Opinion

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF TENNESSEE

AT KNOXVILLE

BLEHCO 520, LLC, WILLIAM RANDOLPH )

STINSON, II, and RAM LINGA REDDY )

DORNALA, )

)

Plaintiffs, )

)

v. ) No. 3:24-CV-145-KAC-DCP

)

THE TIMBER RIDGE GROUP, INC., )

US BANK NATIONAL ASSOCIATION, and )

TRUSTEE J. PHILLIP JONES, )

)

Defendants. )

)

)

THE TIMBER RIDGE GROUP, INC., )

)

Counter-Plaintiff, )

)

v. )

)

WILLIAM RANDOLPH STINSON II, )

)

Counter-Defendant. )

MEMORANDUM AND ORDER

This is case is before the undersigned pursuant to 28 U.S.C. § 626, the Rules this Court,

and Standing Order 13-02.

Now before the Court is Plaintiffs’ Motion to Strike First Amended Counterclaim

[Doc. 61]. Defendant Timber Ridge Group, Inc., (“Timber Ridge”) filed a response in opposition

[Doc. 66], and Plaintiffs filed a reply [Doc. 67]. The motion is ripe for adjudication. See E.D. Tenn.

L.R. 7.1(a). For the reasons set forth below, the Court GRANTS the motion [Doc. 61].

I. BACKGROUND

On March 28, 2024, Plaintiffs filed the Complaint against Defendants [Doc. 1], and later,

on August 9, 2024, they filed an Amended Complaint [Doc. 19]. On September 23, 2024,

Defendant Timber Ridge filed an Answer and Counterclaim [Doc. 31]. Its Counterclaim was

against Plaintiff William Randolph Stinson, II [Id. at 12–15].

On October 16, 2024, United States District Judge Katharine A. Crytzer entered the

Scheduling Order that set the deadline to amend pleadings for July 1, 2025 [Doc. 38 p. 2]. On July

1, 2025, Plaintiffs filed a motion to amend the Amended Complaint [Doc. 48]. The parties briefed

that motion, and on July 29, 2025, the Court granted it and directed Plaintiff to file the Second

Amended Complaint [Doc. 58]. Plaintiffs filed their Second Amended Complaint on July 30, 2025

[Doc. 59].

On August 13, 2025, Defendant Timber Ridge filed the Answer to the Second Amended

and Complaint and the First Amended Counterclaim [Doc. 60]. Plaintiffs now move to strike the

First Amended Counterclaim pursuant to Rule 12(f) of the Federal Rules of Civil Procedure [Doc.

61]. They claim that “[u]nder Rule 15, the only way [Defendant Timber Ridge] is permitted to file

an amended counterclaim is with Plaintiffs’ written consent or leave of the Court” [Id. at 2].

Plaintiffs contend that “[t]he First Amended Counterclaim adds two new counter-defendants—

Plaintiffs BlehCo 520, LLC and Ram Linga Reddy Dornala—whereas the original Counterclaim

included Plaintiff Stinson as the sole counter-defendant” [Id.]. In addition, Plaintiffs argue that

“[t]he First Amended Counterclaim . . . adds a novel form and theory of damages—consequential

damages in the form of lost profits from lost businesses opportunities on the part of [Defendant

Timber Ridge]—that were not sought in the original Counterclaim” [Id. at 2–3]. Plaintiffs assert

that “[Defendant Timber Ridge’s] assertion of an entitlement to recover lost profits from alleged

lost businesses opportunities was not timely raised or asserted by [it] within this action” [Id. at 3].

They state that the deadline to file pleadings expired on July 1, 2025, and that they “are prejudiced

by the improper First Amended Counterclaim due to the minimal discovery window remaining

under the Court’s Scheduling Order” [Id. at 3, 4]. They request that the Court strike the First

Amended Counterclaim, or in the alternative, strike “the new allegations and the entirely novel

form of consequential damages asserted in [p]aragraphs 2, 4, and 13 of the First Amended

Counterclaim” [Id. at 4].

