Architettura Inc v DSGN Associates Inc, et al

Filing 103

MEMORANDUM OPINION AND ORDER granting 88 MOTION for Leave to File 3rd Amended Complaint, and denying without prejudice 44 Motion to Dismiss/Lack of Jurisdiction,, Dismiss for Failure to State a Claim, filed by Texas Department of Housin g and Community Affairs, 69 Motion for Protective Order filed by Fort Worth Housing Authority, 67 Motion to Dismiss filed by Blue Line Lofts, LP, 27 Motion to Dismiss/Lack of Jurisdiction,, Dismiss for Failure to State a Claim, filed by Boston Capital Corporation, 88 Motion for Leave to File filed by Architettura Inc, 30 Dismiss for Failure to State a Claim, Motion to Dismiss/Lack of Jurisdiction filed by Fort Worth Housing Authority, 64 Motion for Protective Order f iled by Boston Capital Corporation, 40 Dismiss for Failure to State a Claim filed by Ellen Rourke, 74 Motion to Dismiss filed by TF Development Limited Partnership, 66 Motion to Dismiss filed by Avondale Farms Seniors LP, 39 Motion to Dismiss filed by Rusk Real Estate LLC, Benetta Lee Rusk, 72 Motion for Protective Order, filed by Ellen Rourke re: 44 MOTION to Dismiss for Lack of Jurisdiction Motion to Dismiss for Failure to State a Claim, 69 MOTION for Protective Order to Stay Discovery, 67 MOTION to Dismiss and Brief in Support, 27 MOTION to Dismiss for Lack of Jurisdiction Motion to Dismiss for Failure to State a Claim, 88 MOTION for Leave to File 3rd Amen ded Complaint, 30 Motion to Dismiss for Failure to State a Claim MOTION to Dismiss for Lack of Jurisdiction , 64 MOTION for Protective Order to Stay Discovery as to Boston Capital Corporation, 40 Motion to Dismiss fo r Failure to State a Claim, 74 MOTION to Dismiss Under Rule 12(b)(6), 66 MOTION to Dismiss and Subject Thereto Answer to DSGN's Cross-Claim, 39 First MOTION to Dismiss , 72 MOTION for Protective Order to Stay Discovery (Ordered by Judge Sidney A Fitzwater on 8/3/2017) (Judge Sidney A Fitzwater)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
ARCHITETTURA, INC.,
Plaintiff,
VS.
DSGN ASSOCIATES INC., et al.,
Defendants.

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§ Civil Action No. 3:16-CV-3021-D
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MEMORANDUM OPINION
AND ORDER
Plaintiff Architettura, Inc. (“Architettura”) moves for leave to file a third amended
complaint and join two additional defendants. For the reasons that follow, the court grants
the motion and directs the clerk of court to file Architettura’s proposed third amended
complaint.
I
The court will limit its discussion of the background facts and procedural history of
this case to what is necessary to understand the decision on the instant motion.
Architettura filed this lawsuit against multiple defendants on October 28, 2016. With
leave of court, it filed a first amended complaint on December 8, 2016. After several
defendants moved to dismiss the first amended complaint, the court on its own initiative
entered a January 25, 2017 order denying the motions without prejudice and directing that
Architettura either adopt its first amended complaint as is or file a second amended
complaint. The court stated:

to reduce delay and expense, before addressing the sufficiency
of plaintiff’s first amended complaint, the court will permit
plaintiff to evaluate defendants’ motions and decide whether to
adopt the first amended complaint as is or to file a second
amended complaint. The court encourages counsel to confer in
good faith regarding what is necessary to cure any pleading
deficiencies so that unnecessary expense and delay related to
resolving the sufficiency of plaintiff’s pleadings can be avoided.
Jan. 25, 2017 Order at 2-3. This is a type of procedure that judges around the country are
following in an attempt to reduce delay and expense associated with disputes over the
pleadings, considering that so few cases are completely resolved on the pleadings alone.
On January 26, 2017 Architettura filed its second amended complaint, which several
defendants have moved to dismiss. See infra § V. Additionally, three defendants have
moved for protective orders to stay discovery until the court decides the motions to dismiss.
See id.
On March 1, 2017 the court entered a scheduling order that set May 8, 2017 as the
deadline for a party to file a motion for leave to join parties, and June 15, 2017 as the
deadline for a party to file a motion for leave to amend pleadings. On June 15, 2017
Architettura filed the instant motion for leave to file a third amended complaint. Architettura
contends that it obtained information during discovery regarding additional parties (or proper
subsidiaries of current defendants) and instances of infringement that it would like to add to
its complaint. Architettura seeks to add two defendants; to add allegations of infringement
based on the use of protected drawings, images, and works in a marketing brochure by the
owners of McKinney Millennium; and to “better . . . articulate its causes of action against the

