Civil Procedure – Amended Answer – Defense Of Release – Rug Debt Guaranty

The 4th Circuit in Nourison Rug Corp. v. Parvizian (Lawyers Weekly No. 001-137-08) (8 pages)upholds a District Court’s refusal to allow a guarantor to amend his answer to a suit on a debt incurred in a rug consignment sale business, beyond the deadline for amending pleadings, to add the defense of release, the 4th Circuit ruled.
There is tension within the Federal Rules between Rule 15(a) and Rule 16(b) amply illustrated by this appeal. Rule 15(a) provides that leave to amend shall be freely given when justice so requires. On the other hand, Rule 16(b) provides that a schedule shall not be modified except upon a showing of good cause and by leave of the district judge.
The 4th Circuit has never directly spoken to the conflict between these two provisions in a published opinion. However, in Montgomery v. Anne Arundel County, 182 F.Appx. 156 (4th Cir. May 3, 2006), this court affirmed a District Court’s refusal to grant an amendment filed after the scheduling order deadline on the basis of Rule 16(b).
Given their heavy case loads, District Courts require the effective case-management tools provided by Rule 16. Therefore, after the deadlines provided by a scheduling order have passed, the good-cause standard must be satisfied to justify leave to amend the pleadings. This result is consistent with rulings of other circuits.
Here, the defendant’s lawyer explained the delay this way: In reviewing the motion for summary judgment, he reviewed defenses to the guaranty letter at issue and noted there was a defense available that he had not raised in his answer: release. The defendant’s reply memorandum did not add any detail to his reasons. This is far short of what is required to satisfy the good-cause standard, and the District Court properly denied the motion.
Exclusion of the defense of release was not in error. The defendant admitted he guaranteed the debt, that the debt was in default and that he was on notice of such default. Therefore the granting of summary judgment was appropriate.
Nourison Rug Corp. v. Parvizian (Lawyers Weekly No. 001-137-08) (8 pages) (Kiser, J.) (4th Circuit) Appealed from the U.S. District Court for the District of Maryland at Greenbelt, Chasanow, J.; Judah Lifschitz for appellant; James M. Andriola for appellee (No. 07-1973) (July 28, 2008).