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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

WALLACE SALES & CONSULTING, LLC, 

Plaintiff/Counter Defendant, 

v. 

TUOPU NORTH AMERICA, LIMITED, 

Defendant/Counter Claimant. 

 /

Case No. 15-cv-10748 

UNITED STATES DISTRICT COURT JUDGE

GERSHWIN A. DRAIN

UNITED STATES MAGISTRATE JUDGE

DAVID R. GRAND

OPINION AND ORDER DENYING DEFENDANT’S MOTION TO AMEND ITS COUNTERCOMPLAINT AND IMPLEAD JAMES WALLACE AS THIRD PARTY DEFENDANT [79] 

I. INTRODUCTION

Wallace Sales & Consulting, LLC (“Plaintiff”) filed a complaint against 

Tuopu North America, Limited (“Defendant”) on March 2, 2015 alleging a breach 

of contract between the parties. Dkt. No. 1. Defendant filed a Counterclaim on 

August 7, 2015, Dkt. No. 21, and Plaintiff submitted its first amended complaint 

on August 28, 2015, Dkt. No. 28. On April 12, 2016, the Court granted partial 

summary judgment and dismissed Plaintiff’s claim under the Michigan Sales 

Representatives Commission Act. Dkt. No. 50. 

 Presently before the Court is Defendant’s Motion to Amend Its CounterComplaint and Implead James Wallace as Third Party Defendant [79], filed on 

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August 26, 2016. Plaintiff filed a timely response on September 12, 2016,1

 Dkt. 

No. 85, to which Defendant replied on September 19, 2016, Dkt. No. 87. 

For the reasons discussed herein, the Court will DENY Defendant’s Motion 

to Amend Its Counterclaim [79]. 

II. BACKGROUND

Plaintiff is a Michigan limited liability company, whose sole member is 

James Wallace (“Wallace”). Defendant is a Canadian corporation and a subsidiary 

of Ningbo Tuopu Group Co., Ltd., a Chinese manufacturing conglomerate. 

Defendant first retained Plaintiff as its sales representative pursuant to a written 

agreement in 2007. 

In December 2011, the Plaintiff and Defendant decided to continue working 

together and executed a new written Manufacturer’s Representative Agreement 

(hereinafter “the Agreement”), under which Plaintiff served as an independent 

 

1

 Defendant states in a footnote on page 4 of its reply brief that “[i]ronically, 

Plaintiff criticizes Tuopu for delay in bringing this motion, despite filing its 

response three days after the 14 day deadline for responsive pleadings under LR 

7.1(e)(2).” Dkt. No. 87, p. 4 (Pg. ID No. 1993). This footnote is indeed ironic, 

though not in the way that Defendant intended. Not only does Plaintiff appear to be 

in compliance with Rule 6(d) of the Federal Rules of Civil Procedure, but 

Defendant’s use of a miniscule type size for this footnote is in violation of Local 

Rule 5.1(a)(3). See FED. R. CIV. P. 6(d) (“When a party may or must act within a 

specified time after service and service is made under Rule 5(b)(2)(C), (D), (E), or 

(F), 3 days are added after the period would otherwise expire under Rule 6(a).”); 

E.D. Mich. LR 5.1(a)(3) (“Except for standard preprinted forms that are in general 

use, type size of all text and footnotes must be no smaller than 10-1/2 characters 

per inch (non-proportional) or 14 point (proportional).”). 

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manufacturer’s representative. The Agreement’s provisions governing the sales 

commissions that Defendant would be required to pay to Plaintiff in the event of 

termination varied based upon whether Plaintiff’s termination was “without cause” 

or “for cause.” Additionally, the Agreement specified that any disputes related to 

the Agreement may be brought in Ontario, Canada and shall be governed solely by 

Ontario, Canada law. 

On July 11, 2014, Defendant sent Plaintiff notice of termination, without 

cause and for financial reasons, effective immediately. Dkt. No. 85-3, p. 2 (Pg. ID 

No. 1891). Plaintiff subsequently filed the present suit in March 2015. See Dkt. 

No. 1. A month after Plaintiff brought this lawsuit, Defendant converted its 

justification for terminating Plaintiff to being for cause and demanded repayment 

of commission in the amount of $225,031.06. Dkt. No. 85-4, p. 2 (Pg. ID No. 

