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BTC Elec. Components, inc. v. AMP

October 20, 1999

BTC ELEC. COMPONENTS, INC. PLAINTIFF,
V.
AMP, INC., DEFENDANT.



OPINION

Before the Court is a motion by plaintiff for leave to file an amended complaint pursuant to Federal Rule of Civil Procedure 15(a). Defendant filed opposition. The Court heard oral argument on October 7, 1999. For the reasons set forth below, plaintiff's motion is granted.

Background

This motion arises out of an action brought by plaintiff BTC Electronic Components, Inc. ("BTC") alleging breach of contract and illegal price discrimination against defendant AMP, Inc. ("AMP"). BTC is seeking to amend its complaint to add allegations of fraudulent concealment and to add a fourth count of common law fraud.

BTC sells and distributes electrical and electronic connectors, interconnection systems, components and assemblies. (Complaint at ¶5) AMP manufactures electrical and electronic connectors, interconnection systems, components and assemblies. (Id. at ¶7). Beginning in 1983 and continuing through 1996, BTC was a distributor of electrical and electronic connector devices for AMP and/or its wholly-owned subsidiary, Matrix Science Corporation ("Matrix"). *fn1

The dispute in this case centers around three agreements between the parties. Under the first agreement, executed in 1992 (the "1992 Agreement"), BTC was to remain a stocking and value added distributor of Matrix electronic and electrical connection devices for a term of at least three years. (Id. at ¶19). The 1992 Agreement provided, inter alia, that Matrix's "prices, terms and conditions to BTC on all products, assemblies and services sold and supplied to BTC shall be no less favorable than the most favorable prices, terms and conditions at which Matrix Science supplies or sells any such product, assembly or service to any other party in substantially equivalent, or lesser, volumes within three (3) months of selling or supplying any such product assembly or service to BTC." (Id. at ¶20) This type of provision is also referred to as a "most favored nations" clause.

The second agreement was entered into by BTC and AMP in 1993 (the "1993 Agreement"). On or about January 1 of that year, BTC and AMP executed a distributorship agreement. (Id. at ¶21). Pursuant to the 1993 Agreement, BTC served as a stocking and value added distributor of AMP's electronic and electrical connection devices, which were sold through AMP's Distributorship Marketing Division. Id.

The third agreement, executed in 1995, was a letter agreement between BTC and AMP (which by this time included Matrix) extending the business relationship between the parties (the "1995 Agreement"). (Id. at ¶24) This agreement also contained a "most favored nations" clause. (Id. at ¶25)

BTC claims that at some point after entry into the 1995 Agreement, it discovered that AMP and Matrix had been selling products and assemblies to BTC on prices, terms and conditions that were less favorable than those offered to certain other of AMP's customers, allegedly in violation of the 1992 and 1995 Agreements. (Id. at ¶¶28-35) Therefore, on February 16, 1999, BTC filed its complaint in this matter, alleging breach of contract, breach of the implied covenant of good faith and fair dealing and unlawful price discrimination.

On August 27, 1999, defendant filed a motion for partial summary judgment. Through this summary judgment motion, currently pending before the District Judge, AMP seeks to preclude BTC's claim for damages for the period from February 18, 1992 to February 15, 1995. AMP argues that the applicable four-year statute of limitations bars BTC's damage claims prior to February 16, 1995 and further argues that BTC is precluded from seeking damages after BTC terminated the parties contractual arrangement effective December 16, 1996.

Plaintiff has filed this motion to amend its complaint in direct response to defendant's summary judgment motion. Plaintiff's counsel admits that "[i]n reviewing and investigating the matters raised in defendant's motion for summary judgment, it became apparent that plaintiff had the basis to, and should, plead in response to defendant's statute of limitations defense that AMP had engaged in a fraudulent scheme to actively conceal the fact that it was discriminating against BTC with regard to prices, terms and conditions on which it was offering and selling products and assemblies to BTC." (Kaplan Cert. at ¶7) Further, counsel states that while it was reviewing the basis for the allegation of fraudulent concealment, it was also determined that BTC had a claim for common law fraud. (Id. at ¶8) Plaintiff's counsel asserts that BTC's failure to plead these matters in the original complaint was "purely the result of inadvertence." (Id. at ¶10)

Discussion

Federal Rule of Civil Procedure 15 governs the amendment of pleadings. Under Rule 15(a), a party may amend its pleading once as a matter of course at any time before a responsive pleading is served. Once a response to a party's pleading is served, the pleading may be amended "only by leave of court or by written consent of the adverse party." Fed. R. Civ. P. 15(a). In this case, AMP served its answer on April 8, 1999, and AMP opposes the amendment. Therefore leave of the Court is required for BTC to amend its complaint.

Leave to amend a pleading "shall be freely given when justice so requires." Fed. R. Civ. P. 15(a). In an effort to "ensure[] that a particular claim will be decided on the merits rather than on technicalities," Dole v. Arco Chem. Co., 921 F.2d 484, 487 (3d Cir. 1990); the Third Circuit has "shown a strong liberality in allowing amendments under Rule 15(a)." Bechtel v. Robinson, 886 F.2d 644, 652 (3d Cir. 1989).

The Supreme Court has held that while leave to amend under Rule 15 is not without limits, it should be denied only in certain exceptional circumstances. ...


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