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ADVENT ELECS., INC. v. BUCKMAN

March 19, 1996

ADVENT ELECTRONICS, INC., Plaintiff,
v.
BERNARD A. BUCKMAN; and BERNARD A. BUCKMAN ENTERPRISES, INC., Defendants.



The opinion of the court was delivered by: ASPEN

 MARVIN E. ASPEN, Chief Judge:

 Plaintiff Advent Electronics brings this diversity action against Defendants Bernard Buckman and Bernard A. Buckman Enterprises, alleging that the defendants violated covenants in which they agreed not to compete against Advent Electronics. Pursuant to Federal Rule of Civil Procedure 15(a), the defendants now move for leave to amend their answer and counterclaim, and to add a jury demand. For the reasons set forth below, we grant leave to amend the answer, but strike the jury demand as untimely and deny leave to amend the counterclaim as futile.

 I. Background

 In 1993, Advent Electronics, an electronic components distributor, agreed to buy Finnigan Electronics, another distributor. Finnigan Electronics (now known as Bernard A. Buckman Enterprises) and Advent Electronics executed an Asset Purchase Agreement dated November 8, 1993. Proposed Countercl., Ex. A. Concomitant with the Purchase Agreement, Advent Electronics and Finnigan's president and owner, Bernard Buckman, entered into an Employment Agreement appointing Buckman as the general manager of Advent Electronics' Missouri Branch Office. Id., Ex. B. The Employment Agreement also prohibited Buckman from competing against Advent Electronics for two years after termination of employment.

 II. Discussion

 A. Leave to Amend Answer

 In its original answer, Buckman alleged as an affirmative defense that Advent had "systematically and intentionally breached its contracts and agreements with the defendants." Answer P 36(B). The answer alleged several acts, some more general than others, that allegedly constituted Advent's breach of the agreements between the parties. Id. P 36(B)(1)-(7). Generally, Advent allegedly "restricted and undermined Bernard A. Buckman's authority as General Manager of Plaintiff's Missouri Branch Office and systematically removed [Buckman's] power to direct, supervise, and manage the business and affairs" of the office. Id. P 36(B)(1). Specifically, Advent demoted Buckman to salesperson on August 1, 1994; announced the demotion prior to that date; forced the Missouri office to use a computer system without adequate training; refused to permit Buckman to hire replacement employees; and failed to pay Buckman commissions and bonuses due under the Employment Agreement. Id. P 36(B)(2)-(7).

 In the proposed answer, Buckman seeks to modify some of the specific acts alleged in support of the affirmative defense that Advent breached its agreements with Buckman and in support of the more general assertion that Advent undermined Buckman's authority to manage the Missouri office. For example, the amended answer alleges that Advent not only refused to permit Buckman to hire sales employees, but also forced Buckman to retain inadequate salesmen. Amended Answer P 36(B)(5). Furthermore, the amended answer adds that Advent limited the customers and geographic area from which Buckman could solicit sales, id. P 36(B)(6)-(7), and restates Buckman's complaint about his demotion as a material amendment to the Employment Agreement, id. P 36(B)(8).

 In determining whether to grant leave to amend a pleading, Federal Rule of Civil Procedure 15(a) mandates that "leave shall be freely given when justice so requires." In the instant action, Advent fails to articulate how amending the answer would impose any unfair prejudice upon the plaintiff; indeed, the plaintiff argues that the amended answer raises no new issues. Moreover, although the amended answer adds allegations that do not constitute newly discovered facts, the defendants moved to amend their answer nearly three months prior to the close of discovery. Such a delay, though not encouraged, does not justify denying leave to amend. See Tamari v. Bache & Co. (Lebanon) S.A.L., 838 F.2d 904, 909 (7th Cir. 1988). Accordingly, we grant leave to amend the answer.

 But Buckman's jury demand is untimely. Under Rule 38, a jury trial demand on any issue should be made "not later than 10 days after the service of the last pleading directed to such issue." Fed. R. Civ. P. 38(b). However, "it is well-settled law that 'under Rule 38[,] amendments or supplemental pleadings do not extend the time for making demand for jury trial except as to new issues raised by the new pleadings.'" Communications Maintenance, Inc. v. Motorola, Inc., 761 F.2d 1202, 1208 (7th Cir. 1985) (quoting Connecticut General Life Ins. Co. v. Breslin, 332 F.2d 928, 931 (5th Cir. 1964)). If the amended pleadings "cease raising new factual issues, and begin simply alleging new legal theories or particularized facts," then the amendments do not revive the time to make a jury demand under Rule 38. Id. In this action, Buckman had already failed to make a jury demand with respect to the issues raised in the original answer, including the allegations that Advent had breached its agreement with Buckman and had undermined Buckman's authority to manage the office. The amended answer merely adds "particularized facts," rather than new factual issues, and thus cannot revive the waived right to a jury. Accordingly, Buckman's jury demand is untimely.

 B. Leave to Amend Counterclaim

 We now turn to Buckman's proposed counterclaim, which amends the original counterclaim by adding two new counts, Count II for fraud and Count III for negligent misrepresentation. Although leave to amend is freely granted, we need not grant leave to file futile amendments. "An amendment may be futile when it fails to state a valid theory of liability, or could not withstand a motion to dismiss." Bower v. Jones, 978 F.2d 1004, 1008 (7th Cir. 1992) ...


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