Defendant Timber Ridge responds that “because the [P]laintiffs filed an amended

complaint, [it] is permitted as a matter or right to file an amended counterclaim [that] asserts new

claims, without obtaining leave pursuant to [Rule] 15(a)(2)” [Doc. 66 p. 3]. It acknowledges that

there is “no Sixth Circuit opinion [that] is on point” but states that the district courts have taken

several approaches, which would allow the filing of the First Amended Counterclaim” [Id. at 3–

7]. Defendant Timber Ridge admits that it “is adding ‘a novel form and theory of damages’” but

states that “by filing their Second Amended Complaint . . . the [P]laintiffs ‘opened the door’” [Id.

at 7–8]. While Plaintiffs argue that they will be prejudiced, Defendant Timber Ridge states that

they waited to file their Second Amended Complaint [Id. at 8]. Further, it contends that “the Court

can address the [P]laintiffs’ concerns regarding discovery deadlines and the trial date” [Id.].

Plaintiffs reply, noting that they “are unable to identify any Sixth Circuit opinion discussing

whether a party may assert new counterclaims as a matter of right when answering an amended

complaint” [Doc. 67 p. 1]. They explain that there are different approaches that the Court could

take but that “[t]he approach that Defendant [Timber Ridge] urges the Court to adopt is the one

that always allows a party to file counterclaims in response to an amended complaint without

seeking leave of court and regardless of the changes made in the amended complaint” [Id. at 2

(citation omitted)]. They ask the Court to adopt the modern approach, which “allows a party to

‘assert new counterclaims without seeking leave of court if the amended complaint changed the

theory or scope of the case regardless of whether the counterclaim relates to the changes made to

the amended complaint’” [Id. at 3 (emphasis and citation omitted)]. “[Because] the Second

Amended Complaint does not expand the scope or theory of this case,” Plaintiffs assert that their

motion to strike should be granted [Id. at 4].

II. ANALYSIS

Rule 15(a) of the Federal Rules of Civil Procedure governs amendments to pleadings

before trial:

A party may amend its pleading once as a matter of course no later

than: (A) 21 days after serving it, or (B) if the pleading is one to

which a responsive pleading is required, 21 days after service of a

responsive pleading or 21 days after service of a motion under Rule

12(b), (e), or (f), whichever is earlier.

Fed. R. Civ. P. 15(a)(1). “In all other cases, a party may amend its pleading only with the opposing

party’s written consent or the court’s leave. The court should freely give leave when justice so

requires.” Fed. R. Civ. P. 15(a)(2).

Rule 12(f) of the Federal Rules of Civil Procedure provides that the court “may strike from

a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous

matter.” Courts view motions to strike with disfavor and do not frequently grant them. Operating

Eng’rs Loc. 324 Health Care Plan v. G & W Const. Co., 783 F.3d 1045, 1050 (6th Cir. 2015).

Striking a pleading is a “drastic remedy” that is “to be resorted to only when required for the

purposes of justice” and “should be sparingly used by the courts.” Brown & Williamson Tobacco

Corp. v. United States, 201 F.2d 819, 822 (6th Cir. 1953) (citations omitted)).

The parties acknowledge that the United States Court of Appeals for the Sixth Circuit has

not addressed whether a party may file a counterclaim without leave of Court following an

amended complaint. See Heritage Guitar, Inc. v. Gibson Brands, Inc., No. 1:20-CV-229, 2022 WL

17828960, at *2 (W.D. Mich. Dec. 21, 2022) (“The Sixth Circuit has not ruled on this question.”).

But they cite to various decisions addressing this issue. As one court explained:

One would think this simple question would have an established

answer in the Federal Rules or caselaw. But the Federal Rules of

Civil Procedure do not speak to this question. Caselaw on the subject

is wildly divergent; different federal courts have adopted at least six

competing approaches. One approach is to always allow a party to

file counterclaims without seeking leave of court in response to an

amended complaint. Walgreen Co. v. Hummer, No. 1:10-CV-2902,

2012 WL 13033091, at *2 (N.D. Ohio May 3, 2012). A second

approach is to never allow a party to file counterclaims without

seeking leave of court in response to an amended complaint. Bern

Unlimited, Inc. v. Burton Corp., 25 F. Supp. 3d 170, 180 (D. Mass.

2014). A third approach is that “a party is only entitled to respond

as of right to an amended complaint if its answer is strictly confined

to the new issues raised by the amended complaint.” S. New England

Tel. Co. v. Glob. NAPS, Inc., No. CIVA 3:04-CV-2075, 2007 WL

521162, at *2 (D. Conn. Feb. 14, 2007). A fourth approach is that a

party may assert new counterclaims without seeking leave of court

if the amended complaint changed the theory or scope of the case,

regardless of whether the counterclaim relates to the changes made

to the amended complaint. Tralon Corp. v. Cedarapids, Inc., 966 F.

Supp. 812, 832 (N.D. Iowa 1997), aff’d on other grounds, 205 F.3d

1347 (8th Cir. 2000); Krinsk v. SunTrust Banks, Inc., 654 F.3d 1194,

1202 (11th Cir. 2011). A fifth approach is that a party may assert

new counterclaims without seeking leave of court if the amended

complaint changed the theory or scope of the case, so long as the

new counterclaims “reflect the breadth of changes in the amended

complaint.” Elite Entm’t, Inc. v. Khela Bros. Entm’t, 227 F.R.D.

444, 446 (E.D. Va. 2005). The sixth approach, created just last year

by the Second Circuit, calls for a sliding-scale rule depending on

how far along the litigation has progressed. GEOMC Co. v. Calmare

Therapeutics Inc., 918 F.3d 92, 100 (2d Cir. 2019).

Raymond James & Assocs., Inc. v. 50 N. Front St. TN, LLC, No. 18-CV-2104, 2020 WL 7332846,

at *3 (W.D. Tenn. June 23, 2020), report and recommendation adopted, No. 218CV02104, 2020

WL 6694299 (W.D. Tenn. Nov. 13, 2020). The court further noted “that the majority rule is the

‘moderate’ approach” but that “courts and commentators do not agree on what constitutes the

moderate approach.” Id. Versions of the moderate approach include (1) “a party may assert new

counterclaims without seeking leave of court if the amended complaint changed the theory or scope

of the case, regardless of whether the counterclaim relates to the changes made to the amended

complaint[,]” and (2) “the scope of permissible new counterclaims must ‘reflect the breadth of

changes in the amended complaint.’” Id. (citations omitted)).

Defendant Timber Ridge urges the Court to adopt the first approach—that is, to always

allow a counterclaim in response to an amended complaint [Doc. 66 p. 7]. The Court declines to

do so under these particular circumstances. This is because striking pleadings should be resorted

to “when required for the purposes of justice[.]” Brown & Williamson Tobacco Corp. v. United

States, 201 F.2d at 822. And here, Defendant Timber Ridge filed its First Amended Counterclaim

on August 13, 2025, adding “a novel form and theory of damages” [Doc. 66 p. 7], after Plaintiffs’

expert disclosure deadline had expired [see Doc. 61 p. 4] and within thirty days of the discovery

deadline [see Doc. 44] without any briefing on whether the filing of the First Amended

Counterclaim was appropriate

Defendant states that “the Court can address the [P]laintiffs’ concerns regarding the

discovery deadlines and the trial date” [Doc. 66 p. 8]. Generally, prejudice can be alleviated by

“extending the discovery period to allow both parties to challenge the counterclaims on their

merits[.]” Heritage Guitar, Inc., 2022 WL 17828960, at *4. Indeed, Plaintiffs have filed a motion

requesting an extension of all the unexpired deadlines if the Court denies their Motion to Strike

[Doc. 68]. But notably, Defendant Timber Ridge has sought to “reopen any scheduling deadlines

that have already expired” [Doc. 69 p. 1]. In other words, Defendant Timber Ridge seeks to start

over. Further, and according to Plaintiffs, “Defendant[] [Timber Ridge’s] First Amended

Counterclaim was the first notice that [they] received of [its] claim for consequential damages in

the form of lost profit from lost business opportunities on the part of Defendant [Timber Ridge]”

[Doc. 67 p. 5].

