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Sodexo Operations, LLC v. Not-For-Profit Hospital Corporation

United States District Court, District of Columbia

September 28, 2016

SODEXO OPERATIONS, LLC, Plaintiff,
v.
NOT-FOR-PROFIT HOSPITAL CORPORATION, Defendant.

          MEMORANDUM OPINION AND ORDER

          COLLEEN KOLLAR-KOTELLY United States District Judge

         Plaintiff Sodexo Operations, LLC (“Sodexo”) brought a breach of contract action against Not-For-Profit Hospital Corporation (“NFP”), the purported successor-in-interest to the hospital operated by Capital Medical Center (“CMC”), seeking damages arising from an alleged breach of contract between Sodexo and CMC. Plaintiff's complaint was dismissed without prejudice for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Presently before the Court is Plaintiff's [25] Motion for Leave to File an Amended Complaint.[1] Upon consideration of the parties' submissions, [2] the applicable authorities, and the record as a whole, the Court shall GRANT Plaintiff's [25] Motion for Leave to File an Amended Complaint for the reasons stated herein.

         I. BACKGROUND

         This action arises out of contract between Plaintiff Sodexo and CMC for services that Sodexo provided to CMC's United Medical Center (“UMC”), formerly Greater Southeast Community Hospital (“Southeast”). In 2007, the District of Columbia permitted Specialty Hospitals of America (“SHA”), the parent company of Specialty Hospitals of Washington (“SHW”), to acquire Southeast. SHA in turn created CMC and the Capital Medical Center Realty (“CMC Realty”) as wholly-owned subsidiaries of SHW. The Southeast assets were owned, controlled, and operated by CMC and CMC Realty. In 2008, Sodexo and CMC entered into contracts (the “Southeast Management Agreement, ” “United Management Agreement, ” and “United Interim Agreement”) that provided Sodexo with the exclusive right to manage and operate nutrition services, plant operations, and maintenance services for CMC's patients, residents, employees, visitors and guests at Southeast and, after being renamed, at UMC, for a fixed term.

         The District of Columbia foreclosed on CMC and transferred UMC to Defendant NFP by statute and mayoral order. As part of the foreclosure sale, the District of Columbia purchased UMC for $20, 000, 000 in July 2010. On July 9, 2010, NFP took over ownership and operation of the hospital assets which previously had been owned and controlled by CMC. Sodexo now seeks to recover on a breach of contract claim against NFP, asserting that NFP is liable for CMC's debts. Specifically, Sodexo seeks to recover $349, 333.81, the past due amount that Sodexo asserts it is owed for work completed under the contract, as well as reasonable attorney's fees, pre- and post-judgment interest, costs, expenses, and other relief.

         On March 19, 2013, United States District Judge Richard W. Roberts granted NFP's motion to dismiss the complaint in the instant action, finding that Sodexo “ha[d] not alleged sufficient facts to state a claim for breach of contract on either the express or implied assumption of debt theory or the mere continuation theory.” Sodexo Operations, LLC v. Not-For-Profit Hosp. Corp., 930 F.Supp.2d 234, 240 (D.D.C. 2013). In granting the motion, Judge Roberts indicated, “The complaint is DISMISSED.” Order (Mar. 19, 2013), ECF No. [20]. On April 11, 2013, Plaintiff filed a Motion for Leave to File an Amended Complaint and for Clarification or, in the Alternative, Reconsideration, requesting that the Court enter an order indicating that the dismissal of its Complaint was without prejudice and requesting leave to file its First Amended Complaint which was filed alongside the Motion. Pl.'s Mot. for Leave to File an Am. Compl. & For Reconsideration Or, In the Alternative, Clarification, ECF No. [21]. On December 19, 2013, Chief Judge Roberts granted the request for reconsideration, amending the Order “to reflect that the complaint is DISMISSED WITHOUT PREJUDICE, ” and directing the Clerk of the Court to file Plaintiff's Motion on the docket to address the request for leave to file the First Amended Complaint. Mem. Order (Dec. 19, 2013), at 5, ECF No. [24]. On April 6, 2016, the instant action was reassigned to this Court. Presently before the Court is Plaintiff's Motion for Leave to Amend the Complaint which Defendant opposes.

         II. LEGAL STANDARD

         Under the Federal Rules of Civil Procedure, a party may amend its pleadings once as a matter of course within twenty-one days after service or within twenty-one days after service of a responsive pleading. Fed.R.Civ.P. 15(a)(1). Where, as here, a party seeks to amend its pleadings outside that time period, it may do so only with the opposing party's written consent or the district court's leave. Fed.R.Civ.P. 15(a)(2). The decision whether to grant leave to amend a complaint is within the discretion of the district court, but leave should be freely given unless there is a good reason to the contrary. Willoughby v. Potomac Elec. Power Co., 100 F.3d 999, 1003 (D.C. Cir. 1996).

         “When evaluating whether to grant leave to amend, the Court must consider (1) undue delay; (2) prejudice to the opposing party; (3) futility of the amendment; (4) bad faith; and (5) whether the plaintiff has previously amended the complaint.” Howell v. Gray, 843 F.Supp.2d 49, 54 (D.D.C. 2012) (citing Atchinson v. District of Columbia, 73 F.3d 418 (D.C. Cir. 1996)); see also Foman v. Davis, 371 U.S. 178, 182 (1962). With respect to an amendment causing undue delay, “[c]ourts generally consider the relation of the proposed amended complaint to the original complaint, favoring proposed complaints that do not ‘radically alter the scope and nature of the case.'” Smith v. Cafe Asia, 598 F.Supp.2d 45, 48 (D.D.C. 2009) (citation omitted). With respect to an amendment being futile, “a district court may properly deny a motion to amend if the amended pleading would not survive a motion to dismiss.” In re Interbank Funding Corp. Sec. Litig., 629 F.3d 213, 218 (D.C. Cir. 2010). Because leave to amend should be liberally granted, the party opposing amendment bears the burden of coming forward with a colorable basis for denying leave to amend. Abdullah v. Washington, 530 F.Supp.2d 112, 115 (D.D.C. 2008).

         III. DISCUSSION

         Sodexo seeks leave from the Court to file its First Amended Complaint in light of the fact that its original complaint was dismissed without prejudice. Sodexo asserts that the First Amended Complaint addresses the infirmities that led to the prior dismissal by sufficiently pleading facts to support its claims of successor liability against NFP. NFP opposes the request, arguing that Sodexo's request for leave to file an amended complaint is futile and that granting the request at this juncture would unduly prejudice NFP. The Court shall first address the two factors discussed by NFP in its briefing. In the interest of completeness, the Court shall discuss the other factors that it must consider in reaching its decision regarding the request for leave to file the amended complaint which the Court notes are not addressed by NFP in its briefing.

         A. Prejudice to Defendant

         NFP first argues that granting Sodexo's request to file an amended complaint would unduly prejudice NFP. Specifically, NFP argues that granting the request to amend “years after the subject contract was executed and allegedly breached, and only after this Court granted NFP's Motion to Dismiss, is . . . unduly prejudicial to NFP.” Def.'s Opp'n at 4 n.4. Instead, NFP argues that Sodexo should have amended its complaint after NFP put it on notice of the infirmities in the original complaint by filing its motion to dismiss, rather than waiting to seek leave to amend the complaint only after the motion to dismiss was granted. Id. at 15. Sodexo asserts that granting its request to amend would not prejudice NFP because “[t]here has been no discovery in this case, and NFP's own brief contends that it is facing the same claims from Sodexo now that it was when this case was filed . . . .” Pl.'s Reply at 8.

         The Court notes that while NFP is correct that the original claims are premised on events that occurred several years ago, Sodexo timely put NFP on notice of these claims and has been pursuing its claims. NFP only points to the temporal distance between the execution and alleged breach of the contract at issue as a basis for this prejudice, but provides no additional explanation as to why this lapse in time will prejudice NFP. Indeed, NFP has pointed to no specific reason why the mere lapse of time prejudices it and, as such, the Court finds NFP's argument unconvincing. Moreover, Sodexo has not added new claims but rather pled additional facts that are related to the claims that it raised in its original complaint. Accordingly, the Court concludes that granting Sodexo's request for leave to file the amended complaint will not prejudice NFP.

         B. Futility

         NFP next contends that the Court should deny Sodexo's request for leave to file an amended complaint because granting the request would be futile. Specifically, NFP asserts that Sodexo's request is futile because: (1) the applicable three-year statute of limitations on Sodexo's breach of contract claim has expired; (2) the “new” allegations in Sodexo's proposed amended complaint fail to establish that NFP is liable for CMC's debts and obligations to Sodexo; and (3) this action is barred by res judicata and/or the prohibition against splitting claims. The Court shall address each of arguments ...


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