Opinion
Case No. A3-97-28.
Filed May 27, 1999.
Summary : Court granted Keimkonzept's motion for judgment on the pleadings because no direct liability claims made against the Keimkonzept defendants and prior release of the employee released employer from vicarious liability claims. Court denied PrimeWood's motion for leave to amend complaint as untimely and futile. Court denied as moot Keimkonzept's motion for summary judgment. Court dismissed PrimeWood's complaint and cause of action against the Keimkonzept defendants.
MEMORANDUM AND ORDER
I. INTRODUCTION
Before the Court are the following motions: Keimkonzept's motion for judgment on the pleadings, (docket # 71); PrimeWood's motion for leave to amend complaint, (docket # 75); Keimkonzept's motion for leave to file reply, (docket # 77); PrimeWood's motion for leave to file sur-reply, (docket # 78); Keimkonzept's motion for summary judgment, (docket # 80); Keimkonzept's motion for leave to file reply, (docket # 87); and PrimeWood's motion for leave to file a sur-reply, (docket # 89). Background information has been previously set out by the Court and will not be repeated here. See Order of April 19, 1998.
As a preliminary matter, the respective motions for leave to file a reply and a sur-reply regarding the motion for judgment on the pleadings, (docket ## 77, 78), are GRANTED and the Court has reviewed and considered the same. In light of the Court's disposition of the other motions set out below, the respective motions for leave to file a reply and a sur-reply regarding the motion for summary judgment, (docket ## 87 89), are DENIED AS MOOT.
II. KEIMKONZEPT DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS
The Keimkonzept defendants move for judgment on the pleadings. They assert that the claims pleaded against them are based on vicarious liability, and given the dismissal from this action of their former employee, Kesmarszky, whose alleged misconduct gives rise to the Keimkonzept defendants' vicarious liability, the Keimkonzept defendants must as a matter of North Dakota law be released as well. PrimeWood asserts that if the pleadings are lacking, then the Court should grant leave to amend the complaint to plead direct liability claims. This issue is addressed by the Court below. PrimeWood also asserts that no "circle of indemnity" problem exists in the circumstances here, thus there is no need to release the Keimkonzept defendants.
Under the doctrine of respondeat superior, i.e. vicarious liability, "an employer is liable for tortious acts of its employees committed while they are acting within the scope of employment." Nelson v. Gillette, 571 N.W.2d 332, 334 (N.D. 1997). "When an employer is vicariously liable for an employee, the employer is entitled to indemnity from the employee because the employer has only a derivative or vicarious liability for damage caused by the one sought to be charged." Id. at 338 (citation omitted). A release of the employee releases the employer in order to avoid an insoluble "indemnity cycle." Id. (quoting Horejsi v. Anderson, 353 N.W.2d 316, 320 (N.D. 1984)). Here, the Keimkonzept defendants would be entitled to indemnity from Kesmarszky if they were found vicariously liable for Kesmarszky's conduct, and this right of indemnification would make Kesmarszky's settlement agreement with PrimeWood worthless and would result in the "corrosive circle of indemnity." See id. at 339; see also Horejsi, 353 N.W.2d at 318-320. Thus, a stipulation by parties to dismiss plaintiff's claims against an employee operates to release the employer from claims of vicarious liability for the employee's acts. Nelson, 571 N.W.2d at 339-340 (discussing Horejsi and L.C. v. R.P., 563 N.W.2d 799 (N.D. 1997)).
The Court rejects PrimeWood's argument that the rule is inapplicable here. The facts of this case exemplify the classic scenario where release of the employer from vicarious liability claims upon release of the employee is fair, just and required by law. See Nelson, 571 N.W.2d at 334-340; L.C. v. R.P., 563 N.W.2d at 801; Horejsi, 353 N.W.2d at 318-320. Nonetheless, release of an employee does not release an employer from claims of direct liability for its "own wrongful conduct independent of any theory of vicarious liability." Hart Constr. Co. v. American Family Mut. Ins. Co., 514 N.W.2d 384, 391 (N.D. 1994) (quoting Zimprich v. North Dakota Harvestore Systems, Inc., 419 N.W.2d 912, 913 (N.D. 1988)). Thus, the amended complaint must be examined for direct claims against the Keimkonzept defendants.
Preliminarily, each of the contract-based claims obviously fail as against the Keimkonzept defendants as there is simply no privity of contract between them and PrimeWood. See Am. Compl. at 11-16 (Claims I (breach of contract), II (fraud), IV (conspiracy to defraud), VI (breach of express warranties), VII (breach of implied warranty of fitness), VIII (breach of implied warranty of merchantability)). Upon examination of the remaining claims, III (deceit), V (negligent representation) and IX (negligence), the Court can not recognize, even when leniently and favorably considering PrimeWood's newly proposed allegations, that PrimeWood's complaint alludes to anything other than vicarious liability against the Keimkonzept defendants. The Court essentially agrees with the Keimkonzept defendants' dissection of the amended complaint in this regard. See Defs.' Reply at 3-7. Since the Court has already concluded that the Keimkonzept defendants are released from claims based on vicarious liability, and now finds no direct claims alleged, it is appropriate to GRANT the motion for judgment on the pleadings.
