Opinion
Civil No. 3:04-CV-0276-H.
December 30, 2004
MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiff's Motion for Leave to File Second Amended Complaint, filed October 12, 2004; Defendant's Response, filed November 1, 2004; and Plaintiff's Reply, filed November 15, 2004. For the following reasons, Plaintiff's Motion is GRANTED.
I. Background
Defendant Financial Computer Software, LP ("FCS") employed Plaintiff for approximately eight months in 2002. (Pl.'s First Am. Compl. ¶ 8; Pl.'s Ex. 1, ¶ 10.) After FCS terminated Plaintiff's and subsequent to the filing of this lawsuit, JP Morgan Chase Bank (the "Bank") purchased FCS and created JP Morgan FCS Corporation as a subsidiary of the Bank. (Pl.'s Ex. 1, ¶ 34.) The Court's Order, entered September 14, 2004 (the "Order"), granted Plaintiff leave to add the Bank and JP Morgan FCS Corporation (collectively, "JP Morgan") as defendants in an amended complaint. (Order at 2, 7.) Pursuant to the Order, the deadline for amending pleadings was November 1, 2004. ( Id.) On October 12, 2004, Plaintiff filed the instant Motion seeking leave to amend his complaint to add JP Morgan, Highland Capital, LP ("HC"), Mark Murray ("Murray"), James Dondero ("Dondero"), and Kevin MacDonald ("MacDonald"). (Pl.'s Mot. At 2; Pl.'s Ex. 1, ¶ 34.) Plaintiff's proposed Second Amended Complaint alleges that HC, MacDonald, Murray, and Dondero were owners of Defendant FCS. (Pl.'s Ex. 1, ¶ 34.)
II. Legal Standard
Federal Rule 15(a) provides that leave to amend "shall be freely given when justice so requires." See FED. R. CIV. P. 15(a). Notwithstanding Rule 15(a)'s liberal standard for granting leave to amend, the Court considers a variety of factors when leave to amend is requested. See Schiller v. Physicians Resource Group Inc., 342 F.3d 563, 566 (5th Cir. 2003). These factors include "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of amendment." Ellis v. Liberty Life Assur. Co. of Boston, No. 03-20623, 2004 WL 2635692, *3 (5th Cir. 2004); Foman v. Davis, 371 U.S. 178, 182 (1962). The Court may also "consider an `unexplained delay' following an original complaint, and whether the facts underlying the amended complaint were known to the party when the original complaint was filed." In re Southmark Corp., 88 F.3d 311, 316 (5th Cir. 1996).
III. Analysis
A. Bad Faith or Dilatory Motive
It does not appear that Plaintiff's Motion is in bad faith or has a dilatory motive. In the discovery process, Plaintiff learned that the Bank purchased FCS. Within seven business days of that discovery, Plaintiff timely filed leave to amend his complaint and join JP Morgan. After further discovery, Plaintiff learned that JP Morgan purchased only the assets and not the liabilities, of FCS. (Pl.'s Resp. at 3.) Within a month of discovering this discovery Plaintiff timely filed leave to amend his complaint and join HC, Murray, Dondero, and MacDonald. Nothing in the record suggests bad faith or dilatory motive on the part of Plaintiff. Plaintiff was not aware that Defendant was judgment-proof until August and September and moved quickly to amend.
On August 25, 2004, Plaintiff filed his unopposed motion for leave to amend his complaint to add JP Morgan Chase Bank and JP Morgan FCS Corporation as defendants. (Order at 2,7; Pl.'s Mot., filed August 25, 2004, at 1.)
On September 10, 2004, while the August 25, 2004, motion was pending, Plaintiff learned that "the Asset Purchase Agreement [between Defendant and JP Morgan Chase Bank] contained a broad exclusion of liabilities on behalf of JP Morgan Chase Bank." (Pl.'s Resp. at 3.)
