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COURT'S OPINION

BEAULEEN CARL-WORSWICK, Associate Justice:

On November 2, 2011, at 9:30 a.m., this matter came before this Court on a hearing on Defendants Lucy Panuelo and Rumors, Inc.'s Motion to Amend Answer and Counterclaim filed with this Court on September 29, 2009. Attorney Stephen V. Finnen, Esq., appeared on behalf of the Plaintiff. Attorney Ron Moroni appeared on behalf of the Defendants.

The Court having heard arguments of counsel, and having considered the pleadings and files herein, hereby grants Defendants' Motion to Amend Answer and Counterclaim for the reasons that follow:

I. BACKGROUND

On July 10, 2008, Plaintiff filed a Complaint against Defendants, alleging breach of contract on two agreements, the first in 1993 and the second in 1996.

A. The 1993 Agreement

Based on Plaintiff's submissions, the facts are discerned. On or about September 1, 1993, he entered into an agreement with Defendant Lucy Panuelo confirming that the amount of $167,283.49 was provided to Rumors, Inc., "and that LUCY PANUELO and/or RUMORS, INC., would reimburse plaintiff in this amount either from PANUELO'S own assets or from the assets of Rumors, Inc." Compl. at 2. Paragraph 6 of the 1993 Agreement states, "the parties agree that Rumors Inc., owes Fredrick Ramp the sum of $167,283.48 effective January 1, 1994, this amount being the sum which Fredrick Ramp has invested in Rumors Inc., in excess of the sum invested by Lucy Panuelo. This sum plus interest accrued between January 1, 1994 and July 1, 1997 shall be the principal sum of the debt which shall be repaid beginning July 1, 1997 at the rate of $3,000 per month. . . ." See Ex. "A" to Compl.

On or about June 3, 2005, Defendants ceased their regularly scheduled monthly payment, resulting in a breach of the 1993 Agreement. As a result of non-payment toward the 1993 Agreement, the balance of $57,031.20 plus interests through July 1, 2008 of $3,512.49, with interest accruing at the rate of 2% per annum became due and owing to Plaintiff. Compl. at 3.

B. The 1996 Agreement

On or about December 9, 1995, Plaintiff "sold his 50% ownership interest and all the stock he owned in Rumors, Inc., to David Panuelo." Compl. at 4. Plaintiff further submits that the "value of the shares and the ownership interest, plus reimbursement for moneys provided to the corporation, in addition to the moneys outlined in Count I, was $142,000.00. " Compl. at 4-5. The Agreement that Plaintiff entered into with David Panuelo was that "the agreement would go into effect January 1, 1996, the purchase price would be paid in monthly installments of $3,000 per month, and the initial payment on this agreement would be due the month following the completion of the payments under the 1993 agreement. . . ." Compl. at 5; see also Ex. "C" to Compl. Plaintiff submits that as a result of non-payment, Defendants are in further breach of the 1996 Agreement. Id.

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1. 1998 Agreement between Plaintiff, Lucy Panuelo, Rumors, Inc. and David Panuelo

Plaintiff submits that on or about January 21, 2008, an agreement was signed between the plaintiff, Defendants Lucy Panuelo and Rumors, Inc., and David Panuelo, providing for the transfers of "shares in Rumors, Inc., and the 50% ownership in Rumors, Inc., acquired by David Panuelo, to Lucy Panuelo and Rumors, Inc., in return for them assuming all of the obligations under the 1996 Agreement." Compl. at 5-6. Paragraph 3 of the Assignment of Interest in Rumors, Inc., and Assumption of Liabilities provides that "David Panuelo wishes to assign all of his right, title and interest in Rumors, Inc., to Lucy Panuelo in exchange for Lucy Panuelo assuming all obligations which David Panuelo may have under the Agreement which took effect January 1, 1996." See Ex. "D" to Compl. Plaintiff submits that as a result of the transfers of shares to Defendants Lucy Panuelo and Rumors, Inc., the defendants jointly and severally, owes the plaintiff $142,000.00, which is the value of the 1996 Agreement, plus interests. Compl. at 6.

C. Defendants' Answers, Counterclaims, Amendments

On September 25, 2008, Defendants through Attorney Marstella Jack, filed their Answer and Counterclaim admitting to the existence of the 1993 Agreement, and denying that "the amount of $167,283.49 made by the Plaintiff was to be reimbursed . . . ." Answer at 1. As to the 1996 Agreement, Defendants admit to its existence, however, deny that "additional repayment terms were assumed by defendants." Answer at 2.

