United States District Court, D. Colorado
MICHAEL E. HEGARTY, UNITED STATES MAGISTRATE JUDGE.
Claimants Stephen L. Waterhouse and Linda L. Waterhouse
(collectively “the Waterhouses”) seek to amend
their counterclaims to add causes of action for outrageous
conduct and prevailing party attorney fees. Because the
Waterhouses withdrew their outrageous conduct claim in their
reply brief, the Court denies the Waterhouses' motion
without prejudice to the extent it seeks to add this claim.
Regarding the claim for prevailing party attorney fees, the
Court holds that the Waterhouses have not shown good cause
for seeking an amendment of the Scheduling Order.
Accordingly, the Waterhouses' motion to amend is denied
in part and denied without prejudice in part.
October 4, 2016, Plaintiff/Counter Defendant Prima Partners,
LLC filed an Amended Complaint in state court. Am. Compl.,
ECF No. 5. Prima Partners claims that on July 11, 2016, it
entered into a contract to buy and sell real estate with the
Waterhouses. Id. Pursuant to the contract, Prima
Partners agreed to purchase property located at 285 Forest
Road, Unit A, Vail, Colorado 81657. Id. at ¶ 7;
Ex. A to Second Am. Compl., ECF No. 20-2. The contract
required the Waterhouses to disclose any known latent defects
with the property. Am. Compl. ¶¶ 9-10. Immediately
after taking possession of the unit, Prima Partners
discovered numerous serious defects that the Waterhouses did
not disclose. Id. at ¶ 18. Moreover, Prima
Partners allegedly learned that the Waterhouses knew of these
defects when they submitted their disclosures. Id.
at ¶ 19.
November 23, 2016, the Waterhouses removed the case to this
Court. Notice of Removal, ECF No. 1. On December 5, 2016, the
Waterhouses filed their original Answer and Counterclaims,
which asserted a statutory claim for attorney fees arising
out of frivolous litigation. ECF No. 11, at ¶¶
January 11, 2017, the Court entered a Scheduling Order, which
set March 17, 2017 as the deadline for joinder of parties and
amendment of pleadings. ECF No. 19. On that deadline, Prima
Partners filed a Motion to Amend Complaint. ECF No. 20. The
Court granted the motion in so far as it sought to add a
claim for exemplary damages and factual allegations regarding
additional leaks Prima Partners recently discovered. Order on
Prima Partners' Motion to Amend 10, ECF No. 34. However,
the Court denied Prima Partners' request to add a theory
of damages based on the failure of a Section 1031 exchange.
Id. Prima Partners filed a Second Amended Complaint
in accordance with the Court's order on April 25, 2017.
ECF No. 35.
response, the Waterhouses filed an Amended Answer on May 16,
2017. ECF No. 39. Contemporaneously, the Waterhouses
submitted the present Motion for Joinder and Leave to Amend
Counterclaims. ECF No. 38. The Waterhouses initially sought
to add claims for outrageous conduct causing severe emotional
distress and prevailing party attorney fees, which are
provided for in the parties' contract to buy and sell
real estate. Id. at 3; Am. Answer & Countercls.
¶¶ 96-106, ECF No. 39. As part of their outrageous
conduct claim, the Waterhouses sought to join James
Butterworth, Prima Partners' sole owner, as a Counter
Defendant. Am. Answer & Countercls. ¶¶ 99-106.
However, in their reply brief, the Waterhouses withdrew their
request to add the outrageous conduct claim. Reply 1-2, ECF
No. 45. The Waterhouses did not withdraw their request to add
a counterclaim for prevailing party attorney fees.
