United States District Court, D. Colorado
ORDER
MICHAEL E. HEGARTY, UNITED STATES MAGISTRATE JUDGE
Before
the Court is Plaintiff's “Motion for Leave to Add
SBMP Ventures LLC (“SBMP”) and DFW Group LLLP
(“DFW”) as Party Defendants (Motion for Leave to
Amend Second Amended Complaint)” [filed March 8,
2019; ECF No. 57]. For the reasons that follow, the
Motion is denied.
BACKGROUND
Plaintiff
initiated this action on December 22, 2017, ECF No. 1, and
filed the operative Second Amended Complaint
(“SAC”) on May 11, 2018. ECF No. 12. The SAC
generally alleges the Defendant fabricated documents to
create the appearance that it was the holder of the Note that
secured the Deed of Trust on Plaintiff's residence at
3076 S. Holly Pl., Denver, CO 80222 (the
“Property”) and wrongfully initiated foreclosure
proceedings on the Property. See ECF No. 12
¶¶ 2-10. The SAC asserts the following six claims:
(1) “wrongful foreclosure”; (2)
“restitution”; (3) “no contract”; (4)
fraud and deceit; (5) quiet title; and (6) “declaratory
and injunctive relief.” Id. ¶¶
16-47.
Plaintiff
now seeks leave to file the proposed Third Amended Complaint
(“PTAC”), which asserts Claims 4-6 against SBMP
and DFW. The PTAC would add allegations that on June 5, 2018,
the Arapahoe County Public Trustee recorded a certificate of
purchase that listed SBMP as a certified purchaser of the
Property. ECF No. 57-1 ¶ 28. It then alleges that SBMP
recorded an assignment of the Property to DFW “to
immunize all from the illegalities of the
transactions.” Id. ¶ 29. The PTAC does
not add substantive allegations as they pertain to the claims
against Defendant.
Plaintiff
initially filed the present Motion on December 27, 2018, ECF
No. 51, which was within the December 29, 2018 deadline for
the amendment of pleadings set in the Scheduling Order, ECF
No. 40 ¶ 9(a). The Court denied that motion without
prejudice on January 8, 2019, because it failed to comply
with D.C. Colo. LCivR 7.1(a), and allowed Plaintiff to refile
the motion on or before January 15, 2019. ECF No. 52. On that
date, Plaintiff timely filed a new motion to amend his
pleading. ECF No. 53. On February 20, 2019, the Court denied
the motion without prejudice again, because it failed to
comply with Local Rule 15.1(b). The Court allowed Plaintiff
to refile the motion on or before March 8, 2019. ECF No. 56.
On that date, Plaintiff filed the present Motion in
conformance with all applicable Local Rules.
DISCUSSION
Because
Plaintiff seeks leave to amend the SAC after Fed.R.Civ.P.
15(a)(1) permits a party to amend its pleading as a matter of
course, the Motion implicates Rule 15(a)(2), which states:
In all other cases, a party may amend its pleading only with
the opposing party's written consent or the court's
leave. The court should freely give leave when justice so
requires.
“[T]he
Rule itself states that ‘leave shall be freely given
when justice so requires.'” Minter v. Prime
Equip. Co., 451 F.3d 1196, 1204 (10th Cir. 2006) (citing
Fed.R.Civ.P. 15(a)). “Refusing leave to amend is
generally only justified upon a showing of undue delay, undue
prejudice to the opposing party, bad faith or dilatory
motive, failure to cure deficiencies by amendments previously
allowed, or futility of amendment.” Bylin v.
Billings, 568 F.3d 1224, 1229 (10th Cir. 2009) (quoting
Frank v. U.S. W., Inc., 3 F.3d 1357, 1365 (10th Cir.
1993)). “The purpose of the Rule is to provide
litigants ‘the maximum opportunity for each claim to be
decided on its merits rather than on procedural
niceties.'” Minter, 451 F.3d at 1204
(quoting Hardin v. Manitowoc-Forsythe Corp., 691
F.2d 449, 456 (10th Cir. 1982)).
