holding that district court did not abuse its discretion in denying leave to amend on the basis of prejudice when amendment came after the close of discovery and "on the eve of the deadline for dispositive motions" and therefore "would [have] change[d] the nature of the litigation"
How later courts described this case
- holding that district court did not abuse its discretion in denying leave to amend on the basis of prejudice when amendment came after the close of discovery and "on the eve of the deadline for dispositive motions" and therefore "would [have] change[d] the nature of the litigation"
- holding that the appellant waived an argument by not raising it in the opening brief, even though that issue was discussed by the panel and the parties during oral argument
- holding that the FHA preempts state-law indemnification claims because such claims would allow “an owner to completely insulate itself from liability for an [Americans with Disabilities Act (‘ADA’)] or FHA violation”
- holding district court did not abuse its discretion in denying leave to amend based on prejudice when the proposed amendment came after the close of discovery, “on the eve of the deadline for dispositive motions,” and “would change the nature of the litigation”
Written by the judges who cited it.
The opinion
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
EQUAL RIGHTS CENTER, a not for
profit corporation; AMERICAN
ASSOCIATION OF PEOPLE WITH
DISABILITIES, a not for profit
corporation; UNITED SPINAL
ASSOCIATION, a not for profit
corporation,
Plaintiffs,
and
ARCHSTONE MULTIFAMILY SERIES I
TRUST; ARCHSTONE,
Defendants-Appellants,
v. No. 09-1453
NILES BOLTON ASSOCIATES, a
Georgia Corporation,
Defendant-Appellee,
and
CLARK REALTY BUILDERS, LLC, a
Maryland Corporation; VIKA
INCORPORATED, a Maryland
Corporation; MEEKS PARTNERS,
f/k/a Kaufman Meeks and
Partners, a Texas partnership;
NATIONAL MULTI HOUSING COUNCIL,
Defendants.
2 EQUAL RIGHTS CENTER v. NILES BOLTON
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Andre M. Davis, District Judge.
(1:04-cv-03975-AMD)
Argued: January 27, 2010
Decided: April 19, 2010
Before NIEMEYER, KING, and SHEDD, Circuit Judges.
Affirmed by published opinion. Judge Shedd wrote the opin-
ion, in which Judge Niemeyer and Judge King joined.
COUNSEL
ARGUED: David M. Gossett, MAYER BROWN, LLP,
Washington, D.C., for Appellants. Charles E. Rogers,
SMITH, CURRIE & HANCOCK, LLP, Atlanta, Georgia, for
Appellee. ON BRIEF: Andrew A. Nicely, Gary A. Winters,
MAYER BROWN, LLP, Washington, D.C., for Appellants.
Russell S. Drazin, JACKSON & CAMPBELL, PC, Washing-
ton, D.C., for Appellee.
SHEDD, Circuit Judge:
Archstone Multifamily Series I Trust and Archstone (col-
lectively referred to as "Archstone") appeal an order of the
district court granting summary judgment in favor of Niles
Bolton Associates, Inc. ("Niles Bolton"). Archstone also
appeals the district court’s denial of its motion to amend its
EQUAL RIGHTS CENTER v. NILES BOLTON 3
complaint to include a claim for contribution. In granting
summary judgment, the court concluded that Archstone’s
state-law claims are preempted by the Fair Housing Act
("FHA"), 42 U.S.C. § § 3601 et seq., and the Americans with
Disabilities Act ("ADA"), 42 U.S.C. § § 12101 et seq.; in
denying the motion to amend, the court concluded that allow-
ing Archstone to amend its complaint would be prejudicial to
Niles Bolton and, in any event, futile. For the following rea-
sons, we affirm.
I.
Archstone develops and owns multi-family housing proj-
ects throughout the United States. Archstone hired Niles Bol-
ton as its architect to design a number of multi-family
apartment buildings on the East Coast in the 1990s. In 2004,
the Equal Rights Center and several other disability advocacy
groups ("Equal Rights plaintiffs") filed this lawsuit against
Archstone, Niles Bolton, various contractors, and other archi-
tects used by Archstone, alleging that these entities failed to
design and construct 71 apartment buildings so that they
would be accessible to persons with disabilities in compliance
with the FHA and ADA.
