United States District Court, D. Utah
MEMORANDUM DECISION AND ORDER
M. Warner Chief United States Magistrate Judge
Judge Jill N. Parrish Chief Magistrate Judge Paul M. Warner
District Judge Jill N. Parrish referred this matter to Chief
Magistrate Judge Paul M. Warner pursuant to 28 U.S.C. §
636(b)(1)(A). Before the court is Plaintiff and
Counterclaim-Defendant VEC, Inc.'s
(“VEC”) Motion for Leave to Amend Complaint and
Answer to Counterclaim. Having reviewed the parties' briefs
and the relevant law, the court renders the following
Memorandum Decision and Order.
2011, VEC and Defendants and Counterclaimants TFG-Ohio, LP
and Tetra Financial Group, LLC (collectively “TFG”)
entered into a Master Lease Agreement (“MSA”)
wherein TFG agreed to lease certain property to
The dispute in this case surrounds the parties' rights
and obligations at the conclusion of the lease term.
alleges that at the conclusion of the lease term, the MSA
provided VEC with the option to purchase “all but not
less than all” of the leased property for a price
agreed upon by VEC and TFG. In 2015, VEC claims that it
notified TFG that it intended to purchase all of the leased
property for a price agreed upon by the
parties. VEC further alleges that despite VEC's
notice of its intent to exercise its purchase rights under
the MSA, TFG continued to charge VEC's account for
monthly lease payments and failed to negotiate in good faith
a price for the leased property.
December 10, 2015, VEC filed the above-captioned lawsuit
against TFG in Ohio state court claiming that TFG breached
the terms of the MSA and violated the implied covenant of
good faith and fair dealing. Additionally, VEC is seeking a
declaratory judgment stating that VEC's obligations under
the MSA will be satisfied once VEC pays TFG the fair value of
the leased property.
removed the action to federal court in the Northern District
of Ohio. On June 30, 2016, the Northern District
of Ohio transferred the case to the District of Utah because
the MSA contains a forum selection clause in favor of
Utah. Subsequently, TFG filed a countersuit
against VEC alleging breach of contract and breach of the
covenant of good faith and fair dealing. TFG also
filed countersuit against the MSA's guarantors J.L. Allen
Co., LLC and Evets Electric, Inc.
November 11, 2016, the court entered in a Scheduling Order
specifying that the parties had until December 30, 2016, to
file amended pleadings. The Scheduling Order further
specifies that the parties have until June 9, 2017, to
complete fact discovery.
March 30, 2017, VEC filed the instant motion seeking leave to
amend the complaint and answer to TFG's
counterclaim. VEC argues that through the course of
discovery it has obtained new information justifying new
claims and defenses. VEC's proposed First Amended
Complaint adds a fraud claim against TFG. VEC claims
that TFG's agent, Rick Razzeca, told VEC that it could
purchase the leased property at the end of the lease term
“for the sum of $1.00, or some other nominal
amount.” Furthermore, VEC's First Amended
Answer to TFG's Counterclaim adds fraudulent inducement
defenses. VEC claims that TFG's counterclaims
are barred because TFG fraudulently induced VEC into entering
into the MSA.
to Rule 15(a)(2) of the Federal Rules of Civil Procedure, the
court “should freely give leave [to amend] when justice
so requires.” Whether to provide a party leave to amend
its pleadings “is within the discretion of the trial
court.” Minter v. Prime Equip. Co., 451 F.3d
1196, 1204 (10th Cir. 2006) (quotations and citation
omitted). The court may deny leave to amend only where there
is a “‘showing of undue delay, undue prejudice to
the opposing party, bad faith or dilatory motive, failure to
cure deficiencies by amendments previously allowed, or
futility of amendment.'” Bylin v.
Billings, 568 F.3d 1224, 1229 (10th Cir. 2009) (quoting
Frank v. U.S. W., Inc., 3 F.3d 1357, 1365 (10th
court's view, whether VEC's motion should be granted
depends on whether VEC was justified in waiting until after
December 30, 2016, to seek permission from the court to amend
its pleadings. VEC claims three sources of information
provide justification for VEC's delay in filing a motion
to amend. First, VEC claims that in the course of searching
VEC's records responsive to TFG's discovery requests,
VEC discovered documents supporting an additional fraud claim
and several fraud defenses. Second, VEC argues that TFG
produced certain emails in response to VEC's discovery
requests that further demonstrate the need to
amend. Specifically, VEC cites the following
• October 7, 2011, email from VEC's former CFO,
Brenda Spencer (“Spencer”), to TFG's
employee, Rick Razzeca (“Razzeca”).
• November 29, 2011, email from Razzeca to Spencer.
• November 30, 2011, email from Spencer to Razzeca.
• December 1, 2011, email from Spencer to Razzeca.
VEC claims that in February of 2017, VEC interviewed Spencer
in preparation for her upcoming deposition and discovered new
information warranting a claim ...