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Target Global Logistics Services, Co. v. KVG, LLC

United States District Court, E.D. Pennsylvania

May 2, 2018

TARGET GLOBAL LOGISTICS SERVICES, CO. Plaintiff/Counterclaim Defendant
v.
KVG, LLC Defendant/Counterclaim Plaintiff
v.
QAIS ANIL MEDICAL EQUIPMENT COMPANY LTD., MOHAMMAD SEDIQ, and ASIA PHARMA LTD. Counterclaim Defendants

          MEMORANDUM

          Henry S. Perkin, M.J.

         This matter is before the Court on Defendant KVG's Motion to Amend its Counter-Complaint Against Plaintiff/Counter-Defendant Target Global Logistics Company to Include Fraud (Dkt. No. 174), which motion was filed April 11, 2018. Plaintiff's Opposition to Defendant KVG LLC's Motion to Amend its Counter-Complaint Against Plaintiff/Counter-Defendant Target Global Logistics Company to Include Fraud (Dkt. No. 188) was filed on April 25, 2018. Having reviewed and considered the contentions of the parties, the Court is prepared to rule on this matter.

         Background

         Target Global Logistics Services, Co. (''Plaintiff''), a company located in Kabul, Afghanistan, entered into two APrime-Subcontractor Purchase ''greements'' with KVG, LLC (''Defendant''), a company located in Elizabethtown, Pennsylvania. Complaint && 5-6, 8. The Agreements required Plaintiff to act as a sub-contractor under an agreement that Defendant had entered into with the United States. Id. && 1, 6. The Agreements called for Plaintiff to deliver certain medical equipment and supplies, for which Defendant was to pay Plaintiff $678, 534.83 under the first Agreement and $179, 136.48 under the second Agreement. Id. && 8-11. Each Agreement required Defendant to pay Plaintiff for the goods within thirty days of delivery. See id. & 12. Although Plaintiff requested payment from Defendant on October 15, 2014, Defendant failed to pay for the medical supplies and equipment that Plaintiff delivered. Id. & 13.

         On January 10, 2016, Defendant filed its Answer and Counterclaim against Plaintiff. In so doing, KVG alleged that Target Global “has also demonstrated repeated and continuing fraudulent intent over the course of its relationship with KVG.” On June 10, 2016, in response to Target Global's motion to dismiss and motion to strike, this Court dismissed said Counterclaim without prejudice. In the June 10, 2016 Order, the Court noted that “[t]o the extent that KVG, LLC would plead allegations based on the tort based claim of fraud, it should be mindful that Federal Rule of Civil Procedure 9(b) requires that a party plead ‘with particularity the circumstances constituting fraud.'” On June 22, 2016, Defendant filed its First Amended Counterclaim against Plaintiff with a Joinder of three additional nonresident, Afghani Defendants. The amended counterclaim against Plaintiff consists of nine different claims, but does not contain any allegations of fraud. Although Plaintiff filed a motion to dismiss Defendant's amended counterclaim, the motion was denied, and Plaintiff filed its Answer and Affirmative Defenses to the Amended Counterclaim on October 18, 2016. The Defendant later sought entry of default against the three additional Afghani defendants, which the Clerk of Court entered.

         On January 13, 2017, Defendant filed a motion for partial dismissal of the claims brought by Plaintiff on the basis of forum non conveniens, which motion this Court denied on April 12, 2017. On March 14, 2017, Defendant filed a Motion for Partial Summary Judgment. On March 27, 2017, Plaintiff filed a Motion for Summary Judgment to Defendant's First Amended Counterclaim. Subsequently, on June 22, 2017, this Court denied Plaintiff's Motion for Summary Judgment, and denied in part and granted in part Defendant's Motion for Partial Summary Judgment. On October 5, 2017, Defendant filed a motion to amend its pleadings and join three additional defendants on the basis that information about these proposed parties was only revealed during the unsworn video-stream deposition of Mr. Yama Ahmadi, Managing Director of Plaintiff, on August 18, 2017. By Memorandum and Order dated November 22, 2017, the Court denied Defendant's motion to amend, concluding that, inter alia, it would cause undue prejudice to Plaintiff.

         Legal Standard

         Rule 15(a)(2) provides that “[t]he court should freely give leave [for a party to amend its pleading] when justice so requires.” Fed.R.Civ.P. 15(a)(2). The trial court has discretion to determine whether a request for leave to file an amended pleading should be granted or denied. See Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971); see also Cureton v. Nat'l Collegiate Athletic Ass'n, 252 F.3d 267, 272 (3d Cir. 2001). As a general matter, the trial court should grant leave to amend “unless equitable considerations render it otherwise unjust.” Arthur v. Maersk, Inc., 434 F.3d 196, 204 (3d Cir. 2006) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)). Denial of a motion to amend must be grounded in substantial or undue prejudice, bad faith or dilatory motives, truly undue or unexplained delay, repeated failure to cure deficiency by amendments previously allowed or futility of amendment. Heyl & Patterson Int'l, Inc. v. F.D. Rich Housing of V.I., Inc., 663 F.2d 419, 425 (3d Cir. 1981) (citing Foman, 371 U.S. at 182).

         Of the above-listed considerations, “prejudice to the non-moving party is the touchstone for denial of an amendment.” Arthur, 434 F.3d at 204 (quoting Cornell & Co. v. Occupational Safety & Health Review Comm'n, 573 F.2d 820, 823 (3d Cir. 1978)). The prejudice inquiry “focus[es] on the hardship to the [non-moving party] if the amendment were permitted.” Cureton, 252 F.3d at 273 (citing Adams v. Gould, Inc., 739 F.2d 858, 868 (3d Cir. 1984). In determining whether prejudice exists, a court can consider whether the proposed amendment “would result in additional discovery, cost, and preparation to defend against new facts or theories.” Cureton, 252 F.3d at 273. Additionally,

[c]ourts have found undue prejudice to the non-moving party and denied leave to amend where the amendment would have asserted new claims, where new discovery would have been necessary, where the motion for leave was filed months after the factual basis of the amendment was discovered by the moving party, and where the motion for leave was brought after summary judgment motions were filed.

Cumming v. City of Philadelphia, No. 03-0034, 2004 U.S. Dist. LEXIS 9030, *11 (E.D. Pa. April 26, 2004).

         Discussion

         Defendant avers that it has shown good cause to amend its counterclaim because it became aware of “newly discovered facts” at the deposition of Yama Ahmadi, Target Global's representative, on March 4 and 5, 2018. Specifically, KVG contends that Mr. Ahmadi's testimony “revealed that Target knowingly and materially, misrepresented, indeed lied about, the material nature and bona fides of the goods … and that it knowingly provided goods that were used, counterfeit or stolen.” See Defendant's Memorandum; Dkt. No. 174-1 at 8. Plaintiff avers that Defendant's motion should be denied because it is prejudicial at this late stage, but also futile given that the counterclaim fails to adequately state a claim for fraud, the statute of limitations has run, and the “gist of the action” doctrine bars such a fraud claim in its entirety. See Plaintiff's Opposition; Dkt. No. 188 at 1-2.

         Prejudice ...


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