In their Counterclaim, Defendants claim among others that Plaintiff is "guilty of fraud and misrepresentation by his demands that the defendant make monthly payment of $3,000 on an alleged loan . . . and that the defendants paid to the plaintiff the sum of $151,000 and has been so damaged in an amount not less than $151,000." Countercl. at 3. On October 13, 2008, Plaintiff filed his Reply to Counterclaim, denying the allegations and asserting several affirmative defenses.

On January 7, 2009, Defendants filed a Substitution of Counsel, wherein Attorney Ron Moroni appeared as Defendants' new attorney of record, replacing Attorney Jack.

On September 28, 2009, Defendants, through Attorney Moroni filed their Amended Answer and Counterclaim. On the following day, September 29, 2009, Defendants filed their Motion to Amend Answer and Counterclaim. Defendants reasoned that after "[t]he depositions of Plaintiff and the Defendant were taken in August 2009. This enabled Counsel to have a clear understanding of the factual legal issues involved." Mot. Amend at 2. Defendants further submit that the Amended Answer and Counterclaim "merely clarifies the counts, legal theories and claims for relief that the Defendants are asserting." Id.

On October 8, 2009, Plaintiff filed his Opposition to Motion to Amend as being "untimely, prejudicial and expanding the claim at this late date." Opp'n at 2. On October 17, 2011, Defendants filed their Reply to Opposition to Motion to Amend, arguing that "[t]he original answer and counterclaim, which was drafted by Defendant's prior counsel, made no distinction between affirmative defenses and counterclaims. The proposed amended pleading attempts to remedy that." Reply at 2.

II. ANALYSIS

A. Defendant's Proposed Amendments to Answer and Counterclaim

Amendment to Complaint as provided under FSM Civil Rule 15(a) states that "[a] party may amend the party's pleading once as a matter of course at any time before a responsive pleading is

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served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, the party may so amend it at any time within 20 days after it is served. Otherwise a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires."

Defendants are seeking leave of court to amend their Answer and Counterclaim, to include new affirmative defenses and counterclaims not specifically pleaded in Defendants' original Answer and Counterclaim. The new affirmative defenses sought to be added are Undue Influence, Estoppel, Failure of Consideration, Statute of Limitation, along with the previously pleaded defenses of "[c]omplaint failed to state a claim upon which relief may be granted, agreement invalid not properly authorized by Rumors, Inc., and that both agreements are void and illegal." Am. Answer at 2-3. Defendants' Amended Counterclaim includes additional counts of customary marriage, and breach of fiduciary, trust, or confidential relationship. Am. Answer at 4-6.

As a threshold matter, this Court must determine if allowing an amendment will result in injustice and prejudice to the opposing party. "In the absence of any apparent or declared reason – such as undue delay, bad faith, or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of the allowance of the amendment, futility of amendment, etc. – the leave sought should, as the rule requires, be "freely given." Primo v. Pohnpei Transp. Auth., 9 FSM Intrm. 407, 413 (App. 2000).

Plaintiff argues that the motion to amend is untimely and prejudicial and that Defendants are attempting to greatly expand the claim at this late date. Opp'n at 2. Plaintiff further argues futility of amendment in so far as "[a]ny counterclaim alleging divisions of marital property, whether or not there was a marriage, are long barred by the statute of limitations, which should be six years." Opp'n at 5.

In determining whether the opposing party will be prejudiced by an amendment, the Court considers Plaintiff's argument on futility of amendment. Plaintiff argues that the claims Defendants sought to be added are barred by the statute of limitation in light of the effective date of the agreements. The Court finds that the facts underlying Plaintiff's causes of action stemmed from his breach of contract claims, which began to run from a starting date of June 3, 2007, when the defendants alleged to have stopped making payment toward the 1993 Agreement and the 1996 Agreement. On the other hand, Defendants' amended answers and causes of actions contain facts involving same parties' conducting transactions prior to the execution of the 1993 Agreement. Whereas Plaintiff's causes of actions commenced at a later stage in Plaintiff Ramp and Defendant Lucy Panuelo's relationship, Defendants' Amended Answer and Counterclaim contain facts that appeared to have occurred at both stages of pre-execution and post-execution of the agreements. Thus, the facts presently before this Court appear to be inextricably linked. The amendments sought arose out of conduct, transaction, or occurrence of events between same Plaintiff and Defendants at different intervals. FSM Civil Rule 15(c) provides for the relation back of claims asserted in an amendment. "Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment related back to the date of the original pleading. . . ." The defendants' proposed amendments state the same matters more fully and differently laid, however, the gist of the action or the subject of the controversy remains the same. The Court construes the proposed amendments to show different wrong arising out of closely related conduct, transaction, and occurrence involving same parties. Even if a different theory of recovery is presented, the Rule 15(c) carries some inferences of the right to plead a new claim by amendment by its provision on relation back to the date of the original pleading.

