CTI Services, L.L.C. v. Haremza et al
Filing
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OPINION AND ORDER by Judge Gregory K Frizzell ; setting/resetting deadline(s)/hearing(s): ( Miscellaneous Deadline set for 6/17/2011); granting 119 Motion to Amend (Re: 105 Amended Complaint, ) (hbo, Dpty Clk)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
CTI SERVICES LLC, d/b/a CITADEL
TECHNOLOGIES and ROGER WALKER,
Plaintiffs,
v.
KEN HAREMZA, an individual; T.D.
WILLIAMS, INC., an Oklahoma corporation;
ENERGY MAINTENANCE SERVICES
GROUP I, LLC, successor-in-interest to
ENERGY FACILITY SERVICES, INC.;
HUNTING SPECIALIZED PRODUCTS, INC.;
HYDRATECH ENGINEERED PRODUCTS,
L.L.C.; and HUNTING PIPELINE SERVICES,
L.L.C.,
Defendants.
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Case No. 09-CV-144-GKF-TLW
OPINION AND ORDER
This matter comes before the court on plaintiffs’ Motion to Amend Complaint to Add
Defendants. [Doc. No. 118]. Plaintiffs seek leave to amend to add Peter Blais (“Blais”) and John
Charest (“Charest”) as defendants. Defendant Energy Maintenance Group I, LLC (“EMS”)
argues that the request is untimely and that the proposed amendments would be futile.
I. Background/Procedural Status
This dispute involves competing composite wrap products designed to repair pipelines.
Plaintiffs filed suit against defendants on January 28, 2009, in Tulsa County District Court. On
March 16, 2009, the case was removed to federal court. [Doc. No. 2]. On January 28, 2011,
plaintiffs requested leave to amend their complaint and add three new defendants. [Doc. No. 79].
The court granted leave. On March 29, 2011 plaintiffs requested leave to amend their complaint a
second time to include Blais and Charest as defendants.
In January, 2005, Blais and Charest signed a Non-Disclosure and Confidentiality
Agreement (“the Agreement”) with plaintiff CTI Services, LLC, d/b/a Citadel Technologies
(“Citadel”). At the time, Blais was the Director of Engineering and Charest was Vice President
and General Manager of defendant Hunting Pipeline Services, LLC (“Hunting Pipeline”). The
Agreement states that the “DISTRIBUTOR agrees to treat as secret and confidential . . . any
confidential information furnished by the other party.” [Doc. No. 118, Ex. 1, ¶ 1.2]. Under
Blais’s name is the address of Hunting Pipeline. Plaintiffs admit that “[w]hen this [A]greement
was signed, Blais signed the agreement on behalf of [Hunting Pipeline]. [Doc. No. 118 at 2].
Plaintiffs alleges that Blais is now the owner and manager of Hydratech Engineered Products,
LLC (“Hydratech”). Plaintiffs further allege that Hunting Pipeline and Hydratech have conspired
with EMS to misappropriate and steal Citadel’s confidential business information, trade secrets,
and proprietary information. [Amended Complaint, Doc. No. 105 at ¶¶ 50-55].
Plaintiffs argue that the basis for adding Blais and Charest was available only as of March
7, 2011, when Hydratech responded to Citadel’s subpoena issued in December of 2009. Plaintiffs
do not seek to add any new claims for relief.
II. Analysis
Rule 15 of the Federal Rules of Civil Procedure states that leave to amend a complaint
shall be freely given when justice so requires. Fed. R. Civ. P. 15(a)(2). A court may refuse leave
to amend “upon a showing of undue delay, undue prejudice to the opposing party, bad faith or
dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of
amendment.” Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1992).
Defendant EMS argues (1) that plaintiffs’ motion is untimely, because it was made two
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years after the lawsuit was filed and because plaintiffs could have added Blais and Charest
sooner, and (2) that the motion is futile, because neither Blais nor Charest is liable to plaintiffs.
1. Timeliness of Amendment
A district court may exercise its discretion and deny leave to amend solely for undue delay
or untimeliness. First City Bank, N.A. v. Air Capitol Aircraft Sales, Inc., 820 F.2d 1127, 1133
(10th Cir. 1987). Factors the court may consider to determine untimeliness include the public
costs of protracted litigation (Fort Howard Paper Co. v. Standard Havens, Inc., 901 F.2d 1373,
1379-80 (7th Cir. 1990)), whether a delay was extreme to the point of prejudice (Id.), and whether
the movant can demonstrate reasons for delay or excusable neglect. Federal Ins. Co. v. Gates
Learjet Corp., 823 F.2d 383, 387 (10th Cir. 1987). Of these factors, “[the Tenth] Circuit focuses
primarily on the reasons for the delay.” Minter v. Prime Equip. Co., 451 F.3d 1196, 1206 (10th
Cir. 2006).
