Court Opinion

ID: 4038013
Source: CourtListenerOpinion
Date Created: 2016-09-28 20:01:38.653751+00
Date Added: 2024-06-11T07:45:16.030596
License: Public Domain

UNITED STATES DISTRICT COURT
                              FOR THE DISTRICT OF COLUMBIA

 SODEXO OPERATIONS, LLC,

                Plaintiff,

           v.
                                                          Civil Action No. 12-108 (CKK)
 NOT-FOR-PROFIT HOSPITAL
 CORPORATION,

                Defendant.

                             MEMORANDUM OPINION AND ORDER
                                   (September 28, 2016)

       Plaintiff Sodexo Operations, LLC (“Sodexo”) brought a breach of contract action against

Not-For-Profit Hospital Corporation (“NFP”), the purported successor-in-interest to the hospital

operated by Capital Medical Center (“CMC”), seeking damages arising from an alleged breach of

contract between Sodexo and CMC. Plaintiff’s complaint was dismissed without prejudice for

failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Presently before the

Court is Plaintiff’s [25] Motion for Leave to File an Amended Complaint. 1 Upon consideration of

the parties’ submissions, 2 the applicable authorities, and the record as a whole, the Court shall

       1
          The Motion also requests reconsideration of the previous dismissal order and/or
clarification that the dismissal was without prejudice. As discussed further below, this portion of
the Motion was addressed pursuant to a Memorandum Order issued by Chief Judge Richard W.
Roberts on December 19, 2013. Mem. Order (Dec. 19, 2013), ECF No. [24].
        2
          While the Court bases its decision on the record as a whole, its consideration has focused
on the following documents: Pl.’s Mot. for Leave to File an Am. Compl. & For Clarification Or,
In the Alternative, Reconsideration (“Pl.s’ Mot.”), ECF No. [25]; Def.’s Mem. in Opp’n to Pl.’s
Mot. for Leave to File an Am. Compl. (“Def.’s Opp’n”), ECF No. [26]; Pl.’s Reply Brief to Def.’s
Mem. in Opp’n to Pl.’s Mot. for Leave to File An Am. Compl. (“Pl.’s Reply”), ECF No. [27];
Def.’s Notice of Decision Issued by Hon. Frederick Weisberg (“Def.’s Notice”), ECF No. [28];
Pl.’s Resp. to Def. NFP’s Notice of Decision Issued by Hon. Frederick J. Weisberg (“Pl.’s Resp.

                                                 1
GRANT Plaintiff’s [25] Motion for Leave to File an Amended Complaint for the reasons stated

herein.

                                           I. BACKGROUND

          This action arises out of contract between Plaintiff Sodexo and CMC for services that

Sodexo provided to CMC’s United Medical Center (“UMC”), formerly Greater Southeast

Community Hospital (“Southeast”).       In 2007, the District of Columbia permitted Specialty

Hospitals of America (“SHA”), the parent company of Specialty Hospitals of Washington

(“SHW”), to acquire Southeast. SHA in turn created CMC and the Capital Medical Center Realty

(“CMC Realty”) as wholly-owned subsidiaries of SHW. The Southeast assets were owned,

controlled, and operated by CMC and CMC Realty. In 2008, Sodexo and CMC entered into

contracts (the “Southeast Management Agreement,” “United Management Agreement,” and

“United Interim Agreement”) that provided Sodexo with the exclusive right to manage and operate

nutrition services, plant operations, and maintenance services for CMC’s patients, residents,

employees, visitors and guests at Southeast and, after being renamed, at UMC, for a fixed term.

