SODEXO OPERATIONS, LLC v. NOT-FOR-PROFIT HOSPITAL CORPORATION

Filing 34

MEMORANDUM OPINION AND ORDER. Plaintiff's 25 Motion for Leave to File an Amended Complaint is GRANTED. The proposed First Amended Complaint, ECF No. [21-2], attached as Exhibit A to Plaintiff's Motion for Leave to File an Amended Complaint and for Clarification or, in the Alternative, Reconsideration, shall be deemed filed. Defendant shall respond to the First Amended Complaint by no later than OCTOBER 19, 2016. Signed by Judge Colleen Kollar-Kotelly on September 28, 2016. (NS)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

SODEXO OPERATIONS, LLC,
Plaintiff,
v.
Civil Action No. 12-108 (CKK)
NOT-FOR-PROFIT HOSPITAL
CORPORATION,
Defendant.

MEMORANDUM OPINION AND ORDER
(September 28, 2016)
Plaintiff Sodexo Operations, LLC (“Sodexo”) brought a breach of contract action against
Not-For-Profit Hospital Corporation (“NFP”), the purported successor-in-interest to the hospital
operated by Capital Medical Center (“CMC”), seeking damages arising from an alleged breach of
contract between Sodexo and CMC. Plaintiff’s complaint was dismissed without prejudice for
failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Presently before the
Court is Plaintiff’s [25] Motion for Leave to File an Amended Complaint. 1 Upon consideration of
the parties’ submissions, 2 the applicable authorities, and the record as a whole, the Court shall

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The Motion also requests reconsideration of the previous dismissal order and/or
clarification that the dismissal was without prejudice. As discussed further below, this portion of
the Motion was addressed pursuant to a Memorandum Order issued by Chief Judge Richard W.
Roberts on December 19, 2013. Mem. Order (Dec. 19, 2013), ECF No. [24].
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While the Court bases its decision on the record as a whole, its consideration has focused
on the following documents: Pl.’s Mot. for Leave to File an Am. Compl. & For Clarification Or,
In the Alternative, Reconsideration (“Pl.s’ Mot.”), ECF No. [25]; Def.’s Mem. in Opp’n to Pl.’s
Mot. for Leave to File an Am. Compl. (“Def.’s Opp’n”), ECF No. [26]; Pl.’s Reply Brief to Def.’s
Mem. in Opp’n to Pl.’s Mot. for Leave to File An Am. Compl. (“Pl.’s Reply”), ECF No. [27];
Def.’s Notice of Decision Issued by Hon. Frederick Weisberg (“Def.’s Notice”), ECF No. [28];
Pl.’s Resp. to Def. NFP’s Notice of Decision Issued by Hon. Frederick J. Weisberg (“Pl.’s Resp.
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GRANT Plaintiff’s [25] Motion for Leave to File an Amended Complaint for the reasons stated
herein.
I. BACKGROUND
This action arises out of contract between Plaintiff Sodexo and CMC for services that
Sodexo provided to CMC’s United Medical Center (“UMC”), formerly Greater Southeast
Community Hospital (“Southeast”).

In 2007, the District of Columbia permitted Specialty

Hospitals of America (“SHA”), the parent company of Specialty Hospitals of Washington
(“SHW”), to acquire Southeast. SHA in turn created CMC and the Capital Medical Center Realty
(“CMC Realty”) as wholly-owned subsidiaries of SHW. The Southeast assets were owned,
controlled, and operated by CMC and CMC Realty. In 2008, Sodexo and CMC entered into
contracts (the “Southeast Management Agreement,” “United Management Agreement,” and
“United Interim Agreement”) that provided Sodexo with the exclusive right to manage and operate
nutrition services, plant operations, and maintenance services for CMC’s patients, residents,
employees, visitors and guests at Southeast and, after being renamed, at UMC, for a fixed term.
The District of Columbia foreclosed on CMC and transferred UMC to Defendant NFP by
statute and mayoral order. As part of the foreclosure sale, the District of Columbia purchased
UMC for $20,000,000 in July 2010. On July 9, 2010, NFP took over ownership and operation of
the hospital assets which previously had been owned and controlled by CMC. Sodexo now seeks
to recover on a breach of contract claim against NFP, asserting that NFP is liable for CMC’s debts.

