Kendall Dealership Holdings, LLC v. Warren Distribution, Inc.

WO IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
KENDALL DEALERSHIP HOLDINGS, )
LLC, )
)
Plaintiff, )
vs. )
)
WARREN DISTRIBUTION, INC., )
) Case No. 3:18-cv-0146-HRH
Defendant. )
_______________________________________)
)
WARREN DISTRIBUTION, INC., )
)
)
Third-party plaintiff, )
)
vs. )
)
ELECTRICAL COMPONENTS )
INTERNATIONAL, INC. and ELECTRICAL )
COMPONENTS CANADA, INC. )
)
Third-party defendants. )
_______________________________________)
O R D E R
Motion to Amend Complaint1
Plaintiff Kendall Dealership Holdings, LLC (“Kendall”) moves to amend its com-
plaint. This motion is opposed.2 Oral argument has not been requested and is not deemed
necessary.
1 Docket Nos. 316 and 329.
2Docket Nos. 322, 323, and 324.
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Background
This case arises from plaintiff Kendall’s allegation that the approximately 8,000
engine block heaters that it purchased from defendant and third-party plaintiff Warren Dis-
tribution, Inc. (“Warren”) were defective.3 Electrical Components Canada, Inc. (“ECC”)
allegedly manufactured the heaters and Electrical Components International, Inc. (“ECI”)
allegedly sold them to Warren.4 Various models of the heater have been at issue in this
case: the 913 heater; the second model, the 913-1 heater; and the third model, the 913-2
heater.5 Originally, Kendall only alleged that the 913 and 913-1 models were defective;
prior to 2022 Kendall never alleged that the 913-2 model was defective.6
Based on its allegations that the 913 and 913-1 models were defective, Kendall filed
its original complaint asserting claims of breach of contract, violation of Alaska’s Unfair
Trade Practices and Consumer Protection Act, breach of the implied warranty of merchant-
ability, and breach of the implied warranty of fitness for a particular purpose.7 The court
issued an initial scheduling and planning order on August 3, 2018.8 An amended
scheduling and planning order was first issued in February 2019, followed by a second
amended scheduling and planning order in August 2019.9
3Order on Motion for Summary Judgment at 2, Docket No. 244.
4Id.
5Id. at 2-4.
6Id. at 4.
7Complaint at 4-6, ¶¶ 16-37, Exhibit A, Notice of Removal, Docket No. 1-1.
8Docket No. 11.
9Docket Nos. 36 and 55.
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Under the most recent scheduling order, motions to amend were to be filed and
served no later than the date specified in Local Civil Rule 16(c)(2) (2018): that is, no later
than sixty days from the date of entry of the pretrial scheduling order.10 In other words, the
deadline for filing a motion to amend was October 20, 2019, which was sixty days from the
date of entry of the second amended scheduling and planning order.
According to Kendall, in late 2021 and early 2022, fires occurred in vehicles con-
taining the 913-2 model heater.11 Based on these events, Kendall filed the pending motion
to amend on March 9, 2022, over two years after the deadline to file such a motion had
passed.12 Kendall did not file a contemporaneous motion to amend the deadlines in the
court’s scheduling and planning order. Kendall now seeks to amend its complaint to add
“new claims for breach of warranty, breach of contract, and violation of [the] Alaska Unfair
Trade Practices and Consumer Protection Act ... [and to] update[] the amount of damages
to include amounts suffered by Kendall since the filing of the initial complaint.”13
In its proposed amended complaint, Kendall claims that “Warren provided Kendall
with new [913-2] block heaters in March 2018 that were designed and manufactured as a
countermeasure to the recalled block heaters” and that “Warren specifically told Kendall
that the countermeasure block heater was ‘safe.’”14 Kendall further claims that “[u]pon
information and belief, the countermeasure block heaters were improperly manufactured
10Docket No. 55 at 6.
11Motion to Amend Complaint at 5, Docket No. 316.
12Id. at 7.
13Id. at 1-2.
14Proposed First Amended Complaint at 4, ¶¶ 17-18, Exhibit 1, Motion to Amend
Complaint, Docket No. 316-1.
