Catipovic v. Turley, C 11-3074-MWB

• Decision Date: 25 October 2014
• Docket Number: No. C 11-3074-MWB,C 11-3074-MWB
• Parties: BRANIMIR CATIPOVIC, Plaintiff, v. MARK TURLEY, Defendant.
• Court: U.S. District Court — Northern District of Iowa

BRANIMIR CATIPOVIC, Plaintiff, v. MARK TURLEY, Defendant.

No. C 11-3074-MWB

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA CENTRAL DIVISION

October 25, 2014

MEMORANDUM OPINION AND ORDER REGARDING PLAINTIFF'S OBJECTIONS TO MAGISTRATE JUDGE'S ORDER DENYING RENEWED MOTION FOR LEAVE TO AMEND TO ASSERT FRAUD CLAIM

TABLE OF CONTENTS

I. INTRODUCTION...........................................................................2

A. Procedural Background...........................................................2

B. The Challenged Order.............................................................3

C. Arguments Of The Parties........................................................5

1. Catipovic's Objections.....................................................5

2. Turley's Response..........................................................6

II. LEGAL ANALYSIS........................................................................7

A. Standard Of Review................................................................7

B. Application Of The Standard...................................................11

1. "Diligence"................................................................11

2. "Futility"...................................................................12

3. "Prejudice"................................................................14

III. CONCLUSION............................................................................16

I. INTRODUCTION

A. Procedural Background

This case is before me—admittedly, belatedly—on plaintiff Branimir Catipovic's December 4, 2013, Objections To Order Denying Renewed Motion For Leave To Amend (docket no. 108). These Objections are to United States Magistrate Judge Leonard T. Strand's November 20, 2013, Order (docket no. 97), denying Catipovic's October 17, 2013, Renewed Motion For Leave To Amend Complaint (docket no. 86), seeking leave to assert a fraud claim against defendant Mark Turley. Turley filed a Response To Plaintiff's Objections To Order Denying Renewed Motion For Leave To Amend (docket no. 115) on December 11, 2013. Unfortunately, owing to the manner in which the Objections were filed and categorized in the court's electronic court filing (ECF) system, the Objections were not brought to my attention as a pending matter. Catipovic only recently brought to my attention that the Objections were still pending. I have tried to address the Objections as expeditiously as possible, once they were brought to my attention, recognizing that the trial of this matter is set to begin on November 12, 2014.

Catipovic has requested oral arguments on his Objections, but my crowded schedule has not allowed for the scheduling of such oral arguments in the relatively short time remaining before trial. Moreover, I find the parties' written submissions adequate to address the issues raised. Therefore, I will consider Catipovic's Objections on the parties' written submissions.

B. The Challenged Order

In the challenged Order (docket no. 97), Judge Strand concluded, first, that Catipovic had failed to show good cause for an untimely amendment to add a fraud claim. Order at 8-10. More specifically, he concluded that, "[a]ssuming it is true that Turley's [September 2013 deposition] testimony revealed relevant new evidence concerning the proposed fraud claim, it is the 'despite diligence' part [of the 'good cause' standard for untimely amendments] that again trips Catipovic up." Id. at 9. Judge Strand concluded that this was so, for the following reasons:

By the time Catipovic finally deposed Turley, this case had been on file for over twenty months and the deadline for amendments to pleadings had long expired. It appears that the case had been pending for over one year before Catipovic commenced any efforts to schedule Turley's deposition. He then devoted substantial time to fighting about the location of the deposition before finally deciding to travel to Hungary to depose not only Turley, but five nonparty witnesses as well. Doc. No. 92. Given the number of nonparties in Hungary who apparently possess relevant information, it is difficult to understand why Catipovic sought to avoid taking a trip to that country for depositions. In any event, it is very clear that Catipovic had ample opportunity to depose Turley (either by videoconference or otherwise) before the May 29, 2013, deadline for amendments to pleadings. As such, even if Turley's deposition in September 2013 resulted in the discovery of new information, Catipovic cannot establish "that, despite the diligence of the movant, the belated amendment could not reasonably have been offered sooner." Transamerica Life Ins. Co. [v. Lincoln Nat'l Life Ins. Co.], 590 F. Supp. 2d [1093,] 1100 [(N.D. Iowa 2008)]. Catipovic has not established good cause for an untimely amendment, as required by Rule 16(b). His motion must be denied on that basis.

