Opinion
CIVIL ACTION No. 00-2099-CM.
March 1, 2001.
MEMORANDUM AND ORDER
Pending before the Court is Defendants' Motion to Amend its Answer to Assert Counterclaims Against Plaintiff and its Owners (doc. 70). Defendants seek an order allowing them to amend their answer to assert counterclaims of breach of contract, fraud, and breach of fiduciary duty against the Plaintiff. In addition, Defendants seek leave to add Carlos Ruiz, Ramiro Carmargo, and Mauricio Peraza, the owners of plaintiff corporation, Aerotech Resources, Inc. ("Aerotech"), as third-party defendants.
Defendants state in support of their motion, filed on December 13, 2000, that newly discovered evidence obtained from the October 24 and 25, 2000 depositions of the owners of Aerotech revealed facts giving rise to their proposed counterclaims of breach of contract, fraud, and breach of fiduciary duty. In addition to asserting the proposed counterclaims, Defendants seek to add the three owners of Plaintiff as third-party defendants to this case. Plaintiff opposes Defendant's Motion to Amend on the grounds that (1) there has been undue delay in filing the motion, (2) there will be undue prejudice to Plaintiff if the motion is allowed, and (3) Defendants knew of the facts giving rise to the proposed counterclaims prior to the October 24th and 25th depositions, and (4) Defendants caused the alleged late discovery of the information by failing to conduct discovery in a timely manner.
Background
On August 24, 1998, Plaintiff and defendant Dodson Aviation, Inc. ("Dodson") signed a letter wherein Plaintiff offered to purchase a Boeing 727 aircraft for $6.1 million from defendant Dodson. Included within the terms of the agreement was a provision that Plaintiff would position an irrevocable $100,000 letter of credit in an escrow account within one day of Dodson's acceptance of the offer. On September 30, 1998, Dodson faxed Plaintiff stating that it granted Plaintiff an exclusive agency to sell Dodson's Boeing 727 aircraft to the Ecuadorian airline, TAME, and that the aircraft was subject to prior sale or withdrawal from the market without prior notice. Dodson notified Plaintiff on November 17, 2000 that it had another interested party and would require the signed purchase agreement and deposit of funds.
Plaintiff never deposited the $100,000 letter of credit into an escrow account. Thereafter, Dodson negotiated the sale of the aircraft to TAME for $6.9 million. By letter dated December 3, 1998, Dodson notified Plaintiff that it was terminating any agency with Plaintiff and stated it had no obligation to Plaintiff for the sale of the aircraft.
On February 25, 2000, Plaintiff brought this action against defendants Dodson Aviation, Inc., Dodson International Part, Inc., and Robert L. Dodson, Jr. alleging tortious interference with a business relationship, fraudulent promise of a future event, fraud by silence, and breach of fiduciary duty. The Scheduling Order was entered by the Court on July 6, 2000, which set forth the case deadlines, including a September 29, 2000 deadline to file motions to amend or add additional parties. Plaintiff and Defendants exchanged their Rule 26 initial disclosures in late June 2000. Although Plaintiff commenced deposing witnesses in August 2000, Defendants did not begin taking depositions until October 2000. Defendants deposed Plaintiff's three owners on October 24 and 25, 2000. Defendants claim that during the course of those depositions, Plaintiff's owners testified that they had no intention of ever placing an irrevocable letter of credit into an escrow account. Rather, they testified that they merely signed such agreement in order to induce Defendants to take the aircraft off the market. Defendants also assert that Plaintiff and its owners purposefully withheld information from Defendants pertaining to the price TAME was willing to pay for the aircraft while, at the same time, persuading Defendants to accept $450,000 less than the original asking price. Based upon this information, Defendants now seek leave to amend their answer to assert in the alternative their claims of fraud and breach of contract, a counterclaim for breach of fiduciary duty against both Plaintiff and its owners.
Amendment
Federal Rule of Civil Procedure 15(a) requires that leave to amend be freely granted when justice so requires. In re Independence Service Organizations Antitrust Litigation, Civ. A. No. MDL-1021, 1995 WL 646812, *1 (D.Kan. Oct. 20, 1995) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)). Federal Rule of Civil Procedure 13(f) also addresses the filing of omitted counterclaims by amendment, providing that "[w]hen a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, the pleader may by leave of court set up the counterclaim by amendment." A motion to amend to add counterclaims should be granted where the motion is made in good faith, is timely, and will not result in prejudice to the opposing party. First City Bank, N.A. v. Air Capitol Aircraft Sales, Inc., 820 F.2d 1127, 1132 (10th Cir. 1987). Whether to grant a party's motion to amend its answer to assert a counterclaim is within the discretion of the district court. Fields v. Atchison, Topeka and Santa Fe Ry. Co., 167 F.R.D. 462, 463 (D.Kan. 1996) (quoting SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1518 (10th Cir. 1990)).