1893). 

III. LEGAL STANDARD

A. Amending Pleadings 

Federal Rule of Civil Procedure 15(a) provides that leave to amend a 

pleading should be freely given “when justice so requires.” Nevertheless, there are 

certain situations in which it is appropriate to deny leave to amend, such as where 

there is undue delay in filing, a lack of notice and undue prejudice to the 

nonmoving party, bad faith by the moving party, or when the amendment would be 

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futile. See Foman v. Davis, 371 U.S. 178, 182 (1962). There must be at least some 

significant showing of prejudice to the non-moving party for a court to deny a 

motion to amend. Duggins v. Steak ‘N Shake, Inc., 195 F.3d 828, 834 (6th Cir. 

1999). However, “[w]hen amendment is sought at a late stage in the litigation, 

there is an increased burden to show justification for failing to move earlier.” Wade 

v. Knoxville Utilities Bd., 259 F.3d 452, 459 (6th Cir. 2001). In the Sixth Circuit, 

allowing amendment after the close of discovery may create significant prejudice 

to the opposing party. Duggins, 195 F.3d at 834. 

B. Counterclaims Arising After Earlier Pleadings 

Federal Rule of Civil Procedure 13(e) provides that “[t]he court may permit 

a party to file a supplemental pleading asserting a counterclaim that matured or 

was acquired by the party after serving an earlier pleading.” “The standard 

applicable to amendments under Rule 15 is used to determine whether leave to file 

a counterclaim under Rule 13(e) should be permitted.” Hi-Lex Controls Inc. v. Blue 

Cross & Blue Shield of Michigan, No. 11-12557, 2013 WL 228097, at *1 (E.D. 

Mich. Jan. 22, 2013) (citing Kuschner v. Nationwide Credit, Inc., 256 F.R.D. 684, 

689 (E.D. Cal. 2009)). 

 

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C. Impleading a Third-Party 

 Federal Rule of Civil Procedure 14(a)(1) governs when a defending party 

may bring in a third party. It provides that: 

A defending party 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. But the third-party plaintiff must, by motion, 

obtain the court’s leave if it files the third-party complaint more than 

14 days after serving its original answer. 

FED. R. CIV. P. 14(a)(1). Additionally, Rule 13 states “Rules 19 and 20 govern the 

addition of a person as a party to a counterclaim or crossclaim.” FED. R. CIV. P. 

13(h) (providing the rules governing required joinder (Rule 19) and permissive 

joinder (Rule 20) of parties). 

IV. DISCUSSION

Defendant’s motion seeks to amend its counterclaim to bring the following 

causes of action: (1) a claim for unjust enrichment against Plaintiff; (2) a claim for 

breach of contract against Plaintiff; (3) a claim for fraud against Plaintiff and 

Wallace; (4) a claim for the tort of deceit against Plaintiff and Wallace; (5) a claim 

to pierce the corporate shield against Wallace; (6) a claim to rescind the contract, 

presumably against Plaintiff; and (7) a declaratory judgment against Plaintiff and 

Wallace. See Dkt. No. 79-2, pp. 5–12 (Pg. ID No. 1599–1606). 

Plaintiff argues in its response that leave to amend the counterclaim should 

be denied because of undue delay in requesting to amend and resulting substantial 

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prejudice. Dkt. No. 85, pp. 13–18 (Pg. ID No. 1857). Further, Plaintiff argues that 

any claims based on allegations of fraud are barred by Michigan and Ontario’s 

statutes of limitations. Id. at 18–25. Finally, Plaintiff contends that it would be 

futile to allow Defendant to amend its counterclaim, as none of the seven counts 

sets forth a claim upon which relief can be granted. Id. at 25–30. 

A. Undue Delay 

Defendant argues that it “only recently” learned of Wallace’s fraud, blaming 

Plaintiff for failing to provide relevant discovery documents earlier. Dkt. No. 79, 

p. 13 (Pg. ID No. 1585). Such an argument stretches the definition of “recent,” 

when viewed in light of the evidence presented to the Court. 

