GAREY, et al v. JAMES S. FARRIN, P.C. et al
Filing
131
MEMORANDUM OPINION AND ORDER DENYING 94 Motion for Certificate of Appealability; DENYING 102 Motion to Strike Certain Affirmative Defenses; DENYING 104 Motion to Strike 101 Reply to Response to Motion; and GRANTING 114 First MOTION to Supplement Complaint. Signed by JUDGE LORETTA C. BIGGS on 09/29/2018. (Samuel-Priestley, Tina)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
JAMES WEAVER GAREY; WILLIAM PARKER
GAREY; AARON KENT CRUTHIS; AMANDA
DAVIS REILLY; ADILAH HANEEFAH-KHADI
MCNEIL; CHARLOTTE MOFFAT CLEVENGER;
ANDREW CHRISTOPHER CLEVENGER; and
JUSTIN BRENT BLAKESLEE on behalf of
themselves and others similarly situated,
Plaintiffs,
v.
JAMES S. FARRIN, P.C. d/b/a LAW OFFICES OF
JAMES SCOTT FARRIN; JAMES S. FARRIN;
MARCARI, RUSSOTTO, SPENCER & BALABAN,
P.C.; DONALD W. MARCARI; RIDDLE &
BRANTLEY, L.L.P.; SEAN A. COLE; WALLACE
PIERCE LAW, PLLC; JARED PIERCE; VAN
LANINGHAM & ASSOCIATES, PLLC d/b/a
BRADLEY LAW GROUP; R. BRADLEY VAN
LANINGHAM; LANIER LAW GROUP, P.A.; LISA
LANIER; CRUMLEY ROBERTS, LLP; CHRIS
ROBERTS; HARDISON & COCHRAN, PLLC;
BENJAMIN T. COCHRAN; TED A. GREVE &
ASSOCIATES, P.A.; TED A. GREVE; LAW
OFFICES OF MICHAEL A. DEMAYO, L.L.P.;
MICHAEL A. DEMAYO; HARDEE & HARDEE,
LLP; CHARLES HARDEE and G. WAYNE
HARDEE,
Defendants.
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1:16CV542
MEMORANDUM OPINION AND ORDER
LORETTA C. BIGGS, District Judge.
Plaintiffs initiated this action alleging that the above-named Defendants violated the
Driver’s Privacy Protection Act (“DPPA”), 18 U.S.C. § 2721, et seq. (ECF Nos. 1, 32.)
Defendants subsequently filed three motions to dismiss Plaintiffs’ First Amended Complaint,
(ECF Nos. 60, 62, 79), which were denied by this Court in its Memorandum Opinion and
Order entered September 29, 2017 (“September 29 Order”), (ECF No. 93). The following
motions are presently before the Court: (1) Motion to Certify Order for Interlocutory Appeal
(“Motion to Certify”), filed by Defendants, (ECF No. 94); (2) Motion to Strike certain
affirmative defenses, filed by Plaintiffs, (ECF No. 102); (3) Motion to Strike Reply Brief on
Motion to Certify (“Motion to Strike Reply Brief”), filed by Plaintiffs, (ECF No. 104); and (4)
Plaintiffs’ Motion for Leave to File and Serve First Supplemental Complaint (“Motion for
Leave”), (ECF No. 114). For the reasons set forth below, Defendants’ Motion to Certify will
be denied; Plaintiffs’ Motion to Strike certain affirmative defenses will be denied; Plaintiffs’
Motion to Strike Reply Brief will be denied; and Plaintiffs’ Motion for Leave to File and Serve
First Supplemental Complaint will be granted. 1
I.
BACKGROUND
The Court incorporates by reference the factual background set forth in its September
29 Order, (ECF No. 93).
II.
MOTION TO STRIKE REPLY BRIEF ON MOTION TO CERTIFY
Before addressing the merits of Defendants’ Motion to Certify, the Court will first
address Plaintiffs’ Motion to Strike Reply Brief. In support of this motion, Plaintiffs contend
that Defendants’ reply brief “violates Local Rule 7.3(h)” because it “is not limited to issues
newly raised in Plaintiffs’ response.” (ECF No. 104 at 1.) The Court disagrees.
