MFIB LLC v. IBCA LLC et al

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Before the Court is Defendants IBCA LLC and Allen W. Sands’s Motion to Amend
Counterclaims (Doc. 77), Plaintiff MFIB, LLC’s Response (Doc. 78), and Defendants’
Reply (Doc. 80).1 For the following reasons, the Motion will be granted.2
I. BACKGROUND
Plaintiff MFIB, LLC initiated this action on June 17, 2025 when it filed a Complaint
against Defendants IBCA, LLC and Allen W. Sands, asserting claims for federal trademark
infringement, federal false designation of origin, and trademark infringement under
Arizona law. (Doc. 1 at 11, ¶¶ 36–67). At the same time, Plaintiff filed a Motion for
Preliminary Injunction, asking the Court to enjoin Defendants from using the allegedly
infringing “ICON” and “ICON Builders” marks. (Docs. 2, 3). Following an evidentiary
1 Also filed on the docket is Defendants’ Motion for Expedited Ruling on the instant
Motion. (Doc. 85). It is not yet fully briefed.
2 Because it would not assist in resolution of the instant issues, the Court finds the
pending motion is suitable for decision without oral argument. See LRCiv. 7.2(f); Fed. R.
Civ. P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998).
MFIB LLC,
Plaintiff,
vs.
IBCA LLC, et al.,
Defendants.
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No. CV-25-02517-PHX-SPL
ORDER
Case 2:25-cv-02517-SPL Document 86 Filed 05/11/26 Page 1 of 7

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hearing (ME 40), the Court denied Plaintiff’s Motion for Preliminary Injunction. (Doc. 49).
In denying the Motion for Preliminary Injunction, the Court found that it is very likely that
Defendant Sands is a senior user of the ICON marks and did not abandon his ownership
rights to the marks. (Id.).
After the Preliminary Injunction Hearing, Defendants filed an Amended Answer,
which includes four counterclaims against Plaintiff for Violation of the Arizona Consumer
Fraud Act, Unfair Competition and Palming Off, Breach of Contract, and Unjust
Enrichment. (Doc. 51 at 14–17). Plaintiff filed an Answer to the Counterclaims. (Doc. 61).
Now, Defendant has filed a Motion to Amend their Counterclaims “to add claims that
MFIB obtained trademarks by fraudulent means.” (Doc. 77 at 2).
II. LEGAL STANDARD
A. Amendment under Rule 15
Federal Rule of Civil Procedure 15(a)(2) provides that leave to amend a complaint
should be “freely give[n] . . . when justice so requires.” The policy in favor of amendment
“is to be applied with extreme liberality.” Desertrain v. City of Los Angeles, 754 F.3d 1147,
1154 (9th Cir. 2014) (internal quotation marks omitted). Still, courts consider the following
factors in deciding whether to grant leave to amend: (1) bad faith, (2) undue delay, (3)
prejudice to the opposing party, (4) futility of amendment, and (5) whether the plaintiff had
amended the complaint before. Id. The prejudice factor carries the most weight. Eminence
Cap., LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). “Absent prejudice, or a
strong showing of any of the remaining . . . factors, there exists a presumption under Rule
15(a) in favor of granting leave to amend.” Id. The party opposing amendment bears the
burden to show that leave to amend should be denied. See New Enters. Ltd. v. SenesTech
Inc., No. CV-18-08033-PCT-JAT, 2019 WL 1505898, at *2 (D. Ariz. Apr. 5, 2019).
B. Amendment under Rule 16
After a court enters a scheduling order under Federal Rule of Civil Procedure 16,
“which establishe[s] a timetable for amending pleadings[,] that rule’s standards control[].”
Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607–08 (9th Cir. 1992). Federal
Case 2:25-cv-02517-SPL Document 86 Filed 05/11/26 Page 2 of 7

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Rule of Civil Procedure 16(b)(4) provides that: “A schedule may be modified only for good
cause and with the judge’s consent.” The analysis under Rule 16 “is not coextensive with
an inquiry into the propriety of the amendment under . . . Rule 15.” Johnson, 975 F.2d at
609 (citation omitted). The “‘good cause’ standard primarily concerns the diligence of the
party seeking the amendment.” Id.
III. DISCUSSION
Defendants seek leave to add three additional counterclaims: (1) Cancellation of the
ICON Marks—Fraud on the TTAB—Similar Marks; (2) Cancellation of the ICON
Marks—Fraud on the TTAB—Overbroad Registration; (3) Cancellation of the ICON
Marks—15 U.S.C. § 1052. (Doc. 77-3 at 16–18). The Court will consider the request under
both Rules 15 and 16.
