The opinion of the court was delivered by: Cooper, District Judge.
This matter comes before the Court on defendant's motion for leave to
file a second amended answer. For the reasons stated, the motion is
granted.
Our prior Opinion addressed the question of whether defendant was
entitled to dismissal of the instant lawsuit brought by PSCC based upon
the fact that PSCC was neither a de facto nor de jure corporation at the
time of the parties' July 1, 1992 Agreement. Defendant's position was
that PSCC could not sue for breach of contract if it did not have the
capacity to enter into the contract as of the date of the execution of
the Agreement, July 1, 1992. In response, plaintiff maintained that PSCC
could sue on the Agreement, based upon the fact that it was a de facto
corporation, or alternatively by virtue of the doctrine of corporation by
estoppel.
The parties having agreed that PSCC was not a de jure corporation at
the time of the Agreement, we focused our attention on whether PSCC could
establish de facto status and thus avoid dismissal on that basis. The
Court held that assuming arguendo that the doctrine of de facto
corporation was still viable under New Jersey law after the enactment of
New Jersey's Model Business Corporation Act ("the Act") in 1968, the
facts of this case demonstrated that PSCC was not a de facto corporation
at the time of the Agreement. We reached that conclusion based upon the
undisputed fact that Sadlon did not attempt to incorporate PSCC until
August 14, 1992, which was approximately 1 1/2 months after the parties
entered into the Agreement.
Despite this finding, we determined that defendant was not entitled to
dismissal of this lawsuit on that basis. Instead, we applied the doctrine
of corporation by estoppel such that defendant would be estopped from
relying upon plaintiff's defective corporate status as a basis for
dismissal of this lawsuit. Accordingly, we denied defendant's motion to
dismiss.
The instant motion asks us to address a different, albeit related
question to that presented by the prior motion to dismiss. Specifically,
now that we have determined that defendant is not entitled to dismissal
of the lawsuit against it solely based upon PSCC's lack of corporate
status, we must decide whether defendant may add two individuals, namely
Jack Sadlon and Laura Micelli, as counterclaim defendants in this suit.
Defendant , seeks to add these additional defendants because such an
amendment would permit Delavau to recover from PSCC and/or the
individuals should the Court conclude that PSCC is liable to Delavau for
the misconduct alleged in Delavau's counterclaims.
Delavau's proposed counterclaims which seek money damages are premised
upon allegations of (1) breach of contract; (2) negligent
misrepresentation; and (3) intentional misrepresentation and fraud.*fn1
(See Prop. Sec. Am. Answer, Affirmative Defenses and Counterclaim.) The
thrust of defendant's argument is that if the Court has determined that
at least as of the date of the Agreement, July 1, 1992, PSCC was not a de
facto corporation, then Delavau should be entitled to recover damages
from PSCC, Sadlon or Micelli on the counterclaims. Defendant's argument
is based upon three premises, each of which must be examined.
Second, assuming that Delavau's first premise is correct and the Court
determines that Sadlon and Micelli are not entitled to rely upon PSCC's
corporate status as of the date of the conduct which forms the basis of
the counterclaims, Delavau's argument is that the Court would then be
required to treat PSCC as a partnership. Under New Jersey's Uniform
Partnership Law, N.J.S.A. § 42:1-15(a), the Court would be required
to impose joint and several liability upon all partners to the
partnership.
From this second premise, Delavau reaches its conclusion that both
Sadlon and Micelli could be individually liable as partners of PSCC if
the Court awards damages on Delavau's counterclaims. In particular, as to
the liability of Micelli, Delavau argues that she shared in the profits
of PSCC and is therefore considered a partner under New Jersey law, even
if she was never so designated. Moreover, under this theory of individual
liability, the fact that she was not a purported shareholder of PSCC is
irrelevant.*fn2
Putting these arguments and assumptions in context, defendant argues
that the liberal standard pertaining to the amendment of pleadings should
apply so that defendant may amend its answer to assert counterclaims
against Micelli and Sadlon individually. Defendant maintains that there
has been no undue delay, and that any prejudice which results from the
amendment is through the fault of the plaintiff, Micelli and Sadlon
rather than defendant.
PSCC argues in opposition to the motion that this Court's discussion of
the contours of the corporation by estoppel concept applies equally to
defendant's ability to amend the counterclaim at this juncture. (See
Pl.'s Ltr. Br. in Opp'n.) PSCC maintains that it would be unfair to
impose personal liability upon Micelli and Sadlon because Delavau
believed at all times that it was dealing with a bonafide corporation.
(Id.) Moreover, PSCC points out that if we were to permit ...