Opinion

UNITED STATES DISTRICT COURT CLERK

EASTERN DISTRICT OF NEW YORK 1/16/2   026

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U.S. DISTRICT COURT

MULTI-STATE PARTNERSHIP FOR

EASTERN DISTRICT OF NEW YORK

PREVENTION, LLC,

LONG ISLAND OFFICE

Plaintiff,

MEMORANDUM

AND ORDER

-against-

24-CV-00013 (JMW)

SAMUEL KENNEDY, KENNEDY

TECHNOLOGY MK, and KENNEDY

TECHNOLOGY, LLC,

Defendants.

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A P P E A R A N C E S:

Jordan Fletcher

Fletcher Law, PLLC

234 Fifth Avenue, 2nd Floor

New York, NY 10001

Attorney for Plaintiff

Kathleen Rose Fitzpatrick

KRF Legal

249 Smith St, #118

Brooklyn, NY 11231

-and-

Peter Brown

Peter Brown & Associates PLLC

260 Madison Avenue, 16th Floor

New York, NY 10016

Attorneys for Defendants

WICKS, Magistrate Judge:

Plaintiff, Multi-State Partnership for Prevention, LLC (“Plaintiff” or “MSPP”) originally

commenced this declaratory judgment action against Defendants Samuel Kennedy, Kennedy

Technology MK, and Kennedy Technology LLC (collectively, the “Defendants”) for invalidity of

copyright, non-infringement of copyright, trademark infringement, breach of contract,

defamation and tortious interference, arising out of Plaintiff's development of computer software

program, PrepMod, developed in the early stages of the COVID-19 pandemic. (See generally,

ECF No. 22.) The parties have attempted to resolve this matter through mediation. (See ECF No.

87; Electronic Order dated 4/23/2025; Electronic Report dated 10/21/2025.) However, those

efforts did not result in settlement, and thus, the parties are currently in the midst of fact

discovery. (See Electronic Order dated 10/29/2025.)

Before the Court are cross-motions to amend: (i) Defendants’ Motion to Amend their

Answer with Counterclaims (ECF No. 94), and (ii) Plaintiff’s Motion to Amend the First

Amended Complaint (ECF No. 96). Plaintiff neither opposes nor consents to Defendants’

proposed amendment. (ECF No. 95.) Defendants, on the other hand, focus on Plaintiff’s

proposed fraud claim, which is the sole subject of the opposition. (ECF No. 99.) For the reasons

set forth below, Plaintiff’s Motion to Amend the First Amended Complaint (ECF No. 96) and

Defendants’ Motion to Amend the Counterclaims (ECF No. 94) are both GRANTED.

BACKGROUND

The following allegations are drawn from the First Amended Complaint. (ECF No. 22.)

Plaintiff is a Maryland limited liability company, consisting of a single member, Tiffany Tate.

(Id. at ¶ 1.) Defendant Samuel Kennedy (“Kennedy”) is a software developer domiciled in New

York and Kennedy Technology MK (“KTMK”) is a partnership based in New York and Struga,

Macedonia. (Id. at ¶¶ 2-3.) Now terminated1 Defendant Kennedy Technology, LLC is a New

York limited liability company. (Id. at ¶ 4.)

On March 10, 2020, Plaintiff met with Defendants and gave Defendants access to the

1 The explanation for Defendant’s termination is discussed further below in the background section.

code to companion software Plaintiff created and owned in 2017 known as ReadiConsent and

ClinicWizard, as well as a prototype of PrepMod. (Id. at ¶¶ 12–13.) On March 13, 2020, Plaintiff

provided Defendants a list of “enhancements” to the code “to fortify it so that it could

accommodate the anticipated demand produced by COVID.” (Id. at ¶ 14.) On March 26, 2020,

the parties had another meeting and came to an oral agreement regarding the terms of a contract.

(Id. at ¶ 17.) Plaintiff requested a proposed written agreement, but Defendants never sent a

contract. (Id. at ¶¶ 18–19, 23.) Beginning in March 2020, Defendants worked with Plaintiff’s

developers on the development of code using a third-party GitHub, secure platform and cloud-

based service for software development in which developers store and edit code resulting in

time-stamped files and software. (Id. at ¶¶ 20–21.) In May and June 2020, Kennedy represented

to multiple third parties, as well as to Plaintiff, that Plaintiff owned the copyright to any work

that Defendants had created. (Id. at ¶ 25.) On August 16, 2020, Defendants provided Plaintiff

with the final copy of the work they had completed via GitHub. (Id. at ¶ 29.) On multiple

occasions, Plaintiff received and paid multiple invoices for the work. (Id. at ¶¶ 24, 28, 30.)

Between April and August 16, 2020, Defendants delivered the code and software to Plaintiff

without imposing any limitations on its use. (Id. at ¶ 34.)

