E-Alert Case Updates

West Virginia Federal Court Examines What Constitutes “Good Cause” To Modify A Scheduling Order Under Federal Rule of Civil Procedure 16

Kelley v. Enhanced Recovery Company, LLC
Case No. 5:15CV10 (United States District Court for the Northern District of West Virginia, April 18, 2016)
by Richard J. Medoff, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: https://ecf.wvnd.uscourts.gov/cgi-bin/show_public_doc?2015cv0010-57

Kelley v. Enhanced Recovery Company, LLC involved a motion for leave to file an amended complaint filed by the plaintiff in her lawsuit against a debt collection company for alleged violations of the West Virginia Consumer Credit and Protection Act (“WVCCPA”). Specifically, the plaintiff sought to add a bank as a new defendant, after the deadline for such amendments in the applicable scheduling order had passed, on the theory that the debt collection company was acting as the bank’s agent when it violated the WVCCPA. The United States District Court for the Northern District of West Virginia found that the plaintiff did not discover that the debt collection company may have been acting as the bank’s agent until after the deadline to amend the pleadings because the debt collection company failed to cooperate in scheduling depositions. Therefore, the District Court concluded that the plaintiff had shown good cause for why she was unable to comply with the deadline set forth in the scheduling order to amend the pleadings, and granted the plaintiff’s motion for leave to file an amended complaint.

By way of factual background, Plaintiff Patty Kelley (“Plaintiff” or “Kelley”) originally filed a complaint against Defendant Enhanced Recovery Company, LLC (“Defendant” or “Enhanced Recovery”), in the Circuit Court of Marshall County, West Virginia. In her complaint, Kelley alleged that Enhanced Recovery violated the WVCCPA by continuing to contact her numerous times to attempt to collect a debt from her after she informed Enhanced Recovery that she was represented by counsel.

Enhanced Recovery subsequently removed the case to the United States District Court for the Northern District of West Virginia (the “District Court”). Kelley then filed a motion to amend the complaint to add a new defendant, after the deadline for such amendments in the applicable scheduling order had passed. Enhanced Recovery filed a response in opposition, arguing that Plaintiff failed to show good cause for not seeking to amend the complaint earlier.

The District Court began its analysis by noting that a party who “seeks to amend its pleadings after the deadline for such amendments in the scheduling order has passed, must show good cause under Rule 16 for why the party failed to timely file a motion to amend.” See Nourison Rug Corp. v. Parvizian, 535 F.3d 295, 298 (4th Cir. 2008). The District Court explained that “good cause requires that the party has been diligent in seeking to abide by deadlines,” and “if the party demonstrates good cause, then the court should deny the party’s motion 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.” See Cook v. Howard, 484 F.App’x 805, 815 (4th Cir. 2012); Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986).

Turning to the facts of the case, the District Court noted that Plaintiff sought to name Synchrony Bank (“Synchrony”) as a defendant on the theory that Enhanced Recovery was acting as Synchrony’s agent when it allegedly violated the WVCCPA. Plaintiff argued that she was not aware that Enhanced Recovery was acting as Synchrony’s agent until Plaintiff’s counsel took Enhanced Recovery’s Rule 30(b)(6) deposition on February 22, 2016. Further, Plaintiff provided as attachments to her reply memorandum, correspondence between counsel showing that Plaintiff was unable to take Defendant’s Rule 30(b)(6) deposition before the amendment deadline passed because Defendant failed to cooperate in scheduling the deposition to coincide with another similar civil action that Plaintiff’s counsel was engaged in against Defendant. The District Court found that it was “not unreasonable” for Plaintiff’s counsel to seek to coordinate the Rule 30(b)(6) depositions between those civil actions, “because coordination would serve to save the parties time and expense,” as both civil actions were based on similar conduct and Defendant and its officers were located in Florida.

Defendant argued that Plaintiff should have discovered that Synchrony was a potential defendant in written discovery. Specifically, Defendant argued that Plaintiff knew Synchrony was her creditor before filing the civil action at issue because she sent letters to Synchrony informing it that she was represented by counsel and unable to pay her debt.

The District Court noted, however, that Plaintiff sought to name Synchrony as a defendant on the theory that Synchrony was liable for Enhanced Recovery’s alleged statutory violations committed as Synchrony’s agent. According to the District Court, the operative question was not when Plaintiff learned that Synchrony was her creditor, but when Plaintiff discovered that Enhanced Recovery “may have been acting as Synchrony’s agent,” which the District Court found was not until the Rule 30(b)(6) deposition. Therefore, the District Court concluded that Plaintiff had shown good cause for why she was unable to comply with the deadline set forth in the scheduling order to amend the pleadings.

Further, the District Court found that Plaintiff had demonstrated that the proposed amended complaint would not prejudice Defendant, was not futile, and was not sought in bad faith. The District Court explained that the amendment did not “affect the viability or theory of the Plaintiff’s cause of action against the Defendant,” and that any additional time Defendant may need to conduct discovery or further develop its defense could be addressed by filing a motion to amend the scheduling order. Thus, the District Court granted Plaintiff’s motion for leave to file an amended complaint.