United States District Court, D. Kansas
MEMORANDUM AND ORDER
D. Crabtree United States District Judge
matter comes before the court on Judge O'Hara's
Report and Recommendation (Doc. 32) and defendants Douglas
Besch, Besch Holdings, LLC, and Laxman Degala's Second
Motion for Leave to Add Counterclaim (Doc. 41). As explained
below, the court concludes that Judge O'Hara did not err
when he recommended that the court deny defendants'
motion for leave to assert a counterclaim for defamation.
Thus, the court affirms Judge O'Hara's decision.
Also, the court grants defendants' Second Motion for
Leave to Add Counterclaim (Doc. 41).
Factual and Procedural Background
RX Savings, LLC filed this breach-of-contract action in
Johnson County District Court on October 15, 2018. Plaintiff
sought injunctive relief and damages against defendants
Douglas Besch and Besch Holdings, LLC. Later, plaintiff RX
Savings, LLC added its individual owners as plaintiffs: Dan
Henry, David Shewmaker, Marcus #1, LLC, Carmel Strategies
LLC, and Jeffrey Carl Brown. And, plaintiffs also joined
DR/Decision Resources, LLC d/b/a DRG/Adaptive and Laxman
Degala as defendants. Defendants answered the Petition on
June 27, 2019, asserting counterclaims against plaintiffs and
adding claims against Michael Rea. Plaintiffs filed a Second
Amended Petition, asserting claims for tortious interference,
unjust enrichment, unfair competition, breach of fiduciary
duty, conversion, violation of the Computer Fraud and Abuse
Act (18 U.S.C. § 1030), civil conspiracy, and
misappropriation of trade secrets. Defendants removed the
case to the United States District Court asserting federal
question jurisdiction on July 30, 2019. Doc. 1. On August 9,
2019, counterclaim defendants replied to the counterclaims.
Doc. 3. Defendants answered plaintiffs' Second Amended
Petition on August 16, 2019, asserting counterclaims, and an
additional defamation claim against Michael Rea. Doc. 10.
moved to strike defendants' Counterclaims, which
defendants opposed. Doc. 13. But, defendants also filed a
motion for leave to join the Counterclaim defendant and add
Counterclaims. Doc. 18. After conferring with the parties,
Judge O'Hara denied plaintiffs' motion to strike as
moot because defendants had moved for leave to join the
Counterclaim. Doc. 26. Also, Judge O'Hara granted
defendants' motion to join Michael Rea. Doc. 32 at 3-6.
But, Judge O'Hara recommended that the district court
deny defendants' motion for leave to add a defamation
claim to their Counterclaim. Id. at 6-11.
did not file an objection to Judge O'Hara's Report
and Recommendation. Instead, defendants filed a Second Motion
for Leave to Add Counterclaim, claiming this amendment, if
allowed, would cure the defects Judge O'Hara had
articulated in his Report and Recommendation (Doc. 41).
Plaintiffs oppose defendants' Second Motion (Doc. 49),
and defendants have replied (Doc. 53).
Judge O'Hara's Report and Recommendation
O'Hara recommended that the district court deny
defendants' motion for leave to add a defamation claim
because the claim was futile under Kansas law. Doc. 32 at
6-7. Judge O'Hara concluded that “a party must
allege and prove actual damages to have a cognizable claim
for defamation” and cannot rely on the theory of
presumed damages. Id. at 7. Because defendants'
proposed defamation did not plead damages adequately, Judge
O'Hara recommended the court deny defendants' motion
because the defamation claim was “clearly
date, no party has filed an objection to Judge
O'Hara's Report and Recommendation, nor has any party
asked to extend the time to object. Because no one has filed
an objection to the Report and Recommendation within the time
prescribed by Rule 72, and no party has sought an extension
of time to object, the court can accept, adopt, and affirm
the Report and Recommendation in its entirety. See
Summers v. Utah, 927 F.2d 1165, 1167 (10th Cir. 1991)
(“In the absence of timely objection, the district
court may review a magistrate's report under any standard
it deems appropriate.”).
de novo review, the court finds that Judge O'Hara's
interpretation of Kansas law did not err. And the court thus
accepts, adopts, and affirms Judge O'Hara's Report
and Recommendation that the district court deny
defendants' motion for leave to add a defamation
that work finished, the court now turns to defendants'
Second Motion for Leave to Add Counterclaim.
Standard of Review
Rule of Civil Procedure 15(a)(1) permits a party to amend its
pleadings in one of two ways: (A) first, as a matter of
course within 21 days after serving it, or (B) second, within
21 days of service of a responsive pleading. Fed.R.Civ.P.
15(a)(1)(A)-(B). Outside those periods, any amendment to the
pleadings requires leave, and courts should “freely
give leave [to amend] when justice so requires.”
Fed.R.Civ.P. 15(a)(2); Foman v. Davis, 371 U.S. 178,
182 (1962). In contrast, a court should refuse to grant leave
to amend on “a showing of undue delay, undue prejudice
to the opposing party, bad faith or dilatory motive, failure
to cure deficiencies . . ., or futility of amendment.”
Bylin v. Billings, 568 F.3d 1224, 1229 (10th Cir.
2009) (quoting Frank v. U.S. West, Inc., 3 F.3d
1357, 1365 (10th Cir. 1993)).
decision whether to grant leave to amend is within the
court's sound discretion. Minter v. Prime Equip.
Co., 451 F.3d 1196, 1204 (10th Cir. 2006) (quoting
Zenith Radio Corp. v. Hazeltine Research, Inc., 401
U.S. 321, 330 (1971)). When exercising this discretion,
“the court must be mindful that the Federal Rules of
Civil Procedure are designed to facilitate decisions on the
merits rather than on pleading technicalities.”
Bank Midwest, N.A. v. Millard, No. 10-2387-JAR-DJW,
2012 WL 4006423, at *1 (D. Kan. Sept. 12, 2012) (citing
Koch v. Koch Indus., 127 F.R.D. 206, 209 (D. Kan.
1989)). Also, the court must remember that the Federal Rules
of Civil Procedure “should be construed, administered
and employed by the court and the parties to secure the just,
speedy, and inexpensive determination of every action and
proceeding.” Fed.R.Civ.P. 1. As this court and other
federal courts have explained time and again, “[t]his
discretionary approach of the federal rules fosters a full
adjudication of the merits of the parties' disputes
within a single comprehensive proceeding.” First
Savings Bank, F.S.B. v. U.S. Bancorp, 184 F.R.D. 363,