Great Southland Limited v. Landash Corporation, et al.

Filing 134

OPINION AND ORDER GRANTING 119 GSL's Motion to Amend and GRANTING 120 GSL's Motion to Dismiss. Because GSL will be amending its Complaint, the remaining motions to dismiss 29 42 50 are MOOT. Signed by Judge Sarah D. Morrison on 4/15/2020. (tb)(This document has been sent by regular mail to the party(ies) listed in the NEF that did not receive electronic notification.)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
GREAT SOUTHLAND LIMITED,

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Plaintiff,
v.
LANDASH CORPORATION, et al.
Defendants.

Case No.: 2:17-CV-719
Judge Sarah D. Morrison
Magistrate Judge Jolson

OPINION AND ORDER
This case involves allegations of fraud relating to the sale of off-the-road mining tires. A
number of motions are now ripe after the January 28, 2020 stay lift (ECF No. 105) and after the
parties conferred with Magistrate Jolson. (ECF Nos. 109, 111, 124.) A brief recitation of the
procedural background is necessary to give each motion context.
I.
The Memorandum of the First Pretrial Conference (ECF No. 66) summarizes the original
Complaint (ECF No. 1) as follows:
This case originates from a loan transaction between
Plaintiff and [Defendant] Landash, which was guaranteed by
[Defendant] Adkins and secured by collateral consisting of thirtysix (36) large, off-the-road tires. [Defendants] Fox Byrd, Knight
Nguyen and Lopez prepared certain financial documents, which
were allegedly relied upon by Plaintiff in entering into the loan
transaction. The loan was predicated upon a tire transaction that
Landash and Adkins had allegedly arranged with [Defendant] Best
One, the seller of the tires, and [Defendant] Production Tire, the
buyer. The tires were to be shipped to [Defendant] XPO
Logistics[’] facility in Houston, Texas. In March 2016, Plaintiff
wired $2,400,000 to Best One for the purchase of the tires.
However, the transaction with Production Tire was never
consummated resulting in Landash and Adkins defaulting on the
loan.
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Plaintiff has alleged that Landash is in breach of the loan
agreement (Count I), that Adkins is in breach of the Guarantee
(Count II), and that Plaintiff is entitled to foreclose on the
collateral (Count III). Plaintiff has brought causes of action against
the Defendants for Fraud (Count IV), Civil Conspiracy (Count V),
RICO (Count VI), Intentional Misrepresentation (Count IX), and
Negligent Misrepresentation (Count X). Plaintiff has brought a
breach of contract action against XPO (Count VII). Plaintiff has
brought a negligence case against Fox Byrd, Knight Nguyen, and
Lopez (Count VIII). Plaintiff seeks to pierce the veil (Count XI) of
Adkins’ and Rebekah Adkins’ companies, which include
Defendants Giant Tyres USA, Midwest Coal, A&B Retreading,
Adkins Tire, Elephant OTR, Rebekah Holding, Investment
Holdings, and 885 Sternberger Road. Finally, Plaintiff has brought
a cause of action to potentially request pre-judgment attachment or
receivership (Count XII).
Defendants A&B Retreading, LLC, Jason E. Adkins, Rebekah Adkins, Adkins Tire, LLC,
Elephant OTR, LLC, Giant Tyres USA, LLC, Landash Corporation, Midwest Coal, LLC,
Rebekah Holding, LLC, Knight Nguyen Investments and Christopher Knight Lopez all moved to
dismiss (ECF Nos. 29, 50). Defendant Fox, Byrd & Company, P.C, an accounting firm that had
completed tax returns for the Adkins Defendants, likewise sought dismissal. (ECF No. 42).
A number of bankruptcy filings initially resulted in all discovery being stayed (ECF No.
66, 81). GSL then sought leave to amend its original Complaint (ECF No. 86). Shortly thereafter,
the Court stayed the entire case due to additional bankruptcy notices. (ECF No. 90.) That order
further held all pending motions in abeyance pending a stay lift. Id.
The stay was lifted in January 2020. (ECF No. 105.) The stay lift order required the
parties to confer and inform the Court which of the pending motions “need rulings, need to be
amended, or will be withdrawn.” Id. at 3. In response, GSL withdrew its original Motion to
Amend (ECF Nos. 86, 109), filed a new Motion to Amend (ECF No. 119) and filed a Motion to
Dismiss its Claims against Fox without prejudice (ECF No. 120). The Court addresses the new
Motion to Amend first.
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II.
GSL seeks leave to amend its original Complaint pursuant to Fed. R. Civ. P. 15(a)(2).
(ECF No. 119). That rule provides “a party may amend its pleading only with the opposing
party’s written consent or the court’s leave. The court should freely give leave when justice so
requires.” Although there is no documented opposition to the motion, GSL’s filing establishes
complete consent is lacking. (ECF No. 119 at 1, 4-5.) Hence, Court approval is required for GSL
to amend.
GSL seeks leave due to “substantial additional evidence pertaining to the claims against”
the non-bankrupt parties. (ECF No. 119 at 3.) GSL argues that justice requires leave be granted
to afford GSL “the opportunity to set forth the full extent of the allegations of fraudulent
conduct, consistent with Fed. R. Civ. P. 9(B), against the Defendants herein and the additional
co-conspirators who have been since [sic] identified.” Id. at 4. To accomplish this, the 289-page
proposed amended complaint adds new claims and parties but removes all claims against Fox.
GSL argues amendment will prejudice no party because this case “has effectively only just
begun.” Id.
“Trial courts enjoy broad discretion in deciding motions for leave to amend.” Johnson v.
Kroger Co., No. 2:18-cv-1240, 2020 U.S. Dist. LEXIS 45825, at *2 (S.D. Ohio Mar. 17, 2020)
(citing Gen. Elec. Co. v. Sargent & Lundy, 916 F.2d 1119, 1130 (6th Cir. 1990)). Rule 15(a)(2)
encompasses a liberal policy in favor of granting amendments and “reinforce[s] the principle that
cases ‘should be tried on their merits rather than the technicalities of pleadings.’” Inge v. Rock
Finan. Corp., 388 F.3d 930, 936 (6th Cir. 2004) (quoting Moore v. City of Paducah, 790 F.2d
557, 559 (6th Cir. 1986)). In interpreting this rule, “[i]t should be emphasized that the case law in