Archstone and the Equal Rights plaintiffs entered into a
Consent Decree to settle the lawsuit covering the 71 apart-
ment communities, 15 of which were designed by Niles Bol-
ton. Under the settlement, Archstone was required, inter alia,
to retrofit the 71 properties to make them compliant with the
FHA and ADA and pay the plaintiffs $1.4 million to cover
damages, attorneys’ fees, and expenses. Archstone has retro-
fitted a majority of the 71 properties and is in the process of
retrofitting the remainder. According to Archstone, the costs
of the retrofits at the sites designed by Niles Bolton exceed
$2.5 million. Niles Bolton was not a party to the settlement
between Archstone and the Equal Rights plaintiffs. However,
Niles Bolton later entered into a separate Consent Decree with
4 EQUAL RIGHTS CENTER v. NILES BOLTON
the Equal Rights plaintiffs that did not include any admission
of liability.
Following settlement with the Equal Rights plaintiffs,
Archstone filed a cross-claim against Niles Bolton asserting
four state-law causes of action: (1) express indemnity; (2)
implied indemnity; (3) breach of contract; and (4) profes-
sional negligence. The express indemnity claim focuses on
clauses in the contracts between Niles Bolton and Archstone
in which Niles Bolton promised to "make good any defects in
its services resulting from the failure of the Architect or any
of its Consultants to perform their respective services in a
manner that is commensurate with the professional standard
of care" and to "indemnify" Archstone "from and against all
losses, claims, liabilities, injuries, damages and expenses,
including attorneys’ fees and litigation costs . . . arising out
of or resulting from or in connection with, the performance,
or failure to perform, by the Architect or its employees." J.A.
37, 51-52. Niles Bolton and Archstone also agreed that "de-
signs or specifications furnished by the Architect found to be
negligent will be promptly corrected by the Architect at no
cost to the Owner, and the Architect will be responsible to the
Owner for all damages, if any, resulting from such defective
designs or specifications." J.A. 148. They further agreed that
"[a]ny designs or specifications furnished by the Architect
which contain errors in coordination of details or dimensional
errors will be promptly corrected by the Architect at no cost
to the Owner". Id.
Archstone’s implied indemnity claim rests on the principle
that Niles Bolton "bears a substantially greater share of
responsibility for any failure of the Properties to be designed
according to the requirements of the FHA and the ADA,
given Niles Bolton’s superior knowledge, skill and involve-
ment in the design of the properties." J.A. 369. The breach of
contract claim, as alleged by Archstone, arises because Niles
Bolton breached the warranties under its contracts with Arch-
stone by failing to design properties that are in compliance
EQUAL RIGHTS CENTER v. NILES BOLTON 5
with the FHA and ADA. Finally, Archstone’s professional
negligence claim results from Niles Bolton’s alleged "failure
to exercise the level of professional skill and care required of
an architect" to design the properties in question in a manner
that conforms to the requirements of the FHA and ADA. J.A.
370. For these state-law causes of action, Archstone sought
(1) to recover damages, attorney’s fees and costs paid by
Archstone to the Equal Rights plaintiffs, (2) to recover costs
it incurred retrofitting those portions of the Properties improp-
erly designed by Niles Bolton, and (3) to be indemnified for
costs that Archstone will incur to modify the remainder of the
properties designed by Niles Bolton that have yet to be retro-
fitted.
After Archstone filed its cross-claim, the parties conducted
discovery for approximately three years. During the course of
discovery, Niles Bolton sought to compel Archstone to dis-
close evidence regarding Archstone’s allocation of damages
among itself, Niles Bolton, and any other party. Archstone
resisted these discovery requests by arguing that it was seek-
ing damages for the 15 of 71 properties that Niles Bolton
designed and all related settlement amounts, attorneys’ fees,
and costs paid to the Equal Rights plaintiffs, as well as the
costs of retrofitting the 15 properties designed by Niles Bol-
ton. The district court affirmed the magistrate judge’s grant of
a protective order to Archstone because the allocation of dam-
ages was irrelevant to a claim for indemnity. The district court
further noted that "there is no suggestion in [the magistrate’s
discovery rulings] that the court perceived there to be a contri-
bution claim presented by Archstone." Equal Rights Center v.