The evidence shows that in October 2005, Wallace sent a résumé bearing 

false information about his educational attainment to employees at Topew 

International. Dkt. No. 79-3, pp. 2–4 (Pg. ID No. 1609–11). The email was not sent 

to Defendant, Tuopu North America Limited, because Defendant was not 

incorporated until January 1, 2006, and accordingly did not exist in October 2005. 

Dkt. No. 85-7, pp. 2–3 (Pg. ID No. 1899–1900). Topew International has since 

voluntarily dissolved. Dkt. No. 85-8, p. 2 (Pg. ID No. 1902). It appears that Topew 

International and Tuopu North America are different companies. Dkt. No. 85-13, 

p. 3 (Pg. ID No. 1943). 

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Defendant and Plaintiff first contracted in February 2007, almost a year and 

a half after the 2005 email was exchanged. Dkt. No. 85-15. The contract appointed 

Plaintiff as the sales agent for Defendant, responsible for promoting and selling 

Defendant’s products. Id. at 2–3 (Pg. ID No. 1980–81). When that contract 

expired, the parties decided to enter into a subsequent contract, effective January 1, 

2012, from which the contract claims in this case arise. Dkt. No. 85-2. 

On December 23, 2015, Wallace testified at his deposition that he did not 

complete his mechanical engineering degree after attending night school for six 

years at Lawrence Technological University. Dkt. No. 85-5, p. 2 (Pg. ID No. 

1895). At his deposition on July 14, 2016, Sigismondo (“Dino”) Zonni testified 

that Wallace led him to believe that he was an engineer when he was hired, but 

never provided him anything in writing to Zonni that said he was an engineer. Dkt. 

No. 79-4, pp. 2–3 (Pg. ID No. 1613–14). Defendant has since recovered a copy of 

the 2005 email and the résumé sent to Topew International.2

 Dkt. No. 79-3. 

 

2

 Defendant also presents a screenshot of Wallace’s LinkedIn profile, stating 

that he has a Bachelor of Science degree in Mechanical Engineering from 

Lawrence Technological University with a date stamp of September 17, 2015. Dkt. 

No. 79-5, p. 2 (Pg. ID No. 1615). This evidence, dated a year before the proposed 

motion to amend, does not support Defendant’s theory that it needed eight months 

after Wallace’s deposition admission to gather evidence supporting new claims. 

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Defendant has three listed directors—Bin Wang, Jianshu Wu, and Dino 

Zonni3

—all of whom were included on or immediately forwarded the October 

2005 email to Topew International containing Wallace’s résumé. Dkt. No. 85-7, p. 

2 (Pg. ID No. 1899); Dkt. No. 79-3, pp. 2–4 (Pg. ID No. 1609–11). It is unclear 

why Defendant needed Plaintiff to produce a document that its three directors have 

possessed for nearly eleven years. Furthermore, it is far from clear that Plaintiff 

would have been required to produce this email pursuant to a request for emails 

between Wallace and Tuopu, see Dkt. No. 79, p 14 (Pg. ID No. 1586), when the 

email was sent to Topew International, not Tuopu North America. 

There is evidence that Defendant waited eight months between finding out 

that Wallace did not earn an engineering degree on December 23, 2015, and 

bringing this motion on August 26, 2016. At the time of Wallace’s December 2015 

deposition, the discovery cutoff was March 31, 2016. Dkt. No. 32. Discovery has 

been extended four times and the latest extension provided that discovery ended on 

September 30, 2016, the same date as the dispositive motion cutoff. Dkt. No. 73. 

Defendant filed the present motion slightly more than a month before the discovery 

period was to expire, meaning that a full briefing schedule and hearing could not 

be completed before the discovery and dispositive motion cutoff. 

 

3

 It appears that Dino Zonni began working as a director at Topew International 

on November 28, 2005, prior to the corporation’s dissolution, but did not work 

there at the time Wallace sent the October 2005 email. Dkt. No. 85-8, p. 3 (Pg. ID 

No. 1903). 

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Defendant states it did not begin its investigation into the 2005 email 

correspondence until mid-July 2016, more than six months after it had notice that 

Wallace did not have an engineering degree. Dkt. No. 79, p. 14 (Pg. ID No. 1586). 

Given that Wallace sent and all three of Defendant’s directors received the email in 

question eleven years ago, and the six month gap between Wallace’s admission 

and Defendant’s investigation into the issue, the Court finds that Defendant has 

failed to show justification for failing to seek amendment before this late stage in 

the litigation. 

