Court allows former subcontractor to amend breach of contract suit regarding project at Army base

By Scott Holland | May 13, 2019

OAKLAND – The U.S. District Court for the Northern District of California recently determined that a subcontractor can amend its breach of contract complaint regarding a project at the Fort Hunter Liggett.

In a May 1 order, U.S. Magistrate Judge Kandis Westmore granted the motion by Federal Solutions Group the amend its lawsuit against H2L1-CSC (H2L1), the main contractor for a U.S. Army Corps of Engineers project at Fort Liggett, in Monterey County. Federal Solutions was a subcontractor until H2L1 terminated it from the project, leading Federal Solutions to file the lawsuit Sept. 19, 2017, claiming breach of contract, unjust enrichment and quantum meruit.

On Jan. 18, 2018, Westmore issued a case schedule and allowed two weeks to amend pleadings, setting a trial date for April 1, 2019, court filings said. On Oct. 4, 2018, Westmore adopted a joint stipulation to continue the trial to Dec. 16, in part because the parties were still meeting and conferring on discovery.

On March 28, 2019, Federal Solutions filed a motion seeking to add a single claim for breach of the implied covenant of good faith and fair dealing, as well as a request for judicial notice of four documents in support of that motion.

H2L1 opposed the request to the amendment in an April 11 filing – though not the request for judicial notice –— and Federal Solutions replied to the opposition a week later. Westmore issued her opinion on the filings in her May 1 order.

Federal Solutions maintained it was diligent in bringing its motion to amend and that being allowed to do so wouldn’t cause prejudice, court filings said. H2L1 said Federal Solutions didn’t propound discovery before the pleading amendment deadline and that the document underscoring the new claim was in Federal Solutions’ possession as of 2014.

Westmore rejected the argument that allowing an amendment after the deadline gives a plaintiff a “mulligan,” noting federal court rules allow late amendments when parties can demonstrate good cause.

“H2L1 produced two rounds of documents, totaling over 3,500 pages, in January 2019, which took weeks to review,” Westmore wrote. “These were produced in response to requests propounded in May 2018.”

Westmore said Federal Solutions notified H2L1 of the basis for the proposed new claim at the end of February and issued a copy of the first amended complaint on March 25, then requested H2L1’s consent to file the amended pleading. The parties conferred on March 28, during which H2L1 refused to stipulate to the request, leading to Federal Signal’s motion to amend.

“This timeline is reasonable given the voluminous document production made in January 2019,” Westmore wrote.

H2L1 said a Federal Solutions agent created the document in question and emailed it from a company email address, court filings said. Federal Solutions said the document was only a draft and that H2L1 didn’t produce the actual schedule of values utilized on the project.

“The individual who created the document was a former employee of both parties, and defendant concedes that this former employee is in sole possession of certain documents, including some of defendant’s, Westmore wrote,

Federal Solutions also said two other documents produced in January 2019 support the new claim, a two-page email chain and the Corps of Engineers correspondence.

Westmore said that the explanation is reasonable, leading her to find Federal Solutions was diligent in seeking permission to amend its complaint. She also said the current case schedule means an amendment at this juncture doesn’t adversely affect H2L1’s ability to defend itself and granted seven days to file the complaint.

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