84 Lumber Company v. F.H. Paschen, S.N. Nielsen & Associates, LLC et al, No. 2:2012cv01748 - Document 291 (E.D. La. 2017)
Court Description: ORDER AND REASONS - For the foregoing reasons, J & A's motion to appeal the Magistrate Judge's decision 267 is DENIED. 84 Lumber's motion to strike J & A's appeal 268 is DENIED AS MOOT. 84 Lumber's motion to strike a portion of J & A's answer 260 is GRANTED. Signed by Judge Sarah S. Vance on 8/1/2017. (cg)
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84 Lumber Company v. F.H. Paschen, S.N. Nielsen & Associates, LLC et al Doc. 291 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA 84 LUMBER COMPANY VERSUS CIVIL ACTION NO. 12-1748 F.H. PASCHEN, S.N. NIELSEN & ASSOCIATES, LLC, ET AL. SECTION “R” (5) ORD ER AN D REASON S J & A Construction Managem ent Resources Co. appeals the Magistrate J udge’s denial 1 of its m otion for leave to file an am ended third-party com plaint. 2 Also before the Court are 84 Lum ber’s m otion to strike J & A’s m otion to appeal, 3 and 84 Lum ber’s m otion to strike a portion of J & A’s answer to Paschen’s third-party com plaint. 4 For the following reasons, J & A’s m otion is denied, 84 Lum ber’s m otion to strike a portion of J & A’s answer is granted, and 84 Lum ber’s m otion to strike J & A’s m otion to appeal is denied as m oot. 1 2 3 4 R. Doc. 253. R. Doc. 267. R. Doc. 268. R. Doc. 260 . Dockets.Justia.com I. BACKGROU N D The facts and procedural history of this prolonged dispute have been recounted in previous orders from the Court. 5 For the purposes of this Order, it will suffice to recount that this dispute arises out of two school construction projects in New Orleans, Louisiana. Paschen was the general contractor on both projects. Paschen subcontracted a portion of each project to J & A, and J & A subcontracted its obligations to 84 Lum ber. On J uly 5, 20 12, 84 Lumber sued Paschen, as well as the projects’ sureties, alleging that it was not paid in full for the work it perform ed under its contract with J & A. 6 Paschen answered 84 Lum ber’s complaint and added J & A as a third-party defendant. 7 J & A also asserted a cross-claim against Paschen, counterclaim s against 84 Lum ber, and added Maggie’s Managem ent, LLC, as a third-party defendant. 8 The case was then stayed for nearly three years while the parties attem pted to resolve (without success) their claim s through arbitration. During the period that the case was stayed, the Court ordered J & A to initiate the arbitration process m ultiple tim es, to no avail. 9 Finally, on May 5 6 7 8 9 See generally R. Doc. 151; R. Doc. 20 6. R. Doc. 1. R. Doc. 25. R. Doc. 151 at 2. Id. at 4-5. 2 5, 20 16, the Court lifted the stay, and dism issed J & A’s claim s against 84 Lum ber’s and Maggie’s Managem ent’s with prejudice for failure to prosecute. 10 The Court based its ruling on a “clear record of delay and contum acious conduct intentionally caused by J & A,” which prejudiced the other parties to this litigation. 11 After the dism issal of J & A’s claims against 84 Lumber and Maggie’s Managem ent, the other parties continued to pursue discovery and prepare for the case’s upcom ing trial date of February 21, 20 17. J & A, however, did not participate in the J oint Discovery plan, nor did it provide Rule 26 disclosures or respond in any manner to requests for production. 12 On November 11, 20 16, J & A’s attorney withdrew as counsel, 13 and J & A was without an attorney until February 3, 20 17, less than three weeks before trial. 14 On February 13, 20 17, the Court granted J & A’s m otion to continue. 15 In doing so, the Court issued a new scheduling order, with new deadlines for am endments 10 11 12 13 14 15 to pleadings, third-party R. Doc. 151. Id. at 7-8. R. Doc. 156. R. Doc. 173. R. Doc. 20 5. R. Doc. 211. 3 actions, crossclaim s, and counterclaim s. 16 On April 11, J & A filed a m otion for leave to file an am ended third-party com plaint. 17 In its m otion, J & A sought to add a new claim for tortious interference against Paschen, and add new claim s for breach of contract and for bad faith against Fidelity and Deposit of Maryland, one of the sureties. 18 84 Lumber opposed J & A’s m otion. 19 On April 26, 20 17, after oral argument, Magistrate J udge North denied J & A’s m otion for leave. 