Fax Agency, Inc. v. ERJ Insurance Group, Inc.

Filing 33

ORDER Denying 25 Plainitff's Motion to Amend/Correct; Denying 27 Motion to Amend Affirmative Defenses. Signed by District Judge Gershwin A. Drain. (Bankston, T)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
FAX AGENCY, INC., a MICHIGAN
CORPORATION,
Plaintiff,

Case No. 11-15343
HON. GERSHWIN A. DRAIN

vs.

E.R.J. INSURANCE GROUP, INC. d/b/a
AMERICAN HERITAGE INSURANCE SERVICES,
A FLORIDA CORPORATION,
Defendant.
AND
E.R.J. INSURANCE GROUP, INC. d/b/a
AMERICAN HERITAGE INSURANCE SERVICES,
A FLORIDA CORPORATION,
Counter-Plaintiff,

vs.

FAX AGENCY, INC., a MICHIGAN
CORPORATION,
Counter-Defendant,
__________________________________/
ORDER DENYING PLAINTIFF’S MOTION TO AMEND [#27] AND DEFENDANT’S
MOTION TO AMEND AFFIRMATIVE DEFENSES [#25]

I.

INTRODUCTION
Presently before the court is Plaintiff’s Motion to Amend and Defendant’s Motion to
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Amend Affirmative Defenses. For the reasons that follow, both motions are denied.

II.

PROCEDURAL AND FACTUAL HISTORY
Plaintiff/Counter-Defendant FAX Agency, Inc. filed a Complaint on December 6,

2011 alleging that Defendant/Counter-Plaintiff AHiS breached the Broker Agreement the
parties entered into by refusing to pay $624,000 in commission fees. On January 19, 2012
AHIS filed an Answer that denied this charge and counter-claimed that FAX has failed to
perform Broker Services and FAX was unjustly enriched by improperly receiving
$869,142.50 in commission fees.
A scheduling order was entered on February 29, 2012 that set the discovery
deadline for March 1, 2013. Parties were able to undertake discovery shortly after this
time. The case was transferred to this Court on December 4, 2012. On March 19, 2013,
FAX filed a motion to extend the discovery and dispositive motions deadline to May 28,
2013. This Court entered an order granting in part FAX’s motion, extending the deadline
to April 19, 2013 instead of May 28, 2013. AHIS filed a Motion for Summary Judgment on
March 20, 2013. FAX requested and was granted an extension to respond to AHIS’
summary judgment motion on April 10, 2013. On March 25, 2013, AHIS filed their Motion
to Amend Affirmative Defenses. FAX filed their Motion to Amend on March 26, 2013.
Neither party responded to the opposing side’s motion.

III.

LAW AND ANALYSIS
Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend

complaints shall be freely granted “when justice so requires.” Foman v. Davis, 371 U.S.
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178, 181 (1962); Troxel Mfg. Co. v. Schwinn Bicycle Co., 489 F.2d 968, 970 (6th Cir.1973).
However, leave is inappropriate when there is “undue delay, bad faith or dilatory motive on
the part of the movant, repeated failure to cure deficiencies by amendments previously
allowed, [or] undue prejudice to the opposing party by virtue of the allowance of
amendment.” Foman, 371 U.S. at 182; Troxel, 489 F.2d at 970. The determination of
whether to grant the motion to amend is left to the sound discretion of the trial court.
Foman, 371 U.S. at 182; Estes v. Kentucky Utilities Co., 636 F.2d 1131, 1133 (6th
Cir.1980). Examination of the Foman factors is made in light of the directive that the rules
“are to be construed to secure the just, speedy, and inexpensive determination of every
action.” FED.R.CIV.P. 1; Foman, 371 U.S. at 182. While delay alone is an insufficient
reason to deny a motion to amend, the court will weigh the reasons for delay in raising the
new issue against the prejudice suffered by the non-moving party. Head v. Timken Roller
Bearing Co., 486 F.2d 870, 874 (6th Cir.1973).

