CBX Technologies, Inc. v. GCC Technologies, LLC
Filing
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MEMORANDUM AND ORDER denying 27 Motion for Leave to Amend Complaint. Signed by Judge James K. Bredar on 7/24/12. (apls, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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CBX TECHNOLOGIES, INC.,
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Plaintiff
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v.
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GCC TECHNOLOGIES, LLC,
Defendant
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CIVIL NO. JKB-10-2112
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MEMORANDUM AND ORDER
Pending before the Court is Plaintiff’s motion to file an amended complaint. (ECF
No. 27.) The matter has been briefed (ECF Nos. 32, 33, 34), and no hearing is necessary, Local
Rule 105.6. The motion will be denied.
I. Procedural History
This case was filed by CBX Technologies, Inc., on August 2, 2010, against “GCC
Technologies, LLC, formerly known as, Government Contract Consultants, LP.” (Compl., ECF
No. 1.) The complaint asserted one count for breach of a teaming agreement between the two
parties. The teaming agreement allowed for GCC to be considered the primary contractor and
CBX to be the subcontractor on a government contract involving the U.S. Department of
Education’s Federal Student Aid program.
On November 15, 2010, then-presiding Judge Quarles entered a scheduling order that
noted the deadline of November 22, 2010, for requests for modification of the initial scheduling
order and further stated, “Thereafter, the schedule will not be changed except for good cause.”
(ECF No. 6.)1 Included in the scheduling order was a deadline of December 30, 2010, for
moving for amendment of pleadings. No such motions were filed by the deadline. GCC’s
motion to dismiss, filed February 21, 2011 (ECF No. 11), was granted on March 18, 2011 (ECF
No. 16). CBX’s appeal to the Fourth Circuit was thereafter docketed, and that Court vacated and
remanded the March 18 judgment for further proceedings. On remand, this Court directed
counsel for the parties to meet and confer about the future direction of the case and to file a joint
status report. (ECF No. 22.) In the status report, the parties declined to submit the matter to a
magistrate judge for a settlement conference at that time and requested 60 days for completion of
discovery.
(ECF No. 23.)
Additionally, the report stated, “Following the completion of
discovery, if not before, plaintiff intends to file a motion seeking leave to file an amended
complaint adding a cause of action alleging a breach of the written subcontract agreement signed
on or about June 6, 2010, as well as fraud. Defendant reserves the right to oppose that motion.”
(Id.) In response, the Court entered a revised scheduling order, which provided:
In the Fourth Circuit’s opinion accompanying its order remanding this
case to this Court for further proceedings, it was stated:
The dispositive factual issues – issues that were not properly resolved on
the face of the pleadings – are (1) whether work began before the
November 9, 2009 retroactive effective date of the Subcontract
Agreement, and if so, (2) whether a breach occurred before November 9,
2009.
CBX Techs., Inc. v. GCC Techs., LLC, No. 11-1380, slip op. at 8 (4th Cir.
Dec. 13, 2011) (per curiam) (unpublished). The parties have requested a
discovery period of 60 days. Accordingly, the following schedule is applicable to
this case:
April 9, 2012
April 16, 2012
May 9, 2012
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Discovery deadline; joint submission of status report
Requests for admission
Dispositive pretrial motions deadline
This case was reassigned to the undersigned on January 12, 2011.
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This schedule will not be changed except for good cause. All
requirements of the original scheduling order (ECF No. 6) that are pertinent to
this portion of the case remain in effect.
(ECF No. 24.)
In CBX’s status report at the close of discovery, it stated,
Plaintiff has repeatedly stated that it intends to file a motion seeking leave
to amend the complaint, and it still intends to do so after analyzing the
information obtained from discovery. Among other allegations, plaintiff shall
allege that the written subcontract agreement was void ab initio since when that
document was signed on behalf of Government Contracts Consultants, LP, the
latter entity had merged with and been superseded by GCC Technologies, LLC,
which never novated or accepted an assignment of the written subcontract
agreement according to its own terms. In the alternative, plaintiff shall allege that
defendant breached the written subcontract agreement as well as the teaming
agreement.
(ECF No. 25.)
