Opinion ID: 199312
Heading Depth: 3
Heading Rank: 1

Heading: Refusal to Allow Invest Almaz to Add Affirmative Fraud Count

Text: 33 As previously noted, Invest Almaz did not assert its affirmative misrepresentation claims until very late in the proceedings. No allegations of affirmative fraud were included in Invest Almaz's second amended complaint, nor was this theory of the case identified in Invest Almaz's proposed jury instructions, final pretrial statement, or opening argument at trial. Even when Invest Almaz finally asserted the claims at the close of plaintiff's evidence, it did not do so directly. Instead, Invest Almaz incorporated the claims into its opposition to Temple-Inland's motion for judgment as a matter of law, accusing Temple-Inland of misreading Invest Almaz's theory of the case by ignoring the affirmative misrepresentation claims. 34 At the hearing on its motion, Temple-Inland commented that the claims had never been pleaded, even though, under the Rules, they needed to be pleaded with some specificity. Temple-Inland did not, however, expressly contend that the inclusion of the claims would be prejudicial. Invest Almaz, for its part, did not dispute that the claims were being raised for the first time. However, it argued that all it was requesting was amendment of the pleadings to conform to the evidence already introduced. Invest Almaz contended that doing so would not prejudice Temple-Inland because the affirmative fraud claims largely tracked the concealment claims. 35 At the conclusion of the hearing, the magistrate judge denied Invest Almaz's request to add the affirmative fraud claims to the case, holding that their last minute inclusion would be prejudicial to Temple-Inland in view of the very special fraud pleading requirements of [Fed. R. Civ. P.] Rule 9. The magistrate judge did not refer to specific evidence of prejudice, other than the untimeliness of the effort to amend. 18 On appeal, Invest Almaz argues that it should have been allowed to amend its pleadings to include the affirmative fraud count, in view of the liberal policies governing amendments to conform pleadings to the evidence contained in Fed. R. Civ. P. 15(b) and the magistrate judge's failure to cite evidence that Temple-Inland would be prejudiced by the amendment. Temple-Inland responds that Invest Almaz failed to move to amend its pleadings below, thus waiving this argument, or, in the alternative, that Temple-Inland is entitled to judgment as a matter of law on the merits of the affirmative fraud claims. 36 As a threshold matter, we find Temple-Inland's argument that Invest Almaz failed to preserve the issue of amendment of its pleadings unpersuasive. Although Invest Almaz chose to broach its affirmative fraud claims for the first time in its opposition to Temple-Inland's motion, Invest Almaz's counsel clearly indicated at the hearing that it wished to amend the pleadings if the magistrate judge thought it necessary. In addition, the magistrate judge himself framed his decision as a denial of Invest Almaz's request for leave to amend. Invest Almaz's appeal of the denial of leave to amend is therefore properly before us. 19 37 We turn to the merits of Invest Almaz's argument guided by the following principles. While leave to amend shall be freely given when justice so requires . . . the liberal amendment policy prescribed by Rule 15(a) does not mean that leave will be granted in all cases. Acosta-Mestre v. Hilton Int'l of P.R., Inc., 156 F.3d 49, 51 (1st Cir. 1998) (internal citations and quotation marks omitted). Among the adequate reasons for denying leave to amend are 'undue delay' in filing the motion and 'undue prejudice to the opposing party' by virtue of allowance of the motion. Id. (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). Furthermore, when considerable time has elapsed between the filing of the complaint and the motion to amend, the movant has the burden of showing some valid reason for his neglect and delay. Acosta-Mestre, 156 F.3d at 52 (quoting Stepanischen v. Merchs. Despatch Transp. Corp., 722 F.2d 922, 933 (1st Cir. 1983)) (internal quotation marks omitted). We also note that, in reviewing a decision denying leave to amend, we accord significant deference to the decisionmaker below. Denial of leave to amend is reviewed only for abuse of discretion, and we will affirm the decision below if any adequate reason for the denial is apparent on the record. Acosta-Mestre, 156 F.3d at 51 (quoting Grant v. News Group Boston, Inc., 55 F.3d 1, 5 (1st Cir. 1995)). 38 We find that the magistrate judge's refusal to allow amendment withstands Invest Almaz's challenge. We concede that the magistrate judge's finding of prejudice could have been accompanied by a clearer explanation of its grounds than was given. 20 Nonetheless, we think the record adequate to sustain the magistrate judge's conclusion. The fact that the theory underlying the affirmative fraud counts had yet to be more than obliquely mentioned, moments before Temple-Inland was scheduled to begin presenting its case, certainly supports an inference of prejudice to Temple-Inland's defense. The inference seems particularly strong here, given that some of Temple-Inland's testimony -- including the important testimony of Charles Kosa, former president of Pathex and Temple-Inland's first witness -- was to be presented via videotaped deposition. Under the circumstances, Temple-Inland had a limited ability to adapt its defense on short order to counter Invest Almaz's new claims. 39 In addition, there is nothing in the record suggesting that Invest Almaz met its burden of showing a valid reason for [its] neglect and delay in proposing the amendment. Acosta-Mestre, 156 F.3d at 52. To the contrary, Invest Almaz's counsel admitted at the hearing on Temple-Inland's motion that the affirmative fraud claims were raised at this late stage simply because it hadn't occurred to Invest Almaz to add them earlier. As we recently said, [w]hat the plaintiff knew or should have known and what he did or should have done are relevant to the question of whether justice requires leave to amend under this discretionary provision. Leonard v. Parry, 219 F.3d 25, 30 (1st Cir. 2000). Such considerations counsel against amendment here. 40