*1 Plaintiff/Counterclaim Defendant Altarum Institute, a Michigan-based non-profit, sued Defendant/Counterclaim Plaintiff Elizabeth Maloney for breach of contract. Until her resignation in January 2022, Maloney served as president of an Altarum subsidiary, Palladian Partners, Inc., which provides communications services to clients in the healthcare industry. Altarum's complaint alleges that when Maloney left Palladian, she reneged on her obligation to return an accelerated bonus payment of $206,885 that she had received two months earlier. Maloney filed an answer to the complaint along with numerous counterclaims.

Pending before the Court are: Altarum's Motion for Judgment on the Pleadings (ECF No. 16); Maloney's Motion to Amend her Answers, Defenses and Counterclaims and to Add Michael Monson, CEO of Plaintiff, as a Third Party Defendant (ECF No. 17); and Altarum's Motion to Compel Discovery from Defendant Maloney (ECF No. 22). Having carefully considered the papers and the arguments presented at the May 2, 2023 motions hearing, the Court rules and orders as follows.

I. Motion for Leave to Amend

After Maloney answered, Altarum moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). Maloney responded with a motion for leave to amend her Answer. As illustrated in the chart on page six of Altarum's opposition to that motion, Maloney proposed changing numerous admissions in her original Answer to denials. Pl.’s Opp'n Mot. Amend at 6, ECF No. 20. For instance, she initially admitted that she participated in Altarum's Executive Management Incentive/Retention Plan (“Retention Plan”) and that, under the plan, she elected to and did receive an accelerated bonus payment of $206,885.30. Answer ¶¶ 6, 10. Her amended answer would deny those factual allegations, which are central issues in this suit. Proposed Am. Answer (“Am. Answer”) ¶¶ 6, 10, ECF No. 17–1. Similarly, she seeks to retract her admission that she kept the payment when she resigned from Altarum's subsidiary, Palladian, and then refused Altarum's request that she return the money. Answer ¶¶ 12, 14; Am. Answer ¶¶ 12, 14. She also seeks to reverse her admission that she resigned from Palladian, effective January 31, 2022. Am. Answer ¶ 12. She would replace it with an unresponsive denial that she resigned from “her employer Altarum the plaintiff.” Id.

Crying foul, Altarum accuses Maloney of revising her Answer only to avoid entry of judgment on the pleadings based on her initial admissions. Pl.’s Opp'n Mot. Amend at 1. Switching an answer from an admission to a denial without a reasonable explanation simply to avoid liability can reflect bad faith, warranting denial of a motion for leave to amend. See Foman v. Davis, 371 U.S. 178, 182 (1962) (noting that a motion for leave to amend pleadings can be denied for reasons such as “bad faith” or “undue prejudice” to opposing party); United States ex rel. Nicholson v. MedCom Carolinas, Inc., 42 F.4th 185, 198 (4th Cir. 2022) (noting that “misleading and inconsistent assertions sometimes reveal bad faith” in context of amending complaint (cleaned up)); see also Romero v. RBS Constr. Corp., No. CV 18-00179 (EGS), 2022 WL 522989, at *9 (D.D.C. Feb. 22, 2022) (noting that sham affidavit rule applies where deponent files “contradictory post-deposition affidavit in an attempt to fabricate a material issue of fact and thus preclude the granting of summary judgment”). The question, then, is whether Maloney has offered colorable reasons for the changes. She justifies them on several grounds.

*2 Maloney's main justification is a disavowal of the authenticity of the contractual documents Altarum attached to its complaint: the Retention Plan (Exhibit A) and a copy of the accelerated bonus Election Form bearing her electronic signature (Exhibit B). As to Exhibit A, Maloney now contends that the document is in fact a “Policy Statement” regarding the plan and not the Retention Plan itself noted in paragraph 11 of the Complaint. Am. Answer ¶ 6a.[1] She also suggests that because the document is undated, she cannot determine if it is the precise version of the Retention Plan she received during her eleven-year tenure with the company. Id. ¶¶ 6b, 6c. As to Exhibit B, which bears her signature, she highlights that the document is dated December 9, 2020, while the Complaint alleges it was executed on December 23, 2019. Id. ¶ 6f. Due to these purported discrepancies, Maloney's amended Answer asserts that Exhibits A and B are “defective and inaccurate,” Am. Answer ¶ 8, in contrast to her earlier admission to the documents’ authenticity. Answer ¶ 6.

