Summary
distinguishing cases in which leaves to amend to correct a mistake or supplement were granted from a case in which leave to amend to gain a strategic advantage in litigation was not granted
Summary of this case from Graybar Elec. Co. v. Musref Bellevue Parkway, LPOpinion
C.A. No. 04L-03-065-JRJ.
Submitted: June 17, 2005.
Decided: July 29, 2005.
F. Peter Conaty, Jr., Esquire, Tanya P. Jefferis, Esquire, Prickett, Jones Elliott, Wilmington, DE.
Joseph R. Biden, III, Esquire, George T. Lees, III, Esquire, Joseph K. Koury, Esquire, Bifferato, Bifferato Gentilotti, Wilmington, DE.
Dear Counsel:
The Court has reviewed the plaintiff's "Motion for Leave to File a Second Amended Complaint and to the Extent Necessary, to Alter and/or Amend Judgment," and the defendants' opposition thereto.
By way of background, the plaintiff filed its complaint seeking damages for breach of an April 15, 2003 contract entered into between plaintiff and defendants for services performed and materials supplied by defendants, as well as an addendum to that contract entered into in the fall of 2003 for additional services and materials. In addition to seeking recovery for breach of contract, the plaintiff sought to enforce a mechanics' lien on the property pursuant to 25 Del. C. § 2701 et seq., as well as recovery in quantum meruit. On July 9, 2004, before the defendants answered, the plaintiff amended its complaint to include certain language required by 25 Del. C. § 2701 et seq. ("the Amended Complaint").
On February 4, 2005, the defendants filed an Answer and Counterclaim and a Motion to Refuse Judgment or Dismiss Plaintiff's Amended Claim for Mechanics Lien (The "Motion to Refuse"). After a hearing, the Court granted the defendants' Motion to Refuse on April 20, 2005. The order granting the Motion was silent as to whether the dismissal of the mechanics' lien was with or without prejudice. Shortly thereafter, the plaintiff filed the motion sub judice. The Court heard oral argument on June 7, 2005, reserved decision, and, without objection, permitted the defendants additional time to submit their opposition to the plaintiff's proposed second amended complaint.
Having now reviewed the written submissions and pertinent case law, and for the reasons that follow, the Court DENIES without prejudice the plaintiff's Motion to File a Second Amended Complaint and GRANTS the plaintiff's Motion to Alter and/or Amend Judgment.
DISCUSSION
The defendants argue that the Court should deny the plaintiff leave to amend because the proposed second amended complaint seeks to change the value of the services the defendants allegedly received and the amount they allegedly owe. According to the defendants, leave to amend should not be granted pursuant to Superior Court Civil Rule 15(a) to allow the plaintiff to plead a contradictory set of facts. The defendants further argue that because the plaintiff was aware of and failed to include these facts in its Amended Complaint, it has repeatedly failed to cure deficiencies and is therefore not entitled to amend. The Court notes that the plaintiff does not explain why, when these facts were indeed known to it, it failed to allege them in the Amended Complaint. And the Court understands the defendants' frustration. The defendants succeeded in having the Amended Complaint dismissed, only to have the plaintiff seek to amend its claim for the second time and attempt to change the amount allegedly owed by the defendant. The Court notes, however, that the amount allegedly owed is different in the proposed second amended complaint because the plaintiff reduced the amount by the payment it received from defendants. This is a correction (in the defendants' favor), more than a "contradiction."
Superior Court Civil Rule 15(a) provides in pertinent part:
A party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, the party may so amend it at any time within 20 days after it is served. Otherwise, a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.
The facts here are distinguishable from Krauss v. State Farm Mut. Automobile Ins. Co. The Court refused to permit an amendment in Krauss because to do so "under the particular circumstances . . . would permit . . . [plaintiff] to abuse the pleading process and to plead a set of contradictory facts." In Krauss, unlike here, the proposed amendment was clearly not to correct a mistake or supplement, it was "in fact a calculated and tactical decision by plaintiffs. . . ." The Court finds that, unlike in Krauss, the plaintiff here is not trying to gain strategic advantage or abuse the pleading process. It is not changing its theories or introducing new causes of action; it is correcting a mistake through the proposed amendment. While there have been "deficiencies," the plaintiff has undertaken to cure those deficiencies promptly. The Court finds no bad faith here. Thus, the Court will not deny leave to amend on this ground.
Krauss v. State Farm Mut. Automobile Ins. Co., 2004 WL 2830889 (Del.Super.Ct. 2004).
Id. at *6.
Id. at *7.
The defendants' second argument is that the proposed second amended complaint is futile because it is not supported by an accurate bill of particulars. Of all the defendants' arguments, this is the least compelling. First, the plaintiff attached to the proposed second amended complaint a bill of particulars which sets forth the amount claimed to be due and owing, and that amount matches the amount set forth in the proposed second amended complaint. Second, the bill of particulars provided with the proposed second amended complaint is sufficient to inform the defendants of the basis for plaintiff's claim and provides sufficient detail to enable the plaintiffs to ascertain the amount allegedly owed. The Court will not deny leave to amend on this ground because the plaintiff has substantially complied with this condition of the Mechanics' Lien statute. The Mechanics' Lien statute should not be strictly construed to create an unreasonable or unwarranted result.
