Farsura et al v. QC Terme US Corp et al

Filing 223

DECISION & ORDER: MOTION TO AMEND: For the foregoing reasons, Plaintiffs' motion for leave to amend their complaint consistent with this order is GRANTED. The amended pleading shall be filed within seven days of entry of this order. SO ORDERED. (Signed by Magistrate Judge Robert W. Lehrburger on 11/21/2022) (ks)

Case 1:21-cv-09030-AT-RWL Document 223 Filed 11/21/22 Page 1 of 10

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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STEFANO FARSURA and SF CAPITAL
:
PARTNERS LLC,
:
:
Plaintiffs,
:
:
- against :
:
:
QC TERME US CORP.,
:
:
Defendant.
:
---------------------------------------------------------------X

11/21/2022

21-CV-9030 (AT) (RWL)

DECISION & ORDER:
MOTION TO AMEND

ROBERT W. LEHRBURGER, United States Magistrate Judge.
Plaintiffs Stefano Farsura and SF Capital Partners, LLC (collectively “Plaintiffs” or
“Farsura”) claim that Defendant QC Terme US Corp. (“Defendant” or “QC Terme US”)
breached its contractual and fiduciary duties to Farsura with respect to development of
spa facilities in the United States, including on Governors Island, New York. Farsura’s
complaint initially named three additional defendants – Italian entities Map S.r.l. (“Map”),
Whitebridge Investments S.p.A. (“Whitebridge”), and Giuturna Investments S.p.A
(collectively, the “Italian Defendants”).

Since then, Judge Torres granted the Italian

Defendants’ motion to dismiss for lack of personal jurisdiction. In the wake of that
decision, and based in part on information learned during discovery, Farsura seeks to
amend the complaint to include additional allegations establishing personal jurisdiction
over Whitebridge and Map’s successor entity, QC Terme S.r.l. For the reasons set forth
below, the Court finds good cause to amend and grants Farsura leave to file the proposed
amended complaint except as otherwise noted.

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BACKGROUND
Farsura commenced this action on November 2, 2021. (Dkt. 1.) On February 2,
2022, the Italian Defendants moved to dismiss for lack of personal jurisdiction and failure
to state a claim. For its part, QC Terme US moved to dismiss for failure to state a claim.
(Dkts. 34-35.) On September 13, 2022, Judge Torres issued an order dismissing the
Italian Defendants for failure to sufficiently allege facts establishing personal jurisdiction
over them (the “Dismissal Order”). (Dkt. 163 at 7-12.) The Court also dismissed all
claims, except for breach of contract, against QC Terme US. (Dkt. 163 at 12-20.) On
November 9, 2022, the Court reinstated Farsura’s claim for breach of fiduciary duty
against QC Terme US as an alternative theory to the breach of contract claim. (Dkt. 220.)
Fact discovery closed on October 7, 2022. (See Dkt. 79 (granting request to
modify discovery schedule).) Depositions of the Italian Defendants were scheduled to
take place in September 2022, but QC Terme US and the Italian Defendants cancelled
them after entry of the Dismissal Order. (See Dkt. 219 at 4.) On October 11, 2022, at
the parties’ request, the Court stayed expert discovery in part due to the parties’ intent to
file summary judgment motions addressing whether the parties entered into an
enforceable contract. (Dkt. 194.) On October 21, 2022, the parties filed pre-motion letters
previewing their respective arguments. (Dkts. 200, 205.)
On October 10, 2022, Farsura requested leave to file an amended complaint to
bolster allegations that would establish personal jurisdiction over the Italian Defendants.
The allegations Farsura seeks to add in part are based on information that Farsura had
in hand even before filing the original complaint, but also in part on information first
learned during discovery, including after entry of the Dismissal Order. Farsura argues

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that he acted diligently, considering the timing of the Dismissal Order and newly
discovered information.

(Dkt. 193.)

