Opinion ID: 167718
Heading Depth: 2
Heading Rank: 1

Heading: Amendment to the Pleadings

Text: 35 Mr. Minter's appeal centers on the district court's decision not to permit him to pursue an alteration product liability claim against Prime Equipment. Procedurally, this question arose in two orders of the district court: the order striking the plaintiff's products liability claim from the pretrial order, and the order denying his Rule 15(b) motion to amend the complaint to conform to the evidence. Mr. Minter raises both issues on appeal, but needs to prevail on only one. We address his argument that the district court erred in striking the alteration product liability claim from the pretrial order. For purposes of this opinion, we assume without deciding, that Mr. Minter did not properly plead the alteration product liability claim in his federal court complaint, and that the proposed pretrial order was the first time Mr. Minter raised the alteration claim. 36 Federal Rule of Civil Procedure 15(a) provides that, after a responsive pleading has been served, a party may amend its pleading only by leave of court or by written consent of the adverse party. The Rule specifies that leave shall be freely given when justice so requires. Although the plaintiff included his products liability claim against Prime Equipment in the proposed pretrial order without filing a formal Rule 15(a) motion to amend the complaint, [w]hen an issue is set forth in the pretrial order, it is not necessary to amend previously filed pleadings because the pretrial order is the controlling document for trial. Wilson v. Muckala, 303 F.3d 1207, 1215 (10th Cir.2002) (internal quotation marks omitted). Consequently, Mr. Minter's attempt to add a new claim to the pretrial order was the equivalent of asking leave to amend his complaint, and must be evaluated by the court under the standards set forth in Rule 15(a). See Wilson, 303 F.3d at 1215; 6A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1525 (2d ed.1990). 37 [T]he grant of leave to amend the pleadings pursuant to Rule 15(a) is within the discretion of the trial court, Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971), and we will not reverse the court's decision absent an abuse of discretion. Wessel v. City of Albuquerque, 299 F.3d 1186, 1197 (10th Cir.2002) (internal quotation marks omitted). But the Rule itself states that leave shall be freely given when justice so requires. Fed. R.Civ.P. 15(a). The purpose of the Rule is to provide litigants the maximum opportunity for each claim to be decided on its merits rather than on procedural niceties. Hardin v. Manitowoc-Forsythe Corp., 691 F.2d 449, 456 (10th Cir.1982). In Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962), the Supreme Court held: 38 If the underlying facts or circumstances 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. 39 Id. at 182, 83 S.Ct. 227 (quoting Fed. R.Civ.P. 15(a)); see also Duncan v. Manager, Dept. of Safety, 397 F.3d 1300, 1315 (10th Cir.2005); Frank v. U.S. West, 3 F.3d 1357, 1365 (10th Cir.1993). The district court struck Mr. Minter's alteration product liability claim from the pretrial order on the grounds that it was prejudicial and untimely. Prejudice and timeliness are obviously closely related, but we will evaluate each. 4
40 In Foman, the Supreme Court listed undue delay as one of the justifications for denying a motion to amend. 371 U.S. at 182, 83 S.Ct. 227. Emphasis is on the adjective: Lateness does not of itself justify the denial of the amendment. R.E.B., Inc. v. Ralston Purina Co., 525 F.2d 749, 751 (10th Cir.1975). Rule 15(a) does not restrict a party's ability to amend its pleadings to a particular stage in the action. Fed.R.Civ.P. 15(a); see also 6 Wright, Miller & Kane, Federal Practice and Procedure § 1488 (2d ed.1990). However, [a] party who delays in seeking an amendment is acting contrary to the spirit of the rule and runs the risk of the court denying permission because of the passage of time. Id. The longer the delay, the more likely the motion to amend will be denied, as protracted delay, with its attendant burdens on the opponent and the court, is itself a sufficient reason for the court to withhold permission to amend. Steir v. Girl Scouts of the USA, 383 F.3d 7, 12 (1st Cir.2004); see also USX Corp. v. Barnhart, 395 F.3d 161, 167 (3d Cir.2004) ([D]elay alone is an insufficient ground to deny leave to amend. At some point, however, delay will become undue, placing an unwarranted burden on the court, or will be become prejudicial, placing an unfair burden on the opposing party. (internal citations and quotation marks omitted)). 41 The courts of appeal are not in agreement regarding the showing necessary to establish undue delay. Some circuits hold that an amendment may be denied for undue delay only if the trial court finds prejudice, bad faith, futility, or (in some circuits) a substantial burden on the court. 