Plaintiff opposes Defendants' motion on the ground that there was undue delay in filing defendants' motion. Plaintiff states that its pre-discovery disclosures were served upon Defendants in June 2000 but Defendants did not set their first deposition until October 2000 and did not conduct the deposition of Plaintiff's owners until October 24 and 25, 2000. Plaintiff argues that Defendants controlled the date set for depositions of Plaintiff's owners and nothing prevented them from setting the depositions at an earlier date. Plaintiff also argues that even if defendants had learned of new facts in the owner's depositions, they nonetheless waited another 49 days, after discovery was closed, before filing the instant motion to amend.
In its reply, Defendants argue that the three-month delay in obtaining Plaintiff's owners depositions was due to the time spent preparing for three of Plaintiff's depositions in August and September, conducting two depositions in early October and time spent responding to information responsive to Plaintiff's interrogatories and requests for production. Defendants also argue that the 49-day delay in filing this motion after their discovery of the facts giving rise to the proposed counterclaims was due to Defendants' involvement with three depositions, responding and supplementing Plaintiff's discovery requests, and preparing various discovery motions.
The Court finds that Defendants have not given any reasons, other than the normal demands of ongoing litigation, for their failures to depose the Plaintiff's owners, to file a motion to extend the time to file motions to amend or to file this motion to amend in a timely manner.
Plaintiff also contends that it would be unduly prejudiced by allowing Defendants' motion to amend at this stage in the litigation. It argues that the counterclaims Defendants seek to assert would require re-deposition of some, or all, of the fifteen depositions in five cities already taken by Plaintiff and will require resubmitting interrogatories and requests for production. Defendants argue that Plaintiff's objection based upon the need for further discovery is without merit because, in its opinion, no further discovery is required regarding its counterclaims. Defendants also argue that Plaintiff has failed to point to any additional fact that it would need to discover through depositions.
The Court does not accept Defendants bare assertion that no further discovery is needed if the Court grants their motion to amend to add their proposed counterclaims. While Defendants may view current discovery as sufficient for their proposed counterclaims, this does not mean Plaintiff may view the current discovery as sufficient for defending against Plaintiff's proposed counterclaims, especially where Defendant is also seeking to add new parties to the lawsuit.
In the Scheduling Order dated July 6, 2000, this Court ordered all motions to amend the pleadings must be filed on or before September 29, 2000 and further ordered that the date would not be modified except by leave of Court upon a showing of good cause. Discovery closed on December 1, 2000. Although Plaintiff provided Defendants with its initial disclosures on June 28, 2000, Defendants did not depose Plaintiff's owners until late October 2000. Even if the Court accepts Defendants' claim that they first discovered the facts giving rise to their counterclaim when they took the depositions of Plaintiff's owners, Ruiz, Camargo, and Pedraza, on October 24 and 25, 2000, defendants did not file the instant motion to amend until 49 days later, after the discovery deadline had passed, less than one month prior to the dispositive motion deadline and five months before the case is scheduled for trial. At this point in the case, the Court finds this to be undue delay in filing a motion to amend an answer to assert new counterclaims and to add additional parties. Furthermore, the Court concludes that Plaintiff will be unduly prejudiced if this motion is granted.
In denying Defendants' Motion to Amend, the Court is fully aware that the proposed counterclaims are compulsory. However, Defendants were clearly on notice of the motion to amend deadline and failed to request its extension. In addition Defendants knew its proposed counterclaims existed throughout the 49-day period after their alleged date of discovery and were aware of the impending discovery deadline and the trial date. Furthermore, the delay in discovering the facts underlying Defendants' counterclaims is attributable to their own delay in conducting discovery. Under these circumstances, the fact the proposed claims are compulsory does not outweigh the untimeliness of this Motion or the prejudice to Plaintiff.
It is therefore ordered that Defendants' Motion to Amend its Answer to Assert Counterclaims Against Plaintiff and its Owners (doc. 70) is denied.
IT IS SO ORDERED.