          The District of Columbia foreclosed on CMC and transferred UMC to Defendant NFP by

statute and mayoral order. As part of the foreclosure sale, the District of Columbia purchased

UMC for $20,000,000 in July 2010. On July 9, 2010, NFP took over ownership and operation of

the hospital assets which previously had been owned and controlled by CMC. Sodexo now seeks

to recover on a breach of contract claim against NFP, asserting that NFP is liable for CMC’s debts.

to Def.’s Notice”), ECF No. [29]; Jt. Status Report Regarding Sodexo’s Pending Mot. for Leave
to File Am. Compl. (“Jt. Status Report”), ECF No. [31]; Def.’s Supp. Mem. in Opp’n to Pl.’s Mot.
for Leave to Am. (“Def.’s Supp.”), ECF No. [32]; Pl.’s Supp. Mem. in Supp. of Mot. for Leave to
File Am. Compl. (“Pl.’s Supp.”), ECF No. [33]. The motion is fully briefed and ripe for
adjudication. In an exercise of its discretion, the Court finds that holding oral argument would not
be of assistance in rendering its decision. See LCvR 7(f).

                                                 2
Specifically, Sodexo seeks to recover $349,333.81, the past due amount that Sodexo asserts it is

owed for work completed under the contract, as well as reasonable attorney’s fees, pre- and post-

judgment interest, costs, expenses, and other relief.

       On March 19, 2013, United States District Judge Richard W. Roberts granted NFP’s

motion to dismiss the complaint in the instant action, finding that Sodexo “ha[d] not alleged

sufficient facts to state a claim for breach of contract on either the express or implied assumption

of debt theory or the mere continuation theory.” Sodexo Operations, LLC v. Not-For-Profit Hosp.

Corp., 930 F. Supp. 2d 234, 240 (D.D.C. 2013). In granting the motion, Judge Roberts indicated,

“The complaint is DISMISSED.” Order (Mar. 19, 2013), ECF No. [20]. On April 11, 2013,

Plaintiff filed a Motion for Leave to File an Amended Complaint and for Clarification or, in the

Alternative, Reconsideration, requesting that the Court enter an order indicating that the dismissal

of its Complaint was without prejudice and requesting leave to file its First Amended Complaint

which was filed alongside the Motion. Pl.’s Mot. for Leave to File an Am. Compl. & For

Reconsideration Or, In the Alternative, Clarification, ECF No. [21]. On December 19, 2013, Chief

Judge Roberts granted the request for reconsideration, amending the Order “to reflect that the

complaint is DISMISSED WITHOUT PREJUDICE,” and directing the Clerk of the Court to file

Plaintiff’s Motion on the docket to address the request for leave to file the First Amended

Complaint. Mem. Order (Dec. 19, 2013), at 5, ECF No. [24]. On April 6, 2016, the instant action

was reassigned to this Court. Presently before the Court is Plaintiff’s Motion for Leave to Amend

the Complaint which Defendant opposes.

                                    II. LEGAL STANDARD

       Under the Federal Rules of Civil Procedure, a party may amend its pleadings once as a

matter of course within twenty-one days after service or within twenty-one days after service of a

                                                 3
responsive pleading. Fed. R. Civ. P. 15(a)(1). Where, as here, a party seeks to amend its pleadings

outside that time period, it may do so only with the opposing party’s written consent or the district

court’s leave. Fed. R. Civ. P. 15(a)(2). The decision whether to grant leave to amend a complaint

is within the discretion of the district court, but leave should be freely given unless there is a good

reason to the contrary. Willoughby v. Potomac Elec. Power Co., 100 F.3d 999, 1003 (D.C. Cir.

1996).

         “When evaluating whether to grant leave to amend, the Court must consider (1) undue

delay; (2) prejudice to the opposing party; (3) futility of the amendment; (4) bad faith; and (5)

whether the plaintiff has previously amended the complaint.” Howell v. Gray, 843 F. Supp. 2d 49,

54 (D.D.C. 2012) (citing Atchinson v. District of Columbia, 73 F.3d 418 (D.C. Cir. 1996)); see

also Foman v. Davis, 371 U.S. 178, 182 (1962). With respect to an amendment causing undue

delay, “[c]ourts generally consider the relation of the proposed amended complaint to the original

complaint, favoring proposed complaints that do not ‘radically alter the scope and nature of the

case.’” Smith v. Cafe Asia, 598 F. Supp. 2d 45, 48 (D.D.C. 2009) (citation omitted). With respect

to an amendment being futile, “a district court may properly deny a motion to amend if the

amended pleading would not survive a motion to dismiss.” In re Interbank Funding Corp. Sec.

