United States District Court, E.D. Virginia, Alexandria Division
MEMORANDUM OPINION & ORDER
Michael S. Nachmanoff United States Magistrate Judge
matter is before the Court on Plaintiff’s Amended
Motion for Leave to File Second Amended Complaint (Dkt. No.
55) and Defendant’s Motion to Amend Counterclaim (Dkt.
No. 61). For the reasons that follow, the Court will grant
case arises out of a contract dispute. Plaintiff SecTek,
Incorporated purchased all shares of stock in The J. Diamond
Group (“TDG”) from its sole owner, Defendant
Jeanette S. Diamond. Plaintiff claims to be entitled under
the parties’ stock purchase agreement to
indemnification for gross tax receipts assessed against TDG,
as well as for attorneys’ fees incurred in defending a
lawsuit brought against TDG. Defendant has filed two
counterclaims- one alleging breach of the covenant of good
faith and fair dealing with regard to the stock purchase
agreement, and another alleging wrongful termination.
Defendant also filed a lawsuit against Plaintiff in Texas
state court, which overlaps in substance with the latter
Motion to Amend seeks to add additional claims, while
Defendant’s Motion seeks to abandon her counterclaim
for wrongful termination. The Court will address the Motions
Motion to Amend comes in response to an argument raised by
Defendant in her a Motion to Dismiss, or in the Alternative,
Motion to Transfer (Dkt. No. 32). In relevant part, Defendant
argued that because TDG suffered the losses alleged in
Plaintiff’s Complaint, any claim for indemnification
lies with TDG-which is itself a party to the stock purchase
agreement-rather than with Plaintiff. See Mem. in
Supp. of Mot. to Dismiss (Dkt. No. 33) at 2-4. In opposing
Defendant’s Motion Plaintiff argued that it is entitled
to recover the amount of the indemnification, but noted that
some courts have held that the proper recourse for a party in
Plaintiff’s position is to seek specific performance of
duties owed to a third party-here, TDG. See Mem. in
Opp. to Mot. to Dismiss (Dkt. No. 43) at 6 n.2.
Court ultimately denied Defendant’s Motion to Dismiss
or Transfer. Shortly thereafter, Plaintiff filed the instant
Motion, which seeks leave to amend the Complaint to
“add specific performance claims to address the
prospect that [Defendant] may later . . . re-assert that
[Plaintiff] is not a proper party to assert claims for
damages under Counts One and Two.” Mem. in Supp. of
Mot. to Amend (Dkt. No. 57) at 2.
argues that the Motion should be denied because the amendment
is futile for two reasons. First, Defendant reiterates its
argument that the claims are not brought in the name of the
real party in interest. Second, Defendant argues that because
“[a]n award of monetary damages would make Plaintiff
whole . . . Plaintiff has an adequate remedy at law and
cannot seek or be granted specific performance.” Mem.
in Opp. to Mot. to Amend (Dkt. No. 59) at 4.
Rule of Civil Procedure 15(a)(2) dictates a liberal standard
under which “leave to amend should be denied only when
the amendment would be prejudicial to the opposing party,
there has been bad faith on the part of the moving party, or
amendment would be futile.” Matrix Capital
Mgmt. Fund, LP v. BearingPoint, Inc., 576 F.3d 172, 193
(4th Cir. 2009). In assessing whether an amendment would be
futile, “the merits of the Plaintiff’s claims
should not be considered . . . unless the proposed amendment
may clearly be seen to be futile because of substantive or
procedural considerations.” Fletcher v. Tidewater
Builders Ass’n Inc., 216 F.R.D. 584, 588 (E.D. Va.
2003). Here, no such problems present themselves on the face
of the proposed amendment, notwithstanding Defendant’s
arguments to the contrary.
the Court already rejected Defendant’s argument that
Plaintiff’s original claims fail because TDG is the
real party in interest in this case. See Order (Dkt.
No. 50). Defendant proffers no reason as to why this argument
should now make Plaintiff’s new claims so evidently
baseless that permitting the amendment would be futile.
Defendant’s second argument-that Plaintiff cannot
obtain specific performance because Plaintiff has an adequate
remedy at law-Defendant herself previously asserted that
Plaintiff is not entitled to monetary damages because any
such damages were incurred by TDG, not Plaintiff. See,
e.g., Mem. in Supp. of Mot. to Dismiss (Dkt. No. 33) at
2 (“TDG is the actual party who suffered the alleged
loss and maintains the putative indemnification claim against
Diamond.”). Plaintiff’s proposed amendment
assumes that Defendant’s argument ultimately prevails,
and provides an alternative means for Plaintiff to obtain
relief. See Restatement (Second) of Contracts §
305 (1981) (“If the promisee has no economic interest
in the performance . . . the ordinary remedy of damages for
breach of contract is an inadequate remedy, since only
nominal damages can be recovered. In such cases specific
performance is commonly appropriate.”).
Defendant may be correct that Plaintiff cannot recover on
both its claim for damages and its claim for specific
performance under Virginia law, parties are permitted to
plead alternative theories of recovery. See Fed. R.
Civ. P. 8(a)(3). To plead one theory of recovery does not
render an inconsistent alternative theory baseless.
short, Defendant has not shown that the proposed amendment
would be futile. Because Defendant does not claim that she
would be prejudiced by the amendment, or that the amendment
is proposed in bad faith, Defendant has not shown any reason
why Plaintiff’s Motion ...