In opposition, QC Terme US argues that the

additional allegations were either known to Farsura or publicly available at the outset of
the action; that the allegations are futile as they merely add details to allegations that the
Court already found deficient to establish personal jurisdiction; and that QC Terme US,
as well as the Italian Defendants, will be prejudiced given the closure of fact discovery
and the case being ripe for summary judgment motions. (Dkt. 198.)
The parties have filed detailed letter briefs, which the Court finds sufficient for
determining the request for leave to amend. (See Dkt. 193, 198, 219.) The Court also
heard extensive argument at a conference held on November 17, 2022.
LEGAL STANDARDS
Motions to amend are principally governed by Federal Rule of Civil Procedure 15(a)
(“Rule 15(a)”). As the rule provides, “[t]he court should freely give leave when justice so
requires.” Fed. R. Civ. P. 15(a)(2); see Aetna Casualty and Surety Co. v. Aniero Concrete
Co., 404 F.3d 566, 603 (2d Cir. 2005). A district court, however, “has discretion to deny
leave for good reason.” McCarthy v. Dun and Bradstreet Corp., 482 F.3d 184, 200 (2d
Cir. 2007). The Second Circuit has held that a Rule 15(a) motion “should be denied only
for such reasons as undue delay, bad faith, futility of the amendment, and perhaps most
important, the resulting prejudice to the opposing party.” Aetna Casualty, 403 F.2d at 60304 (quoting Richardson Greenshields Securities, Inc. v. Lau, 825 F.2d 647, 653 n.6 (2d
Cir. 1987)). Delay alone generally is an insufficient justification for the denial of a motion
to amend under Rule 15(a). Block v. First Blood Associates, 988 F.2d 344, 350 (2d Cir.
1993).

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Delay becomes more significant, however, when a party files a motion to amend
after the deadline for doing so established in a court’s scheduling order. Under Rule
16(b), leave to amend requires “good cause” following expiration of the deadline. Fed.
R. Civ. P. 16(b)(4). That is a more exacting standard than Rule 15(a): “Under Rule 16(b),
a party moving to amend after the applicable deadline must demonstrate good cause.
Whether good cause exists depends on the diligence of the moving party. In other words,
the movant must show that the deadlines [could not have been] reasonably met despite
its diligence.” Volunteer Fire Association of Tappan, Inc. v. County of Rockland, No. 09CV-4622, 2010 WL 4968247, at *3 (S.D.N.Y. Nov. 24, 2010) (internal citations and
quotation marks omitted); accord Parker v. Columbia Pictures Industries, 204 F.3d 326,
340 (2d Cir. 2000) (“despite the lenient standard of Rule 15(a), a district court does not
abuse its discretion in denying leave to amend the pleadings after the deadline set in the
scheduling order where the moving party has failed to establish good cause. Moreover,
we agree … that a finding of ‘good cause’ depends on the diligence of the moving party”).
The burden of showing diligence is borne by the moving party. Fresh Del Monte
Produce, Inc. v. Del Monte Foods, Inc., 304 F.R.D. 170, 175 (S.D.N.Y. 2014). “A party is
not considered to have acted diligently where the proposed amendment is based on
information that the party knew, or should have known, in advance of the motion
deadline.” Id. at 174-75. Although “the primary consideration is whether the moving party
can demonstrate diligence,” however, “[i]t is not ... the only consideration.” Kassner v.
2nd Avenue Delicatessen Inc., 496 F.3d 229, 244 (2d Cir. 2007). “[W]here a party's
motion to amend would require altering a court's scheduling order, the party must satisfy
both Federal Rules of Civil Procedure 15 and 16 to be permitted to amend.” International

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Technologies Marketing, Inc. v. Verint Systems, Ltd., 850 F. App’x 38, 43 (2d Cir. 2021)
(internal quotation marks omitted).
Here, the Court’s scheduling order required that any motion to amend the pleadings
be made by February 3, 2022. (See Dkt. 29 at No. 3 (setting deadline to file amended
pleadings as 30 days from entry of the scheduling order, entered on January 4, 2022).)
Accordingly, the “good cause” standard of diligence applies, together with considerations
of futility, bad faith, and prejudice. See also Judge Torres Individual Practices Rule III.B.iv
(generally requiring good cause be shown where plaintiff fails to address deficiencies
identified by defendant prior to filing of motion to dismiss).
DISCUSSION
The pivotal issue to resolving Farsura’s motion is whether he was sufficiently
diligent. There is no suggestion of bad faith, and neither futility nor prejudice warrant
prohibiting amendment. 1 The Court cannot conclude that the additional allegations to
establish personal jurisdiction would be futile – it is precisely the lack of detail that Judge
Torres found wanting and which Farsura now seeks to remedy. 2 The Court also finds no