Litig., 629 F.3d 213, 218 (D.C. Cir. 2010). Because leave to amend should be liberally granted,

the party opposing amendment bears the burden of coming forward with a colorable basis for

denying leave to amend. Abdullah v. Washington, 530 F. Supp. 2d 112, 115 (D.D.C. 2008).

                                         III. DISCUSSION

         Sodexo seeks leave from the Court to file its First Amended Complaint in light of the fact

that its original complaint was dismissed without prejudice. Sodexo asserts that the First Amended

Complaint addresses the infirmities that led to the prior dismissal by sufficiently pleading facts to

support its claims of successor liability against NFP. NFP opposes the request, arguing that

                                                  4
Sodexo’s request for leave to file an amended complaint is futile and that granting the request at

this juncture would unduly prejudice NFP. The Court shall first address the two factors discussed

by NFP in its briefing. In the interest of completeness, the Court shall discuss the other factors

that it must consider in reaching its decision regarding the request for leave to file the amended

complaint which the Court notes are not addressed by NFP in its briefing.

        A. Prejudice to Defendant

        NFP first argues that granting Sodexo’s request to file an amended complaint would unduly

prejudice NFP. Specifically, NFP argues that granting the request to amend “years after the subject

contract was executed and allegedly breached, and only after this Court granted NFP’s Motion to

Dismiss, is . . . unduly prejudicial to NFP.” Def.’s Opp’n at 4 n.4. Instead, NFP argues that Sodexo

should have amended its complaint after NFP put it on notice of the infirmities in the original

complaint by filing its motion to dismiss, rather than waiting to seek leave to amend the complaint

only after the motion to dismiss was granted. Id. at 15. Sodexo asserts that granting its request to

amend would not prejudice NFP because “[t]here has been no discovery in this case, and NFP’s

own brief contends that it is facing the same claims from Sodexo now that it was when this case

was filed . . . .” Pl.’s Reply at 8.

        The Court notes that while NFP is correct that the original claims are premised on events

that occurred several years ago, Sodexo timely put NFP on notice of these claims and has been

pursuing its claims. NFP only points to the temporal distance between the execution and alleged

breach of the contract at issue as a basis for this prejudice, but provides no additional explanation

as to why this lapse in time will prejudice NFP. Indeed, NFP has pointed to no specific reason

why the mere lapse of time prejudices it and, as such, the Court finds NFP’s argument

unconvincing. Moreover, Sodexo has not added new claims but rather pled additional facts that

                                                 5
are related to the claims that it raised in its original complaint. Accordingly, the Court concludes

that granting Sodexo’s request for leave to file the amended complaint will not prejudice NFP.

       B. Futility

       NFP next contends that the Court should deny Sodexo’s request for leave to file an

amended complaint because granting the request would be futile. Specifically, NFP asserts that

Sodexo’s request is futile because: (1) the applicable three-year statute of limitations on Sodexo’s

breach of contract claim has expired; (2) the “new” allegations in Sodexo’s proposed amended

complaint fail to establish that NFP is liable for CMC’s debts and obligations to Sodexo; and (3)

this action is barred by res judicata and/or the prohibition against splitting claims. The Court shall

address each of arguments in turn. For the reasons described herein, the Court finds that NFP has

failed to establish that granting Sodexo’s request for leave to file an amended complaint is futile.

               1. Statute of Limitations

       NFP first asserts that Sodexo’s breach of contract claim is barred under the statute of

limitations. Pursuant to District of Columbia law, the statute of limitations on a contract claim is

three years. D.C. Code § 12-301(7). The statute of limitations begins to run from the time of the

breach. Murray v. Wells Fargo Home Mortg., 953 A.2d 308, 319-20 (D.C. 2008). NFP contends

that the statute of limitations began to run at the latest in January 2010, when Sodexo notified

CMC in writing that it owed Sodexo $349,333.81 for worked performed under the contract. Pl.’s

Mot., Ex. A, ¶ 38 (1st Am. Compl.); Def.’s Opp’n at 13. The parties do not dispute that the original

complaint in this matter was timely filed on January 23, 2012.

