Free Order on Motion to Amend/Correct - District Court of Arizona - Arizona

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

Century 21 Real Estate LLC, Plaintiff , vs.

Century Surety Co., Defendants.

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No. CIV 03-0053-PHX-SMM ORDER

Pending before the Court is Century 21 Real Estate LLC's ("C21") Second Motion 17 for Leave to Amend the Complaint to add abandonment as a basis for its opposition claim 18 with respect to Century Surety Co.'s ("Century") registration application for the mark 19 "Century Surety Group" (the "Second Motion to Amend"). (Dkt. 222.) Century has filed 20 an opposition to the Second Motion to Amend, to which C21 has replied. (Dkts. 227, 232 21 at Ex. 1.) After considering the parties' briefs, the Court issues this Order. 22 BACKGROUND 23 On March 15, 2006, more than 38 months after C21 filed its original Complaint, 18 24 months after the discovery cut-off, 12 months after cross motions for summary judgment 25 were filed, nine days after oral argument on the summary judgment motions was held, and 26 one day before the Court filed an 89-page order granting Century's motions for summary 27 judgment and dismissing eight of C21's ten claims (the "March 16 Order"), C21 filed its 28
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First Motion to Amend, seeking leave to add several marks to its trademark infringement, unfair competition, and dilution claims against Century. (Dkt. 173.) On May 23, 2006, the Court denied C21's First Motion for Leave to Amend due to "C21's dilatory behavior in requesting leave to amend, C21's use of the Motion to Amend to avoid the Court's ruling on summary judgment, and prejudice to Century resulting from the need for further substantial discovery." (Dkt.200.) After denying C21's First Motion to Amend, on June 19, 2006, the Court held a status conference in order to discuss how the parties intended to resolve the three remaining claims in the case: (i) Century's breach of contract claim; (ii) C21's cancellation claim with respect to the mark "Century Insurance Group"; and (iii) C21's opposition claim with respect to the mark "Century Surety Group." (Dkt. 216 at 7.) At that hearing, Century dismissed its breach of contract claim with prejudice and suggested that the remaining two trademark claims (the "Remaining Claims") be decided by summary judgment motions or a bench trial if summary judgment could not be granted. (Id. at 5-6.) Based on his view that "there would be some different fact and law issues on the remaining opposition and cancellation claims," counsel for C21 proposed that the Court enter a Rule 54(b) judgment permitting an appeal on the eight claims dismissed in the March 16 Order. (Id. at 6.) The Court asked counsel to specify what "additional type of facts" C21 would seek to introduce on the Remaining Claims. (Id. at 16.) In response, counsel for C21 did not refer to his intent to add the completely new theory of abandonment to this lawsuit, but instead referred only to the likelihood of confusion and dilution theories with respect to the Remaining Claims. Id. at 16-18. On July 10, 2006, the Court ordered both parties to file briefs "setting forth each of their respective positions as to how the Court should resolve the two [R]emaining [C]laims." (Dkt. 217 at 2.) C21 submitted that the Court should enter a Rule 54(b) judgment on the issues already decided because "disposition of the two Remaining Claims would require consideration of different legal standards" and "facts in addition to those already submitted as to the likelihood of confusion and dilution issues." (Dkt. 218 at 2.) Once again, however, -2Document 240 Filed 02/08/2007 Page 2 of 16

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C21 did not reveal its intent to seek to leave to inject the new theory of abandonment into the case. Id. at 1-5. Instead, C21 argued that an immediate appeal of the March 16 Order would "streamline the remaining litigation and serve judicial efficiency." Id. at 4. On August 21, 2006, the Court summarized the legal analysis used to resolve the Remaining Claims on the grounds of likelihood of confusion and dilution. (Dkt. 220 at 2-3.) The Court determined that, "[a]lthough the legal standard applicable to a resolution of the Remaining Claims differs from the infringement and dilution standards previously applied," the "Remaining Claims [do not] involve so little factual overlap with the issues previously considered as to require this case to be fractured into two pieces." (Id. at 3.) Accordingly, both parties were permitted to file motions for summary judgment on the Remaining Claims. If the claims could not be resolved by motion, the Court would hold a bench trial. (Id.) On October 3, 2006, C21 filed the instant Motion to add abandonment as the basis for its opposition claim to the mark "Century Surety Group," together with a Motion for Summary Judgment on the abandonment-based opposition claim. (Dkts. 222-25.) According to C21, the Second Motion to Amend "should be granted because the evidence shows that Century has not used the mark CENTURY SURETY GROUP in over three years and has no intent to resume use of the mark." (Dkt. 223 at 4.) Although C21 chose to raise the completely new issue of abandonment nearly four years after its original Complaint was filed, and without prior notice to the Court or opposing counsel, C21 claims that "[t]he addition of abandonment as an aspect of [its cancellation claim] . . . will not cause undue prejudice to Century, is not sought in bad faith, and is not futile." (Id. at 4.) For several reasons, the Court disagrees. C21's untimely Second Motion to Amend will be denied not only because of extraordinary delay, but also because it would be unduly prejudicial to Century and the request appears to have been made in bad faith. PROCEDURAL HISTORY On January 9, 2003, C21 filed its complaint against Century, alleging trademark infringement, unfair competition, and dilution of the service marks "Century 21" and -3Document 240 Filed 02/08/2007 Page 3 of 16

