United States District Court, D. New Jersey
MEMORANDUM OPINION & REPORT AND RECOMMENDATION OF
DUNN WETTRE, UNITED STATES MAGISTRATE JUDGE
the Court are the motions of plaintiff New Jersey Performing
Arts Center Corporation ("NJPAC") for leave to
amend the Complaint (ECF No. 18) and of defendants ZMAN Time
Productions, Inc. ("ZMAN Time") and Alter Wagschal
("Alter") to amend or correct their Answer (ECF No.
19). This motion is decided without oral argument, pursuant
to Federal Rule of Civil Procedure 78. Having considered the
parties' submissions, for the reasons set forth herein,
and for good cause shown, plaintiffs motion to amend is
GRANTED IN PART AND DENIED IN PART. It is
further respectfully recommended that as the Court will lack
subject matter jurisdiction upon the filing of the Amended
Complaint, the case be remanded to the Superior Court of New
Jersey at that time. As defendants will have an opportunity to
file an answer to the Amended Complaint upon remand, their
motion for leave to amend the Answer is DENIED AS
action concerns defendants' alleged failure to compensate
NJPAC in the principal amount of $216, 599.32 under a written
agreement governing defendants' use of NJPAC's
facilities and services for rehearsals and performances of a
play at NJPAC's Prudential Hall in December 2016. NJPAC
commenced the action in the Superior Court of New Jersey,
Essex County, Law Division in March 2017. ECF No. 1 -1.
Defendants timely removed the action to this Court on the
grounds of diversity of citizenship jurisdiction, 28 U.S.C.
§ 1332. Plaintiff NJPAC is a New Jersey not-for-profit
corporation with a principal place of business in Newark, New
Jersey, ECF No. 1-1 ¶ 2, and both defendants are
citizens of the State of New York. ECF No. I ¶ 5. The
amount in controversy exceeds the $75, 000 jurisdictional
threshold. Id. ¶ 7.
Court initially ordered fact discovery to commence in June
2017 and to conclude in September 2017. ECF No. 9. In August
2017, following an unsuccessful settlement conference, the
parties sought and received permission to file motions for
leave to amend their respective pleadings on or before August
25, 2017. ECF No. 17. Within that deadline, the parties filed
the instant motions. ECF Nos. 18, 19.
seeks to file an Amended Complaint that would add four
defendants and several claims to the current Complaint.
Presently, the Complaint alleges that defendant ZMAN Time
entered into a Short Term License Agreement to use
NJPAC's Prudential Hall for rehearsals and performances
in late December 2016 under which the principal sum of $216,
599.32 remains due and owing to NJPAC after a check tendered
by defendant ZMAN Time was returned for insufficient funds.
ECF No. 1-1 ¶¶ 5-12. Plaintiff further avers that
defendant Alter personally guaranteed ZMAN Time's
obligations, in writing, on December 29, 2016. Id.
¶ 14. The Complaint asserts claims for breach of
contract against ZMAN Time, for breach of personal guaranty
against Alter, and for account stated and unjust enrichment
against both defendants. Id. ¶¶ 17-33.
proposed Amended Complaint includes the foregoing
allegations, as well as additional factual allegations and
proposed new claims against the four additional defendants,
ZMAN Productions, Inc. ("ZMAN Productions"),
Yiztchok Wagschal ("Isaac"), Faigy Wieder and Aron
Weinberger. NJPAC avers in the proposed Amended Complaint
that the agreement with ZMAN Time concerned rehearsals and
performances of a Hanukkah play called "Zusman" to
take place at NJPAC between December 19 through 23, 2016 and
December 26 to 29, 2016. Amended Complaint ("Am.
Compl.") ECF No. 18-2 ¶ 1. The agreement provided
for certain payments to be made no later than December 15,
2016, failing which NJPAC could terminate the agreement and
thus not allow defendants to use its facilities for the play.
