November 22, 2013
ENERGY DRILLING, LLC, Plaintiff(s),
OVERLAND RESOURCES, LLC, et al., Defendant(s)
RECOMMENDATION ON PLAINTIFF'S SECOND MOTION FOR LEAVE TO AMEND COMPLAINT (DOCKET NO. 46)
MICHAEL J. WATANABE, Magistrate Judge.
This matter is before the court on Plaintiff's Second Motion for Leave to Amend Complaint and for Joinder of Additional Defendants (docket no. 46). The court has reviewed the subject motion (docket no. 46), the proposed First Amended Complaint, and the response (docket no. 48). In addition, the court has taken judicial notice of the court's file and has considered applicable Federal Rules of Civil Procedure and case law. The court now being fully informed makes the following findings of fact, conclusions of law, and recommendation.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The court finds:
1. That I have jurisdiction over the subject matter and over the parties to this lawsuit pursuant to 28 U.S.C. § 1332 - diversity of citizenship;
2. That venue is proper in the state and District of Colorado;
3. That each party has been given a fair and adequate opportunity to be heard;
4. That in the proposed First Amended Complaint, the Plaintiff alleges that Randy Wheat and Timothy Jones are both agents for Defendant Overland Resources, LLC [hereinafter "Defendant Overland"], and that both Mr. Wheat and Mr. Jones were on-site representatives of Defendant Overland on the wells in question. See averments 4, 5, 13, and 14 in the proposed First Amended Complaint (docket no. 46-1). Furthermore, Plaintiff alleges that Defendant Overland is liable for the actions and omissions of Defendant Wheat and Defendant Jones pursuant to the doctrine of respondent superior and the rules of Agency and Ostensible Agency. See averment 15 in the proposed First Amended Complaint (docket no. 46-1). Nowhere in the proposed First Amended Complaint does Plaintiff allege that either Mr. Wheat or Mr. Jones were not acting as an agent for Defendant Overland;
5. That in the subject motion (docket no. 46), Plaintiff argues that as an "abundance of caution, " this court should allow an amendment to the pleadings and joinder of additional parties [i.e., joinder of Randy Wheat and Timothy Jones]. See averment 2 in the subject motion (docket no. 46);
6. That Plaintiff's suggestion, as outlined in averment 2 in the subject motion (docket no. 46), is without substantive legal basis. Plaintiff has failed to allege a single claim against Mr. Jones individually in the proposed First Amended Complaint (docket no. 46-1) consistent with the requirements of Fed.R.Civ.P. 8. For this reason, the subject motion (docket no. 46) should be denied as to Mr. Jones;
7. That either under C.R.C.P. 20(a) or Fed.R.Civ.P. 20(a), the question of permissive joinder is left to the sound discretion of the trial court. McPhail v. Deere & Co. , 529 F.3d 947, 951-52 (10th Cir. 2008); Draper v. School Dist. No. 1 , 175 Colo. 216, 218, 486 P.2d 1048, 1049 (1971). There are two requirements for permissive joinder. First, the claim must arise out of the same transaction, occurrence, or series of transactions or occurrences. Second, there must be at least one question of law or fact common to all defendants that will arise in the action; and
8. That Colorado courts have adopted the "economic loss rule, " which provides that "a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such a breach absent an independent duty of care under tort law." Town of Alma v. AZCO Constr., Inc. , 10 P.3d 1256, 1264 (Colo. 2000); Grynberg v. Agri Tech, Inc. , 10 P.3d 1267, 1269 (Colo. 2000). "Economic loss is defined generally as damages other than physical harm to persons or property." Town of Alma , 10 P.3d at 1264. Colorado courts apply the economic loss rule "for three main reasons... (1) to maintain a distinction between contract and tort law; (2) to enforce expectancy interests of the parties so they can reliably allocate risks and costs during their bargaining; and (3) to encourage the parties to build the cost considerations into the contract because they will not be able to recover economic damages in tort." BRW, Inc., v. Dufficy & Sons, Inc. , 99 P.3d 66, 72 (Colo. 2004). Here, I find that Plaintiff's proposed First Amended Complaint (docket no. 46-1) fails to allege any specific breach of duty by Mr. Wheat that is independent of the contract. In addition, I find that Plaintiff has alleged that Mr. Wheat is an agent of Defendant Overland and was acting as an agent when he was working as a wellsite supervisor. Further, I find that the fifth claim for relief (Intentional Interference with Contract - tort claim) as alleged in the proposed First Amended Complaint (docket no. 46-1) is based on duties that are imposed by contract as alleged in the first claim for relief. Accordingly, contract law provides the remedies for economic losses. See BRW , 99 P.3d at 66-67. Thus, Plaintiff's claims for relief as alleged in the First Amended Complaint (docket no. 46) are barred by the economic loss rule against Mr. Wheat. For these reasons, the subject motion (docket no. 46) should be denied as to Mr. Wheat as well.
WHEREFORE, based upon these findings of fact and conclusions of law this court RECOMMENDS:
1. That Plaintiff's Second Motion for Leave to Amend Complaint and for Joinder of Additional Defendants (docket no. 46) be DENIED; and
2. That each party pay their own attorney fees and costs for this motion.