THOMAS BOHANNON v. DAVID MCDONALD (2025)

ORDER GRANTING DEFENDANTS' MOTION IN LIMINE NO. 2 TO BIFURCATE STATUTE OF REPOSE DEFENSE AND DENYING PLAINTIFFS' MOTION FOR LEAVE TO FILE AMENDED COMPLAINT

For the reasons stated on the record at the final pretrial conference on July 8, 2025, and the additional reasons stated below, Defendants' Motion in Limine No. 2 to Bifurcate Statute of Repose Defense is GRANTED. (Dkt. No. 195.) At the pretrial conference, Plaintiffs orally moved for leave to file a fifth amended complaint to assert willful misconduct. For the reasons stated on the record at the final pretrial conference and the reasons stated below, that motion is DENIED.

I. FACTUAL BACKGROUND

Plaintiffs brought this case on July 29, 2022. (Dkt. No. 1.) Before any answer was filed, Plaintiffs amended their complaint as of right. (Dkt. No. 6.) On February 27, 2023, the Court granted leave to Plaintiffs to file a Second Amended Complaint, to correct the name of a Defendant. (Dkt. No. 42.) On December 21, 2023, the Court again granted leave to Plaintiffs to file a Third Amended Complaint, to correct the name of a Defendant and to identify three Defendants that had previously been listed as Does. (Dkt. No. 86.)

On February 13, 2024, Defendant B. Wise moved to dismiss the Third Amended Complaint, arguing, in part, that Plaintiffs' claim against it was barred by the 10-year statute of repose. The motion to dismiss was granted on that basis. (Dkt. No. 126.) The order found that Plaintiffs had not adequately pleaded an exception to the statute of repose, and granted leave to amend to allow Plaintiffs an opportunity to correct that pleading deficiency.

Plaintiffs filed a Fourth Amended Complaint on June 6, 2024, which initially named B. Wise (in addition to the other Defendants), but did not plead willful misconduct as an exception to the statute of repose. (Dkt. No. 131.) After B. Wise moved to dismiss the Fourth Amended Complaint, Plaintiffs voluntarily dismissed that Defendant.

Plaintiffs' deadline to amend their pleadings was July 31, 2024. (Dkt. No. 105.) That deadline passed without any further amendment.

Defendants Allen Martin Construction and Martin McDonald Development Inc. also moved to dismiss the Fourth Amended Complaint, on the basis that the claim against them was barred by the statute of repose. (Dkt. No. 135.) The motion was granted on October 4, 2024. (Dkt. No. 146.) In response to Plaintiffs' argument that their claim nonetheless survived because it fell within the exception to the statute of repose—as an action based on willful misconduct— the Court again explained that the Fourth Amended Complaint did not contain any factual allegations supporting that inference. (Id. at 3.) Dismissal was without leave to amend because Plaintiffs had already failed to correct the previously identified pleading deficiency.

After the close of fact and expert discovery, Defendants Andre Mozaffari and Mozaffari Engineering, Inc. moved for summary judgment based on the statute of repose. (Dkt. No. 155.) On January 21, 2025, that motion was granted on the basis that those claims were similarly barred by the statute of repose. (Dkt. No. 170.) Again, the Court rejected Plaintiffs' argument that the claim survived based on an exception to the statute of repose for willful misconduct, explaining that the Fourth Amended Complaint “does not contain any factual allegations supporting a plausible inference that Defendants knew of or recklessly disregarded evidence of defects in the construction.” (Id. at 3.) Plaintiffs still did not move for leave to amend their complaint at that point as to any of the remaining defendants.

