United States District Court, D. New Jersey
HONORABLE TONIANNE J. BONGIOVANNI UNITED STATES MAGISTRATE
pending before the Court is Plaintiff USI International
Inc.'s (“Plaintiff”) motion to file a First
Amended Complaint. [Docket Entry No. 24]. Defendant Festo
Didactic, Inc. (“Defendant”) opposes
Plaintiff's motion. [Docket Entry No. 28] The Court has
fully reviewed the arguments made in support of and in
opposition to Plaintiff's motion. The Court considers
Plaintiff's motion without oral argument pursuant to
L.Civ.R. 78.1(b). For the reasons set forth more fully below,
Plaintiff's motion to amend is GRANTED.
Background and Procedural History
December 3, 2015, Plaintiff filed a Complaint alleging breach
of contract (count one), breach of good faith and fair
dealing (count two), unjust enrichment (count three), and
fraudulent inducement (count four) against Defendant. [Docket
Entry No. 1]. Defendant filed a motion to dismiss
Plaintiff's second, third, and fourth claims on January
11, 2016 [Docket Entry No. 7]. On August 24, 2016, the
District Court dismissed counts two and four without
prejudice and denied Defendant's motion to dismiss count
three of Plaintiff's Complaint. [Docket Entry No. 14].
discovery Scheduling Order was entered on November 8, 2016
and discovery commenced. [Docket Entry No. 17]. Pursuant to
the Scheduling Order, motions to amend were to be filed by
February 10, 2017. On February 1, 2017, the deadline to move
to amend was extended to March 24, 2017. While that deadline
was not formally extended again prior to the April 13, 2017
telephone conference, during the status conference, the Court
noted that it would address the remaining scheduling and any
warranted extensions during the next telephone conference,
which it set for June 15, 2017. On June 15, 2017, the Court,
aware that certain discovery remained outstanding, noted that
it would address the remaining schedule during a telephone
conference scheduled for September 20, 2017.
September 20, 2017, Plaintiff indicated a desire to amend its
Complaint based on discovery it received over the summer. The
Court directed Plaintiff to provide a copy of its proposed
amended pleading to Defendant and for the parties to advise
whether Plaintiff's proposed amendments could be made by
consent. After reviewing Plaintiff's proposed Amended
Complaint, Defendant advised that it would not consent to its
filing. The Court therefore entered an Order on October 25,
2017, granting Plaintiff permission to file a motion to amend
by November 10, 2017. In that Order, the Court also stayed
all depositions that would be affected by Plaintiff's
proposed amendments. [Docket Entry No. 22]. Plaintiff filed
the instant motion on November 10, 2017 in compliance with
the Court's Order. [Docket Entry No. 24].
states that through document discovery that occurred during
the summer of 2017, Plaintiff learned that Defendant
intentionally provided false information to Plaintiff.
(Pl.'s Br. in Supp. of Mot. at 1). As a result, Plaintiff
seeks to add new factual allegations, increase its damages
claim, and add an additional cause of action for fraud.
(Id.) Plaintiff argues that its motion should be
granted because there has been no undue delay, bad faith or
dilatory motive, the amendment would not be futile and the
amendment would not prejudice Defendant. (Id. at
10). Plaintiff notes that it filed the motion to amend soon
after the discovery of facts that were previously unavailable
to it. (Id.) Plaintiff further notes that document
discovery had only recently concluded and no depositions have
been conducted, therefore, no prejudice or undue delay will
result from the amendment. (Id. at 11). Plaintiff
argues that its amendment is not futile as it has alleged
with specificity all of the elements of fraud. (Id.
argues that Plaintiff's motion should be denied because
it is untimely, futile, prejudicial, and filed in bad faith.
(Def.'s Br. in Opp'n at 1). Specifically, Defendant
notes that the Court's November 8, 2016 Scheduling Order
provided that motions to amend were to be filed by February
10, 2017, therefore Plaintiff's motion to amend was filed
eight months late and that Plaintiff cannot show good cause
for the delay. (Id. at 2). Defendant asserts that
contrary to Plaintiff's assertion that it did not know
about the apparent extent of the mark-up in the contract over
Defendant's list price for the equipment until July 2017,
Plaintiff actually had the component information since
January 2017 when Defendant produced, as part of its first
production of documents, a copy of its contract with the U.S
argues that Plaintiff's new breach of contract claim is
implausible. (Id. at 3). Defendant states that
Plaintiff seeks to increase its claim for damages on a theory
that it was entitled not only to the twenty-five percent
commission it has been claiming from the outset but also to
an additional mark-up margin. (Id.). In its
assertion that Plaintiff's amended breach of contract
claim is implausible on its face, Defendant explains the
Plaintiff's allegations begin with a transaction in which
it was dealing with the government of Oman. Plaintiff then
acknowledges that funding for the project changed to U.S.
government funds, which also required a change in the
parties. The government's counterparty would have to be a
U.S. entity. As a result the transaction became one between
Defendant and the U.S. government. Thus, the negotiating and
contracting parties changed entirely.
(Id. at 4). Defendant argues that Plaintiff's
allegations apply to a mark-up by Plaintiff.
(Id.). Defendant asserts that because it had become
not only the negotiating, but also the contracting party,
there could be no mark-up by Plaintiff. (Id.).
further argues that Plaintiff's fraud claim is futile
because it lacks the requisite particularity, fails to show
causation, and is barred by the economic loss doctrine. As
the District Court stated in Its August 23, 2016 Opinion,
Plaintiff must allege the five elements of fraud with the
particularity required by Rule 9(b)'s heightened pleading
standard and Plaintiff has failed to do so. (Id. at
5). Defendant states that Plaintiff failed to identify the
individual speaker who made the alleged misrepresentation.
(Id. at 5-6). Defendant argues that Plaintiff has
failed to allege how it relied on the alleged
misrepresentation, how it changed its position, what it would
have done differently that would have avoided harm, what
facts and circumstances made the reliance reasonable, or how
the reliance harmed Plaintiff. (Id. at 6). Defendant
further argues that Plaintiff has failed to allege a material
misrepresentation of a presently existing fact as well as
resulting damages. (Id. at 7).
Defendant argues that the proposed amended complaint includes
a provably false allegation. Defendant asserts that the
statement “despite repeated requests both
pre-litigation and through this litigation, [Plaintiff] has
not been provided with a copy of the contract” is false
and amounts to bad faith as Defendant's counsel provided
a copy of the contract to Plaintiff's counsel in January
2017. (Id. at 9).
responds arguing that the Defendant does not assert that the
amendment is prejudicial, will cause undue delay, or is the
result of bad faith or dilatory motive. (Pl.'s Reply Br.
at 1). Instead, Plaintiff states that Defendant's
arguments involve factual disputes that are not appropriate
in considering a motion to amend. (Id.). Plaintiff
argues that the motion is not untimely as the Court gave it
permission to file the motion by November 10, 2017, which it
did. (Id.). Plaintiff notes that although the
original deadline to file a motion to amend was February 10,
2017, Plaintiff did not receive the documents that form the
basis of the amendment until the summer of 2017.
(Id. at 3). Plaintiff argues that contrary to
Defendant's assertion, the documents provided to
Plaintiff in January 2017 “were only a portion of the
puzzle, camouflaged in a document dump, with inconsistencies
and incompleteness apparent on the face of the
document.” (Id. at 4). ...