Defendant
opposes the motion, arguing that the proposed amendment would
be futile. “A proposed amendment is futile if the
complaint, as amended, would be subject to dismissal.”
Lind v. Aetna Health, Inc., 466 F.3d 1195, 1199
(10th Cir. 2006); Watson ex rel. Watson v. Beckel,
242 F.3d 1237, 1239-40 (10th Cir. 2001) (“A proposed
amendment is futile if the complaint, as amended, would be
subject to dismissal for any reason . . . .”).
In this
case, the proposed amendment would be futile, because joining
the additional parties would defeat the diversity
jurisdiction on which Plaintiff relies to bring his lawsuit
in this Court. Plaintiff asserts jurisdiction under 28 U.S.C.
§ 1332, which provides “[t]he district courts
shall have original jurisdiction of all civil actions where
the matter in controversy exceeds the sum or value of $75,
000, exclusive of interests and costs, and is between . . .
citizens of different States.” It is Plaintiff's
burden to show diversity exists and subject matter
jurisdiction is proper. Observatory Place LLC v.
Interstate Fire & Cas., No. 10-cv-02423-PAB-KLM,
2010 WL 4942534, at *1 (D. Colo. Nov. 23, 2010) (“It is
well established that ‘[t]he party invoking federal
jurisdiction bears the burden of establishing such
jurisdiction as a threshold matter.'” (alteration
in original) (quoting Radil v. Sanborn W. Camps,
Inc., 384 F.3d 1220, 1224 (10th Cir. 2004))). Diversity
jurisdiction requires every defendant to be diverse from
Plaintiff. Ravenswood Inv. Co. v. Avalon Corr.
Servs., 651 F.3d 1219, 1223 (10th Cir. 2011)
(“[E]ach plaintiff must be diverse from each defendant
to have what is known as complete diversity.”).
Plaintiff alleges he is a citizen of the state of Colorado.
ECF No. 12 ¶ 7; ECF No. 57-1 ¶ 7. Thus, it is
Plaintiff's burden to establish that each proposed
defendant is not a citizen of Colorado.
The
PTAC does not properly allege the citizenship of SBMP or DFW;
but the statements in the proposed pleading suggest those
parties are not diverse. The PTAC alleges SBMP “is a
Colorado Limited Liability Company” and DFW “is
the trade name for DS Fine, LLLP, a Colorado Limited
Liability Limited Partnership.” ECF No. 57-1 ¶
8(b)-(c). If true, the addition of these parties would defeat
diversity jurisdiction. However, neither of these allegations
is sufficient to meet Plaintiff's burden to demonstrate
diversity jurisdiction, because the citizenship of those
entities must be established by the citizenship of its
individual members or partners. Peelle v. Walmart
Inc., No. 19-cv-0171 SMV/GJF, 2019 WL 1559285, at *2
(D.N.M. Apr. 10, 2019) (“Partnerships, limited
partnerships, and limited liability companies . . . are
citizens of each and every State in which any partner or
member is a citizen.”); Nehemiah Rebar Servs, Inc.
v. Hertz, No. 17-cv-01081-PAB, 2017 WL 1830301, at *1
(D. Colo. May 8, 2017). Here, Plaintiff has not established
the citizenship of SBMP or DFW, because he does not allege
the citizenship of the members or partners of the proposed
defendants.
Due to
this deficiency, the Court issued an Order to Show Cause on
April 23, 2019, instructing Plaintiff to file a written
response on or before May 2, 2019, demonstrating why the
present Motion to Amend should not be denied for failure to
establish complete diversity. ECF No. 62. That time has
expired and Plaintiff has not responded. As such,
Plaintiff's lawsuit would be subject to dismissal if he
were permitted leave to file the PTAC. Observatory Place
LLC, 2010 WL 4942534, at *2 (“[T]his Court cannot
proceed under diversity jurisdiction without fully accounting
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