Free Motion to Amend/Correct - District Court of Delaware - Delaware

Case 1:06-cv-00055-GMS

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

TESLA INDUSTRIES, INC., Plaintiff, v.

LYNDOL W. HOLLINGSWORTH, CHARLES MINNICK a/k/a CHUCK MINNICK, and NEW MILLENNIUM TOOLS, INC., Defendants.

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C.A. No. 06-055-GMS

PLAINTIFF'S MOTION FOR LEAVE TO FILE AMENDED ANSWER TO THE ANSWER AND COUNTERCLAIMS OF DEFENDANTS LYNDOL W. HOLLINGSWORTH, CHARLES MINNICK A/K/A CHUCK MINNICK AND NEW MILLENNIUM TOOLS, INC. AND DEMAND FOR JURY TRIAL Comes Now Plaintiff Tesla Industries, Inc. ("Tesla Industries") pursuant to Rule 15(a) F. R. Civ. P. with this its Motion for Leave File Amended Answer to the Answer and Counterclaims of Defendants Lyndol W. Hollingsworth, Charles Minnick a/k/a Chuck Minnick and New Millennium Tools, Inc. and Demand for Jury Trial ("Motion to Amend Answer"). INTRODUCTION Plaintiff Tesla Industries, Inc., moves under Rule 15(a) F. R. Civ. P. to amend its Answer to the Counterclaims of Defendants Lyndol W. Hollingsworth, Charles Minnick, and New Millennium Tools, Inc. (D.I. 32) ("Original Answer"). The Amendments are sought to correct an obvious error in ¶ 36-40 of Plaintiff's Original Answer filed April 17, 2006. Due to a transcription error (See Affidavit of Brian A. Sullivan ("Sullivan Aff."), ¶ 8 attached as Exhibit "A"). Plaintiff inadvertently admitted, rather than denied, antitrust allegations in the

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corresponding paragraphs of Defendants' Answer and Counterclaims of Defendants Lyndol W. Hollingsworth, Charles Minnick a/k/a Chuck Minnick and New Millennium Tools, Inc. and Demand for Jury Trial (hereinafter "Defendants' Counterclaims" attached hereto as Exhibit "B") filed March 27, 2006 (D.I. 26) Two copies of Plaintiff's Amended Answer correcting these inadvertent transcription errors in ¶ 36-40 of its Original Answer are attached hereto as Exhibit "C" (the "Amended Answer"). Another copy of the Amended Answer containing the changes to Plaintiff's original Answer in brackets and underling as required by Local Rule 15.1 is attached hereto as Exhibit "D". DISCUSSION On January 27, 2006 Tesla Industries, Inc. filed a Complaint in this Court against Defendants David C. Waldmann, Lyndol W. Hollingsworth, Charles Minnick, and New Millennium Tools, Inc. alleging, inter alia misappropriation of Plaintiff's trade secrets , breach of contract, conversion and allied counts (D.I.1). After entry of a Stipulation extending Defendants time to answer (D.I. 24) the Defendants filed separate Answers and Counterclaims to this Complaint on March 27, 2006 (D.I. 26, 27). Defendant Waldmann filed a one hundred thirteen (113) paragraph counterclaim (D.I. 26) and the other Defendants filed a sixty-three (63) paragraph counterclaim (D.I. 27). Plaintiff's Answers to the Counterclaims in these voluminous (200 paragraph) pleadings were filed on April 17 2006. (D. I. 32, 33) In the process of preparing these Answers, Plaintiffs responses to four (4) out of the two hundred ­plus paragraphs in the Defendants' Counterclaims were incorrectly, and inadvertently lodged as admissions instead of denials. The