B. Substantial Prejudice to Opposing Party 

In assessing prejudice to the opponent of a motion to amend pleadings, the 

Court looks to the stage in the proceedings when amendment was sought; whether 

amendment could significantly delay the dispute’s resolution; and whether 

amendment would require the opponent to expend significant additional resources 

to conduct further discovery and trial preparation. See Miller v. Admin. Office of 

Courts, 448 F.3d 887, 898 (6th Cir. 2006) (“Because the discovery deadline had 

already passed and the deadline for filing dispositive motions on the issue of 

immunity was imminent, the defendants would have been prejudiced if a further 

amendment had been permitted by the district court.”); Phelps v. McClellan, 30 

F.3d 658, 662–63 (6th Cir. 1994) (“In determining what constitutes prejudice, the 

court considers whether the assertion of the new claim or defense would: require 

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the opponent to expend significant additional resources to conduct discovery and 

prepare for trial; significantly delay the resolution of the dispute; or prevent the 

plaintiff from bringing a timely action in another jurisdiction.”). 

1. Stage of Proceedings 

As mentioned above, due to the timing of this motion’s filing, discovery and 

the dispositive motion deadline have both passed before the Court was able to 

make a determination on whether Defendant may amend its counterclaims. Even 

though the Court extended the parties’ discovery period an additional six months 

from its original deadline, Defendant chose to file this motion a mere 35 days 

before discovery and dispositive motion cutoff—despite having eight months of 

notice. The case was filed more than 18 months ago and is set to go to trial in two 

and a half months. See Dkt. No. 73, p. 2 (“IT IS FURTHER ORDERED that the 

discovery deadline is hereby extended through September 30, 2016, with the 

parties recognizing that this adjournment will not extend the December 13, 2016 

trial date.”). Motions in Limine and the Final Pretrial Order are due in less than 

fifty days. See Dkt. No. 61. 

The Court holds that allowing Defendant to amend at this late stage in the 

proceedings to add six new counterclaims and a new counter-defendant, after the 

discovery and dispositive motion deadlines have passed, would significantly 

prejudice Plaintiff and Wallace. See Duggins, 195 F.3d at 834 (“At least one Sixth 

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Circuit decision has held that allowing amendment after the close of discovery 

creates significant prejudice, and other Circuits agree.”). 

2. Need for Additional Discovery

Despite knowing that Wallace had lied about having an engineering degree 

since December 2015, Defendant remained silent about its fraud claims during the 

eight months of discovery and depositions that followed. There does not appear to 

be any notice, prior to late July 2016, that Defendant intended to bring new 

counterclaims against Plaintiff and Wallace for fraud. Accordingly, the discovery 

between the parties related to the claims each party asserted: Plaintiff’s breach of 

contract claim for commissions following his termination and Defendant’s unjust 

enrichment counterclaim for commissions provided after Plaintiff’s termination. 

Thus, it stands to reason that additional and potentially duplicative discovery will 

be needed if Defendant adds six new counterclaims all premised on fraud, some 

against a new party to the case. 

Defendant cites to Janikowski v. Bendix Corp., 823 F.2d 945, 952 (6th Cir. 

1987) for the principle that even if a timely brought amended claim requires 

additional or duplicative discovery, that is not sufficient to establish prejudice. 

Janikowski differs in several aspects from the present dispute. 

First, in Janikowski, discovery had not yet been completed because the 

parties had agreed to hold discovery in abeyance until the court disposed of the 

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defendant’s motion for summary judgment. 823 F.2d at 951. Here, there was no 

such agreement between the parties and the discovery and dispositive motion 

deadlines passed a month after Defendant filed the motion to amend. The original 

deadline, in place when Defendant first learned about the alleged fraud in 

December 2015, was March 31, 2016. After a seemingly endless series of 

discovery motions from both parties, this deadline was prolonged an additional six 

months over four separate extensions, with the latest extensions specifying there 

would be no delay to the December 2016 trial date. 

