Carando Gourmet Frozen Foods Corp. v. Axis Automation, LLC et al

Filing 56

Judge Allison D. Burroughs: MEMORANDUM AND ORDER entered. Carando's motion to amend [ECF No. 49 ] is DENIED. The Court finds that Carando has failed to demonstrate that it acted diligently in making its motion to amend and further finds that it would be prejudicial to re-open fact discovery. SO ORDERED. (McDonagh, Christina)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CARANDO GOURMET FROZEN FOODS
CORP.,
Plaintiff,
v.
AXIS AUTOMATION, LLC and
AXIS AUTOMATION GROUP, INC.,
Defendants.

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Civil Action No. 3:17-cv-30164-ADB

MEMORANDUM AND ORDER ON PLAINTIFF’S
MOTION TO FILE AMENDED COMPLAINT
BURROUGHS, D.J.
Plaintiff Carando Gourmet Frozen Foods Corporation (“Carando”) filed this action
against Defendants Axis Automation, LLC and Axis Automation Group, Inc., (collectively,
“Axis”), bringing nine claims all stemming from Axis’ alleged failure to timely build an
integrated pie production line. [ECF No. 1]. Axis brought counterclaims against Carando for
breach of contract for Plaintiff’s failure to pay for the allegedly defective pie production line.
(“Counterclaim Complaint”). [ECF No. 26]. Currently pending before the Court is Carando’s
motion to amend the Complaint. [ECF No. 49]. For the following reasons, Carando’s motion to
amend [ECF No. 49] is DENIED.
I.

BACKGROUND
Carando makes, packages, and sells frozen goods to groceries stores across the country.

[ECF No. 1 ¶ 20]. Axis designs and builds automated machinery for use in the food industry.
[Id. ¶ 19]. In April 2016, Carando entered into a contract with Axis for the construction of an
integrated pie production line to be built and installed in Carando’s facility in Agawam,

Massachusetts, for $304,200.00. [Id. ¶¶ 21–22]. According to Carando, prior to delivery, the
integrated pie production line consistently failed quality assurance tests over a period of six
months. [Id. ¶¶ 34–42]. Axis delivered the pie production line on October 31, 2017. [Id. ¶ 44].
Carando claims the line was defective at the time of delivery and that it provided notice of its
rejection of the integrated pie production line on November 9, 2017. [Id. ¶¶ 44–45].
On that same day, Carando filed suit against Axis, claiming: (1) rightful rejection, (2)
breach of contract, (3) breach of express warranty, (4) breach of implied warranty of
merchantability, (5) breach of implied warranty of fitness for a particular purpose, (6) negligent
misrepresentation, (7) promissory estoppel, (8) and unjust enrichment. [ECF No. 1]. Carando
additionally sought a declaratory judgment that the integrated pie production line did not meet
the contract specifications, (9). [Id.]. The case was assigned to Judge Mastroianni. On January
5, 2018, Axis filed its answer and its Counterclaim Complaint. [ECF No. 13].
On July 25, 2018, Judge Mastroianni issued a schedule pursuant to Federal Rule of Civil
Procedure 16(b), which required that all motions to amend pleadings be filed by September 15,
2018. [ECF No. 23]. On September 14, 2018, Axis amended its answer. [ECF No. 26]. On
September 28, 2018, Judge Mastroianni recused himself. [ECF No. 29]. The case was then
reassigned to this Court on October 1, 2018. [ECF No. 30].
Under the operative scheduling order, all non-expert fact discovery was completed on
May 17, 2019. [ECF No. 43]. In July 2019, the Court granted an extension of time for expert
discovery, with all expert discovery now to be completed by October 16, 2019. [ECF No. 46].
On July 31, 2019, Carando filed a motion to amend the Complaint, [ECF No. 49], which Axis
opposed, [ECF No. 54].

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II.