In an earlier memorandum opinion addressing GCC’s motion to dismiss, this Court ruled
that the teaming agreement had been superseded by a written subcontract between the same
parties executed on June 6, 2010, but with an effective date of November 9, 2009. (3/18/11
Mem. Op. 3-4, ECF No. 15.)
The Court also ruled that CBX’s allegations about GCC’s
actionable conduct appeared to relate to the time after the teaming agreement expired. (Id. 4.)
This latter ruling was reversed and the judgment of dismissal was vacated on CBX’s appeal to
the Fourth Circuit inasmuch as CBX had alleged that it had five employees in place ready to
work on October 1, 2009, and the effective date of the subcontract was November 9, 2009. CBX
Techs., Inc. v. GCC Techs., LLC, No. 11-1380, slip op. at 8 (4th Cir. Aug. 13, 2012) (per curiam)
(unpublished).
II. CBX’s Motion for Leave to Amend
In its present motion, CBX seeks leave to amend its complaint to change underlying
allegations for its legal claim and to add three counts for deceit/fraudulent inducement, breach of
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fiduciary duty, and declaratory judgment to declare the written subcontract null and void. It also
seeks to strike from the caption and paragraph three the language “formerly known as
Government Contract Consultants, LP” following “GCC Technologies, LLC.” As justification
for its various, proposed amendments, CBX relies upon Federal Rule of Civil Procedure
15(a)(2), which provides that leave to amend shall be freely given “when justice so requires.”
In its motion, CBX states that its president, Chris D’Andrade,
did not fully comprehend until after GCC filed its motion to dismiss that GCC
would take the position that the teaming agreement would become completely
irrelevant as soon as the written subcontract agreement was entered into. Rather
. . . D’Andrade thought that the teaming agreement would remain in effect and
continue to govern the relationship between the parties, notwithstanding any
language to the contrary . . . . D’Andrade also believed that the written
subcontract agreement, no matter how labeled, incorporated the gist of the
teaming agreement.
Upon learning of GCC’s interpretation, which the Court adopted in
granting the motion to dismiss, CBX came to believe that GCC had not merely
breached the teaming agreement, but tricked CBX into signing the written
subcontract agreement.
CBX also then realized that . . . CBX should file an amended complaint
asserting that GCC had breached the written subcontract agreement . . . .
(Mot. 6-7.)
CBX then states that this Court should have given CBX an opportunity to amend its
complaint. (Id. 7.) Further, CBX states,
CBX did not seek leave to file its amended complaint previously—although it
would have done so in a timely manner had the Court issued a new deadline for
such a filing at any juncture—largely because CBX did not know what defects
GCC had found in the original complaint and wished to conduct discovery before
formulating additional causes of action.
(Id. (emphasis added).) Also, CBX contends that it “did not learn until conducting discovery in
this case that [General Contract] Consultants [LP] did not exist at the time of the written
subcontract agreement.” (Id. 8.) Thus, it posits that if the written subcontract was signed on
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behalf of a nonentity, then the subcontract is not valid, which means the teaming agreement was
not arguably superseded and remains in full effect. (Id.) Finally, CBX asserts its proposed,
amended complaint “corrects significant but not critical factual errors that largely came to light
during GCC’s deposition of Andrade [sic], although nothing prevented GCC from bringing these
errors to CBX’s attention at an earlier date, for example in response to the discovery requests
served in February 2011.”
(Id. (emphasis added).)
Thus, CBX finishes its argument by
contending, “[A]ny inconvenience to GCC does not justify denying CBX of having a fair
opportunity to test its claims on the merits.” (Id.)
GCC opposes the motion because CBX does not present good cause for modifying the
scheduling order’s deadline for motions to amend pleadings and because amendment to allow
CBX’s addition of new counts would be futile. (ECF No. 32.)
III. Standard for Motion to Amend
A motion for leave to amend pleadings filed beyond the deadline set forth in the
scheduling order will only be granted if it satisfies both the “good cause” standard of Rule
16(b)(4) and the standard of Rule 15(a)(2) for allowing amendment of pleadings. See Moses v.
