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Macsherry v. Sparrows Point, LLC

United States District Court, D. Maryland

October 28, 2016

JOHN H. MACSHERRY, JR., Plaintiff,
v.
SPARROWS POINT, LLC, et al. Defendants

          MEMORANDUM OPINION

          Ellen Lipton Hollander, United States District Judge

         John Macsherry, Jr., plaintiff, filed suit against defendants Sparrows Point, LLC (“Sparrows Point” or “SPLLC”); Commercial Development Company, Inc. (“CDC”); and Michael Roberts, to recover a commission of $825, 000 in connection with commercial property that sold for $110, 000.00. See ECF 2.[1] Plaintiff seeks relief under the Maryland Wage Payment and Collection Law (“MWPCL”), Maryland Code (2016 Repl. Vol.) §§ 3-501 et seq. of the Labor and Employment Article, as well as under theories of breach of contract; promissory estoppel/detrimental reliance; and quantum meruit. See ECF 2.

         In this Memorandum Opinion, I consider “Plaintiff's Motion to Amend His First Amended Complaint and to Reopen Discovery Limited to the Issue of Fraudulent Conveyance” (ECF 47). It is supported by a legal memorandum (ECF 47-1) (collectively, “Motion to Amend”) and numerous exhibits. ECF 47-2 through ECF 47-12.[2] In the Motion to Amend, plaintiff seeks to file a Second Amended Complaint to add a new defendant and a new claim. He also appends several new exhibits. See ECF 47-3. Defendants oppose the Motion to Amend (ECF 48, “Opposition”) and Macsherry has replied. ECF 49 (“Reply”). In addition, I also resolve “Defendants' Motion for Leave to File Sur-Reply.” ECF 50 (“Motion for Surreply”). The proposed Surreply is at ECF 50-1. Macsherry responded on May 9, 2016 (ECF 51, “Response”). Defendants did not reply, and the time to do so has expired.

         The motions have been fully briefed and no hearing is needed to resolve them. See Local Rule 105.6. For the reasons that follow, I shall deny the Motion for Surreply and I shall deny the Motion to Amend.

         I. Factual and Procedural Background[3]

         In the First Amended Complaint (ECF 26), Macsherry alleges that he was employed jointly by Sparrows Point and CDC, as Vice President of Leasing and Development. ECF 26 ¶¶ 1, 12. He avers that Roberts is an owner of both Sparrows Point and CDC. ECF 47-2 at 3. Sparrows Point is a single-purpose Missouri LLC that was “formed to acquire 3, 100 acres of real property located at the Sparrows Point peninsula in Baltimore County, formerly the site of the industrial complex owned by Bethlehem Steel.” ECF 48 at 3. CDC is a Missouri corporation that shares common management and human resources personnel with Sparrows Point. ECF 26 ¶ 5. Roberts, a Missouri resident, leads both entities. Id. ¶¶ 5, 6. Macsherry “reported to Robert Schoelch, Vice President of Defendant Commercial Development, until Mr. Schoelch left the company in April 2014.” Id. ¶ 7.

         According to plaintiff, he was employed by both Sparrows Point and CDC, either directly, as a single enterprise, or as joint employers. Id. ¶ 8. In addition, he asserts that Roberts was his employer “by virtue of his leadership role with each entity and his direction and control over employment decisions, including the payment of wages . . . and the payment of the commission at issue . . . .” Id.

         Macsherry asserts that in December 2012, “Defendants presented Plaintiff Macsherry with a contract of employment . . . .” Id. ¶ 12. Subsequently, Macsherry received an edited copy of the document (the “Contract”).[4] At his deposition, Schoelch recalled that he had drafted the Contract. See ECF 26-2; ECF47-4 at 14-17. The Contract outlined Macsherry's duties, as “Vice President of Leasing and Development-Sparrows LLC.” ECF 26-2 at 2. He would, id.:

Be directly responsible for the marketing and brokerage efforts for the property; work directly with listing broker and general counsel to negotiate lease and sale contracts. Work with community organizations to increase the awareness of property; be point person to identify international customers and port related users for the site.
Be responsible for identifying appropriate local and state economic development packages/incentives; understanding the appropriate brown field entitlements and subsidies; work with Site Manager to address master plan issues including utility services, rail issues, zoning/subdivision issues, RET appeals, etc.

         In addition, the Contract included that Macsherry's salary would be $77, 000 per year and that Macsherry would be entitled to a commission of “75 basis points paid on the total value of any sales/leases or parcels on any deals closed after the Start Date, Lafarge and Fritz deals excluded.” Id. The draft included a start date of “TBD, ” but Schoelch changed it to December 10, 2012. Id.

         Macsherry alleges that he signed the Contract in Saint Louis during a meeting with Rebecca Lydon, the Chief Operating Officer of CDC and Sparrows Point. ECF 47-6 at 12-16.[5]Lydon advised Macsherry that she would have Roberts sign the Contract and that she would send him a copy. Id. at 16. Macsherry never received a signed copy, however. See ECF 47-6 at 16; ECF 48-1 at 1-2.

