GJMS LLC v. Hamstra Builders Inc et al

Filing 124

OPINION AND ORDER DENYING 117 MOTION to Amend/Correct 15 Answer to Complaint, Counterclaim seeking leave to file amended counterclaim by Defendants Wilbert Hamstra, Hamstra Builders Inc. Signed by Magistrate Judge John E Martin on 10/21/2021. (lhc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
GJMS, LLC,
Plaintiff,
v.
HAMSTRA BUILDERS, INC., et al.,
Defendants.

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CAUSE NO. 2:18-CV-135-JTM-JEM

OPINION AND ORDER
This matter is before the Court on Defendants’ Motion for Leave to Amend Counterclaim
[DE 117], filed by Defendants Hamstra Builders, Inc., and Wilbert Hamstra (collectively “Hamstra
Defendants”) on August 12, 2021. Hamstra Defendants seek leave to amend their counterclaims
to add two additional claims.
I.

Background
On April 5, 2018, Plaintiff filed this action arising out of a purported oral management

agreement among the parties. On May 29, 2018, Defendants filed their Answer and Hamstra
Builders’ Counterclaim for breach of contract for unreimbursed expenses it purportedly incurred
on behalf of Plaintiff. On June 21, 2018, the Court held a preliminary pretrial scheduling
conference pursuant to Federal Rule of Civil Procedure 16, at which all parties participated and
agreed to a number of case deadlines, including deadlines of July 13, 2018, for Plaintiff, and
August 24, 2018, for Defendants to seek to join parties or amend the pleadings.
On March 9, 2021, Plaintiff filed a Motion for Partial Summary Judgment, which is now
fully briefed and pending. One of the issues in the Motion for Partial Summary Judgment is the
impact of a Management Agreement dated December 1, 2009 between Wilbert Hamstra and

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Plaintiff (“Management Agreement”) on the parties’ obligations to each other. On August 12,
2021, Defendants filed the instant motion to amend their counterclaims. Plaintiff filed a response
on August 26, 2021, and on August 31, 2021, the Hamstra Defendants filed a reply.
II.

Analysis
Hamstra Defendants seek leave to amend their Counterclaim to add two additional counts,

one seeks indemnification in the form of reimbursement for Mr. Hamstra’s attorneys’ fees and
costs in this litigation and the other count seeks a declaratory judgment that the indemnification
provision of the Management Agreement is enforceable.
Federal Rule of Civil Procedure 15(a) provides that, when a party seeks leave to amend a
pleading, the “court should freely give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2).
Thus, if the underlying facts or circumstances relied upon by a party are potentially a proper subject
of relief, the party should be afforded an opportunity to test the claim on the merits. Foman v.
Davis, 371 U.S. 178, 182 (1962). The decision whether to grant or deny a motion to amend lies
within the sound discretion of the district court. Campbell v. Ingersoll Milling Mach. Co., 893 F.2d
925, 927 (7th Cir. 1990). However, leave to amend is Ainappropriate where there is undue delay,
bad faith, 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, or futility of the amendment.@ Villa v. City of Chicago, 924 F.2d 629, 632 (7th
Cir. 1991) (citing Foman, 371 U.S. at 183).
The deadline for the parties to seek leave to amend pleadings expired almost three years
before the instant Motion to Amend was filed, but Hamstra Defendants do not include any request
for extension. When a party moves to amend its complaint after the amendment deadline set in a
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Rule 16 order, the Court first considers whether to extend the deadline under the “heightened goodcause standard of Rule 16(b)(4) before considering whether the requirements of Rule 15(a)(2) were
satisfied.” Alioto v. Town of Lisbon, 651 F.3d 715, 719 (7th Cir. 2011). “In making a Rule 16(b)
good-cause determination, the primary consideration for district courts is the diligence of the party
seeking amendment,” Id. at 720, a burden that “is more onerous than Rule 6(b)(1)(B)=s ‘excusable
neglect’ requirement.” McCann v. Cullinan, No. 11 CV 50125, 2015 WL 4254226, at *10 (N.D.
Ill. July 14, 2015) (citations omitted).
In this case, Hamstra Defendants’ chief reason given for not filing their Motion for Leave
to Amend earlier is that Plaintiff did not refuse to indemnify Mr. Hamstra until June 2021. Hamstra
Defendants offer no other reason for their delay in propounding these claims, focusing instead on
the merits of the amendment itself. Hamstra Defendants imply that Plaintiff’s response to the
motion for summary judgment, filed on April 14, 2021, in which the Plaintiff argued that the
Management Agreement defeated Hamstra Defendants’ claims in their Counterclaim, first put the
Management Agreement at issue. Hamstra Defendants thereafter demanded that Plaintiff
indemnify Mr. Hamstra under the terms of the Management Agreement. Hamstra Defendants
argue that the refusal to indemnify only became ripe upon the denial of that demand in June, 2021.
Although Hamstra Defendants assert that the refusal to indemnify Mr. Hamstra constitutes
“new information” to justify amendment, they do not explain how the denial was new information.
The Management Agreement has been at issue in this matter from the onset. Plaintiff’s Complaint
alleged that the Management Agreement “became a nullity and terminated as a matter of law.” Pl.
Comp. ¶ 14. Defendants denied this allegation, thereby putting the validity of the Management
Agreement at issue as early as May 29, 2018. Although Hamstra Defendants assert that they “have
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been diligent following their receipt of GJMS’ rejection on June 8, [2021],” they do not explain
why their demand for indemnification was not made earlier, nor why they could not have included
these claims earlier, since it was obvious that the validity of the Management Agreement, which
is the source of the indemnification claim, was at issue from the time of Plaintiff’s Complaint.
Hamstra Defendants have failed to establish that they were diligent and have not established good
cause for modifying the scheduling order as required by Rule 16(b)(4). Accordingly, the Court
declines to extend the deadline for seeking leave to amend pleadings.
III.

Conclusion
For the foregoing reasons, the Court hereby DENIES Defendants’ Motion for Leave to

Amend Counterclaim [DE 117].
SO ORDERED this 21st day of October, 2021.
s/ John E. Martin
MAGISTRATE JUDGE JOHN E. MARTIN
UNITED STATES DISTRICT COURT
cc:

All counsel of record

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