       NFP argues that under controlling precedent in this jurisdiction the statute of limitations

ran continuously from the date of the breach and, as such, has expired because the breach occurred

well over three years ago. See Def.’s Opp’n at 13-17. NFP relies primarily on the holding of the

                                                  6
United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) in Ciralsky v.

Central Intelligence Agency, 355 F.3d 661 (D.C. Cir. 2004), to support its assertion that the

dismissal of Sodexo’s original complaint without prejudice was essentially a dismissal with

prejudice because the three-year statute of limitations had expired at that time. The D.C. Circuit’s

holding in Ciralsky is distinguishable from the facts of the instant case for the reasons described

below.

         In Ciralsky, the D.C. Circuit held that the district court did not abuse its discretion in

denying the plaintiff’s motion for reconsideration pursuant to Rule 59(e) and the plaintiff’s related

motion for leave to file an amended complaint pursuant to Rule 15(a), when the district court had

previously struck two complaints for failure to comply with Rule 8(a). Nevertheless, the D.C.

Circuit remanded the case to allow the district court to reconsider its ruling on the motion for

reconsideration in light of the fact that it was now apparent that the plaintiff would be time barred

under the statute of limitation from re-filing his complaint even though his original complaint was

timely filed. Id. at 673-74. NFP argues, quoting Ciralsky, that “‘[o]nce a suit is dismissed, even

if without prejudice, the tolling effect of the filing of the suit is wiped out and the statute of

limitations is deemed to have continued running from whenever the cause of action accrued,

without interruption by that filing.’” Id. at 672 (emphasis added). However, the D.C. Circuit has

since clarified the distinction between the effect of a dismissal without prejudice of a complaint

and dismissal without prejudice of both a complaint and the case in situations where the statute of

limitations has expired since the filing of the original complaint. In Cohen v. Board of Trustees of

the University of the District of Columbia, 819 F.3d 476 (D.C. Cir. 2016), the D.C. Circuit relying

on Ciralsky and the discussion in that opinion of the confines of Rule 15(c), explained that if a

court dismisses only a complaint without prejudice but not the underlying case, the plaintiff “could

                                                 7
. . . file[ ] a new complaint in his original case and the statute of limitations would [be] tolled from

the date of his original complaint.” Id. at 478-79. Alternatively, if a court dismisses both the

complaint and the case without prejudice, the plaintiff “could . . . file[ ] a new complaint in a new

case only if the claims were still timely as of the new filing.” Id. at 479.

       In the instant action, Chief Judge Roberts dismissed only the complaint without prejudice

and did not dismiss the underlying case either at the time of the original dismissal of the complaint

or upon reconsideration. As such, the Court finds that the statute of limitations in the instant action

has been tolled since the date of the filing of the original complaint, January 23, 2012, and

accordingly, Plaintiff’s First Amended Complaint is not barred by the statute of limitations. 3

               2. NFP’s Purported Liability for CMC’s Debts

       NFP next contends that Sodexo’s request to file its First Amended Complaint is futile

because it fails to establish that NFP is liable for CMC’s debts and obligations to Sodexo.

Specifically, NFP argues that the First Amended Complaint does not establish that NFP expressly

or impliedly assumed CMC’s debt or that NFP is a mere continuation of CMC. For the reasons

described, the Court finds that Sodexo has at least pled sufficient facts to demonstrate that its claim

of NFP’s liability on the basis that it is a mere continuation of CMC is not futile. 4 In light of this

finding at this stage of the proceeding, the Court does not reach NFP’s arguments regarding the

       3
          The parties in their briefing also dispute whether equitable tolling would render the First
Amended Complaint timely filed. The Court does not reach this issue because it has determined
the statute of limitations has been tolled since the filing of the original complaint pursuant to
Federal Rule of Civil Procedure 15 and binding precedent.
        4
          Generally, NFP contends that the Court should find Sodexo’s claims futile because two
other district judges in this court and two judges in the Superior Court of the District of Columbia
(“D.C. Superior Court”) have considered the transfer of assets at issue and concluded that NFP did
not assume CMC’s debts. See Def.’s Opp’n at 2 & n.1 (citing cases). The Court has reviewed this
nonbinding authority and at this juncture is not persuaded that it should bar Sodexo from filing an
amended complaint on this basis.