         On September 9, 2014, Macsherry emailed a copy of the Contract to Lydon. See ECF 47-3 at 31-34. On September 12, 2014, Macsherry received a letter from Lydon. ECF 26-3 at 2. The top of the stationery contains the moniker, “Sparrows Point LLC.” Id. Lydon stated, in pertinent part, id. (emphasis in original):

As you are aware, the Sparrows Point site is under contract with the sale expected to close soon. If the sale is completed, please be advised that you will no longer be employed by Sparrows Point LLC as of the date of closing.
All payroll earned to the closing date will be paid as well as any vacation time earned but not yet taken on the next regular payroll date.

Macsherry asserts, ECF 26 ¶ 20: “Following the September 12, 2014 letter, Plaintiff Macsherry inquired several times regarding the status of his commission of .75% of the sale value.” Lydon stated at her deposition that she took a copy of the email that Macsherry had sent her on September 9, 2014, and put it on Roberts's desk. ECF 47-8 at 3-4. Later that afternoon, Lydon sent an email to Roberts and three others, stating, ECF 47-9 (emphasis in original): “John MacSherry [sic] is trying to get a hold of me--I am NOT returning the call, just so you know.” Macsherry followed up with Lydon by email on September 13, 2014, and again on September 17, 2016, requesting information about his commission. See ECF 47-1 at 9; ECF 47-3 at 36. Macsherry also claims that he tried to reach Roberts by phone and by email on September 10, 2014. See ECF 47-1 at 9; ECF 47-10.

         Sparrows Point sold the property for $110, 000, 000 in a transaction that closed on September 17, 2014. ECF 47-7 at 12. Roberts testified at his deposition that, within a week or two of the closing, most of the net proceeds of sale were disbursed. Id. at 14-15. Macsherry maintains that the transfer was made even though defendants knew of plaintiff's claim for a commission. ECF 47-1 at 6. Although Roberts initially denied that he knew of Macsherry's claim as of the time of the transfer of funds, he subsequently acknowledged that he previously had a conversation with plaintiff about his claim. Roberts said, id. at 13: “But . . . at that point . . . we didn't know if he was serious or not.”[6]

         Macsherry again tried to reach Roberts on September 19, 2014 (ECF 47-11), and finally spoke with Roberts on September 25, 2014. ECF 47-1 at 9. Macsherry testified at his deposition that Roberts indicated that he did not think Macsherry deserved as big a commission as was promised in the Contract, and that he would contact Macsherry later with another offer. ECF 47-6 at 18. Macsherry sent an email to Roberts the same day, referencing the telephone call and including as an attachment the Contract negotiated in December 2012. ECF 47-12. On the same date, Roberts forwarded the email to his brother, Thomas Roberts, and wrote: “Need to discuss[.]” Id. According to plaintiff, Roberts never contacted Macsherry to discuss a settlement. ECF 47-1 at 9. Roberts testified at his deposition that he told Thomas Roberts, at a meeting soon after: “I'm sure [the dispute] is going to end up in litigation . . . .” ECF 47-7 at 10-11. Moreover, Thomas Roberts knew of the Contract. Id. at 11.

         This suit followed. In response, defendants filed a motion to dismiss, pursuant to Fed.R.Civ.P. 12(b)(6). ECF 9. By Order of May 21, 2015 (ECF 19), I denied the motion as to Sparrows Point and CDC, but granted the motion with respect to the claims against Roberts, with leave to amend.

         I issued a Scheduling Order on July 2, 2015 (ECF 21), which set July 31, 2015, as the deadline for the amendment of pleadings and October 29, 2015, as the deadline for discovery. Id. Plaintiff filed his First Amended Complaint (ECF 26) on July 7, 2015, renewing his claims against Roberts. Id. CDC and Sparrows Point timely answered (ECF 28), but Roberts again moved to dismiss, pursuant to Rule 12(b)(6). ECF 29. By Memorandum Opinion and Order of October 23, 2015 (ECF 38; ECF 39), I dismissed the claims against Roberts, with the exception of the alleged violation of the MWPCL. See ECF 39. Roberts submitted an Answer to that claim on November 6, 2015. ECF 42.

         On October 9, 2015, while the Motion to Dismiss was pending, the parties filed a “Joint Motion to Modify the Scheduling Order” (ECF 35), which I granted by Order of the same day. ECF 36 (the “Amended Scheduling Order”). The Amended Scheduling Order extended the discovery deadline to January 29, 2016, and set a new deadline for dispositive motions of February 29, 2016. ECF 36.

         The parties filed a “Joint Status Report” on January 29, 2016. ECF 43. The Joint Status Report notified the Court, for the first time, id.: “Plaintiff intends to file a motion for leave to amend his complaint to add claims for fraud and/or fraudulent conveyance against Defendants Michael Roberts and Sparrows Point, LLC as well as to add three (3) new defendants for the same causes of action . . . .” Defendants noted their intent to oppose that motion. Id. A briefing schedule was discussed during a conference call on February 29, 2015. See Docket. The briefing schedule followed. See ECF 45; ECF 46.

