Gabrielson v. Coyne CV-99-285-JD 07/31/01 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Nancy E. Gabrielson

v. Civil No. 99-285-JD Opinion No.

T. Gary Coyne, et a l .

O R D E R

During the past month, counsel representing defendants Scott

Farah and Financial Resources and Assistance of the Lakes Region,

Inc. ("Financial Resources") withdrew and new counsel entered an

appearance on their behalf.1 The defendants' new counsel

immediately filed motions for leave to file an amended answer, to

compel mediation, and for a pretrial conference. The plaintiff

objects to all three motions.

The case arises from Gabrielson's failed investments, which

losses she alleges were caused by the defendants. Financial

Resources, Farah, who is the president of Financial Resources,

and T. Gary Coyne. Gabrielson alleges that she was led to

believe that Coyne worked for Financial Resources and that based

on his representations she transferred funds to Financial

1Only Attorney Ruth Hall moved to withdraw. It therefore appears that Attorney Jason Sullivan continues to represent the defendants along with new counsel who entered an appearance on July 11, 2001. Resources totaling $90,000 and received promissory notes from

Coyne and from Financial Resources totaling $102,500. Gabrielson

further alleges that Coyne has defaulted on his promissory note

in the amount of $60,000 and on the terms of a second promissory

note in the amount of $20,000 and that Financial Resources

defaulted on the terms of its promissory note for $22,500.

Gabrielson alleges claims of breach of fiduciary duty, fraud

and deceit, and violations of New Hampshire's securities and

consumer protection laws against all three defendants. She also

alleges claims of breach of contract against Coyne, vicarious

liability against Financial Resources, and conversion against

Financial Resources and Farah.

The complaint was filed in this case in June of 1999 and an

amended complaint was filed in May of 2000. Trial was originally

scheduled for the trial period of February 15, 2000, but because

of discovery disputes, the trial was rescheduled several times.

Most recently the trial date was reset from the period beginning

on February 20, 2001, to the period beginning on May 15, 2001,

and again to the period beginning on September 18, 2001. On June

29, 2001, defendants Farah and Financial Resources, Inc. moved

for leave to permit their attorney to withdraw. New counsel

filed an appearance on their behalf on July 11, 2001, and the

motion for leave to withdraw was granted on July 20, 2001.

2 A. Motion to File an Amended Answer

Farah and Financial Resources, Inc. move to be allowed to

file an amended answer to add cross-claims against Coyne and a

counterclaim against Gabrielson. In the proposed counterclaim

against Gabrielson, Farah and Financial Resources allege that all

of the parties were acting as a joint venture and that Farah and

Financial Resources are entitled to contribution from Gabrielson

for the joint venture's loss under New Hampshire partnership law.

Farah and Financial Resources, Inc. represent that Coyne, who is

proceeding pro se, has assented to the motion to amend.

Gabrielson objects to the motion to add the counterclaim against

her.

Farah and Financial Resources argue that the counterclaim

against Gabrielson is a compulsory claim under Federal Rule of

Civil Procedure 13 (a). Farah and Financial Resources acknowledge

that they failed to assert the counterclaim in a timely manner,

but argue that they should be allowed to add it by amendment due

to oversight, inadvertence, or excusable neglect. See Fed. R.

Civ. P. 13(f). Gabrielson agrees that the counterclaim is

compulsory, pursuant to Rule 1 3 (a), but argues that the amendment

should not be allowed because of prejudice, since discovery is

complete and trial is scheduled to begin in less than two months,

because a joint venture theory is inconsistent with the

3 defendants' prior pleadings, and because the claim is barred by

the statute of limitations.

The First Circuit has adopted an analysis consisting of four

separate tests for determining whether a proposed counterclaim is

compulsory under Rule 1 3 (a). See Iqlesias v. Mut. Life Ins. Co.

of N .Y .,

(1st Cir. 1998). Despite the

parties' agreement that the counterclaim is compulsory, neither

side has engaged in the required analysis. Given the paucity of

the pleadings and the record on the issue, the court declines to

decide, on its own, whether or not the counterclaim is

compulsory.

Even if the counterclaim were determined to be compulsory,

however, the amendment appears to be futile and the result of

undue or intended delay. See Resolution Trust v. Gold.

(1st Cir. 1994) ("Leave to amend is to be freely given,

unless it would be futile, or reward, inter alia, undue or

intended delay."). Personal actions, such as the defendants'

counterclaim, must be brought within three years of the "act or

omission complained of." RSA 508:4, I. Although Farah and

Financial Resources have not provided factual allegations in

support of their claim that the parties were operating as a joint

venture, the record to date indicates that the dealings between

the parties and the losses they suffered when their investment in

4 the Sand Bar Restaurant failed occurred in 1996. Since the

defendants did not assert their joint venture counterclaim within

three years of the acts or omissions complained of, the claim

would be untimely pursuant to 508:4, I.