The Court recognizes that diligence is a threshold determination for good cause. See
Securities and Exchange Commission v. Rio Tinto plc, No. 17-CV-7994, 2020 WL
2504008, at *7 (S.D.N.Y. March 9, 2020), R. & R. adopted, 2021 WL 807020 (S.D.N.Y.
March 3, 2021) (hereinafter “Rio Tinto”). In this instance, the Court first briefly addresses
the other relevant criteria as they do not pose an impediment to amendment here, and
the critical issue is diligence.
1

Of course, the Italian Defendants would not be precluded from moving to dismiss the
amended complaint for lack of personal jurisdiction or failure to state a claim should they
deem it appropriate to do so. In any event, the amended pleading should not include any
claim previously dismissed (and not reinstated) by Judge Torres for failure to state a claim
and which Farsura included in the proposed amended complaint merely to preserve his
rights, such as Count II (Breach of Implied Covenant and Fair Dealing); Count VIII
2

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substantial prejudice from allowing the amendment. Prior to the dismissal order, the
Italian Defendants already had produced their documents, and the parties had planned
on the Italian Defendants being deposed. 3 Expert discovery is stayed. And, while the
parties are on the cusp of filing cross-motions for summary judgment on the issue of
whether there is an enforceable contract, they will still be able to do so even if at a later
time.
Diligence, however, is a closer question. QC Terme US breaks down Farsura’s
“new” allegations into eleven facts (the “New Facts Chart”). 4 (Dkt. 198 at 6-8.) Of those
eleven facts, the Court finds that at least three of them are material, were not previously
known to Farsura, and were learned during discovery. (See New Facts Chart items 6,
10, 11. 5)

(Promissory Estoppel); Count X (Constructive Trust); and Count XIII (Declaratory
Judgment).
Concerns about expense and logistics of deposing persons in Italy can be addressed
by conducting depositions remotely.

3

Item numbers correspond to the rows of the New Facts Chart even though the rows are
not expressly numbered.

4

Item 6 alleges that a proposal submitted on March 13, 2013 was also made on behalf
of one of the Italian Defendants. Defendant cites allegations from paragraphs 47 and 50
of the initial Complaint that purportedly advanced the same proposition. The Court does
not agree. The cited allegations from the initial Complaint merely assert that Quadratec
S.r.l. acted as an agent, not that it acted also on its own behalf. With respect to item 10,
Defendant correctly notes that the Varni Affidavit cited as support by Farsura does not
use the term “joint.” (See Dkt. 198 at 4.) The Court agrees with Farsura, however, that
the presence of absence of that term is not dispositive to the factual allegation of joint
action by QC Terme US and the Italian Defendants. With respect to item 11, Defendant
cites an article pre-dating the lawsuit as containing information about “expected revenue
from New York.” Although the article mentions Italian Defendant Whitebridge’s
investment in QC Terme US, it does not contain the more specific information concerning

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At least four-and-a-half of the “new” facts, however, were known to Farsura prior
to filing suit as demonstrated by reference to specific documents that were produced by
Farsura. (See New Facts Chart items 2, 4, 5, 7, 8.) Farsura argues that he did not
previously plead those facts because he did not yet have the benefit of the Court’s ruling
indicating what degree of specificity would be required and, in any event, standing alone
without additional new facts learned during discovery, those earlier facts would not have
been enough to establish personal jurisdiction under the Court’s ruling. (Dkt. 219 at 3.)
Among other cases invoked for support, Farsura cites Allianz Global Investors GmbH v.
Bank of America Corp., 473 F. Supp.3d 361, 365 (S.D.N.Y. 2020) (permitting leave to
amend where plaintiffs sought “to provide the greater specificity that the [district court]
found was lacking as to [the dismissed defendants] now that they have the ‘benefit of her
ruling’”), which, in turn, relied on Loreley Financing (Jersey) No. 3 Ltd. v. Wells Fargo
Securities, LLC, 797 F.3d 160, 190 (2d Cir. 2015).
Both Allianz and Loreley are distinguishable. Those cases dealt with motions to
amend under only the Rule 15(a) standard, not the higher bar of good cause required by
Rule 16(b). The same is true for other Second Circuit cases cited by Farsura. See
Attestor Value Master Fund v. Republic of Argentina, 940 F.3d 825, 833 (2d Cir. 2019);
Barron v. Helbiz, Inc., 2021 WL 4519887, at *3 (2d Cir. Oct. 4, 2021). See generally Rio
Tinto, 2020 WL 2504008, at *8 (similarly distinguishing Lorelely). Accordingly, Farsura
cannot claim good cause for holding back facts about which he knew and could have
been asserted earlier. Id.