Defendants have also filed a Motion for Reconsideration of the Court’s Ruling on their Motion to
Dismiss and Alternative Motion for Judgment on the Pleadings, (ECF No. 111). That motion is
currently pending before the Court and will be addressed in a forthcoming Order.
1
2
Rule 7.3(h) of this Court’s Local Rules provides that “[a] reply brief is limited to
discussion of matters newly raised in the response.” L.R. 7.3(h). “Members of this Court . . .
have consistently held that ‘[r]eply briefs . . . may not inject new grounds . . . [and that an]
argument [that] was not contained in the main brief . . . is not before the Court.’” Tyndall v.
Maynor, 288 F.R.D. 103, 108 (M.D.N.C. 2013) (quoting Triad Int’l Maint. Corp. v. Aim Aviation,
Inc., 473 F. Supp. 2d 666, 670 n.1 (M.D.N.C. 2006)).
In their opposition brief on the Motion to Certify, Plaintiffs principally argue that
Defendants’ opening brief fails to include citations to any authority demonstrating substantial
ground for difference of opinion. (ECF No. 99 at 2–8.) Plaintiffs also argue in their
opposition brief that, even if the Court certifies issues from its September 29 Order for
immediate appeal to the Fourth Circuit, the Court should not stay the case, in part, because
“even after they were sued, at least some of the Defendants have continued sending the letters
which Plaintiffs allege violate the DPPA.” (Id. at 9.)
In response to these arguments by Plaintiffs, Defendants’ reply brief includes a
discussion of, and citations to, cases that Defendants contend show a split in authority on the
issues on which they seek certification. (See ECF No. 101 at 3–10.) Defendants also argue in
their reply brief that a stay, pending appellate review, is warranted because Defendants as well
as other entities and industries in the Fourth Circuit who review accident reports need certainty
as to whether their conduct violates the DPPA. (Id. at 10–11.) Despite Plaintiffs’ contention
that such arguments in Defendants’ reply brief constitute newly raised issues, the Court finds
that Defendants’ reply brief properly responds to the issues raised in Plaintiffs’ opposition
brief. Accordingly, the Court, in its discretion, will decline to strike Defendants’ Reply Brief
3
in support of Defendants’ Motion to Certify. Plaintiffs’ Motion to Strike Reply Brief will,
therefore, be denied.
III.
MOTION TO CERTIFY
Defendants “move the Court to certify for appeal its Order denying Defendants’
[m]otions to [d]ismiss . . . entered September 29, 2017.” (ECF No. 94 at 1.) Defendants argue
that the September 29 Order “rests on three controlling questions of law 2 about which there
is substantial ground for difference of opinion,” and further, “[a]n immediate appeal from the
Order may materially advance the ultimate termination” of this case. (Id. at 1, 3.) Plaintiffs
argue, in response, that the motion should be denied because Defendants have failed to show
that there is substantial ground for disagreement as to a controlling question of law. (ECF
No. 99 at 3–8.)
Under 28 U.S.C. § 1292(b), an order may be certified for interlocutory appeal in
instances where the district court is “of the opinion that such order involves a controlling
question of law as to which there is substantial ground for difference of opinion and that an
immediate appeal from the order may materially advance the ultimate termination of the
litigation.” 28 U.S.C. § 1292(b); Flame S.A. v. Freight Bulk Pte. Ltd., 762 F.3d 352, 356 n.5 (4th
Cir. 2014). The Fourth Circuit has cautioned that Section 1292(b) “should be used sparingly
and thus . . . its requirements must be strictly construed.” Myles v. Laffitte, 881 F.2d 125, 127
(4th Cir. 1989). Accordingly, if any requirement is not satisfied, certification is inappropriate.
The Court declines to adopt Defendants’ characterization of the “controlling questions of law” in
the Court’s September 29 Order. The Order speaks for itself.
2
4
In re Charlotte Commercial Grp., Inc., No. 01-52684C-11W, 2003 WL 1790882, at *2 (M.D.N.C.
Mar. 13, 2003).