On August 19, 2020, Defendants decided to end participation from the project but stated

that they would continue working during a transition. (Id. at ¶ 31.) However, only a day later,

Defendants “quit without any transition,” and “the software that they had created was not

functional.” (Id. at ¶ 32.) Plaintiff was thereafter “forced to engage other software developers to

remedy the non-functional software.” (Id. at ¶ 33.) On August 23, 2020, Kennedy sent an

unexecuted assignment of copyright to Plaintiff. (Id. at ¶ 35.) On November 18, 2020, Plaintiff

obtained trademark registration, U.S. Patent and Trademark Office No. 6461613, of and for

“PrepMod.” (Id. at ¶ 38.) “Claiming a first publication on April 1, 2020, the U.S. Copyright

Office awarded to a copyright claimant a copyright registration for a computer program entitled

‘PrepMod’ from a deposited work, Registration No. TX 9-113-201, effective April 23, 2022.”

(Id. at ¶ 39.) On October 13, 2022, Kennedy claimed ownership of PrepMod and sent a cease-

and-desist letter to the Philadelphia Department of Health (see ECF No. 1-3), with who Plaintiff

had a contractual relationship with. (ECF No. 22 at ¶ 40.) That same day and the following,

Kennedy submitted four other letters to two state departments of health, a county department of

health, and a health system. (Id. at ¶ 41.) The letters claimed that Defendants had developed a

software application as requested, MSPP had severed all business relations with Defendants,

Plaintiff had acquired no intellectual property rights to PrepMod, and Plaintiff and its licensees

were engaging in copyright infringement. (Id. at ¶ 42.) Upon learning of the letters, this lawsuit

was filed shortly after. (Id. at ¶ 46.)

On March 13, 2023, Plaintiff filed a Complaint in the District Court for the District of

Maryland. (ECF No. 1.) Plaintiff then filed a First Amended Complaint (“FAC”), on July 27,

2023, asserting invalidity of copyright, non-infringement of copyright, breach of contract,

tortious interference of contractual relations, defamation, and trademark infringement against

Defendants. (ECF No. 22.) On January 2, 2024, the case was transferred from the District of

Maryland to this Court (ECF Nos. 34-35; see also Electronic Order dated 1/2/2024), and on

February 7, 2024, the parties consented to the undersigned’s jurisdiction for all purposes. (ECF

Nos. 44-45.) On February 9, 2024, Plaintiff's FAC was dismissed by the undersigned in its

entirety pursuant to Federal Rule of Civil Procedure (“FRCP”) 41(a)(1)(A)(ii) as against

defendant Kennedy Technology, LLC, and the following causes of action set forth in Plaintiff's

FAC were dismissed pursuant to FRCP 41(a)(1)(A)(ii) as against Defendants Samuel Kennedy

and Kennedy Technology MK: (i) Plaintiff's cause of action for tortious interference (Count IV);

(ii) Plaintiff's cause of action for defamation (Count V); and (iii) Plaintiff's cause of action for

trademark infringement (Count VI).2 (See Electronic Order dated 2/9/2024.) On March 1, 2024,

the remaining Defendants filed an Answer to the FAC, asserting two counterclaims against

Plaintiff for copyright infringement and breach of contract. (ECF No. 48.) After several attempts

to receive a so-ordered protective order, the Court granted the parties’ joint motion for a

protective order. (ECF No. 72.) The parties filed motions to amend their pleadings in March of

2025. (ECF Nos. 81-82.) However, upon substitution of counsel for Plaintiff, the parties

attempted mediation, which unfortunately did not resolve the matter. (See ECF Nos. 84-87, 90.)

As such, the prior motions were denied with leave to renew. (See Electronic Orders dated

4/23/2025.) The parties are currently engaged in fact discovery, which is set to be completed on

or before March 28, 2026.3 (See Electronic Order dated 10/29/2025.) On December 15, 2025,

Plaintiff filed the current motion to amend the operative Complaint (ECF Nos. 96-98, 100-01).

The proposed amended complaint seeks to: (i) simplify the allegations and claims in the prior

complaint, and (ii) add a new fraud claim. (ECF Nos. 97 at 1, 4; 98-1.) According to Plaintiff,

Defendants would not have opposed the motion if the fraud claim was removed. (ECF No. 97 at

1, 4.) At the same time, Defendants filed their motion to amend the answer with counterclaims

2 In that same so-ordered stipulation, the parties also agreed,

that all substantive determinations of law, including any and all causes of action and any

counterclaims the Parties may file, shall be governed by and construed in accordance with

the laws of the Fourth Circuit Court of Appeals and the State of Maryland, and that the

Parties shall defer to the Court for all procedural matters.

(ECF No. 42 at 2.)

3 The current Scheduling Order’s dates and deadlines are as follows: (i) the completion of all fact

discovery is March 28, 2026, (ii) all discovery, including expert discovery shall be completed by May 28,

2026, and (iii) the last date for first steps towards summary judgment motion practice is June 26, 2026.

(See Electronic Order dated 10/29/2025.)

