Opinion ID: 201972
Heading Depth: 2
Heading Rank: 3

Heading: Motion to Amend Answer and Add Counterclaim

Text: 40 A denial of a motion to amend under Fed.R.Civ.P. 15(a) is generally reviewed for abuse of discretion. See Hatch v. Dept. for Children, Youth & Families, 274 F.3d 12, 19 (1st Cir.2001). Rule 15(a) states that leave shall be freely given when justice so requires. Accordingly, unless there appears to be an adequate reason for the denial (e.g., undue delay, bad faith, dilatory motive on the part of the movant, futility of the amendment), we will not affirm the denial. Hatch, 274 F.3d at 19. 41 In this case, TAT filed its motion to amend its answer to add a counterclaim against SRC under Mass. Gen. Laws ch. 93A for unfair and deceptive business practices. In its decision and order granting summary judgment for SRC on TAT's counterclaims, the district court also denied the motion to amend as futile, finding that TAT's arguments relate[d] either to the[] insufficient claims or to the factual allegations underlying them involved in its other counterclaims, which the district court had already rejected. We therefore analyze whether TAT's proposed amendment is properly characterized as futile. See Hatch, 274 F.3d at 19. 42 As a preliminary matter, SRC argues that relief under Mass. Gen. Laws ch. 93A is not available in this case because TAT puts forth no allegations that a commercial transaction took place between SRC and TAT. Under Massachusetts law, whether ch. 93A applies to an interaction between two parties requires a dual inquiry: first, the court assesses whether the interaction is `commercial' in nature, and second, it evaluates whether the parties were both engaged in `trade or commerce,' and therefore acting in a `business context.' Linkage Corp. v. Trustees of Boston Univ., 425 Mass. 1, 679 N.E.2d 191, 206-7 (1997). 43 An interaction is not commercial in nature if it is a purely private intra-enterprise interaction, i.e., where the undertaking is not `in the ordinary course of a trade or business.' Linkage Corp., 679 N.E.2d at 207 n. 33 (citation omitted). Such interactions include disputes stemming from an employment relationship, disputes between individual members of a partnership arising from partnership business, and transactions and disputes between parties to a joint venture and between fellow shareholders. See id. (citing Szalla v. Locke, 421 Mass. 448, 657 N.E.2d 1267 (1995)). 44 The dispute between SRC and TAT does not appear to be purely private. While SRC and TAT do have a fiduciary relationship, SRC's handling of the foreclosure auction was not an intra-enterprise transaction but the management of the sale of a property through public auction. See Szalla, 657 N.E.2d at 1270 (noting that sales generally offered to the public are included in the statutory definition of commerce). 45 However, we need not decide this issue. Assuming arguendo that the interaction between SRC and TAT regarding the foreclosure sale is not generally barred from the application of ch. 93A, we find that the district court's decision to deny the motion to amend should still be affirmed. 46 Chapter 93A is `a statute of broad impact which creates new substantive rights and provides new procedural devices for the enforcement of those rights.' The relief available under c. 93A . . . `is neither wholly tortious nor wholly contractual in nature, and is not subject to the traditional limitations of preexisting causes of action.' It `makes conduct unlawful which was not unlawful under the common law or any prior statute.' Kattar v. Demoulas, 433 Mass. 1, 739 N.E.2d 246, 257 (Mass.2000) (citations omitted). However, some form of deceptive or unfair conduct must be alleged. See Mass. Gen. Laws ch. 93A, § 2 (declaring [u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce unlawful). Chapter 93A does not define what constitutes an unfair or deceptive act or practice. . . . [U]nfair or deceptive conduct is best discerned from the circumstances of each case. Kattar, 739 N.E.2d at 257 (citations and internal quotation marks omitted). 47 To supports its claim for ch. 93A relief, TAT asserts that SRC should have accepted or disclosed the Florence offer in an effort to effectuate a sale. However, as the district court concluded in granting summary judgment for SRC on TAT's breach of fiduciary duty claim, there was nothing unfair or deceptive about SRC's conduct, which it pursued for the purpose of complying with state law. That summary judgment ruling adequately demonstrates the futility of TAT's motion to amend. 48 Focusing on the consequences of SRC's handling of the Florence offer rather than the conduct itself, TAT argues that SRC's conduct was unfair because it caused substantial injury to TAT. See Morrison v. Toys `R' Us, Inc., 441 Mass. 451, 806 N.E.2d 388, 392 (2004) (noting that `a practice or act will be unfair under [ch. 93A] if it is (1) within the penumbra of a common law, statutory, or other established concept of unfairness; (2) immoral, unethical, oppressive, or unscrupulous; or (3) causes substantial injury to competitors or other business people') (citation omitted). However, the injury that TAT asserts it has suffered — the loss of hundreds of thousands of dollars as a result of the diminution in sales price from $2 million to $1.2 million — is not a result of SRC's conduct, but is a consequence of the foreclosure process and its requirements. The property was sold to the person with the highest bid at the second auction. SRC invited Florence to participate in the auction, but Florence declined. As TAT based its allegations of wrongdoing under ch. 93A entirely on SRC's handling of the Florence offer, its motion to amend was futile, and the district court properly denied it.