Cowan Distrib. Servs., Inc., Civ. No. JKB-10-1809, 2012 WL 527657, at *2 (D. Md. Feb. 16,
2012). See also Nourison Rug Corp. v. Parvizian, 535 F.3d 295, 298-99 (4th Cir. 2008) (noting
tension between Rule 15 and Rule 16; not reaching district court’s Rule 15(a) finding of futility
because it affirmed district court’s Rule 16(b) application of “good cause” standard); Odyssey
Travel Center, Inc. v. RO Cruises, Inc., 262 F. Supp. 2d 618, 631 (D. Md. 2003) (“once the
scheduling order’s deadline for amendment of the pleadings has passed, a moving party first
must satisfy the good cause standard of Rule 16(b); if the moving party satisfies Rule 16(b), the
movant then must pass the tests for amendment under [Rule] 15(a)”).
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The analysis under Rule 16(b) is less focused on the substance of the proposed
amendment and more concerned with the timeliness of the motion to amend “and the reasons for
its tardy submission.” Rassoull v. Maximus, Inc., 209 F.R.D. 372, 373-74 (D. Md. 2002). A
court’s scheduling order “‘is not a frivolous piece of paper, idly entered, which can be cavalierly
disregarded by counsel without peril,’” Potomac Electric Power Co. v. Electric Motor Supply,
Inc., 190 F.R.D. 372, 376 (D. Md. 1999), quoting Gestetner v. Case Equipment Co., 108 F.R.D.
138, 141 (D. Me. 1985). “‘Properly construed, “good cause” means that scheduling deadlines
cannot be met despite a party’s diligent efforts.’ . . . Carelessness is not compatible with a
finding of diligence and offers no reason for a grant of relief.” Potomac Elec., 190 F.R.D. at 375
(citations omitted).
IV. Analysis
The Court has considered CBX’s motion, its supporting materials, and the rest of the
record. CBX has not demonstrated good cause under Rule 16(b)(4) for amending the scheduling
order. Any information possessed by D’Andrade, CBX’s president, was well within CBX’s
control prior to the filing of the lawsuit and prior to the deadline for motions to amend, as was
information from CBX’s files on dates of employment of CBX employees subsequent to the
execution of the teaming agreement and on amounts paid by GCC to CBX. Similarly, the
change of General Contract Consultants, LP, to GCC Technologies, LLC, was a matter of public
record in April 2010, well before the filing of the complaint. CBX’s knowledge of this change in
identity before the suit was filed is reflected in the original caption of the complaint, which
recorded the Defendant’s name as “GCC Technologies, LLC, formerly known as, Government
Contract Consultants, LP.” Although CBX may not have anticipated that the teaming agreement
would be interpreted, in conjunction with the subcontract, in such a fashion as to drastically
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narrow its case, its failure to anticipate is of its own doing and not the fault of any other entity.
No one other than CBX had a duty to point out to CBX defects in its original complaint.2
In short, CBX has not offered any facts that would support an amended complaint and
that were not discoverable by CBX through proper diligence prior to the deadline of the original
scheduling order for filing a motion for leave to amend the complaint. Consequently, CBX has
not demonstrated good cause for altering the scheduling order’s deadline for filing such a
motion. Because of the conclusion reached under Rule 16, the Court need not analyze the
motion under Rule 15.
Accordingly, CBX’s motion for leave to amend its complaint (ECF No. 27) is DENIED.
DATED this 24th day of July, 2012.
BY THE COURT:
/s/
James K. Bredar
United States District Judge
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The Court is especially troubled by one proposed amendment to the complaint. In the first sentence of
paragraph eight of the original complaint, CBX alleged, “On or about October 1, 2009, based upon the teaming
agreement, CBX had five employees in place to work on the FSA contract.” In its proposed amended complaint, the
first sentence of paragraph eight would be revised to read, “On or before November 9, 2009, CBX had
approximately five employees in place to work on the FSA contract.” The date on which CBX employees were in
place to work on the FSA contract was significant to this Court’s prior ruling and the Fourth Circuit opinion
vacating it because of the effective date of the subcontract, i.e., November 9, 2009. CBX has offered no good
reason for not having the correct date in the original complaint. Counsel are reminded of the duty under Federal
Rule of Civil Procedure 11(b)(3) to present to the Court only such pleadings about which counsel can certify “that to
the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the
circumstances . . . the factual contentions have evidentiary support or, if specifically so identified, will likely have
evidentiary support after a reasonable opportunity for further investigation or discovery.” Violations of Rule 11(b)
are sanctionable.
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