Importantly, as explained by the Fourth Circuit, “[t]he immediate appeal of a certified
question is an extraordinary remedy” that is “not to be granted lightly.” Fannin v. CSX Transp.,
Inc., 873 F.2d 1438, 1989 WL 42583, at *2 (4th Cir. 1989) (per curiam). Rather, it is reserved
for “exceptional circumstances [that] justify a departure from the basic policy of postponing
appellate review until after the entry of a final judgment.” Id. (citation omitted). Thus, even
in instances where all requirements for certification are satisfied, “the district court has
unfettered discretion to decline to certify an interlocutory appeal if exceptional circumstances
are absent.” Manion v. Spectrum Healthcare Res., 966 F. Supp. 2d 561, 567 (E.D.N.C. 2013)
(internal quotation omitted). The party seeking certification bears the burden of persuading
the court that exceptional circumstances exist. Fannin, at *2.
Here, despite Defendants’ arguments, the Court is not persuaded that there is
substantial ground for difference of opinion as to controlling questions of law to warrant
certification of the September 29 Order. “An issue presents a substantial ground for difference
of opinion if courts, as opposed to parties, disagree on a controlling legal issue.” Lynn v.
Monarch Recovery Mgmt., Inc., 953 F. Supp. 2d 612, 624 (D. Md. 2013) (citation omitted). Further,
“just any simple disagreement between courts will not merit certification.” Cooke-Bates v. Bayer
Corp., No. 3:10cv261, 2010 WL 4789838, at *2 (E.D. Va. Nov. 16, 2010). A substantial ground
for disagreement may arise if there is a “novel and difficult issue of first impression,” or if
there is a circuit split and the controlling circuit has not commented on the conflicting issue.
Id. The mere fact, however, that an issue is one of first impression or that there is a lack of
5
unanimity among courts is insufficient to satisfy this prong. Wyeth v. Sandoz, Inc., 703 F. Supp.
2d 508, 527 (E.D.N.C. 2010). Moreover, differences in opinion among district courts outside
the governing circuit do not mandate a finding that there is substantial ground for difference
of opinion. See Cross v. Suffolk City Sch. Bd., No. 2:11cv88, 2011 WL 2838180, at *3 n.1 (E.D.
Va. July 14, 2011) (concluding that cases from district courts outside the Fourth Circuit “do
not persuade th[e] court that there is a substantial ground for difference of opinion”).
Indeed, Defendants have cited to a number of cases (including cases provided to the
Court as suggestions of subsequently decided authority), 3 in support of their argument that
there is substantial ground for difference of opinion as to the issues as framed by Defendants,
namely: (1) “Do Plaintiffs have standing to assert a claim against Defendants?”; (2) “Can
Defendants be liable for obtaining, using, or disclosing formerly private information that had
already been made public by law enforcement?”; and (3) “Can Defendants be liable for
obtaining, using, or disclosing information that did not come directly from a motor vehicle
record?” (ECF No. 95 at 3.) The vast majority of these cases, however, are from courts
outside this jurisdiction and thus, “do not persuade th[e] [C]ourt that there is substantial
Cases cited by Defendants in their briefing on the instant motion include: Fontanez v. Skepple, 563 F.
App’x 847 (2d Cir. 2014); Murray v. Marchbanks, No. 4:16-cv-198 SNLJ, 2017 WL 2964015 (E.D. Mo.
June 19, 2017); Potocnik v. Carlson, No. 13-CV-2093, 2016 WL 3919950 (D. Minn. July 15, 2016); Pavone
v. Law Offices of Anthony Mancini, Ltd., 118 F. Supp. 3d 1004 (N.D. Ill. 2015); Hurst v. State Farm Mut.
Auto. Ins. Co., No. 10-1001-GMS, 2012 WL 426018 (D. Del. Feb. 9, 2012), aff’d, No. 12-1654 (3d Cir.
