American Electric Co., LLC v. Parsons RCI, Inc.

Filing 211

ORDER GRANTING DEFENDANT/THIRD-PARTY PLAINTIFF PARSONS RCI, INC.'S RENEWED MOTION FOR LEAVE TO FILE FIRST AMENDED AND CONSOLIDATED THIRD-PARTY COMPLAINT AND COUNTERCLAIM AGAINST COVANTA HONOLULU RESOURCE RECOVERY VENTURE re 174 - Signed by Judge BARRY M. KURREN on 2/27/2015. "For the foregoing reasons, the Court GRANTS Parsons's Motion and allows Parsons leave to file its First Amended Third-Party Complaint and Counterclaim as attached to its Motion.&quo t; (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII

AMERICAN ELECTRIC CO., LLC,

)
)
Plaintiff,
)
)
vs.
)
)
PARSONS RCI, INC.,
)
)
Defendant.
)
)
)
)
COVANTA HONOLULU
)
RESOURCE RECOVERY
)
VENTURE,
)
)
Plaintiff,
)
)
vs.
)
)
PARSONS RCI, INC.,
)
)
Defendant.
______________________________ )

CIV. NO. 13-00471 BMK
CIV. NO. 14-00020 BMK
(CONSOLIDATED CASES)

ORDER GRANTING
DEFENDANT/THIRD-PARTY
PLAINTIFF PARSONS RCI, INC.’S
RENEWED MOTION FOR LEAVE
TO FILE FIRST AMENDED AND
CONSOLIDATED THIRD-PARTY
COMPLAINT AND
COUNTERCLAIM AGAINST
COVANTA HONOLULU
RESOURCE RECOVERY
VENTURE

ORDER GRANTING DEFENDANT/THIRD-PARTY PLAINTIFF
PARSONS RCI, INC.’S RENEWED MOTION FOR LEAVE TO
FILE FIRST AMENDED AND CONSOLIDATED THIRD-PARTY
COMPLAINT AND COUNTERCLAIM AGAINST
COVANTA HONOLULU RESOURCE RECOVERY VENTURE
Before the Court is Defendant/Third-Party Plaintiff Parsons RCI,
Inc.’s (“Parsons”) Renewed Motion for Leave to File First Amended and

Consolidated Third-Party Complaint and Counterclaim against Covanta Honolulu
Resource Recovery Venture (the “Motion”). (Doc. no. 174.) Parsons seeks leave
to file its First Amended and Consolidated Third-Party Complaint and
Counterclaim to “clarify” its claims, including claims based on a number of
Change Order Requests (“COR”) allegedly unrelated to claims asserted by
American Electric Co., LLC (“AE”) (the “Amended Claims”).
The Motion came on for hearing before the Court on February 11,
2015.1 After careful consideration of the Motion, the supporting and opposing
memoranda, and the arguments of counsel, the Court hereby GRANTS the Motion.
BACKGROUND
The facts of this case are well known to the Court and the parties.
(See Order (1) Denying Covanta Honolulu Resource Recovery Venture’s Motion
for Partial Summary Judgment re Disallowed Claims (Doc. no. 113) and
(2) Denying Covanta Honolulu Resource Recovery Venture’s Motion for Partial

1

 Concurrent

with the hearing on the present Motion, the Court also heard
arguments on (1) Covanta’s Motion for Partial Summary Judgment re Disallowed
Claims, (2) Covanta’s Motion for Partial Summary Judgment re Parsons, RCI,
Inc.’s Duty to Defend and, With Respect to the Disallowed Claims, to Indemnify,
and (3) Parsons’s Motion for Partial Summary Judgment against Covanta Honolulu
Resource Recovery Venture on its Claims and Counterclaims for Liquidated
Damages. (Doc. nos. 113, 122, and 153.) The Court disposes of those motions by
separate orders.