(ECF No. 94). That amendment seeks to add a new counterclaim defendant, Maryland

Partnership for Prevention, Inc. (MPP). (ECF Nos. 94-1 at 1; 94-9-10.) Plaintiff takes no position

to this new addition. (ECF No. 95.)

THE LEGAL FRAMEWORK

Motions to amend pleadings are governed by the Federal Rule of Civil Procedure 15(a).

Under Rule 15—which applies here since the motion to amend was filed before any deadline

passed—“the court should grant such leave ‘freely… when justice so requires’” pursuant to Rule

15(a)(2).4 Generally, “[u]nless there is a showing of bad faith, undue delay, futility or undue

prejudice to the non-moving parties, the district court should grant leave to amend.” Adlife Mktg.

& Commc’ns Co., Inc. v. Best Yet Mkt., Inc., No. 17-CV-02987 (ADS) (ARL), 2018 WL

4568801, at *1 (E.D.N.Y. Sept. 24, 2018) (citing Forman v. Davis, 371 U.S. 178, 182 (1962)).

The party opposing the proposed amended pleading has the burden of establishing that

amendment would be prejudicial or futile. Jipeng Du v. Wan Sang Chow, No. 18-CV-01692

(ADS) (AKT), 2019 WL 3767536, at *4 (E.D.N.Y. Aug. 9, 2019). However, the burden to

explain the delay rests with the movant. Pilkington N. Am., Inc. v. Misui Sumitomo Ins. Co. of

Am., No. 18 Civ. 8152 (JFK), 2021 WL 4991422, at *5 (S.D.N.Y. Oct. 27, 2021). The moving

party must attach the proposed amended complaint to the motion, as was done here, specifying

the new claims and/or parties intended to be added. (See ECF Nos. 94-10; 98-7 (indicating the

4 Here, as this case was transferred from Maryland, no Initial Conference was held nor was there an initial

Rule 26(f) Scheduling Order entered. However, the first discovery deadlines were “so ordered” as part of

a stipulation between the parties. (See ECF No. 42; Electronic Order dated 2/9/2024.) Further deadlines

have not included a date in which motions to join new parties or amendments were to be made.

Thus, Rule 16 is not implicated here, and accordingly, the motion is considered under Rule 15(a)(2).

Indeed, Plaintiff reiterates this in the instant motion by contending that “[w]here the deadline to amend set

in a scheduling order has not yet passed (or where, as here, no such deadline has been set).” (ECF No. 97

at 5.) See See v. Gov't Emps. Ins. Co., No. 21-CV-00547 (PKC) (JMW), 2025 WL 2042323, at *4

(E.D.N.Y. July 21, 2025) (finding the same).

proposed amendments in tracked changes)); Ghaly v. Nissan Motor Acceptance Corp., No. 21-

CV-01613 (JS) (JMW), 2021 WL 2550389, at *1 (E.D.N.Y. June 22, 2021). The Court must

consider the Rule 15 factors, even when the motion is unopposed. See, e.g., Ryan v. County of

Nassau, No. 21-CV-113 (RPK) (ARL), 2022 WL 21816755, at *4 (E.D.N.Y. Nov. 1, 2022)

(applying Rule 15’s factors to an unopposed motion to amend the complaint); Turano v. Zucker,

No. 17-CV-3397 (ADS) (AKT), 2017 WL 11593734, at *2 (E.D.N.Y. Nov. 4, 2017) (same).

Indeed, “[i]t is ‘within the sound discretion of the district court to grant or deny leave to

amend.’” Pierre v. Cnty. of Nassau, No. 17-CV-6629 (LDH) (RER), 2022 WL 2872651, at *4

(E.D.N.Y. July 21, 2022) (quoting Hart v. Suffolk Cnty., No. 17-CV-5067 (JS) (SIL), 2020 WL

4738243, at *2 (E.D.N.Y. Aug. 15, 2020)).

Moreover, “Rule 21 is implicated along with Rule 15 because [Defendants] seek to add []

additional [parties].” Xianghe Cnty. Yibang Furniture Co. v. Liu, No. 20-CV-5267 (NJC) (JMW),

2024 WL 2222200, at *6 (E.D.N.Y. Apr. 9, 2024), report and recommendation adopted sub nom.

Xianghe Cnty. Yibang Furniture Co. v. Hong Liu, No. 20-CV-5267 (NJC) (JMW), 2024 WL

2214555 (E.D.N.Y. May 16, 2024) (quoting Drossos. Zucker v. Porteck Glob. Servs., Inc., No.

13-CV-2674 (JS) (AKT), 2015 WL 6442414, at *5 (E.D.N.Y. Oct. 23, 2015)). Fed. R. Civ. P. 21

provides “[o]n motion or on its own, the court may at any time, on just terms, add or drop a

party.” Fed. R. Civ. P. 21. Thus, in these circumstances, “courts apply the ‘same standard of

liberality afforded to motions to amend pleadings under Rule 15….’” Addison v. Reitman

Blacktop, Inc., 283 F.R.D. 74, 79 (E.D.N.Y. 2011) (internal citations omitted); GB v. Town of

Hempstead, No. 17-6625 (JMA)(ARL), 2025 WL 1029439, at *4 (E.D.N.Y. Feb. 10, 2025),

report and recommendation adopted, No. 17-CV-06625 (JMA) (ARL), 2025 WL 719125

(E.D.N.Y. Mar. 6, 2025) (same).