5 This Circuit, however, focuses primarily on the reasons for the delay. We have held that denial of leave to amend is appropriate when the party filing the motion has no adequate explanation for the delay. Frank v. U.S. West, 3 F.3d 1357, 1365-66 (10th Cir.1993); see also Durham v. Xerox Corp., 18 F.3d 836, 840 (10th Cir.1994) ([U]nexplained delay alone justifies the district court's discretionary decision.); Fed. Ins. Co. v. Gates Learjet Corp., 823 F.2d 383, 387 (10th Cir.1987) (Courts have denied leave to amend in situations where the moving party cannot demonstrate excusable neglect. For example, courts have denied leave to amend where the moving party was aware of the facts on which the amendment was based for some time prior to the filing of the motion to amend.). 6 42 Courts will properly deny a motion to amend when it appears that the plaintiff is using Rule 15 to make the complaint a moving target, Viernow v. Euripides Dev. Corp., 157 F.3d 785, 800 (10th Cir.1998), to salvage a lost case by untimely suggestion of new theories of recovery, Hayes v. Whitman, 264 F.3d 1017, 1027 (10th Cir. 2001), to present theories seriatim in an effort to avoid dismissal, Pallottino v. City of Rio Rancho, 31 F.3d 1023, 1027 (10th Cir.1994), or to knowingly delay[] raising [an] issue until the `eve of trial,' Walters v. Monarch Life Ins. Co., 57 F.3d 899, 903 (10th Cir.1995). 43 Mr. Minter attempted to assert an alteration product liability claim against Prime Equipment just three weeks before the scheduled start of trial; and the district court took note of his tardiness when it struck the amended claim from the pretrial order. Courts do not normally expect to see claims or defenses not contained in the pleadings appearing for the first time in the pretrial order. Wilson v. Muckala, 303 F.3d 1207, 1215-16 (10th Cir.2002). In this case, however, the plaintiff has provided an adequate explanation for the delay, and therefore his alteration product liability claim is not untimely or unduly delayed. When the plaintiff filed his complaint on March 20, 2002, the evidence supplied by the defendants during discovery in the state case led him to believe that Economy had manufactured and sold the scissor lift in a defective condition. For the first five years of this litigation, Prime Equipment maintained that it had bought the lift from Economy without the solid guardrail, and presented evidence to that effect. In accordance with this apparent state of the facts, the stripped-down complaint filed in federal court included defective design and manufacturing claims against Economy, while holding Prime Equipment responsible for negligent maintenance and repair (in addition to suing both for insufficient warnings). On May 21, 2003, however, one week after the close of discovery, Economy submitted an expert witness report stating that the lift's guardrail system had been altered sometime after leaving its control. Within a month, Prime Equipment reversed its position and stipulated that Economy manufactured and sold the scissor lift with four solid guardrails. The plaintiff's attempt to assert a new claim in the pretrial order—to shift from a manufacturer product liability claim against Economy to an alteration product liability claim against Prime Equipment—was a response to these late disclosures from Prime Equipment and Economy. Consequently, this case is distinguishable from those where courts denied leave to amend because the plaintiff was aware of all the information on which his proposed amended complaint was based prior to filing the original complaint. McKnight v. Kimberly Clark Corp., 149 F.3d 1125, 1130 (10th Cir.1998). 44 During oral argument, Prime Equipment argued that the amendment was untimely because Mr. Minter waited more than six months after he learned of the Joint Stipulation before asserting the alteration product liability claim against it. The record shows that the plaintiff delayed in asserting the alteration product liability claim against Prime Equipment because he believed it was already fairly encompassed by his pleadings. 7 Indeed, on appeal the plaintiff continues to take that position, arguing that the district court erred in striking the products liability claim from the pretrial order. Although we do not reach that argument, in light of the liberal pleading requirements of Rule 8(a) we consider it a colorable argument. In retrospect, the plaintiff could have avoided this entire controversy if he had filed a formal motion to amend his complaint soon after the defendants entered into the Joint Stipulation. Nonetheless, his assumption regarding the scope of his original pleading constitutes an excusable cause for the delay, especially in light of the defendant's own dilatoriness in waiting until discovery was closed and the trial was shortly scheduled to begin to spring the fact that it was changing its position regarding a key fact in the case. Consequently, Mr. Minter's alteration product liability claim cannot be considered untimely or unduly delayed.
