ACS Partners, LLC v GFI Management Services, Inc

Filing 130

MEMORANDUM AND ORDER ( Joint Pretrial Order due by 12/2/2016., Responses due by 9/6/2016., Replies due by 9/16/2016, Docket Call set for 12/12/2016 at 03:00 PM in Courtroom 9F before Judge Nancy F Atlas)(Signed by Judge Nancy F Atlas) Parties notified.(sashabranner, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ACS PARTNERS, LLC,
Plaintiff,
v.
GFI MANAGEMENT SERVICES,
INC.,
Defendant.

§
§
§
§
§
§
§
§

August 11, 2016
David J. Bradley, Clerk

CIVIL ACTION NO. H-15-1111

MEMORANDUM AND ORDER
Plaintiff ACS Partners, LLC, (“ACS”) filed this lawsuit against GFI
Management Services, Inc. (“GFI”) on April 28, 2015. On June 2, 2015, ACS filed
an Amended Complaint [Doc. # 7]. On July 20, 2015, ACS filed a Second Amended
Complaint [Doc. # 17]. On February 2, 2016, ACS filed a Third Amended Complaint
[Doc. # 67]. On May 27, 2016, ACS filed a Fourth Amended Complaint. At that
time, the discovery deadline was May 27, 2016, and the deadline has not been
extended.
On June 25, 2016, GFI filed a Motion for Summary Judgment [Doc. # 112], to
which ACS filed a Response [Doc. # 120], and GFI filed a Reply [Doc. # 124]. On
July 29, 2016, GFI filed a Motion to Strike the Declaration of Trent Arthur [Doc.
# 125].

P:\ORDERS\11-2015\1111MContinuance.wpd

160811.1429

On July 27, 2016, ACS filed a Motion for Leave to File Supplement to
Response to Defendant’s Motion for Summary Judgment [Doc. # 123]. ACS
represents that it is attempting to obtain discovery from Strategic Management
Partners, LLC (“Strategic”) in the United States District Court for the Northern
District of Georgia, Civil Action No. 1:16cv1763. ACS filed a Motion for Contempt
in the Georgia federal court on May 9, 2016, and Strategic filed a Response on
May 27, 2016. In its Response, Strategic notes that the Motion for Contempt was
filed by ACS’s attorney Jason Kraus, who is not admitted to practice in the Northern
District of Georgia. Strategic notes also that the purported subpoena, served on
Strategic on March 14, 2016, contains a number of legal deficiencies, including the
requirement that Strategic, a Georgia limited liability company, produce documents
in Houston, Texas. Strategic noted that it had served written objections to the
subpoena on March 14, 2016 (the same date it was served), notifying ACS of the
alleged deficiencies. Rather than correct the deficiencies by issuing a new subpoena,
ACS filed the Motion for Contempt eight weeks later on May 9, 2016. On June 3,
2016, ACS filed its Reply in support of the Motion for Contempt and inexplicably
asked the Georgia federal court “to order Plaintiff [ACS] to cure its deficiencies.”
There is no indication that the deficiencies have been corrected by ACS, and the
Georgia court has not yet ruled on the Motion for Contempt.

P:\ORDERS\11-2015\1111MContinuance.wpd

160811.1429

2

On August 10, 2016, ACS – now represented by different counsel who filed an
appearance that same day – filed a Motion for Continuance [Doc. # 128] seeking a sixmonth continuance of the docket call currently scheduled for September 19, 2016.
ACS in the motion also seeks an extension of the discovery deadline and the deadline
for joinder of new parties.1 ACS points out that its new attorney has just filed an
appearance in the case. ACS represents that it needs additional time to obtain
discovery from Strategic “because it has been added as a party.” See Motion for
Continuance, p. 2. The Court notes that in none of the five complaints filed by ACS
in this case has Strategic been added as a party. ACS represents also that it served
timely requests for documents from GFI but “GFI has refused to produce them.” See
id. Discovery, however, ended May 27, 2016, and ACS has not previously advised
the Court of this alleged discovery dispute as required under the federal rules and this
Court’s Procedures. The Court finds that ACS has not exercised due diligence in
obtaining the discovery it claims to need in this case. As a result, its request for a full
six-month extension of the deadlines to complete discovery and join new parties is
denied.

1

By Order [Doc. # 50] entered December 29, 2015, the discovery and all other
remaining deadlines were extended. By Hearing Minutes and Order [Doc. # 59]
entered January 13, 2016, the discovery deadline was extended. By Order [Doc. # 75]
entered February 29, 2016, the Court extended the discovery and all other remaining
deadlines.