Oct. 24, 2012); Ocasio v. Riverbay Corp., No. 06 Civ. 6455, 2007 1771770 (S.D.N.Y. June 19, 2007);
Figueroa v. Taylor, No. 06 Civ. 3676 PACKNF, 2006 WL 3022966 (S.D.N.Y. Oct. 23, 2006); Luparello
v. Incorporated Village of Garden City, 290 F. Supp. 2d 341 (E.D.N.Y. 2003); O’Brien v. Quad Six, Inc., 219
F. Supp. 2d 933 (N.D. Ill. 2002); Mattivi v. Russell, No. CIV.A. 01-WM-533(BNB), 2002 WL 31949898
(D. Colo. Aug. 2, 2002); Ark. State Police v. Wren, 491 S.W.3d 124 (Ark. 2016). (ECF No. 94 at 1–2;
ECF No. 101 at 4–6.)
3
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ground for difference of opinion” so as to warrant certification of the Court’s September 29
Order.
The only cases cited by Defendants from within our governing circuit address the issues
of standing and the scope of liability under the DPPA. With respect to standing, the
mandatory authority cited by Defendants include Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547
(2016), as well as three recent Fourth Circuit opinions: Trapp v. SunTrust Bank, 699 F. App’x
144 (4th Cir. 2017) (per curiam); Dreher v. Experian Info Sols., Inc., 856 F.3d 337 (4th Cir. 2017);
and Beck v. McDonald, 848 F.3d 262 (4th Cir. 2017). In citing these cases, Defendants argue
that the proper inquiry is whether Plaintiffs have alleged a concrete injury such that they have
standing under Article III of the Constitution. (ECF No. 101 at 9.)
The Court finds no grounds for difference of opinion with respect to the issue of
standing. In Spokeo, Trapp, Dreher, and Beck, the Supreme Court and the Fourth Circuit
reiterated that in order to establish the first element of Article III standing, a plaintiff must
plausibly allege a concrete injury. 4 See Spokeo, 136 S. Ct. at 1547–49; Trapp, 699 F. App’x at
145; Dreher, 856 F.3d at 344–47; Beck, 848 F.3d at 270–71. Likewise, this Court, in its
September 29 Order discussed that a concrete injury must actually exist in order for Plaintiffs
to have Article III standing. (ECF No. 93 at 6–15.) For the reasons discussed in the Court’s
September 29 Order, the Court concluded that Plaintiffs had plausibly alleged concrete injuries
sufficient to establish Article III standing. (Id.) While it is clear that Defendants disagree with
Article III standing also requires a plaintiff to plausibly allege that his injury “is fairly traceable” to
defendant’s challenged conduct, and that his injury “is likely to be redressed by a favorable judicial
decision.” Spokeo, 136 S. Ct. at 1547. As the Court noted in its September 29 Order, these “remaining
two elements of the standing analysis [were] not in dispute.” (ECF No. 93 at 15.)
4
7
the Court’s application of standing law to the allegations in this case, a party’s disagreement
with the Court is not enough to support certification. See Cooke-Bates, 2010 WL 4789838, at
*2 (“An issue presents a substantial ground for difference of opinion if courts, as opposed to
parties, disagree on a controlling question of law.”).
With respect to the scope of liability under the DPPA, Defendants cite to the following
Supreme Court cases: Reno v. Condon, 528 U.S. 141 (2000) and Fla. Star v. B.J.F., 491 U.S. 524
(1989). Defendants argue that these cases demonstrate a conflict between Supreme Court
decisions and the Court’s analysis as to whether Defendants’ alleged conduct could subject
them to liability under the DPPA. (See ECF No. 101 at 2–8.) The Court is not persuaded that
such a conflict exists given that: (i) in Reno, while the Court discusses that State DMVs and
private persons who have obtained personal information from a State DMV are subject to the
DPPA’s provisions, 528 U.S. at 146, the Court’s holding does not go as far as Defendants
suggest to limit liability solely to those two categories of parties; and (ii) in Fla. Star, the Supreme
Court addressed the narrow question of whether imposing liability on a newspaper for its
publication of a victim’s personal information, obtained from a publicly released police report,
violated the First Amendment, 491 U.S. at 526, 530–41.
Nor is the Court persuaded that an interlocutory appeal will materially advance the
ultimate termination of this litigation. An interlocutory appeal would likely impede, rather
than expedite, the progress of this case, thereby potentially prolonging its disposition, creating
more litigation and expense, and causing an inefficient use of judicial resources. See Blair v.
Equifax Check Servs., Inc., 181 F.3d 832, 835 (7th Cir. 1999); see also Big Rock Sports, LLC v.