Second, the plaintiff in Janikowski sought only to add a single claim for 

breach of contract less than a year after filing his original complaint. 823 F.2d at 

951. Here, Defendant seeks to add six new counterclaims and one new counterdefendant eighteen months after the complaint was filed. Further, Defendant 

allowed eight months of discovery to proceed between learning of potential new 

claims and seeking to amend. The discovery period in the present case would have 

expired in March 2016, had it not been extended four times to deal with the 

parties’ discovery disputes. 

Third, the defendant in Janikowski argued that its only claim of prejudice 

was the cost of conducting an additional round of discovery into the single breach 

of contract claim, and the plaintiff acknowledged he could be held responsible for 

the cost of duplicative discovery. Id. at 951–52. Here, because the original 

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counterclaim did not put any parties on notice of six potential fraud claims, entirely 

new discovery would need to be conducted, including several more depositions of 

individuals living overseas. See Wade v. Knoxville Utilities Bd., 259 F.3d 452, 459 

(6th Cir. 2001) (affirming denial of a motion to amend where significant discovery 

had already been completed and the dispositive motion deadline passed while the 

motion was pending). Defendant has not shown any acknowledgement of a 

responsibility to pay for this additional discovery. 

In sum, the conclusion that significant additional and duplicative discovery 

would have to be conducted is one of the multiple factors supporting a denial of the 

motion to amend the counterclaim. 

3. Further Delay of the Proceedings 

Defendant alleges that amending its counterclaims would not significantly 

delay discovery. Dkt. No. 87, p. 5 (Pg. ID No. 1994). The Court disagrees. There is 

an extensive record of discovery disputes between the parties and numerous 

extensions sought based on Plaintiff’s claim for breach of contract and Defendant’s 

counterclaim of unjust enrichment. See Dkt. No. 45 (extending scheduling order 

dates an additional sixty days); Dkt. No. 48 (seeking to compel discovery from 

Defendant); Dkt. No. 51 (seeking to compel answers to interrogatories from 

Plaintiff); Dkt. No. 55 (seeking to quash a subpoena issued by Defendant); Dkt. 

No. 57 (extending discovery deadline an additional two months and specifying that 

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no further adjournments will be granted); Dkt. No. 61 (extending discovery one 

more month); Dkt. No. 62 (seeking to quash a subpoena issued by Plaintiff); Dkt. 

No. 63 (seeking to quash a subpoena issued by Plaintiff); Dkt. No. 67 (seeking a 

forensic examination of Plaintiff’s computers and email accounts); Dkt. No. 69 

(seeking an emergency stay of depositions and to quash a subpoena issued by 

Defendant); Dkt. No. 71 (seeking a protective order quashing subpoena issued by 

Defendant); Dkt. No. 73 (addressing discovery motions and extending the 

discovery deadline without extending the trial date); Dkt. No. 81 (seeking to 

compel answers to an interrogatory from Defendant); Dkt. No. 83 (seeking to hold 

Plaintiff in contempt of court). Based on this record, there is every indication that 

numerous more discovery disputes will ensue should Defendant be allowed to add 

numerous other counterclaims at the eleventh hour. 

Accordingly, Plaintiff has shown that it would suffer substantial prejudice if 

Defendant is allowed to amend at this late stage in the proceedings, because 

substantial new and duplicative discovery would be required, which would result 

in significant further delay. 

C. Futility of Amendment 

The final factor to be considered upon a motion to amend pleadings is 

whether the proposed amendments would be futile. Wade, 259 F.3d at 458. 

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Plaintiff contends that Defendant’s proposed amendment is futile because it is 

barred by the statute of limitations. Dkt. No. 85, p. 18 (Pg. ID No. 1862). 

“A federal court whose jurisdiction is based upon diversity of citizenship 

must apply the choice of law rules of the forum state.” Johnson v. Ventra Grp., 

Inc., 191 F.3d 732, 745 (6th Cir. 1999) (citing Klaxon Co. v. Stentor Elec. Mfg. 

Co., 313 U.S. 487, 490 (1941)). In the present case, the forum state is Michigan. 

“Under Michigan’s common law choice of law rule, statutes of limitation are 

considered procedural and are governed by the law of the forum.” Id. See also Cole 

v. Mileti, 133 F.3d 433, 437 (6th Cir. 1998) (“Absent an express statement that the 

parties intended another state’s limitations statute to apply, the procedural law of 

the forum governs time restrictions on an action for breach, while the law chosen 

by the parties governs the terms of their contract.”). Accordingly, Michigan’s 

statute of limitations will apply to the claims presented. See Johnson, 191 F.3d at 

745–46 (applying Ontario law to the substance of the case and Michigan’s statute 

of limitations). 

