Federal Leasing, Inc. v. Amperif Corp.

Citation840 F. Supp. 1068
Decision Date23 November 1993
Docket NumberCiv. No. S 87-2435.
PartiesFEDERAL LEASING, INC. v. AMPERIF CORP.
CourtU.S. District Court — District of Maryland

Stewart G. Webb, Jr., James A. Dunbar, Mitchell Y. Mirviss, Venable, Baetjer & Howard, Baltimore, MD, for plaintiff.

Michael R. Matthias, Matthias & Berg, Los Angeles, CA, Leo A. Hughes, Jr., Catonsville, MD, for defendant.

MEMORANDUM OPINION

SMALKIN, District Judge.

This matter is before the Court on cross-motions for summary judgment as to both the Plaintiff's claim and as to the Defendant's counterclaim. The motions have been duly briefed, and no oral argument is deemed necessary. Local Rule 105.6. (D.Md.).

I. Factual Background

Plaintiff and Counter-Defendant, Federal Leasing, Inc. ("Federal") brokers Government contracts. In essence, Federal buys contract rights from a Government contractor and assigns the rights to a bank. Defendant and Counter-Plaintiff, Amperif Corporation ("Amperif"), manufactures and assembles computer memory devices. Federal and Amperif entered into a purchase agreement whereby Federal would purchase rights and monies due under various contracts made between Amperif and the Government. The purchase agreement did not specify the particular contracts but rather provided the general terms and conditions governing the Amperif/Federal relationship. Under the purchase agreement, the specific contracts were conveyed from Amperif to Federal through delivery orders. The delivery orders specifically referenced and incorporated the terms and conditions of the purchase agreement.

During the course of the Amperif/Federal relationship, the two contracts that are at issue in this case were conveyed by Amperif to Federal through delivery orders. The first contract, the Naval Weapons Center ("NWC") Contract, is the subject of Federal's claim against Amperif. The second contract, the "1978 Contract," is the basis of the Amperif claim against Federal. The specific obligations between Amperif and the Government pursuant to these contracts are not at issue in this case and, therefore, need no indepth discussion.

Highly relevant to this action, however, is the fact that Federal subsequently assigned its rights under these two contracts to a third party, First National Bank of Missoula ("First Bank").1 Although not a party to this action, First Bank plays an instrumental role. First Bank sued Federal and Amperif in the United States District Court for the District of Montana (hereinafter "Montana Action"), alleging that a modification2 to the NWC Contract was not "duly authorized" by the Government and, therefore, Amperif and, subsequently, Federal had failed to convey a valid contract as warranted. (Exs. to Aff. of G. Stewart Webb, Jr. hereinafter Webb Aff. Exs., Vol. 1, Ex. A at 3-9).

The District Court in Montana dismissed Amperif from the action for lack of personal jurisdiction, and Federal defended and ultimately prevailed against First Bank in the action. Federal claims that the Purchase Agreement's terms required Amperif to defend against First Bank in the Montana suit, and Federal seeks in this action to recover $251,930.71 in attorneys fees, costs, and expenses incurred in defending the Montana Action.

Amperif's counterclaim against Federal stems from the uncontested fact that First Bank withheld approximately $129,000 due and payable to Amperif under the 1978 Contract as a set-off in the Montana Action. First Bank paid those sums to Federal in December, 1992, after the Montana Action concluded. Amperif now seeks to recover those sums from Federal.

II. Standard for Summary Judgment

A motion for summary judgment will be granted when the moving party demonstrates through pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any, that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A party opposing summary judgment must go beyond the pleadings and identify with specificity facts supporting the existence of a disputed fact. Fed.R.Civ.P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). Furthermore, the facts presented in the opposition must be sufficient to preclude a motion for directed verdict when taken as true and afforded all justifiable inferences on the opposing party's behalf, considering the relevant proof burden. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251, 255, 106 S.Ct. 2505, 2511, 2513, 91 L.Ed.2d 202 (1986); United States v. Diebold, 369 U.S. 654, 655, 82 S.Ct. 993, 993, 8 L.Ed.2d 176 (1962).

III. Plaintiff's Motion and Defendant's Cross-Motion for Summary Judgment — Breach of Contract: The Duty to Defend Against the Montana Action

Federal seeks summary judgment against Amperif on two issues. First, Federal asks the Court to grant summary judgment as to Amperif's contractual duty to defend the Montana Action brought by First Bank. (Mem. in Supp. of Mot. of Pl. Federal Leasing, Inc. for Summ.J. on Am.Compl. hereinafter Federal's Mem.Re.: Am.Compl. at 3). Federal contends that the Federal/Amperif contract encompassed by the Purchase Agreement and Delivery Orders unambiguously provides that Amperif will defend any suits contesting the title or interest in the government contract payments or equipment. Federal argues that the suit brought by First Bank and defended by Federal was a suit within the meaning of the contract, and that, as Maryland law governs the contract interpretation, this Court should construe the contract terms and award summary judgment to Federal regarding Amperif's duty to defend the Montana Action. In addition, Federal requests that the Court award summary judgment in the amount of $251,930.71 in attorneys fees, costs, and expenses incurred by Federal in defending the suit.3

Defendant Amperif asserts in its opposition and cross-motion for summary judgment that Federal's claim is barred by the statute of limitations. Alternatively, Amperif contends that the Montana Action is not a suit within the meaning of the contract. Finally, Amperif argues that even if summary judgment were to be granted regarding its liability to defend the Montana Action, factual disputes would exist as to the amount for fees, costs, and expenses and, therefore, summary judgment is not available as to the whole of the matter.