to Def.’s Notice”), ECF No. [29]; Jt. Status Report Regarding Sodexo’s Pending Mot. for Leave
to File Am. Compl. (“Jt. Status Report”), ECF No. [31]; Def.’s Supp. Mem. in Opp’n to Pl.’s Mot.
for Leave to Am. (“Def.’s Supp.”), ECF No. [32]; Pl.’s Supp. Mem. in Supp. of Mot. for Leave to
File Am. Compl. (“Pl.’s Supp.”), ECF No. [33]. The motion is fully briefed and ripe for
adjudication. In an exercise of its discretion, the Court finds that holding oral argument would not
be of assistance in rendering its decision. See LCvR 7(f).
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Specifically, Sodexo seeks to recover $349,333.81, the past due amount that Sodexo asserts it is
owed for work completed under the contract, as well as reasonable attorney’s fees, pre- and postjudgment interest, costs, expenses, and other relief.
On March 19, 2013, United States District Judge Richard W. Roberts granted NFP’s
motion to dismiss the complaint in the instant action, finding that Sodexo “ha[d] not alleged
sufficient facts to state a claim for breach of contract on either the express or implied assumption
of debt theory or the mere continuation theory.” Sodexo Operations, LLC v. Not-For-Profit Hosp.
Corp., 930 F. Supp. 2d 234, 240 (D.D.C. 2013). In granting the motion, Judge Roberts indicated,
“The complaint is DISMISSED.” Order (Mar. 19, 2013), ECF No. [20]. On April 11, 2013,
Plaintiff filed a Motion for Leave to File an Amended Complaint and for Clarification or, in the
Alternative, Reconsideration, requesting that the Court enter an order indicating that the dismissal
of its Complaint was without prejudice and requesting leave to file its First Amended Complaint
which was filed alongside the Motion. Pl.’s Mot. for Leave to File an Am. Compl. & For
Reconsideration Or, In the Alternative, Clarification, ECF No. [21]. On December 19, 2013, Chief
Judge Roberts granted the request for reconsideration, amending the Order “to reflect that the
complaint is DISMISSED WITHOUT PREJUDICE,” and directing the Clerk of the Court to file
Plaintiff’s Motion on the docket to address the request for leave to file the First Amended
Complaint. Mem. Order (Dec. 19, 2013), at 5, ECF No. [24]. On April 6, 2016, the instant action
was reassigned to this Court. Presently before the Court is Plaintiff’s Motion for Leave to Amend
the Complaint which Defendant opposes.
II. LEGAL STANDARD
Under the Federal Rules of Civil Procedure, a party may amend its pleadings once as a
matter of course within twenty-one days after service or within twenty-one days after service of a

