Pauma Band of Luiseno Mission Indians of the Pauma & Yuima Reservation v. California, State of
3:16-cv-01713
S.D. Cal.Nov 6, 2017Background
- Pauma Band of Luiseno Mission Indians sued the State of California and Governor Brown alleging breaches of the 1999 Pauma Compact and 2004 Amendment related to misuse of Special Distribution Fund (SDF) monies.
- The Court previously dismissed part of Pauma’s First Amended Complaint, allowing recovery only for breaches within the four-year statute of limitations and granting leave to amend the 21st claim to add facts showing breaches by certain state agencies.
- In the Second Amended Complaint (SAC), Pauma did not reassert claims against the California Gaming Control Commission or the CA Dept. of Justice but added allegations invoking the discovery rule to reach older breaches and added a 22nd claim for breach of the implied covenant of good faith and fair dealing against the State and Governor.
- Defendants moved to strike or dismiss the 22nd claim as outside the scope of leave to amend and for failure to state a claim, and to dismiss the 21st claim to the extent it asserts time-barred breaches.
- The Court treated Pauma’s opposition as a Rule 15 motion to amend, allowed the new 22nd claim (denying the motion to strike), but held that Pauma still failed to plead due diligence to invoke delayed discovery, so claims for breaches older than four years remain barred with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether adding the 22nd claim exceeded the Court’s leave to amend | Pauma argues it can add the implied covenant claim and factual allegations already in the SAC | Defendants say leave was limited to the 21st claim and Pauma should not add new causes of action without a Rule 15 motion | Court construed Pauma’s response as a Rule 15 motion, found no prejudice or bad faith, and denied the motion to strike (amendment allowed) |
| Whether the 22nd claim states a claim for breach of the implied covenant of good faith and fair dealing | Pauma contends the State hid SDF administration information, preventing contract monitoring and subverting contract benefits | Defendants argue no contractual duty to disclose exists and the claim duplicates the breach of contract claim | Court found Pauma’s allegations sufficiently distinct to state an implied covenant claim; dismissal denied (merits better addressed at summary judgment) |
| Whether the 21st claim can reach breaches older than four years via the discovery/delayed discovery rule | Pauma alleges difficulty obtaining SDF information and claims it only discovered the injury in 2015 | Defendants contend Pauma failed to exercise due diligence and thus cannot delay accrual | Court held Pauma still failed to plead reasonable due diligence; claims older than four years are barred with prejudice |
| Whether duplicative pleading of breach of contract and implied covenant warrants dismissal | Pauma asserts implied-covenant allegations are distinct (non-duplicative) | Defendants contend the implied-covenant claim merely repeats the contract claim and is superfluous | Court declined to dismiss as duplicative at pleading stage; duplication is generally resolved at summary judgment |
Key Cases Cited
- DCD Programs, Ltd. v. Leighton, 833 F.2d 183 (9th Cir. 1987) (courts should freely grant leave to amend to decide cases on merits)
- Morongo Band of Mission Indians v. Rose, 893 F.2d 1074 (9th Cir. 1990) (policy of liberal amendment applies strongly)
- United Union of Roofers, Waterproofers & Allied Trades No. 40 v. Ins. Corp. of Am., 919 F.2d 1398 (9th Cir. 1990) (grounds for denying leave to amend: futility, prejudice, undue delay, bad faith)
- San Jose Production Credit Ass’n v. Old Republic Life Ins. Co., 723 F.2d 700 (9th Cir. 1984) (all contracts contain an implied covenant of good faith and fair dealing)
- N. Cal. Retail Clerks Unions & Food Emp’rs Joint Pension Tr. Fund v. Jumbo Mkts, Inc., 906 F.2d 1371 (9th Cir. 1990) (statute of limitations begins when plaintiff knows or should know of the injury)
- O’Connor v. Boeing N. Am., Inc., 311 F.3d 1139 (9th Cir. 2002) (plaintiff barred if should have known claim in exercise of due diligence)
- Bibeau v. Pac. Nw. Research Found., Inc., 188 F.3d 1105 (9th Cir. 1999) (same principle on discovery rule and due diligence)
- Careau & Co. v. Security Pacific Bus. Credit, Inc., 222 Cal. App. 3d 1371 (1990) (implied covenant claim may be disregarded as superfluous if it duplicates breach of contract allegations)