AcuSport Corp., No. 4:08-CV-159-F, 2011 WL 579095, at *2 (E.D.N.C. Feb. 9, 2011) (stating
8
that “a district court must keep in mind the strong congressional policy against . . . obstructing
or impeding an ongoing judicial proceeding by interlocutory appeals” (internal quotation
marks omitted)). In addition, a complete factual record developed during the course of
litigation will “greatly enhance the ultimate review of all issues in the Court of Appeals.”
Difelice v. U.S. Airways, Inc., 404 F. Supp. 2d 907, 910 (E.D. Va. 2005).
Further, even if the requirements of section 1292(b) had been satisfied, Defendants
have failed to show that there are “exceptional circumstances” to justify certification of the
September 29 Order. Manion, 966 F. Supp. 2d at 567. Accordingly, this Court is not persuaded
that this case presents an exception to the general rule that “piecemeal review of decisions that
are but steps toward final judgments on the merits are to be avoided, because they can be
effectively and more efficiently reviewed together in one appeal from the final judgments.”
James v. Jacobson, 6 F.3d 233, 237 (4th Cir. 1993). In light of the above, the Court declines, in
its discretion, to certify its September 29 Order for interlocutory appeal, and Defendants’
motion will be denied.
IV.
MOTION TO STRIKE CERTAIN AFFIRMATIVE DEFENSES
Plaintiffs move to strike certain affirmative defenses from Defendants’ Answers.
Plaintiffs argue that certain affirmative defenses asserted by Defendants are “legally
insufficient” while others “merely restate legal arguments that the Court rejected in ruling on
the Defendants’ Motion to Dismiss.” (ECF No. 102 at 1–4.) In particular, Plaintiffs move to
strike the following affirmative defenses from the Farrin Defendants’ 5 Answer:
The Farrin Defendants include the following Defendants: James S. Farrin, P.C., d/b/a Law Offices
of James Scott Farrin, Marcari, Russotto, Spencer & Balaban, P.C., Riddle & Brantley, LLP, Wallace
Pierce Law, PLLC, Van Laningham & Associates, PLLC, Lanier Law Group, P.A., Crumley Roberts,
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(i)
First Defense (Failure to State a Claim);
(ii)
Third Defense (First Amendment);
(iii)
Fourth Defense (Plaintiffs’ Information Not Protected Personal
Information Under the DPPA);
(iv)
Fifth Defense (Public Records);
(v)
Sixth Defense (Prior Disclosure by a Third Party);
(vi)
Seventh Defense (Failure to Join a Necessary Party);
(vii)
Eighth Defense (Rule of Lenity);
(viii)
Thirteenth Defense (Fair Report Privilege);
(ix)
Fourteenth Defense (Lack of Actual Damages); and
(x)
Eighteenth Defense (Lack of Actual Damages).
(ECF No. 102 at 2, 3.) Plaintiffs also seek to strike the following affirmative defenses from
the DeMayo Defendants’ 6 Answer:
(i)
First Defense (Consolidated First Amendment Defense);
(ii)
Second Defense (Constitutional Avoidance);
(iii)
Fourth Defense (Rule of Lenity);
(iv)
Fifth Defense (Accident reports are not “motor vehicle records” under
the DPPA);
(v)
Sixth Defense (Failure to State a Claim); and
LLP, Hardee & Hardee, LLP, James S. Farrin, Donald W. Marcari, Sean A. Cole, Jared Pierce, R.
Bradley Van Laningham, Lisa Lanier, Chris Roberts, Charles Hardee, and G. Wayne Hardee. (ECF
No. 97.)
The DeMayo Defendants include the following Defendants: Michael A. DeMayo, the Law Offices
of Michael A. DeMayo, Hardison & Cochran, PLLC, Benjamin T. Cochran, Ted A. Greve &
Associates, P.A., and Ted A. Greve. (See ECF No. 96 at 2.)
6
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(vi)
Ninth Defense (Exception to DPPA under 18 U.S.C. § 271(b)(1));
(vii)
Tenth Defense (Exception to DPPA under 18 U.S.C. § 271(b)(14));
(viii)
Eleventh Defense (Lack of Damages)
(ix)
Twelfth Defense (Public Records);
(x)
Thirteenth Defense (Failure to Join a Necessary Party); and
(xi)
Seventeenth Defense (Good Faith).
