Opinion ID: 771398
Heading Depth: 1
Heading Rank: 4

Heading: the district court abused its discretion in jordan i in finding futility

Text: 33 In order to resolve all of the contested issues on this appeal, we must consider Stripling's contention that the district court erred in affirming the magistrate judge's decision that the joinder of Guardian would have been futile. In deciding Stripling's Motion to Amend, the magistrate judge concluded that there was no basis for liability against Guardian; therefore, its joinder would have been futile. The district court upheld this conclusion, stating that it was not clearly erroneous. Stripling argues that under the considerations of Federal Rule of Procedure 15(a), 12 Guardian should have been joined as a party. Therefore, Stripling contends that the magistrate judge abused its discretion in precluding Guardian's joinder. We agree.
34 We review a district court's denial of leave to amend under Rule 15(a) for an abuse of discretion. See Whitmire v. Victus Ltd., 212 F.3d 885, 887 (5th Cir. 2000); Martin's Herend Imports, Inc. v. Diamond & Gem Trading U.S. Am. Co., 195 F.3d 765, 770 (5th Cir. 1999). The district court's discretion is limited, however, by Rule 15(a), which states that leave to amend must be freely given when justice so requires. Fed. R. Civ. P. 15(a); see also Foman v. Davis, 371 U.S. 178, 182 (1962); Leffall v. Dallas Indep. Sch. Dist., 28 F.3d 521, 524 (5th Cir. 1994). In the context of motions to amend pleadings, 'discretion' may be misleading, because Fed. R. Civ. P. 15(a) 'evinces a bias in favor of granting leave to amend.' Martin's Herend Imports, Inc., 195 F.3d at 770 (quoting Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 597 (5th Cir. 1981)). Unless there is a substantial reason to deny leave to amend, the discretion of the district court is not broad enough to permit denial. Dussouy, 660 F.2d at 598; Martin's Herend Imports, Inc., 195 F.3d at 770.
35 It is within the district court's discretion to deny a motion to amend if itis futile. See Martin's Herend Imports, Inc., 195 F.3d at 771; Leffall, 28 F.3d at 524. While this court has not specifically defined futility in this context, we join our sister circuits that have interpreted it to mean that the amended complain would fail to state a claim upon which relief could be granted. See, e.g., Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000); Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1085 (7th Cir. 1997); Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir. 1996); Rudolph v. Arthur Anderson & Co., 800 F.2d 1040, 1041-42 (11th Cir. 1986). As these courts have done, to determine futility, we will apply the same standard of legal sufficiency as applies under Rule 12(b)(6). Shane, 213 F.3d at 115; Gen. Elec. Capital Corp., 128 F.3d at 1085; Glassman, 90 F.3d at 623. 36 The question therefore is whether in the light most favorable to the plaintiff and with every doubt resolved in his behalf, the complaint states any valid claim for relief. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000) (internal quotations omitted) (quoting Lowrey v. Tex. A & M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997)); Beanal v. Freeport-McMoran, Inc., 197 F.3d 161, 164 (5th Cir. 1999). The court may not dismiss a complaint under [R]ule 12(b)(6) 'unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.' Shipp v. McMahon, 199 F.3d 256, 260 (5th Cir. 2000) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)); Beanal, 197 F.3d at 164. 37 The magistrate judge held that joining Guardian as a defendant would have been futile because Stripling failed to point to any facts indicating that in entering the agreement with [Stripling], Jordan was acting on behalf of Guardian, rather than on its own behalf, and pursuant to Guardian's direction and control. Because of this lack of facts, the magistrate judge concluded there was no basis for Stripling to recover from Guardian. We disagree. 38 Under the low threshold by which we evaluate a dismissal under Rule 12(b)(6) and resolving any doubt in favor of Stripling, we find that Stripling adduced facts in support of its claim that would entitle it to relief. As discussed in the prior section and without repeating the significant facts, Stripling produced sufficient evidence for a claim of relief against Guardian as an undisclosed principal in order to survive dismissal. 39 We find these facts sufficient to overcome a Rule 12(b)(6) dismissal motion. Accordingly, we conclude that the district court abused its discretion in Jordan I in finding futility.