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"Century 21 & Design" (collectively, the "C21 Marks") under the Lanham Act, Arizona law, and common law. (Dkt. 1 at ¶¶ 5, 7-8.) C21's Complaint also included an opposition claim to Century's registration application for the mark "Century Surety Group." (Dkt. 1 at ¶¶5861.) The crux of C21's original Complaint was that Century infringed and diluted the C21 Marks through its use of the marks "Century Surety Group," "Century Insurance Group," "Century Surety," and "Century" (collectively, the "Century Marks") "in connection with the advertising and sale of insurance services [and surety bonds] in commerce." (Id. ¶¶ 5,1214,17,22, 29,36,40,45,50,55.) On May 23, 2003, Century filed a counterclaim for breach of contract based on an alleged settlement. (Dkt. 11 ¶¶1-24.) On June 16, 2003, C21 filed a counterclaim for cancellation of the registered mark "Century Insurance Group." (Dkt. 13 ¶¶62-70.) On August 27, 2003, both parties filed a Proposed Case Management Plan, which specifically defined the marks and claims at issue. Dkt. 22 at 3. The Proposed Case Management Plan does not allege the alternative theory that Century has abandoned any of its Marks. See Dkt. 22. On September 3, 2003, the Court held an initial pretrial conference pursuant to Fed.R.Civ.P. 16. (Dkt. 25.) There, both parties stipulated to pursue settlement negotiations for sixty days. (Id.) The Court ordered the parties to exchange documents and contact the Court no later than December 12, 2003 if the case did not settle. (Id.) On March 18, 2004, after extenuating attempts to settle failed, both parties filed a Proposed Case Management Plan, specifying the same Marks and claims at issue. See Dkt. 53 at 3. Like C21's original Complaint and the 2003 Proposed Case Management Plan, the 2004 Proposed Case Management Plan does not allege the alternative theory that Century has abandoned its Marks, nor does it disclose that abandonment may become an issue. See Dkt. 53. This is so even though John Marazza ­ one of the three persons upon whom C21 now relies in support of its contention that Century has abandoned the mark "Century Surety Group"­ was deposed in February 2004. See dkt. 224 at 5 and Ex. C.

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On March 25, 2004, the Court held a second pretrial conference pursuant to Fed.R.Civ.P. 16. (Dkt. 58.) There, the parties agreed on a discovery cut-off date of September 17, 2004; a dispositive motion cut-off date of June 17, 2005, and a final pre-trial conference date of July 12, 2005. (Dkt. 58.) When the Court asked counsel for C21 whether he intended to amend the original Complaint, counsel replied, "We don't presently intend to do that, Your Honor, but there's still some discovery that remains to be taken, so I would hesitate to say it's out of the realm of possibility." (Dkt. 61 at 5.) At no time did counsel for C21 mention that abandonment may become an alternative theory in the case. (Id.) Again, this is troubling because John Marazza was deposed in February 2004. On September 8, 2004, the Court granted the parties' stipulation that discovery remain open until September 22, 2004, for the sole purpose of deposing witnesses whose testimony was not completed by September 17, 2004. (Dkt. 75.) On February 23, 2005, Century moved for summary judgment on all claims except the Remaining Claims. (Dkts. 83-84.) On March 4, 2005, the Court agreed to allow C21 until April 22, 2005 to file its response to Century's motions for summary judgment. (Dkt. 88.) In addition, the Court agreed to stay the case while the parties participated in a second facilitated settlement conference, if they chose to do so. On April 22, 2005, C21 filed its response to Century's motions for summary judgment. (Dkts. 95-96.) On April 27, 2005, the Court entered an order staying the case until the earlier of the completed settlement conference, August 5, 2005, or notification from the parties that the case should proceed. (Dkt. 100.) The Court later granted the parties' stipulation to extend settlement discussions and scheduled a status conference. (Dkt. 107.) At the August 29, 2005 conference, the parties stated that the case could not be settled. Because the deadline to file dispositive motions had expired on June 17, 2005, C21 requested and received permission to file a motion for summary judgment on its infringement and unfair competition claims. (Dkt. 110.) At no time during this conference did counsel for C21 mention that "during the course of litigation Century provided discovery in the form of