It is within this legal framework that the Court analyzes the motions.

DISCUSSION

I. Plaintiff’s Motion to Amend the Complaint

Plaintiff represents that its proposed amended complaint seeks to: (i) simplify the

allegations and claims in the prior complaint, and (ii) add a new fraud claim. (ECF Nos. 97 at 1,

4; 98-1.) According to Plaintiff, Defendants would not have opposed the motion if the fraud

claim was removed. (ECF No. 97 at 1, 4.) That appears true as Defendants’ opposition focuses

primarily on the new proposed fraud claim. (See ECF No. 99 at 1.) The fraud claim as explained

further below alleges in sum that at the time Defendants made representations to Plaintiff that

they owned all the rights in the modified version of the PrepMod code, such representations were

false. (See ECF No. 98-1 at 18-19.)

i. Undue Delay

“Mere delay . . . absent a showing of bad faith or undue prejudice, does not provide a

basis for a district court to deny the right to amend.” Block v. First Blood Assocs., 988 F.2d 344,

350 (2d Cir. 1993) (citation omitted); see also Ruotolo v. City of New York, 514 F.3d 184, 191 (2d

Cir. 2008) (emphasizing prejudice and bad faith over delay). Although mere delay is insufficient

to deny a motion to amend, the moving party has the burden to explain the delay. Ordinarily,

where the moving party fails to provide a detailed explanation as to why the proposed

amendments could not have been alleged previously, a court will assume there was undue delay.

Perez v. Escobar Construction, Inc., 342 F.R.D. 378, 381-82 (S.D.N.Y. 2022).

Here, Defendants argue that allowing the proposed amendment with a newly added fraud

claim would unduly delay the litigation further as prior counsel could have asserted this claim in

the prior motion.5 (ECF No. 99 at 6.) Plaintiff avers that it could not file the new fraud claim

when the prior motion was made because while it is true that the relevant documents were

produced in late January to early February 2025 – there were over 400 pages most of which were

untranslated – requiring Plaintiff to investigate the language. (ECF No. 100 at 2.) Likewise, the

case was stayed shortly thereafter due to the parties’ attempt to resolve this matter in Mediation.

Courts have found no undue delay exists where information underlying the proposed

amendments was discovered after the filing of the initial complaint and the movant filed the

motion to amend shortly thereafter. See Sea Trade Co. v. FleetBoston Fin. Corp., No. 03-CV-

10254 (JFK), 2006 WL 2786081, at *1 (S.D.N.Y. Sept. 26, 2006) (finding no undue delay

because although defendant may have had necessary information to assert its claims at the time

of the initial answer, it needed to continue its investigation to verify the basis for its

counterclaims and sought to timely amend after). In addition, Defendants do not oppose the

remaining claims to be amended and clarified in the proposed amendment and solely focus on

the fraud claim. Therefore, this factor weighs in favor of granting the motion.

ii. Bad Faith

“While not much case law exists in this Circuit about what constitutes bad faith for the

purposes of denying a motion for leave to amend a pleading, a finding that a party is seeking

leave to amend solely to gain a tactical advantage supports a finding that such an amendment is

made in bad faith.” Feuer v. Cornerstone Hotels Corp., No. 14-CV-5388 (JFB) (SIL), 2017 WL

3841841, at *5 (E.D.N.Y. Aug. 4, 2017), report and recommendation adopted, 2017 WL

3842350 (E.D.N.Y. Aug. 31, 2017) (internal quotation marks omitted) (citation omitted). The

burden is on the party opposing the amendment to establish bad faith. Contrera v. Langer, 314 F.

5 Defendants reference the prior motions to amend that were denied with leave to renew following the

Mediation.

Supp. 3d 562, 567 (S.D.N.Y. 2018) (“While the party seeking to amend its pleading must explain

any delay, the party opposing the amendment ‘bears the burden of showing prejudice, bad faith,

and futility of the amendment.’”) (citations omitted). Plaintiff’s motion seeks to amend the

existing pleading in two ways, namely, clarify the operative complaint, and add a fraud claim

based on newly discovered evidence.