Id. ¶¶ 14-16.
alleges in the Amended Complaint that, on December 12, 2016,
proposed defendant Isaac tendered to an NJPAC Manager, Kitab
Rollins, a ZMAN Productions check postdated December 28, 2016
in the amount of $140, 000.00. Id. ¶29.
Plaintiff alleges that Isaac knew at the time he tendered the
check that there were insufficient funds for it to be
honored, id. ¶ 31, but Isaac nevertheless
"led Mr. Rollins to believe that [the check] was a valid
check in order to induce NJPAC to forbear from terminating
the [agreement], as it was entitled to do under paragraph
4(c) of the Agreement." Id. ¶ 33.
Allegedly in reliance on Isaac's representations,
plaintiff did not terminate the agreement on December 15,
2016 as it was entitled to do. Id. ¶¶ 33,
the check was returned for insufficient funds, NJPAC so
advised Isaac and Alter, reminding them that Isaac had
represented the check "would be a good check."
Id. ¶¶ 35-37. NJPAC further informed Isaac
and Alter that it "could not let people into Prudential
Hall as a result of ZMAN's material breach of its payment
obligations under the [agreement]." Id. ¶
37. Consequently, Alter offered to personally guarantee
payment of the debt to NJPAC and signed such a guaranty.
Id. ¶¶ 38-40. In alleged reliance on
Alter's guaranty, NJPAC permitted the performances of
Zusman to go forward. Id. ¶ 42. To date, the
principal balance of $216, 599.32 has not been paid.
Id. ¶ 44.
on the foregoing allegations concerning proposed defendant
Isaac's tendering of an invalid check from proposed
defendant ZMAN Productions to fulfill ZMAN Time's
obligations under the agreement, plaintiff seeks leave to
assert additional claims for fraud, negligent
misrepresentation and breach of oral guaranty against Isaac
and ZMAN Productions. Id. ¶¶ 67-87.
Plaintiff also seeks leave to implead ZMAN Productions,
Isaac, Wieder and Weinberger as alleged alter egos of
defendant ZMAN Time. See Id. ¶¶ 19-28.
argue the Court should deny plaintiffs motion to amend
because the new claims against the additional defendants in
its proposed Amended Complaint are futile, made in bad faith,
and would prejudice defendants. See Defendant's
Opposition ("Def. Opp."), ECF No. 20. For the
reasons set forth below, the Court grants in part and denies
in part plaintiffs motion to amend the Complaint. Further, as
the permitted amendments will implead in this action an
additional defendant who resides in New Jersey, Isaac, thus
destroying diversity of citizenship jurisdiction, the Court
recommends to the District Court that this case be remanded
for lack of subject matter jurisdiction upon the filing of
the Amended Complaint.
Plaintiffs Motion To Amend
15(a)(2) of the Federal Rules of Civil Procedure provides
that a court should "freely give leave [to amend] when
justice so requires." Fed.R.Civ.P. 15(a)(2). Courts
grant leave to amend liberally in light of "the
principle that the purpose of pleading is to facilitate a
proper decision on the merits." Foman v. Davis,
371 U.S. 178, 182 (1962). The United States Supreme Court
holds that 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.
Id., "The burden is generally on the party
opposing the amendment to demonstrate why the amendment
should not be permitted." Luppino v. Mercedes-Benz
USA, LLC, Civ. No. 09-5582 (DMC) (JAD), 2012 WL 850743,
at *2 (D.N.J. Mar. 8, 2012).
the settlement conference on August 14, 2017, the Court
extended the date by which the parties were to file their
motions for leave to amend to August 25, 2017. ECF No. 17. As
plaintiff filed its motion within that deadline, and as
defendants fail to set forth any basis on which the Court
could conclude that plaintiff unduly delayed in seeking leave
to amend, the Court finds no undue delay. See, e.g.,
Astra Zeneca AB v. Perrigo Co. PLC, Civ. No. 15-1057
(MLC) (TJB), 2015 WL 8483298, at *4 (D.N.J. Dec. 8, 2015)
("The Court would ...