(Id. at 2–3, 4.)
In responding to a pleading, a party must “state in short and plain terms its defenses
to each claim asserted against it; and admit or deny the allegations asserted against it.” Fed R.
Civ. P. 8(b)(1). A responding party must also “affirmatively state any avoidance or affirmative
defense.” Fed. R. Civ. P. 8(c). However, under Rule 12(f) of the Federal Rules of Civil
Procedure, the Court may “strike from a pleading an insufficient defense or any redundant,
immaterial, impertinent or scandalous matter.” Fed. R. Civ. P. 12(f). Although courts have
broad discretion in disposing of motions to strike, 7 the Fourth Circuit has recognized that
such motions “are generally viewed with disfavor because striking a portion of a pleading is a
drastic remedy and because it is often sought by the movant simply as a dilatory tactic,” Waste
Mgmt. Holdings, Inc. v. Gilmore, 252 F.3d 316, 347 (4th Cir. 2001) (internal quotation marks
omitted); see Brown v. Inst. for Family Centered Servs., Inc., 394 F. Supp. 2d 724, 727 (M.D.N.C.
2005) (“Motions to strike are viewed with disfavor and are granted only for egregious
violations.”). Accordingly, in considering a Rule 12(f) motion to strike, the Court reviews “the
7
Renaissance Greeting Cards, Inc. v. Dollar Tree Stores, Inc., 227 F. App’x 239, 246 (4th Cir. 2007).
11
pleading under attack in a light most favorable to the pleader.” Guessford v. Pa. Nat’l Mut. Cas.
Ins. Co., 918 F. Supp. 2d 453, 467 (M.D.N.C. 2013).
While a party’s affirmative defense must state more than a bare-bones conclusory
allegation, Sedgewick Homes, LLC v. Stillwater Homes, Inc., No. 5:16-CV-00049-RLV-DCK, 2016
WL 4499313, at *2 (W.D.N.C. Aug. 25, 2016), the Fourth Circuit has stated that “[a]n
affirmative defense may be pleaded in general terms and will be held to be sufficient . . . as
long as it gives plaintiff fair notice of the nature of the defense.” Clem v. Corbeau, 98 F. App’x
197, 203 (4th Cir. 2004) (per curiam) (quoting 5 Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 1274 (2d ed. 1990)). Further, a “matter will not be stricken from
a pleading unless it is clear that it can have no possible bearing upon the subject matter of the
litigation.” N.C. Shellfish Growers Ass’n v. Holly Ridge Assocs., L.L.C., 200 F. Supp. 2d 551, 554
(E.D.N.C. 2001) (quoting Craig Funeral Home, Inc. v. State Farm Mut. Auto. Ins. Co., 254 F.2d
569, 572 (5th Cir. 1958)).
The Court’s review of the affirmative defenses subject to the instant motion to strike
reveals that the Defendants have provided adequate notice to the Plaintiffs of the nature of
each defense at issue. Further, the Court’s September 29 Order notwithstanding, at this early
stage of the litigation in which discovery has not yet commenced, the Court is not convinced
that there are no set of circumstances under which the affirmative defenses at issue could
succeed at trial. See Clark v. Milam, 152 F.R.D. 66, 70 (S.D. W. Va. 1993) (“Before granting a
motion to strike, a court must be convinced that ‘there are no questions of fact, that any
questions of law are clear and not in dispute, and that under no set of circumstances could the
defense succeed.’” (quoting B.A. Mortg. & Int’l Realty v. Am. Nat’l Bank, 706 F. Supp. 1364,
12
1375–76 (N.D. Ill. 1989)). Indeed, with respect to Defendants’ First Amendment affirmative
defenses, as this Court acknowledged in its September 29 Order,
[a]t this stage, Plaintiffs’ allegations, taken as true, plausibly allege
unlawful activity that is not protected under the First
Amendment. . . . While the issue of whether Defendants have, in fact,
engaged in such unlawful conduct is to be borne out on a more developed
record, given the current posture of the case, Defendants’ motion
to dismiss on this ground will be denied.
