Bayou Liberty Property, LLC v. Best Buy Stores LP et al

Filing 57

ORDERED that 45 Motion for Leave to File Supplemental and Amending Complaint is DENIED. Signed by Magistrate Judge Karen Wells Roby. (cml)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
BAYOU LIBERTY PROPERTY, LLC

CIVIL ACTION

VERSUS

NO:

BEST BUY STORES, LP, ET AL.

SECTION: “B” (4)

14-1112

ORDER
Before the Court is Plaintiff, Bayou Liberty Property, LLC’s (“Bayou Liberty”) Motion
for Leave to File Supplemental and Amending Complaint (R. Doc. 45), seeking leave of
court to file an amending complaint to add additional factual allegations that include new and
recent breaches of the lease at issue. The motion is opposed. See R. Doc. 50. The motion was
heard on the briefs on Wednesday, March 25, 2015.
I.

Background
This action arises out of the alleged breach of the Ground Lease (“Lease”) agreement

between Bayou Liberty and the defendants, Best Buy Stores LP and Best Buy Co., Inc.
(collectively “Best Buy”), for the rental property located at the northeast quadrant of North Shore
Boulevard and US 190, in Slidell, Louisiana. See R. Doc. 1, at 2. Bayou Liberty alleges that the
Lease was for a term of twenty (20) years and was entered into on April 10, 2001 and
commenced on November 15, 2001.
Bayou Liberty alleges that Best Buy violated the Lease when it: (1) assigned the lease on
two occasions without prior written notice; (2) failed to execute a specific assumption of the
entire lease with the prospective assignee; (3) failed to use reasonable efforts to find a subtenant
or assignee to continue to operate the leased premises; (4) attempted to sale the property that is
owned by Bayou Liberty; and (5) failed to maintain insurance coverage. Id. at 9-10. Pursuant to

the terms of the Lease, Bayou Liberty alleges that it provided default notices for each violation
and gave Best Buy an opportunity to cure the violations, but Best Buy failed to do so.
In the instant motion, Bayou Liberty seeks leave of court to file a supplemental and
amending complaint to allege three additional breaches of the Lease: (1) Best Buy’s failure to
pay all real estate taxes; (2) Best Buy’s failure to maintain the leased premises in a state of good
condition and repair; and (3) Best Buy’s failure ensure there are no hazardous substances on the
premise. See R. Doc. 45-3, at 13.
II.

Standard of Review
Federal Rule of Civil Procedure (“Rule”) 15(a), which governs the amendment of

pleadings, provides that leave to amend pleadings “shall be freely given when justice so
requires.” This, and other federal rules, “reject the approach that pleading is a game of skill in
which one misstep by counsel may be decisive to the outcome and accept the principle that the
purpose of pleading is to facilitate a proper decision on the merits.” Conley v. Gibson, 355 U.S.
41, 48 (1957). Thus, Rule 15(a) evinces a liberal and lenient amendment policy and a motion to
amend should not be denied absent a substantial reason to do so. See Jacobsen v. Osborne, 133
F.3d 315, 318 (5th Cir. 1998).
Although Rule 15(a) governs the amendments of pleadings, the Fifth Circuit has
established that Rule 16(b) “governs the amendment of pleadings after a scheduling order
deadline has expired.” S & W Enters., LLC v. S. Trust Bank of Ala., NA, 315 F.3d 533, 536 (5th
Cir. 2003). Rule 16 provides that a scheduling order may only be modified for good cause shown
and with the Judge’s consent. See Fed. R. Civ. Pro. 16(b)(4). Therefore, only after the movant
has satisfied the good cause requirement of Rule 16(b) will the more liberal standard of 15(a)
apply. S & W Enters., LLC, 315 F.3d at 536.

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In determining whether a party has provided good cause under Rule 16(b), courts may
examine four factors: “(1) the explanation for the untimely conduct; (2) the importance of the
requested untimely action; (3) the potential prejudice in allowing the untimely conduct; and (4)
the availability of a continuance to cure such prejudice.” Huey v. Super Fresh/Sav-A-Center,
Inc., No. 07-1169, 2008 WL 2633767, at *1 (E.D. La. June 25, 2008) (citing S & W Enters.,
LLC, 315 F.3d at 535. “The good cause standard requires the party seeking relief to show that
the deadlines cannot reasonably be met despite the diligence of the party needing the extension.”
S & W Enters., LLC, 315 F.3d at 535 (internal quotations and citations omitted).
III.