A. Rule 15 Factors Test
Leave to amend the counterclaims is warranted under Rule 15. The Court will
address each factor in turn. See Eminence Cap., LLC, 316 F.3d at 1052. First, there is not
evidence on which the Court is inclined to make a finding of bad faith. Plaintiff argues that
Defendants “have made repeated attempts to prolong these proceedings” and Defendants
filed this Motion “to further delay these proceedings” and obtain more time to use the
ICON marks. (Doc. 78 at 11). As will be discussed further below, the Court does not find
that there is undue delay, and Plaintiff does not point to any facts showing that the
amendment is sought with “intent to deceive, harass, mislead, delay, or disrupt.” Wizards
of the Coast LLC v. Cryptozoic Ent. LLC, 309 F.R.D. 645, 651 (W.D. Wash. 2015) (citation
omitted). Therefore, the first factor weighs toward granting leave to amend.
To assess the second factor, undue delay, the Court considers “whether the moving
party knew or should have known the facts and theories raised by the amendment in the
original pleading.” AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 953
(9th Cir. 2006). Plaintiff argues that Defendants should have known about the facts behind
the proposed counterclaims as early as August 2022 “based on the public [United States
Patent and Trademark Office] record” of MFIB’s trademark filings. (Doc. 78 at 7). Plaintiff
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also argues that Defendants were on notice of these facts when Plaintiff filed the Complaint
bringing trademark infringement claims, or at the very least, after the preliminary
injunction hearing which took place on September 10, 2025. (Id. at 7–8). Defendants argue
that the facts behind the proposed counterclaims were “only fully developed during the
Preliminary Injunction Hearing in September 2025” when Plaintiff’s CEO testified at the
with statements that contradict “the statements that MFIB made under oath to obtain the
ICON registered marks.”3 (Doc. 77 at 4, 7). Defendants filed their Amended Answer with
counterclaims on September 22, 2025. (Doc. 51). Defendants then filed the instant Motion
on January 22, 2026. (Doc. 77). Though there is some delay between the hearing and the
motion to file these counterclaims, the Court does not find undue delay here. See Schwartz
v. Miller, 153 F.4th 918, 932 (9th Cir. 2025) (“[D]elay cannot be individually decisive.”).
Moreover, the case is still in the discovery phase. For all these reasons, the second factor
weighs toward granting leave to amend.
Third, and most importantly, the Court does not find prejudice to Plaintiff. Plaintiff
argues that the proposed counterclaims would require opening “a veritable Pandora’s box
of discovery” and it will be prejudiced because it was not “on notice of the fraud dispute.”
(Doc. 78 at 10). Specifically, Plaintiff argues that the proposed counterclaims would
require discovery about “MFIB’s knowledge of Defendants’ business,” the prosecution
histories for the trademark registrations, Plaintiff’s communications with trademark
counsel, and “MFIB’s intent and scienter when filing and pursuing” the trademark
applications. (Id.).
The proposed amended counterclaims assert additional facts about Plaintiff’s
3 Defendants explain that Plaintiff MFIB’s CEO Justin Krueger testified “that he was
fully aware of [Defendant Sands’] use of the ICON Builders name at the time MFIB filed
the trademark registration and he was also aware that MFIB viewed [Defendant Sands’]
use of the ICON Builders name as likely to cause confusion with MFIB’s use of the ICON
marks.” (Doc. 77 at 4 (citing Hearing Tr. at 81:10-18, 90:12-20)). The theory behind
Defendants’ proposed counterclaims is that these statements contradict Plaintiff’s sworn
statement to the United States Patent and Trademark Office that “no other persons have the
right to use such mark in commerce, either in the identical form or in such near resemblance
as to be likely to cause confusion or mistake, or to deceive.” (Id. at 5). Therefore,
Defendants claim that Plaintiff obtained the trademark through fraudulent means. (Id.).
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Trademark applications and Plaintiff’s knowledge of Defendants’ use of the marks.
Although Plaintiff may not have been on notice of these new claims, the new facts are
based on information that is within Plaintiff’s control. In addition, this case is still in
discovery, with no pretrial conference or trial date scheduled. (See Doc. 84); see also DCD
Progs. Ltd. v. Leighton, 833 F.2d 183, 187–88 (9th Cir. 1987) (“Given that this case is still
at the discovery stage with no trial date pending, nor has a pretrial conference been
scheduled, there is no evidence that HFB would be prejudiced by the timing of the proposed
amendment.”). The lack of prejudice to Plaintiff, which “carries the greatest weight” in this
analysis, weighs toward granting leave to amend. Eminence Cap., 316 F.3d at 1052.