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documents and testimony that unequivocally shows that Century no longer uses the mark `Century Surety Group,'" as it now contends. Dkt. 223 at 4. On October 14, 2005, C21 filed its summary judgment motion on the infringement and unfair competition claims. (Dkt. 116.) Both parties' motions were fully briefed by January 17, 2006. (Dkts. 120-21, 150, 154.) On February 1, 2006, the Court scheduled oral argument on the pending motions for summary judgment and motions to strike. (Dkt. 157.) Oral argument on the motions for summary judgment was held on March 6, 2006. (Dkt. 167.) C21's First Motion to Amend was filed on March 15, 2006. (Dkt. 173.) The Court's March 16 Order granted Century Surety's motions for summary judgment and dismissed C21's infringement, unfair competition, and dilution claims. (Dkt. 177.) The status conference to discuss how the parties intended to resolve the Remaining Claims was held on June 19, 2006. (Dkt. 216.) The parties' briefs addressing the best way to resolve the Remaining Claims were filed on July 21, 2006 (dkts. 218-19). C21's counsel did not mention ­ either at the status conference or in its brief ­ C21's current contention, that "during the course of litigation Century provided discovery in the form of documents and testimony that unequivocally show that Century no longer uses the mark `Century Surety Group.'" See dkt. 223 at 4. DISCUSSION Federal Rule of Civil Procedure 15 allows a party to amend its complaint by leave of court at any time, and such leave "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). Denial of leave is within the Court's discretion. In deciding whether to grant leave to amend, the court may consider undue delay, prejudice to the opposing party, bad faith or dilatory motive, futility of the amendment, and whether the party has previously amended its pleadings. Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). These factors are to be applied with a view toward "the strong policy in favor of allowing amendment." Kaplan v. Rose, 49 F.3d 1363, 1370 (9th Cir. 1994).

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A.

Undue Delay Undue delay is a valid reason for denying leave to amend. Contact Lumber Co. v.

