Opinion
02 Civ. 0795 (CBM) (AJP).
November 22, 2004
OPINION AND ORDER
Presently before the Court is defendant PDVSA's "Motion for Leave to Amend the Answer and File a Counterclaim" (Dkt. No. 108). Because the proposed amendment and counterclaim (1) have come after the close of discovery (indeed, after filing of extensive cross-motions for summary judgment), and (2) would need substantial additional discovery, the motion is DENIED.
This Court's Opinion in Turkenitz v. Metromotion discusses the law concerning proposed amendments after the close of discovery:
Rule 15(a) of the Federal Rules of Civil Procedure instructs that "leave [to amend] shall be freely given when justice so requires."
Analysis of any motion to amend starts with the Supreme Court's decision in Foman v. Davis, 371 U.S. 178, 83 S. Ct. 227 (1962):
Rule 15(a) declares that leave to amend `shall be freely given when justice so requires'; this mandate is to be heeded. If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In the absence of any apparent or declared reason — such as 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, futility of amendment, etc. — the leave sought should, as the rules require, be `freely given.'Id. at 182, 83 S. Ct. at 230 (citations omitted).
"`Prejudice to the opposing party if the motion is granted has been described as the most important reason for denying a motion to amend. Prejudice may be found, for example, when the amendment is sought after discovery has been closed. . . . Undue delay [and] bad faith . . . are other reasons for denying a motion to amend.'" Berman v. Parco, 96 Civ. 0375, 1997 WL 726414 at *22[, 986 F. Supp. 195] (S.D.N.Y. Nov. 19, 1997) (Peck, M.J.), quoting 1 M. Silverberg, Civil Practice in the Southern District of New York § 6.26, citing Richardson Greenshields Sec., Inc. v. Lau, 825 F.2d 647, 653 n. 6 (2d Cir. 1987); State Teachers Retirement Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir. 1981);Bymoen v. Herzog, Heine, Geduld, Inc., 88 Civ. 1796, 1991 WL 95387 at *1-2 (S.D.N.Y. May 28, 1991); Priestley v. American Airlines, Inc., 89 Civ. 8265, 1991 WL 64459 at *2 (S.D.N.Y. April 12, 1991) ("Insofar as the proposed claim is not predicated on facts learned after the pleading stage of the litigation, the resulting delay is not excusable. . . . Undue prejudice warrants denial of leave to amend where the proposed claim will significantly increase the scope of discovery when the case is ready for trial.").
"`Delay in seeking leave to amend a pleading is generally not, in and of itself, a reason to deny a motion to amend. However, the Court may deny a motion to amend when the movant knew or should have known of the facts upon which the amendment is based when the original pleading was filed, particularly when the movant offers no excuse for the delay. . . . Leave to amend a complaint will generally be denied when the motion to amend is filed solely in an attempt to prevent the Court from granting a motion to dismiss or for summary judgement, particularly when the new claim could have been raised earlier.'" Berman v. Parco, 1997 WL 726414 at *22, quoting 1 M. Silverberg, Civil Practice in the Southern District of New York § 6.26, citing, inter alia, Bymoen v. Herzog, Heine, Geduld, Inc., 1991 WL 95387, and Priestley v. American Airlines Inc., 1991 WL 64459.
For further discussion of the issues of prejudice and undue delay, see generally 6 Wright, Miller Kane, Federal Practice Procedure: Civil 2d §§ 1487-88 ("Perhaps the most important factor listed by the [Supreme] Court and the most frequent reason for denying leave to amend is that the opposing party will be prejudiced if the movant is permitted to alter his pleading. . . . [A]lthough delay alone may not result in a denial of leave to amend, some courts have held that leave may be withheld if the moving party knew the facts on which the claim or defense sought to be added were based at the time the original pleading was filed and there is no excuse for his failure to plead them."); 3 James Moore, Moore's Federal Practice § 15.15[1]-[3] (3d ed. 1997).