Defendants Landset Engineers, Inc., Macaluso Electric, Inc. and George Michael Macaluso (“Macaluso”), and Dowdy Construction, Inc. never moved for summary judgment. Defendant Landset's Motion in Limine No. 2, which Defendants Macaluso and Dowdy joined, proposed bifurcating the trial to first resolve the statute of repose issue, followed by the trial on liability and damages. In its motion, Landset argued that there is no dispute as to the date of substantial completion, and that because Plaintiffs are precluded from offering evidence of willful misconduct or fraudulent concealment as an exception to the statute of repose, their claim was barred. In their opposition brief, Plaintiffs argued that they were not required to specifically plead willful misconduct under federal pleading standards to offer such evidence at trial. Thus, Plaintiffs contended that bifurcation was not appropriate because evidence of willful misconduct presented in the proposed first phase would largely overlap with the merits of the negligence claim to be litigated in the proposed second phase. Plaintiffs also asserted for the first time that, if necessary, they would move for leave to amend their complaint before trial, or to conform to proof during trial, in order to allege willful misconduct, but did not file any motion.

Prior to the filing of Plaintiffs' opposition, the Court had requested supplemental briefing on whether the parties would prefer to hold a stipulated facts bench trial as to the statute of repose issue, if the Court were to find that evidence of willful misconduct was precluded due to the lack of any such allegation in the complaint and if there was no dispute of fact as to the date of substantial completion. (Dkt. No. 202.) Plaintiffs responded that, as to Defendants Landset and Dowdy, a stipulated facts bench trial was appropriate because there was no dispute of fact as to the date of substantial completion, but that there was a dispute of fact as to Defendant Macaluso regarding the substantial completion date, so a bench trial on written evidence would be more appropriate as to the applicability of the statute of repose to Macaluso. Plaintiffs also reiterated that they intended to move to amend their complaint at the final pretrial conference on July 8, 2025, but did not file a proposed amended complaint. The Court allowed Plaintiffs to make an oral motion for leave to amend at the final pretrial conference, but directed Plaintiffs to file their proposed amended complaint on the docket by July 7, 2025.

At the final pretrial conference, Plaintiffs orally moved for leave to amend their complaint to assert willful misconduct. In response to questions about why Plaintiffs did not seek leave earlier, Plaintiffs explained that the facts that gave rise to the alleged willful misconduct were not developed until expert discovery, which occurred after the deadline to amend pleadings. However, Plaintiffs were unable to provide any explanation for why they did not seek leave to amend once they were aware of those facts, which was, at latest, in December 2024, and instead waited until the final pretrial conference on July 8, 2025. The trial had long been scheduled to begin on August 4, 2025, pursuant to the case schedule set on October 16, 2024, and on April 7, 2025, the trial had been continued to August 11, 2025.

II. DEFENDANTS' MOTION IN LIMINE NO. 2

Defendants' Motion in Limine No. 2 is granted. Plaintiffs did not plead an exception to the statute of repose in their operative complaint, and accordingly, Plaintiffs' evidence of willful misconduct is precluded at trial.

Plaintiffs argue that they are “not required to plead an exception to an affirmative defense, such as [willful misconduct],” and thus, do not need to amend their pleadings in the first place. (Dkt. No. 209 at 4.) However, the statute of repose, and exceptions to it, are a matter of state substantive law. See, e.g., Shubin v. Universal Vacation Club, No. 23-cv-55016, 2024 WL 1367176, at *2 n.2 (9th Cir. Apr. 1, 2024) (“[S]tate statutes of limitations have long been considered to be part of a state's substantive law”); United Heritage Life Ins. Co. v. First Matrix Investment Servs. Corp., No. 06-cv-00496, 2007 WL 1792333, at *10 (D. Idaho June 20, 2007) (collecting federal cases holding that “statutes of repose are considered substantive law”); Albano v. Shea Homes Ltd. P'ship, 634 F.3d 524, 530 (9th Cir. 2011) (a district court sitting in diversity applies state statutes of limitations and state tolling rules).

