Butler v. Balolia

Filing 53

Judge Mark L. Wolf: ORDER entered. MEMORANDUM AND ORDER Accordingly, it is hereby ORDERED that: 1. Defendant's Motion to Strike Plaintiff's Amended Complaint (Docket No. 41) is DENIED. 2. The operative complaint in this case shall be the First Amended Complaint (Docket No. 39). 3. Pursuant to the May 27, 2014 Order, the defendant shall respond to the First Amended Complaint by October 3, 2014.(Hohler, Daniel)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
David BUTLER,
Plaintiff,

)
)
)
)
)
)
)

v.
Shiraz BALOLIA,
Defendant.

C.A. No. 12-11054-MLW

MEMORANDUM AND ORDER
WOLF, D.J.
I.

September 10, 2014

INTRODUCTION
In 2012, plaintiff David Butler filed this suit against

defendant Shiraz Balolia in Massachusetts state court, alleging
that Balolia had failed to comply with a letter of intent that the
two had signed regarding the purchase of Butler's "Whirlwind"
invention.

After the case was removed to the United States

District Court for the District of Massachusetts, Balolia filed a
motion to dismiss for failure to state a claim, and Butler filed a
motion for leave to amend the complaint.
Joseph

Tauro

allowed

the

motion

to

In February 2013, Judge
dismiss,

interpretation of Washington state contract law.

based

on

his

See Butler v.

Balolia, C.A. No. 12-11054-JLT, 2013 WL 752363 (D. Mass. Feb. 26,
2013).

Judge Tauro also denied the motion for leave to amend,

explaining that any such amendment would be futile because the
proposed amended complaint did not alter the underlying legal
theory of the original complaint.

See id.

The First Circuit

subsequently vacated Judge Tauro's decision based on its reading of
Washington law, and remanded the case.

It has been randomly

reassigned to this court.
On remand, the plaintiff filed his First Amended Complaint
without leave from the court or the consent of the defendant to do
so.

The defendant then filed a Motion to Strike the First Amended

Complaint.
Although the plaintiff should have renewed his motion for
leave to amend the complaint following remand, his failure to do so
is not fatal.

For the reasons explained below, the defendant's

Motion to Strike is being denied, and the First Amended Complaint
is now the operative complaint in this case.
II.

PROCEDURAL HISTORY
A.

Proceedings Before Judge Tauro

On May 29, 2012, plaintiff David Butler filed suit in Suffolk
County Superior Court against defendant Shiraz Balolia.

In his

complaint, Butler alleged that he and Balolia had both signed a
letter of intent ("LOI") stating that the parties intended to enter
into a separate agreement for Balolia to purchase the technology
underlying Butler's patented "Whirlwind" invention, which relates
to safety devices for power tools.

When the purchase was not

consummated, Butler sued Balolia for: (1) a declaration that the
LOI was a binding and enforceable contract; (2) damages for breach
of contract; (3) damages for breach of the implied covenant of good
faith and fair dealing; and (4) damages for violation of Mass. Gen.
Laws. ch. 93A.

See Compl. ¶¶35-61.
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On June 13, 2012, Balolia removed the case to the District of
Massachusetts, invoking diversity jurisdiction pursuant to 28
U.S.C. §1332 and 28 U.S.C. §1446. On August 3, 2012, Balolia filed
a motion to dismiss for failure to state a claim, which Butler
opposed.

On September 7, 2012, Butler filed a motion for leave to

amend his complaint, seeking to add additional factual allegations
about events that occurred after the original complaint was filed
and to add a fifth count for specific performance.

See Pl.'s Mot.

for Leave to Amend Compl.
In a decision issued on February 26, 2013, Judge Tauro allowed
the defendant's motion to dismiss.

Judge Tauro applied the law of

Washington

state,

in

provision.

