D'Addario v. D'Addario

          RULING ON PLAINTIFF'S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

          Janet Bond Arterton, U.S.D.J.

         Plaintiff Virginia D'Addario moves for leave to file a Second Amended Complaint. (Mot. for Leave to File Second Am. Compl. [Doc. # 55].) Defendants oppose that motion. (Defs.' Joint Opp. [Doc. # 62].) For the reasons that follow, Plaintiffs motion is granted in part and denied in part.

         I. Background

         The Court assumes the parties' familiarity with the facts alleged in this case, set out in detail in D'Addario v. D'Addario, 901 F.3d 80, 86-91 (2d Cir. 2018). In January 2016, Virginia D'Addario filed this action against Defendants. (Compl. [Doc. # 1].) In May 2016, she filed the First Amended Complaint ("FAC"), asserting claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO") and Connecticut state law. In keeping with the Court's procedures, Defendants moved for a pre-filing conference, setting out in detail the grounds for a forthcoming motion to dismiss the FAC. (Mot. for Pre-Filing Conf. [Doc. # 27].) Plaintiff did not seek leave to further amend her complaint to cure the asserted deficiencies, and Defendants moved to dismiss the FAC. (Mot. to Dismiss First Am. Compl. [Doc. # 37].) The Court granted that motion to dismiss, holding that Plaintiff had failed to plead a viable RICO claim and declining to exercise supplemental jurisdiction over her remaining state law claims. (Ruling Granting Mot. to Dismiss [Doc. # 49].) Plaintiff appealed that ruling.

         The Second Circuit Court of Appeals upheld the dismissal of certain of Plaintiffs claims but reinstated others. Specifically, the Court of Appeals concluded that Plaintiff "has sufficiently identified a distinct acquisition and maintenance injury under section 1962(b) [of RICO] to support her collection expenses claim with regard to [Defendants] David [D'Addario], Gregory Garvey, and Red Knot, but not with regard to the other defendants." D'Addario, 901 F.3d at 92-93. It also determined that "Virginia has also sufficiently alleged a section 1962(c) 'enterprise' with regard to all six defendants, supporting her claim for collection expenses on this theory of recovery as well." Id. at 93. Thus the Court of Appeals vacated the "dismissal as to Virginia's RICO claim on her own behalf and on behalf of her mother's estate for collection expenses and remand[ed] that claim and her state law claims for further proceedings." Id.

         Virginia^[1] now moves for leave to file her Proposed Second Amended Complaint ("PSAC") "to (a) conform to the Second Circuit decision; (b) add additional facts and claims as to the relevant enterprises for Plaintiffs' RICO claims; (c) add two additional causes of action against Defendant David D'Addario related to the claims asserted in the prior Complaint; and (d) clarify that Plaintiff Virginia A. D'Addario is also asserting claims for and on behalf of the Probate Estate of F. Francis D'Addario, Deceased." (Mem. Supp. Mot. for Leave to File [Doc. # 55-2] at 1.)

         II. Discussion

         A party may amend its pleading more than once only with "the opposing party's written consent or the court's leave." Fed.R.Civ.P. 15(a)(2). "The court should freely give leave when justice so requires." Id. But leave to amend "should generally be denied in instances of futility, undue delay, bad faith or dilatory motive, repeated failure to cure deficiencies by amendments previously allowed, or undue prejudice to the non-moving party." Burch v. Pioneer Credit Recovery, Inc., 551 F.3d 122, 126 (2d Cir. 2008). Leave may be denied where plaintiffs were "given ample prior opportunity to allege a claim" but did not do so previously. Dejesus v. Sears, Roebuck & Co., 87 F.3d 65, 72 (2d Cir. 1996).

         Plaintiff argues that leave to file the PSAC should be given because "[t]here is no undue delay[, ] ... no bad faith or dilatory motive [, ] ... no prior failure by Plaintiffs to cure pleading deficiencies, and no undue prejudice would result to the Defendants." (Mem. Supp. Mot. for Leave to File at 2.) She also contends that "it would not be 'futile' to allow Plaintiffs to assert the additional claims set forth" because the "additional 'enterprises' for Plaintiffs' RICO claims are in accordance with the Second Circuit's decision"; because "Plaintiffs have asserted additional viable causes of action against David D'Addario for conversion (Count Six) and for statutory theft [(Count Seven)]" "based on the detailed factual allegations in the proposed Second Amended Complaint"; and because "the proposed Second Amended Complaint clarifies that Plaintiff Virginia A. D'Addario is also asserting claims against the Defendants for and on behalf of her deceased father's probate Estate as allowed under Connecticut law." (Id. at 2-3.)

