Abrams v. HBM Prenscia Inc.
- Valerie Caproni
- 1:19-cv-10357
- U.S. District Court · Southern District of New York
- 6
Abrams v. HBM Prenscia, Judge Caproni denied Abrams’s motion to add an earnout-calculation claim after the amendment deadline.
Scott B. Abrams could not add the proposed earnout-calculation claim through a Second Amended Complaint. HBM Prenscia Inc., Spectris Inc., and Spectris PLC opposed the amendment, and the existing case schedule remained in place.
What happened
In Abrams v. HBM Prenscia Inc., Scott B. Abrams sued HBM Prenscia Inc., Spectris Inc., and Spectris PLC over the sale of his company and an earnout payment. He already asserted contract-related claims and sought to add a claim alleging that the defendants calculated the earnout incorrectly.
Abrams received documents about the earnout calculation in March 2020 but waited until September 2020 to request the amendment. He argued that later depositions supported the proposed claim, while the defendants opposed adding it after discovery had ended.
Judge Valerie Caproni denied the motion because Abrams did not show the diligence required to extend the amendment deadline. The judge also stated that the proposed claim would be too vague to survive a motion to dismiss even if Abrams had shown good cause.
The detailed version
- Abrams v. HBM Prenscia Inc. · No. 1:19-cv-10357
- Valerie Caproni
- Nov. 4, 2020
Background
Scott B. Abrams sued HBM Prenscia Inc., Spectris Inc., and Spectris PLC after HBM Prenscia purchased Abrams’s company, The Omnicon Group Inc. The parties’ Share Purchase Agreement provided for up to $7 million in earnout payments if Omnicon met specified revenue targets during two earnout periods. Abrams’s amended complaint asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment.
Abrams alleged that the defendants undermined his ability to receive an earnout by failing to retain, support, or expand Omnicon’s client base and by failing to ask him to help restore revenue. In his proposed Second Amended Complaint, he sought to add a breach-of-contract claim alleging that the defendants improperly excluded revenue when calculating the earnout.
Court’s analysis
Federal Rule of Civil Procedure 15 generally allows amendments to pleadings when justice requires. But when a scheduling order sets an amendment deadline, Rule 16 requires the party seeking a late amendment to show good cause. Good cause depends on the moving party’s diligence.
The court’s scheduling order required motions to amend to be filed by January 20, 2020. The defendants produced documents on March 13, 2020, describing their earnout calculation and identifying the revenue categories included. Abrams did not move to amend until September 23, 2020—more than six months later. The court concluded that this delay was inconsistent with the diligence required under Rule 16. The court also rejected Abrams’s argument that July 2020 depositions provided the necessary new information, finding that the cited testimony merely confirmed the March documents.
In a footnote, the court added that the proposed amendment would also be futile because its allegations were conclusory and did not specifically identify the revenue allegedly excluded in violation of the agreement. The court did not need to decide the defendants’ prejudice argument because Abrams had not shown good cause, although it stated that changing the trial’s focus after discovery closed would likely prejudice the defendants.
Disposition
The court denied Abrams’s motion for leave to file a Second Amended Complaint. It directed the Clerk of Court to close the motion at docket entry 62 and noted that the previously scheduled pretrial conference and bench trial would proceed on the stated dates.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.