DRR, L.L.C. v. Sears, Roebuck & Co.

171 F.R.D. 162, 37 Fed. R. Serv. 3d 1364, 44 ERC (BNA) 1699, 1997 U.S. Dist. LEXIS 2132, 1997 WL 85340
CourtDistrict Court, D. Delaware
DecidedFebruary 19, 1997
DocketCivil Action No. 94-401 MMS
StatusPublished
Cited by8 cases

This text of 171 F.R.D. 162 (DRR, L.L.C. v. Sears, Roebuck & Co.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
DRR, L.L.C. v. Sears, Roebuck & Co., 171 F.R.D. 162, 37 Fed. R. Serv. 3d 1364, 44 ERC (BNA) 1699, 1997 U.S. Dist. LEXIS 2132, 1997 WL 85340 (D. Del. 1997).

Opinion

OPINION

MURRAY M. SCHWARTZ, Senior District Judge.

I. INTRODUCTION & FACTUAL BACKGROUND

In July of 1994, DRR, L.L.C. (“DRR”), filed suit against Sears, Roebuck & Co. (“Sears”) for reasons recounted in a recent opinion by this Court. See DRR, L.L.C., v. Sears, Roebuck & Co., 949 F.Supp. 1132 (D.Del.1996). Count I of DRR’s complaint alleged fraud, and Count II alleged strict liability. Docket Item. (“D.I.”) 1. Sears counterclaimed. D.I. 6. In Count I of the counterclaim, Sears alleged DRR is contractually obligated to indemnify Sears from all costs arising from this lawsuit. Id. at Till1-6. Count II of the counterclaim alleged breach of contract, and Count III alleged DRR breached a duty of good faith and fair dealing it owed to Sears. Id. at 1H( 7-9, 10-13. As relief for Counts I-III, Sears sought primarily attorneys’ fees, along with other unspecified compensatory and punitive damages.

Following an extended period for discovery, Sears filed a motion for partial summary judgment on both counts of DRR’s complaint. D.I. 71. DRR responded with a motion for partial summary judgment in its favor on Count I of its complaint — its claim in fraud. D.I. 74. The motions were briefed by both parties. On November Í2, 1996, the Court presided over oral argument, during which counsel for both parties exhaustively explored the myriad legal issues surrounding this case. In response to a question during argument, counsel for DRR emphasized that, consonant with the briefing and discovery, DRR was litigating a claim in fraud; he disavowed pursuing a claim of negligent misrepresentation. DRR, 949 F.Supp. 1132, 1138.

In a December 16, 1996 opinion and order, this Court denied DRR’s motion for summary judgment on its fraud claim and granted Sears’ motion for summary judgment as to both counts of DRR’s complaint. DRR, 949 F.Supp. at 1142; D.I. 89. In addition, since both parties briefed the issue, the Court denied Sears’ application for attorneys’ fees. DRR, 949 F.Supp. at 1142-43.

Two passages in the December 16 opinion are worth noting for present purposes. First, in a footnote, the Court discussed an apposite Delaware ease, Wolf v. Magness Constr. Co., 1994 WL 728831 (Del. Ch. Dec. 20, 1994). DRR, 949 F.Supp. 1132, 1138. In Wolf, this Court noted, the Delaware Chancery Court granted summary judgment on a buyer’s fraud claim against a seller, but ordered further briefing on the viability of a claim for negligent misrepresentation. See DRR, 949 F.Supp. 1132, 1138. This Court proceeded to note that DRR, unlike the buy[164]*164er in Wolf, had “expressly defined his claim as one for fraud.” Id.

Second, this Court held in its December 16 opinion that DRR had not adduced any evidence Sears possessed the scienter necessary to be held liable for common law fraud. While Sears “may have been sloppy or negligent,” this Court wrote, “a higher level of scienter is needed for common law fraud.... Were this a claim of negligent misrepresentation, summary judgment may be inappropriate.” DRR, 949 F.Supp. at 1141-42. Emboldened by these dicta, DRR has filed a motion: (1) to amend its complaint pursuant to Rule 15(b) of the Federal Rules of Civil Procedure to add a claim of negligent misrepresentation; 1 and (2) to reargue the same evidence submitted with the initial cross-motions for summary judgment, this time in light of a new theory of negligent misrepresentation. For the reasons that follow, DRR’s motion will be denied.

II. LEGAL ANALYSIS

A. Rule 15(b) Amendment

Rule 15(b) of the Federal Rules of Civil Procedure provides:

Amendments to Conform to the Evidence. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure to so amend does not affect the results of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presenta- ’ tion of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice the party in maintaining the party’s action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.

DRR’s putative amendment fits neither the letter nor the spirit of Rule 15(b). The issue of negligent misrepresentation was never tried by consent of the parties, as the text of Rule 15(b) so plainly requires. See Douglas v. Owens, 50 F.3d 1226, 1236 (3d Cir.1995) (holding amendment permitted under Rule 15(b) only if tried by express or implied consent of parties) (quoting 6A Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1494 (3d ed. 1990)). Wisely, DRR has not advanced the futile argument of express consent.2 Instead, DRR argues the theory of negligent misrepresentation has been tried by the implied consent of the parties.

This argument is unavailing. In Douglas v. Owens, the Third Circuit Court of Appeals adopted three questions which, if answered in the affirmative, determine an issue has been tried by implied consent: (1) whether the parties recognized that the unpleaded issue entered the case; (2) whether the evidence that supports the unpleaded issue was introduced without objection; and (3) whether a finding of trial by implied consent would prejudice the opposing party’s opportunity to respond. 50 F.3d at 1236 (quoting Portis v. First Nat’l Bank, 34 F.3d [165]*165325, 332 (5th Cir.1994)). The negative answers to these three questions demonstrate the theory of negligent misrepresentation has not been tried with the implicit consent of DRR and Sears.

It would have been impossible for either party to recognize the moment the theory of negligent misrepresentation entered the ease — this is so for the simple reason the theory never did enter the case. The theory both sides briefed and argued was fraud. Neither party briefed a negligent misrepresentation claim. Neither side argued it. DRR disavowed it. The Court did not give it any meaningful consideration.

In its briefs, DRR hammers on the fact that much of the evidence in its fraud claim would be relevant to a negligent misrepresentation claim. Since the parties debated much of the evidence as it affected DRR’s fraud claim at summary judgment, DRR’s argument goes, and that same evidence would be relevant to a negligent misrepresentation theory, then the negligent misrepresentation theory has been tried by the implied consent of the parties, and without objection from Sears. This argument has superficial appeal. But it is, at bottom, false logic.

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171 F.R.D. 162, 37 Fed. R. Serv. 3d 1364, 44 ERC (BNA) 1699, 1997 U.S. Dist. LEXIS 2132, 1997 WL 85340, Counsel Stack Legal Research, https://law.counselstack.com/opinion/drr-llc-v-sears-roebuck-co-ded-1997.