84 Lumber Company v. F.H. Paschen, S.N. Nielsen & Associates, LLC et al

Filing 291

ORDER AND REASONS - For the foregoing reasons, J & A's motion to appeal the Magistrate Judge's decision 267 is DENIED. 84 Lumber's motion to strike J & A's appeal 268 is DENIED AS MOOT. 84 Lumber's motion to strike a portion of J & A's answer 260 is GRANTED. Signed by Judge Sarah S. Vance on 8/1/2017. (cg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
84 LUMBER COMPANY
VERSUS

CIVIL ACTION
NO. 12-1748

F.H. PASCHEN, S.N. NIELSEN &
ASSOCIATES, LLC, ET AL.

SECTION “R” (5)

ORDER AND REASONS
J & A Construction Management Resources Co. appeals the Magistrate
Judge’s denial1 of its motion for leave to file an amended third-party
complaint. 2 Also before the Court are 84 Lumber’s motion to strike J & A’s
motion to appeal, 3 and 84 Lumber’s motion to strike a portion of J & A’s
answer to Paschen’s third-party complaint. 4 For the following reasons, J &
A’s motion is denied, 84 Lumber’s motion to strike a portion of J & A’s
answer is granted, and 84 Lumber’s motion to strike J & A’s motion to appeal
is denied as moot.

1
2
3
4

R. Doc. 253.
R. Doc. 267.
R. Doc. 268.
R. Doc. 260.

I.

BACKGROUND
The facts and procedural history of this prolonged dispute have been

recounted in previous orders from the Court.5 For the purposes of this
Order, it will suffice to recount that this dispute arises out of two school
construction projects in New Orleans, Louisiana. Paschen was the general
contractor on both projects. Paschen subcontracted a portion of each project
to J & A, and J & A subcontracted its obligations to 84 Lumber.
On July 5, 2012, 84 Lumber sued Paschen, as well as the projects’
sureties, alleging that it was not paid in full for the work it performed under
its contract with J & A. 6 Paschen answered 84 Lumber’s complaint and
added J & A as a third-party defendant. 7 J & A also asserted a cross-claim
against Paschen, counterclaims against 84 Lumber, and added Maggie’s
Management, LLC, as a third-party defendant.8 The case was then stayed for
nearly three years while the parties attempted to resolve (without success)
their claims through arbitration.
During the period that the case was stayed, the Court ordered J & A to
initiate the arbitration process multiple times, to no avail. 9 Finally, on May

5
6
7
8
9

See generally R. Doc. 151; R. Doc. 206.
R. Doc. 1.
R. Doc. 25.
R. Doc. 151 at 2.
Id. at 4-5.
2

5, 2016, the Court lifted the stay, and dismissed J & A’s claims against 84
Lumber’s and Maggie’s Management’s with prejudice for failure to
prosecute. 10 The Court based its ruling on a “clear record of delay and
contumacious conduct intentionally caused by J & A,” which prejudiced the
other parties to this litigation. 11
After the dismissal of J & A’s claims against 84 Lumber and Maggie’s
Management, the other parties continued to pursue discovery and prepare
for the case’s upcoming trial date of February 21, 2017. J & A, however, did
not participate in the Joint Discovery plan, nor did it provide Rule 26
disclosures or respond in any manner to requests for production. 12 On
November 11, 2016, J & A’s attorney withdrew as counsel,13 and J & A was
without an attorney until February 3, 2017, less than three weeks before
trial. 14
On February 13, 2017, the Court granted J & A’s motion to continue.15
In doing so, the Court issued a new scheduling order, with new deadlines for
amendments

10
11
12
13
14
15

to

pleadings,

third-party

R. Doc. 151.
Id. at 7-8.
R. Doc. 156.
R. Doc. 173.
R. Doc. 205.
R. Doc. 211.
3

actions,

crossclaims,

and

counterclaims. 16

On April 11, J & A filed a motion for leave to file an

amended third-party complaint.17 In its motion, J & A sought to add a new
claim for tortious interference against Paschen, and add new claims for
breach of contract and for bad faith against Fidelity and Deposit of Maryland,
one of the sureties. 18 84 Lumber opposed J & A’s motion. 19
On April 26, 2017, after oral argument, Magistrate Judge North denied
J & A’s motion for leave. 20 In so ruling, Magistrate Judge North found that
the record indicated “undue and unnecessary and unexplained delay in
bringing” the claims that J & A sought to bring, and that the remaining
parties would be “unduly prejudiced” if the amendment was allowed.21
Magistrate Judge North also noted that J & A’s claims were likely futile, but
did not rule on that basis as the delay and prejudice were sufficient grounds

