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Natasha Shpak, et al v. Malcolm Curtis

February 14, 2012


The opinion of the court was delivered by: James Orenstein, Magistrate Judge:


Plaintiffs Natasha Shpak ("Shpak"), Rouben Vatanov, and Lili Ougoulava have asserted a variety of tort and contract claims against defendants Malcolm and Judith Curtis (respectively, "Malcolm" and "Judith"), Belzona Systems of California, Inc. ("Belzona"), and Simnat Global Inc. ("Simnat"). Having secured certain information in the discovery process, they now seek leave to amend the complaint to include additional factual allegations and legal claims, and to add as a named defendant the 2002 Malcolm Curtis and Judith Curtis Revocable Trust (the "Curtis Trust"). The defendants oppose the motion on the grounds that the proposed amendment is both futile and untimely. For the reasons set forth below, I grant the plaintiffs' motion.

I. Background

I assume the reader's familiarity with the factual circumstances and procedural history of this action, as described in an opinion by the Honorable Roslynn R. Mauskopf, United States District Judge, denying the defendants' motion to dismiss the Complaint. See Shpak v. Curtis, 2011 WL 4460605, at *1-3 (E.D.N.Y. Sept. 16, 2011). I include here only the background information relevant to the instant motion to amend. For purposes of analysis, I assume the facts alleged in the plaintiffs' pleadings to be true.

Plaintiff Shpak is the daughter of plaintiffs Vatanov and Ougoulava. They allege that defendants Malcolm and Judith Curtis, together with their son, non-party Simon Curtis ("Simon" or, collectively with his parents, the "Curtises"), hatched a scheme to induce Shpak's parents to give valuable restaurant equipment to the Curtises -- equipment with which the Curtises later absconded. As part of the scheme, the plaintiffs allege that Simon falsely promised to marry Shpak and Simon's parents falsely promised to open a restaurant in California to support the couple. Docket Entry ("DE") 1 (the "Complaint") ¶¶ 7-52. In their original complaint, the plaintiffs further alleged that, sometime after February 2008, Malcolm and Judith formed defendant corporation Simnat as a holding company for the new restaurant, which was to be called "The Edge." Id. ¶¶ 29-31, 38. Although Malcolm and Judith suggested to Shpak that she and her fiance would jointly own Simnat, they in fact retained an 80 percent ownership interest in the company. Id. ¶ 31.

The plaintiffs filed their complaint on April 23, 2010, asserting claims of fraud, conspiracy, violation of Section 80-b of the New York Civil Rights Law, breach of contract, breach of fiduciary duty, conversion, and unjust enrichment. See DE 1. The defendants did not answer the complaint, but instead moved to dismiss the action on a variety of grounds. See DE 34.

Notwithstanding that motion, and over the defendants' objection, I ordered the parties to commence discovery. DE 32. Pursuant to that decision, I entered a case management and scheduling pursuant to Federal Rule of Civil Procedure ("Rule") 16(b) that set deadlines not only for the completion of discovery but also for other pretrial matters, including a deadline of January 31, 2011, for any party to seek to join a new party or amend its pleadings. See DE 33 at 1.

On November 24, 2010, in support of their motion to dismiss, the defendants served an affidavit in which Malcolm stated that Shpak had owned 50 percent of Simnat until at least July 18, 2008, citing as evidence a form submitted to the IRS on that date indicating that Simnat was jointly owned by Simon and Shpak. DE 34-11 ("Malcolm Aff.") ¶ 13, DE 34-12 (exhibits) at 39-40; DE 34-14 (affidavit of service).

On January 18, 2011, in response to the plaintiffs' request for "[a]ll documents reflecting the corporate structure and formation of . Simnat," the defendants produced the first and fifth pages of a "buy-sell agreement" between Simnat and the Curtises dated September 1, 2008. DE 55 ¶ 2, Ex. 1 (defendants' discovery response) at 3 & Ex. 3 (agreement) at 1-2. The agreement identified the three Curtises as Simnat's corporate officers, and indicated that 1,000 shares of common stock in the corporation had been issued in the following amounts: 200 shares to Simon, 400 shares Malcolm as "trustee of the [Curtis] Trust[,]" and 400 shares to Judith in the same capacity. DE 55 Ex. 3 at 1-2. The defendants also simultaneously produced three stock certificates reflecting the issuance of Simnat shares as described in the agreement. DE 55 ¶ 2, Ex. 4. In addition to these documents, the plaintiffs obtained other documents during discovery relating to the ownership of Simnat, including a corporate questionnaire submitted to the California Department of Alcoholic Beverage Control indicating that, as of September 1, 2008, all shares of Simnat were held by the Curtises in the proportions described above, and a print-out from the California Department of Alcoholic Beverage Control online query system indicating that the ownership of Simnat remained unchanged through September 28, 2011. DE 50 Exs. C, E.

As of May 11, 2011, the parties had exchanged documents and responses to interrogatories, but had not yet taken any depositions. Because the defendants' dismissal motion remained undecided at that time, the parties jointly asked me to extend the discovery deadline. DE 41. I granted the request and entered the following order: "To the extent any claims remain pending upon the resolution of the dismissal motion, the parties shall confer and, no later than one week after entry of the court's ruling, submit a proposed schedule for the expedited completion of all remaining discovery." Order dated May 16, 2011.

On September 26, 2011, the court denied the defendants' motion to dismiss. DE 43. A week later, pursuant to my order, the parties submitted a proposed schedule for the completion of all remaining discovery. DE 44. The plaintiffs proposed a schedule that included a new deadline of December 31, 2011, for the amendment of pleadings or joinder of parties -- notwithstanding the fact that the deadline for such actions had already lapsed at the time I granted the parties' request to extend the original schedule. See id.; DE 33 at 1. The defendants objected to that aspect of the plaintiffs' proposal -- but not because the original deadline for amendments had passed or because they contended that allowing any amendment or joinder would somehow be prejudicial. Instead, the defendants said no more than that they "did not agree to the inclusion of a deadline for the joinder of additional parties and the amendment of the pleadings in [the parties' joint scheduling submission] because it is not a 'discovery' item." DE 44 at 1.

On October 12, 2011, I met with the parties to discuss discovery and other pretrial matters. The plaintiffs' counsel raised the possibility of adding new claims and a new defendant, and the defendants' counsel objected. After hearing from both sides, I ordered the parties to confer further on the issue and ruled that in the event they could not reach an agreement, the plaintiffs could file a motion to amend no later than October 26, 2011. DE 47. On the same day, pursuant to Rule 16(b), I entered an Amended Case Management and Scheduling Order that included a new deadline of October 26, 2011, for any party to amend its pleading or join a new party. DE 47 at 1.

The plaintiffs met that deadline. On October 26, 2011 they plaintiffs filed the instant motion seeking leave to amend the complaint to add additional facts and claims based upon the information obtained during discovery, and to add the Curtis Trust as a defendant. DE 50. Specifically, the plaintiffs have seek to supplement the complaint to allege three facts.

First, the plaintiffs seek to allege that Shpak was a 50 percent owner of Simnat upon its formation -- a fact that the defendants apparently believe to be true. DE 50 Ex. 3 (the proposed Amended Complaint ("PAC") ¶¶ 56-58; see Malcolm Aff. ¶ 13. Second, they seek to allege that Shpak was dispossessed of her interest in Simnat, without compensation, on or about September 1, 2008, when Simnat issued shares of its stock to the Curtises. PAC ¶¶ 38, 59-61. Third, they wish to allege that Malcolm and Judith transferred their respective interests in Simnat to the ...

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