United States District Court, D. Massachusetts
MEMORANDUM OF DECISION AND ORDER ON DEFENDANT'S MOTION TO ADD AFFIRMATIVE DEFENSE
JUDITH GAIL DEIN, District Judge.
This action arises out of an alleged oral agreement pursuant to which the plaintiff, Bryan Corporation ("Bryan"), agreed to purchase the pharmaceutical ingredient Tobramycin Sulfate ("TS") from the defendant, ChemWerth, Inc. ("ChemWerth"). Bryan claims that in order to induce it to purchase TS from ChemWerth and to develop products that could expand ChemWerth's TS market in the United States, ChemWerth falsely represented to Bryan that it would provide certain documents required by the United States Food and Drug Administration ("FDA") so that Bryan could obtain FDA approval of its TS products. In its First Amended Complaint, Bryan has asserted claims against ChemWerth for breach of contract (Count I), breach of implied covenant of good faith and fair dealing (Count II), promissory estoppel (Count III), negligent misrepresentation (Count IV), fraud (Count V), and violation of Mass. Gen. Laws ch. 93A (Count VI). ChemWerth denies any liability in this matter and has asserted various affirmative defenses and counterclaims against Bryan. In addition, ChemWerth filed a third-party complaint, and an amended third-party complaint, against Waldman Biomedical Consultancy, Inc. and its principal, Dr. Alan A. Waldman (collectively, "Waldman").
The pleadings in this case have generated extensive motion practice. For example, ChemWerth moved to dismiss Bryan's claim of fraud, which motion was denied by this court in a decision dated December 14, 2012. Waldman then moved to dismiss the thirdparty complaint, and opposed ChemWerth's motion to amend its third-party complaint. ChemWerth's motion to amend was allowed and Waldman's motion to dismiss was denied by this court in a decision dated July 8, 2013. Bryan then moved to strike ChemWerth's Fifth Affirmative Defense that Bryan's claims were barred by the doctrine of unclean hands, and to dismiss ChemWerth's Third Counterclaim alleging a violation of Mass. Gen. Laws ch. 93A. Bryan's motion was allowed by this court in a decision dated December 9, 2013.
This matter is presently before the court on ChemWerth's "Motion for Leave to Amend its Answer, Affirmative Defenses, & Counterclaims to Plaintiff's First Amended Complaint for Damages to Add an Affirmative Defense, " which was filed on May 23, 2014. (Docket No. 156). By this Motion, ChemWerth is seeking to add the affirmative defense that Bryan's contract-based claims (Counts I and II) are barred by the Statute of Frauds found in Mass. Gen. Laws ch. 259, § 1 and Mass. Gen. Laws ch. 106, § 2-201. The parties have consented to the Magistrate Judge's final jurisdiction pursuant to 28 U.S.C. § 636(c) for purposes of this motion.
For all the reasons detailed herein, this court finds that the motion to amend is untimely, and that the addition of the affirmative defense would require additional discovery and would prejudice Bryan. Therefore, the motion to amend is DENIED.
A. Standard of Review
The parties disagree as to the appropriate standard of review. ChemWerth argues that Fed.R.Civ.P. 15(a), which provides that "[t]he court should freely give leave [to amend] when justice so requires[, ]" is the applicable standard in this case. Bryan argues that where, as here, the court has issued scheduling orders, Fed.R.Civ.P. 16(b)'s "good cause" standard, and not Rule 15(a)'s "freely given" standard should apply. See O'Connell v. Hyatt Hotels of P.R. , 357 F.3d 152, 154-55 (1st Cir. 2004), and cases cited. In certain cases the distinction may be significant. As the O'Connell court explained:
Unlike Rule 15(a)'s "freely given" standard, which focuses mostly on the bad faith of the moving party and the prejudice to the opposing party, see Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962), Rule 16(b)'s "good cause" standard emphasizes the diligence of the party seeking the amendment. See Rosario-Diaz, 140 F.3d at 315; accord Leary, 349 F.3d at 906; Parker, 204 F.3d at 340. Prejudice to the opposing party remains relevant but is not the dominant criterion. See Johnson, 975 F.2d at 609. "[I]ndifference" by the moving party "seal[s] off this avenue of relief" irrespective of prejudice because such conduct is incompatible with the showing of diligence necessary to establish good cause. Rosario-Diaz, 140 F.3d at 315.
O'Connell , 357 F.3d at 155.
In the instant case, a number of scheduling orders have been issued, although they have not specifically addressed the deadlines for amending pleadings. Nevertheless, as noted above, the pleadings in this case have been the subject of a number of substantive motions before this court. The litigants were clearly on notice that they each viewed the causes of actions and affirmative defenses to be critical in shaping the discovery in the case. Moreover, discovery has been proceeding. Fact discovery closed in April 2014, and the motion to amend was not filed until after expert reports had been exchanged and ChemWerth's expert witness had been deposed. Therefore, in this court's view, it would be entirely appropriate to apply the more stringent Rule 16(a) standard of review.
That having been said, as detailed herein, this court finds the proposed amendment to be untimely regardless of the standard applied. Therefore, this court will assume, arguendo, that the lesser standard of Rule 15(a) applies, and will analyze the motion to amend accordingly.
It is undisputed that the statute of frauds is an affirmative defense which would normally be deemed waived unless raised in the answer. Davignon v. Clemmey , 322 F.3d 1, 15 (1st Cir. 2003) (citing Fed.R.Civ.P. 8(c)). "Rule 8(c) is designed to provide plaintiffs with adequate notice of a defendant's intention to litigate an affirmative defense, thereby affording an opportunity to develop any evidence and offer responsive arguments relating to the defense." Id . Nevertheless, courts may allow a late assertion of an affirmative defense in an amended pleading for various reasons, such as "where (i) the defendant asserts it without undue delay and the plaintiff is not unfairly prejudiced by any delay, or (ii) the circumstances necessary to establish entitlement to the affirmative defense did not obtain at the time the answer was filed." Id . (internal citations omitted). Similarly, "[s]ome courts have excused noncompliance with Rule 8(c) if a plaintiff receives notice of an affirmative defense by some means other than pleadings and is not prejudiced by the omission of the defense from the initial pleading." Knapp Shoes, Inc. v. Sylvania Shoe Mfg. Corp. , 15 F.3d 1222, 1226 (1st Cir. 1994) (internal quotations and citation omitted). In determining whether an exception to a Rule 8(c) waiver is warranted, "the court must examine the totality of the circumstances and make a practical, commonsense assessment about whether Rule 8(c)'s core purpose - to act as a safeguard against surprise and unfair prejudice - has been vindicated.'" Mass. Asset Fin. v. MB Valuation, 248 F.R.D. 359, 361 (D. Mass. 2008) (quoting Williams v. Ashland Eng'g Co. Inc. , 45 F.3d 588, 593 (lst Cir. 1995)) (abrogated on other grounds by Carpenters Local Union No. 26 v. United States Fid. & Guar. Co. , 215 F.3d 136 (1st Cir. 2000)). This analysis is substantively consistent with that undertaken in order to determine whether an amended pleading is warranted under Rule 15(a). See Vargas v. McNamara , 608 F.2d 15, 18 (1st Cir. 1979) (a motion to amend under Rule 15(a) "ordinarily should not be denied [i]n the absence of any apparent or declared reason such as undue delay, bad faith or dilatory motive on ...