DISCUSSION
Under Federal Rule of Civil Procedure 15(a), where a party seeks to amend a pleading

more than 21 days after a motion to dismiss or answer has been filed, it may only do so “with the
opposing party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). Rule 15
instructs that leave to amend should be “freely give[n] . . . when justice so requires.” Id. “At a
certain point,” however, “this amendment-friendly regime may cease to govern.” U.S. ex rel.
D’Agostino v. EV3, Inc., 802 F.3d 188, 192 (1st Cir. 2015).
In cases where a district court has issued a scheduling order under Rule 16(b) and the
amendment sought contravenes a deadline imposed by the court, “Rule 16(b)’s more stringent
good cause standard supplants Rule 15(a)’s leave freely given standard.” Id. (first citing Cruz v.
Bristol-Myers Squibb Co., P.R. Inc., 699 F.3d 563, 569 (1st Cir. 2012) and then citing TransSpec Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315, 327 (1st Cir. 2008)). “If [the Court]
considered only Rule 15(a) without regard to Rule 16(b), [it] would render scheduling orders
meaningless and effectively would read Rule 16(b) and its good cause requirement out of the
Federal Rules of Civil Procedure.” Sosa v. Airport Sys., Inc., 133 F.3d 1417, 1419 (11th Cir.
1998); see also O’Connell v. Hyatt Hotels, 357 F.3d 152, 155–56 (1st Cir. 2004) (citing Sosa
with approval).
“Rule 16(b)’s ‘good cause’ standard emphasizes the diligence of the party seeking the
amendment.” O’Connell, 357 F.3d at 155. Under this inquiry, “[p]rejudice to the opposing party
remains relevant but is not the dominant criterion.” Id. Rather, “‘[i]ndifference’ by the moving
party” may preclude leave to amend “irrespective of prejudice because such conduct is
incompatible with the showing of diligence necessary to establish good cause.” Id. (citation
omitted).

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“Particularly disfavored are motions to amend whose timing prejudices the opposing
party by ‘requiring a re-opening of discovery with additional costs, a significant postponement of
trial, and a likely major alteration in trial tactics and strategy . . . .” Steir v. Girl Scouts of the
USA, 383 F.3d 7, 12 (1st Cir. 2004) (quoting Acosta-Mestre v. Hilton Int’l of P.R., Inc., 156
F.3d 49, 52 (1st Cir. 1998)). “As a case progresses, . . . the burden on a plaintiff seeking to
amend a complaint becomes more exacting.” Id.
Under the original scheduling order imposed by Judge Mastroianni, all amendments to
the pleadings were required to have been filed by September 15, 2018. [ECF No. 23]. When the
case was reassigned to this Court, the parties filed a joint motion to extend discovery deadlines,
which made no reference to a new deadline for amended pleadings. [ECF No. 37]. Therefore,
all amendments to pleadings should have been filed by September 15, 2018.
Because Carando’s request for leave to amend the pleadings is not timely, the Court
reviews its request under Rule 16(b)’s “good cause” standard. Here, Carando proposes to add
the following claims based on alleged misrepresentations made to Carando in the sale of the pie
production line: (i) intentional misrepresentation, (ii) violation of Massachusetts General Laws
Chapter 93A, and (iii) violations of Massachusetts General Laws Chapter 231, § 85J. See [ECF
No. 51-1 at 46–51].
1.

Whether Carando Was Diligent in Requesting Leave to Amend

Chapter 93A provides that “[u]nfair methods of competition and unfair or deceptive acts
or practices in the conduct of any trade or commerce are . . . unlawful.” Mass. Gen. Laws ch.
93A § 2(a). Chapter 231 § 85J provides treble damages to those who are damaged by any deceit
or fraud in the sale of personal property. Mass. Gen. Laws ch. 231 § 85J.

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Carando argues that it did not became aware of the underlying facts necessary to plead
intentional misrepresentation or its claims under Massachusetts General Law Chapter 93A and
Chapter 231, § 85J until it deposed Axis’ current and former employees, including Axis’ owner
and president. [ECF No. 50 at 6]. These depositions were apparently not completed until June
14, 2019, despite the May 17, 2019 fact discovery deadline in this Court’s scheduling order.
[Id.]; see [ECF No. 43].
Carando first deposed Axis’ president on March 8, 2019. [ECF No. 54 at 1]. Carando
has not explained why it was unable to pursue its new claims after it first deposed Axis’
president in March or demonstrated that its proposed claims of intentional misrepresentation and
violations of Chapter 93A and Chapter 231, § 85J require any facts that were unavailable to
Carando before the June 14, 2019 deposition. See [ECF No. 51-1 ¶¶ 110–17, 128–33, 134–37].
In fact, based on the facts previously alleged in Carando’s Complaint, [ECF No. 1], it seems that
Carando could have alleged at the outset that Axis was deceptive in intentionally misrepresenting
that its pie production line would be free of defects and meet the specifications included in the
contract, assuming that Carando had delivered the required demand letter under Chapter 93A.
See Smith v. Jenkins, 777 F. Supp. 2d 264, 267 (D. Mass. 2011) (noting that Chapter 93A has a
jurisdictional prerequisite that the plaintiff deliver a demand letter to the defendant thirty days
before filing a complaint, which identifies the plaintiff and describes the allegedly unfair or
deceptive acts). 1

