United States District Court, S.D. Mississippi, Northern Division
ORDER GRANTING MOTION FOR LEAVE TO FILE THIRD AMENDED
COMPLAINT, FINDING MOOT MOTION TO DISMISS, AND FINDING MOOT
MOTION TO STRIKE
GUIROLA, JR. UNITED STATES DISTRICT JUDGE.
THE COURT are three motions: the  Motion to Dismiss filed
by Defendants Dirtworks, Inc. of Vicksburg
(“Dirtworks”), HHG, LLC, and Harry H. Gilliland,
Jr.; the  Motion to Strike Reply filed by Plaintiff
Travelers Casualty and Surety Company of America
(“Travelers”); and the  Motion for Leave to
File Third Amended Complaint filed by Plaintiff Travelers.
The motions are all fully briefed. Having considered the
submissions of the parties, the record, and relevant law, the
Court determines that Plaintiff's Motion for Leave to
File Third Amended Complaint should be granted.
Defendants' Motion to Dismiss - which is directed at
Plaintiff's Second Amended Complaint - and
Plaintiff's Motion to Strike - which targets briefing on
the Motion to Dismiss - will accordingly be found moot.
case arises out of a series of performance bonds and related
contracts between Dirtworks, Gilliland, and Travelers.
Travelers filed its initial Complaint on November 8, 2017.
That Complaint was amended once before the entry of case
management deadlines, and, with leave of court, amended a
second time since the entry of those deadlines. The Case
Management Order entered on June 5, 2018 by Magistrate Judge
Linda Anderson set July 2, 2018 as the deadline for filing
amended pleadings. (Case Management Order, ECF No. 20.)
 Second Amended Complaint seeks specific performance,
equitable relief, damages for breach of contract, and
contractual indemnification. On November 14, 2018, Defendants
filed the pending Motion to Dismiss, which argues that these
claims should be dismissed pursuant to Federal Rule of Civil
Procedure 12(b)(6) for failure to state a claim. Travelers
then filed the instant Motion to Strike - which contends that
Defendants' rebuttal regarding the Motion to Dismiss
should be stricken because it raises new arguments not made
in the original supporting memorandum - and Motion for Leave
to File Third Amended Complaint - which seeks leave to amend
its allegations to include an additional, alternative cause
of action for fraud against Defendant Harry Gilliland, Jr.
Because resolution of the Motion for Leave to Amend moots the
remaining motions, the Court will address this motion first.
Motion for Leave to Amend seeks leave of court to file a
proposed Third Amended Complaint. This Motion, filed December
19, 2018, is concededly untimely, but Travelers maintains
that it is nonetheless entitled to amend its pleadings
because “it was just made aware of the facts uncovering
the fraud on Travelers, and Travelers has filed the instant
Motion in the infancy of this litigation, before any
discovery has been propounded by the Defendants or any
depositions taken.” (Mem. Supp. Mot. Leave Amend 3, ECF
No. 40.) Defendants respond that Travelers proposed amendment
“is unsupported by good cause” because
“Travelers had notice of [Defendants' position that
Mr. Gilliland had no authority to enter any agreement on
behalf of HHG] in April 2018, nine months before it finally
decided to make this amendment.” (Resp. Opp. Mot. Leave
Amend 3, ECF No. 42.)
Rules of Civil Procedure 15(a) and 16(b) operate in tandem to
govern the amendment of pleadings after a scheduling
order's deadline to amend has passed. Fahim v.
Marriott Hotel Servs., Inc., 551 F.3d 344, 348 (5th Cir.
2008). Under Rule 16(b) - which sets forth a higher initial
threshold than the more liberal standard of Rule 15(a) - the
deadline to amend can only be extended upon a party's
demonstration of good cause and with the Court's consent.
cause requires a party “to show that the deadlines
cannot reasonably be met despite the diligence of the party
needing the extension.” Texas Indigenous Council v.
Simpkins, 544 Fed.Appx. 418, 420 (5th Cir. 2013)
(quoting S & W Enters., L.L.C. v. Southtrust Bank of
Ala., 315 F.3d 533, 535 (5th Cir. 2003)). Four factors
are relevant to this analysis: “(1) the explanation for
the failure to timely move for leave to amend; (2) the
importance of the amendment; (3) potential prejudice in
allowing the amendment; and (4) the availability of a
continuance to cure such prejudice.” Fahim,
551 F.3d at 348 (quoting Sw. Bell Tel. Co. v. City of El
Paso, 346 F.3d 541, 546 (5th Cir. 2003)). “If the
party meets the good-cause standard, the deadline can be
extended, and the more liberal standard of Rule 15(a) will
then apply to the request for leave to amend.”
Texas Indigenous Council, 544 Fed.Appx. at 420
(citing Fahim, 551 F.3d at 348).
to amend under Rule 15(a) is to be freely given[; however, ]
that generous standard is tempered by the necessary power of
a district court to manage a case.” Priester v. JP
Morgan Chase Bank, N.A., 708 F.3d 667, 678 (5th Cir.
2013) (quoting Schiller v. Physicians Res. Grp.
Inc., 342 F.3d 563, 566 (5th Cir. 2003)). In determining
whether to grant leave to amend under Rule 15(a), “the
court may consider factors such as ‘undue delay, bad
faith or dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of
the allowance of the amendment, [and] futility of the
amendment.'” Leal v. McHugh, 731 F.3d 405,
417 (5th Cir. 2013) (alteration in original) (citations
explanation for the untimeliness of their request to amend is
that “Travelers did not learn of sufficient facts that
would support a fraud claims [sic] against Mr. Gilliland
until Defendants responded to Travelers' Second Amended
Complaint.” (Reply Mot. Leave Amend 3, ECF No. 44.)
Although Defendants did previously allege that Gilliland did
not have authority to bind HHG, this defense was not
sufficient, in and of itself, to support a new claim for
fraud. It was reasonable for Travelers to believe that more
specific facts were necessary to support allegations of
the importance of the amendment, the new claim is intended to
ensure that Travelers still has recourse for the alleged
damages even if Gilliland's lack of asserted contractual
authority proves true. The claim is an alternative theory of
liability. Travelers submits that it has been wronged - if
not by Dirtworks' breach of contract, then by
Gilliland's fraud. For Travelers, this amendment is
therefore important to this litigation.
potential prejudice in allowing the amendment is minimal
given that this case remains in its infancy. Despite being
fourteen-months' old, the parties have not progressed
passed the pleading stage. This is mostly due to delayed
service of process and the parties' earlier attempt to
resolve the matter among themselves, for which purpose case
management deadlines were stayed. (See July 24, 2018
Text Order Staying Case.) The docket reflects minimal
discovery propounded by Travelers and no discovery propounded
by Defendants. Moreover, a continuance of case management
deadlines is available to cure any prejudice resulting from a
shortened discovery window.
of each of these four factors leads to the conclusion that
Traveler's requested leave to amend is supported by good
cause. The Court accordingly turns to the Rule 15(a)
analysis. Traveler's explanation for the untimeliness of
the amendment already negates a finding of undue delay, bad
faith, or dilatory motive. Although Travelers has already
twice amended its pleadings, these amendments did not purport
to cure repeated deficiencies. The Court has also determined
that Defendants will not suffer undue prejudice if Travelers
is granted leave to amend. Finally, although Defendants argue
that their proposed fraud claim is futile because it does not
meet the Rule 12(b)(6) standard, the issue is not adequately
briefed by either party for the Court to make a determination
about the sufficiency of the allegations. This issue is ...