Mersen USA-Midland-MI Inc. v. Graphite Machining Serv. & Innovations, LLC

• Decision Date: 26 July 2012
• Docket Number: Case Number 12-10961
• Court: U.S. District Court — Eastern District of Michigan
• Parties: MERSEN USA - MIDLAND-MI INC., Plaintiff/Counter-Defendant, v. GRAPHITE MACHINING SERVICES & INNOVATIONS, LLC f/k/a GRAPHITE MACHINING SERVICES, INC., Defendant/Counter-Plaintiff.

MERSEN USA - MIDLAND-MI INC., Plaintiff/Counter-Defendant,

v. GRAPHITE MACHINING SERVICES & INNOVATIONS,LLC f/k/a GRAPHITE MACHINING SERVICES, INC., Defendant/Counter-Plaintiff.

Case Number 12-10961

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN NORTHERN DIVISION

Dated: July 26, 2012

Honorable Thomas L. Ludington

OPINION AND ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY

JUDGMENT, GRANTING DEFENDANT'S MOTION TO AMEND ANSWER, AND

GRANTING DEFENDANT'S MOTION FOR LEAVE TO FILE A SUR-REPLY

Graphite Machining Services & Innovations LLC ("GMSI") is in the business of machining graphite for various applications. Mersen USA ("Mersen") provides services to companies like GMSI whereby the machined graphite is coated with various materials. Between August and December of 2011, GMSI entered into numerous contracts with Mersen for the coating of its already machined graphite products. ECF No. 1 Ex. 1. Mersen would receive the machined graphite from GMSI, coat the graphite and ship the graphite back to GMSI. Id. GMSI subsequently did not pay the invoices Mersen issued for its services. After numerous failed attempts to obtain payment from GMSI, Mersen filed this lawsuit seeking to recover on numerous outstanding invoices totaling over $400,000. Mersen's Complaint alleges claims for breach of contract, unjust enrichment and account stated in accordance with Mich. Comp. Laws § 600.2145. ECF No. 1 Ex. 1. Pursuant to Mich. Comp. Laws § 600.2145, Mersen attached copies of the invoices reflecting amounts owed by GMSI and an affidavit supporting its account stated claim and verifying that GMSI owes Mersen $409,866.00 in unpaid invoices. Id. On March 2, 2012, GMSI removed the lawsuit to this court. ECFNo. 1. GMSI filed its Answer to Mersen's Complaint on or about March 9, 2012. ECF No. 2. GMSI's Answer did not incorporate or attach an affidavit rebutting Mersen's affidavit in support of its account stated claim as required by Mich. Comp. Laws § 600.2145.

Because GMSI did not contradict the affidavit testimony provided by Mersen, Mersen filed a motion for summary judgment on the account stated claim, contending that Michigan law is clear that failure to challenge the amount owed on an outstanding account by affidavit testimony with an answer establishes a prima facie case that the amount is owed. GMSI subsequently filed a motion to amend its answer to remedy this error. ECF No. 14. For the reasons provided herein, Mersen's motion for summary judgment will be denied and GMSI's motion for leave to file an amended answer will be granted. GMSI's motion for leave to file a sur-reply will also be granted because Mersen's reply brief provides a number of factual and legal assertions that were not included in its original brief in support of its motion for summary judgment.

I. GMSI's Motion to Amend Answer

Rule 15(a) of the Federal Rules of Civil Procedure provides that "[t]he court should freely give leave when justice so requires." See also Foman v. Davis, 371 U.S. 178, 182 (1962) (holding refusal to grant leave to amend without any justification was an abuse of discretion); Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417, 421 (6th Cir. 2000) (holding denial was abuse of discretion and not harmless error based on futility); Moore v. City of Paducah, 790 F.2d 557, 559 (6th Cir. 1986) (reversing denial of leave to amend). The Sixth Circuit takes a liberal approach to Rule 15(a). Moore, 790 F.2d at 562; Minor v. Northville Public Schs., 605 F. Supp. 1185, 1201 (E.D. Mich. 1985). Leave to amend should be granted unless there is "undue delay, bad faith, or dilatory motive . . . repeated failure to cure deficiencies by amendments previously allowed, undue prejudiceto the opposing party, [] futility of amendment," or lack of notice to the opposing party. Foman, 371 U.S. at 182; see also Wade v. Knoxville Utils. Bd., 159 F.3d 452, 458 (6th Cir. 2001) (noting lack of notice to opposing party as an additional factor); Popp Telcom v. American Sharecom, Inc., 210 F.3d 928, 943 (8th Cir. 2000).