P.T. Moges Shipping Co., 918 F.2d 1446, 1454 (9th Cir. 1990). Although delay by itself does not always justify denying leave to amend, considerable delay with no reasonable explanation is especially significant where a proposed amendment would cause prejudice to the other party or would significantly delay resolution of the case. See Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 986 (9th Cir. 1999) ("Although delay is not a dispositive factor in the amendment analysis, it is relevant, especially when no reason is given for the delay.") (citations omitted); DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186-87 (9th Cir. 1987); Jackson v. Bank of Hawaii, 902 F.2d 1385, 1388 (9th Cir. 1990). In the Ninth Circuit, even a delay of less than a year has been considered to be "undue delay," especially where the facts supporting the allegations sought to be added have been available to the moving party for a significant period of time. See Lockheed Martin Corp. v. Network Solutions, Inc. Lockheed, 175 F.R.D. 640, 644 (C.D. Cal. 1997) (moving party unduly delayed requesting leave to amend even though amendment was sought less than a year after complaint was filed because facts underlying proposed amendment were available to movant more than seven months before leave to amend was sought), affirmed, 194 F.3d 980 (9th Cir. 1999); Royal Ins. Co. of Am. v. Southwest Marine, 194 F.3d 1009, 1017 (9th Cir. 1999) (denial of motion to amend proper where party seeking to amend knew of facts to be added "from the inception of the lawsuit"). In the present case, C21 has chosen to request leave to amend nearly four years after filing this lawsuit, even though C21 forcefully concedes knowing the facts supporting the abandonment allegations for more than two years, when discovery closed. See dkts. 223 at 2-3; 224 at 2 ("Discovery in this case has revealed that Century no longer uses this mark."). Thus, C21 could have sought leave to add the ground of abandonment more than 25 months ago, three months before Century filed its motions for summary judgment on the infringement, unfair competition, and dilution claims. More importantly, C21 has provided no excuse for its extraordinary delay in seeking leave to amend to add this alternative theory
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to the lawsuit. Because C21 unduly delayed for more than two years in seeking leave to add a theory that is completely the opposite of allegations in its original Complaint, and has failed to provide any legitimate excuse for doing so, the existence of undue delay weighs heavily in favor of denying C21's Second Motion to Amend. See Texaco, Inc. v. Ponsoldt, 939 F.2d 794, 798-99 (9th Cir. 1991) (denying leave to amend after two-year delay); Lockheed, 194 F.3d at 986 (denying leave to amend after one-year delay); Jackson, 902 F.2d at 1388 (eight month delay unreasonable). The Court rejects C21's contention that it did "not unduly delay" in seeking leave to add a completely divergent theory to this case because abandonment "is not barred by any applicable statute of limitations" and "[a]bandonment of a mark may be raised at any time." (Dkt. 223 at 4-5.) The only conclusion clear from this contention is that C21, as opposed to Century, will not be prejudiced by its unreasonable delay. Moreover, as previously noted (dkt. 200 at 8), the test for determining whether a party has unduly delayed in seeking leave to amend is when the moving party learns of the facts sought to be added, not when the statute of limitations runs on a claim. See United States ex rel. Schumer v. Hughes Aircraft Co., 63 F.3d 1512, 1527 (9th Cir. 1995) ("Although [plaintiff] knew all of the facts relevant to the [proposed amendment] when the complaint was filed . . . he did not move to amend until three years later. The existence of undue delay supports denial of a motion for leave to amend."), vacated on other grounds, 520 U.S. 939 (1997); Lockheed, 194 F.3d at 986 (moving party unduly delayed by seeking amendment less than one year after complaint filed partly because facts underlying proposed amendment were available to movant more than seven months before request for leave to amend was sought); Kaplan, 49 F.3d at 1370 (giving greater weight to undue delay factor where facts and theories sought to be added were known to moving party early in litigation). Several facts belie C21's contention that "any delay in specifying abandonment as a reason for opposing the registration of Century Surety Group was reasonable given the procedural aspects of this case (i.e., long periods of settlement discussions, a belief that the case would be appealed after entry of the March 16, 2006 Order regarding summary
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judgment motions)." (Dkt. 223 at 5.) First, the March 16 Order did not require the Clerk to enter judgment pursuant to Rule 54(b), nor did C21 file a Motion requesting entry of judgment pursuant to Rule 54(b). Dkt. 177 at 88-89. Thus, C21 could not have had any legitimate belief that the case would be appealed after the March 16 Order. Second, from C21's perspective, evidence supporting a theory of abandonment would have been beneficial to the parties' settlement discussions. Therefore, not raising abandonment during settlement discussions, at one of the case management conferences, or at any other time, in no way appears to be "reasonable." Third, C21 fails to explain why abandonment was not raised at the June 19, 2006 status hearing or in its July 21, 2006 brief, each of which was specifically designed by the Court to discover the parties' intentions with respect to resolving the Remaining Claims. See Lockheed Martin, 194 F.3d at 986 ("Although delay is not a dispositive factor in the amendment analysis, it is relevant, especially when no reason is given for the delay."). Nor does C21 explain why the issue was not raised ten months ago, in its first Motion for Leave to Amend. Dkt. 173. Finally, stays granted at the request of both parties in order to pursue settlement did not relieve C21's counsel from their responsibilities with respect to this lawsuit, including making strategic decisions in the event settlement negotiations failed. More importantly, the record demonstrates that counsel did not ignore the pending lawsuit during the stay periods. The best example of this is C21's request, after a 6-month stay, to file a motion for summary judgment on its infringement and unfair competition claims. See Dkt. 110. Second, regardless of whether the Court measures the length of delay as 37 months or some lesser period, it is clear that C21 inexcusably delayed in seeking leave to amend until after the Court held discussions with counsel and ordered briefing, during which Century made clear its intent to file for summary judgment on the Remaining Claims as they are alleged in the current Complaint. Thus, C21's assertion that "any delay in specifying abandonment" "was reasonable given the procedural aspects of this case" (dkt. 223 at 5), is not well-taken.

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B.

