Green Island Holdings, LLC v. British American Isle of Venice (BVI), Ltd.

• Court: Court of Appeals for the Eleventh Circuit
• Decided: June 6, 2013
• Docket: 11-14534
• Status: Unpublished

Opinion

Case: 11-14534 Date Filed: 06/06/2013 Page: 1 of 7

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 11-14534 Non-Argument Calendar ________________________

D.C. Docket No. 9:09-cv-80207-KAM

GREEN ISLAND HOLDINGS, LLC,

Plaintiff-Appellee,

versus

BRITISH AMERICAN ISLE OF VENICE (BVI), LTD.,

Defendant-Appellant.

________________________

Appeal from the United States District Court for the Southern District of Florida ________________________ (June 6, 2013)

Before TJOFLAT, KRAVITCH, and COX, Circuit Judges.

PER CURIAM: Case: 11-14534 Date Filed: 06/06/2013 Page: 2 of 7

In this diversity case, British American Isle of Venice, Ltd. (Isle of Venice)

appeals the district court’s final judgment in favor of Green Island Holdings, LLC.

On appeal, Isle of Venice challenges the district court’s denial of its motion to

amend the Answer to add an affirmative defense and a counterclaim, a motion filed

nineteen months after the scheduling-order deadline. The district court determined

that Isle of Venice failed to show good cause to modify the order, as required by

Federal Rule of Civil Procedure 16(b). We affirm.

I.

The underlying facts and procedural history are convoluted and tedious. We

need only recite the facts necessary to affirm the district court’s ruling.

Green Island sold its 100-percent membership interest in a company called

Green Island Ventures, LLC, to Isle of Venice in July 2007. To pay (in part) for

the membership interest, Isle of Venice executed a promissory note for about $56

million and secured the debt with the membership interest. After Isle of Venice

failed to meet certain deadlines for payments, Green Island sued Isle of Venice for

breach of the promissory note in February 2009, seeking the balance of the debt

(about $38 million) and foreclosure on the membership interest. Isle of Venice

filed an answer that included the affirmative defense that Green Island could not

collect the debt because it had “fraudulently induced Isle of Venice to enter into

the transaction” by paying incentives to Isle of Venice’s directors. (R.1-15 ¶ 36.)

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The district court issued a scheduling order that set a June 30, 2009, deadline for

amending pleadings. (R.1-23 at 2.) Neither party amended their pleadings by the

deadline, but Green Island had moved in April 2009 to strike Isle of Venice’s

affirmative defense for failure to meet Rule 9(b)’s specificity requirements for

allegations of fraud.

The directors of Isle of Venice’s corporate parent, British American

Insurance Company, Ltd., and several of Isle of Venice’s own directors resigned

on June 30, 2009. Isle of Venice then moved for a stay of proceedings, which the

court granted. During the stay, on August 18, 2009, Isle of Venice’s counsel

withdrew. The stay was lifted on August 28, and the district court addressed Green

Island’s pending Rule 9(b) motion on September 3. The district court construed it

as a motion for a more definite statement under Rule 12(e) and allowed Isle of

Venice ten days to replead. Isle of Venice moved for an extension but did not file

an amended pleading. On October 19, 2009, the district court denied the

extension, granted Green Island’s motion to strike the affirmative defense, and

warned Isle of Venice that it would allow no additional time to amend its

affirmative defenses.

Isle of Venice declared bankruptcy under Chapter 15 of the U.S. Bankruptcy

Code on April 29, 2010. The petition automatically stayed district court

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proceedings until January 10, 2011, when the bankruptcy court lifted the stay to

allow this case to proceed to judgment.

On January 14, 2011—almost nineteen months after the deadline—Isle of

Venice moved, pursuant to Rule 15(a), to amend the Answer to add an affirmative

defense and a counterclaim, both of which alleged that Green Island aided and

abetted “the breach of fiduciary duties by former directors of Isle of Venice in

connection with” the sale of Green Island Ventures. (R.2-78, Ex. A at 2, 12–13.)

The district court denied the motion. In August 2011, the district court granted

Green Island’s motion for summary judgment, on which the parties had submitted

their briefs before the automatic stay took effect. The court’s ruling resolved the

remaining claims, and judgment was entered in Green Island’s favor.

II.