The Court will now proceed to evaluate Defendant’s six proposed new 

counterclaims, in light of their applicable statutes of limitations and pleading 

requirements. 

 

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1. Breach of Contract Claim Against Plaintiff 

Defendant seeks to bring a breach of contract claim against Plaintiff, arguing 

that “Plaintiff breached its duty of good faith and fair dealing, as the Agreement 

was premised on fraud.” Dkt. No. 79-2, pp. 6–7 (Pg. ID No. 1600–01). Defendant 

alleges that “an underlying assumption” of the Agreement was that Wallace had an 

engineering degree, and the lack of that degree caused Plaintiff to fail to perform 

duties and conditions of the Agreement, as they related to engineering duties. See 

id. at 7. 

Defendant’s breach of contract claim fails for several reasons. First, the 

statute of limitations in Michigan for breach of contract claims is six years. MICH.

COMP. LAWS § 600.5807(8). A breach of contract claim accrues “at the time the 

wrong upon which the claim is based was done regardless of the time when the 

damage results.” MICH. COMP. LAWS § 600.5827. Plaintiff allegedly breached its 

duty of good faith and fair dealing by providing a résumé with false educational 

information to Topew International in October 2005. Defendant allegedly relied on 

this information when it contracted with Plaintiff in 2007. When that contract 

expired, the parties chose to continue their relationship in a subsequent contract in 

the 2012 (“the Agreement”). At the time of the 2012 contract renewal, the parties 

had the benefit of experience working with each other for several years, and did 

not need to rely solely on a résumé submitted to another company seven years 

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earlier. Accordingly, “the wrong upon which the claim is based” could be 

Wallace’s 2005 email of his résumé to Topew, upon which Defendant based its 

assumption that Wallace had an engineering degree. The wrong could also be 

considered to be the initial agreement between the parties in 2007, which could 

have been made in reliance on the résumé submitted to Topew in 2005. Since more 

than six years have passed since the email and since the date of the original 

contract, this claim is accordingly time-barred. 

Additionally, contracts themselves do not support Defendant’s new assertion 

that Wallace was hired as an “engineering project manager.” Dkt. No. 79-2, p. 7 

(Pg. ID No. 1601). The contracts in question both state that Plaintiff’s role was as a 

“manufacturer’s representative” or “sales agent.” See Dkt. No. 85-2; Dkt. No. 85-

15. Neither contract mentions the words “engineer” or “engineering” a single time, 

or specifies that Plaintiff’s role was conditional on having an engineering degree. 

See id. Furthermore, neither contract provides that Plaintiff was responsible for any 

duties similar to engineering of products. See id. The contracts instead narrowly 

define Plaintiff’s duties as using his “best efforts to solicit and promote sale of 

[Defendant’s] products,” “maintain[ing] appropriate sales contact with the 

Customers,” “advis[ing] [Defendant] as to relevant developments and activities,” 

“attend[ing] meetings,” and “provid[ing] a summary breakdown of each proposed 

quote” to Defendant. Dkt. No. 85-2, p. 3 (Pg. ID No. 1880). 

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Furthermore, the Agreement included a clause stating: “This Agreement 

constitutes the entire agreement of the parties hereto with respect to the subject 

matter hereof and all prior and contemporaneous agreements between the parties, 

whether written or oral, are merged herein and shall be of no force or effect.” Dkt. 

No. 85-2, p. 8 (Pg. ID No. 1885). Even if the parties had “entered into an 

agreement in 2007 under which Wallace was to provide engineering, program 

management and sales services,” Dkt. No. 79, p. 9 (Pg. ID No. 1581), such an 

agreement would have been rendered void if not included in the 2012 Agreement. 

Accordingly, the Court finds that it is proper to deny Defendant’s request to 

add a new breach of contract counterclaim because such a claim would be futile. 

