Koch Materials Company v. Shore Slurry Seal, Inc., Civil Action No. 01-2059 (D. N.J. 7/14/2003)
| Decision Date | 14 July 2003 |
| Docket Number | Civil Action No. 01-2059 |
| Parties | KOCH MATERIALS COMPANY, Plaintiff, v. SHORE SLURRY SEAL, INC., and ASPHALT PAVING SYSTEMS, INC., Defendants. SHORE SLURRY SEAL, INC., Counterclaim Plaintiff, v. KOCH MATERIALS COMPANY, Counterclaim Defendant. |
| Court | U.S. District Court — District of New Jersey |
Stephen B. Nolan, Esq., Stradley, Ronon, Stevens & Young, LLP, Cherry Hill, NJ, Attorneys for Plaintiff and Counterclaim Defendant, Koch Materials Company.
Carl W. Hittinger, Esq., Neil C. Schur, Esq., Stevens & Lee, P.C., Cherry Hill, NJ, Attorneys for Defendant and Counterclaim Plaintiff, Shore Slurry Seal, Inc.
David G. Concannon, Esq., Law Office of David Concannon, LLC, Hackensack, New Jersey, Attorney for Defendant, Asphalt Paving Systems, Inc.
Plaintiff and Counterclaim Defendant, Koch Materials Company ("Koch"), appeals the Order of Magistrate Judge Joel B. Rosen dated December 6, 2002, which granted the motion to amend the counterclaim of Defendant and Counterclaim Plaintiff, Shore Slurry Seal, Inc. ("Shore Slurry"). For the reasons set forth below, I conclude that Judge Rosen's decision was not clearly erroneous or contrary to law. Accordingly, Judge Rosen's December 6, 2002 Order shall be affirmed.
The detailed factual background in the saga that this case has become has already been set forth in the previous Opinions of this Court, see, e.g., Koch Materials Co. v. Shore Slurry Seal, Inc., 205 F. Supp. 2d 324 (D.N.J. 2002) and 209 F. Supp. 2d 418 (D.N.J. 2002), and shall not be repeated here except where necessary to resolve the pending appeal of Judge Rosen's December 6, 2002 Order.
In my June 12, 2002 Opinion, I granted Koch's motion for partial summary judgment and found, inter alia, that Shore Slurry repudiated its Exclusive Supply and Sublicense Agreement with Koch by failing to provide Koch with adequate assurances that Shore Slurry would perform on the parties' requirements contracts. See Koch, 205 F. Supp. 2d at 332-33. Arguing that Koch itself breached their contract before the time of repudiation, Shore Slurry subsequently sought reconsideration of the June 12, 2002 decision. See Koch, 209 F. Supp. 2d at 420. Shore Slurry's motion for reconsideration was denied, id. at 421, because Shore Slurry never argued Koch's alleged breach in opposition to Koch's motion for summary judgment, id. at 420.
In an Order dated December 6, 2002, Judge Rosen granted Shore Slurry's motion to amend its counterclaim1 to include:
a claim for breach of the October, 2000 Settlement Agreement and Mutual Release, fraud, negligent misrepresentation, violations of the New Jersey Consumer Fraud Act, N.J.S.A. § 56:8-19, breach of the implied covenant of good faith and fair dealing, as to both the February 18, 1998 Exclusive Supply Agreement and related agreements, and the October, 2000 Settlement Agreement and Mutual Release, and a violation of Section 43(b) of the Lanham Act, 15 U.S.C. § 1125(b). Additionally, . . . a claim for punitive damages, because of the evidence of [egregious] and wanton conduct of the plaintiff, uncovered in discovery taken to date.
See Order, Koch Materials Co. v. Shore Slurry Seal, Inc., Civ. A. No. 01-2059 (D.N.J. Dec. 6, 2002). In doing so, Judge Rosen explicitly rejected Koch's arguments that permitting the amendment would cause undue prejudice and delay, and that Shore Slurry was aware of the facts associated with the application for at least two-and-a-half years. Id. The December 6, 2002 Order, however, did not reference Judge Rosen's previous Order of May 10, 2002, in which he granted Defendant Asphalt Paving Systems, Inc.'s ("Asphalt Paving") motion to file an amended answer and counterclaim, but also ordered, pursuant to Fed. R. Civ. P. 16, that no further amendments to the pleadings would be permitted. See Order, Koch Materials Co. v. Shore Slurry Seal, Inc., Civ. A. No. 01-2059 .
As the parties are completely diverse, and the amount in controversy exceeds $75,000, exclusive of interest and costs, I have jurisdiction over this action pursuant to 28 U.S.C. § 1332. Additionally, I may consider a party's objections to the orders of the Magistrate Judge pursuant to Fed. R. Civ. P. 72 and 28 U.S.C. § 636(b).