Nothing in the record presented supports a finding of bad faith, namely, seeking leave to

amend solely to gain a tactical advantage. See Neurological Surgery Prac. of Long Island, PLLC

v. Cigna Health & Life Ins. Co., No. 21-CV-01549 (JS) (JMW), 2025 WL 2933103, at *4

(E.D.N.Y. July 2, 2025), report and recommendation adopted, No. 21-CV-01549(JS)(JMW),

2025 WL 2778389 (E.D.N.Y. Sept. 30, 2025) (finding the same). Defendants’ conclusory

statement that “[t]hroughout this litigation MSPP has thwarted discovery with one tactical move

after another” does not articulate a finding of bad faith. (ECF No. 99 at 7.) Accordingly, this

factor weighs in favor of granting Plaintiff’s motion.

iii. Prejudice

Prejudice to the nonmovant is an important factor when determining whether to grant a

claimant’s leave to amend and is often the “most frequent reason for denying leave to amend.”

Ruotolo, 514 F.3d at 191. When considering whether the opposing party may be prejudiced,

courts consider whether the new claim would: “(1) require the opponent to expend significant

additional resources to conduct discovery and prepare for trial; (2) significantly delay the

resolution of the dispute; or (3) prevent the plaintiff from bringing a timely action in another

jurisdiction.” Block, 988 F.2d at 350; see Alekperova v. Interfaith Med. Ctr., No. 04-CV-202

(BAF), 2006 WL 8439666, at *4 (E.D.N.Y. Aug. 8, 2006) (“[P]rejudice must take the form of

increasing the non-movant’s costs, surprising the non-movant with new allegations or claims, or

delaying or prolonging the trial.”). “[T]he proper standard is one that balances the length of the

delay against the resulting prejudice.... [T]he longer the period of an unexplained delay, the less

will be required of the nonmoving party in terms of a showing of prejudice.” de la Gandara v.

Soriano, No. 25-CV-02242 (FB) (JMW), 2025 WL 3228080, at *3 (E.D.N.Y. Nov. 19, 2025)

(quoting Evans v. Syracuse City Sch. Dist., 704 F.2d 44, 47 (2d Cir. 1983)).

Defendants have not shown that permitting Plaintiff to amend would cause prejudice to

them. Rather, Defendants contend that allowing the fraud claim would “enlarge the scope of

discovery and significantly delay an already stalled litigation.” (ECF No. 99 at 8.) Yet another

conclusory statement that “fail[s] to identify the specific parties that will need to be deposed or

the types of documents that will require discovery. Baker v. Powell, No. 23-CV-1626 (KMK),

2025 WL 2693629, at *8 (S.D.N.Y. Sept. 22, 2025) (collecting cases) (discussing that “courts

often find that any additional discovery that is needed is unlikely to be prejudicial”). While fact

discovery in this case is set to close at the end of March, the end of all discovery including expert

discovery is to be completed by May 28, 2026. (See Electronic Order dated 10/29/2025.) “The

degree of potential prejudice a motion to amend may cause is evaluated against the overall

progress of the litigation: the closer to the end of discovery or the closer to trial a motion to

amend is filed, the more likely that it will cause prejudice and delay to the nonmoving party.”

Bullion Exch. LLC v. Bullion Shark, LLC, No. 24-CV-00467 (SJB) (JMW), 2025 WL 2933204, at

*7 (E.D.N.Y. May 15, 2025), report and recommendation adopted, No. 24-CV-00467

(SJB )(JMW), 2025 WL 2658694 (E.D.N.Y. Sept. 17, 2025) (quoting Mohegan Lake Motors,

Inc. v. Maoli, No. 16-CV-6717 (NSR)(LMS), 2018 WL 4278352, at *5 (S.D.N.Y. June 8, 2018)).

With that, any additional discovery to be conducted, can be in the current timeframe. In addition,

Plaintiff avers that the fraud claim will have limited impact to discovery. (ECF No. 100 at 3.)

Accordingly, little to no prejudice exists.

iv. Futility

An amendment is futile if the proposed claim could not withstand a motion to dismiss

under Fed. R. Civ. P. § 12(b)(6). IBEW Local Union No. 58 Pension Trust Fund and Annuity

Fund v. Royal Bank of Scotland PLC, 783 F.3d 383, 389 (2d Cir. 2015). The party opposing the

amendment bears the burden of proving futility. FC Online Marketing, Inc. v. Burke’s Martial

Arts, LLC, No. 14-CV-03685 (SJF) (SIL), 2016 WL 11481193, at *7 (E.D.N.Y. Sept. 30, 2016).

As such, when a party objects to a motion to amend on futility grounds, “the moving party must

merely show that it has at least colorable grounds for relief.” Copantitla v. Fiskardo Estiatorio,

Inc., No. 09 Civ. 1608, 2010 WL 1327921, at *3 (S.D.N.Y. Apr. 5, 2010) (internal quotation

marks omitted).

