     Case: 14-11177      Document: 00513154934         Page: 1    Date Filed: 08/14/2015




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                               United States Court of Appeals
                                                                                        Fifth Circuit

                                                                                      FILED
                                      No. 14-11177                              August 14, 2015
                                                    Lyle W. Cayce
MATTHEW W. DUELING; TYE DUELING; HEATH E. BARFIELD;      Clerk
KARRIE BARFIELD,

              Plaintiffs–Appellants,

v.

DEVON ENERGY CORPORATION; DEVON ENERGY PRODUCTION
COMPANY, L.P.,

              Defendants–Appellees.




                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 4:14-CV-325


Before REAVLEY, PRADO, and COSTA, Circuit Judges.
PER CURIAM:*
       The sole issue in this appeal is whether the district court properly denied
the plaintiffs’ request for leave to amend their complaint. Plaintiffs–Appellants
the Duelings and the Barfields (collectively “Plaintiffs”) filed this nuisance
lawsuit in Texas state court. Plaintiffs asserted that Devon Energy’s oil and
gas drilling site, across the street from their homes in a residential area, is


       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
     Case: 14-11177       Document: 00513154934         Page: 2    Date Filed: 08/14/2015



                                      No. 14-11177
noisy and disruptive, and interferes with their use and enjoyment of their
properties. The district court granted Devon Energy’s motion for judgment on
the pleadings—finding Plaintiffs’ nuisance claims time-barred—and denied
Plaintiffs’ request for leave to amend. Because the district court denied leave
to amend based on mere delay in the absence of a possibility of serious
prejudice to the defendant, we vacate the judgment and remand.
                        I. PROCEDURAL BACKGROUND
       Plaintiffs filed their lawsuit within the two-year statute of limitations
for nuisance claims, 1 but they initially named the wrong defendant. The case
lingered on the state court’s docket without activity for more than a year until
the state court dismissed the case for want of prosecution. Plaintiffs hired new
counsel, and the state court granted Plaintiffs’ unopposed motion to reinstate
the case.
       In discovery, Plaintiffs learned that Devon Energy Production Company,
L.P., (DEPCO)—not the similarly named Devon Energy Corporation (DEC)—
operated the allegedly offending oil and gas drilling site. In March 2014, more
than twenty months after the lawsuit was initially filed, Plaintiffs moved to
amend their state-court petition to add DEPCO as a party. DEC opposed the
motion to add DEPCO, arguing, inter alia, prejudice and unreasonable delay.
       The state court granted Plaintiffs’ motion for leave to amend their
petition to add DEPCO as a party. Then, DEPCO answered, asserting for the
first time a statute-of-limitations affirmative defense. DEPCO then removed
the case to federal court and moved for judgment on the pleadings. The district
court granted DEPCO’s motion for judgment on the pleadings, denied




       1 See Schneider Nat’l Carriers, Inc. v. Bates, 147 S.W.3d 264, 270 (Tex. 2004) (“The
limitations period for a private nuisance claim is two years.” (citing Tex. Civ. Prac. & Rem.
Code § 16.003)).
                                             2
    Case: 14-11177         Document: 00513154934        Page: 3    Date Filed: 08/14/2015



                                       No. 14-11177
Plaintiffs’ request for leave to amend, and entered final judgment. Plaintiffs
timely appeal. 2
              II. JURISDICTION AND STANDARD OF REVIEW
      The district court had diversity jurisdiction as between the Duelings and
the Barfields (Texas residents) and the Devon Energy entities (Oklahoma
residents) under 28 U.S.C. §§ 1332, 1441, and 1446. We have appellate
jurisdiction over the district court’s final judgment under 28 U.S.C. § 1291.
      We review a district court’s denial of leave to amend under Federal Rule
of Civil Procedure 15 for abuse of discretion. Herrmann Holdings Ltd. v. Lucent
Techs. Inc., 302 F.3d 552, 558 (5th Cir. 2002). “Because of the liberal pleading
presumption underlying Rule 15(a), we have acknowledged that the term
‘discretion’ in this context ‘may be misleading, because [Rule] 15(a) evinces a
bias in favor of granting leave to amend.’” Mayeaux v. La. Health Serv. &
Indem. Co., 376 F.3d 420, 425 (5th Cir. 2004) (quoting Stripling v. Jordan Prod.
Co., LLC, 234 F.3d 863, 872 (5th Cir. 2000)). “[U]nless there is a substantial
reason, such as undue delay, bad faith, dilatory motive, or undue prejudice to
the opposing party, the discretion of the district court is not broad enough to
permit denial.” Martin’s Herend Imports, Inc. v. Diamond & Gem Trading U.S.
Co., 195 F.3d 765, 770 (5th Cir. 1999) (internal quotation marks omitted). In
other words, “district courts must entertain a presumption in favor of granting
parties leave to amend.” Mayeaux, 376 F.3d at 425.
                               III. APPLICABLE LAW
      “Under the Erie doctrine, federal courts sitting in diversity apply state
substantive law and federal procedural law.” Gasperini v. Ctr. for Humanities,
Inc., 518 U.S. 415, 427 (1996). In removed actions, however, the Federal Rules
of Civil Procedure state that the Rules “apply to a civil action after it is removed


