Opinion
NO. 4:00-CV-398-A
November 27, 2000
MEMORANDUM OPINION and ORDER
Came on for consideration the motions of plaintiff, Freed International, Inc. ("Freed"), for leave to join MMS, Inc. ("MMS"), and for leave to amend complaint. Defendant, SKB Corporation ("SKB"), has responded to both motions, and Freed has replied to SKB's response to Freed's motion for leave to join MMS. Having considered the motions, responses, reply, and the applicable authorities, the court determines that both motions should be denied.
On September 25, 2000, Freed moved the court to join MMS pursuant to Federal Rules of Civil Procedure 19 and 20.
The relevant portion of Rule 19(a) states as follows:
A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in the person's absence complete relief cannot be accorded among those already parties or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double1 multiple, or otherwise inconsistent obligations by reason of the claimed interest.
For Rule 19 to apply, the person whose joinder is sought must be subject to service of process. While Freed makes a conclusionary allegation in its motion to join MMS that "MMS, Inc., a Tennessee corporation, is clearly subject to service of process," Mot. to Join at 3, Freed has not alleged or otherwise presented any facts in support of the allegation. Therefore, the court concludes that it cannot find that MMS is subject to service of process.
When Freed submitted for filing its proposed second amended complaint eleven days after it made this allegation, it was not quite so certain, alleging at that time that "[u]pon information and belief, MMS has sufficient contacts with Texas that, under the Texas Long-Arm Statute, it can be served with process. . . ." Proposed Pl.'s Second Am. Compl. at 2. There was no allegation of fact in support of the conclusionary "sufficient contacts with Texas" assertion.
Additionally, the record does not support a finding that Freed cannot be accorded complete relief in the absence of MMS. In Freed's first amended complaint, which is its live complaint, Freed seeks damages from SKB for the following causes of action: breach of contract, anticipatory repudiation, tortious interference with business relations, and negligent representation. Freed's recourse for breach of contract and anticipatory repudiation is against SKB, not MMS, because MMS was not a party to the contract giving rise to these causes of action. With respect to tortious interference with business relations and negligent misrepresentation, Freed contends that it would be unable to obtain complete relief without MMS being joined because SKB would continue, through MMS, to engage in such wrongful behavior and cause further damage to Freed. This concern is unjustified because the court can enjoin SKB from engaging in this behavior should the need arise. Furthermore, Freed has not alleged SKB cannot accord Freed complete relief in the form of damages should SKB be found liable for any or all of the above-stated causes of actions.
The court notes that Freed contends in its reply that MMS is a necessary party because of new causes of action Freed has asserted in its proposed second amended complaint. However, the court is not to consider Freed's proposed pleading in making its determination of the need for joinder under Rule 19. Rather, the court must look to Freed's live complaint at the time of Freed's motion to join MMS. Ross v. Houston Ind. Sch. Dist., 699 F.2d 218, 230 (5th Cir. 1983) (holding that "Rule 19 can be utilized only to bring in parties necessary to a complete and just adjudication of the issues presently before the court."); Faloon v. Sunburst Bank, 158 F.R.D. 378, 380 (N.D. Miss. 1994) (holding that "the court must look to the pleadings as they appear at the time of the proposed joinder.").
Moreover, MMS is not a party of the kind described under Rule 19(a) (2) because MMS does not claim an interest relating to the subject of the action. Since MMS does not qualify under either Rule 19(a)(1) or Rule 19(a)(2), the court does not find it necessary to proceed under Rule 19 (b). FED. R. Civ. p. 19(b); Pulitzer-Polster v. Pulitzer, 784 F.2d 1305, 1309 (5th Cir. 1986) (holding that Rule 19 requires a two-step analysis; it is necessary to apply 19(a) before proceeding to 19(b)).
With regard to Rule 20, the court has discretion to deny such a motion where the addition of a new party would cause prejudice, expense, and delay. Landmark Development Group v. JEG Holdings. Inc., 185 F.R.D. 126, 128 (D.Conn. 1999) (citing Barr Rubber Products Co. v. Sun Rubber Co., 425 F.2d 1114, 1127 (2d Cir. 1970)). The court concludes that Freed's motion for leave to join MMS under Rule 20 should be denied because of (1) the concerns the court has with MMS's, as well as SKB's, ability to prepare an adequate defense this near to the discovery cut-off and trial dates, (2) the remoteness of the claims proposed against MMS from the issues already raised, and (3) the uncertainty that the court has jurisdiction over the person of NMS.
On October 6, 2000, Freed filed its motion for leave to file its second amended complaint. The documents filed by Freed indicate that this motion is contingent on the court granting Freed's motion for leave to join MMS. Therefore, the motion for leave to amend appears to be moot. In any event, it would be denied. The determination of whether to grant leave to amend lies within the discretion of the court. Little v. Liquid Air Corp., 952 F.2d 841, 845-46 (5th Cir. 1992). Factors the court may consider are whether the amendment would impact upon the ability of the trial court to effectively manage a case, the disruption to pretrial proceedings, how the interests of fairness and justice are best served by avoiding additional discovery and trial litigation that new factual allegations would entail, and the futility of the amendment. Id. at 846-47.
On June 14, 2000, Freed filed its first amended complaint, after having been given leave of court to do so.
This action is scheduled for trial the week of March 12, 2001, and all discovery must be initiated in time to allow completion of discovery by January 16, 2001. Freed's proposed second amended complaint asserts civil conspiracy and violations of 15 U.S.C. § 14 (the Clayton Act) as new causes of action against both MMS, as a new defendant, and SKB. The new causes of action Freed seeks to assert in its second amended complaint would require extensive discovery that probably could not be completed in less than two months. Furthermore, Freed's proposed amendment seeks to add MMS as a new defendant only four months before this action is scheduled for trial. As previously noted, the new defendant probably would not have enough time to prepare for trial if the amended complaint were to be allowed. The same could be true as to SKB as well. Therefore, the court finds that the interests of fairness and justice would not be served by granting Freed's motion for leave to amend.
If, as Freed contends in its reply to SKB's response to the motion for leave to join MMS, MMS will be appropriately joined as an additional party under the authority of Federal Rule of Civil Procedure 13(h), the court will deal with that issue if and when it is properly presented in connection with a motion filed by Freed in relation to a proposed counterclaim.
The court finds that a discussion of other arguments advanced by SKB to be unnecessary.
For the reasons discussed herein,
The court ORDERS that Freed's motions for leave to join MMS and for leave to amend complaint be, and are herby, denied.