Neglect is not excusable where a plaintiff had the informational basis for amendment and
failed to use it in a timely manner. See McKnight v. Kimberly Clark Corp., 149 F.3d 1125, 1130
(10th Cir. 1998) (affirming order denying leave to amend, noting that “plaintiff was aware of all
the information on which his proposed amended complaint was based prior to filing the original
complaint [and he] offered no explanation for the undue delay”).
In the instant case, plaintiffs’ Motion for Leave was filed three days prior to the deadline
set by the court (April 1, 2010). Additionally, plaintiffs assert that they were not aware of Blais
and Charest’s involvement in the case until March 7, 2011, when Hydratech released documents
in response to Citadel’s subpoena. [Doc. No. 118, Ex. 5]. Within three weeks of receiving the
documents from Hydratech, Citadel made its Motion for Leave.
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Plaintiffs have demonstrated reasons for the delay in adding Blaise and Charest – they
were denied access prior to March 7, 2011, to information providing the basis for amendment.
The court concludes that the motion is not untimely.
2. Futility of Amendment
EMS argues that plaintiffs’ request to add Blais and Charest should be denied because the
individuals cannot be liable for the actions of their corporate employer.
It is the general rule that if an officer or agent of a corporation directs or participates
actively in the commission of a tortious act, he is personally liable to a third person for injuries
that proximately result. Lobato v. Pay Less Drug Stores, Inc., 261 F.2d 406, 408-409 (10th Cir.
1958); see also All American Car Wash, Inc. v. Nat’l Pride Equip., Inc., 550 F.Supp. 166, 169
(W. D. Okla. 1981) (“Corporate officers are personally liable for alleged tortious conduct of the
corporation if they personally took part in the commission of the tort or if they specifically
directed officers, agents or employees of the corporation to commit such acts.”) (citing Donner v.
Tams-Witmark Music Library, Inc., 480 F.Supp. 1229 (E. D. Pa.1979)); and Okla. Federated
Gold & Numismatics, Inc., 24 F.3d 136, 141 (10th Cir. 1994) (“Under Oklahoma law, an officer
may be held liable for the torts that he personally commits.”); Bane v. Anderson, Bryant & Co.,
786 P.2d 1230, 1234 (Okla. 1989) (if an agent, acting within the scope of his authority, in the
pursuit of a lawful purpose, steps aside to engage in a tortious act to the injury of property or
personal rights of another, the agent becomes liable for the injury done); Restatement (Third) of
Agency § 7.01 (2006) (“An agent is subject to liability to a third party harmed by the agent’s
tortious conduct. Unless an applicable statute provides otherwise, an actor remains subject to
liability although the actor acts as an agent or an employee, with actual or apparent authority, or
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within the scope of employment.”). Misappropriation or disclosure of trade secrets constitutes a
tort for which corporate officers and/or agents may be subject to liability.
The court concludes that EMS has failed to show that adding Blais and Charest as
defendants would be futile.1
III. Conclusion
Plaintiffs’ Motion for Leave to Amend Complaint to Add Defendants is hereby granted.
Plaintiffs shall file their Second Amended Complaint on or before June 17, 2011.
ENTERED this 8th day of June, 2011.
The exhibits attached to plaintiffs’ motion support the proposition that the addition of Blais and
Charest would not be futile. An email from Blais dated March 24, 2005 (CC to
“CharestHunting@aol.com”) refers to an epoxy filler and high strength epoxy, stating, “My
expectations are we can sample the epoxies and reproduce them similar . . . As discussed I will
plan to be out at your office to demonstrate the carbon fiber from this kit, probably with the sales
staff in attendance.” [Doc. No. 118, Ex. 5, at 1]. Another email sent by Blais to Charest on
April 8, 2005 reads, “Attached are the results of . . . my visit with EFSI in Houston, TX this
week. Mr. Faulk, President of EFSI is very interested in breaking their contract with Citadel and
working with us.” [Id. at 3]. A document summarizing a meeting held April 6, 2005, between
Blais and the management of EFSI references the “intent to design a Carbon Fiber-Epoxy
Composite similar to the current product that Citadel supplies to EFSI.” [Id. at 4].
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