      2   Plaintiffs do not appeal judgment on the pleadings as to Devon Energy Corporation.
                                              3
     Case: 14-11177      Document: 00513154934        Page: 4    Date Filed: 08/14/2015



                                     No. 14-11177
from state court.” Fed. R. Civ. P. 81(c)(1) (emphasis added); see also Fed R. Civ.
P. 1 (“These rules govern the procedure in all civil actions and proceedings in
the United States district courts, except as stated in Rule 81.”). Accordingly,
for relation-back purposes, we have held that state rules apply to determine
whether an amended petition filed in state court relates back to the date of the
original petition. Taylor v. Bailey Tool & Mfg. Co., 744 F.3d 944, 947 (5th Cir.
2014).
                                  IV. DISCUSSION
      The sole issue on appeal is whether the district court abused its
discretion in denying Plaintiffs’ request for leave to amend to respond to
DEPCO’s statute-of-limitations defense. The district court granted DEPCO’s
motion for judgment on the pleadings because—although Plaintiffs’ initial
petition was filed within the two-year statute of limitations—Plaintiffs “did not
name DEPCO as a party defendant until the filing of their First Amended
Petition,” nearly four years after their nuisance claims accrued in July 2010.
Plaintiffs requested leave to amend their complaint to plead misidentification
and relation back in response to DEPCO’s statute-of-limitations defense.
      The district court denied Plaintiffs’ request for leave to amend. The
district court’s stated reasons for denying leave to amend were brief:
      Plaintiffs have had several opportunities to learn and name the
      correct defendant and properly plead their reason for avoidance of
      limitations in the over four years since this lawsuit was first filed,
      but they have been dilatory in so doing. Consequently, their
      request for leave to again amend their pleadings is DENIED.
Plaintiffs argue this ruling was error because they have not been dilatory in
amending their complaint, as “there have not been repeated failures to cure
deficiencies.” 3 Plaintiffs further argue that “amendment . . . would not be


      3   DEPCO argues that Plaintiffs have waived this argument, but that is not the case
in light of Plaintiffs’ opening brief.
                                            4
     Case: 14-11177      Document: 00513154934         Page: 5    Date Filed: 08/14/2015



                                      No. 14-11177
futile” because their “proposed second amended complaint . . . clearly laid out
the facts” supporting their argument that the amended complaint should relate
back under Texas procedural law. DEPCO counters that Plaintiffs failed to
comply with the state court’s scheduling deadlines, and, when the state court
granted leave to amend, “Plaintiffs could have asserted any theories to toll or
avoid limitations in their First Amended Petition.” But “[t]hey did not—instead
merely adding DEPCO as a party.” 4 In reply, Plaintiffs emphasize that the
Fifth Circuit has held that “delay alone is an insufficient basis for denial of
leave to amend,” quoting Mayeaux, 376 F.3d at 427.
       Under Federal Rule of Civil Procedure 15(a), “district courts must
entertain a presumption in favor of granting parties leave to amend.” Mayeaux,
376 F.3d at 425. Although proper reasons for denying leave to amend include
“undue delay, bad faith, dilatory motive, repeated failures to cure deficiencies,
or undue prejudice to the opposing party,” “delay alone is an insufficient basis
for denial of leave to amend.” Id. at 425, 427. The touchstone for denial of leave
to amend under Rule 15(a) is prejudice. Lone Star Ladies Inv. Club v.
Schlotzky’s Inc., 238 F.3d 363, 368 (5th Cir. 2001). Thus, delay warrants
dismissal “only if the delay . . . presents the possibility of serious prejudice to
the opponent.” Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 598–99 & n.2
(5th Cir. 1981) (reversing district court’s denial of leave to amend “proposed
after dismissal of the action at the pre-trial conference and one week before the
trial date” in part because the plaintiff moved to amend “promptly upon the
decision of the trial court that held the pleadings defective”).




       4Because we do not find the fact that Plaintiffs’ counsel previously sued DEPCO in
another separate nuisance lawsuit relevant to whether leave to amend should have been
granted in this case, DEPCO’s request for this Court to take judicial notice of this fact is
DENIED.
                                             5
     Case: 14-11177       Document: 00513154934         Page: 6     Date Filed: 08/14/2015