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this Circuit manifests liberality in allowing amendments to a complaint.” Parchman v. SLM
Corp., 896 F.3d 728, 736 (6th Cir. 2018) (citation and internal quotation marks omitted).
In the absence of any apparent or declared reason—such as undue
delay, bad faith or dilatory motive on the part of the movant,
repeated failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, futility of amendment, etc.—the
leave sought should, as the rules require, be “freely given.”
Pittman v. Experian Info. Sols., Inc., 901 F.3d 619, 640-41 (6th Cir. 2018) (quoting Foman v.
Davis, 371 U.S. 178, 182 (1962)).
The Court finds no undue delay, bad faith, dilatory motive, previous amendment or
futility present here. But the undue prejudice aspect of the analysis deserves attention. That is
due to GSL’s concurrent Motion to Dismiss its claims against Fox without prejudice under Fed.
R. Civ. P. 41(a)(2). (ECF No. 120.) Fox opposes, citing to its own fully briefed Motion to
Dismiss the Original Complaint (ECF No. 42) and to the possibility of GSL reasserting the
claims in the future to argue that any dismissal should be with prejudice. (ECF No. 123.)
Alternatively, Fox seeks its attorney’s fees and costs in defending this action if the Court
dismisses the counts without prejudice. GSL’s Reply reiterates its request for dismissal to be
without prejudice and provides that it withdraws its motion if the Court is considering a with
prejudice dismissal. (ECF No. 126.)
As noted, GSL’s proposed Amended Complaint contains no claims against Fox.
Accordingly, Fed. Rs. Civ. P. 15(a)(2) and 41(a)(2) intersect in this instance. “A request to
withdraw an existing count of a complaint as part of a motion to amend overlaps conceptually
with the provisions of Rule 41(a)(2), which requires the permission of the court, or a stipulation,
to dismiss a complaint after an answer to the complaint has been filed.” Greene v. Ab Coaster