"As for prejudice, we start with the premise that is unlikely that a defendant will be prejudiced where the facts underlying a claim sought to be added are substantially similar to those underlying the

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original claim." Arthur v. FSM Dev. Bank, 14 FSM Intrm. 390, 395 (App. 2006) (citing Buder v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 644 F.2d 690, 694 (8th Cir. 1981)).

In addressing timeliness of the filing of the motion to amend, the Court finds no apparent bad faith and that mere delay is not enough of itself to bar an amendment. Furthermore, the FSM Rules of Civil Procedure prescribe no limitation of time for the amendment of pleading. The court in Arthur v. FSM Dev. Bank, 14 FSM Intrm. 390, 395 (App. 2006), in resolving undue delay, rations that "[t]his does not mean that a showing of undue delay, for example, means that a court should deny leave to amend. Prejudice to the opposing party, not the diligence of the moving party, is the crucial factor in determining whether or not to grant leave to amend the complaint." Id. (citing Smith v. Costa Lines, Inc., 97 F.R.D. 451, 453 (N.D. Cal. 1983)). "[I]f the court is persuaded that no prejudice will accrue, the amendment should be allowed." Id. (citing 6 CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 1487 (2d ed. 1990); Davis v. Piper Aircraft Corp., 615 F.2d 606, 613 (4th Cir. 1980) (delay without resulting prejudice or obvious design to harass the opponent is insufficient to justify a denial of leave to amend), cert. dismissed, 448 U.S. 911).

In a final attempt to resolve the question of whether the allowance of an amendment will work an injustice or prejudice any of the parties, the Court is guided by Rule 15 precedents embodied in FSM case law. "When a party requests leave of the court to amend pleadings, leave shall be freely given. In addition, such amendment of the pleadings as may be necessary to cause them to conform to the evidence may be made upon motion of any party at any time." Sellem v. Maras, 9 FSM Intrm. 36, 38 (Chk. S. Ct. App. 1999); "Under Rule 15(a), a court should generally exercise its discretion liberally to allow amended pleadings when justice so requires." FSM Dev. Bank v. Arthur, 13 FSM Intrm. 1, 7 (Pon. 2004). "Leave is freely given to amend complaints to change the theory of recovery and to add new claims when those new theories and claims are based upon the same facts and occurrences that were pled in the original complaint." Nakamura v. Mori, 16 FSM Intrm. 262, 268 (Chk. 2009); "Since a plaintiff need not advance a legal theory or, if the plaintiff does advance one, it need not be correct and since every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in the party's pleadings, defendants generally will not be prejudiced by an amendment adding new claims or causes of action based on the same factual allegations as the original complaint." Id. And "the purpose of allowing complaints to be amended is to enable the pleadings to be conformed to the developing evidence rather than to extend the time for service indefinitely." Id. (citing Del Raine v. Carlson, 826 F.2d 698, 705 (7th Circ. 1987)). Finally, "[t]he purpose of the rule is to provide maximum opportunity for each claim to be decided on the merits rather than procedural technicalities." Arthur v. FSM Dev. Bank, 14 FSM Intrm. 390, 394 (App. 2006).

Accordingly, the Court is going to invoke the wide latitude of Rule 15 for a grant of amendment by leave of court when justice so requires. Plaintiff's claim for statute of limitation and futility of amendment based on lack of customary marriage may be best resolved on a Rule 56 Summary Judgment or Rule 12(b) Motion to Dismiss, and not on a Rule 15 Motion to Amend. Pending before this Court are Plaintiff's Motion for Summary Judgment filed September 18, 2009, and Defendants' Motions for Partial Summary Judgment on Counts I and II of the Complaint filed by Defendants on September 29, 2009.

III. CONCLUSION

For the reasons discussed above and based upon the foregoing authorities, the Court finds that none of the grounds for denial listed above are apparent here. Accordingly, the Court hereby GRANTS Defendants' Motion to Amend Answer and Counterclaim.

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IV. STATUS CONFERENCE

The Court hereby sets a Status Conference to be held in this case on Wednesday, June 20, 2012, at 9:30 a.m., at the FSM Supreme Court, located in Palikir, Pohnpei.

It is the preference of this Court that parties appear in person at the Status Conference. In the interest of moving the case forward, Defendant's counsel, who resides off-island, may appear telephonically and shall initiate a call to the FSM Supreme Court in Palikir on the date and time that this matter is set. Defendant or her counsel are instructed to notify the Court of their intent to appear telephonically no later than Friday, June 15, 2012.