UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIRE

Atlantic Administrators

Insurance Agency, Inc. &

Brokerage Concepts, Inc.

v. Civil No. 06-cv-230-JM

Melcher & Prescott Agency, Inc.

O R D E R

Plaintiff Atlantic Administrators Insurance Agency, Inc.,

(“Atlantic”) is a wholly owned subsidiary of plaintiff Brokerage

Concepts, Inc. (“BCI”) and administers self-funded health care

benefit plans. Defendant Melcher & Prescott Agency, Inc. (“MPA”)

is a brokerage firm that arranged for Atlantic to administer the

self-funded plans of two parties not involved in this action, the

City of Laconia and the Laconia School District (jointly referred

to hereinafter as “Laconia”). One of MPA’s brokers, Alexander

Ruch (“Ruch”), acted as Laconia’s agent to obtain contracts for

Atlantic to provide certain administrative services for Laconia’s

health care benefit plans from July 1, 2002 until June 30, 2004. 

During the course of negotiating and obtaining those contracts,

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Ruch made several misrepresentations related to the costs

associated with funding the plans, which allegedly caused Laconia

to underfund them and lose nearly $3 million. In a separate

action pending before this court, see City of Laconia and Laconia

Sch. Dist. v. Atlantic Adm’rs Ins. Agency & Brokerage Concepts,

Inc., Civil No. 05-306-JD (the “Laconia litigation”), Laconia

sued Atlantic and BCI to recover the money lost due to their

alleged failure to discover and/or inform Laconia of Ruch’s

misrepresentations. Plaintiffs brought this action against MPA

to recover losses sustained because of the terminated contracts

and the Laconia litigation. Currently before the court are

defendant MPA’s motion to dismiss the complaint (document no. 13)

and plaintiffs’ motion to amend the complaint (document no. 17). 

Each motion is disposed of as set forth below.

1. Motion to Amend (document no. 17)

Plaintiffs move to amend the complaint pursuant to Fed. R.

Civ. P. 15(a). Defendant objects and raises two arguments in

support thereof. First, defendant argues the fully briefed

motion to dismiss should be decided before the amendment, which

bolsters the allegations pertaining to the alleged express

indemnification agreement, can properly be considered. Second,

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defendant asserts that plaintiffs seek to advance a different

theory in support of their claim for tortious interference with

contractual relations. Defendant contends the originally pled

claim for tortious interference with contractual relations fails

to state a claim and that the amended claim fails to cure the

defect in the original complaint, rendering the amendment futile.

A complaint may be amended after an answer has been filed by

leave of court, which “leave shall be freely given when justice

so requires.” See Fed. R. Civ. P. 15(a). Among the factors to

consider when deciding whether to grant the motion are “‘“undue

delay” in filing the motion and “undue prejudice to the opposing

party” by virtue of allowance of the motion.”’” Invest Almaz v.

Temple-Inland Forest Prods. Corp., 243 F.3d 57, 71 (1st Cir.

2001) (quoting Acosta-Mestre v. Hilton Int’l, 156 F.3d 49, 51

(1st Cir. 1998) (quoting Foman v. Davis, 371 U.S. 178, 182

(1962))). “‘[B]ad faith or dilatory motive on the part of the

movant, . . . [or] futility of amendment’” are also relevant to

the analysis. Newcare Health Corp. v. Midway Healthcare Ctr. (In

re Newcare Health Corp.), 274 B.R. 307, 311 (Bankr. D. Mass.

2002) (quoting Foman, 371 U.S. at 182). 

Defendant fails to support its opposition to the amendment

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with any showing of plaintiffs’ undue delay, bad faith or

dilatory motive that would somehow prejudice defendant if the

amendment were allowed. This is plaintiffs’ first attempt to

amend their pleading, filed approximately eight months after the

original complaint was filed and two months after defendant’s

motion to dismiss was filed. Responding to problems in a

pleading that are identified in a motion to dismiss is an

appropriate reason to amend a complaint. See e.g. DM Research,

Inc. v. Coll. of Am. Pathologists, 170 F.3d 53, 56 (1st Cir.

