United States District Court, N.D. Indiana, Hammond Division
OPINION AND ORDER
E. MARTIN MAGISTRATE JUDGE UNITED STATES DISTRICT COURT
matter is before the Court on a Motion for Leave to File
Amended Answer to Plaintiff s Complaint, Affirmative Defenses
and Jury Demand [DE 53], filed by Defendant Crane 1 Services,
Inc., on February 27, 2018; a FRCP Rule 14 Motion for Leave
to File Third-Party Complaint Against Cincinnati Crane &
Hoist, LLC [DE 78], filed by Defendant on June 1, 2018; and a
Motion to Extend Discovery Deadlines [DE90], filed by
Plaintiff Munster Steel Co., Inc., on July 13, 2018.
Defendant seeks to amend its Answer to reflect that the party
that answered was not the party with which Plaintiff
contracted. Plaintiff filed a response obj ecting to the
Motion to Amend on March 20, 2018, and on April 6, 2018,
Defendant replied. In the other motions, Defendant seeks to
file a complaint against a third party, which Plaintiff does
not oppose, and Plaintiff seeks to extend discovery
deadlines, which Defendant does not oppose.
October 1, 2013, Plaintiff Munster Steel signed a contract
with an entity called "Crane 1 Services" that
required Crane 1 Services to design, supply, and install
cranes and related equipment to Plaintiffs new facility.
According to Plaintiff, work began by September 2014, but by
October 2014, Plaintiff had identified "serious
deficiencies" with the cranes and the manner in which
they were installed. Plaintiff filed its Complaint on July
26, 2016, alleging breach of contract.
September 16, 2016, Defendant Crane 1 Services answered,
identified itself as a Delaware corporation, and admitted
that it had contracted with Plaintiff.
Defendant now admits, that identification was wrong. Crane 1
Delaware was only incorporated in 2015, two years after the
contract with Plaintiff was signed. In September 2017,
Defendant disclosed that Plaintiff had in fact contracted
with "Crane 1 Ohio," and that Crane 1 Delaware
purchased the majority of Crane 1 Ohio's assets in
October 2015. Crane 1 Ohio also transferred assets and stock
to two other entities, changed its name to "RNM
Holdings," and eventually dissolved in June 2016.
Defendant now seeks to amend its complaint to correct the
misidentification, and to file a third-party complaint
against Cincinnati Crane & Hoist LLC, which Defendant
alleges supplied several of the cranes at issue in this case.
Standard of Review
Rule of Civil Procedure 15 provides that "a party may
amend its pleading only with ... the court's leave."
Fed.R.Civ.P. 15(a)(2). The Rule further provides that the
Court "should freely give leave when justice so
requires." Id. The decision to grant or deny a
motion to amend lies within the Court's sound discretion,
but leave to amend is "inappropriate where there is
undue delay, bad faith, dilatory motive on the part of the
movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party by
virtue of allowance of the amendment, or futility of the
amendment." Villa v. City of Chicago, 924 F.2d
629, 632 (7th Cir. 1991); Campbell v. IngersollMilling
Mack Co., 893 F.2d 925, 927 (7th Cir. 1990). Federal
Rule of Civil Procedure 14 provides that a defendant
"may, as third-party plaintiff, serve a summons and
complaint on a nonparty who is or may be liable to it for all
or part of the claim against it."
seeks to amend its Answer to indicate that only the Ohio
entity was involved in the design and installation of the
cranes. Plaintiff opposes the motion, citing bad faith,
prejudice, and undue delay. Plaintiff also argues that the
"mend the hold" doctrine forecloses Defendant from
amending its answer. In its response brief, Plaintiff
requests that the Court impose sanctions pursuant to Federal
Rule of Civil Procedure 11 against Defendant, alleging
failure to make a reasonable inquiry into the facts before
taking a position in litigation.
initial matter, the Court addresses Defendant's argument
that it can amend without seeking leave of court. Defendant
points to this Court's scheduling order of February 2,
2017, which states in pertinent part: "Any amendments to
the pleadings to be filed by 3/31/2017 or 30 days after the
Court's ruling on the pending motion to dismiss,
whichever is later." To the extent Defendant interprets
that statement to contradict the plain language of Rule
15(a)(2), it is mistaken. For the Court to permit an
amendment to the pleadings, the request had to be filed
within 30 days of the ruling on the motion to dismiss,
and satisfy Rule 15 and all other applicable rules
of procedure, just as any other pleading would.
claims the misidentification of the contracting entity was an
oversight. Defendant states that because Crane 1 Delaware and
Crane 1 Ohio had the same brand name, facilities, equipment,
and business records, the business itself "did not
undergo a significant or even apparent change." As a
result, the distinction between the two entities "did
not resonate" with former counsel, who withdrew in
January 2018, or with the employees who approved the
pleadings and discovery responses.
argues that Defendant offers its proposed amendment in bad
faith. Plaintiff points to the prior pleadings and verified
discovery responses that did not properly acknowledge Crane 1
Ohio's role. Plaintiff accuses Defendant of deliberately
misidentifying the contracting party to obscure the
transactions among the Crane 1 entities. In essence,
Plaintiff accuses Defendant of fraudulently litigating as
Crane 1 Delaware to detract attention from the inability of
Crane 1 Ohio to satisfy a potential judgment.
does offer a reason for its errors: its prior counsel and its
employees did not understand the distinction between the
Crane 1 entities because the asset sale did not make an
apparent difference in the operations of the business.
Without evidence that the relevant individuals did in fact
understand the distinction, the Court is not prepared to
conclude that Defendant is acting in bad faith. If Plaintiff