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Maher Engineering Co. v. Screwmatics of South Carolina, Inc.

United States District Court, N.D. Illinois, Eastern Division

December 9, 2014

MAHER ENGINEERING COMPANY, Plaintiff,
v.
SCREWMATICS OF SOUTH CAROLINA, INC., Defendant.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Judge.

Before the Court is defendant's motion for leave to file a counterclaim. The Court denies the motion for the following reasons.

DISCUSSION

Plaintiff, Maher Engineering Company ("Maher"), originally filed this action for breach of contract (Count I), violation of the Illinois Sales Representative Act (Count II), and unjust enrichment (Count III, pleaded in the alternative) in the Circuit Court of Cook County. Defendant, Screwmatics of South Carolina, Inc. ("Screwmatics"), removed the case to federal court based on diversity of citizenship.

Maher alleges that it was a sales representative for Screwmatics in a territory comprising the states of Wisconsin, Illinois, and Iowa, and that Screwmatics agreed to pay Maher commissions at a rate of 5 percent for the sales in that territory. Maher contends that Screwmatics failed to pay commissions to Maher as required by the parties' written Sales Representation Agreement (the "Agreement"), which is attached to the complaint as Exhibit A.

Screwmatics filed an answer to Maher's complaint on June 4, 2014. It now moves for leave to file a counterclaim.

LEGAL STANDARDS

Federal Rule of Civil Procedure 15(a)(2), which governs defendant's motion, states that after a responsive pleading is filed, "a party may amend its pleading only with the opposing party's written consent or the court's leave." Fed.R.Civ.P. 15(a)(2). Although Rule 15(a) instructs that a court should "freely" give leave to amend "when justice so requires, " "a district court may deny leave for a variety of reasons, including undue delay and futility." McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674, 684 (7th Cir. 2014); see also Arreola v. Godinez, 546 F.3d 788, 796 (7th Cir. 2008) ("[D]istrict courts have broad discretion to deny leave to amend where there is undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies, undue prejudice to the defendants, or where the amendment would be futile...."). An amendment is futile if the amended claim could not survive a Rule 12(b)(6) motion to dismiss. See Arlin-Golf, LLC v. Village of Arlington Heights, 631 F.3d 818, 823 (7th Cir. 2011). "The decision to grant or deny a motion to file an amended pleading is a matter purely within the sound discretion of the district court."• Aldridge v. Forest River, Inc., 635 F.3d 870, 875 (7th Cir. 2011) (brackets omitted).

ANALYSIS

Screwmatics seeks leave to file a counterclaim asserting that it is entitled to recover more than $280, 000 in commissions that it allegedly mistakenly paid to Maher during the last five years the Agreement was in effect. Screwmatics's theory is that Maher did not earn those commissions because they were not related to orders that Maher "forwarded" to Screwmatics. Screwmatics states in its motion that on October 27, 2014, "counsel for Screwmatics took the deposition of" plaintiff's representative, who "confirmed that many orders on which Maher was paid went directly to Screwmatics and were not forwarded by Maher."[1] (Def.'s Mot. ¶ 2.)

In response, Maher argues that the proposed counterclaim is futile. The proposed counterclaim states in pertinent part:

2. Tom Hogge of Screwmatics may have had a copy of the Agreement after it was signed in April 2001 but his copy was lost.
3. Until August 2013, Screwmatics was not aware of the specific terms of the Agreement which only required that Maher be compensated for "Orders for products solicited by Representative [Maher which] shall be forwarded to and subject to acceptance by Principal."
4. Because it was not aware of this provision, Screwmatics paid Maher on hundreds of orders which came directly to Screwmatics and were not solicited or forwarded by Maher. ...

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