                                                   8
assertion that Sodexo did not sufficiently plead facts to demonstrate that NFP impliedly or

expressly assumed CMC’s debts and liabilities.

       “Ordinarily, a business entity which acquires the assets of another business is not liable for

its predecessor’s liabilities and debts.” Bingham v. Goldberg, Marchesano, Kholman, Inc., 637

A.2d 81, 89 (D.C. 1994). However, one exception to this general rule exists if the buying

corporation is a “mere continuation” of the selling corporation. Id. at 89-90. The court must

examine “[a] number of factors . . . to determine whether one business is a mere continuation of a

predecessor.” Id. at 91. Specifically, the court must consider: (1) whether there is a “common

identity of officers, directors, and stockholders in the purchasing and selling corporations[,]” (2)

“the sufficiency of the consideration passing from one entity for the sale of its interest in

another[,]” (3) whether the old entity “failed to arrange to meet its contractual obligation[s]” and

(4) “whether there is a continuation of the corporate entity of the seller.” Id. at 92.

       Indeed, in addressing the motion to dismiss in the instant action, Chief Judge Roberts

concluded that “there is no continuation of the corporate entity of the seller because CMC was a

privately owned corporation . . . while NFP is a non-profit corporation created by and separate

from the District.” Sodexo Operations, LLC, 930 F. Supp. 2d at 239 (citation omitted). However,

Sodexo has now pled additional facts that at this juncture support a claim against NFP under the

theory that NFP is a mere continuation of CMC. See generally 1st Am. Compl. ¶¶ 53-70.

       Sodexo argues that its First Amended Complaint differs from the original complaint in that

it includes additional details to demonstrate that NFP is liable for CMC’s debts. In support of

these assertions, Sodexo also provided an affidavit from the chairperson of SHA and a

contemporaneous memorandum from the District.             Pl.’s Mot. at 4; 1st Am. Compl. ¶ 69.

                                                   9
Specifically, the proposed First Amended Complaint sets forth information to support the

contention that CMC and NFP:

       (1) had the same employees, (2) the same controlling entity, (3) the same accounts
       receivable and checking accounts, (4) the same funding, (5) the same name, (6) the
       same physical address, (7) the same physical equipment, (8) that NFP and
       CMC/UMC are engaged in an identical business, (9) that CMC/UMC effectively
       ceased to exist after the sale of the hospital to the District, and (10) that the hospital
       was effectively owned by the District before (99% ownership) and after (100%
       ownership) the foreclosure.

Pl.’s Reply at 12.

       Specifically, in its proposed First Amended Complaint, Sodexo maintains that “the District

was always the true owner and operator of CMC,” 1st Am. Compl. ¶ 54, and that “SHA’s

ownership and operation of that hospital was only to ‘maintain the perception of private ownership

and management of [CMC],’” id. In support of these assertions, Sodexo now alleges that prior to

the foreclosure by the District: “‘DC . . . owned 99% of the hospital and all of the working capital

funds to operate the hospital had been advanced . . . by DC,” id. ¶ 55; “‘[o]nly DC funds . . . were

used in the operation of the hospital,’” id. ¶ 56; and “‘DC exercised tight fiscal control and DC

insisted on a third party management company to supervise’ the hospital,” id. ¶ 57. Sodexo also

alleges that the District transferred the following to NFP which it created “to continuously run the

foreclosed upon hospital assets”: “checking accounts not named in the 2007 agreement and not in

existence until 2008”; “the name United Medical Center”; “the services of every employee

including the CEO and CRFO”; “every account receivable including DHS payments and Medicaid

payments due from DC to UMC”; “IRA and Keogh contribution that had been in the hands of third

party”; and “certain accounts payable.” Id. ¶¶ 63-65 (emphasis in original). Moreover, Sodexo

alleges that “the District prevented the Specialty Entities from ‘remov[ing] the goods and

equipment from their facilities following their eviction from the UMC campus . . . SHA and SHW

                                                  10
were informed that they would be unable to remove their equipment from the facility by order of

Peter Nickles. Metropolitan police officers . . . physically prevented the relocation.’” Id. ¶ 66.

