Whiting IN City of v. Whitney Bailey Cox Magnani LLC

Filing 64

OPINION AND ORDER: DENYING 43 Motion to File a Third Amended Complaint to join additional parties. The Court now ORDERS that the stay (see DE 57 & 63 ) is lifted over the briefing schedule for WBCM's motion for summary judgment (DE 50 ). Signed by Senior Judge James T Moody on 6/7/17. (jld)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
CITY OF WHITING, INDIANA.,
Plaintiff,
v.
WHITNEY, BAILEY, COX, &
MAGNANI, LLC,
Defendant.

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No. 2:14 CV 440

OPINION and ORDER
This matter is before the court on plaintiff’s motion for leave to file a third
amended complaint to join additional parties. (DE # 43.) The City of Whiting, Indiana
(“the City”) seeks to join American Structurepoint, Inc. (“Structurepoint”) and Superior
Construction Co., Inc. (“Superior”) as defendants. (Id.) Defendant Whitney, Bailey, Cox,
& Magnani, LLC (“WBCM”) opposes the motion. (DE # 52.) The motion has been fully
briefed and is ripe for review.
The City filed its motion to amend on April 28, 2017, over one year after the
deadline of April 1, 2016, for amended pleadings set in the Rule 16 conference. (DE
## 24, 43.) Although Federal Rule of Civil Procedure 15(a)(2) says that courts should
“freely give leave” to amend, a different standard provided by Rule 16(b)(4) applies
once the scheduled deadline passes. See Tschantz v. McCann, 160 F.R.D. 568, 571 (N.D.
Ind. 1995). Thus, “[t]o amend a pleading after the expiration of the trial court’s
Scheduling Order deadline to amend pleadings, the moving party must show ‘good
cause’” to modify the schedule. Trustmark Ins. Co. v. Cgeneral & Cologne Life Re of Am.,
424 F.3d 542, 553 (7th Cir. 2005) (citing Fed. R. Civ. P. 16(b)). “Rule 16(b)’s ‘good cause’

standard primarily considers the diligence of the party seeking the amendment.” Id. In
other words, in order to demonstrate good cause in this context, the City must show
that despite its diligence it could not have met the earlier deadline. See Tschantz, 160
F.R.D. at 571.
WBCM presents the court with several arguments as to why it believes the City
should have been able to meet the earlier deadline. Initially, it argues that the two
parties the City seeks to join were in contractual privity with the City concerning the
Whiting Lakefront Park Project, the design and construction of which is at issue in this
case. (DE # 52 at 3.) WBCM argues that the City, therefore, must have had the
knowledge necessary to support a claim against Structurepoint and Superior before the
deadline. (See id.) However, privity alone is not enough to show that the City should
have known to bring these claims earlier. The City is correct that it has an obligation
under Rule 11 of the Federal Rules of Civil Procedure to support the factual contentions
of its pleadings with evidentiary support (or to identify that it will likely have
evidentiary support after further investigation or discovery). (DE # 53 at 4 (quoting Fed.
R. Civ. P. 11(b)(3)).) The mere existence of a contractual relationship cannot support a
claim.
However, WBCM contends that the City had access to other evidence and
information that made it possible to file its claims against the other defendants before
the deadline. First, WBCM points to a letter written by its counsel, dated April 5, 2013,
that was in the City’s possession and included in the files the City produced for the
lawsuit. (DE # 52-1.) This letter contains allegations from WBCM that Structurepoint

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and Superior failed to provide survey drawings. (DE # 52 at 4.) This failure to provide
surveys was ultimately asserted by the City in its claims against Structurepoint and
Superior that appear in the proposed third amended complaint. (DE # 43-2 at
¶¶ 109–13, 122–24.) At the very least, this letter would put City on notice, before the
deadline, that it should perform further investigation into claims against Superior and
Structurepoint.
Next, WBCM contends that it “repeatedly asserted this same argument” about
survey performance at later dates; however, these later assertions by WBCM all appear
in documents that were not created until after the amendment deadline of April 1, 2016.
(See DE # 52 at 4–5.) So these documents have no bearing on the City’s ability to bring
claims against the proposed defendants before the deadline. On the contrary, they seem
to support the City’s contention that it was only able to bring claims against
Structurepoint and Superior after the deadline once this “new evidence” became
available.
Nevertheless, not all of the “new” documents contain entirely “new”
information. In the letter from November 18, 2016, WBCM relies on information
contained in a “Change Order” document created in 2012. (DE # 43-1.) The Change
Order was executed by Superior, Structurepoint, and the City, and was in the
possession of the City prior to the deadline. (DE # 52 at 11.) Although the City did not
have access to WBCM’s more recent interpretation of the Change Order before the
deadline, it possessed the Order itself and could have discovered its relevance before
the deadline, with the exercise of diligence.