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responsive pleading. Fed. R. Civ. P. 15(a)(1). Where, as here, a party seeks to amend its pleadings
outside that time period, it may do so only with the opposing party’s written consent or the district
court’s leave. Fed. R. Civ. P. 15(a)(2). The decision whether to grant leave to amend a complaint
is within the discretion of the district court, but leave should be freely given unless there is a good
reason to the contrary. Willoughby v. Potomac Elec. Power Co., 100 F.3d 999, 1003 (D.C. Cir.
1996).
“When evaluating whether to grant leave to amend, the Court must consider (1) undue
delay; (2) prejudice to the opposing party; (3) futility of the amendment; (4) bad faith; and (5)
whether the plaintiff has previously amended the complaint.” Howell v. Gray, 843 F. Supp. 2d 49,
54 (D.D.C. 2012) (citing Atchinson v. District of Columbia, 73 F.3d 418 (D.C. Cir. 1996)); see
also Foman v. Davis, 371 U.S. 178, 182 (1962). With respect to an amendment causing undue
delay, “[c]ourts generally consider the relation of the proposed amended complaint to the original
complaint, favoring proposed complaints that do not ‘radically alter the scope and nature of the
case.’” Smith v. Cafe Asia, 598 F. Supp. 2d 45, 48 (D.D.C. 2009) (citation omitted). With respect
to an amendment being futile, “a district court may properly deny a motion to amend if the
amended pleading would not survive a motion to dismiss.” In re Interbank Funding Corp. Sec.
Litig., 629 F.3d 213, 218 (D.C. Cir. 2010). Because leave to amend should be liberally granted,
the party opposing amendment bears the burden of coming forward with a colorable basis for
denying leave to amend. Abdullah v. Washington, 530 F. Supp. 2d 112, 115 (D.D.C. 2008).
III. DISCUSSION
Sodexo seeks leave from the Court to file its First Amended Complaint in light of the fact
that its original complaint was dismissed without prejudice. Sodexo asserts that the First Amended
Complaint addresses the infirmities that led to the prior dismissal by sufficiently pleading facts to
support its claims of successor liability against NFP. NFP opposes the request, arguing that
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Sodexo’s request for leave to file an amended complaint is futile and that granting the request at
this juncture would unduly prejudice NFP. The Court shall first address the two factors discussed
by NFP in its briefing. In the interest of completeness, the Court shall discuss the other factors
that it must consider in reaching its decision regarding the request for leave to file the amended
complaint which the Court notes are not addressed by NFP in its briefing.
A. Prejudice to Defendant
NFP first argues that granting Sodexo’s request to file an amended complaint would unduly
prejudice NFP. Specifically, NFP argues that granting the request to amend “years after the subject
contract was executed and allegedly breached, and only after this Court granted NFP’s Motion to
Dismiss, is . . . unduly prejudicial to NFP.” Def.’s Opp’n at 4 n.4. Instead, NFP argues that Sodexo
should have amended its complaint after NFP put it on notice of the infirmities in the original
complaint by filing its motion to dismiss, rather than waiting to seek leave to amend the complaint
only after the motion to dismiss was granted. Id. at 15. Sodexo asserts that granting its request to
amend would not prejudice NFP because “[t]here has been no discovery in this case, and NFP’s
own brief contends that it is facing the same claims from Sodexo now that it was when this case
was filed . . . .” Pl.’s Reply at 8.
The Court notes that while NFP is correct that the original claims are premised on events
that occurred several years ago, Sodexo timely put NFP on notice of these claims and has been
pursuing its claims. NFP only points to the temporal distance between the execution and alleged
breach of the contract at issue as a basis for this prejudice, but provides no additional explanation
as to why this lapse in time will prejudice NFP. Indeed, NFP has pointed to no specific reason
why the mere lapse of time prejudices it and, as such, the Court finds NFP’s argument
unconvincing. Moreover, Sodexo has not added new claims but rather pled additional facts that

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are related to the claims that it raised in its original complaint. Accordingly, the Court concludes
that granting Sodexo’s request for leave to file the amended complaint will not prejudice NFP.
B. Futility
NFP next contends that the Court should deny Sodexo’s request for leave to file an
amended complaint because granting the request would be futile. Specifically, NFP asserts that
Sodexo’s request is futile because: (1) the applicable three-year statute of limitations on Sodexo’s
breach of contract claim has expired; (2) the “new” allegations in Sodexo’s proposed amended
complaint fail to establish that NFP is liable for CMC’s debts and obligations to Sodexo; and (3)
this action is barred by res judicata and/or the prohibition against splitting claims. The Court shall
address each of arguments in turn. For the reasons described herein, the Court finds that NFP has
failed to establish that granting Sodexo’s request for leave to file an amended complaint is futile.
1. Statute of Limitations
NFP first asserts that Sodexo’s breach of contract claim is barred under the statute of
limitations. Pursuant to District of Columbia law, the statute of limitations on a contract claim is
three years. D.C. Code § 12-301(7). The statute of limitations begins to run from the time of the
breach. Murray v. Wells Fargo Home Mortg., 953 A.2d 308, 319-20 (D.C. 2008). NFP contends
that the statute of limitations began to run at the latest in January 2010, when Sodexo notified
CMC in writing that it owed Sodexo $349,333.81 for worked performed under the contract. Pl.’s
Mot., Ex. A, ¶ 38 (1st Am. Compl.); Def.’s Opp’n at 13. The parties do not dispute that the original
complaint in this matter was timely filed on January 23, 2012.
NFP argues that under controlling precedent in this jurisdiction the statute of limitations
ran continuously from the date of the breach and, as such, has expired because the breach occurred
well over three years ago. See Def.’s Opp’n at 13-17. NFP relies primarily on the holding of the

