Security Seed and Chemical, Inc. v. Manning Farms, L.L.C. et al

Filing 16

MEMORANDUM OPINION AND ORDER signed by Senior Judge Thomas B. Russell on 3/1/2018 granting 13 Motion for Leave to File An Amended Complaint by Plaintiff Security Seed and Chemical, Inc. cc: Counsel(MNM)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
PADUCAH DIVISION
CIVIL ACTION NO. 5:17-CV-00124-TBR
SECURITY SEED AND CHEMICAL, INC.,

PLAINTIFF

v.
MANNING FARMS, LLC, et. al.,

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This matter is before the Court on Plaintiff Security Seed and Chemical, Inc.’s motion for
leave to file an amended complaint. [DN 13.] Defendants Manning Farms, LLC, Anthony Lynn
Manning, and Teresa Gail Manning responded, [DN 14], and Plaintiff replied, [DN 15.] Fully
briefed, this matter is ripe for decision. For the reasons discussed fully below, Plaintiff’s motion
is GRANTED.
BACKGROUND
This case arises out of loans made by Security Seed and Chemical, Inc. (“Security Seed”)
to Defendants Manning Farms, LLC, Anthony Lynn Manning, and Teresa Gail Manning
(“Defendants”) to enable Defendants to purchase farm inputs from Security Seed for use on
Defendants’ farm in Marshall County, Kentucky. [DN 1 at 2–3.] Security Seed brings the instant
action alleging that Defendants “are indebted to the Plaintiff for all outstanding amounts due on
two lines of credit and on a direct account payable.” [Id. at 3.] Security Seed seeks to recover all
amounts due to it under the loans, prejudgment and post-judgment interest, and immediate
possession of any remaining collateral. [Id. at 8.] In the instant motion, Security Seed requests
leave to file an amended complaint, [DN 13], which Defendants oppose. [DN 14.]

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DISCUSSION
In its motion for leave to file an amended complaint, Security Seed contends that, while
Defendants indicated in their discovery responses that they would only be selling any 2017 crops
at a location in Ledbetter, KY, Security Seed has since learned that “the Defendants instead have
continued to sell crops at different locations and in the names of various third-parties in order to
avoid the Plaintiff’s perfected security interest.” [DN 13 at 2.] Therefore, Security Seed “seeks to
file an amended complaint joining additional defendants who received proceeds from the crops
in which the Plaintiff has a valid first security interest and to assert any claims against them for
conversion of the crop proceeds in which the Plaintiff’s hold the first security interest, along with
any other applicable claims.” [Id. at 3.] Security Seed requests permission to file its amended
complaint twenty days after Defendants respond to certain discovery requests, due on January 9,
2017, which are expected to provide “complete records to account for where the crop money has
been diverted, which will allow the Plaintiff to ascertain those additional defendants who are in
possession of proceeds that rightfully belong to the Plaintiff.” [Id.]
In response, Defendants contend that Security Seed’s “[m]otion to file an amended
Complaint is premature and based on partial discovery that fails to reveal the complete facts in
regard to crop sales.” [DN 14 at 2.] In detail, Defendants contend that Security Seed “has
concluded that Defendant . . . sold crops liened through a nondisclosed third party buyer,” but
that this “conclusion comes from subpoenas served on” entities other than Defendants. [Id.]
Therefore, according to Defendants, “[p]rior to joining unrelated third parties . . . Plaintiff should
be required to seek discovery from Defendants as to why unrelated third party buyers paid
unrelated third parties for crops when such buyers would have been aware of such liens claimed

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by” Security Seed. [Id.] Defendants also assert that “no determination of priority as between
competing lienholders have been made at this time.” [Id. at 1.]
In its reply, Security Seed points out that it cannot “adjudicate any unresolved priority
disputes without amending the complaint in order to add those additional parties who may claim
an interest in the collateral.” [DN 15 at 2.] The Court agrees with this argument. Moreover,
Defendants appear to misunderstand the standard for filing an amended complaint. Under Rule
15(a)(2), “a party may amend its pleading only with . . . the court’s leave. The court should
freely give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2). In determining whether the
interests of justice support a grant of leave to amend, courts consider several factors, including
“undue delay in filing, lack of notice to the opposing party, bad faith by the moving party,
repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing
party, or futility of the amendment.” Brumbalough v. Camelot Care Ctrs., Inc., 427 F.3d 996,
1001 (6th Cir. 2005) (citing Coe v. Bell, 161 F.3d 320, 341–42 (6th Cir. 1998)); see also Foman
v. Davis, 371 U.S. 178, 182 (1962). “The grant or denial of leave to amend is within the
discretion of the trial court, and review is for abuse of discretion.” Sec. Ins. Co. of Hartford v.
Kevin Tucker & Assocs., Inc., 64 F.3d 1001, 1008 (6th Cir. 1995) (citing Roth Steel Prods. v.
Sharon Steel Corp., 705 F.2d 134, 155 (6th Cir. 1983)).
Here, Defendants have not argued any undue delay, lack of notice, bad faith, previous
failures to cure deficiencies in the complaint, undue prejudice, or futility of amendment. [See DN
14.] Moreover, Defendants have not cited any case law, and the Court can find none, in which
courts have required a plaintiff to conduct discovery prior to amending its complaint to
determine whether the addition of new parties is necessary. That being said, here, Security Seed
requests to file its amended complaint only after it receives outstanding discovery requests back

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from Defendants. [DN 13 at 3.] Therefore, Security Seed will have conducted additional
discovery prior to adding new parties in its amended complaint. Of course, should it turn out that
the added parties do not have any interest in any of the collateral at issue in this case, they will be
free to raise that argument in a Rule 12(b)(6) motion to dismiss for failure to state a claim.
CONCLUSION
For the reasons explained herein, Security Seed’s motion for leave to file an amended
complaint, [DN 13], is GRANTED.
IT IS SO ORDERED.
Date:
cc:

March 1, 2018

counsel

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