Khanna v. Walia

Background

Defendant Harpreet Walia moved for leave to file first amended counterclaims, and Defendant WaveStrong moved for leave to file a third amended cross-complaint. Both proposed adding fraud-based claims against Plaintiff Dhoat based on alleged misrepresentations about Dhoat’s educational credentials.

The motions were filed by the deadline in the court’s scheduling order, so the court applied Federal Rule of Civil Procedure 15. That rule generally directs courts to freely allow amendments when justice requires, although courts may deny amendment for reasons such as undue delay, bad faith, prejudice, repeated failure to fix problems, or futility.

Analysis

The court first considered prejudice. Dhoat argued that Defendants knew about the alleged fraud as early as 2021 and that adding the claims would change the case and affect his litigation strategy. The court rejected that argument. It noted that the parties had conducted little discovery, fact discovery was not scheduled to close until January 31, 2026, and trial was scheduled for June 23, 2026. The court concluded that Dhoat had not shown prejudice.

The court also rejected Dhoat’s argument that the amendments were made in bad faith as retaliation for his claims. Dhoat offered no evidence of retaliation and asked the court to infer bad faith from the timing of the amendments. The court declined to make that inference.

Dhoat argued that amendment would be futile because the proposed fraud claims did not satisfy the heightened pleading requirements of Rule 9(b) and were barred by the statute of limitations. The court concluded that it could not determine at this stage that the claims were legally futile. Defendants might be able to add facts addressing when and how the alleged misrepresentation was made. The court also found that issues concerning relation back and tolling of the statute of limitations remained open. It stated that Dhoat could raise those arguments in a later motion.

Finally, the court rejected Dhoat’s undue-delay argument. It found that Dhoat had not shown the prejudice, bad faith, or futility that could make delay a basis for denying amendment. The court also noted that all parties had contributed to the case’s extended timeline and that Defendants had represented that their investigation justified the timing.

Ruling

Judge Jacquelyn Corley granted Walia’s motion for leave to file first amended counterclaims and WaveStrong’s motion for leave to file a third amended cross-complaint. The grant was without prejudice to Dhoat later moving to dismiss the amended pleadings based on the statute of limitations or other grounds. The amended pleadings were due by September 5, 2025, and the order disposed of Docket Nos. 92 and 93. The court did not decide whether the proposed fraud claims would ultimately succeed.