Robert B. Reade, Sr.
The Plans and Stone filed a second amended complaint on July 10, 1997. Ms. Reade filed her answer on October 7, 1997. She asserted that she was sued erroneously as "Executrix/Administratrix of the Estate of Robert B. Reade, Sr." She asserted as an affirmative defense that she was not a proper party to the action. At the same time, she filed a motion for summary judgment on the same grounds.
On November 12, 1997, The Plans filed a motion to amend the complaint to correct the error and requested that the district court shorten the time to hear the motion so that it could be heard at the same time as Ms. Reade's motion for summary judgment. The district court denied The Plans' motion to shorten time. It granted Ms. Reade's motion for summary judgment on November 14, 1997. On January 7, 1998, The Plans filed a motion for reconsideration of the order granting summary judgment and a motion for leave to amend the complaint. On March 23, 1998, the district court denied the motion for reconsideration of the order granting summary judgment and the motion to amend. The district court entered judgment on May 7, 1998 in favor of Ms. Reade pursuant to Rule 54(b). The Plans and Stone filed their notice of appeal from the judgment disposing of all claims against Ms. Reade on June 3, 1998. Bowles did not file a notice of appeal.2 We have jurisdiction over this appeal pursuant to 28 U.S.C. S 1291.
The district court dismissed this action because the claims in the first amended complaint were filed against Ms. Reade as "Executrix/Administratrix of the Estate of Robert B. Reade, Sr." Ms. Reade is the trustee of the Robert B. Reade Trust. The Plans and Stone concede that Ms. Reade was not named in the amended complaint in her proper representative capacity. They argue, however, that the district court abused its discretion in denying their motion to amend the complaint to designate Ms. Reade in her proper capacity as the trustee of the Robert B. Reade Trust. We review a district court's denial of a motion for leave to amend for abuse of discretion. See Griggs v. Pace Am. Group, Inc., 170 F.3d 877, 879 (9th Cir. 1999). Rule 15 (a) of the Federal Rules of Civil Procedure provides that leave to amend "shall be freely given when justice so requires." We therefore review such a denial strictly in light of the strong policy permitting amendment. See Plumeau v. School Dist. No. 40, 130 F.3d 432, 439 (9th Cir. 1997).
Liberality in granting a plaintiff leave to amend is subject to the qualification that the amendment not cause undue prejudice to the...
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