Prejudice to Non-Moving Party It is within the district court's discretion to deny leave to amend where new claims

radically shift the nature of the case, require the opposing party to engage in substantial new discovery, or would otherwise unduly delay the proceedings. See Lockheed, 194 F.3d at 986 (defendant prejudiced where plaintiff sought to amend complaint alleging infringement and dilution of domain names to include allegations of several other offending domain-name combinations); Texaco, 939 F.2d at 798-99 (affirming denial of leave to amend where defendant would have been unreasonably prejudiced by addition of new claims four months before trial and after close of discovery); Kaplan, 49 F.3d at 1370 (affirming denial where parties had already engaged in "voluminous and protracted discovery"); Janicki Logging Co. v. Mateer, 42 F.3d 561, 566 (9th Cir. 1994) (affirming court's conclusion that "[p]laintiff should not be permitted at this late date to . . . amend its complaint to add new theories."). In the present case, allowing C21 to amend at this late stage of the case would undoubtedly result in all three types of prejudice to Century. First, nearly four years into a case in which C21 alleged infringement, unfair competition, and dilution of its Marks by virtue of Century's use of the Century Marks, C21 requests permission to add a completely divergent theory ­ abandonment ­ as a basis for its opposition claim. See Dkt. 222, Ex. 1 at ¶61. Discovery in the present case has been closed for more than 27 months (since September 2004), both parties have already filed and argued motions for summary judgment on the infringement and dilution claims, which the Court has resolved in Century's favor, and Century has filed a summary judgment motion on the Remaining Claims as they are pled in the original Complaint. (Dkts. 58, 83-84, 116, 177, 221.) As discussed above, supra at 7-10, C21 has provided no legitimate reason why it failed to seek leave to amend to add the issue of abandonment earlier in the lawsuit so that Century could have adjusted both its discovery and motion strategies to effectively respond to C21's completely divergent theories (i.e., infringement/dilution based on "use" versus abandonment). See Lockheed, 175 F.R.D. at 644-45 (non-moving party is prejudiced by addition of a claim that depends on different facts and requires new discovery one year into
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litigation); Janicki Logging Co., 42 F.3d at 566 (affirming court's conclusion that "[p]laintiff should not be permitted at this late date to . . . amend its complaint to add new theories."). For several reasons, the Court rejects C21's conclusory argument without any elaboration that "[t]here is no need for additional discovery" on the theory of abandonment. (Dkt. 223 at 4.) First, this assertion is conclusory and completely unsupported by facts, law, or evidence. Second, as Century points out, "the existing discovery" ­ on which C21 relies in support of its motion for summary judgment on abandonment ­ "does not contain all of the evidence of use of the CSG mark because abandonment was not previously an issue in this case and there was not reason for Century to provide all evidence relevant to an abandonment allegation that had not been made." (Dkt. 227 at 2.) Third, C21's argument that additional discovery is not necessary ignores the reality that adding the issue of abandonment would require both parties to conduct detailed discovery of facts used to determine the merits of an abandonment claim, including, in C21's own words, "`what activities [Century] engaged in during the nonuse period or what outside events occurred from which an intent to resume use during the nonuse period may be reasonably inferred.'" (Dkt. 232, Ex. 1 at 9.) Fourth, neither C21's Motion for Summary Judgment nor its Reply demonstrates without dispute that the discovery already conducted "strictly proves" (i) whether and, if so, when Century ceased all use of its mark "Century Surety Group" in the ordinary course of business; (ii) what events occurred from which an intent not to resume use of the mark "Century Surety Group" within a reasonable time can be inferred (dkts. 224, 232, ex. 1). See Electro Source, LLC v. Brandess-Kalt-Aetna Group, Inc., 458 F.3d 931, 935 (9th Cir. 2006). Indeed, in support of its motion for summary judgment on the issue of abandonment, C21 relies only on evidence showing trade name use, which it argues "cannot support a service mark application." Compare dkt. 224 at 3:8, 3:3:14 With dkt. 232, ex. 1 at 1:7-9. Moreover, to prove that it has not abandoned its mark, Century will have to demonstrate that there is no clear and convincing evidence of abandonment under the factors set forth above. As C21 concedes, "while intent not to resume use `may be inferred from circumstances,' 15 U.S.C.
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§ 1127, summary judgment is `notoriously inappropriate for determination of claims in which issues of intent, good faith and other subjective feelings play dominant roles.'" See Cline v. 1-888-PLUMBING Group, Inc., 146 F.Supp.2d 351, 363-64 (S.D.N.Y. 2001), cited by C21 at dkt. 232, ex. 1 at 9. For each of these reasons, the theory of abandonment opens up a substantial new area of factual inquiry as to how the mark "Century Surety Group" has been used in the marketplace and, if all use of that mark has ceased, whether Century intended to resume use within a reasonable period. See id. Because none of these facts are relevant to the claims alleged in C21's original Complaint or counterclaim, both Century and C21 would have to conduct discovery on such matters if leave to amend were granted.1 Granting C21 leave to amend would radially shift the nature of the present case such that discovery would have to be reopened for the sole purpose of conducting substantial discovery on the issue of abandonment at a time when eight of C21's ten claims have been decided against it on summary judgment. The Court finds that reopening discovery nearly four years into this lawsuit would unduly delay the proceedings and result in undue prejudice to Century. Given that there is no justifiable reason for C21's delay in seeking to add the issue of abandonment at this late stage of the case, the prejudice factor also weighs in favor of denying C21's Second Motion to Amend. See Lockheed, 194 F.3d at 986 ("A need to reopen discovery and therefore delay the proceedings supports a district court's finding of prejudice from a delayed motion to amend the complaint."); Schlacter-Jones v. Gen. Tel. of Cal., 936 F.2d 435, 443 (9th Cir. 1991) ("A motion for leave to amend is not a vehicle to circumvent summary judgment."), overruled on other grounds, Cramer v. Consolidated Freightways, Inc., 255 F.3d 683, 692-93 (9th Cir. 2001) (en banc).