(ECF No. 93 at 23 (citation omitted) (emphasis added).)
Finally, “to prevail on a motion to strike, the movant must demonstrate prejudice.”
Sedgewick Homes, LLC, 2016 WL 4499313, at *2; see Clark, 152 F.R.D. at 70 (“Even where
technically appropriate and well-founded, motions to strike defenses as insufficient are often
denied in the absence of a showing of prejudice to the moving party.” (internal quotation
marks omitted)). Here, Plaintiffs have made no such showing. The Court will, therefore, deny
Plaintiffs’ Motion to Strike Defendants’ affirmative defenses outlined above.
V.
MOTION FOR LEAVE TO FILE AND SERVE FIRST SUPPLMENTAL
COMPLAINT (“MOTION FOR LEAVE”)
Plaintiffs seek leave to file and serve a Supplemental Complaint which includes
additional claims against Defendant Lisa Lanier, and alleges claims against a new party,
Katherine E. Andrews-Lanier. (ECF No. 114.)
Under Rule 15(d), a party may “serve a supplemental pleading setting out any
transaction, occurrence, or event that happened after the date of the pleading to be
supplemented.” Fed. R. Civ. P. 15(d). A party may, therefore, supplement its complaint,
under Rule 15(d), to assert separate or additional claims against an existing party, so long as
some relationship exists between the original action and the supplemental claims. See Rowe v.
13
U.S. Fidelity & Guaranty Co., 421 F.2d 937, 943 (4th Cir. 1970). A party may also supplement
its complaint “to include new parties when events make it necessary to do so.” 6A Fed. Prac.
& Proc. Civ. § 1504 (3d ed).
“[T]he standards used by a district court in ruling on a motion to amend or on a motion
to supplement are nearly identical. In either situation, leave should be freely granted, and
should be denied only where ‘good reason exists[,] . . . such as prejudice to the defendants.’”
Franks v. Ross, 313 F.3d 184, 198 n.15 (4th Cir. 2002) (quoting Walker v. United Parcel Serv., 240
F.3d 1268, 1278 (10th Cir. 2001)). As observed by the Fourth Circuit, Rule 15(d) motions are
“[s]o useful . . . and of such service in the efficient administration of justice that they ought to
be allowed as a matter of course, unless some particular reason for disallowing them appears.”
New Amsterdam Cas. Co. v Waller, 323 F.2d 20, 28–29 (4th Cir. 1963).
In this case, the proposed Supplemental Complaint contains additional state law claims
against Defendant Lisa Lanier 8 for allegedly violating North Carolina’s Uniform Voidable
Transactions Act (“UVTA”), N.C. Gen. Stat. §§ 39-23.1 et seq. (See ECF No. 114 at 3; ECF
No. 114-1.) Plaintiffs’ additional claims are based on the alleged transfers of real property
from the sole ownership of Defendant Lisa Lanier to the ownership of Defendant Lisa Lanier
and her spouse, Katherine E. Andrews-Lanier, as tenants by the entirety. (See ECF No. 114
at 3; ECF No. 114-1 ¶ 179.) Plaintiffs contend in the proposed Supplemental Complaint that
Plaintiffs’ Motion for Leave originally included UVTA claims alleging the transfer of real property
from the sole ownership of Defendant G. Wayne Hardee to the ownership of G. Wayne Hardee and
his spouse, Heather Hale Hardee, as tenants by the entirety. (ECF No. 114-1 ¶¶ 159–60, 191-210,
217–23; id. at 17.) Plaintiffs subsequently filed a Withdrawal of Some Allegations in Motion for Leave
to File and Serve First Supplemental Complaint, in which Plaintiffs withdrew all claims and allegations
in the proposed Supplemental Complaint against Defendant G. Wayne Hardee and Heather Hale
Hardee. (See ECF No. 119.)
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such transfers were made “with the intent to hinder or delay[ ] Plaintiffs as future creditors.”
(ECF No. 114-1 ¶ 213.) According to the supplemental allegations, the transfers occurred
after the filing of the Amended Complaint naming Lisa Lanier as an individual defendant. (Id.
