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Martell Strategic Funding LLC v. American Hospitality Academy

United States District Court, S.D. New York

July 10, 2017


          Efrem Schwalb Goldberg & Rimberg PLLC New York, New York Counsel for Plaintiff Martell Strategic Funding LLC

          Simcha D. Schonfeld Koss & Schonfeld, LLP New York, New York Counsel for Defendants American Hospitality Academy and Cindi Reiman


          VERNON S. BRODERICK, United States District Judge

         Before me is the motion of Defendants American Hospitality Academy and Cindi Reiman (together, “Defendants”) for leave to amend/correct their answer to Plaintiff's amended complaint. (Doc. 223.) Because Defendants failed to act with diligence and have not demonstrated good cause, the motion to amend is DENIED.

         I. Factual Background and Procedural History[1]

         I assume the parties' familiarity with this case and refer the parties to my prior Memoranda and Orders for a recitation of a more complete factual background. (See Docs. 123, 124.)

         This case was commenced in 2011 and removed from state court by Defendants on January 25, 2012. (Doc. 1.) Martell Strategic Funding LLC (“MSF”) filed its Amended Complaint on May 1, 2012. (Doc. 9.) On September 28, 2012, Training Beam Education, Ltd. (“TBE”) filed a motion to intervene. (Doc. 32.) Defendants thereafter moved to dismiss the Amended Complaint, (Doc. 56), and for sanctions, (Doc. 53). By order dated September 4, 2013, Judge Andrew Carter, to whom this case was originally assigned, [2] granted in part and denied in part Defendants' motion to dismiss, denied the motion for sanctions, and granted TBE's motion to intervene. (Doc. 67.)

         On October 31, 2013, Defendants answered the Amended Complaint. (Doc. 72.) The Case Management Plan and Scheduling Order (“CMP”) was entered on February 18, 2014. (Doc. 82.) The CMP stated in relevant part, that: “No additional causes of action or defenses may be asserted after 4/30/2014 without leave of the Court, ” and provided for all discovery to be completed by July 31, 2014. (CMP ¶¶ 5, 9.) On April 17, 2014, MSF and Defendants filed a joint letter motion seeking extensions of certain deadlines in the CMP, including the following: “No additional causes of action or defenses may be asserted after May 30, 2014 without leave of the Court.” (Doc. 95.) I granted that request on April 18, 2014. (Doc. 96.) On May 30, 2014, Defendants filed the Amended Answer and Counterclaims (“Amended Answer”). (Doc. 101.)

         The parties requested and I granted several requests to extend the deadline for completion of discovery, (see, e.g., Docs. 149, 170, 178, 195, 207), and discovery ultimately closed on November 18, 2016, (Docs. 207, 208). The various extensions enabled the parties to complete necessary discovery including but not limited to depositions and document production. Specifically, Plaintiff MSF deposed Defendant Reiman on February 2, 2016, (Schonfeld Decl., Ex. A), and Defendants deposed Michael Milea, the sole principal of MSF, on February 23, 2016, (id., Ex. B).[3]

         On December 12, 2016, Defendants filed a pre-motion letter regarding their anticipated motion for summary judgment based upon unconscionability. (Doc. 211.) In its response letter, Plaintiff argued that such a motion would be meritless since Defendants failed to assert unconscionability as an affirmative defense in their Amended Answer, and thus waived that defense. (Doc. 213.) I held a pre-motion conference on December 23 to discuss the anticipated motion at which I directed the parties to submit a proposed briefing schedule regarding Defendants' motion to amend their answer. (Dkt. Entry Dec. 23, 2016.)

         On February 10, 2017, Defendants filed their motion for leave to file an amended answer to the amended complaint, (Doc. 223), along with a memorandum of law in support, (Doc. 227), and declaration of Simcha Schonfeld with exhibits, (Doc. 228). On March 14, 2017, Plaintiff filed its memorandum of law in opposition to the motion, (Doc. 231), and the declaration of Efrem Schwalb, (Doc. 232). On April 3, 2017, Defendants filed their reply in further support of the motion to file an amended answer. (Doc. 235.)

         II. Legal Standard

         Where a scheduling order has been entered governing, among other things, the amendment of pleadings, the lenient standard under Rule 15(a), which provides leave to amend “shall be freely given, ” must be balanced against the requirement under Rule 16(b) that a court's scheduling order “shall not be modified except upon a showing of good cause.” Fed.R.Civ.P. 15(a), 16(b)(4) (“A schedule may be modified only for good cause and with the judge's consent.”); see Holmes v. Grubman, 568 F.3d 329, 334-35 (2d Cir. 2009); Grochowski v. Phoenix Constr., 318 F.3d 80, 86 (2d Cir. 2003); Parker v. Columbia Pictures Indus., 204 F.3d 326, 340 (2d Cir. 2000) (holding that “a district court does not abuse its discretion in denying leave to amend the pleadings after the deadline set in the scheduling order where the moving party has failed to establish good cause”). “[A] finding of ‘good cause' depends on the diligence of the moving party.” Parker, 204 F.3d at 340; see also Holmes, 568 F.3d at 335 (citing Grochowski, 318 F.3d at 86); Medicor, Inc. v. Access Pharm., Inc., 290 F.R.D. 50, 52 (S.D.N.Y. 2013) (“[T]he good cause standard is not satisfied when the proposed amendment rests on information that the party knew, or should have known, in advance of the deadline.” (quoting Enzymotec Ltd. v. NBTY, Inc., 754 F.Supp.2d 527, 536 (E.D.N.Y. 2010))).

         A court “also may consider other relevant factors including, in particular, whether allowing the amendment of the pleading at this stage of the litigation will prejudice” the non-moving party. Kassner v. 2nd Ave. Delicatessen Inc.,496 F.3d 229, 244 (2d Cir. 2007). An amendment is prejudicial to the non-moving party if it “would ‘require the opponent to expend significant additional resources to conduct discovery and prepare for trial' or ‘significantly delay the resolution of the ...

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