The Court rejects C21's contention that the topic of Century's use of the mark Century Surety Group "was the subject of several discovery requests" (dkt. 232, ex. 1 at 10), because neither the attached document requests nor the interrogatory responses support C21's theory of abandonment. See dkt. 232, ex. 1 at exs. A-B. Document 240

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C.

Bad Faith or Dilatory Motive Generally, leave to amend should be "freely given when justice so requires."

Fed.R.Civ.P. 15(a). The liberal approach to permitting amendment under Rule 15, however, may not be used as a device to prevent speedy and efficient resolution of cases or to avoid court orders. Rather, the strong policy toward permitting amendment of pleadings must be tempered with other considerations, including bad faith or dilatory motive on the part of the movant. Schlacter-Jones, 936 F.2d at 443. The timing of a motion to amend brought after the parties have conducted discovery and after a summary judgment motion has been ruled on against the party seeking leave to amend weighs heavily against allowing leave to amend. Id. ("A motion for leave to amend is not a vehicle to circumvent summary judgment.") In the present case, C21 has filed its Second Motion to Amend ­ which seeks to add the divergent theory of abandonment ­ nearly four years after its original Complaint was filed and seven months after the Court issued an 89-page decision dismissing its claims of trademark infringement, dilution and unfair competition, each of which was based on Century's use of the mark "Century Surety Group." (Dkt. 177.) Now, rather than argue likelihood of confusion and dilution on the Remaining Claims, C21 suddenly contends the mark "Century Surety Group" has not been used "since the year 2000" (dkt. 224 at 5).2 C21's purported knowledge of facts demonstrating abandonment more than 27 months before its Second Motion to Amend was filed, as well as its failure to provide any legitimate explanation or justification for such delay, strongly indicates that the primary motivation for adding the theory of abandonment is to avoid the Court's ruling on summary judgment that no reasonable jury could conclude that Century's use of the C21 Marks creates a likelihood of confusion and C21's Marks are not likely to be diluted by the Century Marks, see dkts. 177 at 10-45; 239. See Lockheed Martin Corp., 194 F.3d at 986 (the addition of claims not only demonstrated prejudice, but might also indicate bad faith by movants). Granting C21

Indeed, in its reply, C21 contends, Century "is not using Century Insurance Group as a service mark in connection with the listed services." (Dkt. 232, ex. 1 at 9.) Document 240

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leave to amend in order to avoid the Court's rulings against it, require Century to conduct substantial discovery, and unduly delay the present case falls outside the interests of justice. See Schlacter-Jones, 936 F.2d at 443 (A motion for leave to amend "is not a vehicle to circumvent summary judgment."). The Ninth Circuit has previously affirmed district court denials of similar motions made at critical case junctures. See Lockheed Martin Corp., 194 F.3d at 986;