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Holdings, Inc., No. 2:10-cv-38, 2012 U.S. Dist. LEXIS 85278, at *18-20 (S.D. Ohio June 20,
2012). As one court explains:
The discretion to allow a party to withdraw a count in a complaint
as part of a motion to amend appears to have similar limits to the
discretion of the court to reach the same conclusion under Rule 41.
Rule 41 does include the discretion to dismiss a matter with
prejudice and that is not an insignificant difference.
Innovation Ventures, LLC v. N2G Distributing, Inc., 2009 U.S. Dist. LEXIS 132009, 2009 WL
6040220, *2 (E.D. Mich. July 10, 2009); see also Chambers v. Time Warner, Inc., 2003 U.S.
Dist. LEXIS 3652, 2003 WL 1107790, at *2 (S.D.N.Y. March 12, 2003) (“[A] Rule 15(a)
amendment eliminating a claim is the same as a Rule 41(a) voluntary dismissal of the claim” and
is subject to the same standard of review); 6 Charles Alan Wright et al., Federal Practice and
Procedure § 1479 (2012) (“[T]he same considerations are relevant to dropping [a] claim
regardless of which rule [41(a) or 15(a)] is invoked.”).
According to Fed. R. Civ. P. 41(a)(2), “an action shall not be dismissed at the plaintiff’s
instance save upon order of the court and upon such terms and conditions as the court deems
proper. . . . Unless otherwise specified in the order, a dismissal under this paragraph is without
prejudice.” The court has discretion when deciding whether to grant dismissal under the rule.
Grover by Grover v. Eli Lilly & Co., 33 F.3d 716, 718 (6th Cir. Ohio September 8, 1994). That
discretion permits the Court to deny the motion, require that a dismissal be with prejudice, or
impose any other necessary conditions. Wellfount Corp. v. Hennis Care Ctr. of Bolivar, Inc., 951
F.3d 769, 774 (6th Cir. 2020). Those conditions “offset the prejudice the defendant may suffer
from a dismissal without prejudice.” Bridgeport Music, Inc. v. Universal-MCA Music Publ’g,
Inc., 583 F.3d 948, 954 (6th Cir. 2009). And, while they include the payment of costs incurred by

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a defendant, the Sixth Circuit “has expressly rejected the contention that the payment of defense
costs is universally required for voluntary dismissal under Rule 41(a)(2).” Id.
“Generally, an abuse of discretion is found only where the defendant would suffer ‘plain
legal prejudice’ as a result of a dismissal without prejudice, as opposed to facing the mere
prospect of a second lawsuit.” Id. (citation omitted). In determining whether such prejudice
would result, courts typically consider “the defendant’s effort and expense of preparation for
trial, excessive delay and lack of diligence on the part of the plaintiff in prosecuting the action,
insufficient explanation for the need to take a dismissal, and whether a motion for summary
judgment has been filed by the defendant.” Id.
The Court determines that Fox would suffer neither plain legal nor undue prejudice as a
result of amendment or dismissal of GSL’s claims against it without prejudice. No trial
preparation has taken place, no claims of delay or failure to prosecute are present and no motion
for summary judgment has been filed. GSL’s reason for seeking amendment is discussed above
and is sufficient. Fox’s fears of a re-file are inadequate to warrant a dismissal with prejudice
under Bridgeport. See also Grover by Grover v. Eli Lilly & Co., 33 F.3d 716, 718 (6th Cir.
1994) (holding the “mere prospect of a second lawsuit” is insufficient to warrant a dismissal with
prejudice).
Finding no prejudice, and given the liberal policy favoring amendment, the Court
GRANTS GSL’s Motion to Amend (ECF No. 119) and GRANTS GSL’s Motion to Dismiss
(ECF No. 120.) Because GSL will be amending its Complaint, the remaining motions to dismiss
(ECF Nos. 29, 42, 50) are MOOT.

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III.
In summary, GSL withdrew its June 11, 2018 Motion to Amend (ECF No. 86.) The Court
GRANTS GSL’s March 12, 2020 Motion to Amend (ECF No. 119.) The March 12, 2020
Motion to Dismiss of GSL is GRANTED. (ECF No. 120) The defendants’ Motions to Dismiss
(ECF Nos. 29, 42, 50) are MOOT.
IT IS SO ORDERED.
/s/ Sarah D. Morrison
SARAH D. MORRISON
UNITED STATES DISTRICT JUDGE

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