Analysis
Bayou Liberty filed the instant motion on March 5, 2015, which is over five months after

the September 29, 2014 amendment deadline set forth in the Scheduling Order (R. Doc. 18). As
such, the Court must apply Rule 16(b) to determine whether Bayou Liberty has good cause for
filing the motion after the Scheduling Order deadline. Thus, the Court will apply the
aforementioned Huey factors.
A.

Explanation of the untimely conduct

Bayou Liberty argues that its motion for leave to amend is untimely because only
recently it became aware of the conditions of the premise and the fact that Best Buy failed to pay
the real estate taxes for 2014. See R. Doc. 51-1. Bayou Liberty contends that prior to its
inspection of the premise on February 11, 2015, it had no reason to believe that the premise was
not being properly maintained. Id. at 2. Bayou Liberty represents that it was on notice of a
possible violation of the breach when on October 16, 2014 and January 9, 2015 water filled up in
the delivery bay because Best Buy did not have running electricity at the premise. Id. Bayou
Liberty contends that these two occasions made Bayou Liberty concerned about the state of the

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building. Id. Bayou Liberty further argues that their concern was confirmed upon inspection of
the premise on February 11, 2015 and upon receipt of a microbial assessment report on February
19, 2015 revealing high levels of toxic mold. Id.
In opposition, Best Buy argues that despite Bayou Liberty’s assertion that it recently
became aware of the new claims after the inspection, Bayou Liberty has always had the
opportunity to inspect the premise as the landlord. See R. Doc. 50, at 2. Best Buy contends that
Bayou Liberty’s failure to inspect its own property should not be an acceptable basis to stop the
current litigation schedule, reopen discovery, and delay trial. Id.
Courts in the Fifth Circuit have held that information learned during discovery is good
cause to amend under Rule 16. See e.g. Mobius Risk Grp., LLC v. Global Clean Energy
Holdings, Inc., No. H-10-1708, 2011 WL 2193294 (S.D. Tex. June 6, 2011) (granting leave to
amend and add the CEO as a new defendant after his deposition); STMicroelectronics, Inc. v.
Motorola, Inc., 307 F.Supp.2d 845, 853 (E.D. Tex. 2004) (granting leave to amend after
discovery uncovered additional products that might have been infringed); Udoewa v. Plus4
Credit Union, No. CIVA H–08–3054, 2010 WL 1169963, at *2–3 (S.D. Tex. Mar.23, 2010)
(granting leave to amend after discovery to add claim based on deposition testimony).
While new information revealed during discovery can provide good cause to grant leave
to amend, it should not be granted if the information was known or should have been known
prior to discovery. See Mobius Risk Grp., LLC, No. H-10-1708, 2011 WL 2193294 at *3
(granting leave to amend because the record did not reflect the plaintiff knew or could have
known the new defendant’s fraudulent role in the matter); George-Baunchand v. Wells Fargo
Home Mortgage, Inc., No. CIV.A. H-10-3828, 2012 WL 2122198 (S.D. Tex. June 11, 2012),
appeal dismissed (Sept. 12, 2012) (denying leave to amend because the new claims and

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allegations arising out of discovery were known at the time she filed the action). Thus, diligence
is at the crux of the good cause standard under Rule 16. Mobius Risk Grp., LLC, 2011 WL
2193294 at *3.
The issue here is whether Bayou Liberty should have known that the premise was in
disrepair prior to its inspection of the premise on February 11, 2015. Under the circumstances of
this case, the Court finds that Bayou Liberty had reason to inspect the premise well before its
February inspection. When Bayou Liberty initiated this action, it should have been concerned
about the maintenance of the premise due to the fact that Best Buy defaulted on the Lease on
multiple occasions. Best Buy’s prior defaults should have alerted Bayou Liberty to the possibility
that Best Buy would be negligent in its care of the property.
Furthermore, even if Bayou Liberty was not alerted by Best Buy’s numerous defaults, it
should have been alerted on October 16, 2014 when it first learned that water was accumulating
in the delivery bay and the electricity was turned off at the building. Rather than institute an
inspection at that point, Bayou Liberty waited an additional four months to inspect the premise
on February 11, 2015, which only occurred after water accumulated in the delivery bay for a
second time on January 9, 2015. Thus, the first factor in the good cause standard is not satisfied
because the untimeliness of the motion is inexcusable due to Bayou Liberty being dilatory in its
efforts to inspect the premise.
B.

