Opinion
Case No. 01-2236-JWL
April 18, 2002
MEMORANDUM AND ORDER
On February 14, 2002, Magistrate Judge Waxse denied plaintiff's motion for leave to add an additional party-plaintiff and to file a second amended complaint. Plaintiff now seeks review of that order (doc. #59). As set forth below, the court cannot conclude that Judge Waxse's decision was clearly erroneous or contrary to law and, thus, denies plaintiff's motion.
Background
Plaintiff filed suit against defendant alleging that defendant fraudulently induced plaintiff to enter into a Facility Use Agreement (FUA) to operate and improve a waste water plant at the Sunflower Army Ammunition Plant. Plaintiff further alleges that defendant breached the terms of the FUA. Defendant thereafter counterclaimed for lease payments allegedly due under the FUA.
On November 7, 2001, plaintiff filed its motion for leave to add an additional party and to file a second amended complaint. Specifically, plaintiff sought leave to add Wastewater Treatment, Inc. (WTI), plaintiff's sister corporation, as a party-plaintiff. According to plaintiff, it was acting at all times as WTI's agent in connection with the FUA and the leasing of the plant. Plaintiff contends that WTI conducted the day-to-day operations of the waste treatment plant, employed all of the employees at the plant, received the proceeds from the plant's operations and made the lease payments to defendant under the FUA.
After hearing oral argument from both parties and receiving extensive briefing on plaintiff's motion, Judge Waxse denied plaintiff's motion on the grounds that it was untimely filed and plaintiff failed to show good cause for the delay. Although plaintiff argued that the motion was filed as soon as plaintiff's counsel learned that it was WTI (and not plaintiff) that operated the waste treatment plant, Judge Waxse rejected this argument in light of the undisputed fact that plaintiff itself knew at the time the lawsuit was filed (although it did not convey this information to its counsel) that WTI was operating the plant. Judge Waxse also found that "a reasonable, comprehensive review of the facts" on the part of plaintiff's counsel prior to filing the lawsuit would have "disclosed the fact that it was WTI who was operating the wastewater plant."
In short, then, because plaintiff knew of the facts upon which the proposed amendment was based but failed to include them in the original complaint and based on his finding that plaintiff's counsel would have learned about WTI's role in the operation of the plant had they conducted a reasonable inquiry into the facts prior to filing the lawsuit, Judge Waxse denied plaintiff's motion. In doing so, Judge Waxse relied primarily on the Tenth Circuit's decision in Panis v. Mission Hills Bank, N.A., 60 F.3d 1486, 1495 (10th Cir. 1995), wherein the Circuit held that untimeliness of a motion to amend is, by itself, a sufficient reason to deny leave to amend, particularly when the movant provides no adequate explanation for the delay and when the movant knew or should have known of the facts upon which the proposed amended complaint is based but failed to include them in the original complaint.
Defendant opposed plaintiff's motion for leave on a variety of grounds, including untimeliness, bad faith, prejudice to defendant and futility. Because he decided that plaintiff's motion was untimely, Judge Waxse declined to address defendant's remaining arguments. In connection with plaintiff's motion to review, the parties have again briefed the issues of bad faith, prejudice and futility. However, because the court affirms Judge Waxse's decision with respect to the untimeliness of plaintiff's motion, it need not address the other issues briefed by the parties.
Discussion
With respect to a magistrate judge's order relating to nondispositive pretrial matters, the district court does not conduct a de novo review; rather, the court applies a more deferential standard by which the moving party must show that the magistrate judge's order is "clearly erroneous or contrary to law." First Union Mortgage Corp. v. Smith, 229 F.3d 992, 995 (10th Cir. 2000) (quoting Ocelot Oil Corp. v. Sparrow Indus., 847 F.2d 1458, 1461-62 (10th Cir. 1988); 28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a). The clearly erroneous standard "requires that the reviewing court affirm unless it on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Ocelot Oil, 847 F.2d at 1464 (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)).
In its motion to review, plaintiff contends that Judge Waxse's order is both contrary to law and clearly erroneous. Plaintiff's primary argument in support of this assertion is that its delay in filing the motion for leave was neither inordinate nor unexplained as required by Evolution, Inc. v. Suntrust Bank, No. 01-2409-JWL, 2002 U.S. Dist. LEXIS 1356, at *3 (D.Kan. Jan. 15, 2002). Plaintiff's reliance on Evolution, however, is misplaced. There, Judge Waxse simply noted that in the "absence of a specific factor such as flagrant abuse, bad faith, futility of amendment, or truly inordinate and unexplained delay, prejudice to the opposing party is the key factor to be evaluated in deciding a motion to amend." Id. Just prior to that statement, however, Judge Waxse reiterated the Tenth Circuit's rule that denying leave to amend is justified upon a showing of "undue delay." See id. In short, Judge Waxse's opinion in Evolution simply does not stand for the proposition that denial of leave to amend based on untimeliness or undue delay is justified only upon a showing of "truly inordinate" or "unexplained" delay.
In any event, the essence of Judge Waxse's order denying plaintiff leave to amend is that plaintiff's delay was unexplained in light of the fact that at the time the lawsuit was filed plaintiff knew of its relationship with WTI and knew of WTI's role in the operation of the plant.
In fact, such a proposition is inconsistent with Tenth Circuit precedent. As Judge Waxse correctly noted in his order denying plaintiff's motion, untimeliness alone is a sufficient basis for denying leave to amend. See Hayes v. Whitman, 264 F.3d 1017, 1026 (10th Cir. 2001); Viernow v. Euripides Dev. Corp., 157 F.3d 785, 799 (10th Cir. 1998). This is particularly true where, as Judge Waxse found here, the movant offers no adequate explanation for the delay and where the movant knows or should have known of the facts upon which the proposed amendment is based but fails to include them in the original complaint. See Trotter v. Regents of Univ. of New Mexico, 219 F.3d 1179, 1185 (10th Cir. 2000) (citing Pallottino v. City of Rio Rancho, 31 F.3d 1023, 1027 (10th Cir. 1994)). While this court might have resolved plaintiff's motion for leave differently than Judge Waxse resolved it, the court cannot conclude that Judge Waxse's decision was clearly erroneous or contrary to law. Simply put, the magistrate judge acted within his discretion and within the bounds of Tenth Circuit precedent in denying the motion for leave.
Plaintiff also contends that Judge Waxse erred because he failed to address Rules 19(a) and 21 of the Federal Rules of Civil Procedure. According to plaintiff, its motion for leave was timely filed under those provisions. The Tenth Circuit, however, has repeatedly held that a motion to add a party is governed by Rule 15(a) "because it is actually a motion to amend." See United States ex rel. Precision Co. v. Koch Indus., Inc., 31 F.3d 1015, 1018 (10th Cir. 1994) (citing and quoting Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993)) (other citations omitted). Thus, Judge Waxse correctly analyzed plaintiff's motion under Rule 15(a).
For the foregoing reasons, plaintiff's motion to review is denied.
IT IS THEREFORE ORDERED BY THE COURT THAT plaintiff's motion to review and request for oral argument (doc. #59) is denied.