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United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) in Ciralsky v.
Central Intelligence Agency, 355 F.3d 661 (D.C. Cir. 2004), to support its assertion that the
dismissal of Sodexo’s original complaint without prejudice was essentially a dismissal with
prejudice because the three-year statute of limitations had expired at that time. The D.C. Circuit’s
holding in Ciralsky is distinguishable from the facts of the instant case for the reasons described
below.
In Ciralsky, the D.C. Circuit held that the district court did not abuse its discretion in
denying the plaintiff’s motion for reconsideration pursuant to Rule 59(e) and the plaintiff’s related
motion for leave to file an amended complaint pursuant to Rule 15(a), when the district court had
previously struck two complaints for failure to comply with Rule 8(a). Nevertheless, the D.C.
Circuit remanded the case to allow the district court to reconsider its ruling on the motion for
reconsideration in light of the fact that it was now apparent that the plaintiff would be time barred
under the statute of limitation from re-filing his complaint even though his original complaint was
timely filed. Id. at 673-74. NFP argues, quoting Ciralsky, that “‘[o]nce a suit is dismissed, even
if without prejudice, the tolling effect of the filing of the suit is wiped out and the statute of
limitations is deemed to have continued running from whenever the cause of action accrued,
without interruption by that filing.’” Id. at 672 (emphasis added). However, the D.C. Circuit has
since clarified the distinction between the effect of a dismissal without prejudice of a complaint
and dismissal without prejudice of both a complaint and the case in situations where the statute of
limitations has expired since the filing of the original complaint. In Cohen v. Board of Trustees of
the University of the District of Columbia, 819 F.3d 476 (D.C. Cir. 2016), the D.C. Circuit relying
on Ciralsky and the discussion in that opinion of the confines of Rule 15(c), explained that if a
court dismisses only a complaint without prejudice but not the underlying case, the plaintiff “could

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. . . file[ ] a new complaint in his original case and the statute of limitations would [be] tolled from
the date of his original complaint.” Id. at 478-79. Alternatively, if a court dismisses both the
complaint and the case without prejudice, the plaintiff “could . . . file[ ] a new complaint in a new
case only if the claims were still timely as of the new filing.” Id. at 479.
In the instant action, Chief Judge Roberts dismissed only the complaint without prejudice
and did not dismiss the underlying case either at the time of the original dismissal of the complaint
or upon reconsideration. As such, the Court finds that the statute of limitations in the instant action
has been tolled since the date of the filing of the original complaint, January 23, 2012, and
accordingly, Plaintiff’s First Amended Complaint is not barred by the statute of limitations. 3
2. NFP’s Purported Liability for CMC’s Debts
NFP next contends that Sodexo’s request to file its First Amended Complaint is futile
because it fails to establish that NFP is liable for CMC’s debts and obligations to Sodexo.
Specifically, NFP argues that the First Amended Complaint does not establish that NFP expressly
or impliedly assumed CMC’s debt or that NFP is a mere continuation of CMC. For the reasons
described, the Court finds that Sodexo has at least pled sufficient facts to demonstrate that its claim
of NFP’s liability on the basis that it is a mere continuation of CMC is not futile. 4 In light of this
finding at this stage of the proceeding, the Court does not reach NFP’s arguments regarding the

