Int'l Envtl. Mgmt. Inc. v. Envirotron

• Decision Date: 07 July 2010
• Docket Number: C.A. No. 09-CV-30025-MAP.
• Parties: INTERNATIONAL ENVIRONMENTAL MANAGEMENT, INC., Plaintiff v. ENVIROTRON, LTD., d/b/a Chainstar USA, et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

724 F.Supp.2d 230

INTERNATIONAL ENVIRONMENTAL MANAGEMENT, INC., Plaintiff

v.ENVIROTRON, LTD., d/b/a Chainstar USA, et al., Defendants.

C.A. No. 09-CV-30025-MAP.

United States District Court,D. Massachusetts.

July 7, 2010.

COPYRIGHT MATERIAL OMITTED.

Adam J. Chandler, Richard L. Levine, William C. Saturley, Nelson, Kinder, Mosseau & Saturley, PC, Manchester, NH, for Plaintiff.

Thomas O. Bean, McDermott Will & Emery LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER RE: REPORT AND RECOMMENDATION REGARDING THIRD-PARTY DEFENDANT FITZGERALD'S MOTION TO DISMISS AND DEFENDANT ANN TAYLOR'S MOTION TO AMEND CROSS CLAIM AND THIRD-PARTY COMPLAINT (Dkt. Nos. 27, 43 & 55)

PONSOR, District Judge.

This is a complex piece of litigation based, at its core, on Plaintiff's claim to be paid for services in an amount of at least $789,357.00. Third-Party Defendant Fitzgerald filed a Motion to Dismiss (Dkt. No. 27) and Defendant Ann Taylor, Inc. filed a Motion to Amend Cross Claim and Third-Party Complaint (Dkt. No. 43). The motions were referred to Magistrate Judge Kenneth P. Neiman for report and recommendation.

On April 13, 2010, Judge Neiman issued his Report and Recommendation, to the effect that Fitzgerald's motion should be denied and Ann Taylor's motion allowed. See Dkt. No. 55 at 14-15. The memorandum also indicated that Defendant Ann Taylor's “counterclaims” portion of its Motion to Amend would remain under advisement, and within fifteen days following this court's ruling on the Report and Recommendation, Plaintiff and Defendant Ann Taylor would report regarding how they wished to proceed.

On May 3, 2010, Plaintiff and Defendant Ann Taylor filed a Stipulation of Dismissal with regard to all claims between them (Dkt. No. 56).

The conclusion of the Report and Recommendation admonished the parties at n. 3 that objections to the Report and Recommendation were to be filed within fourteen days of receipt. No objections have been filed.

Having reviewed the substance of the Report and Recommendation and finding it meritorious, and noting that there is no objection, the court, upon de novo review, hereby ADOPTS the Report and Recommendation (Dkt. No. 55).

Based upon this, the court hereby DENIES Defendant Fitzgerald's Motion to Dismiss (Dkt. No. 27). Defendant Ann Taylor's Motion to Amend (Dkt. No. 43) is hereby ALLOWED.

On March 16, 2010, Judge Neiman issued his Pretrial Scheduling Order (Dkt. No. 54), setting dates for, among other things, motions for summary judgment. These were to be filed by June 18, 2010, with opposition by July 2, 2010, replies by July 16, 2010, and argument on July 28, 2010. Since no motions have been filed, the court assumes that none will be forthcoming. The July 28 argument date is therefore off. Counsel will appear again before this court on September 14, 2010 at 2:30 p.m. for a final pretrial conference.

It is So Ordered.

REPORT AND RECOMMENDATION REGARDING THIRD-PARTY DEFENDANT JAMES H. FITZGERALD'S MOTION TO DISMISS and DEFENDANT ANN TAYLOR, INC.'S MOTION TO AMEND CROSS CLAIM AND THIRD-PARTY COMPLAINT (Document Nos. 27 and 43)

NEIMAN, United States Magistrate Judge.

Plaintiff, International Environmental Management, Inc. (“IEM”), is a waste-removal company that provided services to Defendant Ann Taylor, Inc. (“Ann Taylor”) at numerous locations nationwide. According to IEM's Second Amended Complaint, Ann Taylor is delinquent in payment for these services in an amount of at least $789,357. This alleged delinquency arose in whole or in part because Ann Taylor's agent, Defendant Envirotron, Ltd. d/b/a Chainstar USA (“Chainstar”), allegedly converted funds intended to pay IEM for Chainstar's own use.

IEM has sued both Ann Taylor and Chainstar under a variety of theories and Ann Taylor, as part of its Answer, has brought a Cross Claim and Third-Party Complaint against Chainstar and its president, James H. Fitzgerald (“Fitzgerald”). (The Cross Claim targets Chainstar, while the Third-Party Complaint targets Fitzgerald.) In August of 2009, Chainstar filed a motion to dismiss the Second Amended Complaint which District Judge Michael A. Ponsor denied, in all respects, on November 16, 2009.

Meanwhile, Fitzgerald had moved to dismiss Ann Taylor's Third-Party Complaint portion of the Cross Claim/Third-Party Complaint. Then, on November 20, 2009, Ann Taylor filed an opposition to Fitzgerald's motion to dismiss. Judge Ponsor thereafter referred that motion to this court for a report and recommendation. See 28 U.S.C. § 636(b)(1)(B).