The futility branch is ofttimes the death knell on a contested motion to amend. See e.g.,

Schwasnick v. Fields, No. 08-CV-4759 (JS) (ARL), 2010 WL 2679935, at *11 (E.D.N.Y. June 30,

2010) (“In this case, there is no evidence of undue delay, bad faith, dilatory motive, or prejudice

to Defendant. However, granting leave to amend would be futile because the [pleading], even

with further amendments could not survive a 12(b)(6) motion[]”); McGrath v. Indus. Waste

Techs., No. 20-CV-2858 (KPF), 2021 WL 791537, at *8 (S.D.N.Y. Feb. 26, 2021) (internal

citations and quotations omitted) (“[L]eave to amend may independently be denied on grounds

of futility if the proposed amendment fails to state a legally cognizable claim . . . .”); see also

Gurvey v. Cowan, Liebowitz & Latman, P.C., No. 06-CV-1202 (LGS) (HBP), 2013 WL 3718071,

at *9 (S.D.N.Y. July 15, 2013) (noting the motion to amend could have been denied based on

futility alone because the potential claims lacked specificity and authority, and were otherwise

meritless).

Here, Defendants only object to the proposed fraud claim. “[T]he Court's futility analysis

is limited to the new material that Plaintiff has asked the Court for leave to add.” Tapjets Inc. v.

United Payment Servs., Inc., No. 19-CV-3740 (RRM)(VMS), 2021 WL 3129886, at *7

(E.D.N.Y. July 22, 2021). As such, the Court will only analyze if the fraud claim is futile. See

Lichtman v. Whole Foods Mkt. Grp. Inc., No. 21-CV-82 (ENV)(VMS), 2022 WL 1645658, at *3

(E.D.N.Y. May 24, 2022) (“As the proposed new allegations do not constitute new claims, but,

rather, provide additional allegations about the circumstances … the Court will not consider

Defendant's futility arguments in this posture.”)

The crux of the dispute is in connection with Count Five for fraud. As an initial matter,

Plaintiff argues that this claim is not futile under New York law. (ECF No. 97 at 6.) However, the

parties stipulated, and the Court so ordered that stipulation, which stated all causes of action shall

be governed by the laws of the Fourth Circuit Court of Appeals and the State of Maryland. (See

ECF No. 42; Electronic Order dated 2/09/2024.) Therefore, the Court analyzes the proposed

fraud claim under Maryland law.

To prevail on a claim for fraud [in Maryland], a plaintiff must show: (1) that the

defendant made a false representation to the plaintiff, (2) that its falsity was either

known to the defendant or that the representation was made with reckless

indifference as to its truth, (3) that the misrepresentation was made for the purpose

of defrauding the plaintiff, (4) that the plaintiff relied on the misrepresentation and

had the right to rely on it, and (5) that the plaintiff suffered compensable injury

resulting from the misrepresentation. Each of these elements must be proven by

clear and convincing evidence. Fraud in the inducement is one theory or means of

committing fraud, and has the same elements as fraud.

Access Funding, LLC v. Linton, 290 A.3d 112, 143 (Md. 2022) (internal citations omitted).

Here, assuming the truth of the pleadings as required, Plaintiff alleges the above

elements. Plaintiff’s proposed amendment includes that Defendants made false statements as to

the representations that Defendants owned “all rights in the modifications to and modified

version of the PrepMod code, and that they lacked the full legal authority to assign or transfer the

copyright rights in that PrepMod code, contrary to what Kennedy (in his personal capacity and

on behalf of KTech) represented to Plaintiff.” (ECF No. 98-1 at ¶ 123.) Next, Defendants knew

or should have known the statements were false. (Id.) The statements were made by Kennedy

“with the intention that MSPP would rely upon them and thus (a) continue engaging Defendants

for their services, (b) continue pursuing license of PrepMod to third party health agencies in the

United States, and (c) continue paying Defendants for their services.” (Id. at ¶ 124.) Plaintiff

having no reason not to believe these representations were false, reasonably relied upon them

and continued to pay Defendants resulting in harm. (Id. at ¶¶ 126-27.) Defendants disagree and

argue that the claim fails due to contradictions. For example, Plaintiff never asked Defendants

for a written assignment prior to licensing the PrepMod code to a third-party. (ECF No. 100 at 9.)

However, such arguments are not appropriate at this stage of the pleadings. All that is necessary

is that the allegations are well-plead. See Smith v. Westhab Traverse House, No. 24-CV-4961

(KMW), 2025 WL 1589422, at *1 (S.D.N.Y. June 4, 2025) (quoting Iqbal, 556 U.S. at 678-79.)

(“In reviewing the complaint, the Court must accept all well-pleaded factual allegations as true,

but it does not have to accept as true ‘[t]hreadbare recitals of the elements of a cause of action,

supported by mere conclusory statements.’”); Nicolosi v. BRG Sports, Inc., No. 16-CV-2910 (SJ)

(CLP), 2019 WL 5695852, at *7 (E.D.N.Y. Aug. 21, 2019) (“the question for this Court on a

motion to amend is whether the proposed Amended Complaints satisfy the minimal pleading

standards of Iqbal and Twombly.”)

