Free Motion to Amend Pleadings - Rule 15 - District Court of Federal Claims - federal

Case 1:03-cv-00623-LSM

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS U.S. FINANCIAL CORP., Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

No. 03-623C (Senior Judge Margolis)

DEFENDANT'S MOTION FOR LEAVE TO FILE AN AMENDED ANSWER TO COMPLAINT Pursuant to Rule 15 (a) of the Rules of the Court of Federal Claims ("RCFC"), defendant respectfully requests leave to file an amended answer to the complaint. Attempts to contact counsel for plaintiff regarding hi position with respect to the granting of this motion have been unsuccessful. Counsel for third-party defendant WINN has indicated that WINN does not oppose the granting of this motion. A copy of the proposed amended answer has been attached to this motion. RCFC 15(a) allows for amendment of a pleading "by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." RCFC 15(a). Consistent with the plain language of RCFC 15(a), this Court and its predecessor, the Court of Claims, have recognized that leave to amend a defendant's answer should be freely granted. Cities Service Helex, Inc. v. United States, 211 Ct. Cl. 222, 234 n.14, 543 F.2d 1306, 1313 n. 14 (1976)(waiver defense considered on the merits where Government did not plead it in its answer, but both parties exhaustively treated the issue in motions); St. Paul Fire and Marine Insurance Co. v. United States, 31 Fed. Cl. 151, 153-54 (1994); Johnson v. United

Case 1:03-cv-00623-LSM

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States, 15 Cl. Ct. 169, 172 (1988); Effingham County Board of Education v. United States, 9 Cl. Ct. 177, 180 (1985). A party should be allowed to litigate all substantive issues, absent a showing of undue delay, bad faith, or a dilatory motive. Hess v. United States, 210 Ct. Cl. 483, 491-92, 537 F.2d 457 (1976) (citing Foman v. Davis, 371 U.S. 178, 181-82 (1962)); St. Paul Fire & Marine Insurance Co. v. United States, 31 Fed. Cl. at 153-54 (1994). None of those situations is present here. Quoting the Supreme Court's interpretation of Rule 15(a) of the Civil Rules of Procedure in Foman v. Davis, 371 U.S. 178, 182 (1962), this Court in Effingham County Board of Education, stated: Rule 15(a) declares that leave to amend "shall be freely given when justice so requires"; this mandate is to be heeded. . . . If the underlying facts or circumstances to be relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In the absence of any apparent or declared reason - such as undue delay, bad faith or 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, futility of amendment, etc. - the leave sought should, as the rules require, be "freely given." Of course, the grant or denial of an opportunity to amend is within the discretion of the District Court, but outright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely abuse of that discretion and inconsistent with the spirit of the Federal Rules. Effingham County, 9 Cl. Ct. at 180. This Court considered the Supreme Court's list of reasons for denying a Rule 15(a) motion, set forth in Foman, to be instructive ­ but not exclusive. Accordingly, a denial properly could be based upon a reason other than one articulated in Foman, but the reason
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Case 1:03-cv-00623-LSM

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would have to be compelling, or it would not meet the strict Foman standard. See also Siemens Aktiengesellschaft v. United States, 26 Cl. Ct. 312, 313 (1992) (courts "have recognized the appropriateness of amending an answer to raise additional defenses"). Undersigned counsel, upon reviewing WINN's Third Party Motion to Dismiss, filed on August 20, 2004, and further investigating the underlying facts,determined that the response given in answering paragraph 2 of plaintiff's complaint that alleged that "[O]n or about March 8, 1999, the Air Force issued a Modification to the Contract that incorporated an assignment of funds between WINN, as assignor, and USFC, as assignee, and assigned all funds for future payments under the Contract to USFC," was incorrect. Based on the evidence in the record at the time the answer was filed, the Government believed the "assignment" in question was valid. Based on the evidence available at this time, including the evidence proffered by WINN that the purported assignment was nothing more that an escrow agreement, the Government lacks sufficient information upon which to admit or deny the allegation. There was no undue delay in filing this motion and plaintiff will not be prejudiced by the amendment of our answer at this time since that factual issue must be decided by this Court given the procedural posture of this case.

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Accordingly, defendant respectfully requests leave to file the amended answer. Respectfully submitted, PETER D. KEISLER Assistant Attorney General DAVID M. COHEN Director s/ Mark A. Melnick MARK A. MELNICK Assistant Director s/ Leslie Cayer Ohta LESLIE CAYER OHTA Attorney Commercial Litigation Branch Civil Division Department of Justice 1100 L Street, N.W. Attn: Classification Unit 8th Floor Washington, DC 20530 Tel. (202) 307-0252 Fax. (202) 307-0972 October 14, 2004 Attorneys for Defendant

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CERTIFICATE OF FILING I hereby certify that on October 14, 2004, a copy of the foregoing "DEFENDANT'S MOTION FOR LEAVE TO FILE AN AMENDED ANSWER" was filed electronically. I understand that notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system.

s/ Leslie Cayer Ohta ______________________________