20 In so ruling, Magistrate J udge North found that the record indicated “undue and unnecessary and unexplained delay in bringing” the claim s that J & A sought to bring, and that the rem aining parties would be “unduly prejudiced” if the amendm ent was allowed. 21 Magistrate J udge North also noted that J & A’s claims were likely futile, but did not rule on that basis as the delay and prejudice were sufficient grounds 16 R. Doc. 216. R. Doc. 245. The scheduling order’s deadline for am endm ents was April 3, 20 17, but as Magistrate J udge North noted in his order denying J & A’s m otion, J & A filed a deficient m otion for leave on April 3. R. Doc. 262 at 21-22. Accordingly, Magistrate J udge North treated J & A’s m otion as tim ely and in accordance with the scheduling order. Id. 18 R. Doc. 245-1 at 2. 19 R. Doc. 250 . 20 R. Doc. 253. 21 R. Doc. 262 at 27-28. 4 17 to deny J & A’s m otion. 22 Magistrate J udge North gave J & A 14 days to object or appeal his ruling. 23 This appeal followed. II. LEGAL STAN D ARD A m agistrate judge’s ruling on a non-dispositive civil m otion m ay be appealed to the district court. Fed. R. Civ. P. 72(a). When a tim ely objection is raised, the district judge m ust review the m agistrate judge’s ruling and “m odify or set aside any part of the order that is clearly erroneous or contrary to law.” Id. Under this standard, a m agistrate judge’s ruling “should not be rejected m erely because the court would have decided the m atter differently.” Arvie v. Tanner, No. 12-1638, 20 12 WL 3597127, at *1 (E.D. La. Aug. 21, 20 12) (internal quotations om itted). Instead, “[a] finding is ‘clearly erroneous’ when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a m istake has been com m itted.” United States v. U.S. Gy psum Co., 333 U.S. 364, 395 (1948). 22 23 Id. at 28. Id. 5 III. D ISCU SSION A. Mo tio n fo r Le ave to Am e n d Under Federal Rule of Civil Procedure 15(a)(2), leave to am end a com plaint is freely given “when justice so requires.” In exercising its discretion to grant or deny leave to amend, the Court considers whether the party seeking leave is doing so after undue delay, in bad faith, or for a dilatory m otive. Jam ieson By and Through Jam ieson v. Shaw , 772 F.2d 120 5, 120 8 (5th Cir.1985). The Court will also consider any undue prejudice to the opposing parties if leave is granted. Fom an v. Davis, 371 U.S. 178, 182 (1962). Further, the court m ay deny a m otion to am end if such an am endment would be futile. Stripling v. Jordan Prod. Co., LLC, 234 F.3d 863, 872– 73 (5th Cir. 20 0 0 ). An amendm ent is considered futile if “the am ended com plaint would fail to state a claim upon which relief could be granted.” Id. To determ ine whether an am endm ent is futile, the court “appl[ies] the same standard of legal sufficiency as applies under Rule 12(b)(6).” Id. The Magistrate J udge denied J & A’s m otion for leave to am end under Federal Rule of Civil Procedure 15 because of a record of delay by J & A, and because allowing the am endment would “unduly prejudice all of the parties 6 to the case and the prosecution of their claim s and defenses.”24 This decision was neither clearly erroneous nor contrary to law. As to delay, the record in this case plainly dem onstrates that J & A is prim arily responsible for the protraction of this litigation. As mentioned above, J & A continually failed to initiate arbitration proceedings, despite m ultiple orders from the Court, and as a result this case was stayed for nearly three years. 25 The Court has already found that during this period there was a “clear record of delay and contum acious conduct intentionally caused by J & A.”26 Additionally, J & A had m ultiple opportunities to assert new claim s, and could have sought leave to file its new claims against Paschen and Fidelity after the stay was lifted in May of 20 16. 27 Instead, J & A did not seek leave to file until alm ost a year later. The Magistrate J udge’s finding of undue delay was not clearly erroneous or contrary to law. See, e.g., Rosenblatt v. United W ay of Greater Houston, 60 7 F.3d 413, 419-20 (5th Cir. 20 10 ) (affirm ing denial of m otion to am end because plaintiff could have brought claim s earlier); Rosenzw eig v. Azurix Corp., 332 F.3d 854, 864-65 (5th Cir. 20 0 3) (same). 