¶ 151.) The proposed Supplemental Complaint further seeks to add Katherine AndrewsLanier as a defendant in this action. (See ECF No. 114 at 3; ECF No. 114-1 ¶ 156.)
Defendants make a number of arguments in opposition to Plaintiffs’ Motion for Leave
which appear to attack the accuracy and sufficiency of the allegations contained in Plaintiffs’
proposed supplementation.
(See ECF No. 120.)
At this stage, however, the Court’s
determination is limited to whether, on its face, the proposed supplementation is prejudicial,
futile, or demonstrates bad faith. See Rambus, Inc. v. Infineon Techs., AG, 304 F. Supp. 2d 812,
819 (E.D. Va. 2004) (explaining that on a motion to amend a pleading, “the substantive merits
of a proposed claim are typically best left for later resolution, e.g., under motions to dismiss or
for summary judgment under Fed. R. Civ. P. 12(b)(6) or Fed. R. Civ. P. 56, respectively, or for
resolution at trial.” (citing Davis v. Piper Aircraft Corp., 615 F.2d 606, 613 (4th Cir. 1980)).
Accordingly, applying the liberal standards of Rule 15(a) to Plaintiffs’ motion under
Rule 15(d), the Court concludes that Plaintiffs’ proposed Supplemental Complaint is not
prejudicial because this litigation has not yet advanced beyond the motion-to-dismiss stage
and discovery has not yet commenced. Further, upon service of the Supplemental Complaint,
Defendant Lisa Lanier and Ms. Katherine Andrews-Lanier will have an opportunity to assert
any applicable defenses or otherwise challenge the legal sufficiency of the claims in the
supplemental pleading. The Court also concludes that the proposed supplementation does
not demonstrate bad faith. See GSS Props., Inc. v. Kendale Shopping Ctr., Inc., 119 F.R.D. 379, 381
15
(M.D.N.C. 1988) (describing an amendment made in bad faith as one which “may be abusive
or made in order to secure some ulterior tactical advantage.”). Finally, the Court finds that
the proposed supplementation is not clearly insufficient or frivolous on its face and thus, is
not futile. See Johnson v. Oroweat Foods Co., 785 F.2d 503, 510 (4th Cir. 1986) (“Leave to amend
. . . should only be denied on the ground of futility when the proposed amendment is clearly
insufficient or frivolous on its face.”). The Court will, therefore, grant Plaintiffs’ request for
leave to file a Supplemental Complaint.
VI.
CONCLUSION
Based on the above, the Court concludes that Defendants’ Motion to Certify will be
denied because Defendants have failed to satisfy the requirements for certification under 28
U.S.C. § 1292(b). The Court further concludes that Plaintiffs’ Motion to Strike Reply brief
and Plaintiffs’ Motion to Strike certain affirmative defenses will likewise be denied.
Finally, the Court concludes that Plaintiffs’ proposed Supplemental Complaint is not
prejudicial, does not demonstrate bad faith, and does not appear futile. The Court will,
therefore, grant Plaintiffs’ Motion for Leave, and Plaintiff shall file and serve the Supplemental
Complaint within 14 days of the entry of this Order.
For the reasons stated herein, the Court enters the following:
[ORDER FOLLOWS ON NEXT PAGE]
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ORDER
IT IS THEREFORE ORDERED that Defendants’ Motion to Certify, (ECF No. 94),
is DENIED. Further, Defendants’ request for a stay of this matter pending disposition of the
instant Motion to Certify is DENIED AS MOOT.
IT IS FURTHER ORDERED that Plaintiffs’ Motion to Strike certain affirmative
defenses, (ECF No. 102), is DENIED.
IT IS FURTHER ORDERED that Plaintiffs’ Motion to Strike Reply Brief, (ECF No.
104), is DENIED.
IT IS FURTHER ORDERED that Plaintiffs’ Motion for Leave to File and Serve First
Supplemental Complaint, (ECF No. 114), is GRANTED and Plaintiff is instructed to file and
serve the Supplemental Complaint within 14 days of the entry of this Order.
This, the 29th day of September, 2018.
/s/ Loretta C. Biggs
United States District Judge
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