United States District Court, D. Maryland
Stephanie A. Gallagher United States District Judge.
Bioiberica Nebraska, Inc. (“Bioiberica Nebraska”)
filed a one-count Amended Complaint against Defendant
Nutramax Manufacturing, Inc. (“Nutramax”),
seeking to recover fees for late payments Nutramax made to
Bioiberica Nebraska under an alleged contract. ECF 8. On June
11, 2019, Bioiberica Nebraska filed a Motion for Leave to
Amend, ECF 21, along with a Memorandum of Law in support
thereof, ECF 21-3 (collectively, “the Motion”).
Nutramax filed an Opposition on June 25, 2019
(“Opposition”). ECF 22. Bioiberica Nebraska
replied on July 8, 2019 (“Reply”). ECF 23. I find
that no hearing is necessary. See Loc. R. 105.8 (D.
Md. 2018). For the reasons that follow, Bioiberica
Nebraska's Motion is granted.
Nebraska is a subsidiary of, but separate and distinct from,
Bioiberica S.A.U., a Spanish corporation located in
Barcelona, Spain. ECF 21-1, ¶¶ 2-3. On August 14,
2017, Nutramax executed a Purchase Order with Bioiberica
S.A.U. to purchase 18, 000 kilograms of chondroitin sulfate
according to the Purchase Order's specifications.
Id. ¶ 5. Bioiberica S.A.U. was to ship the
chondroitin sulfate in three shipments of 6, 000 kilograms
each, at a price of $97.00 per kilogram, on January 4, 2018,
February 5, 2018, and March 1, 2018. Id. Bioiberica
S.A.U. shipped the first installment on time, and Nutramax
timely paid the invoiced amount, $95.95 per kilogram.
Id. ¶ 6.
S.A.U. could not timely perform its obligation to ship the
second installment of chondroitin by February 5, 2018.
Id. ¶ 7. Plaintiff Bioiberica Nebraska alleges
that Bioiberica S.A.U. assigned and delegated its contractual
rights and obligations to Bioiberica Nebraska. Id.
¶¶ 8-9. Bioiberica Nebraska shipped the balance of
the chondroitin due under the Purchase Order (save 175
kilograms), but Nutramax failed to make timely payments under
the two invoices that Bioiberica Nebraska issued (“the
invoices”). Id. ¶¶ 10-16;
see ECF 8-4, 8-5. Bioiberica Nebraska claims that,
in all, Nutramax incurred $1, 001, 525.00 in contractual
liability to Bioiberica Nebraska. ECF 21-1, ¶ 16.
Further, under the terms of the invoices, Nutramax allegedly
owes $108, 690.34 in late fees because of its failure to
timely pay. Id. ¶ 20.
initially filed its Complaint against Nutramax on October 10,
2018. ECF 1. On October 16, 2018, however, Nutramax allegedly
remitted payment to Bioiberica Nebraska in the amount of $1,
001, 525.00, its principal obligation under the invoices. ECF
21-1, ¶ 18. Nutramax did not, however, pay the claimed
late fees. Id. ¶ 20. Accordingly, on October
29, 2018, Bioiberica Nebraska filed an Amended Complaint,
within the twenty-one-day grace period that Federal Rule of
Civil Procedure 15(a)(1)(A) affords, to remove the claim for
the principal amount, leaving only Bioiberica Nebraska's
claim for $108, 690.34 in late fees. ECF 8.
November 19, 2018, Nutramax filed a Motion to Dismiss
Plaintiff's Amended Complaint for Lack of Standing or
Alternatively for Failure to Name a Necessary Party. ECF 15.
On May 23, 2019, Judge Russell issued a Letter Order granting
Nutramax's motion. ECF 20. Judge Russell found that
because Bioiberica Nebraska's Amended Complaint failed to
allege that Bioiberica S.A.U. assigned the Purchase Order to
Bioiberica Nebraska, Bioiberica Nebraska did not have
standing to sue Nutramax under the Purchase Order.
Id. at 4. Judge Russell further held that, because
Bioiberica Nebraska “d[id] not clearly identify and
assert rights under another contract with Nutramax, it fails
to state a claim against Nutramax.” Id. Judge
Russell, however, declined to rule on whether Bioiberica
S.A.U. could assign the contract, and whether Bioiberica
S.A.U. was a necessary party. Id. at 4 n.10.