Isle of Venice appeals the final judgment and challenges the district court’s

denial of Isle of Venice’s January 14, 2011, motion to amend.1

The district court correctly recognized, and neither party disputes, that Isle

of Venice was required to show “good cause” to modify the scheduling-order

deadline under Rule 16(b) before seeking leave to amend under Rule 15(a). (R.2-

93 at 4 (citing Sosa v. Airprint Sys., Inc., 133 F.3d 1417, 1418 n.2 (11th Cir.

1 Isle of Venice also challenges the motion for summary judgment to the extent that, if the district court erred in denying its motion to amend, it also erred in granting summary judgment on the unamended pleadings. 4 Case: 11-14534 Date Filed: 06/06/2013 Page: 5 of 7

1998)).) We review the district court’s denial of a request to modify a scheduling

order, as well as a district court’s denial of a motion to amend a pleading, for abuse

of discretion. Millennium Partners, L.P. v. Colmar Storage, LLC, 494 F.3d 1293,

1299 (11th Cir. 2007).

Rule 16(b) does not define good cause, but the advisory committee note

indicates that good cause exists if the schedule “cannot reasonably be met despite

the diligence of the party seeking the extension.” Fed. R. Civ. P. 16 advisory

committee notes. This court has considered the diligence of the party seeking

leave to amend a factor in the good-cause analysis. See, e.g., Romero v.

Drummond Co., 552 F.3d 1303, 1319 (11th Cir. 2008); Sosa, 133 F.3d at 1419.

We have considered several factors to demonstrate a party’s lack of diligence,

including the month-long pendency of a motion for summary judgment before the

filing of the motion to amend, see Smith v. Sch. Bd. of Orange Cnty., 487 F.3d

1361, 1367 (11th Cir. 2007), and the fact that the information providing the basis

for the proposed amendment was available to the party before the deadline, see id.;

accord Sosa, 133 F.3d at 1419.

The court concluded that Isle of Venice failed to show good cause. The

court reasoned that Isle of Venice had not taken the opportunity the court had

given to amend its fraudulent-inducement affirmative defense under Rule 12(e).

(R.2-93 at 4–5.) The court also noted that the proposed affirmative defense bore

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similarity to the affirmative defense that the Answer had originally included,

implying that the basis for the proposed affirmative defense should have been

available before the deadline for amended pleadings. (See id. at 5.) The court

reasoned further that Isle of Venice’s liquidator, who had been appointed in

October 2009 and claimed to have discovered the additional affirmative defense

and counterclaim after investigating Isle of Venice’s financial affairs, had had six

months to seek an amendment before the proceedings were stayed in April 2010.

(Id.) Finally, the court found that allowing the amendment would unduly prejudice

Green Island, particularly because discovery was complete and Green Island had

filed a motion for summary judgment that each party had already fully briefed.

(Id. at 5–6.)

Isle of Venice contends that it demonstrated good cause to amend the

scheduling order. First, it points out that when the district court allowed a Rule

12(e) amendment to the Answer in September 2009, Isle of Venice had not

replaced its counsel (original counsel withdrew in August 2009) or its directors,

rendering it, in Isle of Venice’s terms, “a ship sailing at night unmanned and

without power.” (Appellant’s Br. at 5.) Second, Isle of Venice contends that the

liquidator’s failure to attempt to amend the pleadings before the proceedings were

stayed in April 2010 does not show a lack of diligence because the liquidator

needed that time to gather the appropriate information to bring the claim.

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We are not persuaded that Isle of Venice’s contentions demonstrate an abuse

of discretion by the district court. First, Isle of Venice had ample time—twenty-six

days between withdrawal of original counsel (August 18, 2009) and the expiration

of the time allowed for a 12(e) repleader (September 13, 2009)—to replace

counsel. Isle of Venice’s failure to do so indicates a lack of diligence, particularly

given that several motions, including Green Island’s motion to strike the

affirmative defense, were pending at the time. Second, the liquidator’s need to

gather information before amending, which apparently delayed his motion to

amend until after the stay had lifted, does not show that the district court abused its

discretion in refusing to modify the scheduling order. The liquidator had six

months before the stay to conduct his investigation and determine if he needed to

seek leave to amend, but he did not do so. His delay suggests a lack of diligence in

light of the appearance that the grounds for the proposed aiding-and-abetting

affirmative defense and counterclaim were the same grounds that supported the

fraudulent-inducement affirmative defense in the original Answer—indicating that

at least some of the required information was already available.

We conclude that the district court did not abuse its discretion in denying

Isle of Venice’s request to modify the scheduling-order deadline for amendments

to pleadings.

AFFIRMED.