County of Yadkin v. CAH Acquisition Company 10 LLC

Filing 92

ORDER denying 54 Motion to Dismiss, denying 56 Motion to Dismiss for Lack of Jurisdiction and granting 73 Motion for Leave to File. Signed by District Judge Terrence W. Boyle on 11/12/2015. (Romine, L.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:15-CV-229-BO

COUNTY OF YADKIN,

)
)
Plaintiff,
)
)
v.
)
)
CAH ACQUISITIONS COMPANY 10
)
LLC, HMC/CAH CONSOLIDATED, INC., )
and RURAL COMMUNITY HOSPITALS )
OF AMERICA, LLC,
)
)
Defendants. )

ORDER

This matter is before the Court on defendants' motions to dismiss and plaintiffs motion
for leave to file an amended complaint. A hearing was held before the undersigned on November
4, 2015, in Raleigh, North Carolina, and the matters are ripe for ruling. For the following
reasons, defendants' motions are denied as moot, and plaintiffs motion is granted.
BACKGROUND
Although this case began only in May 2015, it already has a lengthy procedural history.
Accordingly, the Court incorporates by reference the background section of its June 19, 2015,
order finding defendants to be in civil contempt. Since that date, defendants Rural Community
Hospitals of America (RCAH) and HMC/CAH Consolidated, Inc. (HMC) each filed a motion to
dismiss. RCAH argues that it was not a party to the purchase agreement or hospital lease. HMC
argues that this Court lacks personal jurisdiction over it because it does not have sufficient
minimum contacts with the State of North Carolina. HMC's argument relies in large part on a
prior bankruptcy proceeding in United States Bankruptcy Court for the Western District of

Missouri, in which the bankruptcy plan discharged and extinguished the guaranty between HMC
and CAHIO.
After filing the motion to dismiss in this Court, HMC filed motions in the Western
District of Missouri to re-open the bankruptcy case and for entry of an order enforcing
injunctions issued under the confirmation and discharge orders. HMC also requests costs and
attorneys' fees from the bankruptcy court. Essentially, HMC argues that plaintiffs suit in this
Court violates the bankruptcy court's injunction under its confirmed plan of reorganization and
its discharge injunction under Section 524. The motion to re-open was granted and the motion to
enforce injunctions and award costs and attorneys' fees is pending.
In response, plaintiff seeks to amend its complaint to address only post-discharge and
expressly assumed conduct. Defendants oppose the proposed amendment, requesting that this
Court withhold a decision until the bankruptcy court rules on the pending motions.
DISCUSSION
The Court considers first plaintiffs motion to amend the complaint. Rule 15 of the
Federal Rules of Civil Procedure provides that a party may amend its pleadings as a matter of
right under certain circumstances or with the opposing party's consent or leave of court. Fed. R.
Civ. P. 15(a)(l)-(2). Further, Rule 15 directs that leave to amend should be freely given when
justice so requires. Fed. R. Civ. P. 15(a)(2). "This liberal rule gives effect to the federal policy in
favor of resolving cases on their merits instead of disposing of them on technicalities." Laber v.
Harvey, 438 F.3d 404, 426 (4th Cir. 2006). A court should only deny leave to amend a pleading

when the amendment would be prejudicial to the opposing party, where there has been bad faith
on the part of the moving party, or when the amendment would be futile. Johnson v. Oroweat
Foods Co., 785 F.2d 503, 509 (4th Cir. 1986) (citation omitted).

2

It is unclear under which of the three prongs defendants object to plaintiffs proposed

amendment. Defendants argue that the Court lacks jurisdiction over plaintiffs amended
complaint because of the bankruptcy proceedings, but they do not expressly state that the
amendment would be prejudicial or futile, or that plaintiffs are acting in bad faith. This Court is
unaware of any current rulings from the Bankruptcy Court that would divest this Court of
jurisdiction. Moreover, the allegations in plaintiffs amended complaint relate only to explicitly
assumed obligations and post-discharge conduct, rather than to conduct subject to the injunctions
imposed by the bankruptcy court. As post-confirmation conduct and explicitly assumed
obligations do not implicate the bankruptcy prcoeedings, the Court finds that amendment would
not be futile, that there has been no bad faith on the part of the moving party, and that
amendment would not be prejudicial to defendants. See, e.g., In re Transamerican Natural Gas
Corp., 127 B.R. 800, 804 (S.D. Tx 1991). Plaintiffs motion to amend [DE 73], therefore, is

allowed. As plaintiffs motion to amend is allowed, defendants' motions to dismiss the original
complaint [DE 54, 56] are denied as moot.
CONCLUSION
For the foregoing reasons, plaintiffs motion for leave to file an amended complaint [DE
73] is GRANTED. The Clerk of Court is DIRECTED to file plaintiffs proposed amended
complaint. Defendants' motions to dismiss [DE 54, 56] are DENIED AS MOOT.

SO ORDERED, this

Jk day of November, 2015.
~~~

U).

/64,,t*

; RRENCE W. BOYLE
UNITED STATES DISTRICT JUDGE

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