Archstone Smith Trust, et al., 603 F.Supp.2d 814, 819 (D.Md.
2009).
Three weeks after the close of discovery and on the eve of
the deadline for dispositive motions, Archstone filed a motion
for leave to amend its cross-claim to include a claim for con-
tribution. Under the amended complaint, Archstone sought to
recover contribution on the same grounds as its original
6 EQUAL RIGHTS CENTER v. NILES BOLTON
claims. In a memorandum order, the district court denied the
motion for leave to amend on the ground that it would result
in prejudice to Niles Bolton. According to the court, because
a claim for contribution requires an analysis of the relative
fault of the parties while a claim for indemnification does not,
amending the complaint to add this claim would require addi-
tional discovery of the type previously rejected by the court
because of its view that Archstone was seeking only indemni-
fication rather than contribution. Because Archstone did not
move for leave to amend the complaint until after three years
of discovery and on the eve of dispositive motions, the court
held that the amendment would prejudice Niles Bolton. Fur-
ther, the court held that even if there were no prejudice, a
state-law claim for contribution would be futile because it
would be preempted under federal law.
The district court also granted summary judgment in favor
of Niles Bolton. The court reasoned that although styled as
state-law claims for relief, Archstone’s causes of action were
indemnity and de facto indemnity claims for violations of the
FHA and ADA. Because no right to indemnification exists
under these laws, and because allowing indemnification on
the state-law claims asserted by Archstone would be antitheti-
cal to the purposes of the FHA and ADA, the court held that
federal law preempted these claims under the doctrine of con-
flict, or obstacle, preemption.
Archstone timely appealed the grant of summary judgment
and the denial of its motion for leave to amend. We address
each issue in turn.
II.
A.
Summary judgment is appropriate "if the pleadings, the dis-
covery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
EQUAL RIGHTS CENTER v. NILES BOLTON 7
that the movant is entitled to judgment as a matter of law."
Fed. R. Civ. P. 56(c). We review the district court’s order
granting summary judgment de novo. Jennings v. U.N.C., 482
F.3d 686, 694 (4th Cir. 2007) (en banc). Likewise, we also
review the district court’s preemption determination de novo.
AES Sparrow Point LNG, LLC v. Smith, 527 F.3d 120, 125
(4th Cir. 2008).
Archstone argues that the district court erred because its
state-law claims are not antithetical to Congress’ purpose in
enacting the FHA and ADA. Archstone claims that no conflict
or obstacle exists because its cross-claim does not impose
requirements that make compliance with federal law impossi-
ble. Further, it claims that it only seeks partial indemnity
because it seeks to recover only the damages caused by Niles
Bolton. Archstone also contends that the court erred in finding
its breach of contract and negligence claims are preempted as
de facto claims for indemnification. Archstone asserts that its
claims are not derivative because it is not attempting to
enforce the duties that Niles Bolton owed to the Equal Rights
plaintiffs, but rather is seeking to enforce the duties Niles Bol-
ton owed to Archstone. Having conducted a de novo review
of the record, we hold the district court did not err in finding
these claims preempted.
B.
Obstacle preemption applies "where state law ‘stands as an
obstacle to the accomplishment and execution of the full pur-
poses and objectives of Congress.’" Freightliner Corp. v.
Myrick, 514 U.S. 280, 287 (1995) (quoting Hines v. David-
owitz, 312 U.S. 52, 67 (1941)). The Supreme Court has found
state-law claims preempted under obstacle preemption where
a state-law claim "interferes with the methods by which the
federal statute was designed to reach [its] goal." Gade v. Nat’l
Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 103 (1992) (internal
quotation marks and citation omitted). We have explained that
8 EQUAL RIGHTS CENTER v. NILES BOLTON
[a] decision about [obstacle preemption] requires the
court independently to consider national interests
and their putative conflict with state interests. . . .