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various defendants,” P. Br. 3.
Defendant Ellen Rourke (“Rourke”) opposes the motion, contending that because it
seeks to add parties, it is untimely under the scheduling order. She also maintains that
granting leave to amend would be futile and would only cause the court and the parties to
expend unnecessary time and resources completing yet another round of briefing on motions
to dismiss. The “Bolin Defendants”1 oppose Architettura’s motion for largely the same
reasons, and they also maintain that the parties Architettura seeks to add are not necessary
parties under Fed. R. Civ. P. 19(a). Defendant Boston Capital Corporation (“Boston
Capital”) opposes the motion on the grounds that the parties Architettura seeks to add as
defendants cannot be properly joined under Rule 20(a), and the proposed amendments are
futile. Defendant Fort Worth Housing Authority (“FWHA”) opposes the motion on the
grounds that Architettura’s proposed third amended complaint does not allege any new
causes of action or new factual allegations of wrongdoing by FWHA, the proposed
amendment is futile, and Architettura failed to comply with certain local rules.2

1

The “Bolin Defendants” consist of the following: Brandon Bolin; McKinney
Millennium LP; McKinney Millennium GP, LLC; GFD Holdings, LLC; McKinney
Millennium II, LP; McKinney Millennium II GP, LLC; Avondale Farms Seniors GP, LLC;
Avondale Farms Seniors, LP; GD 2.0 Holdings, LLC; Benetta Lee Rusk; Rusk Real Estate,
LLC; GroundFloor Development; GD Opportunity I, LLC; TF Development Limited
Partnership; and Blue Line Lofts, LP.
2

FWHA contends, inter alia, that Architettura’s counsel made no attempt to confer
with FWHA’s counsel before filing this motion, as required by N.D. Tex. R. 7.1(a),
“inasmuch as FWHA’s counsel did not receive a telephone call, message, email, or any other
communication from Plaintiff’s counsel before Plaintiff filed its Motion.” FWHA Br. 5.
Although the court does not in any way minimize the importance of complying with the
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II
The court begins by addressing a threshold question. Architettura appears to contend
that its motion is timely because it was filed by the June 15, 2017 deadline for filing a motion
for leave to amend the pleadings. It therefore maintains that its motion is governed by the
more lenient standard of Rule 15(a)(2). The court disagrees, in part.
Architettura requests permission to file its third amended complaint in order, inter
alia, “to add additional Boston Capital entities.”3 P. Br. 2. Architettura seeks not only to
amend its complaint but to join new parties. As this court has previously explained:
[a] party cannot use a motion for leave to amend the pleadings
as a device to circumvent the separate deadline for moving for
leave to join parties. Such a reading of a scheduling order
would effectively render meaningless the deadline for leave to
join parties, because an amended pleading could be used to add
parties.
Grant v. Rathbun, 2016 WL 1750572, at *2 (N.D. Tex. May 3, 2016) (Fitzwater, J.).
Architettura was therefore required under the scheduling order to move for leave to join these
parties no later than the May 8, 2017 deadline for a party to file a motion for leave to join

certificate of conference requirement of Rule 7.1(a), there is no indication that FWHA would
have agreed to the relief Architettura seeks had the parties conferred before the motion was
filed. In the circumstances presented here, the court will not deny Architettura’s motion
based on its counsel’s alleged failure to confer with FWHA’s counsel.
3

Architettura identifies three “additional Boston Capital entities” that “comprise the
operating entity for McKinney Millennium”: Boston Capital Direct Placement, a Limited
Partnership; BCP/McKinney Millennium, LLC the investment Limited Partner; and BCCC,
Inc., the Special Limited Partner. P. Br. 2. In its proposed third amended complaint,
however, Architettura only adds as defendants BCP/McKinney Millennium, LLC and BCCC,
Inc.
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other parties. Accordingly, to the extent Architettura seeks to add parties through the filing
of a third amended complaint, the instant motion is untimely because it was filed on June 15,
2017, over one month after the May 8, 2017 deadline for a party to file a motion for leave
to join other parties.

