Dussouy v. Gulf Coast Inv. Corp., 80-3301

• Citation: 660 F.2d 594
• Decision Date: 05 November 1981
• Docket Number: No. 80-3301,80-3301
• Parties: 1981-2 Trade Cases 64,363 John W. DUSSOUY, Jr., Plaintiff-Appellant, v. GULF COAST INVESTMENT CORPORATION, Defendant-Appellee. . *
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 594

660 F.2d 594

1981-2 Trade Cases 64,363

John W. DUSSOUY, Jr., Plaintiff-Appellant, v. GULF COAST INVESTMENT CORPORATION, Defendant-Appellee.

No. 80-3301.

United States Court of Appeals Fifth Circuit. ^*

Nov. 5, 1981.

M. H. Gertler, New Orleans, La., for plaintiff-appellant.

Michael H. Bagot, John H. Gniady, New Orleans, La., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before WISDOM, GEE, and POLITZ, Circuit Judges.

WISDOM, Circuit Judge:

This case requires us to determine (1) the propriety of denying the plaintiff a third opportunity to amend his complaint one week before trial and (2) the sufficiency of a complaint alleging violations of Louisiana unfair competition law. The questions require us to explore Louisiana antitrust law and to determine when and to what extent the Federal Rules of Civil Procedure require a plaintiff to choose a theory and articulate it specifically. We conclude that the liberal federal pleading rules require that the plaintiff receive another opportunity to state his complaint. We conclude also that Louisiana antitrust law recognizes the cause of action asserted by the plaintiff.

The plaintiff, John W. Dussouy, Jr., an insurance salesman, alleged that a customer requested him to obtain insurance for a home that she and her husband were about to purchase. Dussouy issued a binder on Travelers Insurance Company, but the lawyer representing the lender, Gulf Coast Investment Corporation, informed Dussouy that the binder was unsatisfactory to Gulf Coast. The customer then obtained a policy from Allstate Insurance Company.

Dussouy filed an action in Louisiana state court against Gulf Coast and Allstate, alleging a conspiracy in restraint of trade in violation of La.Rev.Stat.Ann. § 51:121 et seq. (West 1965) and a tortious interference with Dussouy's business in violation of La.Civ.Code Ann. art. 2315 (West 1979). Basing jurisdiction on diversity of citizenship, the defendants removed the action to the federal district court for the Eastern District of Louisiana. There, they moved for a more definite statement of the facts under rule 12(e), Fed.R.Civ.Pro. The magistrate granted the motion, and the plaintiff amended his complaint, alleging further facts tending to show a conspiracy between Gulf Coast and Allstate as well as further facts supplementing its allegation of tortious interference. The defendants responded with a motion to strike the complaint for failure to allege the conspiracy with sufficient particularity. Although the magistrate denied the motion to strike, he did order the plaintiff to state more specifically the facts alleged to establish the conspiracy. The plaintiff amended the complaint a second time.

In discovery, the plaintiff learned that Gulf Coast had not directed his former customers specifically to Allstate and concluded that Allstate had not been a party to a conspiracy. As a consequence, he voluntarily moved to dismiss Allstate from the action, with prejudice, while reserving in full his rights against Gulf Coast. Gulf Coast then moved for dismissal of the complaint against it. The trial court granted the motion, reasoning that since conspiracy is an element of a cause of action under La.Rev.Stat.Ann. § 51:121 et seq. and the plaintiff no longer alleged a conspiracy, the complaint failed to state a claim upon which relief could be granted. The plaintiff moved to vacate the dismissal and to amend his complaint by alleging a conspiracy between Gulf Coast and the lawyers representing Gulf Coast at the closing. After the denial of that motion, the plaintiff took this appeal.

On appeal, the plaintiff urges us to reverse the trial court on any of three theories. First, he urges that the trial judge abused his discretion in refusing leave to amend. Second, the plaintiff asserts that, under Louisiana law, a corporation can conspire with its employees and, therefore, his complaint, without further amendment, is sufficient to state a cause of action under La.Rev.Stat.Ann. § 51:121 et seq. Finally, noting that an action for tortious interference with business under La.Civ.Code Ann. art. 2315 requires no combination or conspiracy, he argues that his complaint as it stands states a cause of action under that provision. Agreeing in substantial part with the plaintiff, we reverse.

I. Should the trial court have permitted the plaintiff to amend his complaint?

Rule 15(a), Fed.R.Civ.Pro., governs amendments to pleadings. ¹ Although the plaintiff is allowed, as a matter of right, one amendment before any responsive pleading has been filed, subsequent amendments are permitted only with leave of the trial judge. Appellate review of the decision to grant or deny leave is generally described as limited to "determining whether the trial court abused its discretion". Henderson v. United States Fidelity and Guaranty Co., 5 Cir. 1980, 620 F.2d 530, 534, cert. denied, 449 U.S. 1034, 101 S.Ct. 608, 66 L.Ed.2d 495 (1980); see Nevels v. Ford Motor Co., 5 Cir. 1971, 439 F.2d 251, 257; 6 C. Wright & A. Miller, Federal Practice and Procedure § 1484 (1971).