1999) (explaining plaintiff could have responded to the arguments

for dismissal with an amendment to the complaint to provide “the

district court with additional facts to make its complaint

concrete and plausible”); see also In re Biopure Corp. Derivative

Litig., 424 F. Supp. 2d 305, 307 (D. Mass. 2006) (granting leave

to amend to bolster allegations in complaint with additional

facts); cf. In re Stone & Webster, Inc. Sec. Litig., 217 F.R.D.

96, 98-99 (D. Mass. 2003) (denying motion to amend where

plaintiffs failed to cure defects until after motion to dismiss

decided). The proposed amendment raises no new claims or

parties. No substantive rulings on any of the claims have yet

been issued. Discovery is ongoing. At this initial stage of

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litigation, with no indication of any prejudice to defendant,

leave to amend the complaint is readily justifiable.

I also am unpersuaded by defendant’s futility argument. 

Comparing the original and proposed amended complaints, the only

difference between the tortious interference with contractual

relations claim is the addition of the clause “thereby causing

the City and the District to terminate their contracts with

Atlantic Administrators.” See Complaint, ¶ 47 and Amended

Complaint, ¶ 48. To state a claim for tortious interference with

contractual relations, plaintiffs must allege: “(1) the plaintiff

had an economic relationship with a third party; (2) the

defendant knew of this relationship; (3) the defendant

intentionally and improperly interfered with this relationship;

and (4) the plaintiff was damaged by such interference.” Hughes

v. N.H. Div. of Aero., 152 N.H. 30, 40-41, 871 A.2d 18 (2005)

(emphasis in original). By alleging that MPA knew of Atlantic’s

contracts with Laconia and improperly interfered with them when

Ruch misrepresented critical financial details to Laconia, which

caused Laconia to terminate its relationship with Atlantic and

which, in turn, caused plaintiffs to lose profits, plaintiffs

have asserted sufficient facts to state a claim for tortious

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interference with contractual relations. 

The insertion of the clause pertaining to Laconia’s decision

to terminate the contracts with Atlantic does not alter the

analysis of whether of not plaintiffs have stated a viable claim

for relief. Defendant argues the contract term expired on June

30, 2004, so Laconia’s decision not to continue to do business

with Atlantic for a new term beginning July 1, 2004 fails to

state a claim for tortious interference with contractual

relations, because the contract was ending by its own terms. All

of the factors that influenced Laconia’s decision not to continue

to do business with Atlantic are not entirely clear in either the 

original or the amended complaint, but they do not have to be. 

The allegation that Ruch’s conduct caused Laconia to stop doing

business with Atlantic sufficiently puts defendant on notice of

the charges lodged against it to clear the low threshold of a

“short and plain statement of the claim showing that the pleader

is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Defendant has

failed to demonstrate that the proffered amendment would be

futile. Cf. Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49,

59 (1st Cir. 1990) (denying motion to amend where the proffered

facts would not cure the claims’ defects); see also Norton v.

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Caton, No. 04-cv-439-JD, 2005 WL 1009544, at *4 (D.N.H. May 2,

2005) (same). 

 Plaintiffs’ motion for leave to amend (document no. 17),

therefore, is granted. The clerk’s office is ordered to docket

the Amended Complaint, which shall be the controlling pleading in

this action.

2. Motion to Dismiss (document no. 13)

Because plaintiffs’ motion to amend is granted, defendant’s

pending motion to dismiss the original complaint (document no.

13) is denied as moot, without prejudice. See e.g. Caton v.

Norton, 2005 WL 1009544 at *3 (allowing motion to amend can moot

pending motion to dismiss); Portfolioscope, Inc. v. I-Flex

Solutions Ltd., 473 F. Supp. 2d 252, 254 (D. Mass. 2007) (same). 

SO ORDERED.

/s/ James R. Muirhead 

James R. Muirhead

United States Magistrate Judge

Date: June 29, 2007 

cc: William D. Pandolph

Mark L. Mallory

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