Fenzel v. Group2 Software, LLC et al
MEMORANDUM AND ORDER GRANTING IN PART and DENYING IN PART 51 Plaintiff's motion for leave to file a second amended complaint, STRIKING Count 9, and INSTRUCTING Plaintiff to provide the Clerk a completed summons for Defendant Deven. Signed by Chief Judge Deborah K. Chasanow on 6/24/14. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Civil Action No. DKC 13-0379
GROUP2 SOFTWARE, LLC ET AL.
MEMORANDUM OPINION AND ORDER
Presently pending and ready for resolution is the motion to
file a second amended complaint filed by Plaintiff Jerry Fenzel.
(ECF No. 51).
The court now rules, no hearing being deemed
Local Rule 105.6.
For the following reasons, the
motion will be granted in part and denied in part.
On February 12, 2014, a scheduling order was issued which
set the deadline for moving for joinder of additional parties
and amendment of pleadings at April 28, 2014.
(ECF No. 39).
(ECF No. 49).
The next day, a paperless order was
entered directing the Clerk of Court to mark the second amended
complaint as filed in error as it was not filed in accordance
with Fed.R.Civ.P. 15(a)(1) and (2).
That day, Plaintiff filed a
explained that he erroneously interpreted the scheduling order
to mean that before the April 28 deadline pleadings could be
amended and parties joined without needing to seek further leave
complaint to add Deven Software, LLC (“Deven”) as a defendant
Deven was formed while this lawsuit was pending and is solely
owned by Defendant Thomas Bowen.
Plaintiff recently discovered
that the website for Group 2 has been removed from the internet
Deven’s website includes numerous references to Group 2 and the
Plaintiff has reason to believe that Deven is the recipient of
all or substantially all of the assets of Group 2 and that such
transfers were made for no consideration.
The Federal Rules of Civil Procedure provide that a party
may amend his complaint as a matter of course within 21 days of
serving it or within 21 days of a responsive pleading or Rule
Once the right to amend
as a matter of course expires, “a party may amend its pleading
only with the opposing party’s written consent or the court’s
Denial of leave to amend should occur “only
when the amendment would be prejudicial to the opposing party,
there has been bad faith on the part of the moving party, or the
amendment would be futile.”
Johnson v. Oroweat Foods Co., 785
F.2d 503, 509 (4th Cir. 1986).
Rule 15, thus, reflects “the
Determinations of futility under Rule 15(a) are governed by the
standard for motions to dismiss.
Classen Immunotherapies, Inc.
v. King Pharms., Inc., 403 F.Supp.2d 451, 459 (D.Md. 2005).1
fraudulent conveyance and civil conspiracy.
They argue that the
arguing a conspiracy between Bowen, Group 2, and Deven, is in
effect arguing that Bowen conspired with himself because Bowen
is the owner of Deven and Group 2.
Defendants point to the
“intracorporate conspiracy doctrine,” which “recognizes that a
corporation cannot conspire with its agents because the agents’
A party who fails to obey a scheduling order may incur
sanctions, Fed.R.Civ.P 16(f), to including striking pleadings in
whole or in part.
Defendants argue that Plaintiff failed to
obey the scheduling order by filing his second amended complaint
on April 29, one day late.
Plaintiff’s tardiness will be
excused. He filed his second amended complaint on the deadline
and, after being told it was not field in accordance with
Fed.R.Civ.P 15(a)(2), refiled it the next day.
acts are the corporation’s own.”
Painter’s Mill Grille, LLC v.
important exceptions: (1) “where a co-conspirator possesses a
authorized by the corporation.”
Id. at 353.
As an agent of the
conspiracy unless one of the exceptions applies.
There is no
allegation that Bowen’s acts were not authorized by Group 2 or
And Bowen does not have a personal stake independent of
Mitchell Tracey v. First Am. Title Ins. Co., 935
F.Supp.2d 826, 846 (D.Md. 2013).
Given that Plaintiff alleges
that Bowen is the sole owner of Group 2, as Group 2’s fortunes
conspiracy doctrine bars Plaintiff’s claim and his motion to
amend to add this claim will be denied.
As to the fraudulent conveyance claim, under the Maryland
Uniform Fraudulent Conveyance Act (“MUFCA”), “[e]very conveyance
made . . . with actual intent, as distinguished from intent
presumed in law, to hinder, delay, or defraud present or future
Md. Code Ann., Com. Law § 15-207.
“[e]very conveyance made . . . without fair consideration when
the person who makes the conveyance . . . intends or believes
that he will incur debts beyond his ability to pay as they
mature, is fraudulent as to both present and future creditors.”
