Bankr. M.D.N.C.: DeCoro USA v. Ricci- Amendment of Complaint

Summary: Decor sought to rejoin Decofin, L.L.C. as a party, after it had been voluntarily dismissed by DeCoro earlier, and to add additional claims to its Complaint based upon alleged fraud and breach of a settlement agreement by the Defendant ("Ricci") and Decofin that occurred subsequent to the commencement of this adversary proceeding. DeCoro also sought to present new claims to pierce the corporate veil and impose liability on Ricci. The standard generally used in deciding whether to grant leave to supplement is the same standard for deciding whether to grant or deny leave to amend, which is that leave should be freely given. See 3 JAMES WM . MOORE ET AL., MOORE'S FEDERAL PRACTICE 15.30 (3d ed. 2011). Accordingly, the bankruptcy court allowed DeCoro to supplement, pursuant to Rule 15(d), the First Amended Complaint to allege the fraudulent conduct that occurred subsequent to the commence of the Adversary Proceeding. In order to avoid the risk of prejudice to the Ricco as a result of adding the foregoing claims to the Adversary Proceeding, the bankruptcy court found that the new allegations were “discrete and separate” and, pursuant to Rule 21, should be severed. The claims DeCoro sought to add in order to pierce the corporate veil, however, did not involve conduct or events that occurred subsequent to the commence of the Adversary Proceeding. Because DeCoro sought to add these claims after the time set under Rule 16 in the Scheduling Order, such amendment could only be allowed upon a showing of “good cause”, with the moving parties diligence in seeking the amendment being the “touchstone” of good cause. Marcum v. Zimmer, 163 F.R.D. 250, 255 (S.D.W. Va. 1995). Even absent the Rule 16 deadline, the amendment sought by DeCoro to allowing piercing of the corporate veil would not be allowed as it would, by either depriving Ricci of time to conduct adequate discovery or forcing a further delay (and additional litigation costs) in the trial. For a copy of the opinion, please see: DeCoro USA v. Ricci- Amendment of Complaint.pdf