Cf. Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 599 (5th Cir. 1981) ("[A party's] awareness of facts and failure to include them in the complaint might give rise to the inference . . . of bad faith [where] that the party was engaging in tactical maneuvers [by] present[ing] a theory difficult to establish but favorable and, only after that fails, a less favorable theory[.]") (emphasis added). At the onset, Plaintiff was aware of the facts underlying his cause of action, but did not become aware of the proper parties to join until discovery had begun. Therefore no inference of bad faith exists in the instant case.
See Mitsubishi Aircraft Int'l, Inc. v. Brady, 780 F.2d 1199, 1203 (5th Cir. 1986) (stating that failure to urge a claim which is "usually apparent at the outset of a case . . . strongly suggests either a lack of diligence . . . or a lack of sincerity") (emphasis added); Auster Oil Gas, Inc. v. Stream, 764 F.2d 381, 391 (5th Cir. 1985) (holding that district court abused its discretion by denying leave to amend where movant "asked for amendment promptly upon discovering the basis for new allegations") (emphasis added); cf. Layfield v. Bill Heard Chevrolet Co., 607 F.2d 1097, 1099 (5th Cir. 1979) (upholding denial of leave to amend where "all of the facts relevant to the proposed amendment were known to the [movant] at the time she filed her original complaint," although bad faith and dilatory motive not found) (emphasis added), cert. denied, 446 U.S. 939 (1980).
B. Futility of Amendment
The Court analyzes futility of amendment using the same legal standard as Federal Rule of Civil Procedure 12(b)(6). Stripling v. Jordan Production Co., LLC, 234 F.3d 863, 873 (5th Cir. 2000). Therefore, the Court views the amended complaint "in the light most favorable to the plaintiff and with every doubt resolved in his behalf" to determine whether the amended "complaint states any valid claim for relief." Id. "The policy of the federal rules is to permit liberal amendment to facilitate determination of claims on the merits and to prevent litigation from becoming a technical exercise in the fine points of pleading." Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 598 (5th Cir. 1981).
Plaintiff's proposed Second Amended Complaint adds defendants HC, MacDonald, Murray, and Dondero as owners of Defendant FCS. (Pl.'s Ex. 1, ¶ 34.) Defendant argues, pursuant to Pinebrook Props., Ltd. v. Brookhaven Lake Prop. Owners Ass'n, 77 S.W.3d 487, 499 (Tex.App.-Texarkana May 24, 2002), that "the theory of alter ego, or piercing the corporate veil, is inapplicable to partnerships" under Texas law. Under a technical reading of the proposed Complaint, Defendant is correct. However, a technical pleading is not required. See Dussouy, 660 F.2d at 598. Plaintiff's proposed Second Amended Complaint, although seeking to "pierce the corporate veil," propounds liability by piercing the partnership structure. In Texas, a partnership may be pierced to impose liability on its owners. See TEX.REV.CIV. STAT. ANN. art. 6132a-1, § 3.03(a) (West 2004) (establishing liability for obligations of limited partnership for limited partners who are also general partners or exercise rights and powers as a general partner, including participation in the control of the business); Pinebrook Props., Ltd., 77 S.W.3d at 499; No Barriers, Inc. v. Brinker Chili's Texas, Inc., 262 F.3d 496, 499 (5th Cir. 2001) ("To impose liability on a general partner of a limited partnership, the plaintiff must plead and prove a cause of action against that entity in its capacity as the general partner.") Therefore Plaintiff is alleging that HC, MacDonald, Murray, and Dondero were either general or limited partners in Defendant and thus may be liable as such. Accordingly, Plaintiff's amendment would not be futile. In short, the Court finds no substantial reason to deny leave to amend. See Stripling, 234 F.3d at 872 ("Unless there is a `substantial reason to deny leave to amend, the discretion of the district court is not broad enough to permit denial.'") (citing Dussouy, 660 F.2d at 598.)).
