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Simpler Consulting, Inc. v. Wall

November 1, 2007


The opinion of the court was delivered by: Judge Nora Barry Fischer


Before this Court is a Motion for Leave of Court to File Compulsory Counterclaim ("Defendants' Motion"), filed on behalf of defendants Thomas Michael Wall ("Wall") and Better Enterprise Solutions Corp. ("BESCorp") (collectively, "Defendants") [DE 43]. Defendants seek to bring counterclaims against plaintiff Simpler Consulting, Inc. ("Plaintiff") for breach of contract, intentional interference with an existing contractual relationship and intentional interference with a prospective contractual relationship. For the reasons set forth below, Defendants' Motion is GRANTED in part and DENIED in part.

I. Standard of Review

Pursuant to Federal Rule of Civil Procedure 13(f), "[w]hen a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, he may by leave of the court set up the counterclaim by amendment." Rule 13(f) is "especially flexible" in that its clause allowing amendment "when justice so requires" permits courts to exercise broad discretion and permits amendment whenever the court deems it desirable. Perfect Plastics Indust. v. Cars & Concepts, Inc., 758 F.Supp. 1080, 1082 (W.D.Pa. 1991).

In deciding a motion for leave to file a compulsory counterclaim, this Court must consider whether Defendant has acted in good faith and has not unduly delayed filing the counterclaim, whether undue prejudice would result to Plaintiff if the counterclaim is permitted, and whether the counterclaim raises meritorious claims. Id. at 1081. The argument for allowing amendment is particularly compelling where, as here, the counterclaim asserted is compulsory because "an omitted compulsory counterclaim cannot be asserted in subsequent cases and the pleader will lose the opportunity to have the claim adjudicated." Id. Because Plaintiff does not challenge the compulsory nature of Defendants' proposed counterclaims, this Court need not address this issue. However, Plaintiff does argue that Defendants' proposed counterclaims are without merit and are therefore futile. Whether a claim is meritorious is determined by applying the standards of Federal Rule of Civil Procedure 12(b)(6). Fort Washington Resources, Inc. v. Tannen, 153 F.R.D. 565, 566 (E.D.Pa. 1994).

II. Analysis

Here, Plaintiff argues that Defendants' Motion should be denied because to grant Defendants' Motion would result in undue prejudice to Plaintiff and because Defendants' counterclaims are futile. The Court will address each of these arguments in turn.

A. Defendants' Delay is Not Dispositive and Undue Prejudice To Plaintiff Will Not Result From Granting Defendants' Motion

Although Defendants arguably delayed in filing their Motion, the delay was not so great as to warrant preclusion of the counterclaims, particularly in this case, where the counterclaims are compulsory.See Perfect Plastics Indust., 758 F.Supp. at 1082 ("the mere passage of time between an original filing and an attempted amendment is not sufficient reason for the denial of the motion."). Further,granting Defendants' Motion will not cause undue prejudice to Plaintiff. As Defendants argue in their brief, much of thediscovery needed to support these counterclaims has already occurred.Moreover, given that this case was filed two and a half years ago, that the parties have already had eighteen months for discovery, and that this case was further delayed as the result of its transfer from Judge Hardiman to the undersigned Judge as well as this Court's subsequent attempt to send the parties to mediation or settlement discussions, which the parties represented to the Court would not be fruitful, the Court will not permit discovery to continue for "months" or "years" as Plaintiff suggests. (Document No. 44 at p. 2). In addition, that Plaintiff will have to spend additional money to defend against these counterclaims is insufficient to defeat Defendants' Motion as the counterclaims are interrelated with Plaintiff's claims and Plaintiff could have foreseen that it would have to defend the allegations in the proposed counterclaims. Hellauer v. NAFCO Holding Co., LLC, 1998 U.S. Dist. LEXIS 9102 (E.D.Pa. 1998). Finally, a trial date has not been set, and thus, prejudice will not result from rescheduling the same. See Technographics, Inc. v. Mercer Corp., 142 F.R.D. 429, 431 (M.D.Pa. 1992). Accordingly, any prejudice which will inure to Plaintiff as the result of Defendants' delay in filing is minimal and does not in and of itself justify denying Defendants' Motion.

B. Futility of Defendants' Counterclaims

Plaintiff argues thatDefendants' counterclaims for breach of contract, intentional interference with an existing contractual relationship and intentional interference with a prospective contractual relationship are futile and that Defendants' Motion should be denied on that basis.*fn1

As noted by the Supreme Court in Foman v. Davis, 371 U.S. 178, 182 (1962), leave to amend may be denied if the amendment would be futile. See Id. at 182. "Futility" challenges an amendment's legal sufficiency. In assessing futility, the Court applies the same standard of legal sufficiency as applied under Rule 12(b)(6). In re Burlington Coat Factory Securities Litigation, 114 F.3d 1410, 1434 (3d Cir. 1997) (citation omitted); see also Jablonski v. Pan Am. World Airways, Inc., 863 F.2d 289, 292 (3d Cir.1988) ("Futility is determined by the likelihood that the content of the amendment will survive a renewed motion to dismiss"). Accordingly, the Third Circuit has noted that "an amendment would be futile when 'the complaint, as amended, would fail to state a claim upon which relief could be granted.'" In re NAHC, Inc. Sec. Litig., 306 F.3d 1314, 1332 (3d Cir. 2002) (quoting Burlington, 114 F.3d at 1434); see also Warner-Lambert Co. v. Teva Pharm., Inc., 289 F.Supp.2d 515, 544-45 (D. N.J. 2003) (denying defendant's motion for leave to amend its answer to add an additional inequitable conduct defense as futile because plaintiff "would be entitled to summary judgment in its favor on the defense"). Therefore, in considering a motion for leave to file counterclaims under the standard for a motion to dismiss, all factual allegations, and all reasonable inferences therefrom, must be accepted as true and viewed in a light most favorable to the Defendants (as the moving party). Doswell v. City of Pittsburgh, Civil Action No. 07-761, 2007 WL 2907886, at *1 (W.D. Pa. Oct. 2, 2007)(citing Hasoel v. State Farm Mut. Auto. Ins. Co., 2007 WL 2030272 at *1 (3d Cir. July 16, 2007)).

As a threshold point, the Supreme Court's recent decision in Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007) rejected the famous and often quoted pleading standard articulated in Conley v. Gibson, 355 U.S. 41, 45-46 (1957) that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the [pleader] can prove no set of facts in support of his claim which would entitle him to relief." Twombly, 127 S.Ct. at 1969, abrogating Conley v. Gibson, 335 U.S. 41(1957) (providing that "this famous observation has earned its retirement"). In Twombly, the Supreme Court implemented a fact-based, plausibility-in-pleading standard:

While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide 'grounds' of his [or her] 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of cause of action will not do . . . Factual allegations must be enough to raise a right to relief above a speculative level ...

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