The opinion of the court was delivered by: WILLIAM C. CONNER
Plaintiff Rose McCoy instituted this action against defendants Gary Goldberg & company, Inc., a securities and financial planning concern, and Gary M. Goldberg, its President (together, "Goldberg") asserting claims based on violations of the Racketeering Influenced and Corrupt Organizations Act ("Rico"), 18 U.S.C. § 1961 et seq., the federal securities laws, common law fraud, and breach of fiduciary duty in connection with plaintiff's purchases of various limited partnership interests. Thereafter, Goldberg filed a Third-Party Complaint against eleven limited partnerships in which plaintiff had invested, seeking contribution and/or indemnification. This action is presently before the Court on Third-Party defendants' NTS-Properties IV, NTS-Properties Associates IV, NTS-Properties V, and NTS-Properties Associates V (collectively, "NTS") motion pursuant to Fed R. Civ. P. 15(a) to amend their Answer to assert additional affirmative defenses and counterclaims against Goldberg. For the reasons set forth below, we grant NTS's motion and direct that they amend their Answer in accordance with this Opinion within 15 days.
The principal action in this case was commenced on December 8, 1989 and was then dismissed by this Court. Plaintiff thereafter filed an Amended Complaint on November 27, 1990, alleging that defendant/third-party plaintiff Goldberg solicited and urged her to invest the proceeds of her deceased husband's life insurance policy in twelve different limited partnerships that were manifestly unsuitable for her and contrary to the low-risk, liquid investment program she informed Goldberg was necessary to secure her income.
On January 28, 1991, Goldberg filed the Third-Party Complaint against eleven limited partnerships in which plaintiff had invested, including NTS. The Third-Party Complaint alleges that in reliance on various representations made to Goldberg by NTS through sales literature, prospectuses, and other promotional material, Goldberg recommended that plaintiff invest in NTS. Plaintiff then did so. Thereafter, NTS allegedly did not live up to its "sales pitch," and plaintiff suffered substantial loss. The Third-Party Complaint alleges that Goldberg is entitled to contribution or indemnification from NTS because Goldberg specifically relied on NTS's representations in recommending that plaintiff invest in the limited partnerships.
On April 15, 1991, NTS filed its Answer to the Third-Party Complaint. Thereafter, in October of 1992 and prior to the jury trial of the principal action, this Court severed the third-party actions from the principal action against Goldberg pursuant to Fed. R. Civ. P. 42(b). The trial of the principal action occurred in October of 1992. The jury found for plaintiff solely on the breach of fiduciary duty claim and awarded compensatory damages in the amount of $ 872,714. We granted defendant's motion for a remittitur of the damages award and reduced the award to $ 579,677.85. A satisfaction of judgment in the principal action was entered on April 9, 1993.
Meanwhile, the third-party actions remained dormant from the time of severance until a recent status conference held on September 24, 1993. At the status conference, we set a discovery schedule with respect to the third-party claims.
The present motion was filed on December 2, 1993. In sum, NTS argues that because the jury found that Goldberg breached his fiduciary duty to McCoy, he is in breach of certain agreements he entered into with NTS which obligated him to comply with all legal requirements when offering interests in NTS to prospective purchasers. NTS seeks leave to amend its Answer to assert additional affirmative defenses and counterclaims against Goldberg based upon such breaches and upon the res judicata and/or collateral estoppel effect of the jury's findings.
Rule 15(a), Fed. R. Civ. P., allows a party to amend its pleading more than twenty days after it has been filed or after the pleading in response thereto has been served only with the court's permission. However, the rule notes that "leave shall be freely given when justice so requires." Accordingly, the Supreme Court has ruled that "in the absence of any apparent or declared reason--such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.--the leave sought should . . . be freely given." Foman v. Davis, 371 U.S. 178, 182, 9 L. Ed. 2d 222, 83 S. Ct. 227 (1962).
The Second Circuit and this Court have interpreted the Foman standard to allow amendments, even if there was substantial delay in seeking the same, unless the movant has acted in bad faith, the amendment will prejudice the non-movant, or the amendment is futile. See Richardson Greenshields Securities, Inc. v. Lau, 825 F.2d 647, 653 n.6 (2d Cir. 1987) (motion to amend should be denied only for undue delay, bad faith, futility, or prejudice to opposing party; mere delay, absent a showing of bad faith or prejudice, is not alone grounds for denial of leave to amend) (citations omitted); Posadas de Mexico, S.A. de C.V. v. Dukes, 757 F. Supp. 297, 300 (S.D.N.Y. 1991) (J. Conner) (party should be given leave to amend unless party's motion is product of bad faith or dilatory motive, or amendment will prejudice adversary or be futile).
Defendant/third-party plaintiff Goldberg argues that NTS's motion for leave to amend the Answer should be denied because NTS inexcusably delayed and acted in bad faith in seeking leave to amend and because Counts I, II, III, and IV of the proposed counterclaims are ...