Finally, Sodexo purports that almost nothing changed before and after the hospital takeover in that

DC owned 99% of the building prior to the takeover and owns 100% of it after the takeover and

that prior to the takeover the hospital was operated on the District’s money and it continues to be

operated on the District’s money after the takeover. Id. ¶ 69.

       NFP argues that Sodexo’s claim that NFP is a mere continuation of CMC fails because

there was no sale of CMC and, accordingly, no “selling corporation.” See Bingham, 637 A.2d at

90 (noting successor liability exists when “the buying corporation is a ‘mere continuation’ of the

selling corporation”). Rather, NFP asserts, the District foreclosed on the privately-owned for-

profit CMC and created NFP and in a transaction of this nature, successor liability cannot be

established under a mere continuation theory.

       Sodexo asserts that a foreclosure instead of a sale does not necessarily preclude a

corporation from qualifying as a mere continuation of its predecessor and points to nonbinding

authority in support of this proposition. See Pl.’s Reply at 13-15. Indeed, Sodexo cites to precedent

from other jurisdictions that supports its position that the transfer of assets through foreclosure

does not necessarily preclude a plaintiff from asserting that an entity is a mere continuation of the

foreclosed-upon entity. See, e.g., Ed Peters Jewelry Co. v. C & J Jewelry Co., 124 F.3d 252, 267

(1st Cir. 1997) (“[E]xisting case law overwhelmingly confirms that an intervening foreclosure sale

affords an acquiring corporation no automatic exemption from successor liability.”); Kaiser

Found. Health Plan of Mid-Atlantic States v. Clary & Moore, P.C., 123 F.3d 201, 206 (4th Cir.

1997) (“[F]orm must not be elevated over substance in deciding the issue of successor liability.”);

Stoumbos v. Kilimnik, 988 F.2d 949, 962 (9th Cir. 1993) (“The mere fact that the transfer of assets

                                                 11
involved foreclosure on a security interest will not insulate a successor corporation from liability

where other facts point to a continuation.”); EEOC v. SWP, Inc., 153 F. Supp. 2d 911, 924 (N.D.

Ind. 2001) (“RBK’s argument that a foreclosure sale cuts off all possibility of successor liability

is simply incorrect.”); Fiber-Lite Corp. v. Molded Acoustical Prods. of Easton, Inc., 186 B.R. 603,

610 (E.D. Pa. 1994) (“[W]e reject Easton’s contention that it cannot be responsible for Indiana’s

debts since it acquired Indiana’s assets in a foreclosure sale . . . .”). Here, neither party has pointed

to binding authority such that the Court can conclude that Sodexo’s claim that NFP is a mere

continuation of CMC is futile based on the fact the NFP was created after the District foreclosed

on CMC. Accordingly, for the reasons described and on this record, the Court finds that NFP has

not established that permitting Sodexo to file an amended complaint is futile.

                3. Res Judicata and/or The Prohibition Against Claim Splitting

         NFP further contends that Sodexo’s request to file an amended complaint is futile because

it is barred by res judicata and/or violates the prohibition against splitting claims. Def.’s Opp’n at

25. Specifically, NFP argues that Sodexo is precluded from pursuing a claim against NFP because

Sodexo brought suit against CMC in the D.C. Superior Court to recover damages for the same

alleged breach. Id. at 26. For the reasons described herein, the Court concludes that at least at this

phase of the proceeding, NFP has not demonstrated that Sodexo’s claim is barred by res judicata

or the prohibition against splitting claims such that granting leave to file the amended complaint

is futile.

