Golden Trade v. Jordache

143 F.R.D. 504, 1992 U.S. Dist. LEXIS 11918, 1992 WL 212941
District Court, S.D. New York·Decided August 10, 1992·No. No. 92 Civ. 6292 (JMC)·Published·Cited by 12 cases

Opinion

MEMORANDUM AND ORDER

DOLINGER, United States Magistrate Judge:

Defendant Bugle Boy Industries, Inc. has moved for leave to serve and file an Amended Answer and Counterclaims, as reflected in Exhibit 3 to the February 21, 1992 affidavit of Bugle Boy’s counsel, Edward E. Vassallo, Esq., and in Exhibit D to Mr. Vassallo’s Reply Affidavit, sworn to March 23, 1992. The motion is granted in part and denied in part.

Rule 15(a) of the Federal Rules of Civil Procedure commands that leave to amend be liberally granted “when justice so requires,” and that command has been consistently adhered to by both the Supreme Court, see, e.g., Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962), and the Second Circuit. See, e.g., United States v. Continental Illinois Nat’l Bank & Trust, 889 F.2d 1248, 1254 [506] (2d Cir.1989); Richardson Greenshields Sec., Inc. v. Lau, 825 F.2d 647, 653 n. 6 (2d Cir.1987). As summarized by our Circuit Court:

Leave to amend a complaint “shall be freely given when justice so requires,” and if the [movant] has at least colorable grounds for relief, justice does so require unless the plaintiff is guilty of undue delay or bad faith or unless permission to amend would unduly prejudice the opposing party.

S.S. Silberblatt, Inc. v. East Harlem Pilot Block-Bldg. 1 Housing Dev. Fund Co., 608 F.2d 28, 42 (2d Cir.1979) (citations omitted).

To determine whether there are colorable grounds for an amendment, the court should, as a general rule, apply the standards of Fed.R.Civ.P. 12(b)(6) to determine whether the new pleading states a cognizable claim. See, e.g., id. at 42; CBS, Inc. v. Ahern, 108 F.R.D. 14, 18 (S.D.N.Y.1985) (citing cases); 3 James Wm. Moore & Richard D. Frier, Moore’s Federal Practice 1115.08[4] at 15-78 to 82 (2d ed. 1991). As for allegations of undue delay, the lateness of a motion to amend is not a proper basis for denying the application. Rather, the party opposing the motion must demonstrate that it would be substantially and unfairly prejudiced by the amendment. See, e.g., Richardson Greenshields Sec., Inc. v. Lau, 825 F.2d at 653 n. 6.

In this case, defendant Bugle Boy seeks to amend its Answer and Counterclaim to add three counterclaims and to assert those counterclaims as third-party claims against an entity know as Sun Apparel. The proposed amended pleading also adds nine affirmative defenses. These amendments are designed principally to assert Bugle Boy’s contention that plaintiff Greater Texas Finishing Corporation and a related entity — proposed third-party defendant Sun Apparel — knew or should have known of the patent at issue in this case, and yet lured Bugle Boy into an arrangement by which it purchased large quantities of jeans manufactured by Sun Apparel and treated by Greater Texas with a process that may have infringed the very patent that Greater Texas and its co-plaintiff seek to enforce in this lawsuit. From this set of circumstances, Bugle Boy infers that it cannot be held liable to Greater Texas and that, in any event, it should receive contribution or indemnification from Sun Apparel and/or Greater Texas for any liability to either plaintiff.

The proposed amendments also allege that Greater Texas and Sun Apparel made apparently illicit payments to representatives of Bugle Boy to obtain its business. According to Bugle Boy, this conduct should preclude any liability to Greater Texas on a theory of “unclean hands” and should permit defendants to receive indemnification for any liability to plaintiffs.

Although plaintiffs claim that the motion to amend is untimely and that they would be prejudiced by the proposed amendments, they make no showing on this score that would justify denying leave to amend. At least some of the information on which the motion is predicated was learned at the November 1991 deposition of Mr. Eric Rothfeld, who is the President of both Greater Texas and Sun Apparel. The motion was filed only three months later, in the midst of discovery, which is in fact still ongoing.

This timing is not unreasonable, and, in any event, plaintiffs make no meaningful showing of prejudice. The issues raised by the new counterclaims have been present in the litigation for some time and have plainly been the subject of extensive discovery. Indeed, plaintiffs object to some of the proposed amendments as redundant, an argument that — although not well taken— underscores the fact that the amendments introduce no significant new issues into this case. For this reason, it necessarily follows that little or no new discovery will be occasioned by the amendments, and plaintiffs will not be unduly prejudiced by an order granting the motion of Bugle Boy.

The remaining question concerns whether there is a “colorable basis” for the new allegations and claims. Noting that Golden Trade seeks only injunctive relief, plaintiffs assert that the proposed new allegations can impact only the damage claims of Greater Texas, and they argue that the [507] counterclaims are meaningless since they amount solely to affirmative defenses against liability to Greater Texas. Plaintiffs also indicate that Greater Texas does not seek damages with respect to its finishing work for Bugle Boy, thus negating any need to assert any claim for contribution or indemnification from Sun Apparel. Plaintiffs further argue that the proposed counterclaims and third-party claims are legally deficient.

I start by noting that plaintiffs do not meaningfully challenge the adequacy of the new affirmative defenses, and they appear to be legally unassailable. As for their asserted redundancy, I find no basis for precluding their inclusion in Bugle Boy’s pleading since they add detail to pri- or general allegations.

As for the counterclaims and third-party claims, \ plaintiffs are correct that, insofar as the counterclaims seek indemnification or contribution from Greater Texas, they have no legal significance since only Greater Texas seeks damages and thus these “counterclaims” are simply affirmative defenses, which are pled earlier in the amended answer.1 This infirmity does not affect the new claims insofar as they are asserted as third-party claims against Sun Apparel, since that entity might be required to pay contribution or to indemnify Bugle Boy for any liability that it may incur towards Greater Texas.

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Golden Trade v. Jordache, 143 F.R.D. 504, 1992 U.S. Dist. LEXIS 11918, 1992 WL 212941 (S.D.N.Y. 1992).

143 F.R.D. 504 (Golden Trade v. Jordache) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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