[P]reemption under [an obstacle preemption] theory
is more an exercise of policy choices by a court than
strict statutory construction.
Abbot v. Am. Cyanamid Co., 844 F.2d 1108, 1113 (4th Cir.
1988). Obstacle preemption can apply not only to positive
enactments of state law but also to state tort claims. See, e.g.,
Geier v. Am. Honda Motor Co., 529 U.S. 861 (2000) (holding
that negligence action against a manufacturer was preempted
because it conflicted with a federal agency standard).
In finding Archstone’s state-law claims preempted, the dis-
trict court correctly used the guidance we set forth in Baker,
Watts & Co. v. Miles & Stockbridge, 876 F.2d 1101 (4th Cir.
1989) (en banc). In Baker, Watts & Co., we considered
whether the Securities Exchange Act of 1933 preempted a
state-law claim for indemnity. In holding the indemnification
claim is preempted, we analyzed whether the claim repre-
sented an obstacle to the regulatory goals of the federal law.
We explained that "Congress ha[d] not provided a right to
indemnification in the federal securities laws under any cir-
cumstances." Id. at 1108. Furthermore, we emphasized the
total nature of a claim for indemnity, concluding that "it
would run counter to the basic policy of the federal securities
laws to allow a securities wrongdoer . . . to shift its entire
responsibility for federal violations on the basis of a collateral
state action for indemnification." Id. (emphasis added). As we
explained, "[t]he goal of the 1933 and 1934 Acts is preventive
as well as remedial, and ‘denying indemnification encourages
the reasonable care required by the federal securities provi-
sions.’" Id. (internal citations omitted).
We believe this reasoning applies with equal force to an
indemnity claim brought under the FHA and ADA. To begin,
as with the securities laws at issue in Baker, Watts & Co., the
EQUAL RIGHTS CENTER v. NILES BOLTON 9
goals of the FHA and ADA are "regulatory rather than com-
pensatory." The principal purpose of the ADA is to "(1) . . .
provide a clear and comprehensive national mandate for the
elimination of discrimination against individuals with disabil-
ities [and] (2) to provide clear, strong, consistent, enforceable
standards addressing discrimination against individuals with
disabilities." 42 U.S.C. § 12101(b). The primary purpose of
the FHA is "to provide . . . for fair housing throughout the
United States." 42 U.S.C. § 3601. Furthermore, compliance
with the ADA and FHA, as conceded by Archstone, is "non-
delegable" in that an owner cannot "insulate himself from lia-
bility for . . . discrimination in regard to living premises
owned by him and managed for his benefit merely by relin-
quishing the responsibility for preventing such discrimination
to another party." See Walker v. Crigler, 976 F.2d 900, 904
(4th Cir. 1992). Under these principles, it is clear that, like the
securities laws at issue in Baker, Watts & Co., the regulatory
purposes of the FHA and ADA would be undermined by
allowing a claim for indemnity.
Here, Archstone sought to allocate the full risk of loss to
Niles Bolton for the apartment buildings at issue. Allowing an
owner to completely insulate itself from liability for an ADA
or FHA violation through contract diminishes its incentive to
ensure compliance with discrimination laws. If a developer of
apartment housing, who concededly has a non-delegable duty
to comply with the ADA and FHA, can be indemnified under
state law for its ADA and FHA violations, then the developer
will not be accountable for discriminatory practices in build-
ing apartment housing. Such a result is antithetical to the pur-
poses of the FHA and ADA. Accordingly, we find
Archstone’s indemnification claims are preempted.1
1
Archstone argues that because 28 C.F.R. § 36.201(b) permits "alloca-
tion of responsibility for complying with the obligations" of the ADA,
indemnity is not preempted. We find this argument unpersuasive. The his-
tory of this regulation demonstrates that this allocation provision is unique
to the landlord-tenant relationship and does not impact the relationships
between architects, builders, and other parties. See Nondiscrimination on
the Basis of Disability by Public Accommodations and in Commercial
Facilities, 56 Fed. Reg. 35544, 35555-56 (July 26, 1991).
