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Parkcrest Builders, LLC v. Housing Authority of New Orleans

United States District Court, E.D. Louisiana

January 17, 2017

PARKCREST BUILDERS, LLC
v.
HOUSING AUTHORITY OF NEW ORLEANS (HANO)

         SECTION: “J” (4)

          ORDER AND REASONS

          KAREN WELLS ROBY UNITED STATES MAGISTRATE JUDGE

         Before the Court is a Motion for Leave to File First Supplemental and Amended Counterclaim (R. Doc. 71) filed by the Housing Authority of New Orleans (“HANO”) seeking an order from the Court to allow it to file its first supplemental and amended counterclaim. The motion is opposed. R. Doc. 72. The motion was submitted on January 11, 2017. For the following reasons, the motion for leave to file is GRANTED.

         I. Background

         This diversity action was filed on May 8, 2015 by the Plaintiff Parkcrest Builders, LLC (“Parkcrest”) seeking a Declaratory Judgment and Judgment for Damages in connection with a contract dispute between itself, as the original contractor, and Defendant HANO. R. Doc. 21, p. 2. Parkcrest alleges that on March 4, 2013 it entered into a contract with Defendant for the construction of the Florida Avenue: New Affordable Housing Units (“the Project”) for the amount of $11, 288, 000.00 R. Doc. 1, p. 3. During work on the Project, there were a number of delays which Parkcrest argues were not in its control. As a result of these delays, Parkcrest states that on April 10, 2015 HANO sent a Notice of Final Default and Termination to Parkcrest stating that Parkcrest was in final default of the contract and terminating Parkcrest's right to complete the project. R. Doc. 1, p. 7. Parkcrest alleges that the delays HANO cited as the justification for the notice of default were not attributable to Parkcrest. R. Doc. 21, p. 2. As such, arguing that it was not in default, Parkcrest alleges that the termination was “for convenience” and therefore entitles it to remuneration under its contract with HANO. R. Doc. 21, p. 3. Parkcrest has also alleged that HANO has breached the contract. Id. HANO has filed a counterclaim alleging that the delays were the sole fault of Parkcrest and seeking damages for the delays. R. Doc. 23. HANO also asserted claims against Parkcrest that arose after a Takeover Agreement was executed with Liberty Mutual. Id.

         On September 1, 2016, Liberty Mutual intervened and filed a separate complaint against HANO. R. Doc. Liberty Mutual alleges that it issued a payment and performance bond in connection with the Project pursuant to the Louisiana Public Works Act, La. R.S. 38:2216 and 2242. R. Doc. 32, p. 3. Liberty Mutual states that the bond named the Plaintiff as the principal and the Defendant as obligee. Further, Liberty Mutual alleges that in June 2015 it executed a Takeover Agreement[1] with the Defendant regarding the Project following the termination of Plaintiff from the Project. Id. p. 5. As part of that agreement, Liberty Mutual retained the Plaintiff as the “completion contractor” to carry out the contract work and to deal directly with the Defendant for the remainder of the Project. However, after executing the Takeover Agreement, Liberty Mutual argues that HANO immediately began violating the terms by: not making timely payments for unpaid Project funds; failing to timely respond to change order proposals or finalize change orders; failing to timely process pay applications and timely pay Liberty; timely issue punch lists; and did not grant substantial completion for the project when it received Certificates of Completion and Occupancy on November 18, 2015. Id. at p. 6-8. Thereafter, on June 29, 2016, Liberty Mutual alleges that it was wrongfully terminated from the Project by HANO, who intended to complete the punch lists items with a third-party contractor. As such, Liberty asserts claims of breach of contract, bad faith breach of contract, and two counts of wrongful termination against HANO. Id. at 9-15.

         Thereafter, on September 22, 2016, HANO filed a counterclaim against Liberty. R. Doc. 37, p. 17. HANO argues that after executing the Takeover Agreement Liberty acted as a de-facto contractor and was therefore liable for amounts in excess of the penal sum of the Bond. Id. at p. 18. HANO further asserts that Liberty breached the terms of the Takeover Agreement and that the breach was done in bad faith. Id. HANO also asserts that Liberty fraudulently induced HANO into signing the Takeover Agreement. Id. HANO also avers that Liberty is liable for liquidated damages as set for in the Takeover Agreement as well as all damages resulting from Liberty's breach of the agreement. Id. at p. 19.

         On December 19, 2016, Liberty filed a motion for judgment on the pleadings seeking dismissal of HANO's counterclaims that: (i) Liberty made fraudulent representations to HANO; (ii) Liberty breached the Takeover Agreement by naming Parkcrest as the completion contractor; and (iii) Liberty was the de-facto contractor. R. Doc. 67.

         Thereafter, on December 28, 2016, HANO filed the subject motion to amend and supplement its counterclaim. R. Doc. 71. In its motion, HANO argues that the motion to amend and supplement should be granted because the motion to amend is filed within the deadline for such amendments in accordance with the District Court's scheduling order. R. Doc. 71-1, p. 2.

         While it does not wholesale oppose the granting of HANO's motion, Liberty opposes HANO's motion to amend and supplement its counterclaim insofar as it relates to the above mentioned claims at issue in the pending motion for judgment on the pleadings. R. Doc. 72, p. 3. Liberty argues that HANO's attempted amendment is futile because it does not correct the problems with those claims. Id. at p. 2. Additionally, Liberty also argues that any allegations that Liberty fraudulently withheld the dual nature of its Project presentative/non-testify expert Meridian Consulting Group, LLC (“Meridian”) are prejudicial in that they are an attempt to circumvent discovery into Liberty's assertion of attorney-client and work product privileges associated with Meridian as a non-testifying expert. Id. at p. 2-3.

         II. Standard of Review

         Generally, Federal Rule of Civil Procedure 15(a) governs the amendment of pleadings before trial. Rule 15(a) allows a party to amend its pleadings “only with the other party's written consent or the court's leave.” Fed.R.Civ.P. 15(a)(2). Moreover, the Rule urges that the Court “should freely give leave when justice so requires.” Id. In taking this liberal approach, the Rule “reject[s] the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the merits.” Conley v. Gibson, 355 U.S. 41, 48 (1957).

         “Rule 15(a) requires a trial court ‘to grant leave to amend freely, ' and the language of this rule ‘evinces a bias in favor of granting leave to amend.'” Jones v. Robinson Prop. Grp., 427 F.3d 987, 994 (5th Cir. 2005) (internal quotations marks omitted) (quoting Lyn-Lea Travel Corp. v. Am. Airlines, 283 F.3d 282, 286 (5th Cir.2002)). When denying a motion to amend, the court must have a “substantial reason” considering such factors 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 ...and futility of the amendment.'” Marucci Sports, LLC v. Nat'l Collegiate Athletic Ass'n, 751 F.3d 368, 378 (5th Cir. 2014) (quoting Jones, 427 F.3d at 994).

         An amendment is deemed to be futile if it would be dismissed under a Rule 12(b)(6) motion. Id. (citing Briggs v. Miss., 331 F.3d 499, 508 (5th Cir 2003)). “It is well-established, of course, that the Rule 12(b)(6) analysis necessarily incorporates the federal pleading standard articulated in Bell Atlantic Corp. v. Twombly: ‘To pass muster under Rule 12(b)(6), [a] complaint must have contained ‘enough facts to state a claim to relief that is plausible on its face.'” Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., 818 F.3d 193, 200 (5th Cir. 2016). As such, the Court must accept all well-plead facts as true and view them in the light most favorable to the non-moving party. Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir.2004) (internal quotation omitted). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the ...


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