United States District Court, Eastern District of New York
March 4, 2003
JEREMIAH SULLIVAN IN HIS FIDUCIARY CAPACITY AS A TRUSTEE FOR THE POINTERS, CLEANERS & CAULKERS WELFARE, PENSION & ANNUITY FUNDS, AND AS SECRETARY-TREASURER OF THE BRICKLAYERS & ALLIED CRAFTWORKERS LOCAL UNION NO. 1, B.A.C.I.U., AFL-CIO, PLAINTIFFS, AGAINST WEST NEW YORK RESIDENTIAL, INC., WEST NEW YORK RESTORATION, INC., ALFRED GALLICCHIO, ALAN GALLICCHIO, AND JAN PAWELEC, DEFENDANTS.
The opinion of the court was delivered by: I. Leo Glasser, United States District Judge
MEMORANDUM & ORDER
Plaintiffs seek to add a new party to this action, West New York Restoration of CT, Inc. ("WNYCT"), pursuant to Rules 15(a) and 21 of the Federal Rules of Civil Procedure. For the reasons that follow, the motion is granted.
This action was commenced against defendants West New York Residential, Inc. ("Residential"), West New York Restoration, Inc. ("Restoration"), and Alfred Gallicchio on November 26, 2001. After some discovery, plaintiffs filed an amended complaint on July 11, 2002, adding Alan Gallicchio and Jan Pawelec as defendants, and adding a claim against Alfred Gallicchio on the theory of ERISA fiduciary liability.
In July 2002, plaintiffs' counsel learned of the existence of WNYCT and West New York Restoration JP, Inc. ("JP") from a review of records from the Secretary of State. According to these records, dated July 7, 2002, WNYCT was incorporated on June 13, 2002, and Alfred Gallicchio was a principal of the company. JP was incorporated on June 21, 2002, and shared the same address as Restoration.
Only after deposition testimony which apparently concluded on January 28, 2003, did plaintiffs' counsel learn of information suggesting that WNYCT was an alter ego of Restoration. This information included the facts that a) Alfred Gallicchio was the president of both Restoration and WNYCT, b) both companies performed exterior masonry work covered by the collective bargaining agreement with plaintiffs, c) both companies utilized the same office space, d) many of Restoration's former employees, including three project managers. have worked or currently work for WNYCT, e) WNYCT had assumed several of Restoration's ongoing projects. and f) Jacek Slowac, a project manager for both companies. continued to manage a project for Restoration while receiving his paycheck from WNYCT.
Plaintiffs' counsel also learned that Jan Pawelec was the sole shareholder of JP, which company had never engaged in any activity. By that point, plaintiffs had already filed a notice of dismissal without prejudice against defendant Pawelec only.
Plaintiffs now move, by Notice of Motion dated February 7, 2003, and Reply Notice of Motion dated February 25, 2003, to add WNYCT as a defendant.
I. Legal Standard
Under Rule 15(a) of the Federal Rules of Civil Procedure, a party may amend its complaint "by leave of court" which should be "freely given when justice so requires." A motion to amend should be denied if 1) the party seeking to amend has been guilty of undue delay, dilatory motive, bad faith or repeated failure to cure deficiencies by previous amendments allowed, 2) the amendment would result in undue prejudice to the opposing party, or 3) the amendment would be futile. See Dluhos v. The Floating and Abandoned Vessel, Known as "New York", 162 F.3d 63, 69 (2d Cir. 1998).
Under Rule 21 of the Federal Rules of Civil Procedure, "[p]arties may be . . . added by order of the court on motion by any party . . . on such terms as are just." Rule 21 allows the court broad discretion to permit the addition of a party at any stage in the litigation. See Andujar v. Rogowski, 113 F.R.D. 151, 154 (S.D.N.Y. 1986) (citing 7 C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 1688 (2d ed. 1986).
II. Rule 15(a)
A. Undue delay, bad faith, dilatory motive and repeated failure to cure
Defendants concede that plaintiffs have not unduly delayed bringing this motion or acted in bad faith. Def. Mem. at 1. This would also suggest an absence of dilatory motive. In addition, plaintiffs' derive no benefit from delaying the action, since the only effect would be to delay the recovery they would obtain if successful. Finally, plaintiffs are not guilty of repeated failure to cure deficiencies by previous amendments, since the information on which the present motion is based came into their possession only after they filed their first amended complaint.
B. Undue Prejudice
In determining what would constitute undue prejudice in this context. the Second Circuit considers "whether the assertion of the new claim would: (i) require the opponent to expend significant additional resources to conduct discovery and prepare for trial; (ii) significantly delay resolution of the dispute; or (iii) prevent the [opponent] from bringing a timely action in another jurisdiction." Block v. First Blood Assoc., 988 F.2d 344, 350 (2d Cir. 1993). Plaintiffs' motion implicates none of these concerns.
The additional discovery of WNYCT will likely involve only some of the same witnesses already deposed. and any documents sought will likely be in defendants' possession. This discovery will be limited in scope. and likely involve the same witnesses as did the prior discovery. Indeed. defendants do not contend that the amendment would require them to expend significant additional resources or significantly delay resolution of the dispute. Finally, granting the motion to amend will not prevent defendants' from bringing a timely action in another jurisdiction, something they have indicated no intention to do. For all these reasons, the Court finds that allowance of the amendment would not unduly prejudice defendants.
An amendment is futile only if movants cannot demonstrate "at least colorable grounds for relief." Ryder Energy Distrib. Corp. v. Merrill Lynch Commod. Inc., 748 F.2d 774, 783 (2d Cir. 1984). Here, if, as plaintiffs contend. WNYCT is an alter ego of Restoration. they would have a colorable claim against WNYCT. Although defendants argue that plaintiffs have not made a sufficient showing of this possibility, the Court finds that they have.
In considering whether two enterprises are alter egos. the courts consider whether they have substantially identical management, business purpose, operation, equipment, customers, supervision and ownership. See Goodman Piping Products, Inc. v. NLRB, 741 F.2d 10, 11 (2d Cir. 1984). The undisputed facts laid out in the affidavit of plaintiffs' counsel strongly suggest that some of these conditions are satisfied here. Discovery may reveal that others are satisfied as well. Since plaintiffs therefore have a colorable claim for relief, their amendment is not futile.
III. Rule 21
Parties may be added under Rule 21 "to structure a case for the efficient administration of justice." 4-21 Moore's Federal Practice Civil § 21.02 (3d Ed. 2002). Here, the addition of WNYCT would promote this value by making it unnecessary for plaintiffs to file an entirely new action against it, and by allowing its potential liability to be adjudicated in a closely related case. Defendants' suggestion that plaintiffs first be required to obtain a judgment against Restoration, then demonstrate that it cannot be collected, and only then bring an action against WNYCT is plainly ill-suited to promote judicial efficiency. The Court therefore finds that plaintiffs have satisfied the standards of Rule 21 of the Federal Rules of Civil Procedure.
For all of the above reasons, plaintiffs' motion to amend the complaint to add WNYCT as a defendant is granted.