The Federal Magistrates Act of 1968 provides that a District Court may reverse a Magistrate Judge's pre-trial determination only if it is "clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1)(A) (West 2003); Fed. R. Civ. P. 72(a); Local Civ. R. 72.1(c)(1); see also Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1113 (3d Cir. 1986); Cooper Hosp./Univ. Med. Ctr. v. Sullivan, 183 F.R.D. 119, 127 (D.N.J. 1998) (Orlofsky, J.).
A finding is clearly erroneous only "when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Lo Bosco v. Kure Eng'g Ltd., 891 F. Supp. 1035, 1037 (D.N.J. 1995) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)); see also Bobian v. CSA Czech Airlines, 222 F. Supp. 2d 598, 601 (D.N.J. 2002); Cooper Hosp., 183 F.R.D. at 127. In reviewing a Magistrate Judge's factual determinations, however, a District Court may not consider any evidence which was not presented to the Magistrate Judge. See Haines v. Liggett Group, Inc., 975 F.2d 81, 92-93 (3d Cir. 1992); Cooper Hosp., 183 F.R.D. at 127.
A ruling is contrary to law if the Magistrate Judge has misinterpreted or misapplied applicable law. See Bobian, 222 F. Supp. 2d at 601.
Koch argues that "all of Shore's new claims arise, in some form or another, from the factual allegations that Koch misled Shore about its product E-18R and discriminated against Shore." See Mem. in Supp. of Appeal of Mag. J.'s Order, at 5. According to Koch, Shore Slurry had full knowledge of the existence and uses of E-18R as early as June 1999. Id. at 5, 12. Citing Fed. R. Civ. P. 72(a), Koch contests Judge Rosen's authority to grant the motion to amend in light of his own May 10, 2002 Order barring further amendments to the pleadings. See Mem. in Supp. at 8-11. Koch also argues that Shore Slurry delayed in filing the motion to amend until after the Court's ruling on Koch's motion for partial summary judgment. Id. at 16; Reply Mem. at 10. Furthermore, Koch argues that the claims raised in Shore Slurry's amended complaint are futile, id. at 21, would impose a tremendous burden on the Court, id. at 17, would cause undue prejudice to Koch, id. at 27, and were brought in bad faith, id. at 29.
Shore Slurry, in contrast, argues that it amended its counterclaims in response to facts that emerged through discovery and Koch's recent conduct. see Mem. in Oppos. to Appeal at 1, 14-16. These facts allowed Shore Slurry to adequately plead new claims. Id. at 18-20. Shore Slurry argues that Judge Rosen acted within his authority under Fed. R. Civ. P. 15(a), id. at 9, that the amendment caused no undue prejudice to Koch, id. at 25, and also points out that Koch never raised a futility argument before Judge Rosen, id. at 22-23.
In this District, Magistrate Judges regularly hear and determine pretrial matters in accordance with 28 U.S.C. § 636(b)(1)(A) and Fed. R. Civ. P. 72. See L. Civ. R. 72.1(a) (Gann 2003). Such duties include granting leave to file amended complaints. See, e.g., Thomas v. Ford Motor Corp., 111 F. Supp. 2d 529, 532 (D.N.J. 2000), aff'd in part, rev'd in part, 137 F. Supp. 2d 575 (D.N.J. 2001) (Orlofsky, J.); Bair v. City of Atlantic City, 100 F. Supp. 2d 262, 265 (D.N.J. 2000); see also Allyn Z. Lite, New Jersey Federal Practice Rules 195-96 (2003).
Judge Rosen was clearly acting within the proper scope of his duties on December 6, 2002, when he granted Shore Slurry's motion to amend its counterclaim. The narrow question for appeal is whether Judge Rosen erred in permitting the amendment in light of his May 10, 2002 Order barring further amendments to the pleadings. I conclude that Judge Rosen's decision was not clearly erroneous or contrary to law, and that the amendment was warranted under Fed. R. Civ. P. 15(a).
Fed. R. Civ. P. 15(a).2 Leave to amend a pleading shall be freely given when justice so requires. See id.; Foman v. Davis, 371 U.S. 178, 182 (1962).
The United States Supreme Court discussed Fed. R. Civ. P. 15(a) in Foman v. Davis, 371 U.S. 178, and explained that:
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 failures 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, 371 U.S. at 182; Heyl & Patterson Int'l, Inc. v. F.D. Rich Housing of the Virgin Islands, Inc., 663 F.3d 419, 415 (3d Cir. 1981). Thus, among the grounds that could justify a denial of leave to amend are undue delay, bad faith, dilatory motive, prejudice and futility. See Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000).
In his December 6, 2002 Order, Judge Rosen explicitly found that none of the conditions existed to justify denying a motion to amend under Fed. R. Civ. P. 15(a). See Order, Koch Materials Co. v. Shore Slurry Seal, Inc., Civ. A. No. 01-2059, at 3 (D.N.J. Dec. 6, 2002). Although Judge Rosen did not refer to his previous May 10, 2002 Order, barring further amendments to the pleadings, it is reasonable to assume that, as the author of that Order, Judge Rosen was well-aware of its...
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