What version of the Plan Maloney participated in, and when and under what terms she elected to receive the $206,885 payment, are likely to be pertinent in determining the parties’ respective contractual obligations. But the averred deficiencies in Exhibits A and B are irrelevant to Maloney's earlier admissions that she participated in the Plan, received the $206,855 payment, and did not return it when Altarum demanded she do so. Therefore, any evidentiary shortcomings in the two exhibits cannot justify her retraction of those earlier, unequivocal admissions. That said, paragraph 10 of Maloney's initial Answer does indicate that she views the $206,885 payment as “previously earned.” Answer ¶ 10. As a result, the Court will deny proposed amendments to paragraphs 6 and 10 of the original Answer, but Maloney is not estopped from arguing that, while she received the payment, she is not obligated to repay it under the applicable contractual provisions because it was an earned bonus, rather than an advance on an unearned bonus. The Court takes no position at this stage on whether the contractual documents support that interpretation.

Maloney also defends her about-faces by asserting that Altarum's management made it impossible for her to stay at the company long enough to earn the accelerated bonus by subjecting her to a toxic work environment and constructively discharging her for raising concerns about the company's accounting practices. Reply Mot. Amend at 3–4. But these assertions are the subject of Maloney's affirmative defenses and counterclaims. The parties dispute whether, under the operative agreements, a constructive discharge would excuse Maloney from any obligation she had to repay the bonus. That is a legal question which the Court can resolve at summary judgment. Maloney's counterclaims might also independently entitle her to damages. The allegations underlying the defenses and counterclaims, however, do not support a denial of the previously admitted facts that she participated in the Plan, received the payment at issue, and refused to return it. The Court will thus permit the proposed amendments of the original Answer regarding the constructive discharge to the extent they add (perhaps superfluous) context for Maloney's actions, but it will hold Maloney to her earlier admissions to the key facts regarding her acceptance of and refusal to return the $206,885 payment.

Finally, Maloney proposes to change her admission to the allegation that she “submitted her resignation to Palladian effective January 31, 2022.” Compl. ¶ 18; Answer ¶ 12; Am. Answer ¶ 12. The amended Answer would deny only that “she resigned from her employer Altarum the plaintiff.” Am. Answer ¶ 12. She then suggests that, while under duress, she erroneously submitted her resignation to Palladian rather than Altarum. Id. While the legal significance of what entity Maloney resigned from is not entirely clear to the Court, the proposed denial is unresponsive to the allegation in paragraph 18 of the Complaint. The Court will therefore deny the proposed amendment to paragraph 12 of the original Answer.

II. Motion for Judgment on the Pleadings

*3 Altarum's motion for judgment on the pleadings is premised on the argument that Maloney's original admissions eliminate any factual dispute over whether she breached her contractual obligations, as set forth in the Retention Plan and Election Form, to repay the $206,885 when she resigned from Palladian effective January 31, 2022. Mot. J. Pleadings at 2. As discussed above, however, the precise version of the Plan that covered Maloney and the terms of the Election Form that governed her receipt of the payment will delineate her resulting obligations, if any. At least some discovery is needed to nail down those issues.

As for Maloney's affirmative defenses and counterclaims, Altarum asserts that they operate independently of its breach of contract claim because the Retention Plan and Election Form required that Maloney repay the accelerated bonus regardless of the reason she was not employed by Altarum on the operative date. Mot. J. Pleadings at 10–11. If Altarum is correct, then, its contract claim can be resolved without discovery on Maloney's defenses and counterclaims. As noted above, the Court will confront that legal question at the summary judgment stage once the applicable contractual agreements are determined.

Accordingly, Altarum's motion for judgment on the pleadings is denied.

III. Motion to Compel Discovery

At the motions hearing, the Court invited the parties to propose a plan for bifurcated discovery to resolve any remaining factual disputes on Altarum's breach of contract claim, followed by summary judgment briefing on that claim. This would occur prior to taking discovery on Maloney's five counterclaims—which venture far beyond the limited facts surrounding Maloney's receipt of a single bonus payment, involve extensive allegations of workplace abuse and financial fraud, and no doubt implicate scores of witnesses, including experts, beyond those with direct knowledge concerning Maloney's bonus payment. Although Maloney objects to that approach, the interests of efficiency and proportionality highly recommend it. The Court will therefore enter the following schedule, which essentially tracks that proposed by Altarum, and which shall focus exclusively, for now, on the breach of contract claim:

The Court will set a separate discovery schedule on Maloney's counterclaims at an appropriate time.

IV. Conclusion

For these reasons, it is hereby

ORDERED that [16] Plaintiff's Motion for Judgment on the Pleadings is DENIED. It is further

ORDERED that [17] Defendant's Motion to Amend Answers, Defenses, and Counterclaims and to Add Plaintiff's CEO as Third-Party Defendant is DENIED IN PART and GRANTED IN PART. It is further

ORDERED that [22] Plaintiff's Motion to Compel Discovery from Defendant is GRANTED IN PART and DENIED in PART. Defendant shall respond to Altarum's First Set of Document Requests and First Set of Interrogatories by the stated deadline. The Court denies Altarum's request for attorneys’ fees associated with the motion.

SO ORDERED.