         “To determine whether a plaintiff is claim-splitting, ‘[t]he proper question is whether,

assuming the first suit was already final, the second suit would be precluded under res judicata

analysis.’” Clayton v. District of Columbia, 36 F. Supp. 3d 91, 94 (D.D.C. 2014) (quoting Katz v.

Gerardi, 655 F.3d 1212, 1219 (10th Cir. 2011)). “The doctrine of res judicata prevents repetitious

                                                   12
litigation involving the same causes of action or the same issues.” I.A.M. Nat’l Pension Fund v.

Indus. Gear Mfg. Co., 723 F.2d 944, 946 (D.C. Cir. 1983). The doctrine has two components:

claim preclusion and issue preclusion. Taylor v. Sturgell, 553 U.S. 880, 892 (2008). Claim

preclusion incorporates the principles of “merger—the extinguishment of a claim in a judgment

for plaintiff—” and “bar—the extinguishment of a claim in a judgment for defendant.”

Restatement (Second) of Judgments, ch. 3, Introductory Note (Am. Law. Inst. 1982); Taylor, 553

U.S. at 892 n.5 (citing Migra v. Warren City School Dist. Bd. of Ed., 465 U.S. 75, 77 n.1 (1984)).

Issue preclusion incorporates the principles of direct estoppel—“the effect of the determination of

an issue in another action between the parties on the same claim”—and collateral estoppel—such

effect in another action on “a different claim.” Restatement (Second) of Judgments, ch. 3,

Introductory Note (Am. Law. Inst. 1982); Taylor, 553 U.S. at 892 n.5 (citing Migra, 465 U.S. 75

at 77 n.1).

        “Under claim preclusion, ‘a final judgment on the merits of an action precludes the parties

or their privies from relitigating issues that were or could have been raised in that action.’”

Sheppard v. District of Columbia, 791 F. Supp. 2d 1, 4 (D.D.C. Feb. 22, 2011) (quoting Drake v.

FAA, 291 F.3d 59, 66 (D.C. Cir. 2002)). Under this form of res judicata, “a subsequent lawsuit

will be barred if there has been prior litigation (1) involving the same claims or cause of action,

(2) between the same parties or their privies, and (3) there has been a final, valid judgment on the

merits, (4) by a court of competent jurisdiction.” Smalls v. United States, 471 F.3d 186, 192 (D.C.

Cir. 2006). Broadly speaking, “‘[a] privy is one [who is] so identified in interest with a party to

the former litigation that he or she represents precisely the same legal right in respect to the subject

matter of the case.’” Herrion v. Children’s Hosp. Nat’l Med. Ctr., 786 F. Supp. 2d 359, 371

(D.D.C. 2011) (quoting Smith v. Jenkins, 562 A.2d 610, 615 (D.C. 1989) (alterations in original)).

                                                  13
       Under the collateral estoppel form of issue preclusion, “‘once a court has decided an issue

of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a

suit on a different cause of action involving a party to the first case.’” Sheppard, 791 F. Supp. 2d

at 5 (quoting Yamaha Corp. of Am. v. United States, 961 F.2d 245, 254 (D.C. Cir. 1992)). This

form of issue preclusion applies if three conditions are met:

       First, the issue must have been actually litigated, that is, contested by the parties
       and submitted for determination by the court. Second, the issue must have been
       actually and necessarily determined by a court of competent jurisdiction in the first
       . . . [case]. Third, preclusion in the second . . . [case] must not work an unfairness.

Otherson v. Dep’t of Justice, 711 F.2d 267, 273 (D.C. Cir. 1983) (internal citations, quotations,

and quotation marks omitted).

       Here, NFP appears to argue that Sodexo’s claims are barred by claim preclusion. NFP

asserts that Sodexo has been awarded a final judgment against CMC in the amount of $349,333.81,

the same amount Sodexo is seeking here, in a suit arising out of the same contract in the D.C.

Superior Court and both parties point to an order from Associate Judge Erik P. Christian in that

action denying CMC’s request to substitute the District and apparently NFP as defendants in that

case. 5 Def.’s Opp’n at 3; id., Ex. A (Order Denying Mot. for Substitution, 2010 CA 002467 B);

Pl.’s Reply, Ex. 1 (same). NFP also points to several other opinions from other judges in this court

and in D.C. Superior Court that it argues solidifies “that NFP did not assume the debts and

liabilities of the prior operator of the hospital, Capitol Medical Center, LLC . . . .” Def.’s Supp.