R. Doc. 216.
R. Doc. 245. The scheduling order’s deadline for amendments
was April 3, 2017, but as Magistrate Judge North noted in his order denying
J & A’s motion, J & A filed a deficient motion for leave on April 3. R. Doc.
262 at 21-22. Accordingly, Magistrate Judge North treated J & A’s motion as
timely and in accordance with the scheduling order. Id.
18
R. Doc. 245-1 at 2.
19
R. Doc. 250.
20
R. Doc. 253.
21
R. Doc. 262 at 27-28.
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16
17

to deny J & A’s motion. 22 Magistrate Judge North gave J & A 14 days to object
or appeal his ruling. 23 This appeal followed.

II.

LEGAL STANDARD
A magistrate judge’s ruling on a non-dispositive civil motion may be

appealed to the district court. Fed. R. Civ. P. 72(a). When a timely objection
is raised, the district judge must review the magistrate judge’s ruling and
“modify or set aside any part of the order that is clearly erroneous or contrary
to law.” Id. Under this standard, a magistrate judge’s ruling “should not be
rejected merely because the court would have decided the matter
differently.” Arvie v. Tanner, No. 12-1638, 2012 WL 3597127, at *1 (E.D. La.
Aug. 21, 2012) (internal quotations omitted). Instead, “[a] finding is ‘clearly
erroneous’ when although there is evidence to support it, the reviewing court
on the entire evidence is left with the definite and firm conviction that a
mistake has been committed.” United States v. U.S. Gypsum Co., 333 U.S.
364, 395 (1948).

22
23

Id. at 28.
Id.
5

III. DISCUSSION
A.

Motion for Leave to Amend

Under Federal Rule of Civil Procedure 15(a)(2), leave to amend a
complaint is freely given “when justice so requires.”

In exercising its

discretion to grant or deny leave to amend, the Court considers whether the
party seeking leave is doing so after undue delay, in bad faith, or for a dilatory
motive. Jamieson By and Through Jamieson v. Shaw, 772 F.2d 1205, 1208
(5th Cir.1985). The Court will also consider any undue prejudice to the
opposing parties if leave is granted. Foman v. Davis, 371 U.S. 178, 182
(1962).

Further, the court may deny a motion to amend if such an

amendment would be futile. Stripling v. Jordan Prod. Co., LLC, 234 F.3d
863, 872–73 (5th Cir. 2000). An amendment is considered futile if “the
amended complaint would fail to state a claim upon which relief could be
granted.” Id. To determine whether an amendment is futile, the court
“appl[ies] the same standard of legal sufficiency as applies under Rule
12(b)(6).” Id.
The Magistrate Judge denied J & A’s motion for leave to amend under
Federal Rule of Civil Procedure 15 because of a record of delay by J & A, and
because allowing the amendment would “unduly prejudice all of the parties

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to the case and the prosecution of their claims and defenses.”24 This decision
was neither clearly erroneous nor contrary to law. As to delay, the record in
this case plainly demonstrates that J & A is primarily responsible for the
protraction of this litigation. As mentioned above, J & A continually failed
to initiate arbitration proceedings, despite multiple orders from the Court,
and as a result this case was stayed for nearly three years. 25 The Court has
already found that during this period there was a “clear record of delay and
contumacious conduct intentionally caused by J & A.” 26 Additionally, J & A
had multiple opportunities to assert new claims, and could have sought leave
to file its new claims against Paschen and Fidelity after the stay was lifted in
May of 2016. 27 Instead, J & A did not seek leave to file until almost a year
later.

The Magistrate Judge’s finding of undue delay was not clearly

erroneous or contrary to law. See, e.g., Rosenblatt v. United Way of Greater
Houston, 607 F.3d 413, 419-20 (5th Cir. 2010) (affirming denial of motion to
amend because plaintiff could have brought claims earlier); Rosenzweig v.
Azurix Corp., 332 F.3d 854, 864-65 (5th Cir. 2003) (same).

