United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
J. BOYLE UNITED STATES DISTRICT JUDGE
the Court is Defendant Jason Cory's Motion for Leave to
Amend Pleadings. Doc. 67. For the reasons stated below,
Defendant's Motion is GRANTED.
2016, Plaintiffs filed suit alleging that Defendants
fraudulently induced Plaintiffs into selling their company to
Atherio Inc. (Atherio) by making material misrepresentations
about Atherio and its board of directors, including former
CEO, Defendant Cory. Doc. 1, Compl., ¶¶ 61-62,
65-66, 69, 77, 80, 83. Cory's original answer included an
affirmative defense of release from Plaintiffs' claims
based on a provision of the Omnibus Compromise Release
Agreement (Agreement) executed by Cory and Atherio when Cory
was removed as CEO. Doc. 9, Orig. Answer, ¶ 112; Doc.
81, Resp., 4. Cory claimed Plaintiffs were bound by the
Agreement even though they did not sign it. Doc. 67, Mot. to
Amend, 2. But soon after, Cory filed an amended answer and
withdrew his release defense because Plaintiffs represented
that they were unaware of the Agreement at the time it was
executed. Id. at 2-3. In January 2017, the Court
issued a scheduling order, setting December 28, 2017 as the
deadline to amend pleadings. Doc. 26, Scheduling Order, at 1.
In February 2018, Cory filed the present motion seeking leave
to file an amended answer re-asserting his release defense
and adding a breach-of-contract counterclaim. Doc. 67, Mot.
to Amend, 5. Cory alleges he discovered information after the
December 28, 2017 deadline indicating Plaintiffs were aware
of the Agreement at the time it was signed and are therefore
bound by it. Id. at 4. Cory's motion is ripe for
court has entered a scheduling order and the deadline for
amending pleadings has passed, the decision to permit
post-deadline amendments is governed by Rule 16(b) of the
Federal Rules of Civil Procedure. S & W Enters.,
L.L.C. v. So. Tr. Bank of Ala., 315 F.3d 533, 536 (5th
Cir. 2003). A scheduling order should not be modified unless
there is a showing of good cause. Fed.R.Civ.P. 16(b)(4).
Circuit courts consider four factors to determine whether a
movant has established good cause: “(1) the explanation
for the failure to timely move for leave to amend; (2) the
importance of the amendment; (3) potential prejudice in
allowing the amendment; and (4) the availability of a
continuance to cure such prejudice.” S & W
Enters., L.L.C., 315 F.3d at 536 (quotations and
alterations omitted). “The ‘good cause'
standard focuses on the diligence of the party seeking a
modification of the scheduling order.” Forge v.
City of Ball, No. 3:03-CV-0256, 2004 WL 1243151, at *2
(N.D. Tex. June 4, 2004). A party's mere inadvertence to
meet a deadline and the absence of prejudice to the opposing
side are insufficient to establish good cause. Id.
Rather, one must show that “despite his diligence, he
could not have reasonably met the scheduling deadline.”
Id. (quoting Am. Tourmaline Fields v. Int'l
Paper Co., No. 3:96-CV-3363, 1998 WL 874825, at *1 (N.D.
Tex. Dec. 7, 1998)).
party establishes good cause under Rule 16, the Court then
considers whether the amendment should be allowed under Rule
15's more liberal standard. S & W Enters.,
L.L.C., 315 F.3d at 536 n.4. Rule 15 provides the Court
discretion to grant leave to amend freely “when justice
so requires.” Fed.R.Civ.P. 15(a)(2). “Unless
there exists a substantial reason for denying leave to amend,
the district court should permit the filing of a proposed
amendment.” Hinds v. Orix Capital Mkts.,
L.L.C., No. Civ. A. 3:02-CV-0239-P, 2003 WL 21350210, at
*3 (N.D. Tex. June 10, 2003). “In determining whether
to grant leave to amend, the court may consider several
factors, including 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, and futility of
Cory filed his motion to amend after the Court entered a
scheduling order and the deadline to file amended pleadings
passed, the Court first considers each Rule 16 factor to
determine whether Cory has established good cause, and then
whether the amendment should be allowed under Rule 15.
Rule 16 Factor One: Explanation for Failure to Timely
explains that he did not timely move to amend his answer
because he discovered that Plaintiffs knew of, and are
therefore bound by, the Agreement only after the deadline to
amend had passed. Doc. 67, Mot. to Amend, 4-5. Specifically,
Cory points to emails from Plaintiff Tammy O'Connor
obtained on January 19, 2018 and information obtained during
Defendant Greg Furst's deposition on February 6, 2018
that indicate Plaintiffs were aware of the Agreement prior to
its execution. Id.; see also Id. at 4 n.3.
Plaintiffs argue that Cory obtained this information after
the deadline only because he was not diligent in pursuing his
claims. Doc. 83, Resp., 11-12.
have found a movant's explanation for failure to timely
move sufficient when the information necessary to assert the
new claims was discovered after the deadline to amend.
Clapper v. Am. Realty Inv'rs Inc., No.
3:14-cv-2970-D, 2017 WL 978098, at *3 (N.D. Tex. Mar. 14,
2017); Leaders Inst. LLC v. Jackson, No.
3:14-cv-3572-B, 2016 WL 4179371, at *3 (N.D. Tex. Aug. 8,
2016). And though Plaintiffs are correct that a movant must
be diligent in pursuing his new claims, Forge, 2004
WL 1243151 at*2, the Court finds Cory was sufficiently
diligent in this case.
began investigating their claims in 2015 by ordering pre-suit
discovery in Texas state court pursuant to Texas Rule of
Civil Procedure 202. Doc. 81, Resp., 5. The O'Connor
emails upon which Cory relies as a basis to amend his
pleadings were produced by Atherio during Rule 202 discovery.
Id. After Plaintiffs filed suit in this Court in
June 2016, Cory requested the Rule 202 discovery documents
from Atherio, but Cory and Plaintiffs agree that Atherio
never produced the documents. Id. at 12; Doc. 67,
Mot. to Amend, 3. Plaintiffs argue that Cory should have been
more persistent in obtaining the Rule 202 discovery and that
neither the discovery stay in this case nor Cory's
financial difficulties after the stay was lifted adequately
explain his counsel's lack of persistence. Doc. 81,
Resp., 2. But Cory alleges that shortly after suit was filed
he also requested the Rule 202 discovery documents from
Plaintiffs. Doc. 83, Reply, 3. Plaintiffs provided a number
of documents but Cory claims that none of the those documents
were the ones produced during Rule 202 discovery.
Id. Having never seen the Rule ...