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Lastly, WBCM cites a document containing minutes from a “Construction
Progress Meeting” dated April 10, 2013. (DE # 52 at 5.) This document was produced by
the City in discovery, and the City had access to the information before the deadline.
(Id.) The minutes state that “Superior had admitted non performance of the 3rd party
survey requirements. [Structurepoint] neglected to inform Superior of the
requirement.” (DE # 52-4 at 2.) These “admissions” are similar to the claims the City
now brings against Superior and Structurepoint in the proposed third amended
complaint: a negligence claim against Structurepoint and breach of contract claims
against Structurepoint and Superior regarding, in part, their failures to provide surveys.
(DE # 43-2 at ¶¶ 109–13, 117–18, 122–24.) Whether or not these admissions relate to the
same actions that now serve as the basis for the City’s new claims, they could have put
the City on notice of this issue before the deadline. It is noteworthy that the City does
not address the Construction Progress Meeting minutes in its reply. (See DE # 53.)
In combination, the April 2013 minutes, the April 2013 letter, and the 2012
Change Order provided enough information so that the City could have pursued a
claim against Structurepoint and Superior at some earlier point. Yet, there is no
evidence that the City acted diligently to pursue these claims when it first obtained
these documents. In light of this earlier obtained information, the City has failed to
show that it could not have met the earlier deadline, despite its diligence. See Tschantz,
160 F.R.D. at 571. Therefore, the court finds there is no good cause to allow this motion
for leave to amend to be filed after the previously established deadline of April 1, 2016.

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In its reply, the City—for the first time—argues that the court should grant an
extension of the deadline to amend because of Rule 6(b) of the Federal Rules of Civil
Procedure. (DE # 53 at 2.) Rule 6(b)(1) states:
When an act may or must be done within a specified time,
the court may, for good cause, extend the time . . . on motion
made after the time has expired if the party failed to act
because of excusable neglect.

Fed. R. Civ. P. 6(b)(1). The City has not actually filed a motion to extend the deadline for
amended pleadings. Furthermore, the extension rule in Rule 6(b) is more general than
Rule 16(b)(4), which specifically applies to deadlines set by a Rule 16 scheduling order.
Usually, where more than one Federal Rule of Civil Procedure could apply to a
circumstance, the federal courts should apply the specific provision over the general
provision. See McCann v. Cullinan, No. 11 CV 50125, 2015 WL 4254226, at *10 (N.D. Ill.
July 14, 2015) (analyzing an extension of a deadline set by a Rule 16 conference using
the Rule 16(b)(4) standard rather than Rule 6(b)).
Regardless, the court finds that the City also fails to meet the standard of
excusable neglect. The factors for the court to consider when evaluating a claim of
excusable neglect include the danger of prejudice to the nonmoving party and the
reason for the delay. Murphy v. Eddie Murphy Prods., Inc., 611 F.3d 322, 324 (7th Cir.
2010). Both of these factors favor WBCM. First, the reason for the delay was the City’s
own lack of diligence in pursuing a claim based on information which was under its
own control. Second, allowing the City to add new defendants would prejudice WBCM
by delaying the litigation and taking WBCM out of its chosen forum. Moreover, the

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City brought this motion over one year after the deadline. Powell v. Furnish, 1:11-CV-88,
2012 WL 2128031, at *4 (N.D. Ind. June 12, 2012) (including “the length of the delay”
among factors relevant to excusable neglect). Therefore, the City’s failure to comply
with the deadline was not due to excusable neglect.
Additionally, even if the court had found good cause to allow the late
amendment, the court’s analysis of this issue would not be complete, because the
addition of the proposed defendants (Structurepoint and Superior) would destroy the
diversity of the parties.1 Without complete diversity, the court would no longer have
subject matter jurisdiction over the action.2 When joinder of a nondiverse party would
destroy subject matter jurisdiction, the district court is left with two options: (1) it may
deny joinder, or (2) it may permit joinder and remand the action to the state court. 28
U.S.C. § 1447(e). The choice between those two options is left to the discretion of the
district court and is dependent upon a four-factor balancing test adopted by the Seventh
Circuit. Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 759 (7th Cir. 2009). However,
the court need not reach this issue due to its earlier conclusions regarding good cause
and excusable neglect.

1

This case was originally filed in Lake County Superior Court and was removed
on the grounds that there was complete diversity of citizenship between the parties,
pursuant to 28 U.S.C. § 1332. (DE # 1 at 1.) Both Structurepoint and Superior are Indiana
corporations with their principal places of business in Indiana. (See DE # 43 at 4.) As
such, they are citizens of Indiana for diversity purposes. See 28 U.S.C. § 1332(c)(1). The
City is also an Indiana citizen for these purposes.
2

WBCM does not object to the City’s contention that the addition of
Structurepoint and Superior would destroy diversity and require remand. (See DE # 52
at 7.)
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For the reasons set forth above, the motion for leave to file a third amended
complaint to join additional parties (DE # 43) is DENIED. Consequently, the court now
ORDERS that the stay (see DE ## 57, 63) is lifted over the briefing schedule for WBCM’s
motion for summary judgment (DE # 50).
SO ORDERED.
Date: June 7, 2017
s/James T. Moody
JUDGE JAMES T. MOODY
UNITED STATES DISTRICT COURT

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