Partners opposes the Waterhouses' motion to amend on the
basis that an amendment is improper pursuant to Federal Rules
of Civil Procedure 15(a) and 16(b). Prima Partners' Resp.
to Mot. to Amend, ECF No. 41. Specifically, Prima Partners
contends the claim for prevailing party attorney fees is
untimely. Id. at 2-4. Although the Waterhouses argue
a separate claim for attorney fees is unnecessary under
Colorado law, they claim that adding it out of “an
abundance of caution” will not prejudice Prima
Partners. Mot. to Amend 5.
the Waterhouses withdrew their proposed outrageous conduct
claim, see Reply 1-2, the Court must analyze only
whether an amendment is proper to add a cause of action for
prevailing party attorney fees. The Court will first analyze
whether the Waterhouses show good cause for an amendment of
the Scheduling Order to add this claim. Because the Court
does not find good cause, the Court need not determine
whether an amendment is proper pursuant to Rule 15(a).
Court set March 17, 2017 as the deadline for joinder of
parties and amendment of pleadings. Scheduling Order 10, ECF
No. 19. The Court has not extended this
deadline. Therefore, granting the Waterhouses'
motion would necessitate an amendment of the Scheduling Order
under Rule 16(b), which requires that the Waterhouses show
good cause. Fed.R.Civ.P. 16(b)(4); Minter v. Prime Equip.
Co., 451 F.3d 1196, 1205 n.4 (10th Cir. 2006)
(“This Circuit adopted a similar interpretation of Rule
16(b)'s ‘good cause' requirement in the context
of counterclaims asserted after the scheduling order
deadline.” (citing SIL-FLO, Inc. v. SFHC,
Inc., 917 F.2d 1507, 1518-19 (10th Cir. 1990))).
order to show good cause under Rule 16(b)(4), the Waterhouses
“must provide an adequate explanation for any
delay” in meeting the Scheduling Order's deadline.
Minter, 451 F.3d at 1205 n.4. If the Waterhouses
“knew of the underlying conduct but simply failed to
raise [the] claims, ” good cause does not exist.
Gorsuch, Ltd., B.C. v. Wells Fargo Nat. Bank
Ass'n, 771 F.3d 1230, 1240 (10th Cir. 2014).
“Rule 16 erects a more stringent standard [than Rule
15(a)], requiring some persuasive reason as to why the
amendment could not have been effected within the time frame
established by the court.” Colo. Visionary Acad. v.
Medtronic, Inc., 194 F.R.D. 684, 687 (D. Colo. 2000).
rigid adherence to the Scheduling Order is not advisable.
SIL-FLO, Inc., 917 F.2d at 1519. A failure to seek
amendment within the deadline may be excused due to
oversight, inadvertence, or excusable neglect. Id.
Additionally, “[t]he fact that a party first learns
through discovery of information which may lead to amendment
of deadlines set forth in the Scheduling Order constitutes
good cause.” Riggs v. Johnson, No.
09-cv-01226-WYD-KLM, 2010 WL 1957110, at *3 (D. Colo. Apr.
27, 2010), adopted by 2010 WL 1957099 (D. Colo. May
the Court holds that good cause does not exist for an
amendment of the Scheduling Order's deadline for joinder
of parties and amendment of pleadings. Critically, the
Waterhouses knew of the conduct giving rise to their proposed
counterclaim at the time they filed their original answer and
counterclaim. The claim for prevailing party attorney fees is
based solely on a provision in the parties' contract to
buy and sell real estate. Am. Answer & Countercls. ¶
109 (“Pursuant to Section 22 of the Contract, the Court
‘shall award to the prevailing party all reasonable
costs and expenses, including attorney fees.'”).
Therefore, the Waterhouses likely knew of their ability to
seek attorney fees in any subsequent litigation at the time
they entered into the contract. At the latest, the
Waterhouses learned of the provision when Prima Partners
filed its original Complaint seeking attorney fees based on
the same contractual clause. See Compl. ¶¶
39-42, ECF No. 4. Therefore, the Waterhouses “knew of
the underlying conduct but simply failed to raise [the]
claims.” Gorsuch, Ltd., B.C., 771 F.3d at
1240. Moreover, because the Waterhouses have not provided any
reason, let alone a persuasive one, ...