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Even if the Court were to accept that Carando was unable to pursue these new allegations until
after its June 14, 2019 deposition of Axis’ president, that deposition was still untimely under the
Scheduling Order, which required that all fact discovery be completed by May 17, 2019. [ECF
No. 43].

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The Court therefore finds that Carando has failed to demonstrate that it acted diligently in
requesting its leave to amend.
2.

Whether Axis Will Be Prejudiced by Granting Carando Leave to Amend

Though it is not the dominant criterion, prejudice to the non-moving party remains
relevant when deciding a motion to amend a complaint under Rule 16. O’Connell, 357 F.3d at
155. Carando claims that Axis would not be prejudiced by the additional claims because they
arise out of the same transaction described in the complaint and are intertwined with the prior
claims and would therefore not require additional discovery. [ECF No. 50 at 7]. Although Axis
agrees that the new allegations arise from the “same transaction,” it argues that it would be
prejudiced either by discovery being re-opened or by being denied the opportunity to question
Carando’s witnesses regarding the new allegations. [ECF No. 54 at 2].
Carando, arguing that fact discovery would not have to be re-opened, asks that the Court
find (1) that Carando could not have brought these new allegations until it had the benefit of fact
discovery and (2) that Axis would not be prejudiced because the claims arise from the same
transaction, so no new fact discovery is necessary. Carando cannot have it both ways—in effect
arguing that it needed new discovery to bring the claims, but that Axis does not need reciprocal
new discovery to defend against them.
The Court finds that additional fact discovery would be warranted. “To succeed on a
claim of intentional misrepresentation under Massachusetts law, a plaintiff must show ‘a false
statement of material fact made to induce the plaintiff to act and reliance on the false statement
by the plaintiff to his detriment.’” Zotbelle, Inc. v. Kryolan Corp., No. 17-cv-11411, 2019 WL
4602854, at *10 (D. Mass. Sept. 23, 2019) (quoting Edlow v. RBC, LLC, 688 F.3d 26, 36 (1st
Cir. 2012)). Axis would likely need discovery in order to determine the extent to which Carando

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relied on any allegedly intentionally misleading statements on the part of Axis. Similarly, in
order to defend against Carando’s proposed Chapter 93A claim, Axis would need to investigate
whether its allegedly deceitful actions were “the ‘but-for’ cause of the plaintiff’s loss.” King v.
Wells Fargo Bank, N.A., No. 19-cv-10065, 2019 WL 3717677, at * 4 (D. Mass. Aug. 7, 2019).
Axis argues that, after almost two years of litigation, further delays to permit the
additional discovery necessary to defend against these new claims would be prejudicial and
expensive, including any additional prejudgment interest. [ECF No. 54 at 2]. The Court agrees
that Axis would be prejudiced if discovery were re-opened. See, e.g. Rhoades v. Camden Nat’l
Corp., No. 07-cv-117, 2008 WL 375250 (D. Me. Feb. 11, 2008) (denying a motion to amend to
add a related claim that was allegedly only discovered after deposition when the discovery
deadline had lapsed).
The Court finds that it would be prejudicial to allow Carando to add new allegations at
this late date without providing Axis with additional fact discovery and that re-opening fact
discovery at this stage would be prejudicial.
III.

CONCLUSION
Accordingly, Carando’s motion to amend [ECF No. 49] is DENIED. The Court finds

that Carando has failed to demonstrate that it acted diligently in making its motion to amend and
further finds that it would be prejudicial to re-open fact discovery.
SO ORDERED.
October 22, 2019

/s/ Allison D. Burroughs
ALLISON D. BURROUGHS
U.S. DISTRICT JUDGE

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