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error in these paragraphs (36-40) of Plaintiffs Answer is readily apparent1. More specifically paragraphs 36-40 of Defendants Counterclaims here at issue ( Exhibit "D") accuse Plaintiff of "anticompetitive practices", attempting intentionally to monopolize the relevant product and geographical markets (¶ 36); attempts "to monopolize the market by improper and unlawful actions"(¶ 37); "violation of the Sherman Act" (¶ 38) and conclusory statements that Defendants were damaged by Plaintiff's acts (¶ 39-40). Clearly anyone except Defendants would see Plaintiff's admissions to such serious and patently false allegations as an obvious error. Indeed, Plaintiff's Answers to Paragraphs 36-40 of Defendants' Counterclaims were a simple typographical error as explained in the attached Affidavit of Plaintiff's trial counsel, Brian A. Sullivan. Mr. Sullivan's Affidavit explains that an initial draft of Plaintiff's Answer to paragraphs 36-40 contained denials as one would expect (Sullivan Aff., ¶ 6). He was out of the office on the response deadline (Easter Monday) for filing this Answer and somehow the draft denials were inadvertently word-processed as admissions (Sullivan Aff., ¶ 7-10) Plaintiff should be entitled to amend its responses to these allegations for the following reasons:

ARGUMENT

Under Federal Rule of Civil Procedure 15(a), leave to amend a complaint should be liberally granted. Foman v. Davis, 371 U.S. 178, 182 (1962); Adams v. Gould Inc., 739 F.2d 858, 867-68 (3d Cir. 1984); Coventry v. U.S. Steel Corp., 856 F.2d 514, 519 (3d Cir. 1988) (citing Heyl & Patterson Int'l, Inc. v. F.D. Rich, Inc., 663 F.2d 419, 425 (3d Cir. 1981) for the proposition, "[courts have shown a strong liberality...in allowing amendments under Rule 15(a)"); Boleau v. Bethlehem Steel Corp., 730 F.2d 929, 938 (3d Cir.

They were not recognized however, until Defendants filed their Motion for Partial Judgment on the Pleadings on December 1, 2006 (D.I. 106) seeking to turn these inadvertent admissions into a judgment on the pleadings.

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1984) (same). Denial of leave to amend a complaint is only appropriate if there is undue delay, if it is motivated by bad faith, if it is prejudicial to the opposing party, or if the amendment would be futile. See, e.g., Adams, 739 F.2d at 867-868; U.S. v. Donald Lane Constr., 19 F. Supp. 2d 217, 221 (D. Del. 1998). Additionally, even if an action has reached a final disposition, the Court could still grant a motion for leave to file amended answer "in order to prevent inadvertent error or excusable neglect from controlling the outcome to permit a defendant to amend its answer to conform to the evidence as it believes it to be." Gotham Partners v. Hallwodd Realty, No. 15578-NC, 1999 Del. Ch. LEXIS 204, at *1 (Del. Ch. October 18, 1999). Clearly, Tesla Industries' responses to paragraphs 36 through 40 were the result of mistake and inadvertent error. See Sullivan Aff., ¶ 9. As explained below, Defendants will not be prejudiced, delay is not undue, the proposed amendment is not futile, and Tesla Industries, Inc. is not motivated by bad faith in seeking to amend its answers. A defendant is prejudiced if it is "unfairly disadvantaged or deprived of the opportunity to present facts or evidence which it would have offered had the... amendments been timely." Cuffy v. Getty Ref. & Mktg. Co., 648 F. Supp. 802, 806 (D. Del. 1986) (quoting Heyl & Patterson Intern., 663 F.2d at 426). The Court has ruled that "[u]ndue prejudice is more than mere inconvenience: it is found only where the party must overhaul its entire litigation strategy." In re Fleming Cos., Inc. (CHEP USA v. Fleming Co., Inc., Adv. Pro. No. 04-52368), 319 B.R. 359, 362 (Bankr. D. Del. 2005); see also Post Confirmation Trust of Fleming Co., Inc. v. Target Corp., Adv. Pro. No. 04-52747 (Bankr. D. Del. Apr. 19, 2005). Here, Defendants have not been deprived of the opportunity to present

