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Bioiberica Nebraska, Inc. v. Nutramax Manufacturing, Inc.

United States District Court, D. Maryland

October 10, 2019



          Stephanie A. Gallagher United States District Judge.

         Plaintiff 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.


         Bioiberica 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.

         Bioiberica 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.

         Bioiberica 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.

         On 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.


         Though 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).

         III. ANALYSIS

         Defendant 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.

         A. Futility

         Nutramax 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)).

         This 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 ...

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