45 The second, and most important, factor in deciding a motion to amend the pleadings, is whether the amendment would prejudice the nonmoving party. Rule 15... was designed to facilitate the amendment of pleadings except where prejudice to the opposing party would result. United States v. Hougham, 364 U.S. 310, 316, 81 S.Ct. 13, 5 L.Ed.2d 8 (1960). See also Evans v. McDonald's Corp., 936 F.2d 1087, 1090-91 (10th Cir.1991) (As a general rule, a plaintiff should not be prevented from pursuing a valid claim ..., provided always that a late shift in the thrust of the case will not prejudice the other party in maintaining his defense upon the merits. (internal quotation marks omitted)); Eastern Food Servs., Inc. v. Pontifical Catholic Univ. Servs. Ass'n, 357 F.3d 1, 8 (1st Cir.2004) (Once the adversary has answered, amendment is no longer allowed as of right, Fed.R.Civ.P. 15(a), but in general permission is liberally granted where there is no prejudice.); 6 Wright, Miller & Kane, Federal Practice and Procedure § 1487 (2d ed. 1990) (Perhaps the most important factor listed by the Court and the most frequent reason for denying leave to amend is that the opposing party will be prejudiced if the movant is permitted to alter his pleading.). 46 Courts typically find prejudice only when the amendment unfairly affects the defendants in terms of preparing their defense to the amendment. Patton v. Guyer, 443 F.2d 79, 86 (10th Cir.1971). Most often, this occurs when the amended claims arise out of a subject matter different from what was set forth in the complaint and raise significant new factual issues. Compare Hom v. Squire, 81 F.3d 969, 973 (10th Cir.1996) (finding prejudicial a motion to add an entirely new and different claim to [the plaintiff's] suit little more than two months before trial), with Gillette v. Tansy, 17 F.3d 308, 313 (10th Cir.1994) (finding no evidence of prejudice when the Petitioner's [amended] claims track the factual situations set forth in his [original] claims), Childers v. Indep. Sch. Dist. No. 1, 676 F.2d 1338, 1343 (10th Cir.1982) (ruling that the district court's refusal to allow an amendment was particularly egregious in this case because the subject matter of the amendment was already alleged in the complaint), and R.E.B., Inc. v. Ralston Purina Co., 525 F.2d 749, 751-52 (10th Cir.1975) (finding no prejudice when [t]he amendments did not propose substantially different issues). 47 Prime Equipment repeatedly asserts that the addition of an alteration product liability claim to the pleadings would result in obvious prejudice to it, but offers little explanation as to how it would be prejudiced in light of the similarities between the complaint and the amended claim. The complaint asserted a negligence claim against Prime Equipment for failing to properly inspect, repair and maintain the lift. Complaint 1. The new claim against Prime Equipment was for materially alter[ing] the subject scissor lift by removal of the [] solid guardrail safety feature. Appellant's App. 81. While the two claims are different in form, there is a significant overlap in the factual underpinnings and defenses. Both claims rely on the proposition that Mr. Minter was injured because the scissor lift as provided to [him] was in a condition with a detachable chain link fitted in place of a solid steel guardrail[, which] ... was contrary to established safety standards. Appellee's Supp.App. 37-38. Moreover, most of Prime Equipment's defenses to the negligence claim apply with equal force to the product liability claim, including its defenses that the lift was safe for its intended use, that it did not violate the applicable ANSI or OSHA standards at the time of manufacture, that it was not defective or unreasonably dangerous, and that Mr. Minter's actions were the sole cause of the accident. Prime Equipment's only defense to the negligence claim that it could not use against the product liability claim is comparative negligence, which would include the marijuana evidence. Moreover, Prime Equipment defended against a retailer's product liability claim in the underlying state court action, and all of the discovery materials from that case were available to Prime Equipment in its defense below. These circumstances belie Prime Equipment's argument that it was unprepared for Mr. Minter's late assertion of an alteration product liability claim. 