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The parties in their briefing also dispute whether equitable tolling would render the First
Amended Complaint timely filed. The Court does not reach this issue because it has determined
the statute of limitations has been tolled since the filing of the original complaint pursuant to
Federal Rule of Civil Procedure 15 and binding precedent.
4
Generally, NFP contends that the Court should find Sodexo’s claims futile because two
other district judges in this court and two judges in the Superior Court of the District of Columbia
(“D.C. Superior Court”) have considered the transfer of assets at issue and concluded that NFP did
not assume CMC’s debts. See Def.’s Opp’n at 2 & n.1 (citing cases). The Court has reviewed this
nonbinding authority and at this juncture is not persuaded that it should bar Sodexo from filing an
amended complaint on this basis.
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assertion that Sodexo did not sufficiently plead facts to demonstrate that NFP impliedly or
expressly assumed CMC’s debts and liabilities.
“Ordinarily, a business entity which acquires the assets of another business is not liable for
its predecessor’s liabilities and debts.” Bingham v. Goldberg, Marchesano, Kholman, Inc., 637
A.2d 81, 89 (D.C. 1994). However, one exception to this general rule exists if the buying
corporation is a “mere continuation” of the selling corporation. Id. at 89-90. The court must
examine “[a] number of factors . . . to determine whether one business is a mere continuation of a
predecessor.” Id. at 91. Specifically, the court must consider: (1) whether there is a “common
identity of officers, directors, and stockholders in the purchasing and selling corporations[,]” (2)
“the sufficiency of the consideration passing from one entity for the sale of its interest in
another[,]” (3) whether the old entity “failed to arrange to meet its contractual obligation[s]” and
(4) “whether there is a continuation of the corporate entity of the seller.” Id. at 92.
Indeed, in addressing the motion to dismiss in the instant action, Chief Judge Roberts
concluded that “there is no continuation of the corporate entity of the seller because CMC was a
privately owned corporation . . . while NFP is a non-profit corporation created by and separate
from the District.” Sodexo Operations, LLC, 930 F. Supp. 2d at 239 (citation omitted). However,
Sodexo has now pled additional facts that at this juncture support a claim against NFP under the
theory that NFP is a mere continuation of CMC. See generally 1st Am. Compl. ¶¶ 53-70.
Sodexo argues that its First Amended Complaint differs from the original complaint in that
it includes additional details to demonstrate that NFP is liable for CMC’s debts. In support of
these assertions, Sodexo also provided an affidavit from the chairperson of SHA and a
contemporaneous memorandum from the District.

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Pl.’s Mot. at 4; 1st Am. Compl. ¶ 69.

Specifically, the proposed First Amended Complaint sets forth information to support the
contention that CMC and NFP:
(1) had the same employees, (2) the same controlling entity, (3) the same accounts
receivable and checking accounts, (4) the same funding, (5) the same name, (6) the
same physical address, (7) the same physical equipment, (8) that NFP and
CMC/UMC are engaged in an identical business, (9) that CMC/UMC effectively
ceased to exist after the sale of the hospital to the District, and (10) that the hospital
was effectively owned by the District before (99% ownership) and after (100%
ownership) the foreclosure.
Pl.’s Reply at 12.
Specifically, in its proposed First Amended Complaint, Sodexo maintains that “the District
was always the true owner and operator of CMC,” 1st Am. Compl. ¶ 54, and that “SHA’s
ownership and operation of that hospital was only to ‘maintain the perception of private ownership
and management of [CMC],’” id. In support of these assertions, Sodexo now alleges that prior to
the foreclosure by the District: “‘DC . . . owned 99% of the hospital and all of the working capital
funds to operate the hospital had been advanced . . . by DC,” id. ¶ 55; “‘[o]nly DC funds . . . were
used in the operation of the hospital,’” id. ¶ 56; and “‘DC exercised tight fiscal control and DC
insisted on a third party management company to supervise’ the hospital,” id. ¶ 57. Sodexo also
alleges that the District transferred the following to NFP which it created “to continuously run the
foreclosed upon hospital assets”: “checking accounts not named in the 2007 agreement and not in
existence until 2008”; “the name United Medical Center”; “the services of every employee
including the CEO and CRFO”; “every account receivable including DHS payments and Medicaid
payments due from DC to UMC”; “IRA and Keogh contribution that had been in the hands of third
party”; and “certain accounts payable.” Id. ¶¶ 63-65 (emphasis in original). Moreover, Sodexo
alleges that “the District prevented the Specialty Entities from ‘remov[ing] the goods and
equipment from their facilities following their eviction from the UMC campus . . . SHA and SHW

