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STILL v. REGULUS GROUP LLC

United States District Court, E.D. Pennsylvania


January 5, 2004.

DAVID B. STILL, Plaintiff,
v.
REGULUS GROUP LLC, et al., Defendants

The opinion of the court was delivered by: ROBERT KELLY, Senior District Judge

MEMORANDUM

Presently before this Court is Regulus Group LLC's Motion for Reconsideration of the Court's Order Granting a New Trial. For the reasons that follow, the Motion is granted.

I. INTRODUCTION

  On October 1, 2003, the Court granted Plaintiff, David B. Still ("Still"), a new trial on the Pennsylvania Uniform Commercial Code ("UCC") issues of "commercial reasonableness" and "manifest unreasonableness" ("UCC issues") with respect to his claims for Conversion and Wrongful Seizure set forth in Counts XX and XXII of the Second Amended Complaint.*fn1 See Still v. Regulus Group LLC, No. 00-6053, 2003 WL 22249198 (E.D. Pa. Oct. 1, 2003). Defendant, Regulus Group LLC ("Regulus"), argues that reconsideration of the Court's Order and Opinion granting a new trial is necessary to correct clear errors and to prevent prejudice to Page 2 Regulus. Specifically, Regulus argues that Still's purported UCC claims should never have been submitted to the jury because Still was improperly permitted to amend his pleadings during trial to include the UCC claims. Regulus asserts that this amendment was improper because it neither expressly nor impliedly consented to trial of Still's purported UCC claims. In addition, Regulus asserts that the amendment was erroneous since Regulus was prejudiced because it had neither the opportunity to depose Still's expert nor retain its own expert on the UCC issues. The Court agrees with Regulus and, therefore, grants its Motion for Reconsideration.

 II. STANDARD

  A motion for reconsideration is appropriate only where: (1) there has been an intervening change in controlling law; (2) new evidence is available; or (3) there is need to correct a clear error of law or prevent manifest injustice. N. River Ins. Co. v. Cigna Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir. 1995). "The purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence." Drysdale v. Woerth, 153 F. Supp.2d 678, 682 (E.D. Pa. 2001)(citation omitted). However, motions for reconsideration should be granted sparingly "[b]ecause federal courts have a strong interest in the finality of judgments." Id. (citation omitted).

 III. DISCUSSION

  Still's Second Amended Complaint did not include any claim under the UCC.*fn2 Page 3 Although Still's pleadings did not include any UCC claims, Still was permitted to amend his pleadings during trial to include the UCC issues of "commercial reasonableness" and "manifest unreasonableness" with respect to his claims for Conversion and Wrongful Seizure set forth in Counts XX and XXII of the Second Amended Complaint. This amendment was pursuant to Federal Rule of Civil Procedure 15(b).*fn3 Page 4

  A. Amendment Pursuant to Federal Rule of Civil Procedure 15(b)

  Under Federal Rule of Civil Procedure 15(b), "the district court may . . . permit amendments to conform to the evidence only if an issue has been tried with the express or Page 5 implied consent of the parties and the opposing party will not thereby be prejudiced." Evans Prods. Co. v. W. Am. Ins. Co. 736 F.2d 920, 924 (3d Cir. 1984). Regarding the pivotal role played by consent, either express or implied, to a Rule 15(b) amendment, the Court of Appeals for the Third Circuit has stated that "[i]f the issue . . . has not been tried with the consent of the parties, then an amendment to conform to the pleadings will not be permitted no matter when made." Douglas v. Owens, 50 F.3d 1226, 1236 (3d Cir. 1995) (quotation and internal quotation marks omitted). Determining whether an issue has been tried by implied consent depends upon "whether the parties recognized that the unpleaded issue entered the case at trial, whether the evidence that supports the unpleaded issue was introduced at trial without objection, and whether a finding of trial by consent prejudiced the opposing party's opportunity to respond." Id. (quoting Portis v. First Nat'l Bank, 34 F.3d 325, 332 (5th Cir. 1994))(internal quotation marks omitted). "The primary consideration in determining whether leave to amend under Fed.R.Civ.P. 15(b) should be granted is prejudice to the opposing party." Evans Prods, 736 F.2d at 924 (citation omitted). "The principal test for prejudice in such situations is whether the opposing party was denied a fair opportunity to defend and to offer additional evidence on that different theory." Id. (citation omitted).

  B. Analysis of Amendment

  1. Express Consent

  The Court concludes that the UCC issues of "commercial reasonableness" and "manifest unreasonableness" were not expressly tried with Regulus' consent. Regarding the issue of express consent, Regulus argues, and the Court agrees, that it consistently and repeatedly objected to Still's attempts to assert the UCC issues. (See N.T. 2/6/03, p. 2-6 Page 6 (regarding the UCC issue of "manifest unreasonableness," defense counsel stated that Still "never raised this issue in twenty-nine counts, never. It's not in this case"); N.T. 2/10/03, p. 127-33 (defense counsel objected to Still's filing of a supplemental expert report by Gilbert Matthews regarding the UCC issue of "commercial reasonableness" stating that "it's late, we think it's prejudicial, we think it should be stricken");*fn4 N.T. 2/12/03, p. 5-8 (when Still's counsel tried to argue that the UCC claims were tried with Regulus' express consent, the Court reminded counsel that Regulus objected to Still's supplemental expert report regarding the UCC issues), p. 5-6 (during a discussion about amending the pleadings, Regulus' counsel pointed out that the UCC issues were "not in the case. And [Still] moved to amend the evidence to conform to the Page 7 trial. We objected to it")). The clearest example of a lack of express consent by Regulus is found in the trial transcript where Regulus' counsel stated that Regulus opposed Still's motion to amend the pleadings to conform to the evidence under Rule 15(b). (N.T. 2/11/03, p. 150, lines 17-23).

