Allegheny Plant Servs., Inc. v. Carolina Cas. Ins. Co.
| Decision Date | 27 February 2017 |
| Docket Number | Civil Action No. 14-4265 (KM) |
| Parties | ALLEGHENY PLANT SERVICES, INC., Plaintiff, v. CAROLINA CASUALTY INSURANCE COMPANY, et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
Currently pending before the Court is Plaintiff Allegheny Plant Services, Inc.'s ("Plaintiff") Motion for Leave to File an Amended Complaint. [Dkt. No. 114]. Plaintiff seeks to amend its complaint to add Third-Party Defendant, Wells Fargo Insurance Services USA, Inc. ("Wells Fargo"), as a direct defendant in this matter. Wells Fargo has filed opposition to Plaintiff's motion. [Dkt. No. 117]. The Court has fully reviewed the arguments made in support of and in opposition to Plaintiff's motion, and considers this motion without oral argument pursuant to Fed. R. Civ. P. 78 and L. Civ. R. 78.1(b). For the reasons set forth more fully below, Plaintiff's motion is GRANTED.
The facts underlying the present claim are rooted in a policy of commercial transportation insurance issued by Carolina Casualty Insurance Company ("Carolina Casualty") to Plaintiff. On January 18, 2007, an employee of Plaintiff was involved in a motor vehicle accident. [See Dkt. No. 114-1 at 2; Dkt. No. 117 at 5]. The driver and passenger of the other vehicle filed a personal injury lawsuit against Plaintiff for injures sustained during the accident ("the underlying lawsuit").1 [See id.]. Carolina Casualty retained the services of the Law Offices of Floyd G. Cottrell ("Cottrell") to represent Plaintiff in the underlying lawsuit. [See id.]. The jury returned a verdict above Cottrell's pre-trial projection, and the final judgment exposed Plaintiff to $673,162.21 in excess of the remaining policy limits. [See Dkt. No. 114-1 at 3; Dkt. No. 117 at 5].
Approximately one year later, Plaintiff filed its Initial Complaint in the Western District of Pennsylvania against Carolina Casualty alleging breach of fiduciary duty, breach of contract and bad faith resulting from Carolina Casualty's failure to settle the underlying lawsuit within policy limits. [See generally Dkt. No. 1]. After Carolina Casualty answered, Plaintiff filed an Amended (and currently operative) Complaint naming Cottrell as an additional defendant and alleging breach of fiduciary duty and professional negligence. [See generally Dkt. No. 16]. On July 7, 2014, the matter was transferred to this Court. [See Dkt. No. 45].
Following the transfer, the Court entered a Scheduling Order and the parties engaged in extensive paper and deposition discovery. [Dkt. No. 114-1 at 3; Dkt. No. 117 at 6]. During this time, Cottrell noticed the depositions of two Wells Fargo employees, which took place on March 9, 2015. [Id.]. On March 25, 2015, the Court entered an Amended Scheduling Order, which permitted the parties to make amendments to pleadings until April 15, 2015. [Dkt. No. 74].
On April 14, 2015, Cottrell filed a Third Party Complaint against Wells Fargo for contribution. [Dkt. No. 75]. According to Cottrell, Wells Fargo monitored and rendered services in the underlying lawsuit, knew the claims exceeded the policy limits and allegedly had a duty to manage the claims prudently, but failed to do so. [See generally id.]. Subsequently,Cottrell filed a Motion for Partial Summary Judgment and Wells Fargo filed a Motion to Dismiss Cottrell's Third Party Complaint. [Dkt. Nos. 78, 90]. Discovery was largely stayed pending a decision on the aforementioned motions, both of which District Judge McNulty denied on March 17, 2016. [Dkt. No. 102]. On July 14, 2016, after Wells Fargo had answered, the Court stayed discovery to allow the parties to engage in private mediation. [Dkt. No. 110]. Before the discovery stay was lifted2, Plaintiff filed the present motion, which Carolina Casualty and Cottrell do not oppose. [See Dkt. No. 114-1 at 2].
The threshold issue in resolving a motion to amend, which the Court considers sua sponte, is to determine whether the motion is governed by Rule 15 or Rule 16 of the Federal Rules of Civil Procedure." Sabatino v. Union Twp., No. 11-1656, 2013 WL 1622306, at *2 (D.N.J. Apr. 15, 2013) (citing Karlo v. Pittsburgh Glass Works, LLC, No. 10-1283, 2011 WL 5170445, at *2 (W.D. Pa. Oct. 31, 2011) (internal quotations omitted)). While leave to amend under Rule 15 is generally freely given, Rule 16 requires a party to demonstrate "good cause." See id. (citing Fed. R. Civ. P. 15(a)(2); Fed. R. Civ. P. 16(b)(4)). Plaintiff has filed its present motion after the deadline set by the Court, therefore it must satisfy the Rule 16 good cause standard before the Court will turn to Rule 15. Sabatino, 2013 WL 1622306, at *3 (and cases cited).