Bioiberica Nebraska now seeks leave to file its Second
Amended Complaint to include allegations that Bioiberica
S.A.U. assigned and delegated the Purchase Order to
Bioiberica Nebraska. ECF 21, ¶ 4; see ECF 21-1,
¶¶ 8-16, 18-22.
Bioiberica Nebraska's claims invoke the Court's
diversity jurisdiction, see ECF 21-1, ¶ 1, the
Court applies federal procedural rules, see, e.g.,
Chartis Prop. Cas. Co. v. Huguely, 243 F.Supp.3d
615, 622 (D. Md. 2017). Federal Rule of Civil Procedure 15
provides that a party seeking to amend its pleading after
twenty-one days following service may do so “only with
the opposing party's written consent or the court's
leave.” Fed.R.Civ.P. 15(a)(2). However, the Rule
requires courts to “freely give leave when justice so
requires.” Id. The Fourth Circuit's policy
is “to liberally allow amendment.” Galustian
v. Peter, 591 F.3d 724, 729 (4th Cir. 2010).
Accordingly, leave to amend should be denied only if
“prejudice, bad faith, or futility” is present.
See Johnson v. Oroweat Foods Co., 785 F.2d 503,
509-10 (4th Cir. 1986) (interpreting Foman v. Davis,
371 U.S. 178 (1962)); Hart v. Hanover Cnty. Sch.
Bd., 495 Fed.Appx. 314, 315 (4th Cir. 2012). This Court
retains authority to grant Plaintiff leave to amend its
complaint, even after previously dismissing the complaint
pursuant to a Rule 12(b)(6) motion to dismiss. E.g.,
Adbul-Mumit v. Alexandria Hyundai, LLC, 896 F.3d
278, 293 (4th Cir.), cert. denied sub nom 139 S.Ct.
607 (2018). Ultimately, the decision to grant leave to amend
rests in this Court's discretion. Foman, 371
U.S. at 182; Laber v. Harvey, 438 F.3d 404, 428 (4th
Cir. 2006) (en banc).
Nutramax asserts that all three grounds for denying a motion
for leave to amend are present in this case. First, Nutramax
argues that Bioiberica Nebraska's amendments are futile
because Bioiberica Nebraska's amended claims
“cannot withstand Rule 12(b)(6) scrutiny.” ECF 22
at 8; see Id. at 8-10. Second, Nutramax asserts that
it will be prejudiced if the Court grants Bioiberica Nebraska
leave to amend. Id. at 10-11. Finally, Nutramax
claims that Bioiberica Nebraska brings its proposed
amendments in bad faith. Id. at 12-13. Each is
addressed in turn.
first argues the Court is to apply the same standard applied
in the Rule 12(b)(6) context, in determining whether
Bioiberica Nebraska's proposed amendments are futile. ECF
22 at 7-8. The Court disagrees with this characterization of
the governing legal standard. As the Fourth Circuit has
stated, a proposed amendment is futile when it “is
clearly insufficient or frivolous on its face.”
Johnson, 785 F.2d at 510; see also 6
Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane,
Federal Practice and Procedure: Civil § 1487 (3d. ed.
2010) (“[A] proposed amendment that clearly is
frivolous, advancing a claim or defense that is legally
insufficient on its face, or that fails to include
allegations to cure defects in the original pleading, should
be denied.” (footnotes omitted)).
review for futility “does not involve an evaluation of
the underlying merits of the case.” Kolb v. ACRA
Control, Ltd., 21 F.Supp.3d 515, 522 (D. Md. 2014)
(quoting MTB Serv., Inc. v. Tuckman-Barbee Constr.
Co., No. RDB-12-2109, 2013 WL 1819944, at *3 (D. Md.
Arp. 30, 2013). “To the contrary, ‘[u]nless a
proposed amendment may clearly be seen to be futile
because of substantive or procedural considerations, . . .
conjecture about the merits of the litigation should not
enter into the decision whether to allow
amendment.'” Next Generation Grp., LLC v.
Sylvan Learning Ctrs., LLC, No. CCB-11-0986, 2012 WL
37397, at *3 (D. Md. Jan. 5, 2012) (emphasis added) (quoting
Davis v. Piper Aircraft Corp., 615 F.2d 606, 613