Opinion ID: 1372693
Heading Depth: 2
Heading Rank: 3

Heading: Remand to Amend

Text: Plaintiff asks us to remand to allow it to amend its amended complaint to allege injury to Torch. Typically, we review the district court's decision not to grant leave to amend for abuse of discretion. Ellis v. Liberty Life Assurance Co., 394 F.3d 262, 268 (5th Cir.2004). Yet, at no point did plaintiff move the district court for leave to amend its amended complaint to allege a claim showing injury to Torch. [15] Even assuming that plaintiff has properly raised and preserved the issue, we conclude that it is not entitled to relief. Rule 15 of the Federal Rules of Civil Procedure states that a court should freely give [leave to amend] when justice so requires. Although Rule 15 evinces a bias in favor of granting leave to amend, it is not automatic. Southmark Corp. v. Schulte Roth & Zabel ( In re Southmark Corp. ), 88 F.3d 311, 314 (5th Cir.1996) (quotation marks and citation omitted). Under Rule 15, the courts consider such equitable factors as (1) undue delay; (2) bad faith; (3) dilatory motive on the part of the movant; (4) repeated failure to cure deficiencies by any previously allowed amendment; (5) undue prejudice to the opposing party; and (6) futility of amendment. Ellis, 394 F.3d at 268. We conclude that justice does not require allowing plaintiff additional opportunity to amend. Plaintiff had ample opportunity to cure the noted defects when it amended its complaint in the aftermath of Gheewalla and in its arguments to the district court. See St. Germain v. Howard, No. 08-30364, 2009 WL 117944, at  (5th Cir.2009) (affirming denial of a motion for leave to amend where [a]ppellants had several opportunities to state their best case) (citing Price v. Pinnacle Brands, Inc., 138 F.3d 602, 607-08 (5th Cir.1998) (affirming denial of a motion for leave to amend where the plaintiffs, represented by counsel, had three opportunities to articulate their damage theory)). Over defendants' opposition, the district court granted plaintiff's prior motion to amend its complaint. In its amended complaint, plaintiff still fails to allege injury to Torch, even though it expressly converted the direct claims of the creditors to derivative claims (which, it bears repeating, could only have been on behalf of Torch). The way in which plaintiff amended its original complaint also lends support to our conclusion. Plaintiff substituted creditors with creditors and shareholders, labeled its previously direct claim derivative, and asserted the same substantive facts without determining whether those facts supported a claim on behalf of Torch. This pleading practice demonstrated a complete disregard for its burden to allege facts that state a claim under existing law. Nor is it an appropriate answer for plaintiff to suggest that Gheewalla changed the applicable law. Even before Gheewalla, the Delaware Supreme Court in Malone identified the necessary elements to state a claim for deliberate misinformation when the directors are not seeking shareholder action. That plaintiff was responding in one way to new Delaware case law does not forgive its burden to research and plead the necessary elements of the claim it attempts to bring in its amended complaint. To cure the present deficiency, plaintiff informed the court during oral argument that it could easily amend paragraph 46 of the complaint to delete the reference to creditors and shareholders to say Torch has suffered damages in the amount of not less than $35,800,000 another find and replace exercise. In light of its prior substitution of creditors and shareholders for creditors, we are not inclined to oblige a simple substitution now without better explanation regarding how the amendment would allow the twice-amended complaint to sustain plaintiff's burden of alleging a complete, properly pleaded, and plausible claim. Lacking a viable theory to support its claim of injury, [16] plaintiff asserts that discovery would entail finding out What would have happened? had the Directors made their disclosures earlier. This sounds like a request to discover a claim. The role of discovery, however, is to find support for properly pleaded claims, not to find the claims themselves. Cf. Brown v. Texas A & M Univ., 804 F.2d 327, 334 (5th Cir. 1986) (refusing to allow the plaintiffs to continue to amend or supplement their pleadings until they stumble upon a formula that carries them over the threshold of an immunity defense (quoting Jacquez v. Procunier, 801 F.2d 789, 792 (5th Cir. 1986))). By our view, plaintiff is not attempting to recover for injury to Torch but instead attempting yet again to repackage creditor claims against the Directors that are defunct under Delaware law after Gheewalla. Under these circumstances, we are not inclined to allow plaintiff to continue.