This means that before the court can consider the merits of

Architettura’s request to join these parties, Architettura must satisfy the good cause standard
of Rule 16(b)(4) for modifying the scheduling order to allow the motion to be filed.
III
The court must therefore decide first whether, with respect to Architettura’s request
to join two parties, it has met the good cause standard of Rule 16(b)(4) for modifying the
scheduling order.
A
Rule 16(b)(3)(A) provides that the court’s “scheduling order must limit the time to
join other parties, amend the pleadings, complete discovery, and file motions.” Rule 16(b)(4)
states that “[a] schedule may be modified only for good cause and with the judge’s consent.”
“The ‘good cause’ standard focuses on the diligence of the party seeking to modify the
scheduling order.” Cut-Heal Animal Care Prods., Inc. v. Agri-Sales Assocs., Inc., 2009 WL
305994, at *1 (N.D. Tex. Feb. 9, 2009) (Fitzwater, C.J.). Mere inadvertence on the part of
the movant, and the absence of prejudice to the nonmovant, are insufficient to establish
“good cause.” Id.; Price v. United Guar. Residential Ins. Co., 2005 WL 265164, at *4 (N.D.
Tex. Feb. 2, 2005) (Fish, C.J.) (citing Geiserman v. MacDonald, 893 F.2d 787, 791 (5th Cir.
1990)). “Instead, the movant must show that, despite her diligence, she could not reasonably
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have met the scheduling deadline.” Matamoros v. Cooper Clinic, 2015 WL 4713201, at *2
(N.D. Tex. Aug. 7, 2015) (Fitzwater, J.) (citing S&W Enters., L.L.C. v. SouthTrust Bank of
Ala., N.A., 315 F.3d 533, 535 (5th Cir. 2003)).
The court assesses four factors when deciding whether to modify a scheduling order
under Rule 16(b)(4): “(1) the explanation for the failure to timely [file the motion]; (2) the
importance of the [motion]; (3) potential prejudice in allowing the [motion]; and (4) the
availability of a continuance to cure such prejudice.” S&W Enters., 315 F.3d at 536 (citation,
internal quotation marks, and brackets omitted). The court considers the four factors
holistically and “does not mechanically count the number of factors that favor each side.”
EEOC v. Serv. Temps, Inc., 2009 WL 3294863, at *3 (N.D. Tex. Oct. 13, 2009) (Fitzwater,
C.J.), aff’d, 679 F.3d 323 (5th Cir. 2012).
B
Architettura does not address the Rule 16(b)(4) good cause standard in its motion for
leave to file third amended complaint. It has not filed a reply to defendants’ opposition
responses, and therefore has not replied to defendants’ assertions that Rule 16(b)(4) applies.
“When a party files an untimely motion . . . and does not address the good cause standard
under Rule 16(b)(4), this court typically denies the motion for that reason alone.” Wachovia
Bank, Nat’l Ass’n v. Schlegel, 2010 WL 2671316, at *3 (N.D. Tex. June 30, 2010)
(Fitzwater, C.J.) (citing Serv. Temps, 2009 WL 3294863, at *1). But the court has made
exceptions in cases where the movant does not address the Rule 16(b)(4) good cause
standard, but the grounds on which it relies to establish good cause are relatively clear. See,
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e.g., Nieves v. John Bean Techs. Corp., 2014 WL 2587577, at *2 (N.D. Tex. June 10, 2014)
(Fitzwater, C.J.) (“Nieves neither identifies the correct standard nor cites Rule 16(b)(4) in her
brief, but the grounds on which she relies enable the court to apply the pertinent four-factor
test.”). Accordingly, because the grounds on which Architettura relies enable the court to
apply the pertinent four-factor test, the court will consider on the present briefing whether
Architettura has met the good cause standard of Rule 16(b)(4) to amend the scheduling order.
C
1
The court first considers Architettura’s explanation for failing to timely file a motion
for leave to join parties. Architettura contends that in response to its request for production
of documents, certain defendants produced to Architettura, on or around May 9, 2017, a
Second Amended and Restated Limited Partnership Agreement (“Agreement”) that lists the
entities that comprise the operating entity for McKinney Millennium (one of the projects in
question), and that of the listed entities, the only one Architettura knew of was McKinney
Millennium, GP, LLC (“McKinney GP”), a defendant in the case. Architettura also
maintains that the other owners of the McKinney Millennium project appear to be owned or
affiliated with Boston Capital, but that because Boston Capital has refused to respond to
discovery requests, Architettura “cannot be entirely sure of the relationship until such
responses are provided,” and that, regardless, the additional entities “need to be added as
parties, since they share in the liability for claims against [McKinney GP].” P. Br. 3.
The court concludes that Architettura’s explanation is satisfactory. Architettura does
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not explain why it waited until June 15, 2017 to move for leave to add parties (perhaps it did
so based on the mistaken belief that it could properly add parties through a timely-filed
motion for leave to amend the complaint). But it explains that, until it was provided
discovery responses after the May 8, 2017 deadline for adding parties, it was unaware that
the additional entities owned McKinney Millennium.
2
The court next considers the importance of the requested relief. Architettura contends
that the additional parties must be added because they share liability for claims against
McKinney GP. Architettura offers no explanation, however, for why it will not be able to
fully recover the damages it seeks (and thus be made whole) by suing only McKinney GP.
Accordingly, this factor weighs against granting leave.
3
The court will consider together the third factor—the potential prejudice to the
defendants in allowing the amendment—and the fourth factor—the availability of a
continuance to cure such prejudice.
Although defendants argue that they will be prejudiced if the court allows the
amendment—because they will have to incur unnecessary time and resources completing
another round of briefing on motions to dismiss4—no defendant specifically argues that the