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and have caused several fires due to the defect[,]” that these countermeasure heaters “were
defective,” and that “[s]tatements made by Warren regarding the safety of the counter-
measure block heater were false.”15 The allegations that comprise Kendall’s new claims for
breach of contract, violation Alaska’s Unfair Trade Practices and Consumer Protection Act,
breach of the implied warranty of merchantability, and breach of the implied warranty of
fitness for a particular purpose are largely identical to those in Kendall’s original com-
plaint.16 However, there is one change common to each claim: in every instance where
“engine block heaters” were previously referenced, the allegations now read, “engine block
heaters including countermeasure block heaters.”17 Kendall also alleges that the amount of
damages suffered is now based on those incurred from the sale of the countermeasure block
heaters, in addition to those incurred from the sale of the original block heaters.18
Discussion
Rule 15(a), Federal Rules of Civil Procedure, governs the amendment of pleadings
before trial. Where, as here, a motion to amend is filed after the court has entered a
scheduling and planning order that establishes a deadline for amending pleadings, then “the
motion ‘is governed first by Rule 16(b), and only secondarily by Rule 15(a).’” Cervantes
v. Zimmerman, Nos. 17-cv-1230-BAS-NLS & 18-cv-1062-BAS-NLS, 2019 WL 1129154,
at *2 (S.D. Cal. Mar. 12, 2019). See also Coleman v. Quaker Oats Co., 232 F.3d 1271,
1294 (9th Cir. 2000); Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607-08 (9th
15Id. at 4-5, ¶¶ 19-21.
16Id. at 5-7, ¶¶ 22-43.
17Id.
18Id.
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Cir. 1992). The scheduling order limits the time to amend pleadings. Fed. R. Civ P.
16(b)(3)(A). The “schedule may be modified only for good cause and with the judge’s
consent.” Fed. R. Civ. P. 16(b)(4).
“Good cause” is a more stringent standard than the Rule 15 inquiry.
AmerisourceBergen Corp. v. Dialysist W., Inc., 465 F.3d 946, 952 (9th Cir. 2006). This
standard “primarily considers the diligence of the party seeking the amendment.” Johnson,
975 F.2d at 609. “The district court may modify the pretrial schedule ‘if it cannot reason-
ably be met despite the diligence of the party seeking the extension.’” Id. (quoting Fed. R.
Civ. P. 16 advisory committee’s notes to 1983 amendment). “[T]he existence or degree of
prejudice to the party opposing the modification might supply additional reasons to deny a
motion, [but] the focus of the inquiry is upon the moving party’s reasons for seeking modi-
fication.... If that party was not diligent, the inquiry should end.” Id. Modification should
not be permitted. Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002).
Kendall argues that it should now be permitted to amend its complaint. Kendall
claims that it was not and could not have become aware of the alleged defect in the 913-2
heater until late 2021 and early 2022, when vehicles containing the 913-2 heater caught
fire.19 “Despite efforts to comply with the deadline for amending complaints, Kendall
could not have reasonably foreseen at that time that the 913-2 units were defective”
because its experts only inspected vehicles equipped with the 913 model, “in light of
Toyota Canada’s findings that the 913 contained a manufacturing defect.”20 Kendall claims
19Motion to Amend Complaint at 5, Docket No. 316.
20Id.
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that it diligently sought to file its motion to amend after learning of these fires.21 Kendall
alleges that these facts establish “good cause” to amend after the deadline in the scheduling
and planning order.22
Defendants oppose. Warren alleges that Kendall is not entitled to amend its com-
plaint under Rule 16 because there is no good cause for amendment of the court’s pretrial
deadlines.23 ECC/ECI additionally points out that Kendall moved to amend the complaint
without moving to amend the scheduling and planning order.24 ECC/ECI argues that the
court has discretion to deny as untimely such a motion filed after the deadline set forth in
the scheduling order where there exists no attendant request to modify the pretrial order.25
When a movant seeks to amend the complaint but does not seek leave to amend the
scheduling and planning order, the court can consider the movant’s motion to amend com-
plaint as a motion to amend the scheduling order. See Copper River Seafoods, Inc. v.
Chubb Custom Ins. Co., No. 3:16-cv-00039-TMB,, 2018 WL 6252493, at *2 (D. Alaska
Aug. 8, 2018). In the alternative, the court can simply deny a motion to amend filed after
the scheduling order’s cut-off date when a motion to amend the scheduling order is not also
filed. Estate of Shane Tasi v. Municipality of Anchorage, No. 3:13-cv-00234-SLG,
2016 WL 4942323, at *1 (D. Alaska Apr. 3, 2016). In both Estate of ShaneTasi and
Copper River Seafoods, the court construed the motions to amend complaint as motions to
amend the scheduling order, and considered whether the movants had demonstrated good
21Reply to Opposition to Motion to Amend Complaint at 5, Docket No. 329.
22Motion to Amend Complaint at 5, Docket No. 316.
23Warren’s Opposition to Motion to Amend Complaint at 7, Docket No. 322.
24ECC/ECI’s Opposition to Motion to Amend Complaint at 6, Docket No. 323.
25Id. at 7.
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cause to amend under Rule 16. The court will here consider Kendall’s motion to amend
complaint as a motion to amend the court’s scheduling and planning order. It is preferable
to resolve issues on the merits rather than on technicalities.
The court first considers whether Kendall has established that it diligently sought
amendment and therefore whether Kendall has established “good cause” to amend under
Rule 16. “Central to this required showing of diligence is whether the movant discharged
[the] obligation under Rule 16 to collaborate with the district court in managing the case.”