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were informed that they would be unable to remove their equipment from the facility by order of
Peter Nickles. Metropolitan police officers . . . physically prevented the relocation.’” Id. ¶ 66.
Finally, Sodexo purports that almost nothing changed before and after the hospital takeover in that
DC owned 99% of the building prior to the takeover and owns 100% of it after the takeover and
that prior to the takeover the hospital was operated on the District’s money and it continues to be
operated on the District’s money after the takeover. Id. ¶ 69.
NFP argues that Sodexo’s claim that NFP is a mere continuation of CMC fails because
there was no sale of CMC and, accordingly, no “selling corporation.” See Bingham, 637 A.2d at
90 (noting successor liability exists when “the buying corporation is a ‘mere continuation’ of the
selling corporation”). Rather, NFP asserts, the District foreclosed on the privately-owned forprofit CMC and created NFP and in a transaction of this nature, successor liability cannot be
established under a mere continuation theory.
Sodexo asserts that a foreclosure instead of a sale does not necessarily preclude a
corporation from qualifying as a mere continuation of its predecessor and points to nonbinding
authority in support of this proposition. See Pl.’s Reply at 13-15. Indeed, Sodexo cites to precedent
from other jurisdictions that supports its position that the transfer of assets through foreclosure
does not necessarily preclude a plaintiff from asserting that an entity is a mere continuation of the
foreclosed-upon entity. See, e.g., Ed Peters Jewelry Co. v. C & J Jewelry Co., 124 F.3d 252, 267
(1st Cir. 1997) (“[E]xisting case law overwhelmingly confirms that an intervening foreclosure sale
affords an acquiring corporation no automatic exemption from successor liability.”); Kaiser
Found. Health Plan of Mid-Atlantic States v. Clary & Moore, P.C., 123 F.3d 201, 206 (4th Cir.
1997) (“[F]orm must not be elevated over substance in deciding the issue of successor liability.”);
Stoumbos v. Kilimnik, 988 F.2d 949, 962 (9th Cir. 1993) (“The mere fact that the transfer of assets

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involved foreclosure on a security interest will not insulate a successor corporation from liability
where other facts point to a continuation.”); EEOC v. SWP, Inc., 153 F. Supp. 2d 911, 924 (N.D.
Ind. 2001) (“RBK’s argument that a foreclosure sale cuts off all possibility of successor liability
is simply incorrect.”); Fiber-Lite Corp. v. Molded Acoustical Prods. of Easton, Inc., 186 B.R. 603,
610 (E.D. Pa. 1994) (“[W]e reject Easton’s contention that it cannot be responsible for Indiana’s
debts since it acquired Indiana’s assets in a foreclosure sale . . . .”). Here, neither party has pointed
to binding authority such that the Court can conclude that Sodexo’s claim that NFP is a mere
continuation of CMC is futile based on the fact the NFP was created after the District foreclosed
on CMC. Accordingly, for the reasons described and on this record, the Court finds that NFP has
not established that permitting Sodexo to file an amended complaint is futile.
3. Res Judicata and/or The Prohibition Against Claim Splitting
NFP further contends that Sodexo’s request to file an amended complaint is futile because
it is barred by res judicata and/or violates the prohibition against splitting claims. Def.’s Opp’n at
25. Specifically, NFP argues that Sodexo is precluded from pursuing a claim against NFP because
Sodexo brought suit against CMC in the D.C. Superior Court to recover damages for the same
alleged breach. Id. at 26. For the reasons described herein, the Court concludes that at least at this
phase of the proceeding, NFP has not demonstrated that Sodexo’s claim is barred by res judicata
or the prohibition against splitting claims such that granting leave to file the amended complaint
is futile.
“To determine whether a plaintiff is claim-splitting, ‘[t]he proper question is whether,
assuming the first suit was already final, the second suit would be precluded under res judicata
analysis.’” Clayton v. District of Columbia, 36 F. Supp. 3d 91, 94 (D.D.C. 2014) (quoting Katz v.
Gerardi, 655 F.3d 1212, 1219 (10th Cir. 2011)). “The doctrine of res judicata prevents repetitious