4

To the extent defendants argue that they will incur unnecessary time and resources
completing another round of briefing on motions to dismiss, the court, for the reasons
explained below, see infra § IV, is granting Architettura’s timely filed motion for leave to
file its third amended complaint, so regardless whether the court also permits Architettura
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defendant will be prejudiced by the court’s allowing Architettura’s untimely motion for leave
to add parties. Moreover, this case has not yet been set for trial. The lawsuit was initiated
in October 2016, and it appears that discovery is at an early stage. If any defendant is
prejudiced by Architettura’s joining two defendants at this juncture, that defendant may move
for a continuance to cure such prejudice.
D
Considering the factors holistically, the court concludes that the scheduling order
should be modified to permit Architettura to file the instant motion for leave to amend, which
essentially includes a motion for leave to join parties. Architettura has provided the court
with a satisfactory explanation for its failure to meet the scheduling order deadline, and
although the motion has not been shown to be important (because of the apparent availability
of relief from the existing defendants), the court is not persuaded that any defendant will be
prejudiced by the court’s allowing these parties to be joined. Accordingly, treating
Architettura’s motion in part as an untimely request for leave to join parties, the court
modifies the scheduling order to permit Architettura to file the request as a component of its
motion for leave to file a third amended complaint.5

to add additional parties, defendants will have to file new motions to dismiss directed to the
third amended complaint. Additionally, as the court notes above, “few cases are completely
resolved on the pleadings alone.” The parties could actually reduce the delay and expense
involved in this dispute over the pleadings by attempting to resolve it by agreement and move
to the discovery and summary judgment motion phases of the case, and, if necessary, to trial.
5