The proposed fraud claim satisfies Fed. R. Civ. P. 9(b)’s heightened pleading standard for

fraud claims. “Importantly, ‘[f]raud-based claims under the MCPA are subject to Federal Rule of

Civil Procedure 9(b)'s heightened pleading standard’ and ‘must at a minimum, describe the time,

place, and contents of the false representations, as well as the identity of the person making the

misrepresentation and what he obtained thereby.’” Bryant v. Koppers, Inc., 627 F. Supp. 3d 466,

478 (D. Md. 2022), aff'd, No. 22-2017, 2023 WL 3053017 (4th Cir. Apr. 24, 2023) (quoting

Washington Cnty. Bd. of Educ. v. Mallinckrodt ARD, Inc., 431 F. Supp. 3d 698, 710 (D. Md.

2020)). Here, Plaintiff provides the time, contents and identity of those who made

misrepresentations. (See ECF No. 98-1 at 18-19.) Specifically, the amendment alleges,

Defendants represented to plaintiff, in writing by email dated June 23, 2020, that

they owned all right, title, and interest in the modified version of PrepMod code

and that they were fully capable of transferring or assigning the copyright rights in

that PrepMod code to Plaintiff “at any time.” At the time Defendants made the

foregoing representations, those statements were false, and Defendants knew or

should have known that they were false. Specifically, Defendants knew that they

did not at that time own all rights in the modifications to and modified version of

the PrepMod code, and that they lacked the full legal authority to assign or transfer

the copyright rights in that PrepMod code, contrary to what Kennedy (in his

personal capacity and on behalf of KTech) represented to Plaintiff.

(Id. at ¶¶ 122-23) (emphasis added).

Moreover, Defendants argue that Plaintiff may not bring a fraud claim because of the

“economic loss” rule. That rule states generally when a “controversy concerns purely economic

losses allegedly caused by statements made during the course of a contractual relationship

between businessmen, it is plainly contract law which should provide the rules and principles by

which the case is to be governed.” Superior Bank, F.S.B. v. Tandem Nat. Mortg., Inc., 197 F.

Supp. 2d 298, 310 (D. Md. 2000), adhered to on denial of reconsideration (June 27, 2000)

(quoting Flow Industries, Inc., v. Fields Construction Co., 683 F.Supp. 527, 530 (D.Md.1988)).

However, Courts have found that the “economic loss rule also does not bar claims of fraudulent

inducement to contract.” Next Generation Grp., LLC v. Sylvan Learning Centers, LLC, No. 11-

CV-0986 (CCB), 2012 WL 37397, at *4 n. 5 (D. Md. Jan. 5, 2012) (collecting cases). And that is

exactly what Plaintiff argues here – the misrepresentations induced the contractual agreement –

resulting in harm. (ECF No. 100 at 5.) The proposed allegations state Defendant Kennedy made

false statements to Plaintiff with the intent that Plaintiff would rely on the misrepresentations,

continue working with Defendants which included pursuing licensing of PrepMod and paying for

such services. (ECF No. 98-1 at ¶¶ 88, 99, 124, 126.) Plaintiff’s reasonable reliance on those

statements resulted in paying Defendants without receiving what was agreed upon. (Id. at ¶¶ 89,

127.)

Put simply, “[t]he economic loss doctrine does not apply to fraud or intentional

misrepresentation claims that ‘go directly to the inducement of the contract, rather than its

performance.’” ISP Techs., Inc. v. Capricorn Pharma, Inc., No. 11-CV-0023 (WDQ), 2011 WL

2600674, at *7 n.11 (D. Md. June 28, 2011) (internal citation omitted). In Americas Premiere

Corp. v. Schwarz, the court found that the economic loss rule did not bar a fraud claim brought

by the plaintiff. No. 08-CV-3304 (DKC), 2009 WL 2477521, at *5 (D. Md. Aug. 11, 2009).

There, the plaintiff alleged that the defendant “did not intend to honor the contract at the time the

contract was made.” Id. The Court looked to the Fourth Circuit that dealt with a similar situation,

where there were separate claims for contract and fraud stemming a false statement made and

found that the fraud claim could proceed due to the knowingly fraudulent representation. Id. at

*4-5. (The Fourth Circuit applied Virginia law. However, the District of Maryland noted that the

economic loss rule is the same under both Maryland and Virigina law.); see also Dwoskin v. Bank

of Am., N.A., 850 F. Supp. 2d 557, 569 (D. Md. 2012) (citing Marvin Lumber & Cedar Co. v.

PPG Indus., Inc., 223 F.3d 873, 885 (8th Cir. 2000) (This court and others, however, have

recognized that the economic loss rule does not bar claims of fraudulent inducement to contract.

In this case, [plaintiff] plead an independent claim of fraud in the inducement … [which] are an

exception to the economic loss doctrine because they are ‘necessarily prior to the contract’ and

‘independent of the contract.’”) Given the above, the economic loss rule does not bar the fraud

claim advanced by Plaintiff.

Accordingly, Plaintiff’s proposed fraud claim may proceed.