See Butler v. Balolia, C.A. No. 12-11054-JLT, 2013 WL

as

specified

752363, at *2 (D. Mass. Feb. 26, 2013).

the

LOI's

choice-of-law

He "conclude[d] that the

parties merely entered into an agreement to agree," id., and that
such agreements are unenforceable under Washington law, id. (citing
Keystone Land & Dev. Co. v. Xerox Corp., 94 P.3d 945, 948 (Wash.
2004)). In the same order, Judge Tauro also denied Butler's motion
for leave to amend, solely on the grounds that the proposed amended
complaint was "futile" because the "new allegations do not affect
the court's construction of the [LOI] as an unenforceable agreement
to agree."
B.

Id.
Appeal

The First Circuit vacated the judgment and remanded.

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See

Butler v. Balolia, 736 F.3d 609, 618 (1st Cir. 2013).

The First

Circuit acknowledged that the Washington Supreme Court had not
directly addressed whether to "recognize a cause of action for
breach of a contract to negotiate."

Id. at 612.

However, the

court concluded that "the district court erred in deeming the
absence of an on-point opinion from the state's highest court
dispositive," id. at 612, and stated that "[t]he goal is to
replicate, as well as possible, the decision that the state's
highest court would be likely to reach," id. at 613 (emphasis
added).

The court concluded that:

In this case, all roads lead to Rome. After surveying the
relevant legal landscape in Washington and beyond and
weighing the pertinent policy considerations, we conclude
that the Washington Supreme Court will in all probability
recognize the enforceability of contracts to negotiate
when it squarely confronts that issue.
Id. at 616.
The First Circuit then turned to the complaint, which the
court admitted was "not a model of clarity."

Id.

The court

concluded that the LOI, as described in the complaint, could be
construed as a contract to negotiate binding under Washington law,
and

that

the

complaint

contract." Id. at 617.

"plausibly

alleges

a

breach

of

that

However, the court was explicit that "[w]e

do not hold either that the LOI is an enforceable contract to
negotiate or that, if it is, the defendant breached it.
matters remain subject to proof."

Id. at 618.

Those

The court also

noted that, on remand, the district court "it remains free to
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certify specific questions to the Washington Supreme Court."

Id.

(citing Wash. Rev. Code §2.60.020).
Finally, the First Circuit turned to the district court's
other rulings:
In addition to dismissing the breach of contract claim,
the district court also dismissed the plaintiff's implied
covenant of good faith and Chapter 93A claims and denied
his motion for leave to amend.
See Butler, 2013 WL
752363, at *2.
Although these rulings implicate
different legal theories and standards, the entire
decision of the court below rested on its erroneous
determination that no enforceable contract existed
between the parties. See id. Because our holding that
the complaint plausibly states a claim for breach of a
contract to negotiate undermines the district court's
reasoning, we believe that all the components of the
decision must be revisited.
Butler, 736 F.3d at 618.
C.

Proceedings After Remand

Following

the

First

Circuit's

decision,

the

case

was

reassigned to this court. See Dec. 2, 2013 Order to Reassign Case.
On February 14, 2014, Butler filed his First Amended Complaint,
without having received leave to do so.

This First Amended

Complaint is identical to the proposed First Amended Complaint
included with the Motion to Amend that Judge Tauro denied when he
granted the motion to dismiss.
On February 19, 2014, the defendant filed his Motion to Strike
Plaintiff's Amended Complaint, arguing that the Amended Complaint
should be stricken because it had not been filed within the
appropriate time limits to amend as a matter of right, and the

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plaintiff had not obtained leave to amend from the court or consent
from the defendant.
15(a)(1)-(2)).

See Mot. to Strike (citing Fed. R. Civ. P.

The plaintiff opposed the motion.

The defendant also filed three motions for extensions of time
to respond to the Amended Complaint, citing the pending Motion to
Strike.

On May 27, 2014, the court allowed the motions and stated

that "[t]he defendant shall respond to the operative complaint
within 21 days of the court's decision on the defendant's pending
Motion to Strike."