P:\ORDERS\11-2015\1111MContinuance.wpd

160811.1429

3

ACS also has filed a Motion for Leave to File Amended Complaint (“Motion
to Amend”) [Doc. # 129], seeking leave to file a Fifth Amended Complaint joining
Strategic as a party to this lawsuit. Because the deadline for amendments to pleadings
has expired, Federal Rule of Civil Procedure 16(b)(4) provides the standard for
assessing Plaintiff’s request to file a fifth amended complaint. See E.E.O.C. v. Serv.
Temps Inc., 679 F.3d 323, 333-34 (5th Cir. 2012); Marathon Fin. Ins., Inc. v Ford
Motor Co., 591 F.3d 458, 470 (5th Cir. 2009); Fahim v. Marriott Hotel Servs., Inc.,
551 F.3d 344, 348 (5th Cir. 2008). “Rule 16(b) provides that once a scheduling order
has been entered, it ‘may be modified only for good cause and with the judge’s
consent.’” Marathon, 591 F.3d at 470 (quoting FED. R. CIV. P. 16(b)). Rule 16(b)
requires a party “to show that the deadlines cannot reasonably be met despite the
diligence of the party needing the extension.” Id. (quoting S&W Enters., LLC v.
Southtrust Bank of Ala., NA, 315 F.3d 533, 535 (5th Cir. 2003)); see also Spear
Marketing, Inc. v. BankcorpSouth Bank, 2013 WL 2077032, *1 (N.D. Tex. Aug. 12,
2013). The factors to be considered are:
(1)
(2)
(3)
(4)

the explanation for the failure to timely move for leave to amend;
the importance of the amendment;
potential prejudice in allowing the amendment; and
the availability of a continuance to cure such prejudice.

Id. (quoting Sw. Bell Tel. Co. v. City of El Paso, 346 F.3d 541, 546 (5th Cir. 2003));
see also Serv. Temp, 679 F.3d at 334.
P:\ORDERS\11-2015\1111MContinuance.wpd

160811.1429

4

ACS asserts that it “diligently moved to amend as soon it [sic] became apparent
that the amendment was necessary.” See Motion to Amend, ¶ 11. ACS’s assertion
is refuted by the record. ACS has taken the position since at least January 10, 2016,
that GFI and Strategic were involved in a civil conspiracy. Indeed, on that date ACS
filed a Motion for Leave to File Third Amended Complaint to add a civil conspiracy
claim and a claim under the Texas Uniform Fraudulent Transfer Act (“TUFTA”)
based on the alleged conspiracy. The Court granted leave to file the Third Amended
Complaint, but in connection with neither the Third nor the Fourth Amended
Complaint did ACS seek to add Strategic as a party.
The importance of Strategic’s joinder is unclear particularly since ACS already
has asserted a civil conspiracy and TUFTA claim against GFI.
Joinder of a new party at this late stage of the proceeding would significantly
prejudice both GFI and Strategic. All depositions will need to be retaken in order for
Strategic to participate. GFI will be required to file an amended Motion for Summary
Judgment based on the new pleading and evidence, rendering useless all the work
already performed on the current motion. The case has been pending for quite some
time and both parties are entitled to prompt resolution. A continuance would not cure
the prejudice from the increased time and expense and, moreover, the Court is not
inclined to extend yet again the deadlines in this case.

P:\ORDERS\11-2015\1111MContinuance.wpd

160811.1429

5

In conclusion, ACS has failed to demonstrate good cause as required by Rule 16
of the Federal Rules of Civil Procedure for its request to file a fifth amended
complaint to join a new party well after the expiration of the October 16, 2015
deadline for amendments to pleadings and joinder of new parties.
The Court finds that ACS has not exercised due diligence in obtaining the
discovery it claims to need in this case. The Court finds also that ACS has failed to
demonstrate good cause for an extension of the deadlines for joinder of new parties
and for discovery. The Court will allow ACS to file a supplemental response to the
Motion for Summary Judgment and a response to the Motion to Strike the Declaration
of Trent Arthur. Accordingly, it is hereby
ORDERED that Plaintiff’s Motion for Leave to File Supplement [Doc. # 123]
is GRANTED only to the extent that Plaintiff shall file by September 6, 2016, a
supplemental response to Defendant’s Motion for Summary Judgment and a response
to the Motion to Strike the Declaration of Trent Arthur. Defendant shall file its reply
by September 16, 2016. It is further
ORDERED that the Joint Pretrial Order deadline is extended to December 2,
2016, and the docket call is rescheduled to 3:00 p.m. on December 12, 2016. No
further extension of any deadline in this case will be permitted, by agreement or
otherwise. It is further

P:\ORDERS\11-2015\1111MContinuance.wpd

160811.1429

6

ORDERED that Plaintiff’s Motion for Continuance [Doc. # 128] is DENIED
except to the extent that the Joint Pretrial Order and docket call deadlines are extended
as set forth in the preceding paragraph. It is further
ORDERED that Plaintiff’s Motion for Leave to File [Fifth] Amended
Complaint [Doc. # 129] is DENIED.
SIGNED at Houston, Texas, this 11th day of August, 2016.

NAN Y F. ATLAS
SENIOR UNI
STATES DISTRICT JUDGE

P:\ORDERS\11-2015\1111MContinuance.wpd

160811.1429

7