Jackson v. Laureate, Inc., 186 F.R.D. 605, 607 (E.D. Cal. 1999).
[T]o demonstrate diligence under Rule 16’s “good cause”
standard, the movant may be required to show the following:
(1) that [the movant] was diligent in assisting the Court in
creating a workable Rule 16 order, ... (2) that [the movant’s]
noncompliance with a Rule 16 deadline occurred or will occur,
notwithstanding ... diligent efforts to comply, because of the
development of matters which could not have been reasonably
foreseen or anticipated at the time of the Rule 16 scheduling
conference, ... and (3) that [the movant] was diligent in seeking
amendment of the Rule 16 order, once it became apparent that
[the movant] could not comply with the order....
Id. at 608 (citations omitted). See also Copper River Seafoods, Inc., 2018 WL 6252493, at
*2 (applying Jackson’s three-factor test).
Kendall does not address whether it diligently assisted the court in the creation of a
workable Rule 16 order, nor do the defendants contend that Kendall was not diligent in
assisting the court to create a workable Rule 16 order. Notwithstanding, the record shows
that Kendall’s noncompliance with the scheduling and planning order was due to the
recency of the vehicle fires which Kendall argues were caused by defective 913-2 heaters.
These fires occurred after the deadline in the scheduling and planning order and were not
reasonably foreseeable or anticipatory at the time of the Rule 16 scheduling conference.
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Yet the record also shows that Kendall first learned of these fires in November of
2021.26 Kendall filed a motion for relief from judgment on January 28, 2022,27 which was
denied by the court’s order of April 20, 2022.28 On March 9, 2022, Kendall filed its motion
to amend. That motion could not have been filed by October 20, 2019, nor could it have
been filed before November of 2021. The court finds that Kendall was reasonably diligent
in moving to amend. That conclusion does not end our inquiry, as explained below.
Kendall argues that the defendants will suffer either no prejudice or only minimal
prejudice stemming from the delay of trial and the reopening of discovery for just the 913-2
model, and that any prejudice is outweighed by potential injustice to Kendall.29 Warren
argues that amendment would cause undue prejudice.30 Warren argues that if Kendall is
permitted to amend its complaint, discovery will need to be reopened on the questions of
damage and defect.31 Warren claims that this will require new discovery efforts, including
additional document production and depositions; new expert inspections, analysis, reports,
and depositions; and new motion practice.32 ECC/ECI agrees with Warren, that permitting
26Reply to Opposition to Motion to Amend Complaint at 5, Docket No. 329.
27Docket No. 307.
28Docket No. 328.
29Motion to Amend Complaint at 5, Docket No. 316; Reply to Opposition to
Motion to Amend Complaint at 2, Docket No. 329.
30Warren’s Opposition to Motion to Amend Complaint at 6, Docket No. 322.
31Id. at 2–3.
32Id.
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amendment at this juncture would result in significant prejudice because it would necessi-
tate new discovery, including new expert discovery and motion work.33
Defendants have the better of the prejudice arguments. If the court were to permit
Kendall to amend its complaint at this time, such an amendment would undoubtedly result
in great prejudice to defendants.
Kendall’s proposed amended complaint presents an entirely new claim at a time
when claims made in Kendall’s original complaint were ready for trial. That is to say, the
original scheduling and planning order program for the pretrial development of this case
had been completed. Granting Kendall’s motion to amend would require not just an exten-
sion of the time for amending Kendall’s complaint. Rather, a completely new case
schedule would be required. Discovery would have to be reopened. “Paper” discovery as
well as depositions would be required. Expert discovery would necessarily be reopened.
The possibility of discovery motions and potential dispositive motions would likely follow.
The foregoing would certainly be time-consuming, expensive, and therefore prejudicial to
defendants. See Coleman, 232 F.3d at 1295 (quoting Lockheed Martin Corp. v. Network
Sols., Inc., 194 F.3d 980, 986 (9th Cir.1999)) (“A need to reopen discovery and therefore
delay the proceedings supports a district court’s finding of prejudice from a delayed motion
to amend the complaint.”); Acri v. Int’l Ass’n of Machinists & Aerospace Workers,
781 F.2d 1393, 1398-99 (9th Cir. 1986) (district court’s finding that amendment would
necessitate further discovery and therefore prejudice defendant supports denial of leave to
amend).
33ECC/ECI’s Opposition to Motion to Amend Complaint at 9, Docket No. 323.
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Kendall has not established good cause for leave to amend and, more importantly,
has not established good cause for a complete reopening of this case for purposes of litigat-
ing Kendall’s claims based upon the 913-2 engine block heater. Granting Kendall’s motion
to amend would prejudice both Warren and ECC/ECI.
Kendall’s motion to amend is denied.
DATED at Anchorage, Alaska, this 2nd day of May, 2022.
/s/ H. Russel Holland
United States District Judge
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