GMSI first notes that there has been no undue delay in seeking amendment. Undue delay is typically found where years have passed, discovery has been substantially conducted, and dispositive motion deadlines have passed. Wade, 159 F.3d at 459 (holding there would be significant prejudice where the dispositive motion deadline had passed and significant discovery had been conducted and would need to be extensively supplemented to address the newly raised issues). Here, GMSI served its original answer on March 9, 2012 and the time period for GMSI to amend as a matter of course has only just passed. ECF No. 2; Fed. R. Civ. P. 15(a)(1) (amendment permitted as a matter of course for 21 days after serving pleading). Furthermore, discovery is still open with initial disclosures being exchanged on April 20, 2012, depositions have not yet been noticed, no discovery requests have been made by Mersen, and the cut off for dispositive motions has not passed. ECF No. 8. Additionally, even if there was undue delay here, undue delay is not a sufficient reason alone to deny leave to amend. Prater v. Ohio Educ. Ass'n, 505 F.3d 437, 445 (6th Cir. 2007)(noting the 6th Circuit requires "at least some significant showing of prejudice" to deny motion for leave that is otherwise solely based on delay).

GMSI also contends that there is no evidence of bad faith or dilatory motives and there has not been a prior amendment to the answer. Mersen had notice of GMSI's defenses against its claims. Only one paragraph has been added to the original answer, and only one paragraph has been modified. ECF No. 14 Ex. 1 at ¶¶ 44, 49. The additional paragraph makes reference to an affidavitby Peter Guercio in support of GMSI's allegations that were already contained in the original answer. Id. at ¶ 49. Paragraph 44 was modified to clarify the GMSI products that are still in Mersen's possession and the monies owed by Mersen for these products. Id. at ¶ 44. Paragraphs 28 and 32-34 now have cites to Peter Guercio's affidavit. Mersen is, and was made, fully aware of the defenses and supporting allegations in the original answer and therefore, Merson was on notice; the answer will be amended to simply add detail to the damages GMSI already claimed were owed and evidentiary support for these already-known allegations. See Popp Telcom., 210 F.3d at 943 ("The inclusion of a claim based on facts already known or available to both sides does not prejudice the non-moving party."); Tefft v. Seward, 689 F.2d 637, 639-40 (6th Cir. 1982) (reversing denial of leave to amend where facts set forth in the original complaint would support the new cause of action).

There would likewise be no undue prejudice to Mersen if leave to amend is granted. See Busam Motor Sales v. Ford Motor Co., 203 F.2d 469, 473 (6th Cir. 1953) (holding amendment not barred simply because it raises new issues of law); Harrison v. Rubin, 174 F.3d 249, 253 (D.C. Cir. 1999) (holding where "amendment would do no more than clarify legal theories or make corrections" undue delay does not justify denial of leave to amend); Tefft, 689 F.2d at 639-40. As noted above, GMSI is simply adding evidentiary support and expanded detail to its answer and thus, Mersen is not unduly prejudiced. Tefft, 689 F.2d at 639-40; Harrison, 174 F.3d at 253; Moore, 790 F.2d at 560 (determining, in its discussion of another case, that undue prejudice was present where discovery had been completed and the amended charge was not contemplated in the original complaint). Additionally, discovery has not been conducted by Mersen and the dispositive motion deadline has not passed. See Operating Eng'rs Local 324 Health Care Plan v. Mid MichiganCrushing & Recycling, LLC, No. 10-12987, 2012 U.S. Dist. LEXIS 17337, at *2 (E.D. Mich. Feb. 13, 2012) ("In determining what constitutes prejudice, the court considers whether the assertion of the new claim or defense would: require the opponent to expend significant additional resources to conduct discovery and prepare for trial; significantly delay the resolution of the dispute; or prevent the plaintiff from bringing a timely action in another jurisdiction.").

Finally, GMSI argues that its amendment would not be futile. Rose, 203 F.3d at 421 ("The test for futility, however, does not depend on whether the proposed amendment could potentially be dismissed on a motion for summary judgment."). An amendment is futile only if it could not withstand a Rule 12(b)(6) motion to dismiss. Id.; Operating Eng'rs Local 324 Health Care Plan, 2012 U.S. Dist. LEXIS 17337, at *3. In analyzing futility on an affirmative defense, the Court must take defendants allegations as true, and if a defendant has pleaded allegations that indicate the defense may apply, then the amendment is not futile. Operating Eng'rs Local 324 Health Care Plan, 2012 U.S. Dist. LEXIS 17337, at *3-4 (granting leave to amend answer). The determination of whether the defense actually applies is for later proceedings. Id. at *4. Here, GMSI proposes amending its answer to include a supporting affidavit in defense of Mersen's statement of account claim. GMSI has met the pleading requirements set forth in the federal rules by denying allegations required for Mersen's statement of account claim and by pleading "in short plain terms its defenses" that would entitle GMSI to monetary damages from Mersen, as well as an offset against Mersen's statement of account. ECF No. 2 at ¶¶ 27-35, 38-45]; Fed. R. Civ. P. 8(b). Taking GMSI's allegations in its proposed amended answer as true, GMSI's amendment to add evidentiary support to such allegations would not be futile, but would further support that GMSI's defenses may apply. Operating Eng'rs Local 324 Health Care Plan, 2012 U.S. Dist. LEXIS 17337, at *3-4; see alsoMich. Comp. Laws § 600.2145 (account stated statute).

Mersen opposes GMSI's request and contends that granting leave to amend the answer would be inappropriate because it is sought to...