Newman Capital LLC v. Private Capital Group, Inc.

Background

Newman Capital moved under Federal Rule of Civil Procedure 15(a)(2) for leave to file a second amended complaint. Rule 15 generally allows amendments when justice requires. The proposed second amended complaint would add individual defendants Jared Lucero and Michael Burke, who were already defendants in the action, and Doe defendants to the breach-of-contract claim. It would also revise factual allegations and add Doe defendants to the fraudulent-conveyance claim.

In an earlier order, the court had dismissed the fraudulent-conveyance claim without prejudice and allowed Newman Capital to amend it. The court later clarified that its earlier ruling had not granted leave to amend the breach-of-contract claim or to add new defendants, but allowed Newman Capital to file a formal motion to amend.

Parties’ Arguments

Newman Capital argued that the liberal Rule 15 standard supported the proposed amendment. The defendants argued that the amendment would be futile, would cause undue delay, and would unfairly prejudice them. Their futility argument concerned the fraudulent-transfer claim. Because the court had already granted leave to amend that claim, it did not consider the futility argument in deciding this motion and made no finding about whether the proposed complaint cured any alleged defects.

Court’s Analysis

The court found that Newman Capital had not explained why it waited to seek amendment. In particular, Newman Capital did not explain why Lucero and Burke had not previously been named in the breach-of-contract claim or why its proposed allegations about those defendants and the Doe defendants justified the delay. The court therefore found that Newman Capital had not overcome the presumption that the request was delayed.

The court nevertheless held that delay alone was not enough to deny amendment absent bad faith or undue prejudice. The defendants did not meet their burden of showing undue prejudice. Discovery had not concluded, no motion for summary judgment was pending, and no trial date had been set. The court stated that the possibility of additional discovery and trial-preparation work, by itself, did not justify denying amendment. When a proposed amendment adds parties, Rule 21 also applies, but courts use the same liberal standard used for Rule 15 amendments.

Ruling

Judge Vernon S. Broderick granted Newman Capital’s motion for leave to file a second amended complaint. The court ordered Newman Capital to file it within seven days of the order. The complaint must comply with the earlier amended order and the March 28, 2025 order. The clerk was directed to terminate the motion at Doc. 50. The order did not decide the underlying breach-of-contract or fraudulent-conveyance claims or whether the proposed fraudulent-conveyance allegations were legally sufficient.