LEGAL STANDARD

Fed. R. Civ. Proc. 15(a) provides that, once a responsive pleading is served, a
plaintiff must obtain leave of court to amend its complaint. The rule mandates that
leave be given freely “when justice so requires,” but if there is an apparent reason not
to permit the amendment, such as “undue delay, bad faith or dilatory motive on the part
ofthe movant, repeated failure to cure deficiencies by amendments previously allowed,
undue prejudice to the opposing party by virtue of allowance of the amendment, [or]
futility of amendment,” Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230 (1962),

the motion may be denied. See, e.g., Payne v. Churchich, 161 F.3d 1030, 1036-37 (7th

Cir. 1998). The decision whether to grant or deny a motion for leave to amend is
committed to the sound discretion of the district court. Perrian v. O’Grady, 958 F.2d
192 (7th Cir. 1992).
DISCUSSION

FMS has not previously sought to amend its complaint. Nor has there been any
contention that the instant motion was filed in bad faith or with a dilatory motive.
Thus, we restrict our analysis to whether FMS unduly tarried in presenting the
proposed amendment, whether Volvo is unduly prejudiced by the addition of Sons, and

whether the amendment is futile because it will ultimately succumb to a motion to

dismiss.



additional examples of prejudice discussed above and the substantial amount of water
that has passed under the bridge in this case.
3. Futility of Amendment

The combination of the undue delay and prejudice described above provides a
sufficient basis to deny FMS’s motion to amend, but the content of the proposed
amendment lends additional support to our decision. The noted statute of limitations
problem renders the added claim immediately susceptible to a motion to dismiss,
making the change an exercise in futility.

FMS attempts to salvage the viability of Sons’ claim by invoking Fed. R. Civ.
Proc. 15(c), which provides that an untimely amendment can be treated as though it
were filed on the date of a prior timely pleading if certain conditions are satisfied. In
Olech, the court enumerated these conditions in the form of a four-factor test. Olech,
138 F. Supp. 2d at 1044. The first factor examines whether the new plaintiffs claim
arises out of the same conduct, transaction, or occurrence that formed the basis of the
original complaint. Id, The second looks at the identity of interest between the
original and new plaintiffs. Id. The third queries if the defendant has had fair notice
of the proposed claim. Id. The final factor focuses on the prejudicial effect that the

addition of the new plaintiff would have on the defendant. Id. Although FMS


liability upon which Sons wishes to rely is not novel, nor are the new allegations the
result of facts that have only recently come to Sons’ attention. See Murphy v. White
Hen Pantry Co., 691 F.2d 350, 354 (7th Cir. 1982). Rather, the information required
to formulate the new allegations was known to both FMS and Sons well before this suit
was filed. The excessive amount of time that has elapsed and the extensive case
development that took place before presentment of the instant motion, in combination
with the fact that FMS has offered no principled reason why it did not act more
expeditiously in bringing Sons into the case, lead to a single conclusion: FMS’s delay
in seeking this amendment is undue.

While the foregoing counsels strongly against allowance of the amendment, we
cannot cease our analysis with this conclusion. The Seventh Circuit has explicitly held
that undue delay alone is an insufficient reason to deny leave to amend. See Dubicz

yv. Commonwealth Edison Co., 377 F.3d 787, 793 (7th Cir. 2004), In addition, other

courts faced with similar situations have concluded that the plaintiff's reason (or lack
thereof) for delaying its amendment is not an appropriate focus in deciding whether to

allow an amendment. See, e.g., Olech v. Village of Willowbrook, 138 F. Supp. 2d

1036, 1044 (N.D. Il. 2000). Thus, we tur our attention to the remaining factors:

undue prejudice and futility of the amendment.

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1. Undue Delay

Because the timing of the motion is a consideration, we must place it in its
proper temporal perspective. The initial complaint was filed four years and two months
before the motion to amend. The applicable statute of limitations for any action filed
under the Maine franchise law expired in mid 2002.' 10 M.R.S.A. § 1369. The period
for fact discovery ended one month before the instant motion was filed, after a one-
month extension. Expert discovery ended the same day that the motion was filed.