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facts or evidence relevant to their defenses to the proposed Amended Answer. The Defendants have ample opportunity to pursue this claim against Tesla Industries, yet there has been no development of these allegations by New Millennium Tools, Inc. Under these circumstances, Defendants cannot claim to have suffered any prejudice, much less the type of "undue prejudice" necessary to warrant denial of this Motion to Amend. Nor has Tesla Industries, Inc. unduly delayed its Motion to Amend. The Third Circuit has liberally granted leave to amend even after discovery has closed and scheduling deadlines have expired. See, e.g., Cuffy, 648 F. Supp. At 805-807 (granting leave to amend even though scheduling deadline to file motion to amend pleadings had passed); Coventry, 856 F.2d at 519 (reversible error for district court to deny leave to amend complaint even though discovery had closed eight months earlier); In re Worldwide Direct, Inc., 2003 WL 22000600 (Bankr. D. Del. 2003) (granting leave to amend preference complaint even though discovery deadline had passed). Tesla Industries has filed this Motion promptly after learning of the mistake and within the time to respond to New Millennium Tool's motion. Defendants cannot be prejudiced by Plaintiff's original admissions as to paragraphs 36 through 40 as few rational persons reading these admissions would see them as other than what they are--clearly a mistake. Defendants no doubt realized this, but instead chose unnecessary motion practice to gloat over the mistake. Neither is Tesla Industries' Motion to Amend Answer "futile" or motivated by "bad faith". The Motion is not futile because it will correct a

transcription error, which was a mistake. Sullivan Aff., ¶ 9. Additionally, the amendment is not motivated by bad faith because the admissions to paragraphs 36 through 40 were simply the result of a typographical error. Allowing the correcting of them is not being sought in bad faith

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and allowing the amendment would serve the interests of justice, and allow the case to proceed on the merits. Under Rule 15(c)(2) of the Federal Rules of Civil Procedure, an amendment of a pleading relates back to the date of the original pleading when a "claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth to the original pleading" Fed. R. Civ. P. 15(c). In this case, there is no doubt that the Amended Answer arose out of the same conduct, transaction, or occurrence set forth in the original pleading. The change is not one that occurred after the filing of the Complaint but rather one that was always present and was inconsistent and mistakenly stated through a typographical transcription error. CONCLUSION For all the foregoing reasons, Tesla Industries, Inc. respectfully requests that this Court grant Tesla Industries, Inc.'s Motion to Amend Answer.

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Dated: December 15, 2006 Wilmington, Delaware

WERB & SULLIVAN

/s/ Brian A. Sullivan__________ Brian A. Sullivan (DE No. 2098) Robert D. Wilcox (DE No. 4321) Amy D. Brown (DE No. 4077) 300 Delaware Avenue, 13th Floor P. O. Box 25046 Wilmington, DE 19899 Telephone: (302) 652-1100 Facsimile: (302) 652-1111 and Paul E. Crawford (I.D. # 493) CONNOLLY BOVE LODGE & HUTZ LLP 1107 N. Orange Street P.O. Box 2207 Wilmington, DE 19899-2207 302.658.9141 [email protected] ATTORNEYS FOR PLAINTIFF TESLA INDUSTRIES, INC.

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CERTIFICATE OF SERVICE

I hereby certify that on December 15, 2006, I caused one copy of the foregoing document to be served upon the persons listed below in the manner indicated:

VIA E-MAIL & FIRST CLASS MAIL John A. Adams, Esq. Susanin Widman & Brennan, P.C. 455 S. Gulph Road, Suite 240 King of Prussia, PA 19406 Louis S. Mastriani, Esq. Rodney R. Sweetland, III, Esq. David F. Nickel, Esq. Adduci,Mastriani & Schaumberg, LLP 1200 Seventeenth Street, N.W. Fifth Floor Washington, DC 20036-3006

VIA HAND DELIVERY John D. Demmy, Esq. Stevens & Lee, P.C. 1105 North Market Street, 7th Floor Wilmington, DE 19801 Steven J. Balick, Esq. John G. Day, Esq. Lauren E. Maguire, Esq. Ashby & Geddes 500 Delaware Avenue, 8th Floor Wilmington, DE 19801

/s/ Brian A. Sullivan Brian A. Sullivan (#2098)