         Defendants respond that "the Plaintiffs now attempt to begin the entire process again, alleging new legal theories, new causes of action, and newly expanded damages claims, all based on the same alleged conduct that occurred years before the filing of the first Complaint in this matter" despite "multiple prior opportunities to amend . . . after full notice of all the deficiencies [of the FAC] the Defendants ultimately raised in their motion to dismiss." (Defs.' Joint Opp. at 1-2, 13-14.) Defendants explain that "[a]ll of the alleged facts upon which the Plaintiffs rely in crafting their new theories of liability and causes of action were in existence for many years before this Court provided the Plaintiffs with their 'final' opportunity to amend the Complaint" following Defendants' Motion for Pre-Filing Conference which explained the bases for a forthcoming motion to dismiss. (Id. at 16.) Moreover, "Plaintiffs have offered no justification for why they failed to include these causes of action[] and legal theories at that time, or why after failing to do so, they should be allowed to assert new theories now, years later, after a lengthy appeal process." (Id.)

         Defendants also contend that "[a]ll of the factors supporting denial of leave to amend are present here and mandate denial of Plaintiffs motion, including that Defendants would suffer prejudice if they are "now required to begin the process anew and litigate the new claims" after "already dedicating] significant resources to litigating the claims in the FAC" and that "any further amendment would be futile." (Id.) Defendants argue that they would "be significantly prejudiced if they are forced to continue to incur litigation costs endlessly defending against the Plaintiffs' repeated attempts to fashion various causes of action and damages theories from the same alleged facts." (Id. at 19.)

         Because the PSAC represents Plaintiffs opportunity to accord with the Second Circuit's opinion and because Defendants acknowledge that "[although the Plaintiffs have substantially revised their legal theories and claims [in the PSAC], the alleged conduct underlying these claims remains essentially the same, " (Defs.' Joint Opp. at 8), the Court will not address individual embellishments and changes made in the PSAC but rather will focus on the claims and damages alleged in the PSAC.

         A. Assertion of Claims on behalf of Estate of F. Francis D'Addario

         "Plaintiff Virginia D'Addario now seeks to assert all of the claims in this action on behalf of the Estate" of her father, F. Francis D'Addario, in addition to the capacities in which she first filed this action. (Defs.' Joint Opp. at 20 (citing PSAC ¶ 7.3); see PSAC ¶ 3.) The FAC did not include any claims pleaded by Virginia on behalf of her father's estate. By pleading in this capacity, Virginia endeavors to recover "damages proximately caused to the Estate and to Plaintiffs by Defendants' wrongful conduct, " including the "misappropriat[ion of] Estate assets ... in excess of $588, 000, 000" and "over $1, 000, 000 in unnecessary legal fees" incurred by the Estate. (PSAC ¶ 138.)

         "Notwithstanding the lack of any changed circumstances or newly acquired facts, " Defendants argue, "Virginia D'Addario has now donned yet another 'hat' and now purports to bring this action on behalf of her deceased father's 'probate estate' as 'a legatee under her father's Will; and heir of her deceased father; a beneficiary of her father's probate estate; and Executrix of her mother's probate estate, ' in addition to the various capacities through which she brought the" FAC. (Id. at 9.) Defendants contend that Virginia's attempt to proceed on behalf of her father's estate is futile because "[u]nder Connecticut law, Plaintiffs-who are not executors or administrators of the Estate [of F. Francis D'Addario]-lack standing to assert any such claims on behalf of the Estate, " and because any claims on behalf of the Estate are "not ripe" and "are also barred by the applicable statute of limitations." (Id. at 19.)

         "Actions designed to recover personalty belonging to the estate or for its use, conversion, or injury are brought by the fiduciary rather than by the beneficiaries." Geremia v. Geremia, 159 Conn.App. 751, 781-82 (2015). However, "an exception exists" to that general rule. Id. "Where the executor or administrator has been guilty of fraud or collusion with the party to be sued, or where the interests of the personal representative are antagonistic to those of the heirs or distributees, the heirs or distributees may maintain actions relating to the personalty of the estate in their own names." Id. at 784.^[2] "Similarly, when the legal representative has failed or refused to act, the heir may maintain an action to recover assets for the benefit of the estate." Id.

         Thus Virginia perhaps could have brought some or all claims in this action on behalf of her father's estate, had she chosen to do so when filing the original complaint or the FAC. But she offers no explanation as to why she chose not to do so, nor any convincing argument as to why she should be permitted to do so now, several years after this litigation began and following thorough litigation of the adequacy of the claims in the FAC. Virginia argues that "forcing [her] to file a new action against the Defendants asserting claims for and on behalf of her father's Probate Estate . . . would result in unnecessary duplicative proceedings and disserve judicial economy." (Reply Supp. Mot. for Leave to File [Doc. # 67] at 6-7.) Though it might have been more efficient had Virginia asserted claims in this new capacity earlier in this case, the Court disagrees that it would serve judicial economy to incorporate entirely new legal theories, pleading capacities, and damages requests at this stage of the litigation. In the absence of any explanation of the delay in pleading in this capacity despite prior opportunity to do so, and of any argument in support of her conclusory assertion that "Defendants would not suffer undue prejudice by the filing of the PSAC, " (Reply at 7), Plaintiff may not now amend the complaint to assert claims on behalf of her father's estate.^[3]

         B. ...