FMS claims that we should consider only the period since the discovery cut-off
date was set, trimming the duration of the delay to six months. We disagree. Although
fact development may not have started in earnest before that point, four courts and
attorneys for both sides expended significant efforts prior to that point, so it is

appropriate to consider the entire lifespan of the case. Furthermore, the theory of

' The latest possible point that Sons’ cause of action could have accrued is
September 10, 2000, the date on which Volvo ceased to fulfill any further parts orders
from FMS or Sons. If we consider this the starting point of the two-year statute of
limitations, our entry of final judgment occurred one year and 16 days thereafter,
leaving more than 11 months unexpired in the statutory period. Assuming that the
statute was tolled during the pendency of the appellate proceedings, the instant motion,
filed less than 9 months after the appellate decision was rendered could conceivably
be considered timely. However, FMS does not raise this argument, choosing instead
to argue only relief from the statute’s operation under the relation back doctrine. As
a result, if this avenue had been open to Sons, an issue upon which we offer no
opinion, it is now waived. See In re Kontrick, 295 F.3d 724, 735 (7th Cir. 2002); Stern
vy. Cintas Corp., 319 F. Supp. 2d 841, 857 (N.D. Ill. 2004).

5.



with no action by Sons. At that point, Volvo was entitled to assume that no claim
would be filed, and to now reexpose it to potential liability is plainly prejudicial.” See
Wood v. Woracheck, 618 F.2d 1225, 1230 (7th Cir. 1980).

Next, FMS argues that Volvo will suffer no prejudice because of the way
discovery was performed. Specifically, it states that Volvo requested and received
documents pertaining to Sons’ business. Moreover, Volvo deposed the owners of
FMS, who are also the owners of Sons, and questions specific to Sons were asked. We
have no doubt that FMS fully complied with its discovery obligations with respect to
the requests it has received. However, it is no stretch of the imagination that the
preparation of discovery requests, review of materials given in response, and Volvo’s
choice of deponents and questions posed to them would have been different if Sons had
been a plaintiff during the earlier discovery period. Given that reality, a reopening of
discovery is likely, if not inevitable, ifthe amendment is allowed. This added expense
and effort would be unduly detrimental to Volvo.

Finally, FMS points out that no trial date has been set yet. While this is true, it

is certainly not dispositive of the issue of prejudice to Volvo, especially in light of the

2 Of course, this factor would not be prejudicial to Volvo if the amendment
could relate back to the originally filed complaint, but as discussed in the next section,
that doctrine does not apply to the present circumstances.

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Minute Order Form (06097)

United States District Court, Northern District of Mlinois

Name of Assigned Judge judge if Other
noe Magistrate Judge Charles P. Kocoras “than Assigned Suge
CASE NUMBER 00 C 8143 DATE 10/28/2004
CASE Cromeens, Hollomon, Sibert, Inc. et al vs. AB Volvo et al
TITLE

[In the following box (a) indicate the party filing the motion, e.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

of the motion being presented.]

(uy)

MOTION:

DOCKET ENTRY:

qd) im} Filed motion of [ use listing in “Motion” box above.]

(2) a Brief in support of motion due

(3) a Answer brief to motion due___. Reply to answer brief due

(4) im} Ruling/Hearingon set for_——at

(5) im Status hearing[held/continued to] [set for/re-set for]on___setfor__—_at

(©) a Pretrial conference[held/continued to] [set for/re-set for]on___setfor___——at__.

() a Trial[set for/re-set for]on_____aat.

(8) a (Bench/Jury trial] [Hearing] held/continued to__—_at

(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) CLocalRule 41.1 CIFRCP41(a)(1) C1 FRCP41(a)(2).

(10) +4 [Other docket entry] Ruling held. Volvo’s motion for leave to file surreply to plaintiff's motion

for leave to amend, is granted. ENTER MEMORANDUM OPINION: FMS’s motion (Doc 59-1) to
amend the complaint is denied. Simultaneaus cross-motions for summary judgment to be filed by
November 29, 2004. Simultaneaus answers to said motions due December 13, 2004. No replies. Ruling
set for January 20, 2005 at 9:30 a.m.

[For further detail see order attached to the original minute order.]

No notices required, advised in open court.
No notices required.

Notices mailed by judge's staff.
Notified counsel by telephone.