48 Prime Equipment's claim of prejudice thus rests, in reality, on the viability of two defenses it argues it would have prepared if it had known about the alteration product liability claim at an earlier stage in the litigation. First, Prime Equipment alleges that it would have conducted more discovery to determine who was responsible for altering the lift. Second, it argues that it never would have signed the Joint Stipulation, which helped to exonerate Economy from the product liability claim, if it thought there was a product liability claim against it as well. 49 Prime Equipment contends that it would have been prejudiced by the late addition of an alteration product liability claim because the evidence was inconclusive as to who altered the lift, and it would have discovered this case up differently if it thought the case was about alteration. Appellee's Br. 6-7, 12. The Plaintiff counters that [t]he fact that `Prime [Equipment] removed the bar' is evident from the [Joint] Stipulation, and the Record, Appellant's Reply Br. 2, since Prime Equipment stipulated that the scissor lift was. . . manufactured and sold by Economy Co. with a solid guardrail around the entire upper perimeter of the scissor lift platform, and that [w]hen Prime Equipment sold the scissor lift, the solid guardrail had been removed from the entry end and replaced with a [] chain entry. Pretrial Order 8. Nonetheless, Prime Equipment maintains that the lift may have been altered by someone else. During arguments before the district court, Prime Equipment explained that Economy had two [sales] invoices on the same day; one [scissor lift] goes to [a company named] Forte Rents up north someplace, and the other one goes to . . . Prime [Equipment]. Appellee's Br. 12. Prime Equipment speculates that Forte Rents may have modified the guardrail system on the lift it bought from Economy, and then sold that lift to Prime Equipment. 50 Although an amendment may be prejudicial if its timing prevents the defendant from pursuing a potentially promising line of defense, Prime Equipment's assertion that Forte Rents may have altered the lift and sold it to Prime Equipment is far too speculative to support such a finding. Prime Equipment does not cite any evidence indicating that it purchased the lift from Forte Rents. 8 In fact, before Prime Equipment entered into the Joint Stipulation, it argued that it purchased the lift from Economy with a chainlink entry; and at trial one of Prime Equipment's employees testified that the company bought the lift brand new from Economy, and that Prime [Equipment] did not buy used equipment for rental. Appellee's Supp. App. 81; Appellant's App. 311. Moreover, if there was any evidence that Forte Rents was responsible for the alteration, it should have surfaced during the underlying state court action, where Prime Equipment was defending against a retailer product liability claim and could have impleaded any upstream distributor. Prime Equipment had incentive and opportunity to conduct discovery on this issue during the underlying state court litigation, from which most of the discovery in this case was gathered, and we therefore find no support for its claim of prejudice. 51 More importantly, however, Prime Equipment's claim of prejudice fails because its attempt to pin responsibility for the alteration on an upstream distributor is not a defense to an alteration product liability claim. Even if Prime Equipment could produce evidence to support its theory that Forte Rents altered the lift, [i]n a strict liability action it is immaterial to the plaintiff's case that the defect in the product was not caused by the distributor. Braden v. Hendricks, 695 P.2d 1343, 1350 (Okla.1985). Under Oklahoma law, it is enough that Prime Equipment admits to selling the lift in its altered condition. Id. Consequently, there is no merit to Prime Equipment's claim that the amendment is prejudicial because