Hutson v. AMCO Insurance Co Inc

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA [6] 7 JANICE HUTSON, et al., Case No. 19-cv-03667-EMC 8 Plaintiffs, ORDER DENYING PLAINTIFFS’ 9 v. MOTION FOR LEAVE TO FILE THIRD AMENDED COMPLAINT 10 AMCO INSURANCE CO INC, et al., Docket No. 69 11 Defendants. [13] 14 Plaintiffs are the heirs of a woman named Betty Hutson. They initially sued two 15 companies: AMCO Insurance Co. and Wells Fargo Bank, NA. In August 2020, Plaintiffs and 16 Wells settled their dispute, and thus Wells was dismissed from the suit. See Docket Nos. 58, 60 17 (notice of settlement and order dismissing action against Wells). Thus, at this juncture, the only 18 defendant in the case is AMCO and the only cause of action against AMCO (following the Court’s 19 order on a 12(b)(6) motion) is one for unjust enrichment. 20 Currently pending before the Court is Plaintiffs’ motion for leave to file a third amended 21 complaint (“TAC”). In the motion, Plaintiffs ask that new plaintiffs be added to this action so that 22 the new plaintiffs can assert their own claim for unjust enrichment against AMCO. Having 23 considered the parties’ briefs and accompanying submissions, the Court hereby DENIES 24 Plaintiffs’ motion. 25 The proposed new plaintiffs are contractors who did repair on the real property at issue 26 (that had suffered damage from a fire) but were not paid. See Prop. TAC ¶¶ 1, 87 (naming Louis 27 Cherry, American Precision Builders, and Roosevelt Williams as “contractors hired to do 1 project”). As noted above, the contractors wish to assert a claim for unjust enrichment against 2 AMCO. 3 Under Federal Rule of Civil Procedure 15, “[a] court should freely give leave [to amend] 4 when justice so requires.” Fed. R. Civ. P. 15(a)(2). Factors for a court to consider in deciding 5 whether to give leave include undue delay in amending, bad faith in amending, futility in 6 amending, and prejudice to the other side from the amendment. Prejudice is often the crucial 7 factor. See Eminence Cap., LLC v. Aspeon, Inc., 316 F.3d 1048, 1051-52 (9th Cir. 2003). But 8 futility alone can be a basis for denial of leave to amend. See United States ex rel. Insoon Lee v. 9 SmithKline Beecham, Inc., 245 F.3d 1048, 1052 (9th Cir. 2001); Bonin v. Calderon, 59 F.3d 815 , 10 845 (9th Cir. 1995). 11 In the instant case, the unjust enrichment claim by the contractors against AMCO would be 12 futile. Plaintiffs’ proposed complaint and motion to amend indicate that Wells hired the 13 contractors to do the repairs and/or Janice Hutson did. See, e.g., Prop. TAC ¶ 88 (alleging that 14 “[t]he contractors were hired by Wells Fargo, not by the homeowners”); Prop. TAC, Ex. 1 15 (consisting of several documents, including a “Prime Building Contract” between Janice Hutson 16 and American Builders); Mot. at 8 (taking note of “the first contract signed by both the 17 homeowner Janice Hutson and the contractor”). Thus, any work that the contractors performed 18 was at the behest of Wells and/or Janice Hutson, and the only services provided by the contractors 19 were for Wells and/or Janice Hutson. As a result, the contractors may have a claim for unjust 20 enrichment against Wells and/or Janice Hutson,1 but not against AMCO.2 AMCO did not receive 21 any benefit from the contractors’ work and therefore was not unjustly enriched. See In re De 22 Laurentiis Entm’t Grp., Inc., 963 F.2d 1269, 1274 (9th Cir. 1992) (holding that, even though an 23 advertising agency had contracted with NBC to buy advertising – and not the agency’s client – [24] 1 Cf. Kossian v. Am. Nat’l Ins. Co., 254 Cal. App. 2d 647 (1967) (holding that contractor who [25] provided services to the owner of a building damaged by fire could recover in quantum meruit against the company that held a deed of trust on the building and who had received proceeds of the [26] fire insurance). [27] 2 The Court does not opine on whether Plaintiffs’ counsel could ethically represent both Plaintiffs 1 NBC could still recover in quantum meruit from the agency’s client because the client was the one 2 who had requested the advertising and who had benefited from it). Plaintiffs contend that AMCO 3 benefited because it acknowledged owing more money to cover repairs but then never paid out 4 that money. See Mot. at 3; Reply at 4. Even assuming that AMCO acknowledged owing more in 5 insurance proceeds, that does not mean that AMCO benefitted from these contractors’ work; at 6 most, AMCO would owe insurance money under the policy to Wells, not directly to the 7 contractors. 8 The Court also acknowledges Plaintiffs’ assertion that the contractors “were hired pursuant 9 to a scope [of work] prepared by AMCO[] and with direction to Wells Fargo that the contractors 10 follow that scope.” Prop. TAC ¶ 88. At best, however, that suggests that Wells Fargo could have 11 a claim against AMCO. 12 Accordingly, Plaintiffs’ motion for leave to amend is hereby denied. At the next status 13 conference, currently set for January 7, 2021, Plaintiffs and AMCO shall be prepared to address 14 whether they have reached a settlement of their dispute or whether this litigation shall continue on 15 Plaintiffs’ unjust enrichment claim alone. 16 This order disposes of Docket No. 69. [17] 18 IT IS SO ORDERED. [19] 20 Dated: December 14, 2020 [21] 22 ______________________________________ EDWARD M. CHEN 23 United States District Judge