United Security Financial v. First Mariner Bank et al
Filing
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MEMORANDUM DECISION and Ordergranting 72 Motion for Leave to File an Amended Counterclaim. The Court directs Defendant/Counter-Plaintiff First Mariner Bank to file its Answer, Affirmative Defenses, and Amended Counterclaim within seven (7) days of this Order. Signed by Magistrate Judge Evelyn J. Furse on 11/15/16. (jlw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
UNITED SECURITY FINANCIAL
CORPORATION, a Utah Corporation,
MEMORANDUM DECISION AND
ORDER GRANTING FIRST MARINER
BANK’S MOTION FOR LEAVE TO FILE
AN AMENDED COUNTERCLAIM (ECF
NO. 72)
Plaintiff,
vs.
Case No. 2:14-cv-00066-JNP-EJF
FIRST MARINER BANK, et al.,
District Judge Jill N. Parrish
Magistrate Judge Evelyn J. Furse
Defendants.
On March 23, 2016, Defendant/Counter-Plaintiff First Mariner Bank (“First Mariner”)
moved the Court for leave to file an amended counterclaim. (Mot. & Mem. of Law in Support of
1st Mariner’s Mot. for Leave to File an Am. Countercl. (Mot.), ECF No. 72.) First Mariner
seeks to amend its Counterclaim to reflect additional damages and causes of action for fraud and
negligent misrepresentation, which First Mariner states it first identified during depositions of
United Security Financial Corporation (“USF”) fact witnesses in February 2016. (See id. at 4.)
The deadline to amend pleadings passed on August 27, 2015. (ECF No. 53.) USF
opposes First Mariner’s requested amendment, contending that First Marnier has not shown
“good cause” under Federal Rule of Civil Procedure (“Rule) 16(b)(4) for its delay in seeking
amendment when First Mariner had notice of the existence of these additional claims in
documentary evidence provided months before the amendment deadline passed. (See Mem. in
Opp’n to 1st Mariner’s Mot. for Leave to File an Am. Countercl. (Opp’n) 1–4, ECF No. 73.)
USF further objects that First Mariner’s late attempt to amend its Counterclaim resulted from
First Mariner’s unexplained delays in scheduling depositions and serving discovery requests.
(Id. at 4–6.)
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Upon consideration of the briefing, the record, and the applicable law, the Court finds
First Mariner states good cause for modifying its Counterclaim at this stage and adequately
explains its delay in seeking amendment. Thus, the Court GRANTS First Mariner Bank’s
Motion for Leave to File an Amended Counterclaim, (ECF No. 72).
ANALYSIS
Parties seeking leave to amend pleadings after the expiration of a scheduling order
deadline “must demonstrate (1) good cause for seeking modification under Fed. R. Civ. P.
16(b)(4) and (2) satisfaction of the Rule 15(a) standard.” Gorsuch, Ltd. v. Wells Fargo Nat.
Bank Ass’n, 771 F.3d 1230, 1240 (10th Cir. 2014). The decision to grant leave to amend falls
within the Court’s discretion. Minter v. Prime Equip. Co., 451 F.3d 1196, 1204 (10th Cir. 2006).
A. Rule 16(b)(4)
Rule 16(b)(4) states “[a] schedule may be modified only for good cause and with the
judge’s consent.” Fed. R. Civ. P. 16(b)(4). The Tenth Circuit interprets Rule 16 to require a
showing that the “scheduling deadlines cannot be met despite [the movant's] diligent efforts.”
Gorsuch, 771 F.3d at 1240 (alteration in original) (quoting Pumpco, Inc. v. Schenker Int’l, Inc.,
204 F.R.D. 667, 668 (D. Colo. 2001)). For example, a movant can satisfy Rule 16’s good cause
requirement in the amendment context if it “learns new information through discovery or if the
underlying law has changed.” Id. By contrast, where the movant fails to conduct the legal
research necessary to discover a claim or defense, courts have declined to find good cause. See
Colo. Visionary Acad. v. Medtronic, Inc., 194 F.R.D. 684, 688 (D. Colo. 2000) (holding
defendants’ failure “to do the research necessary to recognize the applicability of the defense
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they [sought] to add” precluded a finding of good cause for amending their answer after the
deadline).
