was issued on November 8, 1993. This Order set deadlines for discovery on "preliminary issues" and permitted UGI to file for summary judgment. Extensions of the preliminary issue discovery were requested by PSE&G, based upon its counsel's representation that his search for documents relevant to the 1899 release was not complete. Therefore, discovery continued on this limited subject matter well into April of 1994.
In late March of 1994, PSE&G claims to have become aware of a Third Circuit reported opinion from 1942 which contained evidence establishing a post-1899 nexus between UGI and the gas manufacturing operations on the Site.
At that time, PSE&G requested supplemental discovery in order to further establish such a link. This Court denied PSE&G's request by a written order entered July 21, 1994.
In the meantime, UGI prepared a motion for summary judgment that was to be heard in October, 1994, and PSE&G retained new counsel to prosecute their third-party claims against UGI.
On August 23, 1994 a status conference was held. At that conference, PSE&G requested leave to file an amended third-party complaint. The original pleading was based on Consumers Gas Company's lease of the manufactured gas plant to UGI for the period between 1886-1899. The amended third-party complaint alleges that UGI is liable to PSE&G for contribution and reimbursement based on the following set of alleged facts and circumstances: In 1899, Hudson County Gas Company ("Hudson") was formed through a merger with Consumers Gas Company and assumed control of the lease previously held by UGI. McPhee Aff. P 6. From 1899 until 1903, UGI owned a majority of the authorized issued and outstanding common stock of Hudson. Am. Comp. P 14. In 1903, Public Service Corporation of New Jersey ("PSC") acquired control of the manufactured gas plants by a lease from Hudson. McPhee Aff. P 7. At that time UGI owned 25% of the original common stock of PSC. In addition, the president of UGI was also the first Chairman of the Board of Directors of PSC, and the chief engineer of UGI became the first Superintendent of PSC's gas department. Am. Comp. P 15. From 1903 until the early 1940's, UGI and/or its parent were the largest shareholder of common stock of PSC. Am. Comp. P 15. In 1909, PSC assigned the lease held by Hudson to the Public Service Gas Company ("PSGC"), which was a subsidiary of PSC. In 1924, PSGC merged to form PSE&G. McPhee Aff. P 7. In 1939, Hudson also merged into PSE&G. Am. Comp. P 16.
Based upon the foregoing, PSE&G now seeks to expand its contribution claim against UGI on the theory that UGI, as a stockholder of PSC, was an owner or operator of the Site. The Court granted leave to PSE&G to file this motion to amend the complaint over UGI's objection that it was not timely.
I. Standard of Review
Pursuant to Fed.R.Civ.P. 15(a) the party wishing to amend a pleading must seek leave of the court to do so. Leave to amend a pleading "shall freely be granted when justice so requires." Fed.R.Civ.P. 15(a). Generally, the moving party ought to be afforded an opportunity to test its claim on the merits, if the underlying facts and circumstances may be a proper subject for relief. Foman v. Davis, 371 U.S. 178, 182, 9 L. Ed. 2d 222, 83 S. Ct. 227 (1962). The denial of a motion to amend is proper only when there is a finding of "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of amendment." Id.
The discretion of the trial court "must be tempered by considerations of prejudice to the non-moving party, for undue prejudice is the 'touchstone for the denial for leave to amend.'" Harrison Beverage Co. v. Dribeck Importers, Inc., 133 F.R.D. 463, 468 (D.N.J. 1990), citing Cornell & Co., Inc. v. Occup. Safety and Health Review Comm'n, 573 F.2d 820, 823 (3rd Cir. 1978). A court will find that prejudice is undue "when the opponent shows it would be unfairly disadvantaged or deprived of the opportunity to present facts or evidence which it would have offered." Id.
A court may deny a motion to amend based on undue delay when the movant is unable to "satisfactorily explain" the reasons for delay. Leased Optical Departments v. Opti-Center, Inc., 120 F.R.D. 476, 478 (D.N.J. 1988).
It is well recognized that futility is an appropriate ground for denying leave to amend a complaint. Allied Erecting and Dismantling Co., Inc. v. United States Steel Corp., 786 F. Supp. 1223, 1227 (W.D.Pa. 1992). However, it is improper to deny leave to amend if the proposed amendment is not clearly futile. Harrison Beverage at 468. "The trial court may properly deny leave to amend where the amendment would not withstand a motion to dismiss." Massarsky v. General Motors Corp., 706 F.2d 111, 125 (3d Cir.), cert. denied, 464 U.S. 937, 104 S. Ct. 348, 78 L. Ed. 2d 314 (1983). Parties are not required to engage in substantive motion practice to prove the futility of an amendment; however "[to] allow a meritless claim to proceed to the motion to dismiss and motion for summary judgment stages is an abdication of judicial responsibility that serves neither justice nor efficiency." Allied Erecting at 1227.
