Summary:
Trustee sought leave to amend a Complaint, which originally alleged fraudulent conveyances under 11 U.S.C. §§ 544 and 548 and N.C.G.S. § 39.23.4 and unjust enrichment, to add a claim for preferential transfers under 11 U.S.C. § 547. The Defendants, having already answered the Complaint, objected.
Leave to amend should be denied, therefore, “only when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or the amendment would be futile.” Edwards v. City of Goldsboro, 178 F.3d 231, 242 (4th Cir. 1999) (quoting Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986)) (internal quotation marks omitted). The Defendants did not allege either bad faith or futility, instead only that such amendment would be prejudicial, in which case such prejudice must be “substantial or undue.” Since the parties agreed that motions to amend could be filed up to two months after the Trustee filed his motions, the Trustee was asserting an additional cause of action based on the same facts, and because the parties are still in the process of conducting discovery, the Bankruptcy Court held that the proposed amendment would cause no substantial or undue prejudice to the Defendants.
The Bankruptcy Court continued by finding that the Trustee’s amended Complaint related back to the original Complaints, because of the factual nexus between the original fraudulent conveyance/unjust enrichment claims and the additional preference claims. Accordingly, the addition of the preference claim was not time-barred.
For a copy of the opinion, please see:
Burns v. Dennis-Lambert Investments, L.P.- Amendment to Complaint and Relation Back for Statute of Limitation Purposes.pdf
Blog comments