Docketing to mail notices.

Mail AO|

number of notices

SCT

Copy td jdgt/magistrate judge.

courtroom
deputy’s
initials

pees
Date/time teceived in
central Clerk's Office

mailing deputy initials



written document; the terms of the other were dictated by multiple interactions between
several different people over a period of more than three years. FMS specifically notes
that “the provisions in the FMS Agreement refer only to the relationship between
[Samsung] and FMS, and speak not at all about the relationship between [Samsung]
and Sons.” Reply, at 4. In short, the new claim and the original claim arose from

different conduct, transactions, and occurrences.’ See Morgan Distributing Co., Inc.

y. Unidynamic Corp., 868 F.2d 992, 994 (8th Cir. 1989). As aresult, in addition to the
problems noted above on the same topic, the original complaint did not give fair notice
to Volvo of the proposed addition of Sons and claims related to the alleged second
agreement. Moreover, given the lack ofa written contract between Sons and Samsung,
much additional discovery would likely be necessary to determine the precise
parameters of an arrangement reached through an extended period of interactions. The
addition of Sons would thus prejudice Volvo, and Rule 15(c) does not allow the
proposed amendment to relate back to the original claims. Without relation back, the
new claims cannot withstand a challenge on statute of limitations grounds, and the

filing of the amendment would be a futile act.

5 For this same reason, Sons’ proposed addition does not satisfy the

requirements of Fed. R. Civ. Proc. 20(a).

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contends that all four of these factors weigh in its favor, it is apparent that it satisfies
only the second.

Because of the decisions already rendered in this case, Sons can potentially sue
Volvo only under the Maine statute that governs agreements between franchisors and
Maine franchisees. FMS concedes, as it must, that Sons was not a party to the 1997
agreement between FMS and Samsung, which is the sole agreement of a Maine
franchisee referenced in the original complaint. In its reply,’ FMS explicitly states that
Sons operated pursuant to a different agreement with Samsung, one whose terms were
not reduced to writing but that were part of a larger, holistic “Dealership AgreementTM
with Samsung that included both FMS and Sons.

We do not accept this rationalization. According to FMS, the contracts involved
supplying different goods to different entities. Given the nature of the goods involved
(completed construction equipment as opposed to parts and service), the consideration

almost certainly varied. The terms of one agreement are reduced to an integrated

3 FMS’s initial brief was somewhat ambiguous as to whether Samsung’s

agreement with Sons was separate from its written contract with FMS. The reply
clarifies this point.

‘ This assertion cannot stand in light of the integration clause of the 1997
agreement, FMS’s own contention that the agreements were terminated at different
times, and the fact that the proposed complaint treats the agreements as though they
were one.

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2. Undue Prejudice to Volvo

Although undue delay in and of itself will not prevent amendment of a
complaint, the greater the delay involved, the more the delay itself becomes prejudicial
and the less showing of additional prejudicial factors is necessary to present an

insurmountable obstacle for the plaintiff. See Tamari v. Bache & Co., 838 F.2d 904,

909 (7th Cir. 1988). Despite the extreme delay, FMS insists that there is no prejudice
at all to Volvo in this instance for several reasons. First, FMS contends that Samsung
and Volvo were aware of the relationship between FMS and Sons even before the suit
was filed. Second, FMS argues that its attribution of actions within the original
complaint to FMS before it was even formed, which were in fact taken by Sons, should
have put Volvo on notice that alleged damage to Sons’ business could become an issue
in the case. Consequently, urges FMS, Volvo should have prepared its defense with
an eye toward Sons’ inclusion. These arguments are unconvincing. Even if Volvo was
aware of the relationship between the two companies, the original complaint made no
reference whatsoever to Sons. It relied solely on the 1997 agreement, to which Sons

was not a party. This is not a case akin to Olech, where the complaint was replete with

specific references to the party who later sought to be added as a plaintiff. Olech, 138
F. Supp. 2d at 1045. Most importantly, as noted above, the two-year period set by the

Maine statute of limitations for any potential franchise claim by Sons came and went

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“All Samsung Construction Equipment for sale in North America” for a designated
sales area.

