Weld v. Stage Stores Inc ( 2001 )

UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 00-20230
JOHN C. WELD, JR., On Behalf of Himself and all
others Similarly Situated,
Plaintiff-Appellant,
VERSUS
STAGE STORES INC.*, CARL TOOKER, TYLER INTERNATIONAL, TYLER
MASSACHUSETTS L P; TYLER CAPITAL FUND L P, BCIP ASSOCIATES,
BAIN CAPITAL INC., BAIN VENTURE CAPITAL, ACADIA PARTNERS L P,
ACADIA FW PARTNERS L P, ACADIA MGP INC., OAK HILL PARTNERS INC.,
SANDRA BORNSTEIN, ERNEST R. CRUSE, RIGO HERNANDEZ, JERRY C. IVIE,
JOANNE SWARTZ, MARK SHULMAN, MEL WARD, DONALD R. WESTBROOK, JAMES
MARCUM, STEPHEN LOVELL, CHARLES SLEDGE, ADAM KIRSCH, JOSHUA
BEKENSTEIN, PETER G. MULVIHILL, CREDIT SUISSE FIRST BOSTON, BEAR
STEARNS & CO., INC., BCIP TRUST ASSOCIATES L P,
Defendants-Appellees.
Appeal from the United States District Court
For the Southern District of Texas
H-99-CV-957
May 16, 2001
Before DAVIS, WIENER and STEWART, Circuit Judges
PER CURIAM:**
*
The appeal is stayed as to Stage Stores pending bankruptcy
proceedings.
**
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this
opinion should not be published and is not precedent except under
The only significant issues presented in this appeal are: (1)
whether the district court erred in dismissing the appellants’
petition because it failed to comply with Rule 9(b) F.R.C.P. and
allege with sufficient particularity facts which would support an
inference of fraud; and (2) whether the district court abused its
discretion in refusing to permit appellant to file an amended
complaint.
As to issue 1, our review of the record persuades us that the
plaintiffs’ conclusory allegations are insufficient to give rise to
a “strong inference” that each defendant acted with the requisite
fraudulent intent. See 15 U.S.C. § 78u-4(b)(2). We need not reach
the issue of whether allegations of motive and opportunity are
sufficient to establish scienter under the Reform Act because even
under this standard the plaintiff’s allegations are insufficient to
raise a strong inference of fraud.
As to issue 2, we agree with the appellants that Rule 15(a)
gave them the absolute right to file an amended petition in this
case at any time before judgment was entered. Although more than
five months elapsed between the time the defendants moved to
dismiss the petition and the court’s ruling on that motion,
plaintiff did not file an amended petition. After the district
court granted defendants’ motion to dismiss, the plaintiff did seek
permission to amend which the court denied. In denying that
the limited circumstances set forth in 5TH CIR. R. 47.5.4.
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motion, the court explained that plaintiff had failed to provide it
with a proposed amending complaint or provide, in some other form,
an explanation of how it proposed to improve its earlier
allegations. Although there is certainly no universal requirement
that a party seeking to amend provide a copy of a proposed
amendment, we conclude that under the facts and circumstances of
this case, the district court did not abuse its discretion in
refusing to allow the amendment without some explanation of how the
plaintiff proposed to improve his complaint so as to avoid
dismissal under Rule 12(b)(6). Plaintiff, with full knowledge of
the defendant’s arguments as to the defects in the original
petition, allowed over five months to elapse without amending his
petition to correct these deficiencies. The plaintiff made a
strategic decision to stand on his complaint as filed, which
required the district court to analyze the defendant’s motion in
light of the existing complaint. Under these circumstances, the
district court did not abuse its discretion in declining to allow
an amendment to that petition after it entered judgment,
particularly where the plaintiff declined to provide a proposed
amended complaint or give the court any information about how it
proposed to improve his original complaint so as to avoid a
12(b)(6) motion.
AFFIRMED.
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