As to Plaintiff's remaining proposed theories of liability, Plaintiff's Response clarifies that he is alleging vicarious, not direct liability for the TCHRA, FLSA, Sabine Pilot, breach of contract, and quantum meruit causes of action. Although such causes of action may not lie directly against HC, MacDonald, Murray, and Dondero, resolving doubts in Plaintiff's behalf, Plaintiff's amended complaint alleges vicarious liability against them as owners of Defendant.
C. Undue Delay and Undue Prejudice
Although undue delay and undue prejudice are separate factors under Ellis, both parties argue them as a single factor. (Pl.'s Reply at 4; Def.'s Resp. at 5.) Defendant argues that undue delay will result in undue prejudice given the pending discovery and dispositive motion deadlines. (Def.'s Resp. at 5.) As Plaintiff notes, such "undue prejudice" may be remedied with an amendment to the scheduling order. (Pl.'s Reply at 4.) Finding no other prejudice to Defendant, the Court agrees that an amendment of the discovery and dispositive motion deadlines will cure Defendant's perceived prejudice. Therefore, the Court shall amend its scheduling order.
IV. Conclusion
The Court finds no substantial reason to deny leave to amend. Plaintiff does not appear to be acting in bad faith or with dilatory motive. It does not appear that the amendment is futile. To prevent undue delay (and undue prejudice) to Defendant, the Court hereby amends its scheduling order as follows:
1. This case is set for Jury Trial during the weeks of September 12, 19 and 26, 2005.
2. A party seeking affirmative relief must file a written designation of its expert witnesses and otherwise comply with Rule 26(a)(2) by noon, February 7, 2005. A party opposing affirmative relief must file a written designation of its expert witnesses and otherwise comply with Rule 26(a)(2) by noon, February 28, 2005. Any Daubert objections to expert witnesses must be filed by noon, April 4, 2005. Objections must be supported by briefs.
3. Except as otherwise provided in this paragraph, dispositive motions and responses thereto, must comply with the requirements of the Local Rules and may not exceed 15 pages. Such motions must be filed by noon, May 2, 2005, Supporting briefs must not exceed 25 pages; reply briefs must not exceed 15 pages. Delay in deciding motions will not affect trial dates.
4. All discovery procedures shall be initiated in time to complete discovery by noon, April 22, 2005. Oral depositions shall be taken only on weekdays and may not be extended beyond 5:00 p.m., except with the approval of the Magistrate Judge or by agreement of counsel. All discovery motions are referred to Magistrate Judge Sanderson.
5. Counsel must file by noon, August 22, 2005, a Joint Pretrial Order containing the information required by Local Rule 16.4 plus the following:
A. A list of witnesses who may be called by each party in its case in chief. Each such witness list shall contain a brief narrative summary of the testimony to be elicited from each witness, shall state whether the witness has been deposed, and whether the witness' testimony at trial is "probable", "possible", "expert", or "record custodian". A copy of this list must be furnished to the court reporter on the day of trial.
B. Requested jury instructions (annotated) and interrogatories. Proposed instructions may be submitted on a labeled 1.4-meg. diskette, in WordPerfect format, in addition to the required written form.
C. Comply with the requirements of Local Rule 26.2. Exhibit list must be furnished to the court reporter on the day of trial.
D. A report as to the status of settlement negotiations as of the date of the Pretrial Order.
E. Trial briefs may be filed with the Pretrial Order, but are not required unless specifically requested by the Court.
The Joint Pretrial Order will control all subsequent proceedings in this case.
6. Motions in limine, requested voir dire questions, objections to exhibits, and objections to deposition designations must be filed by noon, August 29, 2005. Counsel must confer about objections and make reasonable efforts to agree prior to the pretrial conference, at which the Court will rule on the admissibility of exhibits and deposition designations.
For the foregoing reasons, Plaintiff's Motion is GRANTED. The Clerk is DIRECTED to file Plaintiff's Second Amended Complaint.
SO ORDERED.