Velocity Press v. Key Bank et al

Filing 301

MEMORANDUM DECISION and ORDER granting 265 Plaintiff's Motion to Amend. Key Bank is to file its proposed findings of fact and conclusions of law relating to this issue within fourteen (14) days. Velocity's response is due fourteen (14) days thereafter. Signed by Judge Ted Stewart on 05/02/2012. (tls)

IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

VELOCITY PRESS, INC., a Utah
corporation,
Plaintiff,

MEMORANDUM DECISION AND
ORDER ON PLAINTIFF’S MOTION
TO AMEND

vs.
KEY BANK, N.A., Q.A.M., INC., a Virginia
corporation dba SANDEN USA, INC.;
Q.A.M., INTERNATIONAL, a Nevada
corporation; ROBERT PITEL, an individual;
DOUGLAS JUSTUS, an individual; DOE
DEFENDANTS I through X,

Case No. 2:09-CV-520 TS

Defendants.

This matter is before the Court on Plaintiff Velocity Press, Inc.’s (“Velocity”) Motion to
Amend/Correct Pleadings to Conform to Proof. 1 For the reasons set forth below, the Court will
grant Plaintiff’s Motion.
I. BACKGROUND
Velocity is a commercial printer that has specialized in web printing since January 2004.
In 2006, Velocity began negotiating with Sanden Machine Limited (“Sanden”) to purchase a
press from Sanden. Velocity ultimately agreed to purchase the press and arranged financing

1

Docket No. 265.
1

through Defendant KeyBank, N.A. (“KeyBank”). Through a series of events that are not
relevant to the present Motion, Sanden declared bankruptcy and the press Velocity ordered was
not built.
Velocity filed suit against a number of parties, which ultimately proceeded to a bench
trial against Defendant KeyBank. On January 24, 2011—nine days before trial commenced—the
stipulated Pretrial Order first identified the possibility of a fraud claim brought by Velocity. It
stated: “If the evidence supports a fraud claim, Velocity intends to file a motion to amend the
pleadings to conform to the proof.” 2 Velocity further discussed this claim in its Trial Brief,
where it set forth what KeyBank conduct it felt constituted fraud.
The case went to trial and, while trial was ongoing, Velocity filed a Motion to
Amend/Correct Pleadings, seeking under Rule 15(b) to “add a claim for fraud, based on
documents showing that KeyBank entered into a contract with Velocity with no present intent to
abide by its terms.” 3 Defendant argues that, as the issue was first identified before trial in the
Pretrial Order, the Motion should be evaluated under Rule 15(a) instead of Rule 15(b).
II. MOTION TO AMEND/CORRECT PLEADINGS
A.

LEGAL STANDARD
Under Fed. R. Civ. P. 15(a), “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.” Adding a new claim to the pretrial order is “the equivalent of asking leave to amend

2

Docket No. 258, at 6.

3

Docket No. 265, at 1.
2

[the] complaint, and must be evaluated by the court under the standards set forth in Rule 15(a).” 4
The Tenth Circuit has set forth several factors for a court to consider when determining whether
to allow amendment of a complaint.
These include whether the amendment will result in undue prejudice, whether the
request was unduly and inexplicably delayed, was offered in good faith, or that
the party had sufficient opportunity to state a claim and failed. Where the party
seeking amendment knows or should have known of the facts upon which the
proposed amendment is based but fails to include them in the original complaint,
the motion to amend is subject to denial. 5
Fed. R. Civ. P. 15(b)(1) specifically addresses amendments during trial. It states that:
If, at trial, a party objects that evidence is not within the issues raised in the
pleadings, the court may permit the pleadings to be amended. The court should
freely permit an amendment when doing so will aid in presenting the merits and
the objecting party fails to satisfy the court that the evidence would prejudice that
party’s action or defense on the merits. The court may grant a continuance to
enable the objecting party to meet the evidence.
Rule 15(b) requires that the party opposing the amendment be seriously prejudiced in the
presentation of the action or defense on the merits. 6 Furthermore, even if the objecting party is
able to show prejudice, it is more favorable for the court to grant a continuance to cure that
prejudice than to deny amendment entirely. 7

4

Minter v. Prime Equip. Co., 451 F.3d 1196, 1204 (10th Cir. 2006).

5

State Distribs., Inc. v. Glenmore Distilleries Co., 738 F.2d 405, 416 (10th Cir.1984).

6

Amendment When There is an Objection to the Evidence, 6A FED. PRAC. & PROC. CIV.
§ 1495 (3d ed.).
7

Id.
3

B.

DISCUSSION
Although the parties dispute whether the proposed amendment should be evaluated under

Rule 15(a) or Rule 15(b), the Court finds that amendment is appropriate under either standard.
To begin, the Court finds that Plaintiff made its request in good faith and did not did not unduly
or inexplicably delay in doing so. There were numerous discovery disputes in this case, with
many documents turned over by KeyBank well after the discovery deadline has passed. 8
Furthermore, Plaintiff notified KeyBank of the possibility of a fraud claim before trial, giving
KeyBank the opportunity to request an extension for additional discovery if KeyBank felt it
would assist in its defense.
KeyBank argues that, although notice was given before trial, it would be prejudiced if a
claim were added because notice was given only nine days before trial, giving KeyBank
insufficient time “to request documents related to this claim, depose witnesses about this claim,
or determine whether there were additional witnesses that could have rebutted the claim or
supported KeyBank’s defense to this claim.” 9 However, KeyBank does not explain how it
would be prejudiced in light of the similarities between the previously alleged claims and the
newly brought fraud claim.
As the Tenth Circuit stated when faced with a similar scenario in Minter v. Prime
Equipment Co., “[w]hile the [] claims are different in form, there is a significant overlap in the

8

Docket No. 293, at 6.

9

Docket No. 275, at 11.
4

factual underpinnings and defenses.” 10 In the present matter, the previously pled claims were for
breach of contract, breach of the implied covenant of good faith, and breach of fiduciary duty—
all arising out of transactions between Drew Elkins and various KeyBank representatives. The
claim that Velocity seeks to add is for fraud, dealing with the same interactions between the
same individuals. While a fraud claim does additionally require an examination of the
knowledge and purpose of the individual making a statement, the allegedly fraudulent statements
were made by KeyBank employees and witnesses and were supported at trial by internal
KeyBank documents. As KeyBank already had access to these documents and witnesses, was
aware of what information Velocity had received through discovery, and had received notice of
the fraud claim prior to trial through Velocity’s Trial Brief, KeyBank certainly had knowledge of
the information Velocity’s fraud claim would be based on. KeyBank also did not request that the
trial be continued to allow for additional discovery or state with specificity what additional
discovery would have been pursued.
Because the Court finds 1) that Velocity acted with good faith and no undue delay, 2) that
KeyBank will not be prejudiced, and 3) that allowing amendment will aid in presenting the
merits of the case, the Court will grant Velocity’s Motion to Amend.
III. CONCLUSION
It is therefore
ORDERED that Velocity’s Motion to Amend/Correct Pleadings to Conform to Proof
(Docket No. 265) is GRANTED. KeyBank is to file its proposed findings of fact and

10

451 F.3d at 1208.
5

conclusions of law relating to this issue within fourteen (14) days. Velocity’s response is due
fourteen (14) days thereafter.
DATED May 2, 2012.
BY THE COURT:

_____________________________________
TED STEWART
United States District Judge

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