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Forward Financing LLC v. Maxx Powersport LLC

United States District Court, D. Massachusetts

November 29, 2017

FORWARD FINANCING LLC, Plaintiff and Counterclaim-Defendant,
v.
MAXX POWERSPORT LLC, and ROBERT LANDIS, Defendants and Counterclaim-Plaintiffs.

          MEMORANDUM AND ORDER ON DEFENDANTS' MOTION FOR LEAVE TO FILE SECOND AMENDED COUNTERCLAIMS

          F. Dennis Saylor, IV United States District Judge

         This is an action for breach of contract. Plaintiff Forward Financing LLC alleges that defendants Maxx Powersport LLC and Robert Landis, the sole member of Maxx Powersport, breached a “Future Receipt Sales Agreement” (the “Agreement”) executed by the parties on October 5, 2016, and attached to the complaint as Exhibit A.

         In their answer, defendants assert counterclaims on behalf of themselves and a potential class of similarly situated merchants who had signed similar agreements with Forward Financing. Defendants allege that the Agreement is not a sales agreement, but in fact a usurious loan that is unenforceable.

         Maxx Powersport seeks leave to file second amended counterclaims. Because this litigation is in its early stages and leave to amend should be freely given, defendant's motion will be granted.

         I. Background

         Forward Financing LLC filed a complaint on May 2, 2017, against Maxx Powersport LLC and Robert Landis alleging breach of contract. On August 9, Maxx Powersport filed an answer and two class-action counterclaims: one for violation of Mass. Gen. Laws ch. 93A, §§ 2 and 11 (unfair trade practices), and one for violation of Mass. Gen. Laws ch. 271, § 49 (criminal usury). On August 28, before Forward Financing answered the counterclaims, Maxx Powersport filed amended counterclaims. The amended counterclaims asserted the same two causes of action but specified the alleged classes and their commonality more precisely.

         On September 18, Forward Financing filed a motion to dismiss the counterclaims. Maxx Powersport filed an opposition on October 10, and Forward Financing filed a reply on October 17. The Court held a hearing on October 19 and took the matter under advisement.

         On November 3, Maxx Powersport filed the present motion for leave to file second amended counterclaims. The proposed amendment does not add any new counts, but rather alleges a substantial number of new facts, alleged to have been recently discovered by counsel and related to the arguments advanced by the parties in the motion-to-dismiss papers.

         II. Standard of Review

         Rule 15 of the Federal Rules of Civil Procedure addresses amendments to pleadings.[1] Under Rule 15(a), a party may amend a “pleading” without leave of court in certain relatively narrow circumstances.[2] “In all other cases, a party may amend its pleadings only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2). “In the absence of any apparent or declared reason-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 allowance of the amendment, futility of amendment, etc.-the leave sought should, as the rules require, be ‘freely given.'” Foman v. Davis, 371 U.S. 178, 182 (1962). In determining whether to grant a motion to amend, the court must examine the totality of the circumstances and “exercise its informed discretion in constructing a balance of pertinent considerations.” Palmer v. Champion Mortg., 465 F.3d 24, 30-31 (1st Cir. 2006).

         III. Analysis

         Defendants request leave to amend to include (1) factual allegations from several non-confidential depositions of witnesses in an action involving similar issues, which were taken in late September and received by defendants' counsel in early October; and (2) factual allegations from e-mails provided to defendants' counsel from Maxx Powersport. Defendants argue that these facts “further establish that the form of the transaction is a sham, and that, in economic reality, the transaction is a loan.” Def. Mot. for Leave to Amend at 1.

         Plaintiff opposes the motion for leave to amend on the grounds that it is futile and would cause undue delay.

         A. ...


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