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Kang Haggerty & Fetbroyt LLC v. Hayes

United States District Court, E.D. Pennsylvania

June 1, 2018

KANG HAGGERTY & FETBROYT, LLC, Plaintiff,
v.
BAXTER MCLINDON HAYES, JR., et al., Defendants.

          MEMORANDUM

          LYNNE A. SITARSKI UNITED STATES MAGISTRATE JUDGE

          Pending before the Court is Plaintiff's Motion for Leave to File Amended Complaint (ECF No. 43) and Defendants' Memorandum of Law in Opposition thereto (ECF No. 46).[1] For the following reasons, Plaintiff's Motion will be GRANTED.

         I. BACKGROUND

         The procedural posture of this case is well-known to the parties, so the Court provides only a brief recitation of the background pertinent to the instant motion. On March 10, 2016, Kang Haggerty & Fetbroyt LLC (“Plaintiff”) initiated the instant action against Baxter McLindon Hayes, Jr. and Utilipath Holdings, Inc. (“Defendants”) in the United States District Court for the Middle District of Florida, raising claims of breach of contract (Count I) and unjust enrichment (Count II). (See Original Record 5, ECF No. 1; Compl., ECF No. 1-1). The Complaint averred that Hayes, individually and on behalf of Utilipath Holdings, retained Plaintiff to defend Defendants in two separate lawsuits: Utilipath, LLC v. Baxter McLindon Hayes, Jr., et al., Court of Chancery of Delaware, Civil Action No. 9214-VCN (“the Delaware Action”); and NewSpring Mezzanine Capital Ii, L.P. v. Baxter McLindon Hayes, Jr., et al., United States District Court for the Eastern District of Pennsylvania, Civil Action No. 2:14-cv-1706-NIQA (“the Federal Court Action”). (Compl. ¶¶ 8-9, ECF No. 1-1). Plaintiff was also retained to investigate and prosecute any available counterclaims, cross claims, or separate claims in each lawsuit, and to provide professional services related to other matters. (Id. ¶¶ 9, 14). Defendant agreed to pay Plaintiff an hourly fee; a contingency fee on any recovery from any counterclaim, cross claim, or separate claim; and “hard costs” incurred in the representation.[2] (Id. ¶ 11). Plaintiff expended hundreds of hours of attorney time in defending Defendants in both lawsuits, pursing a counterclaim and cross-claim in the Federal Court Action, and providing services to Defendant in other matters. (Id. ¶¶ 15, 17). In March 2015, Plaintiff withdrew from the representation “[a]s a result of irreconcilable conflicts between Plaintiff and Defendant concerning the nature of the representation.” (Id. ¶ 19). At that time, Defendants had “significant outstanding balances for fees owed” to the Plaintiff. (Id. ¶¶ 20-22). On March 22, 2017, the action was transferred to this district on the grounds of forum non conveniens. (See Original Record 7, ECF No. 1).

         On April 6, 2017, Defendants filed an Answer, Affirmative Defenses, and Counterclaim. (Answer, ECF No. 7). Defendants brought claims of breach of contract (Count I), unjust enrichment (Count II), and breach of fiduciary duty (Count III). (See id.). In April 2017, Plaintiff filed a Motion to Strike Defendants' Answer, Affirmative Defenses, and Counterclaim (ECF No. 9) and a Motion to Dismiss Defendants' Counterclaims (ECF No. 15) - specifically Counts II and III. On June 9, 2017, Plaintiff filed a Motion for Partial Summary Judgment. (Mot. for Partial Summary J., ECF No. 24). Defendants opposed each motion. (Resp. to Pl.'s Mot. to Strike, ECF No. 14; Resp. to Pl.'s Mot. to Dismiss, ECF No. 22; Mem. of Law in Opp. to Mot. for Partial Summary J., ECF No. 26).

         On January 19, 2018, Plaintiff's Motion to Strike was denied and Plaintiff's Motion for Partial Summary Judgment was denied without prejudice. (Order, ECF No. 31). On March 1, 2018, Plaintiff's Motion to Dismiss was granted in part and denied in part. (Mem., ECF No. 35; Order, ECF No. 36). Specifically, Judge Jones dismissed Defendants' unjust enrichment claim (Count II), but found Defendants' breach of fiduciary duty claim (Count III) could proceed. (Mem. 4-9, ECF No. 35).

         On March 15, 2018, Plaintiff filed an Answer and Affirmative Defenses to Defendants' Counterclaims. (Pl.'s Answer, ECF No. 39).

         On April 23, 2018, Plaintiff filed the instant Motion for Leave to File Amended Complaint. (Mot. for Leave to File Am. Compl., ECF No. 43). Specifically, Plaintiff seeks leave to file an Amended Complaint to “conform with events that have transpired since the filing of the Complaint” and “seek[] recovery of the contingency fee that is owed” as a result of Defendants' subsequent settlement in the Federal Court Action.[3] (Pl.'s Mem. of Law 2-3, ECF No. 43-2). Defendants filed a Memorandum of Law in Opposition, arguing Plaintiff's Motion should be denied because “the Amendment is an exercise of futility.” (Defs.' Mem. in Opp. 5, ECF No. 46).

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 15(a)(2) states that, after an answer has been filed, “a party may amend its pleading only with . . . the court's leave.” Fed.R.Civ.P. 15(a). “The court should freely give leave when justice so requires, ” and the Third Circuit has held that “motions to amend pleadings should be liberally granted.” Fed.R.Civ.P. 15(a)(2); Long v. Wilson, 393 F.3d 390, 400 (3d Cir. 2004). However, leave to amend under Rule 15 may be denied in cases of: (1) undue delay; (2) bad faith or dilatory motive; (3) undue prejudice; or (4) futility of amendment. Cureton v. Nat'l Collegiate Athletic Ass'n, 252 F.3d 267, 273 (3d Cir. 2001) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Given the liberal standard of Rule 15(a), the party opposing amendment bears the burden of showing undue delay, bad faith, prejudice, or futility. E.E.O.C. v. Hussey Copper Ltd., No. 08-809, 2009 WL 918298, at *1 (W.D. Pa. Apr. 2, 2009); Chancellor v. Pottsgrove Sch. Dist., 501 F.Supp.2d 695, 700 (E.D. Pa. 2007). The decision to grant or deny a motion for leave to amend is within the sound discretion of the district court. Cureton, 252 F.3d at 272.

         III. ANALYSIS

         Plaintiff seeks leave to amend the Complaint to “conform with events that have transpired since the filing of the Complaint” and to “seek[] recovery of the contingency fee that it is owed.” (Pl.'s Mem. of Law 3, ECF No. 43-2). Defendants argue that amendment would be futile, and suggest that Plaintiff has demonstrated undue delay and bad faith. (Defs.' Mem. in Opp. 5-6, ECF No. 46). For the reasons explained in more detail below, the Court grants Plaintiff's Motion.

         A. Futility

         Defendants argue that amendment would be futile because Plaintiff cannot recover the contingency fee requested in the proposed Amended Complaint. (Defs.' Mem. in Opp. 5-6, ECF No. ...


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