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Fahs Rolston Paving Corp. v. Pennington Properties Development Corp.

August 9, 2007

FAHS ROLSTON PAVING CORP., PLAINTIFF,
v.
PENNINGTON PROPERTIES DEVELOPMENT CORP., INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Bongiovanni, Magistrate Judge

OPINION

Presently before the Court is a Motion by Plaintiff, Fahs Rolston Paving Corporation ("Fahs Rolston"), requesting leave to file an Amended Complaint, and a Cross Motion by Defendants Stark & Stark and Daniel Haggerty, Esq. (hereinafter collectively "Stark") to file a Third Party Complaint. No oral argument has been held pursuant to FED. R. CIV. P. 78. The Court has reviewed the submissions of the parties and for the foregoing reasons Fahs Rolston's Motion to Amend is GRANTED in-part and DENIED in-part, and Stark's Cross-Motion for leave to file a Third-Party Complaint is DENIED.

I. Background

The parties are familiar with the background and lengthy history of this matter and therefore it shall not be repeated here at length. The Court refers the parties to Its December 27, 2006 Opinion and Order. [Docket Entry No. 81]. On January 9, 2007, Fahs Rolston filed a Motion requesting leave to file an Amended Complaint. Fahs Rolston Moving Brief of January 9, 2007 ("Moving Brief") [Docket Entry No. 87]. Fahs Rolston seeks to identify Hearth Management, LLC, Maynard Fahs, Mark Burritt, Daniel Suits and Carl Guy (collectively, "Proposed Plaintiffs") as proper additional Plaintiffs in this action, add factual information demonstrating that Westrum Pennington, L.P. ("WP") is a successor to Pennington Properties Development Corp., Inc. ("Pennington Properties"), add existing Defendant, WP, to its claims asserted in Count I and Count V of the Complaint, and lastly, add factual information relating to unilateral discussions that Stark and Pennington had with Menlo Engineering and the Lawrence Township Planning Board in the Fall of 2000. Moving Brief at 1.

On January 22, 2007, Stark opposed and filed a cross motion (hereinafter "Stark Opposition Brief") [Docket Entry No. 93]. In opposition to Fahs Rolston's Motion, Stark claims undue delay and dilatory motives. Stark Opposition Brief at 5. In its cross motion, Stark asks for leave to file a Third-Party Complaint against Plaintiff's counsel, Marc Citron ("Citron") and Saul Ewing ("Saul Ewing"). Id. at 11. Stark's basis for this Third-Party Complaint lies in alleged misrepresentations by Citron that induced Pennington Properties to enter default against Fahs Rolston. Id.

On January 29, 2007, Pennington Properties, WP, Ellenbogen and Blicher (hereinafter collectively "Pennington") filed an opposition brief to Plaintiff's Motion and in support of Stark's cross-motion (hereinafter "Pennington Opposition Brief") [Docket Entry No. 97]. In its opposition, Pennington claims the proposed amendments are futile. Pennington Opposition Brief at 20. In support of the cross-motion, Pennington re-iterates Stark's assertions that but-for the alleged misrepresentations of Citron, Pennington would not have entered default against Fahs Rolston. Id. at 26.

Fahs Rolston submitted a reply brief on February 5, 2007, (hereinafter "Reply Brief"), claiming that the proposed amendments are not futile, and will not cause undue delay or prejudice to Defendants. [Docket Entry No. 98]. Furthermore, Fahs Rolston argues that the Stark's cross-motion is futile, was made in bad faith, and will cause undue delay and prejudice to Fahs Rolston. See Reply Brief at 32-40. Pursuant to a request of the parties these Motions were stayed until June 2007. [Docket Entry No. 102].

On July 11, 2007, Defendant Stark submitted a letter brief in lieu of a more formal reply in further support of their Cross-Motion. [Docket Entry 103]. The Court notes that this informal letter brief was improperly submitted, and therefore has not been considered.

II. Analysis

A. Motion to Amend Standard

Leave to amend pleadings "shall be freely given when justice so requires." FED. R. CIV. P. 15(a). Despite this liberal standard, courts will deny a motion to amend on grounds of dilatoriness or undue delay, prejudice, bad faith, or futility. See Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir. 2000); Hill v. City of Scranton, 411 F.3d 118, 134 (3d Cir. 2005). The Supreme Court has held that leave should be granted "in absence 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." Foman v. Davis, 371 U.S. 178, 182 (1962).

B. Fahs Rolston's Motion to Amend

Fahs Rolston seeks to add new Plaintiffs to this action, factual information demonstrating that WP is a successor to Pennington Properties, existing Defendant, WP, to its claims asserted in Count I and Count V of the Complaint, and lastly, add factual information relating to unilateral discussions that Stark and Pennington had with Menlo Engineering and the Lawrence Township Planning Board in the Fall of 2000. Moving Brief at 1.

1. Addition of Plaintiffs

Fahs Rolston claims that if Stark and Pennington had not improperly concluded they were in default and thereafter sold the Property to a third party, Fahs Rolston would have constructed an assisted living facility from which Proposed Plaintiffs would have profited. Moving Brief at 4. More specifically, Hearth Management, LLC, would have operated and managed said facility, earning a management fee. Furthermore, Messrs. Fahs, Burritt, Suits, and Guy would have formed and served as principals in a limited liability company responsible for developing said facility, and therefore, would have earned a development fee and would have been entitled to all profits arising therefrom. Id.

Stark argues that the addition of new parties constitutes a litigation tactic with dilatory motives that would result in substantial delays and "undue and unfair prejudice." Stark Opposition Brief at 5, 10. They contend that Proposed Plaintiffs were known to Fahs Rolston at the time the action was commenced, as Fahs, Burrit, Suits, and Guy all were, and still are, employees of Fahs Rolston. Id. at 5. Furthermore, they assert that Hearth Management, LLC, is a company known to be owned and controlled by Fahs Rolston, a fact known to Fahs Rolston and its counsel since the beginning of this lawsuit. Id. at 9. Stark also asserts that "the allegations [of these parties] are highly speculative in that they pile contingency upon contingency to establish a claim for damages." Id.

Pennington joins in Stark's Opposition, and further argues that the amendments must be denied as to Proposed Plaintiffs. Pennington argues that Hearth Management, LLC, cannot be a party to this suit because it is not qualified to do business in New Jersey, and that all Proposed Plaintiffs fail to state a cause of action and therefore the amendments are futile. Pennington Opposition Brief at 19-20.

a. Undue Delay

The Third Circuit has held that a motion for leave to amend should be denied when the delay in amending the pleading is undue. Cureton v. Nat'l Collegiate Athletic Ass'n, 252 F.3d 267, 273 (3d Cir. 2001). "[T]he mere passage of time does not require that a motion to amend a complaint be denied on grounds of delay," however, "at some point, the delay will become 'undue,' placing an unwarranted burden on the court, or will become 'prejudicial,' placing an unfair burden on the opposing party." Adams v. Gould Inc., 739 F.2d 858, 863 (3d Cir. 1984). Delay may become undue when there has been previous opportunity to amend the complaint. See Lorenz v. CSX Corp., 1 F.3d 1406, 1414 (3d Cir. 1993) (three year lapse between the filing of the complaint and the proposed amendment was "unreasonable" delay when plaintiff had previous ...


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