Opinion
Case No. 1:01-CV-147.
June 13, 2003.
OPINION
This matter is before the Court on Plaintiffs' Objection to Magistrate Judge Hugh W. Brenneman's Report and Recommendation ("Report").
I. Background
Plaintiffs' filed a Motion in limine for Application of Michigan Law and Request to Amend Their Second Amended Complaint. Magistrate Judge Brenneman recommended denial of both requests.
The Court will not restate the facts of this matter as they are described at length in the Court's February 20, 2003 Partial Judgment.
II. Standard of Review and Applicable Federal Rules
Under 28 U.S.C. § 636(b), a magistrate judge's report that is case-dispositive shall be reviewed de novo by the district court, and the court may accept, reject, or modify the findings and recommendations of the magistrate judge. 28 U.S.C. § 636(b); L. Civ. R. 72.3(b). The court may rely on the record before the magistrate judge in conducting its review. L. Civ. R. 72.3(b). "If the Court were to adopt the Magistrate Judge's report and recommendation, the Court would not need to state with specificity what it reviewed; it is sufficient for the Court to say that it has engaged in a de novo review of the record and adopts the Magistrate Judge's report and recommendation." Lardie, 221 F. Supp.2d at 807; see also Hayden v. Rhode Island, 13 Fed.Appx. 301, 301-02 (6th Cir. 2001) (citing Tuggle v. Seabold, 806 F.2d 87, 92-93 (6th Cir. 1986)) (same).
The Sixth Circuit Court of Appeals has yet to determine whether a motion to amend is a dispositive or non-dispositive motion. In spite of the weight of precedent in other circuits deeming such motions to be non-dispositive, this Court will treat the instant motion as dispositive for purposes of review for a few reasons. Since Magistrate Judge Brenneman understood the motion to be dispositive, and treated it as such by issuing a Report as opposed to an order on the Motion, the Court will not surprise the parties by not adhering to the current procedural treatment of the Motion. Also, the Court's research revealed only two relevant cases in the Sixth Circuit on this issue, both of which tend toward treatment of a motion to amend as a dispositive motion. In Woods v. Dahlberg, 894 F.2d 187, 187-88 (6th Cir. 1990), the court treated a magistrate judge's denial of in forma pauperis status as the functional equivalent of involuntary dismissal and therefore subject to de novo review. In Knowles v. Worsham, 81 F.R.D. 1, *2-3 (E.D. Tenn. 1978), the court reviewed a magistrate judge's recommendation to permit amendment of a third party complaint so as to add a third party defendant under a de novo standard. In light of the above, this Court finds it appropriate to conduct a de novo review of Plaintiffs' motion to amend.
Pursuant to Federal Rule of Civil Procedure 15(b), leave to amend should be freely granted "where justice so requires." However, prejudice and undue delay are factors which weigh against granting leave to amend. Duggins v. Steak 'N Shake, Inc., 195 F.3d 828, 834 (6th Cir. 1999) (citing Foman v. Davis, 371 U.S. 178 (1962)). Additionally, leave to amend should not be granted when the proposed amendments would be futile. Hahn v. Star Bank, 190 F.3d 708, 715-18 (6th Cir. 1999).
III. Analysis
Plaintiffs' only objection is to Magistrate Judge Brenneman's recommendation that the Motion to Amend be denied in full as futile. Specifically, Plaintiffs argue Count V of their proposed Third Amended Complaint alleging a claim for damages under a concert of action theory is not restricted to Michigan law and so can be heard even though the Court will apply Indiana law to the instant action.
Plaintiffs' proposed Count V states as follows:
81. That Katrina Stewart converted the proceeds of numerous check ( sic) as set forth above.
82. That NCB knew that Katrina Stewart's conduct in converting said checks was in breach of her duties to the Plaintiff, and that said conduct was in violation of common law, Michigan Statutes, and its own policies, procedures, and regulations, all of which constitute suspicious check cashing procedures.
83. The NCB acted in concert with Katrina Stewart to accomplish the conversion as aforesaid, and substantially assisted Katrina Stewart in the conversion of millions of dollars.
84. As a direct and consequential result of NCB's concert of action with Katrina Stewart, Plaintiffs have sustained damage, including, but not limited to, loss of money, loss of business, lost business value, excessive and unnecessary bank charges, costs, fees, and interest.
For a number of reasons, the Court finds Magistrate Judge Brenneman was correct to recommend denial of Plaintiffs' Motion to Amend. The Court will expand Magistrate Judge Brenneman's analysis and add additional reasons for reaching the same conclusion.