  In light of the aforementioned, Regulus clearly opposed amendment of Still's pleadings to include issues under the UCC. In this same vein, Regulus also opposed the introduction of Gilbert Matthews' supplemental report based, in part, upon the premise that it improperly addressed the UCC issue of "commercial reasonableness" which, Regulus argued, was not in the case. As a result, the record does not support a finding that the UCC issues were tried with the express consent of Regulus. Thus, the Court turns to whether the UCC issues were tried with Regulus' implied consent.

  2. Implied Consent

  As mentioned earlier, determining whether an issue has been tried by implied consent depends upon the following factors: (1) whether the parties recognized that the unpleaded issue entered the case at trial; (2) whether the evidence that supports the unpleaded issue was introduced at trial without objection; and (3) whether a finding of trial by consent prejudiced the opposing party's opportunity to respond. Douglas, 50 F.3d at 1236. Similar to the analysis pertaining to express consent, the record does not support a finding that the UCC issues were tried with the implied consent of Regulus. Regarding the first factor, the parties clearly recognized that the unpleaded UCC issues entered the case at trial because Still moved to amend his Second Amended Complaint. The Court heard argument on this issue and ruled on the motion. As for the second factor, the record shows that Regulus objected to the introduction Page 8 of evidence that supported the unpleaded issues during trial. (N.T. 2/10/03, p. 127-33; N.T. 2/12/03, p. 5-8; see also Defs.' Mot. in Limine to Exclude Expert Reports and Test. by Gilbert Matthews).

  Examination of the third factor, prejudice, reveals that Regulus was prejudiced when the Court permitted Still to amend the pleadings. "It is well-settled that prejudice to the non-moving party is the touchstone for the denial of an amendment." Katz v. Food Sciences Corp., No. 99-622, 2000 WL 1022986, at *3 (E.D. Pa. July 13, 2000)(quoting Cornell & Co. v. Occupational Safety and Health Review Comm'n, 573 F.2d 820, 823 (3d Cir. 1978)). As previously explained, the principal test for prejudice is whether the opposing party was denied a fair opportunity to defend and to offer additional evidence on the different theory. Evans Prods., 736 F.2d at 924. Regulus argues that it has been clearly prejudiced because it was not able to depose Gilbert Matthews on his supplemental report or to retain a UCC expert of its own on the UCC issues.

  Regulus argues that it has been prejudiced by its inability to depose Gilbert Matthews regarding his supplemental report, which dealt, in part, with the unpleaded UCC issue of "commercial reasonableness." In support of its argument, Regulus points out that the Court recognized such prejudice when stating to Still's counsel that "if he [Gilbert Matthews] made no reference to it in his original report — then I think that the defense is at a disadvantage." (N.T. 2/10/03, p. 131-32). Due to Regulus' inability to depose Still's expert regarding his supplemental report, specifically as it pertains to the UCC, it was denied a fair opportunity to defend itself.

  The fact that Regulus was unable to retain a UCC expert of its own also reveals Page 9 prejudice. Through the inability to retain its own UCC expert, Regulus was denied a fair opportunity to defend itself. Regulus was also denied a fair opportunity to offer any additional evidence that its own UCC expert may have provided. As a result of Regulus' inability to depose Gilbert Matthews regarding his supplemental report or to retain a UCC expert of its own on the UCC issues, it was denied a fair opportunity to defend itself and to offer additional evidence on the UCC issues. Thus, Regulus' opportunity to defend against Still's UCC claims was prejudiced.*fn5

 IV. CONCLUSION

  As previously explained, "the district court may, under Fed.R.Civ.P. 15(b), permit amendments to conform to the evidence only if an issue has been tried with the express or implied consent of the parties and the opposing party will not thereby be prejudiced." Evans Prods., 736 F.3d at 924. Regulus did not consent, either expressly or impliedly, to trial of the UCC issues. In fact, Regulus strongly opposed the amendment of Still's Second Amended Complaint and it suffered the resultant prejudice when the amendment was granted. Since the UCC issues were tried without Regulus' express or implied consent and Regulus was prejudiced, amendment under Rule 15(b) was improper. Page 10

  As a result, Regulus' Motion for Reconsideration requesting that the Court reconsider its Order granting Still's Motion for a New Trial regarding the UCC issues is granted. The Court's October 1, 2003 Order granting a new trial on the UCC issues of "commercial reasonableness" and "manifest unreasonableness" with respect to Still's claims for Conversion and Wrongful Seizure set forth in Counts XX and XXII of the Second Amended Complaint is vacated and Still's Motion for a New Trial is denied.

  On December 3, 2003, Still filed a Third Amended Complaint. (See Doc. No. 201). The Third Amended Complaint incorporates Still's previous twenty-nine counts, as well as an entirely new Count XXX which is a claim for relief under the UCC. (Id.). According to Still, the filing of the Third Amended Complaint is in accordance with the Court's grant of leave allowing him to amend his Complaint to conform to the evidence. (Id.). As previously mentioned, the Court permitted Still to amend the pleadings, specifically Counts XX and XXII of the Second Amended Complaint, to include the UCC. Even though Counts XX and XXII were amended to include the UCC in February, 2003, Still's recently filed Third Amended Complaint includes a thirtieth claim explicitly alleging a UCC claim. Examination of Still's Third Amended Complaint does not alter the Court's conclusion that permitting the Rule 15(b) amendment to the pleadings to include the UCC was improper. In light of the above, Still's filing of a Third Amended Complaint was unnecessary and superfluous. As a result, Still's Third Amended Complaint is stricken.

  An appropriate Order follows. Page 11

  ORDER


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