2

Summary Judgment re Parsons, RCI, Inc.’s Duty to Defend and, With Respect to
the Disallowed Claims, to Indemnify (Doc. No. 122).) Accordingly, the Court
only addresses the facts pertinent to the present Motion.
On September 16, 2013, AE filed suit against Parsons, alleging claims
for breach of contract and unjust enrichment, based on Parsons’s alleged refusal to
pay for additional work. (Doc. no. 1.) AE subsequently amended its Complaint on
September 24, 2013. (Doc. no. 5.) On January 22, 2014, Parsons filed its ThirdParty Complaint against Covanta, and Covanta filed a counterclaim against
Parsons. (Doc. nos. 25, 53, 103.)
Around the same time that Covanta filed its counterclaim against
Parsons, it filed its own Complaint in a separate action against Parsons, which it
amended on August 15, 2014 (the “Covanta Complaint”). (Doc. no. 1 in 14-cv00020 ACK-RLP; Doc. no. 102 in 13-cv-00471 SOM-BMK.) On March 21, 2014,
Parsons filed its answer to the Covanta Complaint and asserted a counterclaim
against Covanta and a counterclaim against AE. (Doc. no. 51.)
Trial in this matter is currently set for May 19, 2015.
STANDARD
Under Rule 15(a)(2) of the Federal Rules of Civil Procedure, “a party
may amend its pleading only with the opposing party’s written consent or the

3

court’s leave.” Whether to grant leave to amend is within the district court’s
discretion. Foman v. Davis, 371 U.S. 178, 182 (1962).
DISCUSSION
Parsons allegedly seeks leave to amend its Third-Party Complaint and
Counterclaim against Covanta not to add new claims, but to “provide specificity to
those claims already asserted.” (Mot. at 11.) Parsons argues that its request is not
made in bad faith, there is no undue delay or prejudice toward the other parties,
and an amendment would not be futile. (Id. at 11-14.)
In response, Covanta argues that Parsons did not follow the
contractual process for asserting claims against Covanta; Parsons did not seek an
amendment of the Court’s Rule 16 Scheduling Order; Parsons was not diligent in
seeking the proposed amendment and cannot show “good cause” for the
amendment; and Parsons cannot meet the standards set out in Rule 15(a). (Mem.
in Opp’n at 23-36.) Covanta additionally argues that Parsons is precluded from
asserting non-AE claims in the present litigation. (Id. at 36-37.)
I.

Leave to Amend Under Rule 15(a)
The Court first considers whether Parsons has met the standard for

leave to amend under Rule 15(a)(2) of the Federal Rules of Civil Procedure.
Pursuant to Rule 15(a)(2), “a party may amend its pleading . . . with the . . . court’s

4

leave. The court should freely give leave when justice so requires.” Fed. R. Civ.
P. 15(a)(2). If the facts and circumstances a plaintiff relies upon may be the basis
of relief, the plaintiff should be afforded an opportunity to test his claims on the
merits. Foman, 371 U.S. at 182. In determining whether to grant leave to amend,
courts consider factors such as: futility of the amendment; bad faith by the
plaintiff; whether there was undue delay in seeking the amendment; whether it will
prejudice the opposing party; and whether the plaintiff failed to cure deficiencies in
prior amendments. Id.; see also In re W. States Wholesale Natural Gas Antitrust
Litig., 715 F.3d 716, 738 (9th Cir. 2013) (the court weighs five factors in
determining whether justice requires that leave to amend be granted: “(1) bad faith,
(2) undue delay, (3) prejudice to the opposing party, (4) futility of amendment; and
(5) whether plaintiff has previously amended his complaint”).
The Court holds that Parsons meets the standard set out by Rule 15(a).
As an initial matter, the Court understands Covanta’s frustration with having the
Amended Claims pled at this stage of litigation. Although it does appear as though
Parsons is alleging new facts, including those relating to the CORs that the parties
agreed were not part of this litigation, Parsons had previously pled those claims,
albeit very generally; since those claims could apparently not be settled separately,
Parsons is asserting them as a part of this litigation. If the Court denies the

5

Motion, the parties would just be left to fight over the Amended Claims in a
separate lawsuit and to try related matters twice, likely at great expense. As such,
because Parsons’s proposed amendment does not assert “new” claims, in the
interest of fairness and efficiency, the Court does not find that Parsons’s
amendments will result in undue prejudice to Covanta.
Turning to the Rule 15(a) analysis, first, the Court does not find that
there is bad faith on Parsons’s part in bringing the present Motion. Parsons argues
that the proposed amendment only gives the parties additional notice of the bases
for claims previously pled. (Mot. at 11-12.) Conversely, Covanta argues that
Parsons is attempting to gain an unfair advantage by bringing the non-AE claims
so late. (Mem. in Opp’n at 33-36.) Although the Court agrees that Parsons could
likely have sought an amendment earlier, there is nothing in the record to indicate
bad faith or a wrongful motive on Parsons’s part.
Second, the Court similarly determines that, even though trial is
scheduled in a few months, Parsons has not exhibited undue delay. It initially filed
the Motion in October 2014, but the motion was withdrawn, pending the parties’
attempts to resolve the issues raised herein. (Mot. at 3 n.1.) As such, the Court
cannot say that there is undue delay to warrant denying the Motion.
Third, as to prejudice to Covanta, the Court again acknowledges that