Order at 10 (footnote omitted).

Judge Strand also concluded that Catipovic's proposed amendment was not allowable, because it was both "futile" and "unduly prejudicial" to Turley. As to "futility," Judge Strand considered each of the proposed additions to Catipovic's previously-rejected fraud claim in turn, explaining that each addition involved no more than a conclusory allegation, not an allegation of specific facts from which fraudulent intent could be inferred. Id. at 13-15. Judge Strand concluded,

Despite now having had the opportunity to depose Turley and other witnesses, Catipovic still has not alleged specific facts giving rise to a strong inference of fraudulent intent. As an alternative basis for denying the renewed motion to amend, I hold that the proposed new fraud claim is futile for the same reasons described by Judge Scoles and Judge Bennett in their prior rulings.

Order at 15. As to "undue prejudice," Judge Strand concluded, as follows:

Here, discovery has already closed. Catipovic suggests there would be no need to reopen discovery if he is allowed to add a fraud claim to this case. He goes so far as to state that if Turley believes any of the already-deposed witnesses have relevant evidence, he can simply call them as witnesses at trial. I categorically reject this argument. As evidenced by Catipovic's ongoing pleading problems, fraud is a tort claim with additional elements that are distinct from those presented by his existing, contract-based causes of action. It would be manifestly unjust to allow Catipovic to add a fraud claim, and introduce the possibility of punitive damages into this case for the first time, without reopening discovery.

Allowing the amendment and reopening discovery would, naturally, require a postponement of the deadline for dispositive motions. That, in turn, would likely require continuance of the existing trial date. I find that the consequences of adding a fraud claim at this late stage of thecase would be unduly prejudicial to all defendants. This finding presents another alternative basis for denying Catipovic's renewed motion.

Order at 17.

For these reasons, Judge Strand denied Catipovic's Renewed Motion For Leave To Amend Complaint.

C. Arguments Of The Parties

1. Catipovic's Objections

Catipovic objects to Judge Strand's conclusions on each of the grounds that Judge Strand identified for denying his Renewed Motion For Leave To Amend Complaint. First, however, Catipovic argues that, because Judge Strand's order is effectively a dispositive ruling on his "fraud" claim, it should be subjected to de novo review, not merely the less rigorous "clearly erroneous or contrary to law" standard applicable when a district court reviews a magistrate judge's non-dispositive ruling on a party's objections.

Catipovic also argues that he has a well-pleaded, "well-discovered," and submissible "fraud" claim, so that justice requires leave to amend to assert it. Catipovic argues that, contrary to Judge Strand's view, the record reveals that he diligently pursued discovery, but Turley threw up huge impediments and delays to his discovery of what he contends were Turley's admissions in Turley's deposition that Turley never intended to fulfill any agreement with him. Indeed, he argues that Judge Strand's findings regarding his purported lack of diligence are "gratuitous and incorrect," in light of the history of discovery in this case. He contends that his desire to have written discovery before deposing Turley was entirely justified.

Catipovic argues that his "fraud" claim also is not "futile." He contends that, under Rule 9(b) of the Federal Rules of Civil Procedure, he was allowed to plead scienter "generally," and that he has done so. He also contends that Turley cannot crediblycontend that he is unable to respond specifically and quickly to the claim, which is based on Turley's admissions that he never intended to honor an agreement with Catipovic and Wendland. Thus, Catipovic contends that his proposed amendment adequately pleads the circumstances of the alleged fraud.

Finally, Catipovic contends that, contrary to Judge Strand's conclusions, Turley will not be prejudiced by the amendment. Catipovic argues, in essence, that largely the same facts will or should establish fraud as will establish his existing claims of breach of contract and unjust enrichment.

2. Turley's Response

Turley counters that Judge Strand's Order should be upheld in its entirety, whatever standard of review is applicable. Indeed, Turley concedes that the district court retains the inherent authority to review de novo even "non-dispositive" rulings of a magistrate judge.

More specifically, Turley argues that Judge Strand correctly found that Catipovic could not establish the "diligence" prong of the "good cause" requirement for leave to amend, where Catipovic has had almost two years to conduct discovery. Turley also argues that Judge Strand correctly concluded that Catipovic's contention that he purportedly learned facts recently, even if believed, demonstrates a failure of due diligence on his part. Turley argues that...