May 27, 2014 Order at 2.

III. DEFENDANT'S MOTION TO STRIKE PLAINTIFF'S AMENDED COMPLAINT
In his Motion to Strike, the defendant argues that the First
Amended Complaint should be stricken because it falls outside of
the time limits of Federal Rule of Civil Procedure 15(a)(1) for
amendment as a matter of right, and because the plaintiff received
neither leave of court nor consent from the defendant. See Mot. to
Strike at 1.

The defendant notes that:

[T]he First Circuit did not grant plaintiff's motion for
leave to amend. Instead, the First Circuit vacated the
judgment and remanded for further proceedings, directing
that "all components of the [District Court's]
decision . . . be revisited."
Plaintiff's tactic in filing the Amended Complaint
without leave of court is calculated not only to deprive
defendant of his right to raise objections, but also to
circumvent this Court's "revisiting" of plaintiff's
motion for leave to amend as directed by the First
Circuit.
Id. at 1 (alterations in original) (citations omitted).

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Although the defendant correctly argues that the plaintiff
should have renewed his original motion for leave to amend, the
plaintiff's failure to do so does not require that the First
Amended Complaint be stricken. Instead, the court is ruling on the
defendant's Motion to Strike as though it were an opposition to a
renewed motion for leave to amend.
Under the Federal Rules of Civil Procedure, the court may
permit a party leave to amend its pleadings, and it "should freely
give leave when justice so requires."

Fed. R. Civ. P. 15(a)(2);

see also Foman v. Davis, 371 U.S. 178, 182 (1962).

Leave to amend

should be allowed unless there is an "apparent or declared reason
— such as undue delay, bad faith or dilatory motive on the part of
the movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party by virtue
of allowance of the amendment, futility of amendment, etc." Foman,
371 U.S. at 182; see also Glassman v. Computervision Corp., 90 F.3d
617, 622 (1st Cir. 1996).
Here, the court discerns no "apparent or declared reason" that
Butler should not be permitted to amend his complaint at this stage
of the litigation.

Although the plaintiff erred by not renewing

his motion for leave to amend when the case was remanded, there is
also nothing to suggest that the plaintiffs' filing of the First
Amended Complaint was done in bad faith or was intended to slow the
progress

of

this

case.

Nor

will

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the

defendant

be

unfairly

prejudiced by an amendment.

The First Amended Complaint was filed

shortly after the case was remanded, and the defendant has not yet
filed an Answer, either to the original complaint or the proposed
First Amended Complaint.
Finally, the court discerns no futility in such an amendment.
As explained earlier, Judge Tauro's determination that the First
Amended Complaint was futile was based on his determination that
the

LOI,

as

described

in

the

unenforceable agreement to agree.

original

complaint,

was

an

Because the First Circuit has

rejected this reasoning, and because the First Amended Complaint
does not alter the legal theory underlying the original complaint,
the First Amended Complaint does not appear futile.
First

Amended

Complaint

does

add

a

request

Although the
for

specific

performance, the defendant has already conceded that this request
"adds nothing legally to Plaintiff's alleged claims."

Def.'s Opp.

to Pl.'s Mot. for Leave to Amend Compl. ¶2.
Therefore, because the court sees no "apparent or discerned
reason" to deny the plaintiff leave to amend his complaint, the
defendant's Motion to Strike is being denied.

IV.

ORDER
Accordingly, it is hereby ORDERED that:
1. Defendant's Motion to Strike Plaintiff's Amended Complaint

(Docket No. 41) is DENIED.

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2.

The operative complaint in this case shall be the First

Amended Complaint (Docket No. 39).
3.

Pursuant to the May 27, 2014 Order, the defendant shall

respond to the First Amended Complaint by October 3, 2014.

/s/ Mark L. Wolf
UNITED STATES DISTRICT JUDGE

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