6

Covanta may have to conduct discovery with regard to the Amended Claims.
(Mem. in Opp’n at 31-32.) Although the Court is not unsympathetic to Covanta’s
situation, the alternative is to dismiss the case so that Parsons can file a separate
lawsuit based on the Amended Claims. (Reply at 11.) This second lawsuit would
necessitate the same discovery required here and would arguably result in greater
expense and time to litigate two separate lawsuits. Moreover, it appears that
Covanta has been aware of the allegations and facts pertaining to the Amended
Claims. (Id.) Thus, the possible prejudice faced by Covanta is not any greater
than the resulting prejudice if the Court denies the Motion.
Fourth, the Court considers the futility of the proposed amendment.
Covanta argues that the proposed claim for a share in Covanta’s early completion
bonus would be futile. (Mem. in Opp’n at 33.) However, Covanta’s bald
assertions regarding the completion of certain milestones are insufficient to
demonstrate the futility of Parson’s claims and are better determined when the
facts are fully before the Court.2 Therefore, the fourth factor weighs in Parsons’s
favor.

2

 Similarly,

Covanta’s brief argument that Parsons is contractually barred
from asserting the Amended Claims is also not appropriate for disposition at this
time and is better suited for a motion for summary judgment when the parties can
fully brief the Court on this issue. (Mem. in Opp’n at 23.)

7

Finally, this is the first amendment sought by Parsons. As such, this
factor weighs in favor of granting the Motion.
Therefore, based on the five factors of the Rule 15(a) analysis
discussed above, the Court will allow Parsons to file its First Amended Third-Party
Complaint and Counterclaim.
II.

Good Cause Under Rule 16
Next, Covanta argues that the Motion should be denied, because

Parsons did not seek to modify the Court’s Rule 16 Scheduling Order, and Parsons
cannot show “good cause” to amend the order. Pursuant to the Court’s February
24, 2014 Scheduling Order, the deadline to file motions to amend the pleadings
was July 7, 2014. (Doc. no. 41.) However, Parsons originally filed the present
Motion on October 22, 2014. Covanta argues that Parsons should not be allowed
to disregard the Court’s order, as it was not diligent in seeking the proposed
amendments. (Mem. in Opp’n at 24-25.)
Although the Court is cognizant of its own deadlines, it holds that
there is good cause to allow Parsons to amend its Third-Party Complaint and
Counterclaim. “[T]he focus of the inquiry is upon the moving party’s reasons for
seeking modification.” Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609
(9th Cir. 1992). “Rule 16(b)’s ‘good cause’ standard primarily considers the

8

diligence of the party seeking the amendment. The district court may modify the
pretrial schedule ‘if it cannot reasonably be met despite the diligence of the party
seeking the extension.’” Id. (quoting Fed. R. Civ. P. 16 adv. comm. notes (1983
amendment)). There is nothing in the record to demonstrate that Parsons had been
dilatory in seeking the amendment; rather, Parsons has shown that it had pled the
Amended Claims generally and was seeking to settle them out of court. Only
when it became obvious that the settlement negotiations would not be fruitful did
Parsons file this Motion. Moreover, Parsons argues that it has only recently been
able to obtain the necessary facts to “identify and categorize its claims with the
added specificity included in its amended claims.” (Reply at 7.) As such, the
Court finds that Parsons has shown good cause warranting a modification of the
Rule 16 deadlines.
//
//
//
//
//
//
//

9

CONCLUSION
For the foregoing reasons, the Court GRANTS Parsons’s Motion and
allows Parsons leave to file its First Amended Third-Party Complaint and
Counterclaim as attached to its Motion.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, February 27, 2015.

/S/ Barry M. Kurren
Barry M. Kurren
United States Magistrate Judge

American Electric Co., LLC v. Parsons RCI, Inc., CIV. NO. 13-00471 BMK, CIV. NO. 1400020 (Consolidated), ORDER GRANTING DEFENDANT/THIRD-PARTY PLAINTIFF
PARSONS RCI, INC.’S RENEWED MOTION FOR LEAVE TO FILE FIRST AMENDED
AND CONSOLIDATED THIRD-PARTY COMPLAINT AND COUNTERCLAIM AGAINST
COVANTA HONOLULU RESOURCE RECOVERY VENTURE 

10