Id. § 206.
A plaintiff bringing a claim under the MUFCA must
“allege that a creditor-debtor relationship exists and that the
debtor has fraudulently transferred assets.”
Dixon v. Bennett,
72 Md.App. 620, 623 n.2 (1987), overruled on other grounds by
(citing Md. Code Ann. Com. Law § 15-201, et seq.).
standard of Fed.R.Civ.P. 9(b).
Rule 9(b) provides that, “in
Malice, intent, knowledge and other conditions of a
typically “include the ‘time, place and contents of the false
representation, as well as the identity of the person making the
misrepresentation and what [was] obtained thereby.’”
Bank, F.S.B. v. Tandem Nat’l Mortg., Inc., 197 F.Supp.2d 298,
313-14 (D.Md. 2000) (quoting Windsor Assocs., Inc. v. Greenfeld,
564 F.Supp. 273, 280 (D.Md. 1983).
The purposes of Rule 9(b)
are to provide the defendant with sufficient notice of the basis
frivolous suits; to eliminate fraud actions where all of the
facts are learned only after discovery; and to safeguard the
Harrison v. Westinghouse Savannah River
Co., 176 F.3d 776, 784 (4th Cir. 1999).
In keeping with these
under Rule 9(b) if the court is satisfied (1) that the defendant
has been made aware of the particular circumstances for which
she will have to prepare a defense at trial and (2) that [the]
plaintiff has substantial prediscovery evidence of those facts.”
Plaintiff’s allegations satisfy Rule 9.
He alleges that
transfers were without fair consideration; and indicates that
the transfer was made to hinder, delay, or defraud Plaintiff by
making his ownership interest in Group 2 worthless and Group 2
Additionally, Plaintiff’s motion indicates that it has evidence
of the fraud, specifically the fact that Group 2’s website no
Group 2, and Deven’s executives and owners are the same as Group
F.Supp.2d 499, 505 (D.Md. 2002).
Defendants’ motion to dismiss
on the basis of Rule 9 will be denied.2
denied because of undue delay.
On March 7, 2014, Plaintiff
“Defendant Bowen transferred substantially all of the assets of
[Group 2] to a successor company for no consideration in an
attempt to prevent Plaintiff from receiving the value of his 15%
Defendants argue that there is nothing to explain why Plaintiff
did not name Deven as a Defendant at that time, a view bolstered
Defendants allege that Plaintiff is engaging in strategic delay.
This argument will be rejected.
The time between the first and
second amended complaint is less than two months, not so great a
time to constitute undue delay.
would result in undue prejudice to them and the court.
Deven would prejudice Defendants by requiring them to initiate
Defendants contend that Plaintiff has no information, much
less evidence, to support this claim.
They point to discovery
where he states that he does not currently have any documents
reflecting assets allegedly transferred fraudulently.
55-3, at 2).
But the futility aspect of Rule 15(a)(2) is
evaluated against the standards of a motion to dismiss, which
generally cabins itself to the sufficiency of the allegations
contained in the complaint.
or participate in further discovery and motions on a wholly
separate set of operative facts, which do not involve Group 2.
Because a claim for fraudulent conveyance can only be brought by
creditor, Plaintiff’s claim is viable only if a judgment is
entered in his favor in the litigation concerning Group 2’s
obligations to him.
Defendants’ arguments are unconvincing.
It is true that
Plaintiff’s success in his claims against Group 2 and Bowen,
thereby creating the possibility that if these claims were part
of one case, discovery and motion practice could occur on a
claim that never had any chance of success.
While the wasted
effort would be frustrating, that possibility is not so certain
as to effect undue prejudice.
There is no indication that these
additional claims and the addition of Deven as a Defendant would
prejudice Group 2 and Bowen’s defense so much as add another
remains the money owed to Plaintiff by Group 2 and Bowen; the
peripheral, and do not drastically alter the character of the
Memorandum Opinion, it is this 24th day of June, 2014, by the
complaint filed by Plaintiff Jerry Fenzel (ECF No. 51) BE, and
the same hereby IS, GRANTED IN PART AND DENIED IN PART;
The Clerk is directed to detach and file Plaintiff’s
second amended complaint (ECF No. 51-1);
Count 9 containing the allegations of civil conspiracy
(ECF No. 51-1 ¶¶ 59 - 62) IS STRICKEN;
Deven Software, LLC is added as a Defendant to this
action and Plaintiff is instructed to provide the Clerk of Court
a completed summons form for Deven; and
Opinion and Order to counsel for the parties.
DEBORAH K. CHASANOW
United States District Judge
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