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litigation involving the same causes of action or the same issues.” I.A.M. Nat’l Pension Fund v.
Indus. Gear Mfg. Co., 723 F.2d 944, 946 (D.C. Cir. 1983). The doctrine has two components:
claim preclusion and issue preclusion. Taylor v. Sturgell, 553 U.S. 880, 892 (2008). Claim
preclusion incorporates the principles of “merger—the extinguishment of a claim in a judgment
for plaintiff—” and “bar—the extinguishment of a claim in a judgment for defendant.”
Restatement (Second) of Judgments, ch. 3, Introductory Note (Am. Law. Inst. 1982); Taylor, 553
U.S. at 892 n.5 (citing Migra v. Warren City School Dist. Bd. of Ed., 465 U.S. 75, 77 n.1 (1984)).
Issue preclusion incorporates the principles of direct estoppel—“the effect of the determination of
an issue in another action between the parties on the same claim”—and collateral estoppel—such
effect in another action on “a different claim.” Restatement (Second) of Judgments, ch. 3,
Introductory Note (Am. Law. Inst. 1982); Taylor, 553 U.S. at 892 n.5 (citing Migra, 465 U.S. 75
at 77 n.1).
“Under claim preclusion, ‘a final judgment on the merits of an action precludes the parties
or their privies from relitigating issues that were or could have been raised in that action.’”
Sheppard v. District of Columbia, 791 F. Supp. 2d 1, 4 (D.D.C. Feb. 22, 2011) (quoting Drake v.
FAA, 291 F.3d 59, 66 (D.C. Cir. 2002)). Under this form of res judicata, “a subsequent lawsuit
will be barred if there has been prior litigation (1) involving the same claims or cause of action,
(2) between the same parties or their privies, and (3) there has been a final, valid judgment on the
merits, (4) by a court of competent jurisdiction.” Smalls v. United States, 471 F.3d 186, 192 (D.C.
Cir. 2006). Broadly speaking, “‘[a] privy is one [who is] so identified in interest with a party to
the former litigation that he or she represents precisely the same legal right in respect to the subject
matter of the case.’” Herrion v. Children’s Hosp. Nat’l Med. Ctr., 786 F. Supp. 2d 359, 371
(D.D.C. 2011) (quoting Smith v. Jenkins, 562 A.2d 610, 615 (D.C. 1989) (alterations in original)).

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Under the collateral estoppel form of issue preclusion, “‘once a court has decided an issue
of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a
suit on a different cause of action involving a party to the first case.’” Sheppard, 791 F. Supp. 2d
at 5 (quoting Yamaha Corp. of Am. v. United States, 961 F.2d 245, 254 (D.C. Cir. 1992)). This
form of issue preclusion applies if three conditions are met:
First, the issue must have been actually litigated, that is, contested by the parties
and submitted for determination by the court. Second, the issue must have been
actually and necessarily determined by a court of competent jurisdiction in the first
. . . [case]. Third, preclusion in the second . . . [case] must not work an unfairness.
Otherson v. Dep’t of Justice, 711 F.2d 267, 273 (D.C. Cir. 1983) (internal citations, quotations,
and quotation marks omitted).
Here, NFP appears to argue that Sodexo’s claims are barred by claim preclusion. NFP
asserts that Sodexo has been awarded a final judgment against CMC in the amount of $349,333.81,
the same amount Sodexo is seeking here, in a suit arising out of the same contract in the D.C.
Superior Court and both parties point to an order from Associate Judge Erik P. Christian in that
action denying CMC’s request to substitute the District and apparently NFP as defendants in that
case. 5 Def.’s Opp’n at 3; id., Ex. A (Order Denying Mot. for Substitution, 2010 CA 002467 B);
Pl.’s Reply, Ex. 1 (same). NFP also points to several other opinions from other judges in this court
and in D.C. Superior Court that it argues solidifies “that NFP did not assume the debts and
liabilities of the prior operator of the hospital, Capitol Medical Center, LLC . . . .” Def.’s Supp.
Mem. in Opp’n at 1; see also Def.’s Opp’n at 3.