In July 1998, Volvo bought Samsung and assumed its contractual obligations
with the dealers. About a year later, in March 1999, the agreement between FMS and
Samsung expired. Thereafter, Volvo informed FMS that it intended to discontinue the
Samsung line of equipment. FMS and six other dealers (from states other than Maine)
filed suit in Arkansas state court in March 2000, alleging breach of contract and
violations of various state franchise and trade practice laws. The case was removed to
federal court in the Eastern District of Arkansas and then transferred to this court.
After we entered summary judgment on the whole of the complaint, the parties
appealed. The Seventh Circuit affirmed our decision save whether Volvo’s actions
with respect to FMS were done for good cause, as required by the Maine Franchise
Laws for Power Equipment, Machinery and Appliances. Cromeens, Holloman, Sibert,
Inc. v. AB Volvo, 349 F.3d 376 (7th Cir. 2003).

After the case was remanded, that statutory cause of action was the sole
remaining claim and FMS consequently the sole remaining plaintiff. The parties
conducted both fact and expert discovery. On the day that expert discovery closed,
FMS moved for leave to amend its complaint to add Sons as a plaintiff pursuant to Fed.

R. Civ. Proc. 15(a).



BACKGROUND

At its inception, this case was substantially more complicated than it is now. In
the early to mid 1990s, various companies in several states contracted with Samsung
Construction Equipment America Corporation (“Samsung”), the predecessor in interest
to Defendant Volvo Construction Equipment North America, Inc. (“Volvo”), to serve
as dealers of Samsung construction equipment. Prospective plaintiff Frank Martin
Sons, Inc. (“Sons”) signed an agreement with Samsung in late 1994 that established
Sons as an authorized, non-exclusive dealer of “All Samsung Construction Equipment
Products” for a designated sales area. The agreement had a term of two years and
expired on December 28, 1996.

Both before and after becoming a Samsung dealer, Sons was also a dealer of
John Deere equipment. It appears that the sale and service of John Deere equipment
comprised a substantial amount of Sons’ business. In 1995, Deere expressed
reservations about Sons offering products of Samsung, its competitor. To allay these
concerns, Sons’ owners formed a new corporation, FMS, to handle the Samsung
equipment sales. Apparently the division between Sons and FMS was not crystal clear.
However, it is undisputed that in March 1997, Samsung signed a two-year dealership

agreement with FMS only, establishing FMS as an authorized, non-exclusive dealer of


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

CROMEENS, HOLLOMON, SIBERT, INC., d/b/a CISCO
FORD EQUIPMENT, a Texas corporation; CON-EQUIP, INC.,
a Texas corporation, CON-EQUIPMENT, INC., a Texas
corporation; FMS, INC., a Maine corporation, HAMMER
EQUIPMENT SALES, LTD., a Canadian corporation; KEIL
EQUIPMENT CO., INC., a New York corporation; KORPAN
TRACTOR & PARTS, a Canadian partnership; and
PERFORMANCE MACHINERY COMPANY, a Montana
corporation,

)

)

)

)

)

)

)

)

)

)

Plaintiffs, )

)

vs. ) 00 C 8143

)

AB VOLVO, a Swedish corporation; VOLVO )

EXCAVATORS, AB, a Swedish corporation; VOLVO )

CONSTRUCTION EQUIPMENT, NV, a foreign corporation; )

and VOLVO CONSTRUCTION EQUIPMENT NORTH )

AMERICA, INC., a Delaware corporation, )
)
)

Defendants.

MEMORANDUM OPINION

CHARLES P. KOCORAS, Chief District Judge:
This matter comes before the court on the motion of Plaintiff FMS, Inc. (“FMS”)
to amend its complaint pursuant to Fed. R. Civ. Proc. 15(a). For the reasons set forth

below, the motion is denied.


In sum, FMS unduly delayed in bringing Sons into the case. The presence of the
additional plaintiff would work substantial prejudice to Volvo, and the amendment
would be futile. For all these reasons, justice requires that FMS not be granted leave
to amend its complaint.

CONCLUSION

Based on the foregoing analysis, FMS’s motion to amend the complaint is

denied.
Charles P. Kocoras
Chief Judge
United States District Court
OCT 2820
Dated: OCT 2 8 2004

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