Although the Court declines to adopt the first approach in this instance, it need not address

what approach is applicable under the facts of this case. This is because under the remaining

approaches, Defendant Timber Ridge’s First Amended Counterclaim would not be permitted.

Defendant Timber Ridge argues otherwise, stating that under the Raymond James & Assocs., Inc.

approach, it would be allowed to file its First Amended Counterclaim [Doc. 66 p. 6]. It

acknowledges that the “[Plaintiffs’] Second Amended Complaint did not change their theories”

[Id.]. But it states that the Second Amended Complaint “expanded the scope of the case by making

additional allegations regarding the [P]laintiffs’ claims[,] . . . and it expanded the relief and

remedies sought by increasing the [P]laintiffs’ demand by more than $400,000” [Id.]. In moving

to amend, however, Plaintiffs stated, “The Second Amended Complaint corrects two typographical

errors, adds additional allegations of fact supporting the pre-existing causes of action, and amends

Plaintiffs’ damages demand to account for the revised damages figures consistent with expert

disclosures. No additional/new causes of action are asserted, and no additional parties are added”

[Doc. 48 p. 2]. And indeed, Plaintiffs filed the Second Amended Complaint reflecting the changes

they made [Doc. 48-1]. The majority of the changes are on page seven [id. at 7], and Plaintiffs

increased their damages request on page nine [id. at 9]. As Defendant Timber Ridge acknowledges,

these changes “show[] that the amendments were to add allegations concerning the alleged

additional costs relative to the swimming pool, the alleged costs of repair, the alleged additional

costs necessary to obtain a certificate of occupancy, the alleged costs of completion, and the

alleged loss of revenue” [Doc. 66 p. 2]. Moreover, as Plaintiffs state, “Since the filing of [their]

First Amended Complaint on August 9, 2024, Defendant has been aware of Plaintiffs’ claims for

damages in relation to the swimming pool, the costs of repair and completion, including the need

for a certificate of occupancy, and the loss of revenue in the form of lost rental income” [Doc. 67

p. 6 (citing Doc. 19 ¶¶ 44–49)].

Despite Defendant Timber Ridge’s arguments, the Court cannot find that these allegations

change the scope of this lawsuit. As further noted by Plaintiffs, “Additional allegations that clarify

and revise damages figures after discovery has proceeded do not expand the scope or theory of the

case beyond what was stated in Plaintiffs’ original complaint” [Doc. 67 pp. 4–5]. See Menapace

v. Alaska Nat’l Ins. Co., No. 20-CV-00053, 2021 WL 2012324, at *7 (D. Colo. May 20, 2021)

(finding that plaintiff’s amended pleading did not change the scope of the case, noting that it

“added factual allegations that provided more specificity to the bases for [p]laintiff’s claims,

including the claim for bad faith, and conformed to the evidence discovered by [p]laintiff since the

original Complaint was filed”); cf. Heritage Guitar, Inc., 2022 WL 17828960, at *3 (“[The

plaintiff’s] second amended complaint changed the scope of the case by adding federal and state

antitrust claims of monopolization and attempted monopolization.”); Raymond James & Assocs.,

Inc., 2020 WL 7332846, at *4 (finding that the amended complaint changed the theory or scope in

the case when it made “additional allegations regarding [d]efendant’s knowledge of the problems

facing the subject elevator system[,]” it “include[d] additional breaches of the [l]ease by

[d]efendant beyond the ones previously alleged[,]” and it “expand[ed] the remedies and relief

sought”).

Based on the above, the Court finds Plaintiffs’ motion well taken.

CONCLUSION

For the reasons set forth above, the Court GRANTS the Motion to Strike First Amended

Counterclaim [Doc. 61] and STRIKES the new allegations and the consequential damages

asserted in paragraphs 2, 4, and 13 of the First Amended Counterclaim.

IT IS SO ORDERED.

ENTER: .

Debra C. Poplin

United States Magistrate Judge