2. Fraud Claim Against Plaintiff and Wallace 

Defendant’s next proposed counterclaim alleges that Plaintiff and Wallace 

are liable for fraud because Wallace emailed the résumé claiming he had an 

engineering degree to Topew International in 2005, and in 2007 Defendant 

retained Plaintiff “to provide engineering and project management services.”4

 Dkt. 

No. 79-2, pp. 8–9 (Pg. ID No. 1602–03). 

 

4

 Defendant provided no support for its new argument Plaintiff’s position in 

sales was actually a position to provide engineering and project management 

services. The lone piece of evidence offered in support is an unsigned, unsworn, 

and undated “affidavit” from Dino Zonni. Dkt. No. 79-6, p. 2–5 (Pg. ID No. 1618–

21). A district court may properly reject unsigned, unsworn affidavits. Sfakianos v. 

Shelby Cnty. Gov’t, 481 Fed. App’x. 244, 245 (6th Cir. 2012). Zonni’s previous 

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Fraud claims in Michigan are subject to a six-year statute of limitations. 

MICH. COMP. LAWS § 600.5813. Like a breach of contract claim, “the claim 

accrues at the time the wrong upon which the claim is based was done regardless 

of the time when damage results.” MICH. COMP. LAWS § 600.5827. Thus, 

Defendant’s claim for fraud accrued when wrong was done, not when it was 

discovered. See Boyle v. Gen. Motors Corp., 468 Mich. 226, 661 N.W.2d 557 

(2003). Additionally, Michigan courts have assumed that fraud will be quickly 

discovered when an employee lies on a résumé about a core qualification for the 

position. See Smith v. Charter Twp. of Union, 227 Mich. App. 358, 365, 575 

N.W.2d 290, 293–94 (1998). 

Again, this proposed claim is brought eleven years after Wallace emailed his 

fictitious résumé to Topew International, and nine years after the parties first 

contracted in alleged reliance on that résumé. Defendant’s proposed fraud claim is 

time-barred and therefore amendment to add the claim should be denied for 

futility. 

 

 

signed affidavit, submitted with Defendant’s Motion for Partial Summary 

Judgment, characterizes Plaintiff’s position as a “manufacturer’s representative,” 

responsible for serving as a liaison between Tuopu and its customers. Dkt. No. 38-

3, p. 2 (Pg. ID No. 631). The affidavit never includes any mention or inference that 

Wallace was considered one of the engineering employees or performed any 

engineering duties. The affidavit similarly lacks any explicit or implicit reference 

to any project management duties for which Wallace was responsible. 

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3. Tort of Deceit Claim Against Plaintiff and Wallace 

Defendant’s proposed “tort of deceit” counterclaim essentially repeats the 

same allegations as its proposed fraud counterclaim. See Dkt. No. 79-2, p. 9 (Pg. 

ID No. 1603). Under Ontario law, a tort of deceit claim appears to be the same as a 

tort of civil fraud claim. See Bruno Appliance and Furniture, Inc. v. Hryniak, 

[2014] 1 S.C.R. 126. Accordingly, the Court’s above analysis on Defendant’s 

proposed fraud counterclaim applies similarly to Defendant’s proposed tort of 

deceit counterclaim. Thus, this proposed amendment is also denied due to futility. 

4. Pierce the Corporate Veil Claim Against Wallace 

Defendant next seeks to amend its counterclaim to set aside the corporate 

shield and hold Wallace personally liable for Plaintiff’s conduct because he is 

Plaintiff’s sole member. Dkt. No. 79-2, pp. 9–10 (Pg. ID No. 1603–04). Plaintiff 

argues that this counterclaim is futile because it fails to identify the elements for a 

corporate piercing claim under either Ontario law or Michigan law, and fails to set 

forth any factual allegations supporting a corporate piercing claim. Dkt. No. 85, 

p. 29 (Pg. ID No. 1873). 