A. Statute of Limitations

Federal initially filed suit against Amperif on September 8, 1987, after Amperif refused to defend the Montana Action as requested by Federal in January, 1986. (See Compl. ¶ 45; Answer ¶ 3 (documenting Federal's request).4 The proceedings were stayed by this Court on September 1, 1988, pending the outcome of the Montana Action. On February 4, 1993, the stay was lifted, and on May 12, 1993, Federal filed both a motion for leave to file an amended complaint and the proposed amended complaint. This Court granted Federal's motion the next day. Amperif contends that Federal's amended claim is barred under Maryland's three-year statute of limitations. (See Mem. in Supp. of Cross-Mot. of Def. Amperif Corp. for Summ.J. on Am.Compl. & in Opp'n to Mot. of Pl. Federal Leasing, Inc. for Summ.J. Thereon hereinafter Amperif's Opp'n Re.: Am.Compl. at 6). Amperif asserts that Federal's amended pleading relies on a different set of facts and asserts a new theory of recovery and, therefore, does not relate back to the original complaint under Maryland or federal law. (Id. 6-7; Reply Mem. in Supp. of Cross-Mot. of Def. Amperif Corp. for Summ.J. on Am.Compl. hereinafter Amperif's Reply Re: Am.Compl. at 2-8). Moreover, Amperif claims that the original complaint did not provide the requisite notice under Federal Rule 15(c) and that relation back is inappropriate, because Amperif will suffer prejudice if relation back is allowed. (Amperif's Reply Re: Am.Compl. at 6-8).

Federal Rule 15(c) governs the relation back of amendments and controls in the face of conflicting and less generous state law. Davis v. Piper Aircraft Corp., 615 F.2d 606, 611-12 (4th Cir.), cert. dismissed, 448 U.S. 911, 101 S.Ct. 25, 65 L.Ed.2d 1141 (1980).5 Under Rule 15(c), an amendment relates back to the date of the original pleading when "... the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading...." Fed.R.Civ.P. 15(c). Leave to amend is "freely given" absent prejudice to the opponent. Ward Elec. Serv., Inc. v. First Commercial Bank, 819 F.2d 496, 497 (4th Cir.1987); Davis, 615 F.2d at 613. In essence, if some factual nexus exists between the amendment and the original complaint, then the amendment is liberally construed to relate back to the original pleading, provided that the opposing party had notice of the claim and will not be prejudiced by the amendment. See Tischler v. Baltimore Bancorp, 801 F.Supp. 1493, 1497 (D.Md.1992) (relying on Grattan v. Burnett, 710 F.2d 160, 163 (4th Cir.1983), aff'd, 468 U.S. 42, 104 S.Ct. 2924, 82 L.Ed.2d 36 (1984)). Moreover, an amendment will not be disallowed merely because it asserts a new theory of recovery. See Ward, 819 F.2d at 497 (observing that change in theory is insufficient basis for denying amendment absent prejudice, bad faith, futility, or dilatoriness associated with motion).

Turning to the pleadings at issue, it is clear that a factual nexus exists between the original and amended pleadings. A comparison of the General Allegations presented in the original and amended complaints reveals an identical recitation of the facts giving rise to the lawsuit.6 (Compare Compl. ¶¶ 5-39 with Am.Compl. ¶¶ 5-39 (articulating history of Amperif/Government, Amperif/Federal, Federal/First Bank relationships and Montana Action)). Both complaints arise out of the sale and assignment of the NWC contract and the subsequent suit brought by First Bank. Therefore, both complaints clearly stem from the same...

To continue reading

Request your trial
15 cases
  • Sherwin-Williams Co. v. Artra Group, Inc.
    • United States
    • U.S. District Court — District of Maryland
    • January 12, 2001
    ...then its interpretation is a matter of law and there is no issue of fact to be determined."); Federal Leasing; Inc. v. Amperif Corp., 840 F.Supp. 1068, 1073 (D.Md.1993). Furthermore, the right of a party to be indemnified when a written contract is involved requires that the agreement "be r......
  • Touko v. United States
    • United States
    • U.S. District Court — District of Maryland
    • June 29, 2021
    ...the relation back of amendments and controls in the face of conflicting and less generous state law." Fed. Leasing, Inc. v. Amperif Corp., 840 F. Supp. 1068, 1071 (D. Md. 1993) (citing Davis v. Piper Aircraft Corp., 615 F.2d 606, 611-12 (4th Cir.), cert. dismissed, 448 U.S. 911 (1980). Here......
  • Akwa v. Residential Credit Solutions, Inc.
    • United States
    • U.S. District Court — District of Maryland
    • April 30, 2015
    ...unambiguous and “construction of an unambiguous written agreement is left to the court as a matter of law.” Fed. Leasing, Inc. v. Amperif Corp., 840 F.Supp. 1068, 1073 (D.Md.1993) (citation omitted). Here, the provisions are not “separate or additional security interest[s], but merely [ ] p......
  • Phoenix Technologies, Inc. v. TRW, INC., 92-CV-5863.
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • January 5, 1994
    ......921, 111 S.Ct. 1313, 113 L.Ed.2d 246 (1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 ...However, it is well settled that federal courts apply the conflict of law rules of the state in which they sit when ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT