United States District Court, E.D. Michigan, Southern Division
R. Grand United States Magistrate Judge.
OPINION AND ORDER DENYING DEFENDANT'S MOTION TO
AMEND ITS COUNTER-COMPLAINT AND IMPLEAD JAMES WALLACE AS
THIRD PARTY DEFENDANT 
GERSHWIN A. DRAIN UNITED STATES DISTRICT COURT JUDGE.
Sales & Consulting, LLC (“Plaintiff”) filed a
complaint against Tuopu North America, Limited
(“Defendant”) on March 2, 2015 alleging a breach
of contract between the parties. Dkt. No. 1. Defendant filed
a Counterclaim on August 7, 2015, Dkt. No. 21, and Plaintiff
submitted its first amended complaint on August 28, 2015,
Dkt. No. 28. On April 12, 2016, the Court granted partial
summary judgment and dismissed Plaintiff's claim under
the Michigan Sales Representatives Commission Act. Dkt. No.
before the Court is Defendant's Motion to Amend Its
Counter-Complaint and Implead James Wallace as Third Party
Defendant , filed on August 26, 2016. Plaintiff filed a
timely response on September 12, 2016,  Dkt. No. 85, to
which Defendant replied on September 19, 2016, Dkt. No. 87.
reasons discussed herein, the Court will DENY Defendant's
Motion to Amend Its Counterclaim .
is a Michigan limited liability company, whose sole member is
James Wallace (“Wallace”). Defendant is a
Canadian corporation and a subsidiary of Ningbo Tuopu Group
Co., Ltd., a Chinese manufacturing conglomerate. Defendant
first retained Plaintiff as its sales representative pursuant
to a written agreement in 2007.
December 2011, the Plaintiff and Defendant decided to
continue working together and executed a new written
Manufacturer's Representative Agreement (hereinafter
“the Agreement”), under which Plaintiff served as
an independent manufacturer's representative. The
Agreement's provisions governing the sales commissions
that Defendant would be required to pay to Plaintiff in the
event of termination varied based upon whether
Plaintiff's termination was “without cause”
or “for cause.” Additionally, the Agreement
specified that any disputes related to the Agreement may be
brought in Ontario, Canada and shall be governed solely by
Ontario, Canada law.
11, 2014, Defendant sent Plaintiff notice of termination,
without cause and for financial reasons, effective
immediately. Dkt. No. 85-3, p. 2 (Pg. ID No. 1891). Plaintiff
subsequently filed the present suit in March 2015.
See Dkt. No. 1. A month after Plaintiff brought this
lawsuit, Defendant converted its justification for
terminating Plaintiff to being for cause and demanded
repayment of commission in the amount of $225, 031.06. Dkt.
No. 85-4, p. 2 (Pg. ID No. 1893).
Rule of Civil Procedure 15(a) provides that leave to amend a
pleading should be freely given “when justice so
requires.” Nevertheless, there are certain situations
in which it is appropriate to deny leave to amend, such as
where there is undue delay in filing, a lack of notice and
undue prejudice to the nonmoving party, bad faith by the
moving party, or when the amendment would be futile. See
Foman v. Davis, 371 U.S. 178, 182 (1962). There must be
at least some significant showing of prejudice to the
non-moving party for a court to deny a motion to amend.
Duggins v. Steak ‘N Shake, Inc., 195 F.3d 828,
834 (6th Cir. 1999). However, “[w]hen amendment is
sought at a late stage in the litigation, there is an
increased burden to show justification for failing to move
earlier.” Wade v. Knoxville Utilities Bd., 259
F.3d 452, 459 (6th Cir. 2001). In the Sixth Circuit, allowing
amendment after the close of discovery may create significant
prejudice to the opposing party. Duggins, 195 F.3d
Counterclaims Arising After Earlier Pleadings
Rule of Civil Procedure 13(e) provides that “[t]he
court may permit a party to file a supplemental pleading
asserting a counterclaim that matured or was acquired by the
party after serving an earlier pleading.” “The
standard applicable to amendments under Rule 15 is used to
determine whether leave to file a counterclaim under Rule
13(e) should be permitted.” Hi-Lex Controls Inc. v.
Blue Cross & Blue Shield of Michigan, No. 11-12557,
2013 WL 228097, at *1 (E.D. Mich. Jan. 22, 2013) (citing
Kuschner v. Nationwide Credit, Inc., 256 F.R.D. 684,
689 (E.D. Cal. 2009)).
Impleading a Third-Party
Rule of Civil Procedure 14(a)(1) governs when a defending
party may bring in a third party. It provides that:
A defending party may, as third-party plaintiff, serve a
summons and complaint on a nonparty who is or may be liable
to it for all or part of the claim against it. But the
third-party plaintiff must, by motion, obtain the court's
leave if it files the third-party complaint more than 14 days
after serving its original answer.
Fed. R. Civ. P. 14(a)(1). Additionally, Rule 13 states
“Rules 19 and 20 govern the addition of a person as a
party to a counterclaim or crossclaim.” Fed. R. Civ.
P.13(h) (providing the rules governing required joinder (Rule
19) and permissive joinder (Rule 20) of parties).
motion seeks to amend its counterclaim to bring the following
causes of action: (1) a claim for unjust enrichment against
Plaintiff; (2) a claim for breach of contract against
Plaintiff; (3) a claim for fraud against Plaintiff and
Wallace; (4) a claim for the tort of deceit against Plaintiff
and Wallace; (5) a claim to pierce the corporate shield
against Wallace; (6) a claim to rescind the contract,
presumably against Plaintiff; and (7) a declaratory judgment
against Plaintiff and Wallace. See Dkt. No. 79-2,
pp. 5-12 (Pg. ID No. 1599-1606).
argues in its response that leave to amend the counterclaim
should be denied because of undue delay in requesting to
amend and resulting substantial prejudice. Dkt. No. 85, pp.
13-18 (Pg. ID No. 1857). Further, Plaintiff argues that any
claims based on allegations of fraud are barred by Michigan
and Ontario's statutes of limitations. Id. at
18-25. Finally, Plaintiff contends that it would be futile to
allow Defendant to amend its counterclaim, as none of the
seven counts sets forth a claim upon which relief can be
granted. Id. at 25-30.
argues that it “only recently” learned of
Wallace's fraud, blaming Plaintiff for failing to provide
relevant discovery documents earlier. Dkt. No. 79, p. 13 (Pg.
ID No. 1585). Such an argument stretches the definition of