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Bowser Cadillac, LLC. v. General Motors Corp.

July 18, 2008

BOWSER CADILLAC, LLC., PLAINTIFF,
v.
GENERAL MOTORS CORPORATION AND SAAB CARS USA, INC., DEFENDANT.



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

MEMORANDUM ORDER

Currently pending before this Court is Plaintiff Bowser Cadillac's (hereinafter "Bowser") Motion for Leave to File an Amended Complaint [39]. Pursuant to Federal Rule of Civil Procedure 15(a), said Motion seeks to add a breach of contract claim against Defendant General Motors Corporation (hereinafter "GM") for breach of the contractual duty of good faith and fair dealing (Docket No. 39).

I. Procedural History Pertinent to Bowser's Motion for Leave to Amend

On August 21, 2007, Bowser originally brought this action against GM and Saab Cars USA, Inc. (hereinafter "Defendants"), based upon an allegation that Defendants unlawfully and improperly attempted to exercise a contractual right of first refusal with respect to a franchise agreement with P&W Foreign Car Service, Inc. d/b/a P&W Saab ("P & W Saab").*fn1 (Docket No. 1). Defendants filed a Motion to Dismiss the Complaint on September 18, 2007. (Docket No. 4). On November 15, 2007, this Court entered a Case Management Order, providing that all motions to amend pleadings or motions to add parties shall be filed on or before December 15, 2007. (Docket No. 22). On January 18, 2008, this Court denied Defendants' Motion to Dismiss in a Memorandum Opinion in which this Court held that Bowser had sufficiently pled and set forth facts in support of counts one through five of its Complaint permitting this case to proceed through discovery. (Docket No. 27). Thereafter, Defendants filed a Motion for Reconsideration on February 1, 2008, which this Court denied on February 22, 2008. (Docket Nos. 30, 35). Following a status conference on May 1, 2008, this Court issued an Order permitting Bowser to file a Motion for Leave to File an Amended Complaint. (Docket No. 39). On May 27, 2008, GM filed its Response to said Motion arguing undue delay, futility and prejudice. (Docket No. 42). Subsequently, on May 29, 2008, during a status conference, this Court granted Bowser's Motion to File a Reply Brief which was filed on June 6, 2008. (Docket Nos. 44, 45). This matter was fully briefed on June 16, 2008 when Defendants filed their Sur-Reply Brief. (Docket No. 48).

II. Facts Pled by Bowser

Bowser claims that it learned certain facts throughout the course of discovery giving rise to a claim for breach of contract. Specifically, Bowser claims that through discovery it learned that GM completely integrated the Saab line into GM's corporate hierarchy and re-issued dealer agreements wherein GM became the contracting party with all of its Saab line make dealers, including P & W Saab. (Docket No. 39 at ¶ 4). In addition, Bowser states it learned of certain facts relating to GM's dislike of Bowser, its close relationship with another Pittsburgh dealer, its contact and encouragement of P&W Saab to sell its dealership to Bowser allegedly thereby creating an opportunity to effectively terminate the P&W Saab dealership point. Id. at ¶ 5. Hence, Bowser now seeks to amend its Complaint to include a claim based on breach of contract. Id. at ¶ 6.

In its proposed Amended Complaint, Bowser asserts that GM encouraged a buy-sell between P&W Saab and Bowser in an effort to manipulate the parties. (Docket No. 45 at 4). Bowser further asserts that this created a situation in which GM could effectively eliminate one of the existing Saab dealership points in the Pittsburgh market by exercising its right of first refusal once the buy-sell between P&W Saab and Bowser was submitted. Id. Bowser contends that GM failed to disclose its true intentions to Bowser, misled Bowser as to its true intentions, and improperly favored its relationship with another dealer ("Cochran") over its existing contractual relationship with Bowser by exercising a right of first refusal without proper and/or adequate investigation or market analysis. Id. at 5.

III. Standard

The Federal Rules of Civil Procedure are to be construed and administered "to secure the just, speedy, and inexpensive determination of every action and proceeding." Fed. R. Civ. P. 1. The Federal Rules of Civil Procedure also provide that courts should freely give leave to amend when "justice so requires." Fed. R. Civ. P. 15(a)(2). While courts should not grant leave to amend automatically, the circumstances under which Rule 15(a) permits denial of leave to amend are limited. William W. Schwarzer, A. Wallace Tashima & James M. Wagstaffe, Federal Civil Procedure Before Trial § 8:400 (2008). Denial of leave to amend is disfavored; and a district judge should grant leave absent a substantial reason to deny. Moore's Federal Practice, 3 ed., vol. 3, 15.14(1); see also Shane v. Fauver, 213 F.3d 113, 115-117 (3d Cir. 2000). Presumably, the liberal ethos of amendment means that the party opposing amendment bears a burden of production to come forward with reasons or evidence to deny leave to amend. Moore's Federal Practice, 3 ed., vol. 3, § 15.15(2); see also Heyl & Patterson Intern., Inc. V. F. D. Rich Housing of Virgin Island, Inc., 663 F.2d 419, 425 (3d Cir. 1981) ("Courts have shown a strong liberality...in allowing amendment under Rule 15(a)").

Whether to grant a party leave to amend a pleading is within the sound discretion of the trial judge. This Court has discretion to deny such a request if it is apparent from the record that (1) the moving party has demonstrated undue delay, bad faith or dilatory motives; (2) the amendment would be futile; or (3) the amendment would prejudice the other party. Fraser v. Nationwide Mut. Ins. Co., 352 F.3d 107, 116 (3d Cir. 2003) (citing Foman v. Davis, 371 U.S. 178 (1962)).

Courts often deny leave to amend a pleading when the moving party either knew or should have known the facts on which the amendment is based when drafting the original pleading, but failed to include such facts in the original pleading. William W. Schwarzer, A. Wallace Tashima & James M. Wagstaffe, Federal Civil Procedure Before Trial § 8:406 (2008) (citing Hoover v. Blue Cross & Blue Sheild of Alabama, 855 F.2d 1538, 1544 (11th Cir. 1988)). The longer the delay in seeking to amend, the greater the risk that leave will be denied because of prejudice to the opposing party. Id. However, most courts hold that undue delay alone, unless unexplained and egregious, is not enough for a court to deny a motion to amend. Id.

"Futility" challenges an amendment's legal sufficiency. Foman, 371 U.S. at 182. In assessing futility, courts apply the same standard of legal sufficiency as applied under Federal Rule of Civil Procedure 12(b)(6). In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997); 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 United States Court of Appeals for 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." Id.

Prejudice to the opposing party is "the touchstone for the denial of leave to amend." Cornell and Company, Inc. v. Occupational Safety and Health Review Commission, 573 F.2d 820, 823 (3d Cir. 1978).However, to justify denial of leave to amend, the prejudice must be substantial. William W. Schwarzer, A. Wallace Tashima & James M. Wagstaffe, Federal Civil Procedure Before Trial § 8:424.2 (2008) (citing Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990)). "Such prejudice ordinarily is not considered to have occurred unless the Motion is made during or after ...


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