III. PRIMEWOOD'S MOTION FOR LEAVE TO AMEND COMPLAINT
In an attempt to cure the defects of it's pleadings, PrimeWood moves, albeit informally, for leave to amend the amended complaint. Keimkonzept defendants resist. A decision whether to allow a party to amend the complaint is left to the sound discretion of the district court. Bell v. Allstate Life Ins. Co., 160 F.3d 452, 454 (8th Cir. 1998) (citations omitted). Pursuant to Fed.R.Civ.P. 15(a), after an answer has been filed in response to the plaintiff's complaint, the plaintiff "may amend the party's pleading only by leave of court . . . and leave shall be freely given when justice so requires." But, "[t]here is no absolute or automatic right to amend." Williams v. Little Rock Municipal Water Works, 21 F.3d 218, 224 (8th Cir. 1994). Leave need not be granted in circumstances involving undue delay, bad faith, or dilatory motive, failure to cure deficiencies by previously allowed amendments, undue prejudice to the opposing party, or futility of amendment. Foman v. Davis, 371 U.S. 178, 182 (1962).
PrimeWood filed the original complaint on February 28, 1997, and filed an amended complaint on May 7, 1997. The deadline for making additional motions to amend the pleadings was November 1, 1998. The stipulation of the dismissal of the primary defendants, the Roxan defendants, was signed by PrimeWood's attorney on November 7, 1998, by the Roxan defendants' attorney on November 11, 1998, and an Order endorsing the stipulation was signed by the Court on November 16, 1998. The document which the Court construes as PrimeWood's motion for leave to amend complaint was not filed until December 17, 1998, approximately 22 months after the commencement of the action, only in response to the Keimkonzept defendants motion for judgment on the pleadings, after the deadline imposed for motions to amend pleadings.
It can fairly be inferred that negotiations regarding the dismissal of the Roxan defendants were well under way prior to the deadline for making motion to amend the pleadings. It must also be assumed that competent attorneys would anticipate potential adverse consequences of the dismissal of some, but not all, parties to an action. Nonetheless, PrimeWood did not move to extend the deadline within which to amend the pleadings. The request to amend appears to be solely in reaction to the Keimkonzept defendants' motion for judgment on the pleadings and is at best considered a "last minute change in strategy." See Perkins v. Spivey, 911 F.2d 22, 34-35 (8th Cir. 1990) (finding no abuse of discretion in denial of motion for leave to amend pleading where plaintiff waited 18 months after filing case before seeking to amend and was motivated by last minute change in strategy). The Court finds no changed circumstances here that excuses the failure of counsel to move to amend the pleadings before the deadline, or at least move for an extension. The Court views PrimeWood's present motion for leave to amend complaint untimely and dilatory.
Yet, delay alone is insufficient justification for denying a request for amendment, there must be prejudice to the nonmovant.Bell, 160 F.3d at 454. Furthermore, and in any event, parties should not be allowed to amend their complaint without showing how the complaint could be amended to save a meritless claim. Wisdom v. First Midwest Bank, 167 F.3d 402, 409 (8th Cir. 1999); see also Foman, 371 U.S. at 182 (providing futility of amendment as justification for denying leave to amend pleadings).
Primewood did not lodge a proposed second amended complaint but rather asserts in its brief that it would, if given the opportunity, allege that the Keimkonzept defendants "knew of the information in the reports and helped prepare them, that Kesmarszky conferred with others at Keimkonzept regarding the testing of PrimeWood's doors, that others at Keimkonzept were informed of the information being shared by Roxan, that the reports were issued under the name of Keimkonzept, and that Kesmarszky was acting with Keimkonzept's authority and for its commercial benefit." Pl.'s Mem. Opp'n Def.'s Mot. J. Pldgs. at 9. The Court fails to see how these allegations, assuming them true, state a direct claim or establish direct liability against the Keimkonzept defendants. As discussed above, PrimeWood's allegations, even considering the new proposed allegations, suggest only vicarious liability against the Keimkonzept defendants. See e.g., Rolin Mfg, Inc. v. Mosbrucker, 544 N.W.2d 132, 136 (N.D. 1996) (deceit sufficiently pleaded). The Court can not now allow amendment of the amended complaint without a showing how it could be amended, under the strictures of Rule 11(b) of the Federal Rules of Civil Procedure, to state a viable claim to which there is no absolute defense. See Wisdom, 167 F.3d at 409. "It is settled that `if the proposed change . . . advances a claim or defense that is legally insufficient on its face, the court may deny leave to amend.'" Williams, 21 F.3d at 225. In addition, permitting another amendment to the complaint prejudices the Keimkonzept defendants by unnecessarily prolonging this litigation; not allowing an amendment does not prejudice PrimeWood as no sufficient showing has been made to resuscitate the pleadings. PrimeWood's motion for leave to amend complaint is DENIED.
IV. KEIMKONZEPT DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
In light of the Court's disposition on Keimkonzept's motion for judgment on the pleadings, it is unnecessary for the Court to address the motion for summary judgment. Keimkonzept's motion for summary judgment, (docket # 80), is hereby DENIED AS MOOT.
V. SUMMARY
1. Keimkonzept's motion for judgment on the pleadings, (docket # 71), is GRANTED.
2. PrimeWood's motion for leave to amend complaint, (docket #75), is DENIED.
3. Keimkonzept's motion for leave to file reply, (docket # 77), is GRANTED.
4. PrimeWood's motion for leave to file sur-reply, (docket # 78) , is GRANTED.
5. Keimkonzept's motion for summary judgment, (docket # 80), is DENIED AS MOOT.
6. Keimkonzept's motion for leave to file reply, (docket # 87), is DENIED AS MOOT.
7. PrimeWood's motion for leave to file a sur-reply, (docket # 89), is DENIED AS MOOT.
In light of the Court's rulings, PrimeWood's complaint and cause of action against the Keimkonzept defendants, i.e. Keimkonzept GbR, Hans-Joachim Keim in his capacity as a partner of Keimkonzept GbR, and Jörn Schröoer in his capacity as a partner of Keimkonzept GbR, are hereby DISMISSED. LET JUDGMENT BE ENTERED ACCORDINGLY.
IT IS SO ORDERED.