United States District Court, D. Kansas
March 28, 2014
KRON-CIS GmbH, Plaintiff,
LS INDUSTRIES, INC., Defendant.
MEMORANDUM AND ORDER
K. GARY SEBELIUS, Magistrate Judge.
This matter comes before the court upon Plaintiffs' Motion for Leave to File a Second Amended Complaint (ECF No. 117). Plaintiff Kron-CIS GmbH seeks to amend its complaint to add a claim for negligent misrepresentation. Kron, however, filed this case more than a year ago, was already allowed to amend its complaint once, and is now seeking to amend nine months after the scheduling order's deadline for amendments to the pleadings. The court denies Kron's motion because Kron has not shown good cause for an extension of the scheduling order deadline and because Defendant LS Industries has shown that Kron has unduly delayed in seeking to amend and has failed to cure the deficiency through a previously allowed amendment.
When the deadline for amending the pleadings has passed, Fed.R.Civ.P. 16(b)(4) is potentially implicated. Rule 16(b)(4) provides that a scheduling order "may be modified only for good cause and with the judge's consent." Judges in this district have consistently applied the two-step analysis based on both Rule 16(b) and Rule 15(a) when deciding a motion to amend filed after the deadline established in the scheduling order. Here, the scheduling order imposed a deadline of May 20, 2013, for motions to amend the pleadings. Because Kron did not file its motion until February 28, 2014, the court will follow the two-step analysis in determining whether to grant leave to amend.
I. Rule 16(b)(4)
The court first determines whether the movant has shown good cause within the meaning of Rule 16(b)(4) to justify allowing the untimely motion. The good-cause standard under Rule 16(b)(4) considers the diligence of the party seeking to amend. To establish good cause, the moving party must show that despite due diligence, it could not have reasonably met the deadline for amendments to the pleadings. "Carelessness is not compatible with a finding of diligence and offers no reason for a grant of relief." Similarly, lack of prejudice to the nonmovant does not constitute good cause. The party seeking an extension is normally expected to show good faith on its part and some reasonable basis for not meeting the deadline.
Although Kron's motion and supporting briefs acknowledge that the scheduling order deadline has passed for motions to amend the pleadings, Kron does not expressly mention Rule 16(b)(4)'s good cause standard or attempt to make a showing satisfying this standard. Kron's failure to satisfy Rule 16(b)(4)'s requirement, is sufficient grounds to deny its motion to amend.
Kron, however, does make arguments regarding the timeliness of its motion. Even considering these statements, the court still finds that the circumstances set forth by Kron do not demonstrate good cause. Kron's proposed second amended complaint alleges that LS Industries made multiple misrepresentations, including LS Industries' alleged statement that there was no need for an insurance claim to be filed upon LS Industries' insurance carrier for damage that occurred to the shot blaster system during shipping. Kron states that it did not learn until a January 6, 2014 deposition that LS Industries was taking that position that Kron needed to file an insurance claim. Even assuming this is accurate, Kron fails to explain why it waited from January 6, to February 28, 2014, to seek to amend its pleadings to include this factual allegation in support of its proposed negligent misrepresentation claim. Moreover, it seems that LS Industries' position regarding insurance was capable of being discovered far earlier.
As for the other facts giving rise to the proposed claim, Kron notes that "[t]he allegations pled in the negligent misrepresentation claim are already pled in the intentional misrepresentation claim filed in the original complaint." Kron goes on to characterize the proposed negligent misrepresentation claim as "a further delineation of the intentional misrepresentation claim already pled and part of the court file." The crux of the negligent misrepresentation claim, obviously, concerns alleged misrepresentations made to Kron. It is difficult to see how Kron would have lacked this information at the time it filed its original pleading. In fact, despite its arguments about ongoing discovery, Kron admits that it omitted the negligent misrepresentation claim from its prior pleadings "due to inadvertence of counsel[.]" This court has previously held that a plaintiff does not meet the good-cause standard for a belated amendment when it has in its possession "evidence that should have led it to the information that the proposed claim is based on." Kron has not shown good cause under Rule 16(b)(4).
II. Rule 15(a)
Kron's motion would also fail under Fed.R.Civ.P. 15's standard for amendments to the pleadings. When leave of the court is required under Rule 15(a), the court may refuse leave "only [upon] a showing of undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of amendment." Leave should freely be given when justice requires.
LS Industries argues that Kron unduly delayed in seeking to amend and that Kron also failed to cure the deficiency with its complaint through an amended pleading previously allowed. Rule 15(a)'s undue delay analysis is similar to the good cause analysis discussed above. When considering whether a party has unduly delayed, the Tenth Circuit has directed that courts should focus primarily on the reasons for the delay. For example, if the movant was or should have been aware for some time of the facts on which the amendment is based, the court may properly deny leave to amend. Moreover, the longer the delay, the more likely the court will deny the motion to amend. Undue delay alone is a sufficient reason to deny leave to amend.
The present circumstances illustrate that Kron unduly delayed and also failed to cure the deficiency by an amendment previously allowed. As discussed above, Kron states the negligent misrepresentation claim was omitted largely due to inadvertence of counsel and has admitted that many of the factual allegations giving rise to the proposed negligent misrepresentation claim were already pled in support of its fraud claim. Kron has offered no reasonable explanation as to why it failed to include this claim in its original complaint, filed more than a year ago on December 26, 2012. It also seems that Kron should have been able to include this claim in its amended complaint, filed on November 19, 2013. Kron's failure to cure this deficiency in its previously allowed amended complaint also weighs in favor of denying Kron's motion. Discovery has now closed, and the court is scheduled to hold a final pretrial conference on April 11, 2014. For all these reasons, the court finds Kron unduly delayed in seeking to amend and has also failed to cure the deficiency in the previously allowed amendment to the complaint.
IT IS THEREFORE ORDERED that Plaintiff's Motion for Leave to File a Second Amended Complaint (ECF No. 117) is denied.
IT IS SO ORDERED.