Magistrate Judge Brenneman recommended denial of Plaintiffs' Motion to Amend on the ground that Plaintiffs' proposed claims were futile in light of the fact that they were brought pursuant to Michigan law. Having determined that Indiana law applies to the instant action, Magistrate Judge Brenneman deemed Plaintiffs' claims futile. Plaintiffs respond that Count V is not restricted to Michigan law and can be brought under Indiana law which includes a concert of action theory of recovery as defined by the Restatement (Second) of Torts § 876. The Court finds Plaintiffs' Objection implausible in light of the language used in Plaintiffs' Motion to Amend.
Plaintiffs' Motion specifically seeks permission to amend its Second Amended Complaint "to conform the theories of liability set forth in the last amended complaint to Michigan law." Plaintiffs' Request to Amend Second Amended Complaint, Dkt. No. 209, at 5. Plaintiffs contend no further discovery will be necessary and the only purpose for the amendment is to "bring the amended complaint under Michigan law." Id. at 6. Despite Plaintiffs subsequent attempt to present Count V as a universal claim brought pursuant to Indiana law, the language of Plaintiffs' Motion and the language of proposed Count V indicate otherwise. Plaintiffs' intent was to amend the Second Amended Complaint so as to conform to Michigan law. Since Michigan law does not apply to the instant action, such an attempt is properly deemed futile and the motion to amend is appropriately denied. Hahn, 190 F.3d at 715-18.
A At the hearing on this Motion before Magistrate Judge Brenneman, Plaintiffs acknowledged additional discovery would be required.
The Court finds it necessary to provide additional reasoning for its decision to deny Plaintiffs' Objection, because it is bothered by Plaintiffs' apparent disregard for this Court's February 20, 2003 Opinion and Partial Judgment. In that Opinion, the Court stated Plaintiffs' attempt to argue a concert of action theory of liability in their Response to Defendant's Motion for Summary Judgment was redundant of Plaintiffs' original claim XII. Opinion and Partial Judgment, Case No. 1:01-CV-147, February 20, 2003, at 6. Furthermore, the Court indicated allowing Plaintiffs to offer such a theory for recovery at that time would be unfair to Defendant since discovery was complete and dispositive motions had been filed. Id. Plaintiffs have presented no reason for the Court to reconsider that earlier decision. As Defendant indicated, Plaintiffs already have amended their Complaint twice and a significant portion of this matter has been dismissed. Plaintiffs cannot be allowed to continually postpone final resolution of this action by periodically attempting to insert new claims in order to keep issues alive. The Court finds such an attempt to be in bad faith when taken after previous amendments, so close to trial, and with respect to futile claims.
The Court agrees with Defendant's contention that Count V appears to be an attempt to circumvent this Court's February 20 Opinion which addressed Plaintiffs' original claims regarding Defendant's knowledge of Katrina Stewart's activities related to allegedly unauthorized check cashing. As stated above, Plaintiffs' proposed Count V essentially restates a claim remaining in this action and to the extent it raises any other arguments, the Court already has ruled on the merits of such arguments based on the record before it. Having no reason to amend that ruling, the Court sees no reason to grant Plaintiffs' Motion to Amend.
While Rule 15 supports general approval of motions to amend, such approval should not be granted when it is the result of undue delay in filing, bad faith by the moving party, repeated failure to cure deficiencies by previous amendments, will result in undue prejudice to the opposing party, and is futile. Wade v. Knoxville Utils. Bd., 259 F.3d 452, 458 (6th Cir. 2001). Plaintiffs offer no valid reason for seeking to amend their Second Amended Complaint at this stage of the proceedings, after the Court previously has ruled on the merits of similar claims, after Plaintiffs have had multiple opportunities to amend their original Complaint, and when such an amendment would impose additional discovery burdens on Defendant long after discovery in this matter has ended. More importantly, the Court has deemed the amendment to be futile. Under these circumstances, Rule 15 does not sanction approval of Plaintiffs' Motion to Amend.
IV. Conclusion
Therefore, the Court will deny Plaintiffs' Objections. The Court will adopt Magistrate Judge Brenneman's Report.
ORDER
In accordance with the Opinion issued this date,
IT IS HEREBY ORDERED that Plaintiffs' Objection (Dkt. No. 224) is DENIED. IT IS FURTHER ORDERED that Defendant's Objection (Dkt. No. 225) is DENIED. IT IS FURTHER ORDERED that Magistrate Judge Hugh W. Brenneman's Report and Recommendation (Dkt. No. 222) is ADOPTED. IT IS FURTHER ORDERED that Plaintiffs' Motion in limine for Application of Michigan Law and Request to Amend their Second Amended Complaint (Dkt. No. 209) is DENIED for the reasons given in the related Opinion.