As a matter of substantive law, California courts have adopted the “prevailing” rule that “a statute of repose is not an affirmative defense.” PGA W. Residential Ass'n, Inc. v. Hulven Int'l, Inc., 221 Cal. Rptr. 3d 353, 378 (Ct. App. 2017), as modified (Aug. 23, 2017). “Put another way, a statute of repose does not cut off an existing right of action, but rather provides that nothing which happens thereafter can be a cause of action.” Id. at 371 (quotations omitted) (emphasis in original). Under California law, the negligence cause of action that Plaintiffs seek to assert does not exist in the first place unless the statute of repose is inapplicable. Thus, “[a]lthough the defendant must plead a statute of limitations defense to avoid forfeiture, it is the plaintiff who must plead facts showing their substantive right has not been extinguished by a statute of repose.” Id. at 372 (emphasis in original).

This is not a procedural requirement. Whether a defense is an “affirmative defense, granting defendants a substantive right to claim its protection, or whether it creates a heightened pleading requirement for plaintiffs, thereby increasing their burden for stating a substantive claim over the specified amount, is an integral part of the substantive right created by the statute. Thus, this is a question of substantive state law.” Racher v. Westlake Nursing Home Ltd. P'ship, 871 F.3d 1152, 1165 (10th Cir. 2017). The inapplicability of the statute of repose is part of California's substantive requirements for Plaintiffs' negligence claim, and therefore, like any other substantive element of a claim, must be pled in a manner that satisfies federal pleading requirements under Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007).

In analogous situations, federal courts have held that “when the very statute which creates the cause of action also contains a limitation period, the plaintiff must plead and prove facts showing that [they are] within the statute.” Mori v. Saito, No. 10-06465, 2013 WL 1736527, at *3 (S.D.N.Y. Apr. 19, 2013) (citing Toombs v. Leone, 777 F.2d 465, 468 (9th Cir. 1985)) (cleaned up). For example, the right-to-sue provision in the Securities Act requires claims to be brought within the limitations period. Id. In that context, the statute of limitations is not merely an affirmative defense; instead, satisfaction of the limitations period is a precondition for bringing the claim in the first place. Accordingly, the Ninth Circuit has held that to “assert[ ] a violation of Section 12 [of the Securities Act], the plaintiff must affirmatively plead sufficient facts in [their] complaint to demonstrate conformity with the statute of limitations.” Toombs, 777 F.2d at 468. The same logic applies here.

Plaintiffs' operative complaint pleads only the substantial completion date as the basis for escaping the statute of repose. Nowhere do Plaintiffs allege any facts about willful misconduct to bring themselves within the statute of repose. Therefore, they cannot raise those facts for the first time at trial. See Wasco Prods., Inc. v. Southwall Techs., Inc., 435 F.3d 989, 992 (9th Cir. 2006) (“The necessary factual averments are required with respect to each material element of the underlying legal theory.” (quoting Fleming v. Lind-Waldock & Co., 922 F.2d 20, 24 (1st Cir. 1990))); S. Ry. Co. v. King, 217 U.S. 524, 536 (1910) (“It is elementary that the proof must conform to the allegations, and that without proper allegations, testimony cannot be admitted.”).

Plaintiffs conceded at the final pretrial conference that, if their evidence regarding willful misconduct could not be presented at trial, bifurcation was appropriate. Accordingly, the motion to bifurcate the statute of repose to be litigated in the first phase of the trial is granted.