Mem. in Opp’n at 1; see also Def.’s Opp’n at 3.

        5
           While not crystal clear, the Court has reviewed the docket in the matter before Judge
Christian and the Order provided by the parties. In this review, it appears that CMC sought to join
both the District and NFP as defendants in that action and Sodexo took no position as to the request.
Judge Christian ultimately denied the request, stating: “Because the Court has concluded that
neither the District nor NFP assumed the debts and liabilities of CMC, there is no basis for a third-
party complaint alleging the District’s secondary liability to CMC.” Def.’s Opp’n, Ex. A at 7.

                                                 14
       However, NFP has not set forth its argument in full, applying the requisite legal standard

for either claim or issue preclusion to the facts of the instant action. Rather, each party argues that

the other has presented inconsistent positions with the respect to whether this action involves the

same parties or their privies before the Court in this action and in the action in D.C. Superior Court.

Moreover, neither party has fully discussed the import, if any, of the earlier decisions in this court

and in D.C. Superior Court to this action. While NFP cites to these other decisions, it does not

sufficiently analyze the application of these decisions to the present case. As such, the Court

concludes that NFP has not met its burden of coming forward with a colorable basis for denying

leave to amend on the grounds that Sodexo’s claims are barred by res judicata.

       C. Other Factors for the Court’s Consideration

       While they are not the focus of NFP’s briefing, the Court also consider the remaining

factors. First, the Court notes that Sodexo has not previously amended its complaint. As such, the

Court now turns to the issues of undue delay and bad faith.

       Turning first to the issue of undue delay, NFP appears to argue that Sodexo should have

amended its complaint as soon as it was placed on notice through the filing of NFP’s motion to

dismiss of the infirmities in the original complaint. However, Sodexo represented in response that

it was its belief that its original complaint was sufficient based on its reading of prior case law.

Pl.’s Reply at 5-6. Moreover, as Sodexo noted, it “filed its original claim nearly a year before the

three-year period ran . . . [and] [s]ince that time, there has been less than one month where this

Court has not had on file either an active complaint or a motion to amend the complaint.” Id. at 5.

As such, while this matter has been pending for a significant amount of time, the Court notes that

Sodexo has continually pursued its claim. Moreover, a review of the proposed First Amended

Complaint does not radically alter the scope and nature of the case. Rather, Sodexo, through its

                                                  15
First Amended Complaint, appears to bolster its same claims with additional facts. Finally, turning

to the issue of bad faith, NFP has not alleged bad faith on Sodexo’s part and nothing in the record

indicates that either party has acted in bad faith.

          After considering the parties’ arguments, the Court concludes that NFP has not met its

burden of showing a colorable basis for denying leave to amend the complaint. Accordingly, in

an exercise of its discretion, the Court shall grant leave to Sodexo to file its proposed First

Amended Complaint pursuant to Rule 15(a)(2). In reaching this conclusion, the Court notes that

while it has concluded that NFP has not met its burden of demonstrating a colorable basis for

denying leave to amend, the Court expresses no other opinion on the validity of the Sodexo’s

claims.

                                        IV. CONCLUSION

          For the foregoing reasons, it is this 28th day of September, 2016, hereby

          ORDERED that Plaintiff’s [25] Motion for Leave to File an Amended Complaint is

GRANTED; and it is further

          ORDERED that the proposed First Amended Complaint, ECF No. [21-2], attached as

Exhibit A to Plaintiff’s Motion for Leave to File an Amended Complaint and for Clarification or,

in the Alternative, Reconsideration, shall be deemed filed; and it is further

          ORDERED that Defendant shall respond to the First Amended Complaint by no later than

October 19, 2016.

                                                              __     /s/______________________
                                                              COLLEEN KOLLAR-KOTELLY
                                                              United States District Judge

                                                  16