United States District Court, D. Delaware
before the Court is Defendants Evolving Systems NC and
RateIntegration's motion to amend their answer and add
counterclaims. (D.I. 69). Plaintiff filed a response. (D.I.
seek to add counterclaims against Plaintiff for unjust
enrichment, fraudulent inducement, equitable fraud, and
negligent misrepresentation. (D.I. 69-1, pp. 31-33 at
¶¶ 16-35). The counterclaims arise out of Plaintiff
s allegedly filing false "Commission Statements, "
resulting in $207, 869 in overpaid commissions.
(Id., p. 30 at ¶¶ 8-12).
filed their motion on October 23, 2017. (D.I. 69). The
deadline was June 22, 2017. (D.I. 51 at 1).
court-ordered schedule "may be modified only for good
cause and with the judge's consent." Fed.R.Civ.P.
16(b). "[T]he good cause standard under Rule 16(b)
hinges on diligence of the movant, and not on prejudice to
the non-moving party." Roquette Freres v. SPI
Pharma, Inc., 2009 WL 1444835, at *4 (D. Del. May 21,
2009). "Only after having found the requisite showing of
good cause will the court consider whether the proposed
amended pleading meets the standard under Fed.R.Civ.P.
15." Intellectual Ventures I LLC v. Toshiba
Corp., 2016 WL 4690384, at *1 (D. Del. Sept. 7, 2016)
(citing E. Minerals & Chems. Co. v. Mahan, 225
F.3d 330, 340 (3d Cir. 2000)).
initial matter, I think the good cause standard under Rule
16(b) has been met. In their motion, Defendants represent
that they only recently discovered the factual bases
supporting their proposed counterclaims. In particular,
Defendants maintain that in preparing responses to Plaintiffs
discovery requests in late-August 2017, Defendant
Ratelntegration's finance team discovered that Plaintiff
had submitted several false Commission Statements resulting
in $207, 869 in overpaid commissions. (See D.I. 69
at 2-3). While it appears the facts underlying the
counterclaims were in Defendants' possession prior to the
expiration of the deadline to amend, it seems to me that
Defendants acted diligently once they became aware of the
concluded Defendants have met the Rule 16(b) good cause
standard, I now turn to Rule 15. Under Rule 15, "[t]he
court should freely give leave [to amend] when justice so
requires." Fed.R.Civ.P. 15(a)(2). A court may deny leave
to amend, however, for reasons of undue delay, bad faith on
part of the moving party, undue prejudice to the non-moving
party, or futility of amendment. Foman v. Davis, 371
U.S. 178, 182 (1962). "The decision to grant a motion
for leave to amend is within the sound discretion of the
District Court." Winer Family Trust v. Queen,
503 F.3d 319, 331 (3d Cir. 2007).
opposition to Defendants' motion to amend implicates
three of the factors that weigh against permitting
amendments. They are undue delay, prejudice, and futility of
amendment. (See D.I. 72 at 13-18).
undue delay, I think Defendants' delay is "neither
so egregious nor unexplained as to warrant refusal of leave
to amend." See Arthur v. Maersk, Inc., 434 F.3d
196, 204 (3d Cir. 2006). As noted above, Defendants did not
discover the facts underlying their proposed counterclaims
until discovery was underway. Further, "[t]he liberality
of Rule 15(a)... allows for misunderstandings and good-faith
lapses in judgment, so long as the party thereafter acts
reasonably and diligently." Id. at 206. While
it appears Defendants possessed the relevant facts prior to
expiration of the deadline, I think the record demonstrates
that Defendants acted reasonably and diligently in filing
their motion relatively soon after they uncovered the unpaid
commissions at issue. In any event, "[d]elay alone is
not sufficient to justify denial of leave to amend."
Id. at 204.
I do not think Plaintiff is particularly prejudiced by
Defendants' delay in seeking to add their counterclaims.
Prejudice to the non-moving party occurs when "allowing
the amended pleading would (1) require the non-moving party
to expend significant additional resources to conduct
discovery and prepare for trial, (2) significantly delay the
resolution of the dispute, or (3) prevent [a party] from
bringing a timely action in another jurisdiction."
Intellectual Ventures, 2016 WL 4690384, at *1
(quoting Long v. Wilson, 393 F.3d 390, 400 (3d Cir.
2004)). To show undue prejudice, Plaintiff must demonstrate
that he will be "unfairly disadvantaged or deprived of
the opportunity to present facts or evidence" unless
leave to amend is denied. Bechtel v. Robinson, 886
F.2d 644, 652 (3d Cir. 1989).
Defendants' proposed counterclaims seem closely related
to several of Plaintiff s already asserted claims related to
unpaid commissions. Plaintiff claims he is owed $136, 737.72
in unpaid commissions while Defendants claim Plaintiff was in
fact overpaid in commissions by $207, 869. In light of the
interrelatedness of these claims, I do not think allowing
Defendants leave to amend would unfairly disadvantage
Plaintiff, deprive him the opportunity to present facts
related to the commissions at issue, or require him to expend
significant additional resources. Nor do I think allowing
leave to amend would significantly delay resolution of the
with Plaintiff, however, that Defendants' proposed
amendment would be futile. A proposed amendment would be
futile if "the complaint as amended is frivolous,
advances a claim that is legally insufficient on its face, or
fails to state a claim upon which relief can be
granted." Intellectual Ventures, 2016 WL
4690384, at *1.
opposition, Plaintiff argues amendment would be futile
because Defendants' proposed counterclaims do not meet
the heightened pleading standard under Federal Rule of Civil
Procedure 9(b) and "are otherwise barred by the
applicable statute of limitations." (D.I. 72 at 16).
Rule 9(b), I agree with Plaintiff that Defendants'
counterclaims fail to meet the heightened pleading standard
required by the Rule.
initial matter, I agree with Plaintiff that not only must
Defendants' fraudulent inducement and equitable fraud
claims meet the 9(b) standard but so too must their claims
for negligent misrepresentation and unjust enrichment. The
heightened pleading standard required by Rule 9(b) extends to
claims of negligent misrepresentation and unjust enrichment
that "sound in fraud." See Travelers Indent.
Co. v. Cephalon, Inc.,32 F.Supp.3d 538, 550-51 (E.D.
Pa. 2014), aff'd,620 Fed.Appx. 82 (3d Cir.
2015) (applying Rule 9(b) standard to plaintiffs'
negligent misrepresentation claim where claim was based on
allegations that the defendant made "deliberate
mispresentat[ions]"); Zuniga v. Am. Home