10 EQUAL RIGHTS CENTER v. NILES BOLTON
We also hold that the district court correctly held Arch-
stone’s state-law breach of contract and negligence claims to
be de facto indemnification claims and, thus, preempted. Our
conclusion is buttressed by Archstone’s argument in its brief,
and repeated at oral argument, that it seeks — regardless of
how it labels its claim — to recover 100% of the losses at the
15 sites where Niles Bolton provided architectural services.
Such a claim for relief is a de facto claim for indemnification
derived from violations of these federal statutes. Although
Archstone suggests that these claims are not derivative
because it only seeks to enforce duties Niles Bolton owes to
Archstone, we find that this argument fails because Archstone
really seeks to have Niles Bolton pay all damages that arise
under the FHA and ADA at these sites.
Therefore, we agree with the district court that these de
facto indemnification state-law claims by Archstone are pre-
empted under federal law. See Baker, Watts & Co., 876 F.2d
at 1108 (holding that plaintiff’s pendent common law actions
are preempted to the extent that they are de facto claims for
indemnification). Accordingly, we affirm the district court’s
grant of summary judgment in favor of Niles Bolton.
III.
We must next decide whether the district court erred by
denying Archstone leave to amend its complaint to include a
claim for contribution. We review the district court’s denial
of a motion to amend a complaint under the deferential abuse
of discretion standard. See Glaser v. Enzo Biochem, Inc., 464
F.3d 474, 476 (4th Cir. 2006). Although leave to amend
should be "freely give[n] when justice so requires," Fed. R.
Civ. P. 15(a)(2), a district court has discretion to deny a
motion to amend a complaint, so long as it does not outright
refuse "to grant the leave without any justifying reason."
Foman v. Davis, 371 U.S. 178, 182 (1962). A district court
may deny a motion to amend when the amendment would be
prejudicial to the opposing party, the moving party has acted
EQUAL RIGHTS CENTER v. NILES BOLTON 11
in bad faith, or the amendment would be futile. See Laber v.
Harvey, 438 F.3d 404, 426 (4th Cir. 2006) (en banc). Here,
the district court gave two bases for denying Archstone’s
motion to amend — prejudice and futility. Because we
believe the district court did not abuse its discretion on at least
one of these bases, we affirm.
As to the first basis — prejudice — the district court held
that the addition of a contribution claim after the close of a
three-year long discovery process and on the eve of the dead-
line for dispositive motions would have required it to reopen
discovery and thereby prejudice Niles Bolton. See Equal
Rights Center, 603 F.Supp.2d at 820. In finding that the addi-
tion of a claim for contribution would change the character of
litigation, the court stated:
Niles Bolton correctly infers from the proposed
claim for contribution that Archstone is essentially
admitting liability for some of the violations at the
Niles Bolton-designed properties Archstone devel-
oped and operates. This admission, according to
Niles Bolton, would require further discovery into
the nature of each and every alleged violation (under
myriad states’ laws) to which Archstone is impliedly
conceding liability.
In other words, as the case had been framed in the
more than three years before the motion to amend
was filed, Niles Bolton was alleged, by virtue of the
claim for indemnification, to be solely liable under
the FHA and the ADA for all of the violations in the
complexes it designed. . . . To permit an eleventh
hour change in litigation theory to one of partial lia-
bility would mean that Niles Bolton has been preju-
diced in its ability to assess rationally its exposure to
a damages award in favor of Archstone, as its litiga-
tion plan did not contemplate such an atomistic bat-
tlefield. Furthermore, Niles Bolton’s settlement
12 EQUAL RIGHTS CENTER v. NILES BOLTON
posture would of necessity have been quite different
three years ago (before the expenditure of large sums
for attorney’s fees and litigation expenses) had it
known that it was not facing a liability in excess of
15/71 of $1.5 million plus some share of the cost of
retrofitting, but something considerably below that
amount. . . .