                                       No. 14-11177
       Delay is undue and prejudicial if it hinders the opposing party’s ability
to respond to the proposed amendment or to prepare for trial. This Court and
other courts have found prejudice, for instance, if the amendment is asserted
after the close of discovery; after dispositive motions have been filed, briefed,
or decided; or on the eve of or in the middle of trial. See Smith v. EMC Corp.,
393 F.3d 590, 594–96 (5th Cir. 2004) (affirming denial of leave to amend—
finding the delay undue and prejudicial—because the amendment would add
a new claim in the middle of trial after discovery had closed); Campbell v.
Emory Clinic, 166 F.3d 1157, 1162 (11th Cir. 1999) (“Prejudice and undue
delay are inherent in an amendment asserted after the close of discovery and
after dispositive motions have been filed, briefed, and decided.”); Solomon v. N.
Am. Life & Cas. Ins. Co., 151 F.3d 1132, 1139 (9th Cir. 1998) (affirming denial
of leave to amend where the plaintiff filed the motion “on the eve of the
discovery deadline”).
       At the same time, “[l]iberality in pleading does not bestow on a litigant
the privilege of neglecting her case for a long period of time.” Daves v. Payless
Cashways, Inc., 661 F.2d 1022, 1025 (5th Cir. 1981). “At some point in the
course of litigation, an unjustified delay preceding a motion to amend goes
beyond excusable neglect, even when there is no evidence of bad faith or
dilatory motive.” Id.
       Here, although there is ample evidence of delay (particularly in state
court before the case was removed), 5 we struggle to perceive how this delay
unduly prejudiced DEPCO. Plaintiffs’ initial state court petition—incorrectly
identifying Devon Energy Corporation as the defendant—did linger on the


       5  Contrary to Plaintiffs’ argument, we may and do consider the entire record—
including proceedings in state court prior to removal—in assessing the district court’s denial
of leave to amend. See Nissho-Iwai Am. Corp. v. Kline, 845 F.2d 1300, 1303 (5th Cir. 1988)
(“The federal court accepts the case in its current posture as though everything done in state
court had in fact been done in the federal court.” (internal quotation marks omitted)).
                                              6
     Case: 14-11177     Document: 00513154934       Page: 7   Date Filed: 08/14/2015



                                     No. 14-11177
state court’s docket for over a year until finally the state court dismissed the
petition for want of prosecution. But as soon as Plaintiffs learned in discovery
that the similarly named Devon Energy Production Company, L.P., was in fact
the correct party, Plaintiffs promptly sought and obtained leave from the state
court to amend their petition to add DEPCO. DEPCO answered asserting a
statute-of-limitations defense; the Devon Energy entities had not previously
asserted a statute-of-limitations defense until after Plaintiffs moved for leave
to amend to add DEPCO. Then, DEPCO removed to federal court and filed a
motion for judgment on the pleadings on the same day. In their timely response
to DEPCO’s motion for judgment on the pleadings, Plaintiffs requested leave
to   amend   and      attached   a   proposed   amended       complaint   to   allege
misidentification and tolling of the statute of limitations. As in Dussouy,
Plaintiffs promptly requested leave to amend in response to DEPCO’s motion
as soon as it appeared likely that their pleadings were defective. See 660 F.2d
at 599.
       The district court had not issued a Rule 16 pretrial scheduling order,
and neither the discovery cutoff date nor the time to file dispositive motions
had lapsed. The proposed amended complaint does not include new legal
theories of which DEPCO was not on notice: Plaintiffs’ tolling arguments were
included in their successful motion to amend the petition in state court. Thus,
we conclude that the district court abused its discretion in denying leave to
amend based on Plaintiffs’ “dilatory” conduct in this litigation.
      Although undue delay appears to be the only reason the district court
gave for denying leave to amend, we may nonetheless affirm if other reasons
are “readily apparent” such that “the record reflects ample and obvious
grounds for denying leave to amend.” Mayeaux, 376 F.3d at 426 (internal
quotation marks omitted). This is not such a case. There is no evidence of bad
faith, and Plaintiffs have not repeatedly failed “to cure deficiencies by
                                          7
    Case: 14-11177         Document: 00513154934   Page: 8   Date Filed: 08/14/2015



                                    No. 14-11177
amendments previously allowed.” See Foman v. Davis, 371 U.S. 178, 182
(1962). So far, only one amendment has been allowed: the state court granted
Plaintiffs leave to amend their petition to include DEPCO. Plaintiffs up to this
point have not had an opportunity to amend their complaint to address
DEPCO’s statute-of-limitations defense that had not been previously asserted:
soon after DEPCO answered asserting this defense, the case was removed.
Further, it is not readily apparent that Plaintiffs’ proposed amendment would
be futile. Under Texas law, “[i]f the plaintiff merely misnames the correct
defendant . . . , limitations is tolled and a subsequent amendment of the
petition relates back to the date of the original petition.” Enserch Corp. v.
Parker, 794 S.W.2d 2, 4–5 (Tex. 1990). If this rule were to apply here, Plaintiffs’
proposed amended complaint may relate back to their initial, timely state-
court petition—though, we express no opinion on this issue, except to say that
futility is not obvious.
                                 V. CONCLUSION
      Although we do not countenance Plaintiffs’ delay in pursuing this action
in state court, that delay did not substantially prejudice DEPCO, nor does it
overcome the presumption in favor of granting leave to amend. Mayeaux, 376
F.3d at 425. Thus, the district court abused its discretion in denying Plaintiffs’
request for leave to amend. We therefore VACATE the judgment of the district
court and REMAND for proceedings not inconsistent with this opinion.




                                          8