At the outset, we note that the court's task of reviewing this case would have been lighter if the trial judge had given reasons for denying the plaintiff's motion to amend. Although the absence of an explanation of the denial need not always result in reversal, Rhodes v. Amarillo Hospital District, 5 Cir. 1981, 654 F.2d 1148, the reasons would have to be readily apparent, particularly in view of the liberal position of the federal rules on granting amendments. Fed.R.Civ.Pro. 15(a); see generally Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222, 226 (1962); Hilgeman v. National Insurance Co. of America, 5 Cir. 1977, 547 F.2d 298, 303. We find no such obvious reasons here.

In our review of the trial court's exercise of discretion, rule 15(a), of course, provides the starting point. "Discretion" may be a misleading term, for rule 15(a) severely restricts the judge's freedom, directing that leave to amend "shall be freely given when justice so requires". It evinces a bias in favor of granting leave to amend. The policy of the federal rules is to permit liberal amendment to facilitate determination of claims on the merits and to prevent litigation from becoming a technical exercise in the fine points of pleading. See, e. g., Foman v. Davis, 371 U.S. at 182, 83 S.Ct. at 230, 9 L.Ed.2d at 225-26; Conley v. Gibson, 355 U.S. 41, 48, 78 S.Ct. 99, 103, 2 L.Ed.2d 80, 86 (1957); Sherman v. Hallbauer, 5 Cir. 1972, 455 F.2d 1236, 1242. Thus, unless there is a substantial reason to deny leave to amend, the discretion of the district court is not broad enough to permit denial. See Lone Star Motor Import v. Citroen Cars, 5 Cir. 1961, 288 F.2d 69, 75.

The types of reasons that might justify denial of permission to amend a pleading include undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, and undue prejudice to the opposing party. A court may weigh in the movant's favor any prejudice that will arise from denial of leave to amend. E. g., Foman v. Davis, 371 U.S. at 182, 83 S.Ct. at 230, 9 L.Ed.2d at 226; Bamm v. GAF, 5 Cir. 1981, 651 F.2d 389, 391. That consideration arises only if there are substantial reasons to deny the amendment. Otherwise, rule 15(a) requires the trial judge to grant leave to amend whether or not the movant shows prejudice. Finally, it is appropriate for the court to consider judicial economy and the most expeditious way to dispose of the merits of the litigation. See Zenith Radio v. Hazeltine Research, 401 U.S. 321, 329, 91 S.Ct. 795, 801, 28 L.Ed.2d 77, 87 (1971); Summit Office Park v. United States Steel, 5 Cir. 1981, 639 F.2d 1278, 1286 (Wisdom, J., dissenting); Lone Star Motor Import v. Citroen Cars, 5 Cir. 1961, 288 F.2d 69; see generally Fed.R.Civ.Pro. 1.

On first consideration, it might appear that Dussouy did delay unduly and that granting leave to amend would prejudice Gulf Coast, for the amendment was proposed after dismissal of the action at the pre-trial conference and one week before the trial date. But mere passage of time need not result in refusal of leave to amend; on the contrary, it is only undue delay that forecloses amendment. Amendment can be appropriate as late as trial or even after trial; see 6 C. Wright & A. Miller, Federal Practice and Procedure § 1488 (1971); see also Fed.R.Civ.Pro. 15(b). Instances abound in which appellate courts on review have required that leave to amend be granted after dismissal or entry of judgment. For instance, in Foman v. Davis, the plaintiff alleged breach of an oral contract. When the district court dismissed on the basis of the defendant's argument that the Statute of Frauds rendered the contract unenforceable, the plaintiff moved to vacate the dismissal and to amend to sue in quantum meruit. The Supreme Court required that the amendment be permitted even though it changed the theory of the case. 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962); accord, Bamm v. GAF, 5 Cir. 1981, 651 F.2d 389; Lone Star Motor Import v. Citroen Cars, 5 Cir. 1961, 288 F.2d 69; Sherman v. Hallbauer, 5 Cir. 1972, 455 F.2d 1236. ²

Dussouy moved to amend within a reasonable time 41 days after entry of the dismissal of Allstate necessitated amendment and promptly upon the decision of the trial court that held the pleadings defective. Thus delay alone cannot justify the decision of the trial court. Nor is this a case of bad faith on the part of the moving party. On the contrary, the entire pleading problem arose from Dussouy's voluntary dismissal of Allstate once discovery revealed that the allegation of conspiracy against Allstate was unfounded. If anything, that tends to establish Dussouy's good faith. It is true that Dussouy was aware of the facts alleged in the proposed amendment from the beginning. In...