Transplace Texas LP v. Alioto et al

Filing 36

MEMORANDUM OPINION AND ORDER - Pending before the Court is Plaintiff's Motion for Leave to Amend Pleadings (Dkt. 32 ]. After reviewing the relevant pleadings, the Court GRANTS Plaintiff's motion. Signed by Judge Amos L. Mazzant, III on 3/2/2017. (baf, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

TRANSPLACE TEXAS LP
v.
DAVID ALIOTO, PROBITY
ENTERPRISES, INC.

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Civil Action No. 4:16-CV-00647
Judge Mazzant

MEMORANDUM OPINION AND ORDER
Pending before the Court is Plaintiff’s Motion for Leave to Amend Pleadings (Dkt. #32).
After reviewing the relevant pleadings, the Court grants Plaintiff’s motion.
BACKGROUND
In this dispute Transplace Texas LP (“Transplace”) alleges fraud and breach of contract
against Probity Enterprises, Inc. (“Probity”) and its President and sole shareholder David Alioto
(“Alioto”) (collectively, “Defendants”). Transplace claims that Alioto made intentional
misrepresentations about the viability and predicted success of Probity’s Transportation Network
Solution Program.
This case was removed to the Court on August 25, 2016 (Dkt. #1). On October 6, 2016,
Transplace filed its first amended complaint (Dkt. #12). On December 13, 2016, Defendants
filed an answer and verified counterclaims (Dkt. #24). On January 24, 2017, the parties
participated in mediation. On February 7, 2017, the parties filed a Joint Motion to
Amend/Correct Scheduling Order (Dkt. #30). On February 13, 2017, the Court granted the joint
motion and set the Transplace’s deadline to file amended pleadings on March 14, 2017
(Dkt. #31). That same day, Transplace filed this motion for leave to amend and attached its
proposed second amended complaint (Dkt. #32). On February 27, 2017, Defendants filed a
response (Dkt. #34).

LEGAL STANDARD
Rule 15(a) of the Federal Rules of Civil Procedure provides that a party may amend its
pleading once without seeking leave of court or the consent of the adverse party at any time
before a responsive pleading is served. Fed. R. Civ. P. 15(a). After a responsive pleading is
served, a party may amend only with the opposing party’s written consent or the court’s leave.”
Id. Rule 15(a) instructs the court to “freely give leave when justice so requires.” Id. The rule
‘“evinces a bias in favor of granting leave to amend.’” Jones v. Robinson Prop. Grp., L.P.,
427 F.3d 987, 994 (5th Cir. 2005) (quoting Lyn–Lea Travel Corp. v. Am. Airlines, Inc., 283 F.3d
282, 286 (5th Cir. 2002)). But leave to amend “is not automatic.” Matagorda Ventures, Inc. v.
Travelers Lloyds Ins. Co., 203 F. Supp. 2d 704, 718 (S.D. Tex. 2000) (citing Dussouy v. Gulf
Coast Inv. Corp., 660 F.2d 594, 598 (5th Cir. 1981)). Whether to allow amendment “lies within
the sound discretion of the district court.” Little v. Liquid Air Corp., 952 F.2d 841, 845–46
(5th Cir. 1992). A district court reviewing a motion to amend pleadings under Rule 15(a) may
consider “whether there has been ‘undue delay, bad faith or dilatory motive, . . . undue prejudice
to the opposing party, and futility of amendment.’” Jacobsen v. Osborne, 133 F.3d 315, 318
(5th Cir. 1998) (quoting In re Southmark Corp., 88 F.3d 311, 314–15 (5th Cir. 1996)).
ANALYSIS
Transplace seeks leave to amend its First Amended Petition to add two paragraphs of
factual allegations and a cause of action for Fraud/Fraudulent Inducement against Alioto
personally—a claim that was previously only against Probity. Transplace seeks to make these
amendments because of “significant factual developments” discovered by Transplace through
Rule 26 disclosures, mediation, and Defendants’ counterclaims. Defendants oppose the
amendments because Transplace possessed the necessary information at the time Transplace

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filed its first amended complaint and thus amendment at this time would cause undue delay.
Defendants further argue that if Transplace uses information gleaned from mediation to
supplement their complaint, then they will be breaking the rule regarding confidentiality of
settlement negotiations. Defendants’ arguments are without merit.
The Court finds that allowing amendment before the deadline would not cause undue
delay. Further, Rule 408 is not an appropriate reason to deny Transplace’s proposed amended
complaint. Rule 408 is a rule of evidence governing the admissibility of settlement discussions as
evidence at trial. Fed. R. Evid. 408. Specifically, Rule 408 states that “conduct or a statement
made during compromise negotiations about [a disputed] claim” is not admissible “to prove or
disprove the validity or amount of [the] claim.” Id. The Court cannot determine which facts may
have been gleaned from mediation and Defendants have not pointed to any. Even if the
allegations were made during settlement negotiations, Rule 408 is a rule governing the admission
of evidence in court and not a rule of pleading. Disputes over Rule 408 should be resolved as
evidentiary matters with motions in limine rather than opposing an amended complaint.
Transplace has not implicated Rule 408 by offering the statements into evidence, and the Court
will not use a rule of evidence to bar preemptively Transplace’s second amended complaint.
Since the Federal Rules instruct leave to amend to be freely given when justice so requires, the
Court determines such leave is proper in this case.
CONCLUSION
Therefore, Plaintiff’s Motion for Leave to Amend Pleadings (Dkt. #32) is hereby
GRANTED.
IT IS SO ORDERED.

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SIGNED this 2nd day of March, 2017.

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AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

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