R. Doc. 262 at 23-24, 27.
R. Doc. 151.
26
Id.
27
See R. Doc. 154 (June 9, 2016 scheduling order setting July 11,
2016 deadline for amendments to pleadings, third-party actions, crossclaims
and counterclaims).
7
24
25

The Magistrate Judge’s findings on prejudice are also not clearly
erroneous. As the Court has already stated, the other parties in this case were
“precluded from litigating their claims and defenses because this case has
been stayed pending arbitration proceedings that J & A never initiated.”28
What the Court said before remains true now: as time passes, memories fade,
evidence becomes harder to locate, and the litigation process becomes more
difficult for all parties involved.29 See Gonino v. UNICARE Life & Health Ins.
Co., No. 02-2501, 2005 WL 608158, at *3 (N.D. Tex. Mar. 16, 2005).
To make matters worse, J & A refused to participate in discovery after
the stay was lifted, and did not participate in the creation of the joint pretrial
order. 30 All other parties were prepared to try this case on February 21, 2017,
but the Court granted J & A’s motion to continue, over objection from the
other parties, so that J & A could have its day in court. 31 The trial is now set
for January 29, 2018.32 Because of J & A’s conduct, the other parties must
now incur more delay, and more costs associated with that delay, before they
can resolve this case.

28
29
30
31
32

Id. at 8-9.
Id. at 9.
R. Doc. 156; R. Doc. 210.
R. Doc. 211.
R. Doc. 216.
8

This case is five years old, and the delays were caused by J & A.
Expansion of this litigation now to add new claims, which could involve new
parties or parties that have already have the claims against them dismissed,
would prejudicially add costs and time to this already protracted litigation.
Additionally, J & A cannot absolve itself for its past conduct by placing the
blame on its previous counsel. 33 If securing new counsel could erase the
prejudice and delay incurred by other parties, than Rule 15(a)’s
consideration of delay and prejudice would be meaningless. See Winstead v.
Georgia Gulf Corp., 77 Fed. App’x 267, 270 (5th Cir. 2003) (affirming denial
of motion to amend based on undue delay and rejecting plaintiff’s argument
that placed blame on previous attorney); Rhodes v. Amarillo Hospital Dist.,
654 F.2d 1148, 1154 (5th Cir. 1981) (“The retention of a new attorney . . . is
itself no excuse for the late filing of an amended complaint.”); see also Ansam
Assocs., Inc. v. Cola Petroleum, Ltd., 760 F.2d 442, 446 (2d Cir. 1985)
(rejecting argument that any prejudice to other party and delay was fault of
previous attorney).

Id. at 5. It is worth noting that contrary to J & A’s assertion that
its previous counsel is responsible for all of its improper past conduct, J &
A’s previous counsel La Koshia Roberts stated to the Court that J & A’s owner
refused to follow Ms. Roberts’ advice. R. Doc. 172 at 1.
9
33

Accordingly, the Magistrate Judge’s denial of J & A’s motion for leave
to amend was not clearly erroneous or contrary to law, and J & A’s appeal is
denied. 34 84 Lumber’s motion to strike J & A’s appeal is denied as moot.
B.

Motion to Strike

84 Lumber moves to strike a portion of J & A’s answer 35 to Paschen’s
amended complaint. Specifically, 84 Lumber moves to strike the sentence in
J & A’s prayer for relief that asks for a judgment against 84 Lumber and
Maggie’s Management. J & A’s claims against 84 Lumber and Maggie’s
Management have already been dismissed with prejudice, and accordingly
84 Lumber’s motion to strike the reference to 84 Lumber and Maggie’s
Management in J & A’s prayer for relief is granted.

Because the Magistrate Judge’s decision was not clearly
erroneous, the Court need not consider J & A’s arguments on futility.
35
R. Doc. 258.
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34

IV.

CONCLUSION
For the foregoing reasons, J & A’s motion to appeal the Magistrate

Judge’s decision is DENIED. 84 Lumber’s motion to strike J & A’s appeal is
DENIED AS MOOT. 84 Lumber’s motion to strike a portion of J & A’s
answer is GRANTED.

1st
New Orleans, Louisiana, this _____ day of August, 2017.

_____________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

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