3:22-cv-01917
S.D. Cal.May 30, 2023Background
- Plaintiffs LifeVoxel Virginia SPV, LLC and several individual investors sued LifeVoxel.AI, Kovey Kovalan, and Linh Le alleging securities-law violations, common-law fraud, and civil conspiracy arising from investments in SAFE notes and alleged misrepresentations/ concealment about LifeVoxel’s financial condition.
- The original complaint asserted six causes of action under Sections 12(a)(1), 10, and 20 of the Securities Exchange Act, the Virginia Securities Act, common-law fraud, and civil conspiracy.
- Defendants moved to dismiss; before resolution, Plaintiffs moved for leave to file an amended complaint to add detail (specific emails and a presentation) and to add plaintiff Peter Bershatsky.
- Plaintiffs had previously filed a substantially similar case (LifeVoxel I) that was dismissed after plaintiffs failed to oppose a motion to dismiss; here Plaintiffs say prior omissions were inadvertent and that new documents were later located.
- The court granted leave to amend, finding no undue delay, no bad faith, no substantial prejudice to defendants, and that amendment was not clearly futile.
- The court ordered Plaintiffs to file the amended complaint within five days, vacated the June 2, 2023 hearing, and denied the pending motions to dismiss as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Undue delay | Motion filed early, before discovery; only months after complaint | Prior similar suit and earlier mistakes show delay | No undue delay — no discovery or substantial proceedings here |
| Bad faith | Amendment corrects earlier omissions after locating documents | Amendments are insufficiently particular and tactical | No bad faith — errors appear inadvertent, not dilatory |
| Prejudice | Amendments do not add new claims or theories | Amendments would force new courses of defense | No undue prejudice — case in early stage, little burden on defendants |
| Futility | New facts cure prior defects (particularity, scienter, loss causation) | Claims still inadequately pled and should be dismissed | Not clearly futile — plausible amended claims; merits to be tested on motion to dismiss |
Key Cases Cited
- Foman v. Davis, 371 U.S. 178 (leave to amend should be freely given)
- DCD Programs, Ltd. v. Leighton, 833 F.2d 183 (Rule 15 favoring amendments applied liberally)
- Eminence Cap., LLC v. Aspeon, Inc., 316 F.3d 1048 (prejudice is the most important Foman factor)
- SAES Getters S.p.A. v. Aeronex, Inc., 219 F. Supp. 2d 1081 (undue delay requires showing delay past initiation of discovery)
- McGlinchy v. Shell Chem. Co., 845 F.2d 802 (context where denial for delay was appropriate)
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (scienter standard for securities fraud)
- Corinthian Colleges v. United States, 655 F.3d 984 (futility standard for amendments)
- Lopez v. Smith, 203 F.3d 1122 (Rule 15 aims to decide cases on merits rather than technicalities)