Under Ontario law, piercing the corporate veil “is to disregard the separate 

legal personality of a corporation, a fundamental principle of corporate law” only 

imposed in exceptional cases where it would be “flagrantly” unjust to treat the 

corporation as a separate legal person. See 642947 Ontario Ltd. v. Fleischer, 2001 

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CanLII 8623, ¶ 67 (ON CA). “Typically, the corporate veil is pierced when the 

company is incorporated for an illegal, fraudulent or improper purpose.” Id. at 

¶ 68. See also Transamerica Life Insurance Co. of Canada v. Canada Life 

Assurance Co. (1996), 28 O.R. (3d) 423 at pp. 433–34 (Gen. Div.) (“[T]he courts 

will disregard the separate legal personality of a corporate entity where it is 

completely dominated and controlled and being used as a shield for fraudulent or 

improper conduct.”). The corporate shield is not lightly set aside under Ontario 

law. See 642947 Ontario Ltd, 2001 CanLII 8623, ¶ 69 (affirming a trial court’s 

decision to pierce the corporate veil when the corporation had no assets to honor its 

undertaking and the members knew that the corporation had no assets, making it a 

mere “shell company”). 

In the present case, Defendant’s proposed counterclaim briefly alleges that 

Plaintiff has one member—Wallace—and the “fraudulent and wrongful actions of 

James Wallace and damages therefrom warrant the setting aside of the corporate 

shield” and a finding that Wallace is individually liable. Dkt. No. 79-2, p. 10 (Pg. 

ID No. 1604). Such a claim, viewed in conjunction with the allegations contained 

in the proposed counterclaim as a whole, are insufficient to state a claim under 

Ontario law. Defendant has not alleged that Plaintiff was incorporated for “an 

illegal, fraudulent or improper purpose.” See 642947 Ontario, 2001 CanLII 8623, ¶ 

67. Defendant’s allegations that Wallace, on behalf of Plaintiff, submitted a 

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fraudulent résumé to Topew International in 2005, and that Defendant relied on 

that résumé when it hired Plaintiff in 2007, do not present Plaintiff as a mere sham 

or shell corporation being used as a shield for improper conduct. 

Thus, the Court finds that Defendant’s proposed counterclaim to pierce the 

corporate veil fails to set forth a claim upon relief can be granted, and is denied for 

futility. 

5. Rescission of Contract Claim 

Defendant also proposed to rescind the 2012 Agreement based on fraudulent 

representations that Plaintiff made to Topew International in the 2005 email. Dkt. 

No. 79-2, pp. 10–11 (Pg. ID No. 1604–05). Defendant’s proposed equitable 

remedy of rescission is also governed by the same six-year statute of limitations as 

applies to Defendant’s proposed fraud claim. See MICH. COMP. LAWS § 600.5813; 

Adams v. Adams, 276 Mich. App. 704, 710, 742 N.W.2d 399, 403 (2007). 

Accordingly, as the Court already found Defendant’s proposed fraud claim was 

time-barred, this proposed remedy is also denied for futility. 

6. Declaratory Judgment Against Plaintiff and Wallace 

In its final proposed counterclaim, Defendant seeks a declaratory judgment 

against Plaintiff and Wallace, stating that the 2012 Agreement was void from the 

beginning, that Defendant is entitled to repayment of all payments to Plaintiff 

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during their relationship. Dkt. No. 79-2, pp. 11–12 (Pg. ID No. 1605–06). 

Alternatively, Defendant seeks a declaratory judgment that the 2012 Agreement 

was terminated for cause no later than July 11, 2014. Id. at 12. Both requests are 

premised on the alleged fraud Plaintiff and Wallace committed in emailing a 

résumé with incorrect educational information to Topew International in 2005, 

prior to the beginning of Defendant and Plaintiff’s working relationship in 2007. 

See id. 

All of Defendant’s other proposed counterclaims have been denied for 

failure to state a claim or for being barred by the applicable statute of limitations. 

Similarly, the Court will deny Defendant’s proposed counterclaim for a declaratory 

judgment, as it appears to be premised on this breach of contract and fraud claims 

that the Court has denied. 

V. CONCLUSION

The Court has found that Defendant has not provided a sufficient 

justification for the delay in requesting the amendment; that Plaintiff will be 

substantially prejudiced in having to perform additional and duplicative discovery, 

which will further delay the proceedings; and that the proposed amendments are 

futile. The Court hereby DENIES Defendant’s Motion to Amend Its CounterComplaint and Implead James Wallace as Third Party Defendant [79]. 

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IT IS SO ORDERED. 

Dated: October 3, 2016 

 /s/Gershwin A Drain 

 HON. GERSHWIN A. DRAIN 

 United States District Court Judge 

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