United States District Court, D. Nebraska
Michael D. Nelson United States Magistrate Judge
matter comes before the Court on the Rule 15 Motion (Filing
No. 66) filed by Plaintiff, Timothy Hauder
(“Hauder”). Hauder requests leave to file a
Second Amended Complaint. The federal defendants, the United
States Small Business Administration and Linda McMahon,
Administrator of the Small Business Administration
(“SBA”), oppose Hauder's motion. (Filing No.
75). For the following reasons, the Court will grant the
action Hauder alleges that the defendants violated his due
process rights under the Fifth and Fourteenth Amendments to
the United States Constitution when they dismissed a debt
collection action in a Nebraska state court and subsequently
referred the action to the SBA and U.S. Department of
Treasury. (Filing No. 57 at p. 6). In 2006, Hauder
unconditionally guaranteed an SBA loan for Yolanda Hauder and
Depot Grill and Pub, LLC. The guarantee was assigned by the
Nebraska Economic Development Corporation,
(“NEDCO”) to the SBA. In June 2007, defendants
David and Debra McNew sought to purchase the Depot Grill and
assume the SBA loan. Hauder asserts that although he
communicated his unwillingness to continue as the guarantor
of the loan, he was induced to remain the guarantor by
material misrepresentation or fraud by the SBA. The McNews
ultimately defaulted on the loan in 2016, and the SBA
demanded payment from Hauder. (Filing No. 57 at pp. 5-6).
Hauder seeks to vacate the subsequent SBA administrative
proceedings and challenges the administrative garnishment of
his wages by the Department of Treasury under the
Administrative Procedure Act, 5 U.S.C. §§ 702 and
703. (Filing No. 57 at pp. 8-9).
September 7, 2018, the Court granted the Federal
Defendants' Partial Motion to Dismiss Hauder's
Complaint, but granted him leave to amend to add a claim
pursuant to Bivens v. Six Unknown Named Agents of Fed.
Bureau of Narcotics, 403 U.S. 388 (1971). (Filing No.
53). Hauder timely filed his Amended Complaint on September
21, 2018, containing a Bivens claim against Linda
McMahon, Administrator of the SBA, in her individual
capacity. (Filing No. 57). On December 1, 2018,
Hauder filed the instant motion requesting leave to file a
Second Amended Complaint.
proposed Second Amended Complaint includes the same counts
and allegations against the same defendants as the Amended
Complaint, but adds a Bivens claim against
“Unknown Employees of the Small Business Association in
their individual capacities” and pleads additional
factual allegations regarding his underlying allegation for
deprivation of due process. (Filing No. 67 at p. 1). The SBA
opposes Hauder's motion claiming the proposed amendment
is speculative and fails to state a claim against the Unknown
Employees of the SBA. (Filing No. 75 at p. 4).
Additionally, the SBA argues that Hauder's Amended
Complaint added a Bivens claim against McMahon and
no reason has been offered as to why a Bivens claim
against the Unknown Employees was not included at that time.
(Filing No. 75 at p. 3).
Federal Rule of Civil Procedure 15, the Court should
“freely give leave” to amend a pleading
“when justice so requires.” Fed.R.Civ.P. 15(a).
Nevertheless, a party does not have an absolute right to
amend, and “[a] district court may deny leave to amend
if there are compelling reasons such as undue delay, bad
faith, or dilatory motive, repeated failure to cure
deficiencies by amendments previously allowed, undue
prejudice to the non-moving party, or futility of the
amendment.” Reuter v. Jax Ltd., Inc., 711 F.3d
918, 922 (8th Cir. 2013) (internal quotation and citation
contends that Hauder's proposed Bivens claim
against the Unknown Employees in their individual capacities
is futile for failure to state a cause of action. (Filing
No. 75 at p. 3). Leave to amend “may be denied if
an amendment would be futile.” Stricker v. Union
Planters Bank, N.A., 436 F.3d 875, 878 (8th Cir. 2006).
“Denial of a motion for leave to amend on the basis of
futility ‘means the district court has reached the
legal conclusion that the amended complaint could not
withstand a motion to dismiss under [Fed. R. Civ. P.
12(b)(6)].'” Zutz v. Nelson, 601 F.3d 842,
850 (8th Cir. 2010) (quoting Cornelia I. Crowell GST
Trust v. Possis Med., Inc., 519 F.3d 778, 782 (8th Cir.
2008)). The pleading standard under Fed.R.Civ.P. 8, however,
does not require “detailed factual allegations, ”
but it does demand more than a “formulaic recitation of
the elements” or mere conclusory statements. Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Furthermore, the court must accept as true the factual
allegations contained in the complaint. Id.
plaintiff can bring a cause of action directly under the
United States Constitution against a federal official in his
individual capacity for purposeful violations of
constitutionally protected rights. Bivens, 403 U.S.
at 396; Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009).
Although the Supreme Court “refuse[s] to extend
Bivens liability to any new context, ” a due
process violation under the Fifth Amendment has been
recognized as an appropriate context in which courts will
permit a Bivens action. Correctional Servs.
Corp. v. Malesko, 534 U.S. 61, 68 (2001); see
FDIC v. Meyer, 510 U.S. 471, at 484, n. 9 (1994)).
Hauder seeks to add Unknown Employees in their individual
capacities, alleging they intentionally violated his due
process rights during the administrative proceedings by
depriving him of his ability to conduct discovery, have a
hearing on the merits by an impartial decision maker, plead
in the McNews so his rights and liabilities could be decided
in a single action, and to be heard in a local forum.
Furthermore, Hauder alleges the Unknown Employees deprived
him of due process when NEDCO referred the debt to the SBA
and Department of Treasury, intentionally causing the debt to
escalate from $155, 105.69 to $219, 614.19, a $64, 508.50
increase. (Filing No. 66-1 at p. 6). Hauder seeks to
bring his Bivens claim directly under the Due
Process Clause of the Fifth and Fourteenth Amendments.
Accepting the allegations against the SBA Unknown Employees
as true, Hauder has pled sufficient factual allegations to
“state a claim to relief that is plausible on its
face.” Twombly, 550 U.S. at 570. At this early
stage of the proceedings and in assessing whether leave to
amend should be granted, the Court finds it cannot determine
if the SBA wage garnishment order was lawful and Hauder
received all the due process to which he was entitled.
defendants also argue that Hauder's request for leave is
unjustified because Hauder could have added the additional
Bivens claim against the Unknown Employees in the
Amended Complaint. (Filing No. 75 at p. 3). The Court
instructed Hauder to file an amended complaint adding a
Bivens claim within fourteen days of September 7,
2018, and Hauder timely added a Bivens claim against
McMahon. (Filing No. 53). While Hauder has not explained why
he could not have included the Bivens claim against
the Unknown Employees at that time, there is little prejudice
to the defendants by permitting him to do so now. Although
the Complaint was filed on December 27, 2017, the case has
not moved past the pleadings stage and is still in the early
stages of progression. The parties have not yet met and
conferred and filed a Rule 26(f) Report, no discovery has
taken place, and a trial date has not been set. In
consideration of the above, and considering that leave to