United States District Court, D. New Mexico
ALPHA ALPHA, LLC, a New Mexico limited liability company, on behalf of itself and derivatively on behalf of Avalon Jubilee, LLC, Plaintiff,
LAND STRATEGIES, LLC, a Nevada limited liability company, RONALD R. COBB, and PETER GHISHAN, Defendants, and RONALD R. COBB, Third-Party Plaintiff,
AVALON JUBILEE, LLC, a New Mexico limited liability company, Third-Party Defendant.
MEMORANDUM OPINION AND ORDER
matter comes before the Court on Defendants Land Strategies,
LLC (Land Strategies), Peter Ghishan (Ghishan), and Ronald
Cobb's (Cobb) (collectively, Defendants) Motion to Strike
Purported Third Amended Complaint (Doc. 54) in Lieu of Filing
Answer to Third Amended Complaint (Motion to Strike), filed
March 25, 2019 (Doc. 56), and Plaintiff Alpha Alpha,
LLC's (Alpha Alpha), Renewed Motion for Leave to File
Third Amended Complaint, and Motion for Extension of Case
[Management] Deadline (Motion to Amend), filed May 14, 2019
(Doc. 64). Alpha Alpha filed its response in opposition to
Defendants' Motion to Strike on April 9, 2019, and its
reply in support of its Motion to Amend on June 11, 2019.
(Docs. 60 and 70). Defendants filed their reply in support of
the Motion to Strike on April 23, 2019, and their response in
opposition to Alpha Alpha's Motion to Amend on May 28,
2019. (Docs. 61 and 66). Having reviewed the briefing, the
record, and the applicable law, the Court grants
Defendants' Motion to Strike (Doc. 56); strikes Alpha
Alpha's Verified Third Amended Complaint for Breach of
Fiduciary Duty, Constructive Fraud, Conversion, Willful
Breach of Contract, Piercing the Corporate Veil, Aiding and
Abetting, and Civil Conspiracy, filed March 11, 2019 (Doc.
54); and denies Alpha Alpha's Motion to Amend (Doc. 64).
Background and Procedural History
litigation stems from Alpha Alpha's allegations that
Defendants mishandled and misappropriated money from Avalon
Jubilee, LLC (Avalon). Alpha Alpha was and is Avalon's
majority member. Land Strategies, owned 50/50 by Cobb and
Ghishan, was also a member of Avalon. Cobb was Avalon's
first Manager, vested with near plenary authority to conduct
Alpha, on behalf of Avalon, claims that Cobb acted beyond his
authority and abused his position as Avalon's Manager to
bilk Avalon out of more than $600, 000.00 by paying Land
Strategies an unauthorized $10, 000.00 per month
“management fee, ” among other misdeeds. However,
the instant motions do not address Alpha Alpha's claims
on the merits. Instead, these motions relate to procedural
irregularities in Alpha Alpha's attempts to amend its
Alpha filed its Complaint and First Amended Complaint in
state court on November 17, 2017. (Doc. 23-2). Alpha Alpha
refined its claims into the Second Amended Complaint, filed
in state court on June 28, 2018. (Doc. 2). The Second Amended
Complaint contained two claims against Cobb, Ghishan, and
Land Strategies: Count 1, breach of fiduciary duty, aiding
and abetting the breach; and Count II, willful violations of
the operating agreement. (Id.) Defendants removed
the case on July 9, 2018, asserting diversity jurisdiction.
Magistrate Judge held a Rule 16 Scheduling Conference and
entered a Scheduling Order. (Docs. 19, 20). The Scheduling
Order provides that Alpha Alpha could move to amend the
pleadings through and including October 24, 2018. (Doc. 20 at
Alpha filed its Motion for Leave to File Third Amended
Complaint on October 24, 2018. (Doc. 22). In compliance with
DNM-LR Civ. 15.1, Alpha Alpha attached its proposed Third
Amended Complaint (Proposed AC) as an exhibit to that motion.
(Doc. 22-1). It filed a Notice of Filing Regarding Motion to
Amend on November 5, 2018, indicating that Defendants did not
oppose the motion to amend. (Doc. 24). The Court entered a
stipulated Order, submitted by Alpha Alpha, granting Alpha
Alpha's “Motion for Leave to file a Third Amended
Complaint” on November 13, 2018. (Doc. 26).
Proposed AC contains three counts: breach of fiduciary duty,
willful violation of the operating agreement, and
conversion/civil theft; as well as a section related to
piercing the corporate veil, and a section based on aiding
and abetting a civil conspiracy. (Doc. 22-1). All told, the
Proposed AC spans 117 paragraphs. (Id.)
March 11, 2019, Alpha Alpha filed its “Third Amended
Complaint” (Filed AC). (Doc. 54). The Filed AC differs
in material and substantial ways from the Proposed AC
submitted to the Court and approved by defense counsel.
Compare (Doc. 54) with (Doc. 22-1). In
addition to adding an entirely new claim for fraud, which was
not pled in any previous complaint or proposed amended
complaint, the Filed AC added forty-seven (47) paragraphs.
Standard of Review
12(f)(2) states that the court “may strike from a
pleading an insufficient defense or any redundant,
immaterial, impertinent, or scandalous matter. The court may
act on motion made by a party either before responding to the
pleading or, if a response is not allowed, within 21 days
after being served with the pleading.” Whether to grant
a motion to strike is a matter of judicial discretion.
See Nielson v. Moroni Feed Co., 162 F.3d 604, 606
n.3 (10th Cir. 1998). Motions to strike under Rule 12(f),
however, are disfavored. Payne v. Tri-State Careflight,
LLC, 327 F.R.D. 433, 445 (D.N.M. 2018). Nonetheless,
courts have the inherent authority to manage their dockets
and to preserve the integrity of the judicial process.
Chambers v. NASCO, 501 U.S. 32, 49 (1991).
“[t]he court should freely give leave [to amend a
complaint] when justice so requires.” Fed.R.Civ.P.
15(a)(2). The Tenth Circuit has explained,
Rule 15(a) provides that leave to amend “shall be
freely given when justice so requires.” 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 ...