The Court has discretion to determine what kind of showing Plaintiff must make to satisfy the good cause requirement under Rule 16. See Phillips v. Greben, No. 04-5590, 2006WL 3069475, at *6 (D.N.J. Oct. 27, 2006) (internal quotations omitted). Whether good cause exists depends on the diligence of the moving party. Id. (internal quotations omitted). Under some circumstances, good cause may be found based on a "mistake, excusable neglect or any other factor which might understandably account for failure of counsel to undertake to comply with the [s]cheduling [o]rder." Id. Often, courts will find a lack of good cause if the party had knowledge of the potential claim before the deadline to amend has passed. See Stallings ex rel. Estate of Stallings v. IBM Corp., No. 08-3121, 2009 WL 2905471, at *16 (D.N.J. Sept. 8, 2009) ; In re Merck & Co., Inc. Vytorin/Zetia Sec. Litig., No. 08-2177, 2012 WL 406905, at *4 (D.N.J. Feb. 7, 2012) (same).
Plaintiff avers that significant factual developments have occurred warranting its present leave to file a motion to amend. [Dkt. No. 114-1 at 1]. Among the new information that has arisen, Plaintiff cites the March 2015 Wells Fargo depositions, the filing of Cottrell's Third Party Complaint and a June 2016 affidavit prepared by an expert in claims risk management and circulated by Cottrell in support of its Third Party Complaint ("the June 2016 affidavit"). [Id. at 4-5]. Plaintiff was privy to the March 2015 Wells Fargo depositions and Cottrell's Third Party Complaint prior to the deadline set forth in the Amended Scheduling Order, albeit the latter was filed one day prior to the deadline. [See id.]. Of import, discovery was largely stayed after the filing of Cottrell's Third Party Complaint until the Court issued a decision on the dispositive motions filed by Cottrell and Wells Fargo. After Wells Fargo filed its Answer, it appears that discovery resumed, whereupon Cottrell circulated the June 2016 affidavit. [See id. at 5-6].Shortly thereafter, the parties requested a 60-day stay of discovery to allow the parties to engage in private mediation. [Dkt. No. 110]. After the 60 days expired, but prior to the Court lifting the stay of discovery, Plaintiff filed its motion.
Based on these facts, the Court is hesitant to conclude that Plaintiff had full knowledge of its potential direct claims against Wells Fargo prior to the deadline to amend. The Federal Rules are not meant to trap those who may be caught off guard—they are meant to assure fair, efficient and focused conduct of litigation. In re Merck & Co., Inc., 2012 WL 406905, at *5 . It appears that Plaintiff exercised reasonable diligence after receiving the June 2016 affidavit, and filed its motion for leave to amend in a timely manner. See Sabatino, 2013 WL 1622306, at *6 (citing GlobespanVirata, Inc. v. Texas Instruments, Inc., No. 03-2854, 2005 WL 1638136, at *3 (D.N.J. July 12, 2005)). Therefore, the Court finds good cause exists for Plaintiff to amend its complaint.
The decision of whether to grant leave to amend is always within the discretion of the court. See Fourte v. Countrywide Home Loans, Inc., No. 07-1363, 2009 WL 2998110, at *7 (D.N.J. Sept. 15, 2009) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230, 9 L. Ed. 2d 222 (1962)). Pursuant to Federal Rule of Civil Procedure 15(a), leave of court to amendpleadings "shall be freely given as justice so requires." Fed. R. Civ. P. 15(a). Whether to allow such amendments is within the discretion of the court. See Lorenz v. CSX Corporation, 1 F.3d 1406, 1413-14 (3d Cir. 1993) (citing Foman, 371 U.S. at 182). Although the rule requires that leave to amend be "freely given," it is appropriate to deny such a request in the event that the court finds "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 allowance of the amendment, or futility of the amendment." Id. (and cases cited).
The Third Circuit has established that "prejudice to the non-moving party is the touchstone for the denial of an amendment." Cornell & Co. v. Occupational Safety & Health Review Comm'n, 573 F.2d 820, 823 (3d Cir. 1978). While mere delay is insufficient to constitute denial of leave to...
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