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Catamount Radiology, P.C. v. Bailey

United States District Court, D. Vermont

August 27, 2015

Catamount Radiology, P.C., and Scott D. Smith, M.D., Plaintiffs,
v.
Yvette Bailey, M.D., Defendant. Yvette Bailey, M.D., Counterclaim Plaintiff And Third-Party Plaintiff
v.
Scott D. Smith, M.D.; Catamount Radiology, P.C.; and Rebecca O’Berry, Counterclaim Defendants And Third-Party Defendant.

MEMORANDUM AND ORDER ON PLAINTIFFS’ MOTION TO AMEND THEIR COMPLAINT (DOC. 63)

HONORABLE J. GARVAN MURTHA UNITED STATES DISTRICT JUDGE.

I. Introduction

On July 17, 2015, Plaintiffs Catamount Radiology, P.C. (“Catamount”) and Scott Smith (“Smith”) moved to amend their Complaint. (Doc. 63.) Catamount and Smith seek to add Kenneth Romer (“Romer”) and House Call Radiology LLC (“House Call”) as defendants, and to add claims for civil conspiracy, unjust enrichment, and fraud/estoppel. Defendant Yvette Bailey “(Bailey”) opposed the motion to amend (Doc. 66) and Catamount and Smith replied (Doc. 74).

II. Discussion

A. Standard of Review

“[W]hen a party requests leave to amend its complaint, permission generally should be freely granted.” Buckner v. Shumlin, No. 12-cv-90, 2013 WL 809590, at *6 (D. Vt. Mar. 5, 2013) (quoting Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162, 185 (2d Cir. 2012); see also Fed.R.Civ.P. 15(a)(2) (“The court should freely give leave [to amend] when justice so requires.”). “Leave to amend will be denied, however, if amending the complaint would be futile or would unduly prejudice the defendant.” Naylor v. Rotech Healthcare, Inc., 679 F.Supp.2d 505, 508 (D. Vt. 2009). Prejudice can result if a new claim unfairly expands the scope of the complaint, requires substantial further discovery, or delays the resolution of the case. See id. at 509. By the same token, “prejudice to the nonmoving party is alleviated if the new claim arises out of similar facts as existing claims.” Id. “When deciding whether to permit joinder of a party, courts apply this same standard.” Rodriguez v. Walton, No. 7-cv-58, 2008 WL 747003, at *3 (D. Vt. Mar. 18, 2008).

B. Prejudice to Bailey

The proposed new claims and parties will not prejudice the nonmoving party. As Catamount and Smith point out, Romer and House Call have been involved in this litigation from the outset. Catamount and Smith also assert joining Romer and House Call will not require additional discovery. (Doc. 63, at 3.) Bailey disagrees, contending granting the motion would further draw out discovery. (Doc. 66, at 2.) Any marginal extension in discovery, however, is unlikely to prejudice Bailey, who has already requested and received extensions in the discovery schedule. See Docs. 42, 67. The new claims against Romer and House Call tie in with the original claims against Bailey, “so it makes sense to include [them] rather than initiate a separate lawsuit.” Naylor, 679 F.Supp.2d at 509.

C. Permissive Joinder of House Call

Joining House Call as a party is not improper. Bailey contends House Call should not be joined as a party because “Plaintiffs do not identify any acts or omissions by House Call.” (Doc. 66, at 3.) Bailey also points out that Catamount and Smith seek to join House Call as a party while simultaneously alleging it is merely an alter ego for Bailey and Romer. Under Federal Rule of Civil Procedure 20(a)(2), however, permissive joinder of a party is available if “any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions and occurrences” and “any question of law or fact common to all defendants will arise in the action.” Fed.R.Civ.P. 20(a)(2). Regardless of whether House Call is a necessary party -- and Catamount and Smith appear to concede it is not -- it may be joined. See Vt. Assembly of Home Health Agencies, Inc. v. Shalala, 18 F.Supp.2d 355, 360 (D. Vt. 1998) (“In joinder determinations, the impulse is toward entertaining the broadest possible scope of action consistent with fairness to the parties; joinder of claims, parties and remedies is strongly encouraged.”) (quoting United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724 (1966)). Furthermore, both a corporation and its officer may be held liable for a “tort in which the officer personally participated.” Sec’y, Agency of Nat. Res. v. Upper Valley Reg’l Landfill Corp., 167 Vt. 228, 243, 705 A.2d 1001, 1010 (1997). Accordingly, House Call may be joined.

D. Futility of Claims

“In addressing the proposed futility of an amendment, the proper inquiry is comparable to that required upon a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6).” Aetna Cas. & Sur. Co. v. Aniero Concrete Co., 404 F.3d 566, 604 (2d Cir. 2005) (quoting Rotblut v. 333 E. 66th St. Corp., No. 96-cv-5228, 1996 WL 586353, at *1 (S.D.N.Y. Oct. 11, 1996). Thus, the Court accepts all facts alleged by Catamount and Smith as true and construes them in the light most favorable to those parties. See Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir. 2006).

First, Bailey argues Catamount and Smith’s fraudulent inducement claim (Count II) cannot be extended to include Romer and House Call because it alleges insufficient facts.[1] The Court agrees. In Vermont, to state a claim for fraudulent inducement a plaintiff must show “an intentional misrepresentation of fact affecting the essence of the transaction, false when made and known to be false by the maker, not open to the defrauded party’s knowledge, and relied upon by the defrauded party to its damage.” Ben & Jerry’s Homemade, Inc. v. La Soul, Inc., 983 F.Supp. 504, 506 (D. Vt. 1997). The amendments Catamount and Smith propose do not allege any false statement made by either Romer or House Call, only false statements made by Bailey. (Doc. 63-1, at ¶¶ 53-70.) The proposed Amended Complaint alleges “Bailey made these representations on behalf of herself, Romer and House Call” (id. ¶ 59), but asserts no factual basis underpinning that allegation. See Rombach v. Chang, 355 F.3d 164, 170 (2d Cir. 2004) (Fed. R. Civ. P. 9(b) requires plaintiffs to plead the factual basis which gives rise to a strong inference of fraudulent intent with specificity). Accordingly, the Court denies the motion to amend to the extent the proposed amendments would extend the fraudulent inducement claim (Count II) to Romer and House Call.

Second, Bailey argues Catamount and Smith’s tortious interference with contract claim (Count III) cannot be extended to include Romer and House Call because any communications Romer had with Gifford were motivated by an acceptable purpose. To ...


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