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First Technology Capital, Inc. v. Banctec, Inc.

United States District Court, E.D. Kentucky, Central Division, Lexington

December 27, 2016

FIRST TECHNOLOGY CAPITAL, INC., Plaintiff,
v.
BANCTEC, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          Robert E. Wier United States Magistrate Judge.

         BancTec, Inc. (BancTec), moved for leave to file an amended answer (to include counterclaims) due to allegedly newly discovered evidence. DE ##49, 50. First Technology Capital, Inc. (FTC), responded in opposition. DE #61. BancTec replied. DE #62. Following the briefing close, FTC separately moved for leave to file a surreply to BancTec's reply in support of its motion for leave to file an amended answer. DE #63. BancTec responded in opposition. DE #64. FTC replied. DE #66. Both motions are now fully briefed and ripe for consideration.

         For the following reasons, the Court GRANTS FTC permission to file a surreply and DENIES BancTec leave to file an amended answer. A surreply is appropriate in these circumstances (to respond to BancTec's new reply arguments / theories). Further, DE #20 bars a Schedule 7-based counterclaim, and BancTec otherwise fails to satisfy the Rules' requirements to file an untimely pleading amendment.

         I. RELEVANT BACKGROUND

         The parties are currently hotly litigating what appears to be a relatively straightforward commercial lease dispute between two business entities. See DE ##23, 41, 51, 57, 59, 67 (Orders); see also DE ##65 (Transcript), 51 (referencing “the limited scope of this case”). To briefly summarize the background (to the extent necessary here), and simplifying somewhat, FTC and BancTec entered into a Master Lease Agreement (MLA) in February 2006 to govern FTC leasing certain equipment to BancTec. See DE #26-1 (MLA). The MLA contemplated a series of equipment transactions under various “Schedules” or “Sub-Schedules”; this case involves MLA Schedules 7 and 8. See DE ##26-3 & 26-10. A related case, concerning only Schedule 8, has pended in the Woodford Circuit Court since 2015.

         In the present substantive motion, BancTec seeks leave to amend its answer and to assert counterclaims based on allegedly newly discovered evidence. Specifically, BancTec asserts that on October 5, 2016, it discovered an 11/24/09 email from John Ratliff, the late president of NRI Data and Business Products, Inc. (a wholly owned subsidiary of FTC), to Lisa Bridges, BancTec's former Comptroller, on an external hard drive in BancTec's possession on which Bridges stored certain emails. BancTec also cites a 10/20/08 email from Rita Carpenter, FTC's Operations Coordinator, to Bridges and Ratliff that FTC produced in discovery in the Woodford Circuit action as a basis for the request to amend the answer. FTC opposes the motion.

         II. MOTION FOR LEAVE TO FILE A SURREPLY

         As an initial matter, and to ensure completeness of the materials under consideration, the Court addresses FTC's motion for leave to file a surreply to BancTec's reply in support of its motion for leave to file an amended answer. See DE #63 (Motion). BancTec responded. DE #64. FTC replied. DE #66. The matter is ripe for consideration.

         “Although the Federal Rules of Civil Procedure do not expressly permit the filing of sur-replies, such filings may be allowed in the appropriate circumstances, especially ‘when new submissions and/or arguments are included in a reply brief, and a nonmovant's ability to respond to the new evidence has been vitiated.'” Key v. Shelby Cnty., 551 F.App'x 262, 265 (6th Cir. 2014) (quoting Seay v. Tenn. Valley Auth., 339 F.3d 454, 481 (6th Cir. 2003)). “[M]any courts have noted” that surreplies “are highly disfavored.” Liberty Legal Found. v. Nat'l Democratic Party of the USA, Inc., 875 F.Supp.2d 791, 797 (W.D. Tenn. 2012). Still, the Sixth Circuit reviews a district court's decision whether to grant leave to file a surreply “under the deferential abuse-of-discretion standard.” Mirando v. U.S. Dep't of Treasury, 766 F.3d 540, 549 (6th Cir. 2014). A district court abuses its discretion, for example, when it denies permission to file a surreply after a party presents “new arguments and new evidence in [its] reply brief.” Eng'g & Mfg. Servs., LLC v. Ashton, 387 F.App'x 575, 583 (6th Cir. 2010). Overall, though, “[w]hether to permit a party to file a surreply is a matter left to the trial court's discretion.” Rose v. Liberty Life Ins. Co. of Boston, No. 3:15-CV-28-DJH-CHL, 2015 WL 10002923, at *1 (W.D. Ky. Oct. 19, 2015).

         The Court has fully analyzed the underlying briefing-DE ##49, 50, 61, and 62- as well as the briefing on the motion for leave to file a surreply-DE ##63, 64, and 66. The Court, in an exercise of its discretion, finds FTC's proposed surreply appropriate in the circumstances. The Sixth Circuit's focus is whether “new submissions and/or arguments are included in a reply brief.” Key, 551 F.App'x at 265; Ashton, 387 F.App'x at 583. Here, as FTC persuasively lays out, BancTec did indeed include new arguments in DE #62, and a surreply is therefore appropriate. To summarize, and speaking generally, BancTec shifted (at least in its focus) from a $1 buyout theory to a $0 buyout theory and inserted new arguments concerning, e.g., “quotes, ” “deal points, ” and the word “purchase.” Compare DE #50, with DE #62. The arguments likewise differ, at least by implication, concerning BancTec's posture as to Stipulated Purchase Value and, indeed, the basic nature of the FTC-BancTec lease at issue. BancTec also attached new evidentiary submissions. DE ##62-1, 62-2, 62-3. As FTC stated, the tendered surreply is confined to BancTec's new arguments and documents, see DE #63-1, at 2, and appropriately refrains from returning to ground already covered in the underlying motion briefing.

         Further, FTC filed the motion for leave to file a surreply essentially immediately (2 days) after BancTec's reply, greatly diminishing any timing or gamesmanship concerns that may negatively tinge surreply motions. See Key, 551 F.App'x at 265 (“[c]onsidering the amount of time that passed between Shelby County's filing of its reply brief and Key's filing of her motion for leave to file a sur-reply” and concluding the district court did not abuse its discretion in denying Key permission to file a surreply given an “unexplained delay of six months in moving for leave to file” it). Overall, under the Sixth Circuit's standard, the Court finds permitting an FTC surreply, in these circumstances, appropriate. FTC should fairly have an opportunity to address new arguments or theories (and documents) BancTec injected into the reply.

         For these reasons, the Court GRANTS DE #63 and DIRECTS the Clerk to file DE #63-2 in the record as a surreply to DE #62.

         III. MOTION FOR LEAVE TO FILE AN AMENDED ANSWER

         BancTec moved for leave to file an amended answer due to allegedly newly discovered evidence. DE ##49, 50. FTC responded in opposition. DE #61. BancTec replied. DE #62.[1] FTC surreplied. DE #63-2. The matter is ripe for consideration.

         1. DE #20 precludes a Schedule 7-based counterclaim.

In July 2016, the parties agreed, and the Court ordered, as follows:
On or before August 5, 2016, FTC shall file a First Amended Complaint in this action to assert causes of action under [Schedules 7 and 8] to the [MLA]. BancTec shall timely file an answer to the First Amended Complaint and may also assert a counterclaim, but any counterclaim filed by BancTec, whether it is asserted in its answer to the First Amended Complaint or before or after filing of the answer, shall be limited solely to any causes of action that BancTec may have under Schedule 8 to the Master Lease. Under ...

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