Stone Tech. (HK) Co. v. GlobalGeeks, Inc.

STONE TECHNOLOGY (HK) CO., LTD., Plaintiff, v. GLOBALGEEKS, INC., Defendant.

Case No. 20-cv-23251-BLOOM/Louis

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

October 28, 2020

ORDER

THIS CAUSE is before the Court upon Plaintiff Stone Technology (HK) Co., Ltd.'s ("Plaintiff") Motion to Add Defendant and Amend First Amended Complaint Filed in State Court. ECF No. [29] ("Motion"). Defendant GlobalGeeks, Inc. ("Defendant") filed its response in opposition, ECF No. [31] ("Response"), to which Plaintiff replied, ECF No. [32] ("Reply"). The Court has carefully reviewed the Motion, all opposing and supporting submissions, the record in this case, the applicable law, and is otherwise fully advised. For the reasons set forth below, the Motion is granted in part and denied in part.

I. BACKGROUND

Plaintiff originally initiated this breach of contract action against Defendant in the Circuit Court for the Eleventh Judicial Circuit in and for Miami-Dade County, Florida. ECF No. [1-1] at 2-6. Plaintiff subsequently filed its First Amended Complaint in state court. Id. at 35-56 ("Amended Complaint"). Defendant removed this action to federal court on August 5, 2020, on the basis of diversity jurisdiction. ECF No. [1]. Further, on August 26, 2020, this Court issued its Order Setting Trial and Pre-Trial Schedule Requiring Mediation, and Referring Certain Matters to Magistrate Judge, ECF No. [13] ("Scheduling Order"), which set an October 26, 2020, deadline to file all motions to amend pleadings or join parties. Id. at 2.

On October 7, 2020, Plaintiff filed the instant Motion, requesting leave to amend its pleading a second time to join Stone Group USA, LLC ("Stone Group") as a plaintiff to this action,¹ to join Ahmad Loul, Defendant's Chief Executive Officer, as a defendant, and to assert eleven additional claims for relief.² Defendant filed its Response on October 21, 2020, opposing the requested amendment on grounds of bad faith, undue delay, and futility. On October 27, 2020, Plaintiff filed its Reply, which argued that the Motion was not motivated by either bad faith or undue delay. In its Reply, Plaintiff nonetheless agreed to withdraw the two counts of fraud and to not join Mr. Loul as a defendant in this case. Attached to the Reply was an updated amended pleading, ECF No. [32-1] ("Second Amended Complaint"), which is the document the Court will rely on for the remainder of this Order.

II. LEGAL STANDARD

Generally, Rule 15 of the Federal Rules of Civil Procedure governs amendments to pleadings. Apart from initial amendments permissible as a matter of course, "a party may amend its pleading only with the opposing party's written consent or the court's leave." Fed. R. Civ. P. 15(a)(2). "The court should freely give leave when justice so requires." Id.

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." Of course, the grant or denial of an opportunity to amend is within the discretion of the District Court, butoutright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely abuse of that discretion and inconsistent with the spirit of the Federal Rules.

Foman v. Davis, 371 U.S. 178, 182 (1962). Thus, "[a] district court need not . . . allow an amendment (1) where there has been undue delay, bad faith, dilatory motive, or repeated failure to cure deficiencies by amendments previously allowed; (2) where allowing amendment would cause undue prejudice to the opposing party; or (3) where amendment would be futile." Bryant v. Dupree, 252 F.3d 1161, 1163 (11th Cir. 2001).

Likewise,

A court may weigh in the movant's favor any prejudice that will arise from denial of leave to amend. That consideration arises only if there are substantial reasons to deny the amendment. Otherwise, rule 15(a) requires the trial judge to grant leave to amend whether or not the movant shows prejudice. Finally, it is appropriate for the court to consider judicial economy and the most expeditious way to dispose of the merits of the litigation.

Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 598 (5th Cir. 1981) (citations omitted).³ Ultimately, "[t]he thrust of Rule 15(a) is to allow parties to have their claims heard on the merits, and accordingly, district courts should liberally grant leave to amend when 'the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief.'" Menudo Int'l, LLC v. In Miami Prod., LLC, No. 17-cv-21559, 2018 WL 8311386, at *4 (S.D. Fla. Jan. 12, 2018) (quoting In re Engle Cases, 767 F.3d 1082, 1108 (11th Cir. 2014); Foman, 371 U.S. at 182).

III. DISCUSSION

In this case, Plaintiff timely sought this Court's permission to file the Second Amended Complaint by October 26, 2020, the deadline to amend. Thus, absent any apparent or compelling reason for denial, leave to amend should be freely given, as required by Rule 15(a)(2). See Foman,371 U.S. at 182. Defendant argues that leave to amend should be denied, on grounds of bad faith, undue delay, and futility of the requested amendments and citing issues of futility and vagueness in the originally proposed amended pleading. Plaintiff's Reply ultimately withdrew the addition of two fraud counts and the joinder of Mr. Loul as a defendant. Thus, the Court need not address the merits of these issues.