         Plaintiff submitted his Motion to Amend on March 4, 2016 (ECF 47), which includes a memorandum of law (ECF 47-1), and more than two dozen exhibits. ECF 47-2 through ECF 47-12. In particular, plaintiff seeks to file a Second Amended Complaint to add a new defendant, Thomas Roberts, and a new claim - fraudulent conveyance, under Maryland law. See Maryland Code (2013 Repl. Vol., 2016 Supp.), §§ 15-201 et seq., of the Commercial Law Article; ECF 47-1 at 5-14; see also ECF 47-3 ¶¶ 51-62.

         According to plaintiff, in December 2015, “[d]uring the course of the St. Louis depositions, Plaintiff became aware of the existence of an additional claim for fraudulent conveyance.” ECF 47-1 at 2; 3 n. 2. He alleges that “two Unknown Trusts received substantial funds in violation of Maryland's Uniform Fraudulent Conveyance Act . . . . These trusts are identified by Defendant Sparrows Point as the ‘Roberts family trusts.[]'” ECF 47-1 at 2. Further, plaintiff argues, id. at 13-14:

While on actual notice of Plaintiff's claim to an $825, 000.00 commission and Plaintiff's intention to file a lawsuit for the commission, Mike Roberts and his brother, Tom Roberts, caused Sparrows Point to transfer nearly all of the proceeds from the Property's sale from Sparrows Point's bank account to the Roberts family trusts. The transfer was not made in exchange for any consideration, left the LLC with insufficient funds to pay Plaintiff's $825, 000.00 commission and, as Plaintiff alleges in his amended pleading, was done for the purpose of placing the funds out of Plaintiff's reach in any subsequent lawsuit.

         Defendants oppose the Motion to Amend as untimely. ECF 48 at 1-2. They argue there is no good cause as to why plaintiff took three months from the time that he learned of the new claim for fraudulent conveyance on December 2, 2015 to file the Motion to Amend. Id. They also argue that they would be prejudiced by the addition of a new claim and a new defendant. Id. at 10. In this regard, they point to additional discovery burdens in a case where discovery has closed, prejudicial delay of the proceedings, and the lack of prejudice to plaintiff, who can pursue a fraudulent conveyance claim if he prevails in this case. Id. at 13-15. Further, defendants argue futility, based on lack of personal jurisdiction. Id. at 15-21.

         In addition, defendants claim plaintiff has waived his right to a jury trial. Therefore, they maintain that he is “not entitled to resuscitate that right through amending the complaint.” ECF 48 at 21.

         In their Motion for Surreply (ECF 50), defendants argue that, in his Reply, plaintiff introduced new arguments as to (1) a previous discovery request, (2) the potential for additional discovery that would result from granting the Motion to Amend, and (3) the request for a jury trial. ECF 50-1 at 1-5. Plaintiff disagrees. ECF 51.

         II. The Motion for Surreply

         Local Rule 105.2(a) provides that a party is not permitted to file a surreply without permission of the court. The filing of a surreply “is within the Court's discretion, see Local Rule 105.2(a), but they are generally disfavored.” EEOC v. Freeman, 961 F.Supp.2d 783, 801 (D. Md. 2013), aff'd in part, 778 F.3d 463 (4th Cir. 2015); see also, e.g., Chubb & Son v. C & C Complete Servs., LLC, 919 F.Supp.2d 666, 679 (D. Md. 2013). A surreply may be permitted “when the moving party would be unable to contest matters presented to the court for the first time in the opposing party's reply.” Clear Channel Outdoor, Inc. v. Mayor & City Council of Baltimore, 22 F.Supp.3d 519, 529 (D. Md. 2014) (quotations and citations omitted). However, a surreply is not permitted where the nonmoving party, in its reply, merely responds to an issue raised by the moving party in its opposition. See Khoury v. Meserve, 268 F.Supp.2d 600, 605- 06 (D. Md. 2003). This is because, in that posture, the moving party had the opportunity to fully support its arguments in the opposition and the surreply would not be the first time that the party could respond. Id. at 606.

         Defendants argue that plaintiff made three new arguments in his Reply. See ECF 50-1. First, defendants submit, id. at 1: “Plaintiff attaches to his Reply an irrelevant discovery request seeking all of [Sparrow's Point's] financial information. [Sparrows Point] previously objected to this request due to its breathtakingly overbroad nature and complete lack of connection to the sole issue in this case . . . .” According to defendants, “the Reply brief is the first time Plaintiff has ever suggested that the objection was improper.” Id. at 2. Second, defendants contend that, for the first time, plaintiff argued in the Reply that “should his Motion be granted, there will be no meaningful additional delay because this Court can severely curtail the right of new (and existing) ...


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