Architectural Coatings Associates Ltd. Partnership v. Applied Coatings International, Inc.

103 F.R.D. 442, 1984 U.S. Dist. LEXIS 22029
CourtDistrict Court, E.D. Pennsylvania
DecidedNovember 14, 1984
DocketCiv. A. No. 84-2154
StatusPublished
Cited by3 cases

This text of 103 F.R.D. 442 (Architectural Coatings Associates Ltd. Partnership v. Applied Coatings International, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Architectural Coatings Associates Ltd. Partnership v. Applied Coatings International, Inc., 103 F.R.D. 442, 1984 U.S. Dist. LEXIS 22029 (E.D. Pa. 1984).

Opinion

MEMORANDUM

O’NEILL, District Judge.

Architectural Coatings Associated Limited Partnership (ACALP) has sued Applied Coatings International, Inc. (Ohio) (ACII Ohio) for breach of an agreement dated December 31,1982. Plaintiff alleges, inter alia, that defendant agreed to perform services in connection with a research project, namely, the development of technology relating to a coating system for architectural glass; that plaintiff paid defendant the sum of $380,000 of a total contract price of $2,159,600; that defendant has failed to do what it agreed to do; also that defendant failed to maintain or to provide to plaintiff various records and status reports; and that defendant wrongfully disclosed confidential information generated by the project to a third party. Plaintiff seeks damages and other relief.

ACII Ohio has filed an answer and counterclaim against plaintiff and additional counterclaim defendants Omnimax, Inc., Alan Magerman, Victor Boddy and the law firm of Parker & Rutstein (P & R), these [444]*444additional defendants allegedly being the “promoters” of ACALP.

Count I of the ACII Ohio counterclaim asserts a breach of the December 31, 1982 contract by plaintiff, who allegedly has failed to make the payments required by the contract, thereby obliging defendant to curtail its research and development activities with resultant loss of business. Count II alleges that the promoters fraudulently induced ACII Ohio to enter into the December 31, 1982 agreement and have deliberately withheld funds from ACII Ohio in order to damage its business. Count III alleges that the acts alleged in Count II prevented ACII Ohio from performing its contract with ACALP.

On September 13, 1984, the Court denied a motion of Omnimax and Magérman to dismiss Counts II and III of the ACII Ohio counterclaim. Despite the provision of Rule 12(a) granting only 10 days for a responsive pleading, Omnimax filed its “answer” (not a reply as required by Fed.R. Civ.P. 7) to the counterclaim on October 3, 20 days later.

On September 24, 1984, counsel for Omnimax withdrew his appearance and an appearance was entered by new counsel, who had been retained by Omnimax on September 12, 1984.

On October 23, 1984, Omnimax filed and served by mail the present motion for leave to file an amended answer asserting a counterclaim against ACII Ohio and others. For the reasons stated hereinafter, this motion will be denied.

The Court agrees with the contention of Omnimax that under Rule 15(a) and without leave of court an answer may be amended to add a counterclaim within 20 days after service of the original answer if the case has not been placed upon the trial calendar. The Court does not agree, however, that Rule 15(a) is applicable to the present situation. Although the Omnimax motion appears to have been filed on the 20th day after service of its answer, its answer was served 10 days late in violation of Rule 12(a). Omnimax may not use its own default to avoid the requirement of judicial approval of its proposed pleading.1

Leave to amend must, therefore, be sought pursuant to the provisions of Rule 13(f):

“(f) Omitted Counterclaim. When a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, he may by leave of court set up the counterclaim by amendment.”

In his brief, counsel for Omnimax gives the following explanation of why a counterclaim was not asserted in the answer:

“A counterclaim was not then set forth in that Answer in view of new Counsel’s unfamiliarity with the factual background of this litigation and the lack of sufficient time to review and analyze that background, as well as the complex issues and the many documents involved.” (p. 2)

At oral argument counsel for Omnimax stated that a counterclaim had not been asserted because previous counsel for Omnimax believed that a counterclaim was not warranted. Given these statements, it seems likely that the omission was deliberate rather than due to oversight, inadvertence or neglect. The Court may, nonetheless, grant leave to amend if it concludes that justice so requires. Although leave to amend to add a counterclaim has been freely granted under Rule 13(f), the matter is one which is committed to the Court’s sound discretion.

The proposed counterclaim consists of 6 ■ counts, 83 numbered paragraphs and 25 pages, and would add 3 new parties to the action. A non-exhaustive summary of its contents follows.

Count I names ACII Ohio, Harry Beale and James Clare defendants. It asserts [445]*445breach of a written joint venture agreement between Beale and Omnimax dated June 5, 1982, as amended by a further writing made March 23,1983. The venture concerned research, development and commercialization of technology in the area of certain coatings for glass. ACII Ohio was to be the corporate instrumentality of this venture.2 Omnimax agreed to use its best efforts to obtain funds for ACII Ohio; ACII Ohio was to pay a royalty to the provider of the funds and a consulting fee to Omnimax.3 The agreement provides that it is to be governed by Ohio law and requires that any claim or dispute thereunder must be litigated in a court sitting within Ohio. The Count seeks damages in the amount of $100,000, the amount of the allegedly unpaid consulting fee.

Count II names ACII Ohio, Beale and another corporation, ACII Delaware, defendants. It asserts breach by Beale of a provision in the agreement of June 5, 1982, obligating him and Omnimax to “attempt to develop mutually satisfactory terms” with respect to proposed thermoelectric generator research by U.S. Energy Resources, Inc., a subsidiary of Omnimax. No facts are alleged which would constitute a breach of duty by ACII Ohio. The Count seeks damages in an unspecified amount.

Count III names Beale, Clare and ACII Delaware defendants. It asserts breach of a contractual duty and a duty under the laws of Ohio and Delaware to provide Omnimax with accurate statements of the finances of ACII Delaware and ACII Ohio and to allow Omnimax access to the books of ACII Delaware. The Count seeks damages in an unspecified amount.

Count IV names ACII Ohio, Beale, Clare and ACII Delaware defendants. It asserts that, by virtue of the agreement of June 5, 1982, Beale and Clare became fiduciaries owing a duty of good faith dealing to Omnimax; further, that Beale and Clare have breached this duty in numerous (15) respects, the purpose of their actions being to deprive Omnimax of its share in the joint venture and to acquire such ownership interest for themselves. No facts are alleged which would constitute a breach of duty by ACII Ohio; conceivably that company could be an appropriate party to such an action because of the relief requested. The Count seeks an accounting, imposition of a constructive trust, the return of Omnimax shares, injunctive relief, and damages in an unspecified amount.

Count V names ACII Ohio, Beale, Clare and ACII Delaware defendants. It alleges wilful and malicious false statements by Beale and Clare upon which Omnimax reasonably relied to its detriment. No facts are alleged which would constitute a breach of duty by ACII Ohio. The Count seeks damages in an unspecified amount.

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103 F.R.D. 442, 1984 U.S. Dist. LEXIS 22029, Counsel Stack Legal Research, https://law.counselstack.com/opinion/architectural-coatings-associates-ltd-partnership-v-applied-coatings-paed-1984.