it was prevented from arguing that Forte Rents altered the lift. 9 52 Prime Equipment's second claim of prejudice arises out of the Joint Stipulation. During the underlying state court action, where the plaintiff asserted negligence and product liability claims against both defendants, Prime Equipment filed a cross-claim against Economy for indemnity from the plaintiff's manufacturer product liability claim. The Joint Stipulation prevented Prime Equipment from filing a similar motion in the federal case, and Prime Equipment argues that it never would have made such a stipulation had there been an alteration product liability claim against it. Appellee's Br. 7. The district court agreed with Prime Equipment, concluding that the somewhat curious Joint Stipulation was consistent with Prime Equipment's position that it believed that a products liability claim had not been stated against it. Order 6. 53 We believe that concerns about prejudice run the other way. It is true, as the district court observed, that the strategy behind the Joint Stipulation is somewhat curious. But one thing is clear: the defendants' change in position potentially undermined the plaintiff's entire products liability case. During the first five years of the litigation, when the complaint was formulated and until after completion of discovery, Prime Equipment maintained and presented evidence that the chainlink closure had been installed on the lift before it came into Prime Equipment's possession. Plaintiff crafted his case accordingly, suing Economy for defective design and manufacture, and Prime Equipment for negligent maintenance and repair. The revelation of June 12, 2003 changed all of that. Prime Equipment entered a Joint Stipulation and submitted evidence that at the time the lift was sold by Economy, it was equipped with a solid metal guardrail. At the same time, Prime Equipment filed an evidentiary motion limiting the plaintiff to a negligence theory only. Appellee's Supp.App. 10. Unless his complaint were construed to include a products liability claim against Prime Equipment or he were permitted to amend, Mr. Minter would be left with no products liability claim at all. If Prime Equipment could absolve Economy of responsibility for the defect, and simultaneously avoid liability by holding the plaintiff to a narrow construction of the complaint, this would mean that no one could be held responsible for the alleged defect. We do not think it is prejudicial to Prime Equipment not to allow this gambit to succeed. On the contrary, allowing Mr. Minter to assert an alteration product liability claim against Prime Equipment is necessary so that he is not prejudiced by Prime Equipment's extraordinary change in its account of what happened. 54 Due to the rather unusual circumstances surrounding the Joint Stipulation and Prime Equipment's objection to the pretrial order, we agree with the plaintiff that the district court's finding of prejudice was a clear error. The Federal Rules of Civil Procedure are designed to put an end to the `sporting theory of justice,' by which the result depends on . . . the skill and strategy of counsel. Mid-West Paper Prods. Co. v. Cont'l Group, Inc., 596 F.2d 573, 579 (3d Cir.1979) (internal quotation marks omitted). See United States ex rel. Precision Co. v. Koch Indus., Inc., 31 F.3d 1015, 1018 (10th Cir.1994) (The Federal Rules . . . accept the principle that the purpose of pleading is to facilitate a proper decision on the merits. (internal quotation marks omitted)); 6 Wright, Miller & Kane, Fed. Prac. & Proc. 3d § 1488 (2d ed.1990). Although Prime Equipment gave up the ability to file a cross-claim against Economy when it entered into the Joint Stipulation, it did so as part of a strategy designed to avoid a decision on the merits of Mr. Minter's product liability claim. Prime Equipment cannot now argue that the amendment to add an alteration product liability claim against it is prejudicial because of the Joint Stipulation. Whatever harm befalls Prime Equipment as a result of entering into the Joint Stipulation is of its own making, and therefore does not qualify as prejudice under Rule 15(a).