III. MOTION FOR LEAVE TO FILE FIFTH AMENDED COMPLAINT

Plaintiffs' oral motion to amend their complaint at the final pretrial conference on July 8, 2025 is denied. The deadline to amend pleadings was almost a year ago, on July 31, 2024. As such, Plaintiffs must demonstrate that “good cause” exists to modify the scheduling order under Federal Rule of Civil Procedure 16(b). Fed. R. Civ. P. 16(b). “Unlike Rule 15(a)'s liberal amendment policy which focuses on the bad faith of the party seeking to interpose an amendment and the prejudice to the opposing party, Rule 16(b)'s ‘good cause’ standard primarily considers the diligence of the party seeking the amendment.” Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). “Although the existence or degree of prejudice to the party opposing the modification might supply additional reasons to deny a motion, the focus of the inquiry is upon the moving party's reasons for seeking modification. If that party was not diligent, the inquiry should end.” Id. (internal citation omitted). If the “good cause” standard is satisfied, the Court will then determine if amendment under Rule 15(a) is appropriate. In deciding to grant leave to amend under Rule 15(a), a district court considers the following factors: whether there was “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962). Among these factors, “it is the consideration of prejudice to the opposing party that carries the greatest weight.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

Plaintiffs have not demonstrated that good cause exists to grant leave to file an amended complaint under Rule 16(b), because they have not shown the required diligence in seeking the amendment. As previously explained, Plaintiffs were repeatedly put on notice for over a year that they were required to plead willful misconduct as an exception to the statute of repose if they intended to present that evidence at trial. In the Court's May 7, 2024 order granting B. Wise's motion to dismiss, the Court stated, “[t]here are no allegations in the [Third Amended Complaint] supporting that B. Wise (or any of [the] Defendants) engaged in willful misconduct or fraudulent concealment.” (Dkt. No. 126 at 3.) On October 4, 2025, in another order granting Defendants Allen Martin Construction and Martin McDonald Development Inc.'s motion to dismiss, the Court identified the same pleading deficiency, this time not giving leave to amend because Plaintiffs had failed to allege facts about willful misconduct in their Fourth Amended Complaint. (Dkt. No. 146 at 3 (“The [Fourth Amended Complaint] does not contain any factual allegations supporting a plausible inference that [Defendants] or their subcontractors knew there were defects in the construction or must have consciously disregarded evidence of such defects.”).) And on January 21, 2025, the Court granted a motion for summary judgment as to Defendants Andre Mozaffari and Mozaffari Engineering, Inc. on the same basis.

Plaintiffs had ample notice of their pleading deficiency, and yet, did not attempt to amend their complaint until the eve of trial. At the pretrial conference, Plaintiffs explained that the facts giving rise to their allegations of willful misconduct were not developed until their initial expert disclosures. As one example, Plaintiffs identified Joshua B. Kardon's expert report as providing the basis for some of their willful misconduct allegations. But Plaintiffs argued in November 2024, in their opposition brief to Defendants Andre Mozaffari and Mozaffari Engingeering Inc.'s motion for summary judgment, that triable issues of fact existed as to those Defendants' willful misconduct, and cited Kardon's declaration in support. At the final pretrial conference, Plaintiffs could identify no reason why they did not seek leave to amend in late 2024 or early 2025, after they were aware of the facts giving rise to their allegations of willful misconduct.

As such, Plaintiffs have failed to act diligently, and cannot demonstrate that good cause exists to file yet another amended complaint at this stage. But even if Plaintiffs were able to meet the good cause standard, Plaintiffs' undue delay and repeated failure to cure the deficiency cuts against allowing amendment under Rule 15(a), especially where prejudice to Defendants would result from allowing amendment on the eve of trial. The proposed amended complaint adds a series of specific new allegations about Defendants' state of mind, particularly what they allegedly should have known based on their expertise. As noted in other pretrial filings, Defendants did not depose Plaintiffs' expert Kardon, whom Plaintiffs identified as one of the key witnesses on this topic. To allow Plaintiffs to amend their complaint to assert that exception after fact discovery and expert discovery have closed, and while the parties are completing their final pretrial preparations, would be highly prejudicial. Accordingly, the motion for leave to file a fifth amended complaint is denied.

IV. CONCLUSION

For the reasons stated above, Defendants' Motion in Limine No. 2 is granted and Plaintiffs' motion for leave to file a fifth amended complaint is denied.

IT IS SO ORDERED.

RITA F. LIN United States District Judge