Blackhawk Development, LLC v. Krusinski Construction Company

Background

Blackhawk Development, LLC hired Krusinski Construction Company as the general contractor for a distribution-center project. Krusinski hired Boyce Excavating Company, Inc. as a subcontractor, while Blackhawk directly retained Advance Testing Company, Inc. for soil and fill testing and inspection. After a water leak damaged the distribution center and surrounding area, Blackhawk sued Krusinski. Krusinski later brought claims against several parties, including Advance, and Boyce asserted cross-claims against Advance.

The court had previously set deadlines for amending pleadings and joining additional parties. Those deadlines expired in 2020. The parties conducted extensive document discovery and site inspections, but depositions were deferred while they pursued mediation. In 2022, Boyce moved for permission to amend its answer to add factual allegations supporting its cross-claims against Advance. Blackhawk then moved for permission to amend its complaint to add Advance as a direct defendant, relying partly on affidavits submitted in support of Boyce’s motion.

Legal standard

Because the amendment and joinder deadlines had expired, the court first applied Federal Rule of Civil Procedure 16’s “good cause” requirement. Good cause generally depends on whether the moving party acted diligently and could not reasonably have met the original deadline. If good cause is shown, Rule 15’s more permissive standard applies; under that rule, courts generally allow amendments when justice requires, unless there is a reason such as undue delay, bad faith, futility, or unfair prejudice.

Blackhawk’s motion

The court found that Blackhawk showed good cause for its late request to join Advance. Blackhawk stated that Boyce’s March 2022 affidavits provided the first indication of how Advance had interacted with the contractor and of Advance’s alleged responsibility for ensuring the accuracy of the work. Blackhawk filed its application three days after Boyce filed its motion.

Advance argued that the proposed claims were futile because they were subject to New York’s three-year limitations period for professional malpractice. The court declined to resolve the issue against Blackhawk at the amendment stage. It concluded that the proposed complaint’s allegations and the service agreements did not establish, on their face, that Advance’s services were professional services covered by that three-year period. The allegations instead described testing, inspection, documentation, and monitoring services, and the agreements and fee schedules referred to technicians, equipment, and laboratory testing.

The court also rejected Advance’s claim of undue prejudice. Advance had already participated in the case and would need to defend Boyce’s remaining cross-claims. The court found that additional work and discovery, standing alone, did not establish unfair prejudice, particularly because depositions had not occurred, expert reports had not been exchanged, no summary-judgment deadlines had been set, and no trial date had been scheduled.

Boyce’s motion

The court found that Boyce had not shown good cause under Rule 16. It concluded that the documents supporting Boyce’s proposed amendment, other than the affidavit of Boyce’s vice president, had been obtained well before the amendment deadline. The court characterized the late request as resulting from new counsel’s reassessment of facts that had been known earlier.

Even so, the court exercised its discretion to allow Boyce to amend. It found no demonstrated prejudice to Advance and considered it unfair to deny Boyce’s motion while granting Blackhawk’s motion, which relied on the same affidavits Boyce had provided.

Disposition

The court granted Boyce’s motion for leave to file an amended answer to the amended third-party complaint. It also granted Blackhawk’s motion for leave to file an amended complaint joining Advance as a direct defendant. Blackhawk and Boyce were ordered to file their amended pleadings within seven days, and the clerk was directed to terminate the two pending motions.