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Eagle View Technologies, Inc. v. Xactware Solutions, Inc.

United States District Court, Ninth Circuit

November 18, 2013

EAGLE VIEW TECHNOLOGIES, INC., Plaintiff,
v.
XACTWARE SOLUTIONS, INC., Defendant.

ORDER ON PLAINTIFF'S MOTION TO FILE SUPPLEMENTAL COMPLAINT

RICARDO S. MARTINEZ, District Judge.

INTRODUCTION

This matter comes before the Court upon Plaintiff's Fed.R.Civ.P. 15(d) Motion for Leave to File a Supplemental Complaint setting forth Roof InSight allegations. Dkt. # 143. For the reasons set forth below, Plaintiff's motion is DENIED.

BACKGROUND

Eagle View Technologies, Inc. ("Eagle View") provides aerial roof measurement services, and Xactware Solutions, Inc. ("Xactware") provides computer software to professionals in the insurance and construction industries involved in estimating building and repair costs. In November 2008, Eagle View and Xactware entered into an integration agreement ("Agreement") whereby Xactware granted Eagle View certain limited rights to import data from Eagle View's customers through Xactware's network. In January 2011, the parties amended certain provisions, which among other things contain an automatic renewal provision that required written notice of non-renewal by September 5, 2012. After unsuccessful attempts at further negotiations, Eagle View filed for declaratory and injunctive relief on October 12, 2012, seeking to prevent Xactware from prematurely terminating the Agreement on the grounds that it automatically renewed for another 48 months. See Dkt. # 1.

Eagle View now seeks leave to update its form of declaratory relief and supplement a breach claim with the information obtained at the close of discovery. Dkt. # 143, p. 5. Eagle View alleges that Xactware materially breached the Agreement by developing and piloting a product called Roof InSight, which was created to compete directly with Eagle View. Id. at 2. Eagle View states that the facts underlying the violation did not arise until June 2013, when Xactware began advertising its product on its website. Id. at 5. Xactware opposes the motion, arguing that Eagle View is asserting a new and distinct claim rather than supplementing an existing claim and that it should be denied for undue delay, bad faith, prejudice and futility.

DISCUSSION

Rule 15(d) provides that "[o]n motion and reasonable notice, the court may, on just terms, permit a party to serve a supplemental pleading setting out any transaction, occurrence, or event that happened after the date of the pleading to be supplemented." Fed.R.Civ.P. 15(d). The rule applies when a party seeks to file additional causes of action based on facts that did not exist when the original complaint was filed. See Cabrera v. City of Huntington Park, 159 F.3d 374, 382 (9th Cir. 1998) ("Rule 15(d) permits the filing of a supplemental pleading which introduces a cause of action not alleged in the original complaint and not in existence when the original complaint was filed.") (quotation omitted). The purpose of this provision is to "promote as complete an adjudication of the dispute between the parties as possible." 6A Charles Alan Wright et al., Federal Practice and Procedure ยง 1504 (2d ed. 1990). Thus, the rule is "intended to give district courts broad discretion in allowing supplemental pleadings." Keith v. Volpe, 858 F.2d 467, 473 (9th Cir. 1988). However, "[w]hile leave to permit supplemental pleading is favored, ' it cannot be used to introduce a separate, distinct and new cause of action.'" Planned Parenthood of S. Ariz. v. Neely, 130 F.3d 400, 402 (9th Cir. 1997). The threshold inquiry is whether some relationship exists between the newly alleged matters and the subject of the original action, although they need not all arise out of the same transaction. Keith, 858 F.2d at 474; see also Weeks v. New York State (Div. of Parole), 273 F.3d 76, 88 (2d Cir. 2001) (considering whether "the supplemental facts connect [the supplemental pleading] to the original pleading"). The court may still deny the motion for undue delay, bad faith, undue prejudice to the opposing party, or futility. See Keith, 858 F.2d at 475.

A. Separate and Distinct Claim

Xactware argues that Eagle View's claim for breach is a separate and distinct claim because the original complaint specifies breach of contract only in the context of anticipatory wrongful termination, which was rendered moot by the preliminary injunction order keeping the Agreement in place. Dkt. # 182, p. 3. However, Xactware does not dispute that there is some relationship that exists between the original complaint and the proposed supplement, as they both pertain to the parties' Agreement and relationship thereto. Eagle View is seeking to supplement a breach claim that has unfolded during the course of this litigation against the sole, existing defendant in the matter. Thus, the Court finds there is a sufficient connection between the claims here and Eagle View's proposed supplement is not a separate and distinct claim.

B. Undue Delay

Eagle View filed its initial complaint on October 29, 2012. On August 1, 2013, almost nine months after the initial complaint, Eagle View seeks to supplement. Eagle View claims it was only after Xactware updated its website in late June 2013 that Eagle View learned of its plans to compete using Roof InSight. Dkt. # 143 at 5. By the time Eagle View filed its motion to supplement, the parties had less than two months before the trial.[1] Xactware argues that Eagle View acknowledged its awareness of Roof InSight as early as May 7, 2013, had all the information to depose on the matter, but failed to supplement in earlier in June or July. Dkt. # 184, p. 13. Eagle View argues that it is not seeking a trial continuance or additional discovery, and there will be no undue delay on adjudication of the matter. Dkt. # 143 at 5.

However, Eagle View does not deny that the landscape of this litigation has already been shaped on its original complaint for relief based solely on the issue of the Agreement's automatic renewal. Allowing Eagle View to now modify its claim for declaratory relief and supplement with a material breach claim will cause undue delay, particularly since Xactware must seek a continuance to pursue any additional discovery and file dispositive motions related to the new claims. Further, Eagle View's own summary judgment motion on its original claim for declaratory relief (Dkt. # 123) is currently pending before the Court. See Roberts v. Ariz. Bd. of Regents, 661 F.2d 796 (9th Cir. 1981) (district court did not abuse its discretion when it denied motion to amend when the issue was raised at the eleventh hour, after discovery was virtually complete and there was a pending summary judgment motion). The Court finds there is undue delay, but ...


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