the Italian Defendants’ expected revenue from New York and the Governors Island
project.
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The remaining three-and-a-half new facts, according to QC Terme US, could have
been gleaned from publicly available information, specifically the website of the Italian
Chamber of Commerce. (See New Facts Chart items 1, 3, 5, 9.) Farsura thus “should
have known” of those facts, Fresh Del Monte Produce, 304 F.R.D. at 175, and cannot
rely on them as the basis for his motion to amend. See International Technologies
Marketing, 850 F. App’x at 43 (affirming finding that good cause was lacking for
amendment adding “publicly available (and easily accessible) information”); Morgan Art
Foundation Ltd. v. McKenzie, No. 18-CV-4438, 2021 WL 863264, at *7 (S.D.N.Y. Jan. 22,
2021) (information “already in the public domain … cannot justify a late motion to amend”).
That argument falls short, however, because the Chamber of Commerce material
referenced by QC Terme US does not supply certain specific facts learned by Farsura at
deposition that are critical to Farsura’s personal jurisdiction allegations. (See, e.g., Dkt.
219 at 3 (explaining that “[i]t was not until depositions that Plaintiffs obtained admissions
showing that” certain individuals were acting on behalf of the Italian Defendants when
they took particular actions “vis-à-vis Plaintiffs in New York”).)
The depositions on which Farsura relies as providing newly discovered information
supporting personal jurisdiction over the Italian Defendants were taken between
September 19-26, 2022. (See Dkt. 193 at 2.) Approximately two weeks later, Farsura
filed his motion to amend. Farsura thus acted diligently. See City of Almaty, Kazakhstan
v. Ablyazov, No. 15-CV-5345, 2019 WL 2324587, at *2 (S.D.N.Y. May 29, 2019) (“courts
in this District have found that a time period of less than three months satisfies the
diligence standard under Rule 16”); Permatex, Inc. v. Loctite Corp., No. 03-CV-943, 2004

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WL 1354253, at *3 (S.D.N.Y. 2004) (finding diligence where plaintiffs moved to amend
almost two months after deposition revealed new information).
At oral argument, QC Terme US emphasized two cases in particular that it
contends warrant denying Farsura’s motion to amend: Rio Tinto and Essar Steel Algoma
Inc. v. Southern Coal Sales Corp., No. 17-MC-360, 2019 WL 4391506 (S.D.N.Y. Aug. 27,
2019), R. & R. adopted, 2019 WL 4392514 (S.D.N.Y. Sept. 13, 2019). In both cases, the
Court denied motions to amend under the Rule 16 good cause standard in part because
much or all of what the parties sought to add by way of amendment was known or should
have been known by them at an earlier time. See Rio Tinto, 2020 WL 2504008, at *1012; Essar Steel Algoma, 2019 WL 4391506, at *3.
Both cases, however, are materially distinguishable from the instant case. In Rio
Tinto, the plaintiff sought to triple the size of its pleadings, expanding from 50 pages to
129 pages, and from 176 paragraphs to 414, only 3 of which arguably were based on
information from later-produced documents, and even those were of little significance.
2020 WL 2504008, at *6, 11. Indeed, with respect to the key issues found wanting by the
Court in dismissing the SEC’s claims – scienter and other fraud elements – the SEC did
not argue that it did not have any of the factual information prior to the deadline for moving
to amend. Id. at *11. Moreover, unlike here, the proposed amendments sought to
introduce “previously unmentioned topics.” Id. at *6. In Essar Steel Algoma, during expert
discovery, defendant sought to assert a variety of counterclaims and attempted to defend
its delay based on an explanation this Court found “specious” and which was belied by
the defendant’s own arguments.

2019 WL 4391506, at *3.

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Farsura’s basis for

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amendment may be somewhat thin, but it is not specious, and nevertheless supports a
finding of good cause.
In sum, the Court finds that Farsura acted with sufficient diligence to find good
cause and that neither futility, nor bad faith, nor prejudice warrant denying him the
opportunity to amend.
CONCLUSION
For the foregoing reasons, Plaintiffs’ motion for leave to amend their complaint
consistent with this order is GRANTED. The amended pleading shall be filed within seven
days of entry of this order.

SO ORDERED.

_________________________________
ROBERT W. LEHRBURGER
UNITED STATES MAGISTRATE JUDGE
Dated: November 21,2022
New York, New York

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