Rule 16(b) of the Federal Rules of Civil Procedure also impacts upon a court's decision to grant leave to amend. Rule 16(b), which was amended in 1983, requires that scheduling orders be issued for case management purposes. The rule demands a demonstration of "good cause" for extensions of deadlines. Harrison Beverage at 468.
UGI argues that the type of delay present in this case requires the standards of Rule 16(b) to control the Court's analysis rather than the more traditional standards of Rule 15(a). While this Court agrees that PSE&G has caused significant delay through numerous requested extensions of discovery, thereby protracting UGI's participation in this matter, the delay is distinguishable from the delay that existed in Harrison Beverage. In Harrison Beverage, the defendant brought a motion to amend only one and one-half weeks before the trial date. Furthermore, the amendment had been contemplated by the defendant for over fifteen months. The case, sub judice, is distinguishable primarily because neither a trial date nor a final pretrial conference date has been set. Thus, hearing PSE&G's motion does not disrupt any overall trial schedule set for this case. While the Court recognizes that this motion has delayed UGI's summary judgment motion, such delay is not equivalent to that found in Harrison Beverage.
In declining to decide this motion pursuant to the strict standards of Rule 16(b), this Court recognizes that UGI's ability to have its summary judgment motion heard has been impeded and that UGI has thereby been prejudiced. Such delay can properly be considered in the context of a traditional Rule 15(a) analysis. Thus, the Court will decide this motion pursuant to Rule 15(a) rather than addressing the good cause standard required by Rule 16(b).
The first factor which must be considered is whether the movant has engaged in undue delay. As stated above, this court recognizes that PSE&G has caused significant delay. This motion to amend was filed some nine months after the October 15, 1993 deadline set for motions to amend at the first pretrial conference. PSE&G fails to provide a satisfactory explanation for this delay. It was not until the third extension of discovery was expiring that PSE&G came forward with the results of its investigation of its own corporate history. PSE&G argues that it only recently discovered the connection between UGI and PSC, PSE&G's predecessor. This Court is not satisfied with PSE&G's reason for delay, because knowledge of its corporate history must be imputed to PSE&G. Furthermore, a great deal of PSE&G's information was derived from the reported decision of the Third Circuit in Public Service Corporation of New Jersey v. Securities and Exchange Commission, 129 F.2d 899 (3d.Cir.), cert. denied, 317 U.S. 691, 87 L. Ed. 553, 63 S. Ct. 266 (1942). This decision was discoverable by PSE&G prior to March 1994 when counsel claims to have learned of it. Indeed, it strains credibility to suggest that PSE&G only recently learned of the identity of its stockholders.
Furthermore, the representations of PSE&G's prior counsel to this Court should be noted. PSE&G based its requests for discovery extensions on its need to complete document discovery pertaining to the 1899 release on which UGI intends to rely in its summary judgment motion. Counsel never intimated that PSE&G intended to assert a completely new (and novel) theory of liability. This Court did not intend to extend discovery to enable PSE&G to pursue a protracted investigation of its corporate history. In fact, this Court explicitly denied PSE&G's request for supplemental discovery on the issue of UGI's post-1899 nexus to the Site by Order entered July 21, 1994. For these reasons, the Court finds that PSE&G has caused undue delay without a satisfactory explanation.
While a motion to amend may be properly denied on this ground alone, the Court is hesitant to enter such an order based upon procedural misconduct where alternative sanctions, such as an award of counsel fees for UGI during the period of inordinate delay, could serve to assuage any prejudice caused by PSE&G. Therefore, the outcome of the motion must abide the analysis of its futility.
A finding of futility requires a Fed. R. Civ. P. 12(b)(6) analysis. Massarsky at 125. In considering a motion to dismiss, a court must view all allegations in a light most favorable to the plaintiff. Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990). A motion to dismiss must be denied "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974). A district court must accept as true the facts pleaded in the complaint and any and all reasonable inferences derived from those facts. Unger v. National Residents Matching Program, 928 F.2d 1392, 1400 (3d Cir.1991).
CERCLA, adopted by Congress in 1980, is a complex remedial statute enacted to enable the government to hold responsible parties liable for contributing to the costs of environmental clean-up. 42 U.S.C. § 9607; George J. Tyler and Patrick J. McNamara, Superfund Amendments and Current Superfund and RCRA Activities, in Hazardous Waste in New Jersey, 43, 47 (1991).
In 1986, CERCLA was amended by Congress through the Superfund Amendments and Reauthorization Act (SARA). Donald W. Stever, Law of Chemical Regulation and Hazardous Waste § 6.04. The amendment, particularly § 9613, expanded the number of civil proceedings that could be brought under the Act. Pursuant to subsection (f), a responsible party may seek contribution from other potentially liable parties. The statute provides that:
(f)(1) Contribution. Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title, during or following any civil action under section 9606 of this title or under section 9607(a) of this title. Such claims shall be brought in accordance with this section and the Federal Rules of Civil Procedure, and shall be governed by Federal law. In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines appropriate. 42 U.S.C. § 9613(f)(1).