The fourth factor, futility, also weighs toward granting leave to amend. “A proposed
amendment is futile only if no set of facts can be proved under the amendment to the
pleadings that would constitute a valid and sufficient claim.” Coronado v. Costco
Wholesale Corp., No. CV-18-04184-PHX-SMB, 2019 WL 2288312, at *1 (D. Ariz. May
29, 2019) (quoting Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988),
overruled on other grounds by Ashcroft v. Iqbal, 556 U.S. 662 (2009)). Plaintiff argues that
Defendants have not met the heightened pleading standard required for fraud claims,
specifically as to Defendants’ allegations for scienter and intent. (Doc. 78 at 12). To support
the proposed counterclaims, Defendants have pled facts based on statements made in the
trademark applications and contracts between the parties. (Doc. 77-3 at 9–12, at ¶¶ 52, 54,
55, 60, 67). From the Court’s review of the proposed counterclaims and the parties’
briefing, it appears that there are facts that could be proved under the amendment.
Plaintiff also argues that the claims “fail on their face” because Plaintiff’s
“affordable housing renovation services do in fact fall within the four categories of the
Class 37 services to which Defendants point—custom building construction, custom
construction of home, general construction contracting, and residential building
construction.” (Id. at 12–13). This appears to be a factual question. Moreover, “denial on
[the ground of futility] is rare and courts generally defer consideration of challenges to the
merits of a proposed amended pleading until after leave to amend is granted and the
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amended pleading is filed.” Coronado, 2019 WL 2288312, at *1 (alteration in original)
(quoting Duhn Oil Tool, Inc. v. Cooper Cameron Corp., No. CV-F-05-1411 OWW/GSA,
2010 WL 596312, at *14 (E.D. Cal. Feb. 16, 2010)). Therefore, the Court does not find
futility at this point.
The fifth and final factor, whether there has been a previous amendment, weighs
slightly against leave to amend. Defendants filed an Amended Answer on September 22,
2025, after the preliminary injunction hearing. (Doc. 51). On balance, although Defendants
have already filed an Amended Complaint, all four other factors weigh toward leave to
amend. Leave to amend is warranted under Rule 15.
B. Rule 16 Good Cause Standard
The Court initially entered a Rule 16 Case Management Order on October 9, 2025
(Doc. 60), which has since been amended. (Docs. 81, 84). The Court will assess whether
there is good cause under Rule 16 to amend the deadline for amended pleadings.
Defendants argue that they discovered the basis for the proposed counterclaims
during the preliminary injunction hearing on September 10, 2025. (Doc. 77 at 7). They did
not request a copy of the transcript of that hearing until October 29, 2025, and they received
it on November 3, 2025. (Doc. 80 at 6). On December 5, 2025, Defendants filed a Motion
to Stay (Doc. 68), which was denied on December 22, 2025. (Doc. 74). Defendants then
filed the instant Motion on January 22, 2026. (Doc. 77). Though there was a slight delay
in Defendants’ proposal of these new counterclaims after the preliminary injunction
hearing, the Court does not find that it reflects a lack of diligence. This is not a case in
which Defendants ignored legal theories previously raised by Plaintiff. See Johnson, 975
F.2d at 610 (explaining that the plaintiff had the burden to prosecute their case and the
defendant previously raised the issue about which plaintiff sought to amend the complaint).
Instead, it appears that Defendants moved to add these counterclaims within a reasonable
time after discovering the basis for them. Therefore, the Court finds good cause to allow
the amendment under Rule 16.
///
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IV. CONCLUSION
For all the reasons stated above, the Court will grant Defendants’ Motion to Amend
Counterclaims. (Doc. 77). The Rule 15 factors weigh toward granting leave to amend and
there is good cause to amend the case management order under Rule 16. In addition, this
decision comports with the policy in favor of liberal amendment. See Fed. R. Civ. P.
15(a)(2). Because the Motion to Amend (Doc. 77) will be granted, the Court will deny as
moot the Motion for Expedited Ruling. (Doc. 85).
Accordingly,
IT IS ORDERED that Defendants’ Motion to Amend Counterclaims (Doc. 77) is
granted.
IT IS FURTHER ORDERED that Defendants must file the Second Amended
Answer including the Amended Counterclaims on the docket by May 14, 2026.
IT IS FINALLY ORDERED Defendants’ Motion for Expedited Ruling on Motion
to Amend Counterclaims (Doc. 85) is denied as moot.
Dated this 11th day of May, 2026.
Honorable Steven P. Logan
United States District Judge
Case 2:25-cv-02517-SPL Document 86 Filed 05/11/26 Page 7 of 7