24 R. Doc. 262 at 23-24, 27. R. Doc. 151. 26 Id. 27 See R. Doc. 154 (J une 9, 20 16 scheduling order setting J uly 11, 20 16 deadline for am endments to pleadings, third-party actions, crossclaims and counterclaim s). 7 25 The Magistrate J udge’s findings on prejudice are also not clearly erroneous. As the Court has already stated, the other parties in this case were “precluded from litigating their claims and defenses because this case has been stayed pending arbitration proceedings that J & A never initiated.”28 What the Court said before rem ains true now: as tim e passes, m em ories fade, evidence becom es harder to locate, and the litigation process becomes m ore difficult for all parties involved. 29 See Gonino v. UN ICARE Life & Health Ins. Co., No. 0 2-250 1, 20 0 5 WL 60 8158, at *3 (N.D. Tex. Mar. 16, 20 0 5). To m ake m atters worse, J & A refused to participate in discovery after the stay was lifted, and did not participate in the creation of the joint pretrial order. 30 All other parties were prepared to try this case on February 21, 20 17, but the Court granted J & A’s m otion to continue, over objection from the other parties, so that J & A could have its day in court. 31 The trial is now set for J anuary 29, 20 18. 32 Because of J & A’s conduct, the other parties m ust now incur m ore delay, and m ore costs associated with that delay, before they can resolve this case. 28 29 30 31 32 Id. at 8-9. Id. at 9. R. Doc. 156; R. Doc. 210 . R. Doc. 211. R. Doc. 216. 8 This case is five years old, and the delays were caused by J & A. Expansion of this litigation now to add new claim s, which could involve new parties or parties that have already have the claim s against them dism issed, would prejudicially add costs and time to this already protracted litigation. Additionally, J & A cannot absolve itself for its past conduct by placing the blam e on its previous counsel. 33 If securing new counsel could erase the prejudice and delay incurred by other parties, than Rule 15(a)’s consideration of delay and prejudice would be m eaningless. See W instead v. Georgia Gulf Corp., 77 Fed. App’x 267, 270 (5th Cir. 20 0 3) (affirm ing denial of m otion to amend based on undue delay and rejecting plaintiff’s argument that placed blam e on previous attorney); Rhodes v. Am arillo Hospital Dist., 654 F.2d 1148, 1154 (5th Cir. 1981) (“The retention of a new attorney . . . is itself no excuse for the late filing of an am ended com plaint.”); see also Ansam Assocs., Inc. v. Cola Petroleum , Ltd., 760 F.2d 442, 446 (2d Cir. 1985) (rejecting argument that any prejudice to other party and delay was fault of previous attorney). 33 Id. at 5. It is worth noting that contrary to J & A’s assertion that its previous counsel is responsible for all of its im proper past conduct, J & A’s previous counsel La Koshia Roberts stated to the Court that J & A’s owner refused to follow Ms. Roberts’ advice. R. Doc. 172 at 1. 9 Accordingly, the Magistrate J udge’s denial of J & A’s m otion for leave to am end was not clearly erroneous or contrary to law, and J & A’s appeal is denied. 34 84 Lumber’s m otion to strike J & A’s appeal is denied as m oot. B. Mo tio n to Strike 84 Lumber m oves to strike a portion of J & A’s answer 35 to Paschen’s am ended com plaint. Specifically, 84 Lum ber m oves to strike the sentence in J & A’s prayer for relief that asks for a judgm ent against 84 Lum ber and Maggie’s Management. J & A’s claim s against 84 Lum ber and Maggie’s Managem ent have already been dism issed with prejudice, and accordingly 84 Lumber’s m otion to strike the reference to 84 Lumber and Maggie’s Managem ent in J & A’s prayer for relief is granted. 34 Because the Magistrate J udge’s decision was not clearly erroneous, the Court need not consider J & A’s arguments on futility. 35 R. Doc. 258. 10 IV. CON CLU SION For the foregoing reasons, J & A’s motion to appeal the Magistrate J udge’s decision is DENIED. 84 Lumber’s m otion to strike J & A’s appeal is DENIED AS MOOT. 84 Lum ber’s motion to strike a portion of J & A’s answer is GRANTED. New Orleans, Louisiana, this _ 1st _ _ day of August, 20 17. __ _____________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 11
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