United States District Court, N.D. Illinois, Eastern Division
July 7, 2004.
MARIA HENRY VANCE, Plaintiff,
ROBERT E. GALLAGHER, SR., Individually and as Trustee of the Maria Henry Trusts Numbers 1, 2 and 3, Defendant.
The opinion of the court was delivered by: JOAN H. LEFKOW, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, Maria Henry Vance ("Vance"), has moved pursuant to
Rule 15 of the Federal Rules of Civil Procedure for leave to file
a Fourth Amended Complaint adding Shirley M. Gallagher as a
defendant on Count I, requesting an accounting. For the reasons
stated below, the motion is granted.
Rule 15(a) of the Federal Rules of Civil Procedure provides
that a party may amend its complaint with leave of court, and
leave to amend should be "freely given when justice so requires."
Fed.R.Civ.P. 15(a). The court "need not allow an amendment
when there is undue delay, dilatory motive, undue prejudice to
the opposing party, or when the amendment would be futile."
Bethany Pharmacal Co. v. QVC, Inc., 241 F.3d 854, 860-61
(7th Cir. 2001), citing Foman v. Davis, 371 U.S. 178, 182
(1962). However, delay is not a sufficient basis for denial of
leave to amend unless the delay has caused the opposing party
undue prejudice. Textor v. Board of Regents, 711 F.2d 1387,
1391 (7th Cir. 1983). "Generally, `the grant of leave to
amend . . . is within the discretion of the trial court.'" Sanders v. Venture
Stores, Inc., 56 F.3d 771, 773 (7th Cir. 1995), quoting
Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321,
On November 13, 2002, Vance filed a seven-count Complaint
against Robert E. Gallagher, Sr. ("Gallagher"), individually and
as Trustee of the Maria Henry Trusts Numbers 1, 2, and 3. Vance
alleged that Gallagher had mishandled the trusts' assets and
engaged in self-dealing by, among other things, investing the
trusts' assets in business entities that he controls. Vance
alleged claims for a preliminary and permanent injunction (Count
I), breach of fiduciary duty (Count II), an accounting (Count
III), breach of the trust agreements (Count IV), negligence in
the administration of the trusts (Count V), a declaratory
judgment as to trust 3 (Count VI), and a declaratory judgment as
to her written election to liquidate the trusts (Count VII).
Vance's Complaint was dismissed by this court for failure to
properly plead diversity jurisdiction.
On December 18, 2002, Vance filed a First Amended Complaint
against Gallagher. Once again, Vance's First Amended Complaint
was dismissed for failure to properly plead diversity
On January 28, 2003, Vance filed a Second Amended Complaint. On
August 5, 2003, Vance sought leave to file a Third Amended
Complaint voluntarily dismissing three of the seven counts in her
Second Amended Complaint, namely, Count 1 (Preliminary and
Permanent Injunction), Count VI (Declaratory Judgment as to Trust
No. 3), and Count VII (Declaratory Judgment as to Election to
Liquidate). Gallagher answered the Third Amended Complaint and
filed Affirmative Defenses and a Counterclaim thereto. On or about August 12, 2003, Shirley Gallagher notified Vance
that she would be assuming the role of successor trustee under
the terms and conditions of the Maria Henry Trusts Numbers 1, 2,
and 3. Vance deposed Shirley Gallagher on December 18, 2003.
During the deposition, Shirley Gallagher confirmed the existence
of a Power of Attorney authorizing her to sign Gallagher's
resignation as Trustee and her subsequent assumption of the role
of Trustee to the Maria Henry Trusts. On March 3, 2004, Vance
requested from Shirley Gallagher "a complete accounting . . . of
all business interests owned by [Vance] and her remaining
trusts." (Pl. Ex. C.) According to Vance, such an accounting has
not been provided. Vance now seeks to add Shirley Gallagher as a
defendant on Count I of the proposed Fourth Amended Complaint,
requesting an accounting.
Gallagher asserts four grounds for opposing Vance's motion for
leave to amend her complaint. First, Gallagher argues that
Vance's motion is premature as to Shirley Gallagher because Vance
never requested an accounting from Shirley Gallagher after
Gallagher assumed the role of trustee of the Maria Henry Trusts.
However, on March 3, 2004, Vance did request such an accounting.
Thus, Vance's motion is ripe.
Second, Gallagher argues that Vance has unduly delayed seeking
leave to add Shirley Gallagher as a party. Gallagher points out
that seven months have passed since Shirley Gallagher advised
Vance that she would be assuming the duties and responsibilities
of successor trustee. However, Vance, quite reasonably, sought to
confirm the validity of Gallagher's resignation as trustee and to
determine under what authority Shirley Gallagher was acting as
successor trustee. Vance did so at Shirley Gallagher's deposition
in December of 2003. The instant motion was filed one month after Shirley Gallagher's deposition. The court
finds that this does not constitute undue delay.
Third, Gallagher argues that by allowing Vance leave to amend
her complaint, Gallagher will be prejudiced. The court finds this
argument unpersuasive. The accounting claim asserted against
Shirley Gallagher does not raise, as Gallagher contends, "new
claims, theories and allegations." (Def. Resp., at 5.) Rather, it
is identical to accounting claim against Gallagher set forth in
the initial complaint. Gallagher has failed to explain how the
addition of Shirley Gallagher as a defendant to the accounting
claim will require significant additional discovery. Furthermore,
the prejudice to Vance if the motion for leave to amend is denied
will be far greater than any prejudice to Gallagher if the motion
is granted. It is possible that Vance would be unable to obtain
the accounting requested in Count I if Shirley Gallagher is not
added, because Shirley Gallagher is the current trustee of the
Maria Henry Trusts. See Godfrey v. Kamin, 99 C 3230, 1999 WL
756151, at *2 (N.D. Ill. Sept. 13, 1999) (holding that all
trustees are necessary and indispensable parties to a suit
alleging breach of fiduciary duty for failure to provide trust
Finally, Gallagher argues that granting Vance leave to file a
Fourth Amended Complaint "would only increase the already
frivolous nature of this lawsuit." (Def. Resp., at 7.) In support
of this argument, Gallagher argues only that "discovery has not
produced a single piece of evidence which in any way supports the
allegations in Vance's Third Amended Complaint." The court will
not evaluate the factual merits of Vance's claims at this stage.
The proposed amendment is not frivolous on its face. Thus, the
court will allow it. CONCLUSION
Because Gallagher has not shown good reason for denial of the
motion, and Rule 15(a) requires that leave to amend be freely
given, Vance's motion for leave to amend is granted. Vance is
required to file her Fourth Amended Complaint by July 16, 2004.
Defendants are given until August 3 to plead to the Fourth
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