See William M. Young Co. v. Ticor Title Ins. Co., 1994 Del. Super. Ct. LEXIS 273, at *4.
See id quoting Active Korean Records, Inc. v. Formosa Plastics Corp., Del. Super. Ct., C.A. No. 85L-JA-24, Stiffel, J. (Dec. 29, 1987) at *5. ("The provisions of the Mechanic's Lien statute embodying the conditions upon which a lien may be obtained must be substantially complied with.").
The defendants' third argument is that the amendment is futile because the plaintiff's time for filing a mechanics' lien claim has expired. The Court does not agree. It is undisputed that a certificate of occupancy ("COO") has not yet been issued (indeed, the defendants point out that they are unable to obtain a COO because of the plaintiff's failure to install their HVAC system in compliance with city code requirements). "[W]ithout limitation," a mechanics' lien claim " shall be deemed timely if it is filed within 180 days of any of the" events set forth in 25 Del. C. § 2711(a)(2). 25 Del. C. § 2711 (a)(2) provides:
25 Del. C. § 2711(a)(2) (emphasis added).
For purposes of this subsection, and without limitation, a statement of claim shall be deemed timely if it is filed within 180 days of any of the following:
a. The date of purported completion of all the work called for by the contract itself;
b. The date when the statute of limitations commences to run in relation to the particular phase or segment of work performed pursuant to the contract, to which phase or segment of work the statement of claim relates, where such date for such phase or segment has been specifically provided for in the contract itself;
c. The date when the statute of limitations commences to run in relation to the contract itself where such date has been specifically provided for in the contract itself;
d. The date when payment of 90% of the contract price, including the value of any work done pursuant to contract modifications or change orders, has been received by the contractor;
e. The date when the contractor submits his final invoice to the owner or reputed owner of such structure;
f. With respect to a structure for which a certificate of occupancy must be issued, the date when such certificate is issued;
g. The date when the structure has been accepted, as provided in the contract, by the owner or reputed owner;
h. The date when the engineer or architect retained by the owner or reputed owner, or such other representative designated by the owner or reputed owner for this purpose, issues a certificate of completion; or
i. The date when permanent financing for the structure is completed.
The plaintiff acknowledged at oral argument that it is proceeding only under 25 Del. C. § 2711 (a)(2)f. It acknowledges in its Motion that where one of the trigger dates in § 2711 has not occurred, the statute of limitations has not yet begun to run. 25 Del. C. § 2711 (a)(1)b. provides that a contractor " shall file his statement of claim [for mechanics lien] within 180 days after the completion of such structure." (emphasis added) The structure at issue here is not complete because a COO has not yet been issued. Thus, the question presented is whether the plaintiff may file its claim before the completion of the structure. The answer is "no." The Mechanics' Lien statute is to be strictly construed. "Strict compliance with the statute is required as powerful relief is afforded that was unavailable at common law." As this Court has noted:
25 Del. C. § 2711 (a)(1) provides a contractor who:
a. Has made his contract directly with the owner or reputed owner of any structure; and
b. Has furnished both labor and material in and for such structure, or has provided construction management services in connection with the furnishing of such labor and material, in order to avail himself of 180 days after the completion of such structure.
J.O.B. Construction Co. v. Jennings Churella Services, Inc., 2001 Del. Super. LEXIS 326 at *4 (citations omitted.).
The [mechanics' lien] complaint must also be filed within prescribed times. This reflects the statutory basis for the creation of the claim and a concern that property interests not be unduly exposed to claims. Perhaps more so than other areas of the law, time is of the essence in a mechanics' lien case.
Id. at *5-6. (citations omitted.).
The Court does not find the statute of limitations has expired. To the contrary, the Court finds that the statute has not yet begun to run.
The defendants' fifth argument is that if the statute has not begun to run, the plaintiff is not entitled to file a mechanics' lien claim and therefore its proposed second amended complaint is futile. The Court agrees. The plaintiff is not entitled to file a mechanics' lien under 25 Del. C. § 2711(a)(1)b. until "after the completion of . . . [the] structure," and the structure at issue here is not complete because a COO has not been issued. The plaintiff therefore finds itself in a "Catch 22." On the one hand, it claims the statute of limitations has not expired because a COO has not been issued; on the other hand, because a COO has not been issued, the structure is not complete, the statute has not begun to run, and the plaintiff is not yet entitled to file its claim.
See 25 Del. C. § 2711(a)(2)f.
In light of this, the Court finds that the proposed amendment would be futile and is therefore not permitted under Superior Court Civil Rule 15(a), but that the order dismissing the mechanics' lien claim should be altered, in the interest of justice, to reflect that the dismissal is without prejudice. This will enable the plaintiff to file a mechanics' lien claim when and if the "trigger event" ( i.e. the issuance of the COO) occurs.
This case will proceed forward on the remaining claims and counterclaims. The parties should contact Marjorie Swain in Judges Chambers (255-0665) promptly to arrange a scheduling teleconference.