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While not crystal clear, the Court has reviewed the docket in the matter before Judge
Christian and the Order provided by the parties. In this review, it appears that CMC sought to join
both the District and NFP as defendants in that action and Sodexo took no position as to the request.
Judge Christian ultimately denied the request, stating: “Because the Court has concluded that
neither the District nor NFP assumed the debts and liabilities of CMC, there is no basis for a thirdparty complaint alleging the District’s secondary liability to CMC.” Def.’s Opp’n, Ex. A at 7.
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However, NFP has not set forth its argument in full, applying the requisite legal standard
for either claim or issue preclusion to the facts of the instant action. Rather, each party argues that
the other has presented inconsistent positions with the respect to whether this action involves the
same parties or their privies before the Court in this action and in the action in D.C. Superior Court.
Moreover, neither party has fully discussed the import, if any, of the earlier decisions in this court
and in D.C. Superior Court to this action. While NFP cites to these other decisions, it does not
sufficiently analyze the application of these decisions to the present case. As such, the Court
concludes that NFP has not met its burden of coming forward with a colorable basis for denying
leave to amend on the grounds that Sodexo’s claims are barred by res judicata.
C. Other Factors for the Court’s Consideration
While they are not the focus of NFP’s briefing, the Court also consider the remaining
factors. First, the Court notes that Sodexo has not previously amended its complaint. As such, the
Court now turns to the issues of undue delay and bad faith.
Turning first to the issue of undue delay, NFP appears to argue that Sodexo should have
amended its complaint as soon as it was placed on notice through the filing of NFP’s motion to
dismiss of the infirmities in the original complaint. However, Sodexo represented in response that
it was its belief that its original complaint was sufficient based on its reading of prior case law.
Pl.’s Reply at 5-6. Moreover, as Sodexo noted, it “filed its original claim nearly a year before the
three-year period ran . . . [and] [s]ince that time, there has been less than one month where this
Court has not had on file either an active complaint or a motion to amend the complaint.” Id. at 5.
As such, while this matter has been pending for a significant amount of time, the Court notes that
Sodexo has continually pursued its claim. Moreover, a review of the proposed First Amended
Complaint does not radically alter the scope and nature of the case. Rather, Sodexo, through its

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First Amended Complaint, appears to bolster its same claims with additional facts. Finally, turning
to the issue of bad faith, NFP has not alleged bad faith on Sodexo’s part and nothing in the record
indicates that either party has acted in bad faith.
After considering the parties’ arguments, the Court concludes that NFP has not met its
burden of showing a colorable basis for denying leave to amend the complaint. Accordingly, in
an exercise of its discretion, the Court shall grant leave to Sodexo to file its proposed First
Amended Complaint pursuant to Rule 15(a)(2). In reaching this conclusion, the Court notes that
while it has concluded that NFP has not met its burden of demonstrating a colorable basis for
denying leave to amend, the Court expresses no other opinion on the validity of the Sodexo’s
claims.
IV. CONCLUSION
For the foregoing reasons, it is this 28th day of September, 2016, hereby
ORDERED that Plaintiff’s [25] Motion for Leave to File an Amended Complaint is
GRANTED; and it is further
ORDERED that the proposed First Amended Complaint, ECF No. [21-2], attached as
Exhibit A to Plaintiff’s Motion for Leave to File an Amended Complaint and for Clarification or,
in the Alternative, Reconsideration, shall be deemed filed; and it is further
ORDERED that Defendant shall respond to the First Amended Complaint by no later than
October 19, 2016.

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/s/______________________
COLLEEN KOLLAR-KOTELLY
United States District Judge

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