Schlacter-Jones, 936 F.2d at 443. The instant case presents an even more egregious situation because (i) discovery closed two years ago and the majority of C21's claims have been dismissed in a lengthy decision (dkts. 177, 239); (ii) C21's Second Motion to Amend was filed with no notice to the Court or Century notwithstanding considerable discussions and briefing with respect to parties' intentions in resolving the Remaining Claims; and (iii) Century has filed a Motion for Summary Judgment on the Remaining Claims under the theories alleged in C21's original Complaint. See M/V American Queen v. San Diego Marine Constr. Corp., 708 F.2d 1483, 1492 (9th Cir. 1983) ("Finally, a motion for summary judgment was pending and possible disposition of the case would be unduly delayed by granting the motion for leave to amend."); Roberts v. Arizona Board of Regents, 661 F.2d 796, 798 (9th Cir. 1981) (affirming court where amendment was "raised at the eleventh hour, after discovery was virtually complete and the Board's motion for summary judgment was pending before the court."). D. Cases Cited by C21 are Inapposite Neither Isaly Co. v. Kraft, Inc., 619 F.Supp. 983, 986 n.1 (M.D. Fla. 1985), nor Cline v. 1-888-PLUMBING Group, Inc., 146 F.Supp.2d 351, 363-64 (S.D.N.Y. 2001), support C21's assertion that a claim of abandonment "may only be ripe after those three years have elapsed, and may be raised at any time" (see dkt. 232, ex. 1 at 9-10). In both Isaly and Cline, the issue of abandonment was allowed to be added in order to conform to the evidence

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presented at trial.3 As noted above, supra at 11-12, C21 has not satisfied its burden of providing a legal basis for its motion for summary judgment on abandonment by identifying those portions of the record which demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Therefore, in the present case, abandonment may not be added to conform to the evidence presented by C21. Moreover, it is well-settled that amendment of the pleadings to conform to proof under Rule 15(b) does not permit amendment to include collateral issues which may find incidental support in the record. See Cole v. Layrite Prods. Co., 39 F.2d 958, 961 (9th Cir. 1971), cited by C21 at dkt. 232, ex. 1 at 11. Finally, Emmpresa Cubana del Tabaco v. Culbro Corp., 213 F.R.D. 151, 155-58 (S.D.N.Y. 2003), see dkt. 232, ex. 1 at 10, is also distinguishable from the present case. In Emmpresa Cubana, the moving party adequately explained its reason for unduly delaying in raising the issue of abandonment and no prejudice was shown by the nonmoving party. Here, by contrast, C21 has failed to explain why it waited two years ­ after eight of its ten claims were dismissed ­ to raise the issue of abandonment, resulting in an inference of bad faith. Moreover, adding this theory four years after the case was filed will prejudice Century. See supra at 10-12. E. Conclusion The Court finds that the arguments against permitting amendment outweigh the arguments in favor of permitting amendment at this late date, as follows: (i) C21 has unduly delayed in seeking leave to add the theory of abandonment without any explanation, (ii) Century will suffer substantial prejudice resulting from the need to conduct further discovery on the issue of abandonment after filing a motion for summary judgment on the Remaining Claims as alleged in C21's original Complaint; and (iii) C21's use of the Second Motion to Amend appears to be another attempt to avoid the Court's ruling on the previous summary judgment motions (dkts. 177, 239). An analysis of these factors suggests yet again

Likewise, in Albani v. S. Ariz. Anesthesia Servs., 1997 WL 718499, at *6 n.2 (D. Ariz. 1997), the plaintiffs' motion to amend their complaint was granted to conform to the evidence adduced at trial. Document 240

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that "C21's proposed amendment is another last-minute attempt to take a second bite at a vanishing apple." See dkt. 200 at 14. Thus, the Court will deny C21's Second Motion for Leave to Amend. Accordingly, IT IS HEREBY ORDERED DENYING Century 21 Real Estate LLC's Second Motion for Leave to Amend the Complaint (Dkts. 222-23). IT IS FURTHER ORDERED DENYING AS MOOT Century 21 Real Estate LLC's Motion for Summary Judgment on Count IX on Ground of Abandonment. (Dkt. 224.) IT IS FURTHER ORDERED GRANTING Century 21 Real Estate LLC's Motion for Permission to File Corrected Reply in Support of C21's Motion for Summary Judgment on Grounds of Abandonment. (Dkt. 232.) DATED this 6th day of February, 2007.

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