In the interim, on December 31, 2009, Ann Taylor filed a motion for leave to amend its Cross Claim/Third-Party Complaint against Chainstar and Fitzgerald. In addition, Ann Taylor's motion seeks to assert three Counterclaims against IEM. On January 14, 2010, IEM filed an opposition to the “Counterclaims” portion of Ann Taylor's motion to amend and then Fitzgerald, on February 11, 2010, filed his own pro se opposition to the “Third-Party Complaint” portion of the motion. ¹

The court heard oral argument on the two pending motions-Fitzgerald's motion to dismiss and Ann Taylor's motion to amend-on February 24, 2010. At that time, IEM and Ann Taylor jointly indicated that they were on the verge of settling all claims between them. Accordingly, they asked the court to withhold ruling on the “Counterclaims” portion of the motion to amend. Chainstar, for its part, has not opposed the motion to amend, did not even appear at the motion hearing and, as indicated supra at n. 1, was recently defaulted. As a result, oral argument proceeded only on the “Cross Claim” and “Third-Party Complaint” portions of the motion to amend as well as on Fitzgerald's motion to dismiss. For the reasons that follow, the court will recommend that both outstanding portions of Ann Taylor's motion to amend be allowed and that Fitzgerald's motion to dismiss be denied. ²

I. Background

In brief, Ann Taylor's original Cross Claim/Third-Party Complaint against Chainstar and Fitzgerald alleges that in or around 2003 Ann Taylor hired Chainstar to manage its accounts payable to third-party waste haulers and to distribute funds that Ann Taylor advanced to Chainstar for the purpose of paying such waste haulers, and that Ann Taylor executed two contracts with Chainstar memorializing this service arrangement. (Cross Cl./Third-Party Compl. ¶¶ 6, 7, 9, 12.) Ann Taylor further alleges that Fitzgerald, Chainstar's president, was its primary representative in these dealings. ( Id. ¶¶ 3, 15.) In addition, Ann Taylor alleges that it advanced in excess of $630,000 to Chainstar for payment to IEM, but that Fitzgerald purportedly directed Chainstar to fraudulently accept and retain those funds. ( Id. ¶¶ 22, 23, 27, 53, 68.)

Ann Taylor's Cross Claim/Third-Party Complaint contains the following seven causes of action, four of which are asserted against Fitzgerald (in addition to Chainstar):

Count I: Breach of Contract (against Chainstar only);

Count II: Breach of Fiduciary Duty (against Chainstar only);

Count III: Conversion (against Chainstar and Fitzgerald);

Count IV: Indemnification (against Chainstar only);

Count V: Money Had and Received/Unjust Enrichment (against Chainstar and Fitzgerald);

Count VI: Account Stated (against Chainstar and Fitzgerald); and

Count VII: Fraud (against Chainstar and Fitzgerald).

Fitzgerald's motion seeks to dismiss the four counts targeting him: Counts III, V, VI and VII. ( Id. ¶¶ 31-84.)

Should the Cross Claim and Third-Party Complaint portions of its motion to amend be allowed, however, Ann Taylor's pleading will maintain the above seven counts, but target Fitzgerald in all of them; thus, he will also be named in Counts I, II and IV. To get there, the proposed amendment adds new factual allegations that Fitzgerald is Chainstar's “alter ego,” one of the main topics at issue in Ann Taylor's opposition to Fitzgerald's motion to dismiss.

II. Discussion

In the court's view, it makes analytical sense to first discuss Ann Taylor's motion to amend, insofar as it seeks to add new factual allegations and claims against Fitzgerald and Chainstar. The court's recommendation will be to allow that part of the motion to amend. Turning then to Fitzgerald's motion, the court will recommend that there are insufficient grounds to dismiss Counts III, V, VI and VII. Should these recommendations be adopted, therefore, Fitzgerald will face all causes of action (Counts I through VII) contained in Ann Taylor's Cross Claim.

A. Ann Taylor's Motion to Amend the Cross Claim/Third-Party Complaint

In the court's estimation, Ann Taylor's motion to amend the Cross Claim and Third-Party Complaint portions of its pleading can be dealt with in short order. In sum, Fitzgerald's pro se opposition fails to adequately address any of the reasons Ann Taylor advances as to why the amendment should be allowed.

Subsection (2) of Fed.R.Civ.P. 15(a) provides that leave to amend a pleading “shall be freely give[n] ... when justice so requires.” “This phrase is usually interpreted as an affirmation of the liberal approach to pleading ... and as an encouragement to district judges to decide a plaintiff's claims on the merits whenever possible.” McMillan v. Mass. Soc'y for the Prevention of Cruelty to Animals, 168 F.R.D. 94, 97 (D.Mass.1995) (citing, inter alia, Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)). See also Espinosa v. Sisters of Providence Health Sys., 227 F.R.D. 24, 26 (D.Mass.2005) (“[T]he liberal amendment policy of Rule 15(a) is a mandate to be heeded.”). At bottom, “Rule 15(a) requires that leave to amend be given freely in the absence of any apparent or declared reason such as undue delay, bad faith or dilatory motive, or undue prejudice to the opposing party.” Chiara v. Dizoglio, 59 F.Supp.2d 193, 198 (D.Mass.1999).

Here, there is no evidence of undue delay, bad faith, or dilatory motive. Indeed, the proposed amendment was filed shortly after a limited deposition of Fitzgerald (allowed by ...