II. Defendants’ Motion to Amend the Counterclaims

Defendants’ amendment seeks to add a new counterclaim defendant, MPP and allegations

as to new counterclaim defendant MPP thereto. (ECF Nos. 94-1 at 1; 94-9-10.) Plaintiff takes no

position to this new addition. Here, unlike Plaintiff’s motion, Fed R. Civ. P. 21 is implicated as

the relief sought would add an additional party. See Gov't Emps. Ins. Co., 2025 WL 2042323, at

*3.

i. Undue Delay, Bad Faith, and Prejudice

As for the first factor of undue delay, the additions proposed were only uncovered

through the course of discovery and upon that, Defendant moved to amend the counterclaims

back in March of 2025. (See ECF No. 81.) Courts typically will find no undue delay exists where

information underlying the proposed amendments was discovered after the filing of the initial

complaint and the movant filed the motion to amend shortly thereafter. See Sea Trade Co., 2006

WL 2786081, at *1. The motion was denied with leave to renew as the case was stayed due to

Plaintiff’s substitute of counsel as well as the referral to mediation. (ECF No. 84; Electronic

Orders dated 4/5/2024, 4/23/2025.) Thus, the case was stayed from April until October. (See

Electronic Orders dated 4/23/2025 and 10/15/2025.) Moreover, the lack of undue delay is further

bolstered by the fact that Plaintiff has not opposed this motion, and therefore, Plaintiff has not

“shown that [Defendants have] unduly delayed by filing the Motion.” Menzel v. Roadget Bus.

Pte. Ltd., No. 24-CV-860 (JGK) (SLC), 2024 WL 4827403, at *1 (S.D.N.Y. Nov. 19, 2024).

Therefore, no undue delay exists.

Next as to bad faith, there is no indication that the proposed additional counterclaim

defendant is to gain a tactical advantage. As Plaintiff takes no position here, and does not object

(see ECF No. 95), no bad faith has been established. See Zou v. Han, 797 F. Supp. 3d 199, 214

(E.D.N.Y. 2025) (“Based on these circumstances and lack of evidence to the contrary, bad faith

does not exist.”)

Finally, a finding of prejudice also is absent here. Notably, where the motion to amend is

not contested, prejudice is absent. See Titus-Phillips v. British Airways PLC, No. 20-CV-5100

(EK)(SJB), 2022 WL 1177306, at *4 (E.D.N.Y. Apr. 20, 2022) (collecting cases granting

unopposed motions to amend because no prejudice would result); Willton NC NY, LLC v. MH I

Investment LLC, No. 24-CV-5526 (AT) (JW), 2025 WL 20656019, at *2 (S.D.N.Y. July 23,

2025) (concluding no prejudice existed “[w]ithout opposition from Defendants”); Peralta v. LA

Morena Rest. Corp., No. 25-CV-3396 (VSB) (SLC), 2025 WL 2218829, at *1 (S.D.N.Y. Aug. 5,

2025) (“As an initial matter, Defendants did not respond to the Motion and, therefore, they have

not shown that [plainitff] unduly delayed filing the Motion, acted in bad faith or with dilatory

purposes, or caused Defendants prejudice.”).

Accordingly, the above three factors favor granting Defendants’ motion.

ii. Futility

Defendants seek to add MPP as a counterclaim defendant following discovery that

revealed MPP’s purported authority to license the PrepMod software at issue here. (ECF No. 94-

1 at 1.) Defendants do not add new claims but rather only add MPP as an additional party to the

two counterclaims against Plaintiff. (See ECF No. 94-10 at 12-20.) Indeed, a review of the

proposed amendment shows that the same theories remain, and the only additions are those as to

MPP to connect the copyright infringement and breach of contract allegations between Plaintiff

and MP. (See id.) As this amendment is unopposed, Plaintiff has not shown why granting leave

would be futile. See Brawer v. Egan-Jones Ratings Co., 347 F.R.D. 650, 654 (S.D.N.Y. 2024)

(“Defendants have not shown any just reason why Wu should not be added as a defendant. Hu's

alleged involvement in the conduct underlying Plaintiffs’ claims is amply demonstrated in the

allegations contained in the proposed Amended Complaint. …Thus, the Court, in its discretion,

grants Plaintiffs’ motion to add her as a defendant in this action.”) Moreover, “interests of

judicial economy also favor adding [MPP] as a party to this action over deferring claims against

it to separate future action.” Bridgeport Music, Inc. v. Universal Music Grp., Inc., 248 F.R.D.

408, 415 (S.D.N.Y. 2008).

Accordingly, Defendants’ motion to amend is granted.

CONCLUSION

For the foregoing reasons, Plaintiff’s Motion to Amend the First Amended Complaint

(ECF No. 96) is GRANTED, and Defendants’ Motion to Amend the Counterclaims (ECF No.

94) is GRANTED. The parties shall file their respective amended pleadings on ECF on or

before January 23, 2026.

Dated: Central Islip, New York.

January 16, 2026

S O O R D E R E D:

James M. Wicks

/S/

JAMES M. WICKS

United States Magistrate Judge