The importance of the requested untimely action

Bayou Liberty argues that the amendment is important for the purpose of judicial
economy. Bayou Liberty contends that the new factual allegations relate to the same breach
alleged in the original complaint. See R. Doc. 51-1, at 3. Bayou Liberty contends that they are
not asserting any new claims of action and that it would be judicially efficient to litigate all of

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Best Buy’s breaches together rather than in separate lawsuits. Id. Bayou Liberty also argues that
the new allegations are aligned with Rule 18, which permits a party to join together “as many
claims as it has against an opposing party.” Id.
Best Buy argues that the new factual allegations do not need to be included in this
litigation. See R. Doc. 50, at 3. Best Buy avers that any ruling on the claims already at issue
would not have a binding effect on the new allegations and that there is no need to have the
claims in a single action. Id.
The new factual allegations are related to Bayou Liberty’s breach of lease claim because
the alleged breaches pertain to the same Lease agreement at issue. Thus, judicial economy would
weigh in favor of allowing the amendment. However, joinder is not required but it is permissive.
Thus, the second factor in the good cause standard is satisfied.
C.

The potential prejudice in allowing the untimely conduct and availability of a
continuance to cure the prejudice

Bayou Liberty contends that Best Buy will not suffer any prejudice as a result of the
amendment because depositions have not begun and discovery is still being exchanged by the
parties. See R. Doc. 51-1, at 3. Bayou Liberty further argues that the amendment should not
come as a surprise to Best Buy because it has the sole right to occupancy and should have known
the condition of the building. Id. Additionally, Bayou Liberty argues that Best Buy was on
notice that it did not pay the real estate taxes because it received the tax bill on December 8,
2014. Id. at 4. Bayou Liberty claims that if there is a potential of prejudice against Best Buy, the
prejudice can be cured by a brief continuance of the discovery deadline and trial date.
Best Buy contends that it would be prejudiced by the amendment because the amendment
would extend the life of this case, which forces Best Buy to incur additional cost. See R. Doc. 50,
at 3. Best Buy argues that it is still paying rent, utilities and insurance on the vacant property. Id.
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According to Best Buy, allowing Bayou Liberty to amend its complaint would push this case
back to the pleading stage and require new discovery requests that will reopen discovery for
months, possibly pushing the case back six months. Id.
Under this third factor, courts in the Fifth Circuit have found that a delay in the
proceedings and increased cost can be prejudicial to a defendant when the motion to amend is
filed at a late stage in the litigation. See Lowery v. Ocwen Loan Servicing, LLC, No. CIV.A. H13-3647, 2015 WL 459263, at *2 (S.D. Tex. Feb. 3, 2015) (denying motion to amend finding
defendant “would be prejudiced by the increased costs and expenses”); Ward v. CNH Am., LLC,
Ind., No. 3:11-CV-0762-L, 2012 WL 3072927, at *3 (N.D. Tex. July 27, 2012) (affirming
Magistrate Judge’s denial of a motion to amend on the grounds that it would “necessitate
additional avoidable costs, such as those for conducting additional discovery and again
presenting dispositive motions to the court”).
Here, the discovery deadline is April 7, 2015 and the trial is scheduled for May 18, 2015.
At this stage in the litigation, the only way to cure the prejudice would be to extend the discovery
deadline and post pone the trial date. Bayou Liberty’s proposed amended complaint not only
includes new factual allegations, but also includes new claims for relief. The new claims for
relief consist of (1) an order requiring Best Buy to repair the premise or require Best Buy to pay
for the repairs; (2) a declaration that Best Buy indemnify, defend, protect and hold harmless
Bayou Liberty from all claims, damages, cost, etc. arising from the breach; and (3) a judgment in
the amount of $42,195.92 for the taxes paid by Bayou Liberty. See R. Doc. 45-3, at 14. Each of
the new claims for relief raise the stakes of the litigation and will require Best Buy to engage in
thorough discovery to defend against the claims. As such, the third and fourth factors of the good
cause standard are not satisfied.

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IV.

Conclusion
Bayou Liberty does not satisfy the good cause standard to amend its complaint under

Rule 16(b) because its amendment is inexcusably untimely and will prejudice Best Buy by
raising the cost of litigation and requiring a continuance of the trial.
Accordingly,
IT IS ORDERED that Plaintiff’s Motion for Leave to File Supplemental and
Amending Complaint (R. Doc. 45) is DENIED.
New Orleans, Louisiana, this 27th day of March 2015.

KAREN WELLS ROBY
UNITED STATES MAGISTRATE JUDGE

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