Turkenitz v. Metromotion, Inc., 97 Civ. 2513, 1997 WL 773713 at *8-9 (S.D.N.Y. Dec. 12, 1997) (Peck, M.J.); accord, Whelan v. Bank United of Texas, 97 Civ. 0479, 1999 WL 285502 at *1-2 (S.D.N.Y. May 6, 1999) (Peck, M.J.); Schnepf v.Siegel, 98 Civ. 1255, 1998 WL 474132 at *1-2 (S.D.N.Y. July 11, 1998) (Peck, M.J.); see also, e.g., Classicberry Ltd. v.Musicmaker.com, Inc., No. 02-7054, 48 Fed. Appx. 360, 361-3, 2002 WL 31313186 at *1-2 (2d Cir. Oct. 16, 2002) (upholding denial of motion to amend answer made after close of discovery and summary judgment made); Cartier, Inc. v. Four Star Jewelry Creations, Inc., 01 Civ. 11295, 2004 WL 169746 at *3-4 (S.D.N.Y. Jan. 28, 2004) (Motley, D.J.).
In this case, on October 30, 2003, Judge Motley set an October 1, 2004 discovery cutoff date and an October 15, 2004 deadline for filing summary judgment motions. (Dkt. No. 37: 10/30/03 Order.) Because the parties had difficulty meeting the deadline, I adjusted the discovery cutoff date in minor ways (for outstanding discovery) and extended the deadline for the summary judgment motion by one week to October 22, 2004, at a conference on September 23, 2004. (Dkt. No. 72: 9/23/04 Conf. Tr.; Dkt. No. 74: 9/23/04 Order.)
Defendant PDVSA's Motion to Amend (Dkt. No. 108) was not filed until October 29, 2004 — after the close of discovery and after the filing of extensive cross-motions for summary judgment. PDVSA's explanation for its eleventh-hour motion to amend was that it had only learned at the October 4-5, 2004 deposition of Roger Macke of LCR that LCR (allegedly) breached the Crude Oil Supply Agreement by time-trading crude oil in violation of the Agreement. (Dkt. No. 108: PDVSA Motion at 2-3.) PDVSA's counsel contends that "[n]o documents known to PDVSA evidence such sales or PDVSA's written consent to such sales or trades." (Id. at 3.) Plaintiff LCR responds that this is not true: "PDVSA knew, at the time these trades were occurring, that LCR had, on occasion, agreed to time-trade crude cargos with other PDVSA's customers." (LCR 11/10/04 Opp. at 2; see id. at 3-4 Exs. B-J.) Indeed, such documents were produced (or made available) to PDVSA in discovery. (Id.)
The Court concludes that PDVSA itself, and its counsel, knew or should have known of these transactions and could have amended in a timely manner, but did not do so.
PDVSA has made clear that although discovery has closed (and summary judgment motions have been filed), it will need additional discovery in support of its proposed new counterclaim. (PDVSA Motion at 6 n. 2.) While PDVSA disingenuously claims that LCR will not need discovery because LCR can "look to its own records" (id. at 6), LCR correctly notes that it would need additional discovery on this new issue as well (LCR 11/10/04 Opp. at 11-12). The delay of additional months of discovery, followed perhaps by further summary judgment motions, would significantly delay resolution of this case, to the prejudice of LCR and the judicial process.
Finally, PDVSA claims that it will be prejudiced if amendment is not allowed because the counterclaim is a compulsory counterclaim. (PDVSA Motion at 4-6.) LCR, however, responds that "PDVSA's counterclaim is not compulsory." (LCR 11/10/04 Opp. at 10-11.) The Court need not decide this issue because LCR hasstipulated that PDVSA can bring its proposed counterclaim in a separate action:
If PDVSA believes its counterclaim has merit, PDVSA is free to file its proposed counterclaim in a separate case. Indeed, LCR stipulates that the counterclaim is permissive and can be asserted in another case to the extent that the claim is not time-barred.
(Id. at 11.)
CONCLUSION
For the reasons set forth above, PDVSA's "Motion for Leave to Amend the Answer and File a Counterclaim" (Dkt. No. 108) isDENIED as too late and because it will prejudice LCR by delaying decision of this case, in which discovery already had closed and cross summary judgment motions already were submitted.
SO ORDERED.