The Court finds First Mariner states good cause to amend its Counterclaim. First Mariner
notes that it promptly sought to amend its Counterclaim after counsel discovered the basis for
additional damages and grounds for new causes of action during February 2016 depositions of
USF witnesses. (Mot. 10, ECF No. 72; Reply 8, ECF No. 75.) First Mariner informed USF’s
counsel that it would seek amendment of its Counterclaim during the depositions and sought
USF’s consent to file the amended counterclaim before filing this Motion. (Mot. at 9–10, ECF
No. 72.) The Court finds First Mariner exercised diligent effort in moving to amend upon
discovery of the relevant information.
USF contends First Mariner could have identified the additional counterclaims from
written discovery provided several months in advance of the amendment deadline. (Opp’n 3–4,
ECF No. 73.) First Mariner responds that the documents and interrogatory responses only
provided sufficient information for First Mariner to determine that it would need to depose USF
employees. (Reply 5–6, ECF No. 75.) First Mariner explains that the February 2016 depositions
provided the evidence necessary to make good faith assertions of additional damages and claims
of fraud and misrepresentation. (Id.) Having reviewed the discovery responses the Court agrees
with First Mariner.
USF also protests that First Mariner provided no explanation for waiting until February
2016 to take the relevant depositions when USF counsel requested to schedule the depositions as
early as June 2015. (Opp’n 5, ECF No. 73.) First Mariner took the depositions before fact
discovery closed. Moreover, USF concedes that it agreed to amendments of the scheduling order
that extended deadlines and delayed the completion of discovery. (Opp’n 6, ECF No. 73.) The
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Court finds that despite the delay in conducting the depositions First Mariner acted diligently
given the preference of many attorneys to complete all written discovery first, leaving significant
depositions for the end of fact discovery to ensure the party has as much information as possible
going into the deposition.
Furthermore, First Mariner contends that the amendment will not necessitate additional
discovery because the discovery done fully encompasses the new claims. (Mot. 8-9, ECF No.
72.) Thus, given the nature of the late discovered evidence, this Court finds the delay in taking
the depositions that resulted in the uncovering of new evidence unpersuasive.
In sum, the Court finds that First Mariner states good cause for seeking to amend its
counterclaim after discovering evidence during timely depositions sufficient to assert new claims
and additional damages after the deadline to amend passed.
B. Rule 15(a)
Moving from timing issues to amendment issues, Rule 15(a)(2) directs the Court to
“freely give leave” for parties to amend their pleadings “when justice so requires.” Fed. R. Civ.
P. 15(a)(2). The Tenth Circuit has observed that “[t]he purpose of [Rule 15(a)] is to provide
litigants ‘the maximum opportunity for each claim to be decided on its merits rather than on
procedural niceties.’” Minter, 451 F.3d at 1204 (Hardin v. Manitowoc–Forsythe Corp., 691 F.2d
449, 456 (10th Cir. 1982)). Thus, a party opposing leave to amend must show “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. 1993). As discussed above, the Court finds First Mariner adequately
explains its delay in seeking amendment of its Counterclaim.
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USF does not contend it would suffer prejudice by virtue of the Court’s permitting
amendment, or that First Mariner acted in bad faith or with dilatory motive, or that amendment
would prove futile. The Tenth Circuit has held that “[l]ateness does not of itself justify the
denial of the amendment.” Minter, 451 F.3d at 1205 (quoting R.E.B., Inc. v. Ralston Purina Co.,
525 F.2d 749, 751 (10th Cir.1975)). This motion constitutes First Mariner’s first request for
leave to amend its Counterclaim. Thus, the record does not show First Mariner has failed to cure
deficiencies by previous amendments. Therefore, the Court finds First Mariner also meets the
Rule 15(a) standard.
CONCLUSION
Because First Mariner states good cause for amending its Counterclaim after the
amendment deadline under Rule 16(b)(4) and meets the Rule 15(a) standard for amending
pleadings, the Court GRANTS First Mariner Bank’s Motion for Leave to File an Amended
Counterclaim, (ECF No. 72).
The Court directs Defendant/Counter-Plaintiff First Mariner Bank to file its Answer,
Affirmative Defenses, and Amended Counterclaim within seven (7) days of this Order.
DATED this 15th day of November, 2016.
BY THE COURT:
_____________________________
EVELYN J. FURSE
United States Magistrate Judge
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