Unquestionably, any reasonable litigant in Niles Bol-
ton’s position would have sought specific discovery
into how Archstone believed it appropriate to allo-
cate fault for the violations alleged by Plaintiffs, e.g.,
was Niles Bolton 25% at fault; 35%; 75%? Plainly,
in the face of a claim solely for indemnification, no
litigant would have been motivated to undertake
such discovery, and Niles Bolton has not done so.
Indeed, Niles Bolton attempted in some ways to
obtain certain discovery that, indisputably, would
have been relevant to a contribution claim but not to
an indemnity claim. Archstone resisted such discov-
ery and both Magistrate Judge Gesner (who man-
aged discovery) and I sustained Archstone’s
objections, each of us on the understanding that
Archstone was pursuing indemnity.
Id. at 818-819 (emphasis in original).
We hold that the district court did not abuse its discretion
in finding the proposed amendment would be unduly prejudi-
cial to Niles Bolton. We find compelling the court’s analysis
that the amendment — coming so belatedly — would change
the nature of the litigation and, would therefore, prejudice
Niles Bolton.2 See Deasy v. Hill, 833 F.2d 38, 42 (4th Cir.
2
We need not reach the district court’s futility analysis because we find
the district court’s prejudice analysis is a sufficient basis to affirm the
denial of the motion to amend. Accordingly, we do not reach the question
of whether a state-law claim for contribution is preempted under federal
law.
EQUAL RIGHTS CENTER v. NILES BOLTON 13
1987) (noting that "[b]elated claims which change the charac-
ter of litigation are not favored").3
Archstone argues on appeal that its proposed amendment
would not prejudice Niles Bolton because it would not change
the character of the litigation. Specifically, Archstone argues
that it seeks the same relief that it has sought throughout the
litigation and no further discovery would be needed — hence,
no prejudice would result for Niles Bolton. See, e.g., Appel-
lant’s Br. 50 (arguing that it "seeks the same relief under both
its indemnity and contribution theories"). Indeed, at oral argu-
ment, Archstone conceded that its contribution claim would
seek to have Niles Bolton cover 100% of the damages at the
15 properties in question. Archstone’s position demonstrates
a fundamental misunderstanding of the difference between
contribution and indemnification. See Baker, Watts & Co.,
876 F.2d at 1103 (noting that "[i]ndemnification, of course,
involves shifting the entire loss from one wrongdoer to
another; contribution requires each wrongdoer to pay his pro-
portionate — or pro rata — share of the adverse judgment").
As presented on appeal, the claim which Archstone presents
in its amended complaint is a de facto indemnification claim,
and such a claim is preempted under federal law. Therefore,
allowing Archstone to amend under these circumstances to
include a so-called contribution claim is, in any event, futile.
3
We have repeatedly affirmed denials of motions to amend which
change the character of the litigation late in the proceedings. See Smith v.
Angelone, 111 F.3d 1126, 1135 (4th Cir. 1997) (holding that given the
delay in amending, the late hour of the motion to amend, and the burdens
it would impose on the opposing party, the district court did not abuse its
discretion in denying the motion to amend); see also Deasy, 833 F.2d at
40 (affirming the district court’s discretion to deny the motion to amend
because of the undue delay and prejudice caused to the opposing party);
Barnes Group, Inc. v. C&C Products, Inc., 716 F.2d 1023, 1035 n. 35 (4th
Cir. 1983) (affirming the district court’s denial of defendant’s motion to
amend).
14 EQUAL RIGHTS CENTER v. NILES BOLTON
Accordingly, we affirm the district court’s denial of the
motion to amend.4
IV.
For the foregoing reasons, we affirm both the district
court’s grant of summary judgment in favor of Niles Bolton
and its denial of Archstone’s motion to amend its complaint.
AFFIRMED
4
At oral argument, there was discussion concerning whether the district
court abused its discretion in denying this amendment because the original
complaint included the word "contribution" in one of the counts. However,
any such argument has been waived because it was not raised in Arch-
stone’s opening brief. See United States v. Jones, 308 F.3d 425, 427 n.1
(4th Cir. 2002) (holding that an argument not raised in the opening brief
is waived).