By granting Architettura this relief, the court suggests no view concerning the
propriety of joining BCP/McKinney Millennium, LLC or BCCC, Inc. under Rule 20(a). See
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IV
The court now turns to Architettura’s motion for leave to file third amended
complaint.
Rule 15(a)(2) provides that “[t]he court should freely give leave [to amend a pleading]
when justice so requires.” “‘It is settled that the grant of leave to amend the pleadings
pursuant to Rule 15(a) is within the discretion of the trial court.’” Garcia v. Zale Corp., 2006
WL 298156, at *1 (N.D. Tex. Feb. 1, 2006) (Fitzwater, J.) (quoting Zenith Radio Corp. v.
Hazeltine Research, Inc., 401 U.S. 321, 330 (1971)). When, as here, “a party files a motion
for leave to amend by the court-ordered deadline, there is a ‘presumption of timeliness.’”
Pyramid Transp., Inc. v. Greatwide Dall. Mavis, LLC, 2012 WL 5875603, at *2 (N.D. Tex.
Nov. 21, 2012) (Fitzwater, C.J.) (quoting Poly-Am., Inc. v. Serrot Int’l Inc., 2002 WL
206454, at *1 (N.D. Tex. Feb. 7, 2002) (Fitzwater, J.)). Granting leave to amend, however,
“is by no means automatic.” Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139 (5th Cir. 1993)
(citation omitted). In deciding whether to grant leave to amend, the court may consider
factors 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, and futility of amendment. Id. (citing cases).
Having considered the relevant factors, the court concludes that leave should be

Rolls-Royce Corp. v. Heros, Inc., 576 F.Supp.2d 765, 795 n.22 (N.D. Tex. Mar. 25, 2008)
(Fitzwater, C.J.) (granting motion for leave to amend complaint to add additional parties, but
expressing no view concerning the propriety of joining the parties under Rule 20(a)).
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granted. Architettura sought leave to amend before the court-ordered deadline. “The court
in entering its scheduling order presumptively determined that a motion filed before the
deadline for seeking amendments to pleadings would not be deemed dilatory.” Poly-Am,
Inc., 2002 WL 206454, at *1.

Nothing in the record persuades the court that this

presumption of timeliness has been rebutted in this case. Although permitting Architettura
to file a third amended complaint will likely result in another round of motions to dismiss,
but see supra note 4, there is no suggestion that the new allegations in the third amended
complaint will necessitate extensive changes to the motions that defendants have already
briefed. And because the court has not yet decided any of the pending motions to dismiss,
no judicial resources will be wasted if the court permits the amendment.
Regarding defendants’ futility arguments, as this court has frequently noted,
the court’s almost unvarying practice when futility is raised is to
address the merits of the claim or defense in the context of a
Rule 12(b)(6) or Rule 56 motion. The court only infrequently
considers the merits of new causes of action in the context of
Rule 15(a). The court prefers instead to do so in the context of
a Rule 12(b)(6) or Rule 56 motion, where the procedural
safeguards are surer.
Garcia, 2006 WL 298156, at *1-2 (quoting Poly-Am., Inc., 2002 WL 206454, at *1-2).
Accordingly, the court grants Architettura’s motion for leave to file third amended complaint.
V
In view of the court’s decision granting Architettura’s motion, it denies the following
motions without prejudice as moot: (1) Boston Capital’s February 9, 2017 motion to dismiss
plaintiff’s second amended complaint and jury demand under Rules 12(b)(2) and 12(b)(6);
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(2) FWHA’s February 9, 2017 motion to dismiss plaintiff’s second amended complaint for
lack of jurisdiction and failure to state a claim; (3) the February 9, 2017 motion of Benetta
Lee Rusk and Rusk Real Estate LLC to dismiss under Rule 12(b)(6); (4) the February 9, 2017
motion of Rourke to dismiss under Rule 12(b)(6); (5) the February 13, 2017 motion of the
Texas Department of Housing and Community Affairs to dismiss for lack of jurisdiction and
failure to state a claim; the March 17, 2017 motion of Boston Capital for protective order to
stay discovery; the March 23, 2017 motion of Avondale Farms Seniors, LP to dismiss; the
March 28, 2017 motion of Blue Line Lofts, LP to dismiss under Rule 12(b)(6); the March
31, 2017 motion of FWHA for protective order to stay discovery; the April 5, 2017 motion
of Rourke for protective order to stay discovery; and the April 7, 2017 motion of TF
Development Limited Partnership to dismiss under Rule 12(b)(6).
*

*

*

For the foregoing reasons, the court grants Architettura’s motion for leave to file third
amended complaint and directs the clerk of court to file Architettura’s third amended
complaint today. The court denies without prejudice as moot the pending motions to dismiss
Architettura’s second amended complaint and the pending motions for protective order to
stay discovery.
SO ORDERED.
August 3, 2017.
_________________________________
SIDNEY A. FITZWATER
UNITED STATES DISTRICT JUDGE
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