A. Bad Faith & Undue Delay

Defendant contends that permitting amendment here would encourage Plaintiff's bad faith gamesmanship in this litigation. Specifically, Defendant asserts that there is no valid excuse for Plaintiff's failure to assert all of the claims in the Second Amended Complaint in earlier pleadings. Instead, Plaintiff's Motion, according to Defendant, is simply an improper attempt to expand the issues presented in this case and delay its resolution.

"[A] district court has discretion to deny leave to amend when the moving party's delay was the result of bad faith, dilatory tactics, or sheer inadvertence, or when the moving party offers no adequate explanation for a lengthy delay." In re Engle Cases, 767 F.3d at 1119; see Carruthers v. BSA Adver., Inc., 357 F.3d 1213, 1217 (11th Cir. 2004) (affirming the denial of leave to amend where the moving party offered no explanation for why she could not have included the proposed amended pleadings in her original complaint or her first amended complaint); Campbell v. Emory Clinic, 166 F.3d 1157, 1162 (11th Cir. 1999) (affirming denial where "[t]he facts upon which the claims . . . were based were available at the time the complaints were filed"); Streaminn Hub Inc. v. Gayle, No. 18-24684-CIV, 2020 WL 4501801, at *1 (S.D. Fla. May 11, 2020).

"Although generally, the mere passage of time, without more, is an insufficient reason to deny leave to amend a complaint, undue delay may clearly support such a denial." Pines Props., Inc. v. Am. Marine Bank, 156 F. App'x 237, 240 (11th Cir. 2005) (citing Hester v. Int'l Union of Operating Eng'rs, AFL-CIO, 941 F.2d 1574, 1578-79 (11th Cir. 1991))). Further, whether aparties' delay is undue depends on: "(1) the amount of time movant knew of the claim prior to seeking leave to amend; (2) the amount of time movant delayed in seeking to amend the complaint upon learning of the claim; (3) the reason offered for the delay; and (4) the stage of the litigation proceedings." Yule v. Ocean Reef Cmty. Ass'n, No. 19-10138-CIV, 2020 WL 5216993, at *2 (S.D. Fla. Sept. 1, 2020) (citing Lesman v. Specialized Loan Servicing, LLC, No. 1:14-cv-02007-ELR-AJB, 2015 WL 13773978, at *4 (N.D. Ga. Jan. 16, 2015); Fla. Evergreen Foliage v. E.I. DuPont De Nemours & Co., 470 F.3d 1036, 1041-42 (11th Cir. 2006)).

Similarly,

"[b]ad faith amendments are those which may be abusive or made in order to secure some ulterior tactical advantage." GSS Properties, Inc. v. Kendale Shopping Ctr., Inc., 119 F.R.D. 379, 381 (M.D.N.C.1988). Moreover, "when a plaintiff withholds his true position from his opponent, especially when done for some ulterior purpose, the Court may view the action as having a bad faith motive unless satisfactory explanation clearly shows otherwise." Id.

Calkins v. USAA Cas. Ins. Co., No. 2:15-cv-454-FtM-29CM, 2016 WL 3360429, at *3 (M.D. Fla. May 10, 2016), report and recommendation adopted, No. 2:15-cv-454-FtM-29CM, 2016 WL 3348979 (M.D. Fla. June 16, 2016).

In light of the fact that Plaintiff filed its Motion within the time period the Court set for the deadline to amend, the Court is unpersuaded by Defendant's arguments regarding Plaintiff's alleged undue delay in seeking leave to amend here. See Alonso v. Sch. Bd. of Collier Cty., Fla., No. 2:16-cv-379-FtM-38MRM, 2018 WL 9617244, at *2 (M.D. Fla. Dec. 28, 2018) ("Plaintiffs acted in compliance with the Court's Amended Case Management and Scheduling Order. Accordingly, the Court declines to find undue delay even though this action was filed over two years ago and Plaintiffs' learned of the ELCATE Academy over one year ago."); Sher v. Raytheon Co., No. 8:08-cv-889-T-33AEP, 2010 WL 11507785, at *2 (M.D. Fla. Feb. 22, 2010) (finding no undue delay when motion for leave to amend was filed prior to the deadline to amend even though the motion was filed two months before the discovery deadline and more than a year and a halfafter the litigation began); cf. Burger King Corp. v. Weaver, 169 F.3d 1310, 1319 (11th Cir. 1999) ("This court has found delay to be undue where "both the parties and the court were fully prepared for trial and the addition of a new claim would have...