In addition, in order to be permitted to add a counterclaim

by amendment, the defendants must show that their omission is due

to "oversight, inadvertence, or excusable neglect, or [that]

justice so requires." Fed. R. Civ. P. 13(f). To assess

excusable neglect, courts consider factors such as "the good

faith of the claimant, the extent of the delay, and the danger of

prejudice to the opposing party." Pioneer Inv. Servs. Co. v.

Brunswick Assocs. Ltd. P'ship,

, 392 n.10 (1993) .

Farah and Financial Resources have provided no explanation for

their delay in seeking leave to add their counterclaim.

In their pretrial statement filed on August 14, 2000,

defendants Farah and Financial Resources characterized the

relationship among the parties as a joint venture. Gabrielson

objected to those portions of the defendants' pretrial statement.

Therefore, it appears that the defendants were aware of their

joint venture theory at least by August of last year, but waited

almost a year to assert a counterclaim based on that theory.

The motion to amend comes two years after the case was

filed, after all discovery is complete, after the close of

5 deadlines for dispositive motions, and two months before the date

for trial. Because the joint venture counterclaim has not been a

subject of discovery or prior motion practice between Gabrielson

and the defendants, it would be necessary to at least reopen

discovery to address issues raised by the claim. The parties'

pretrial materials would also have to be amended and refiled. As

a result, the trial, which is scheduled in September, would

likely once again be delayed. Gabrielson strenuously objects to

any further delay in the trial date. The defendants have not

offered any grounds that would overcome the prejudice to

Gabrielson that would be caused by adding the counterclaim at

this late date. The motion to amend to add the counterclaim

against Gabrielson is denied.

In contrast, defendant Coyne, who is appearing pro se,

apparently assented to the motion by Farah and Financial

Resources to amend their answer to add the cross-claims against

him. Farah and Financial Resources assert in support of their

motion to amend that the issue of joint venture was the subject

of discovery among the defendants and that the amendment would

not cause a delay in the trial date. Therefore, the motion to

amend is granted as to the cross-claims against defendant Coyne

to which he assented. The trial date will not be rescheduled to

accommodate those claims.

6 Farah and Financial Resources shall file a new amended

answer that is consistent with this order on or before August 8,

2 0 0 1 , failing which their opportunity to amend will be deemed

waived. After the amended answer is filed within the time

allowed, all of the defendants shall file amended final pretrial

materials on or before August 29, 2001, to reflect the cross­

claims against Coyne.

B. Motion for Additional Pretrial Conference

Defendants Farah and Financial Resources ask the court to

hold a pretrial conference to establish new motions deadlines and

to discuss the trial schedule. In support of the motion, the

defendants argue that their new counsel should be given an

opportunity to address the factual and legal issues in the case,

including issues pertaining to their cross-claims against

defendant Coyne, in motions for summary judgment. Gabrielson

objects, arguing that any further delay in this case would be

prejudicial to her.

The defendants' decision to change counsel two and a half

months before the case is scheduled to go to trial is not a

ground to delay the case or to permit new dispositive motions.

The final pretrial conference in this case is scheduled for

9 a.m. on September 6, 2001. The defendants have not shown that

an additional conference is necessary.

7 C. Motion to Compel Mediation

Farah and Financial Resources also move for an order to

compel Gabrielson to participate in mediation. Farah and

Financial Resources failed to sign the joint mediation statement

proposed by Gabrielson and failed to file any mediation statement

of their own. In her mediation statement filed on June 2 ,2000, Gabrielson stated that "[d]ue to the very substantial difference

in the parties [sic] positions regarding the liability of Scott

Farah, individually and [Financial Resources], counsel for the

plaintiff has concluded that mediation would be unproductive and

more than likely a waste of the mediator's time and the court's

resources." Doc. no. 46.

In response to the defendants' motion, Gabrielson reiterates

her belief that mediation would be unproductive. Her counsel

further states that he will be unavailable until mid-August,

which would leave insufficient time before trial in mid-September

to prepare for meaningful mediation. Given the defendants' lack

of diligence in pursuing mediation until the eleventh hour and

the plaintiff's lack of interest, the court concludes that

mediation would serve no useful purpose at this time.

Although the court will not compel the parties to mediate,

the court strongly encourages counsel to engage in good faith

settlement efforts. The court will expect a report at the final pretrial conference concerning counsels' efforts and the progress

that has been made toward settlement.

Conclusion

For the foregoing reasons, the defendants' motion to amend

(document no. 90) is granted as to the cross-claims against

defendant Coyne, as is more fully explained in this order, and is

otherwise denied. The defendants' motions for an additional

pretrial conference (document no. 91) and to compel mediation

(document no. 92) are denied.

SO ORDERED.

Joseph A. DiClerico, Jr. District Judge

July 31, 2001

cc: Steven M. Latici, Esquire John M. Sullivan, Esquire Philip a. Brouillard, Esquire T. Gary Coyne, pro se

9