Finally, “[t]he longer the period of

unexplained delay, the less will be required of the nonmoving party to show prejudice.”
Minor v. Northville Public Schools, 605 F. Supp. 1185, 1201 (E.D. Mich. 1985).

1. FAX’s Motion to Amend
FAX requests leave to amend in order to include additional sums of money owed to
them by AHIS. Specifically, FAX claims that through recent discovery disclosures they
learned that AHIS committed two additional breaches of the Broker Agreement: “by
refusing to pay FAX on 15,544 GAP contracts, totaling $103,957.50 in unpaid commission
fees, and by incorrectly calculating the amount of commission due on another 27,442
contracts, totaling $35,042.00 in unpaid commission fees.” Pl.’s Mot. to Amend 2. FAX
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argues that leave should be granted since none of the Foman factors are present and AHIS
would not suffer prejudice.
FAX’s motion is untimely. While FAX claims that the additional amount owed only
came to light during the discovery process, they do not offer a reason why they did not
seek to amend earlier in the discovery process. One possible reason is suggested by
FAX’s claim that the data which brought these new claims to light was under exclusive
control of AHIS. However, this does not provide a satisfactory explanation as FAX should
have had access to this data at the start of the discovery process. That means FAX had
almost a year to discover and bring these additional claims, but failed to do so for an
unspecified reason.
Additionally, granting the motion would prejudice AHIS. The Motion for Summary
Judgment filed by AHIS on March 20, 2013 is limited to the claims brought by FAX in their
initial Complaint. While the arguments advanced in the summary judgment motion may be
applicable to the new claims raised by FAX, that is a determination that would have to be
made by AHIS. This determination would be difficult to make based on FAX’s Motion to
Amend alone as sparse detail about how these new claims arose is offered. Granting
FAX’s motion in all likelihood would necessitate AHIS filing a new motion for summary
judgment, which would not only come at the additional litigation fees for AHIS but also this
Court’s time. See Durfee v. Rich, 2008 U.S. Dist. LEXIS 8202, Case No. 02–10041, at *3
(E.D. Mich. Feb. 4, 2008) (“An amendment to a complaint prejudices a party where the
amendment will require the party to prepare an additional defense strategy and expend
additional resources to defend against new claims.”). Given the prejudice to AHIS and the
failure of FAX to explain their delay, the Court finds that there was undue delay in bringing
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the Motion to Amend.

2. AHIS’s Motion to Amend Affirmative Defenses
AHIS requested leave to amend in order to add a statute of limitations defense. The
defense would apply to FAX’s claim of fees withheld from 2003 to 2005. The timing of this
request is puzzling.

The Complaint alleged breach of contract for failure to pay

commissions due on a contract entered into on May 1, 2003. AHIS must have been aware
at the time the Complaint was filed that a statute of limitations defense would be available
to them. Even if they somehow were not aware of the defense at the time, AHIS states that
their defense is based on an exhibit produced in response to a discovery request from FAX
last summer. Def.’s Mot. to Amend 4. AHIS has failed to provide a reason the defense
was not raised at the time it was discovered last summer.
Since AHIS has failed to offer any reason for the lengthy delay in requesting its
affirmative defense, only a light showing of prejudice is needed to deny the motion. See
Minor, 605 F. Supp. at 1201. Sufficient prejudice arises from FAX having to spend the
resources to respond to the affirmative defense. This comes at a time when FAX is facing
a pending summary judgment motion and the dispositive motion deadline on April 19, 2013.
While FAX would not be greatly prejudiced, they would suffer enough to merit denial of the
motion given the length of the delay and lack of reasoning for failing to add the affirmative
defense earlier.

IV.

CONCLUSION

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For the foregoing reasons, Plaintiff’s Motion to Amend [#25] and Defendant’s Motion
to Amend Affirmative Defenses [#27] are DENIED.
SO ORDERED.

Dated: April 17, 2013
S/Gershwin A. Drain
GERSHWIN A. DRAIN
UNITED STATES DISTRICT JUDGE

CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
April 17, 2013, by electronic and/or ordinary mail.
S/Tanya Bankston
Deputy Clerk

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