Cook v. USAA Cas. Ins. Co.

• Decision Date: 10 June 2019
• Docket Number: 1:16-cv-00207-JCN
• Parties: JENNIE M. COOK, Plaintiff v. USAA CASUALTY INSURANCE COMPANY, Defendant
• Court: U.S. District Court — District of Maine

JENNIE M. COOK, Plaintiff v. USAA CASUALTY INSURANCE COMPANY, Defendant

1:16-cv-00207-JCN

UNITED STATES DISTRICT COURT DISTRICT OF MAINE

June 10, 2019

ORDER ON MOTIONS TO AMEND, TO JOIN A REAL PARTY, AND TO REMAND TO STATE COURT

In this action, Plaintiff alleges that Defendant USAA Casualty Insurance Company (USAA CIC) did not properly adjust her insurance claim following a fire at property she owned in Old Town, Maine. (First Amended Complaint, ECF No. 8.) The matter is before the Court on three related motions: Plaintiff seeks to amend her complaint (ECF No. 127) to join the United Services Automobile Association (USAA), as a defendant, which party she maintains is a necessary or real party (ECF No. 126), and, upon joinder of USAA, asks the Court to remand the case to state court (ECF No. 125) because the joinder of USAA would divest the Court of jurisdiction.

Following a review of the record, and after consideration of the parties' arguments, the Court denies Plaintiff's motions.

FACTUAL AND PROCEDURAL BACKGROUND¹

A. The Plaintiff, the Property, and the Fire

On November 16, 2012, USAA CIC issued Policy No. 00278416380A to Plaintiff, insuring the real property located at 188 Veazie Street, Old Town, Maine (the property). (Defendant USAA CIC's Statement of Facts ¶¶ 1, 3, ECF No. 101, hereinafter DSMF.) Plaintiff paid all premiums and met all requirements of the policy. (Proposed Second Amended Complaint ¶ 8, ECF No. 127-1.) The property was occupied by tenants from July 2012 through July 2013 and was vacant after July 2013. (DSMF ¶ 6.) At that time, Plaintiff lived in Virginia. (Id. ¶ 11.)

In early September 2013, Plaintiff returned to Maine to make repairs to the property. (Id. ¶ 12.) On the morning of September 24, 2013, at approximately 7:00 a.m., a fire ignited and caused damage to the property. (Id. ¶¶ 16 - 18.)

B. Legal Proceedings

On March 25, 2016, Plaintiff filed a complaint in Maine Superior Court (Kennebec County) against USAA CIC, in which complaint she asserted claims for breach of contract and unfair claims settlement practices. (ECF Nos. 1-2, 1-3.) USAA CIC removed the case to federal court, citing the Court's diversity jurisdiction over the matter. (ECF No. 1.) Plaintiff subsequently filed a motion to amend her complaint, which the Court granted. (ECF Nos. 6 - 7.)

After completion of discovery, USAA CIC moved for summary judgment. (ECF No. 100.) At oral argument on the motion, Plaintiff raised a possible jurisdictional issue based on Plaintiff's contention that a necessary party, USAA, had not been joined in the matter. Plaintiff subsequently filed the pending motions - the motion to amend the complaint, the motion to join a real party, and the motion to remand the matter to state court.² (ECF Nos. 125 - 127.)

C. The Relationship between USAA and USAA CIC

USAA is a reciprocal inter-insurance exchange formed pursuant to Texas Insurance Code § 942.002(a). (Proposed Second Amended Complaint ¶ 12.) "Reciprocal insurance means insurance resulting from the mutual exchange of insurance contracts among persons in an unincorporated association under a common name through an attorney-in-fact having authority to obligate each person both as insured and insurer." Haney v. USAA Cas. Ins. Co., 331 F. App'x 223, 229 (4th Cir. 2009) (quoting North Carolina law, internal quotation marks omitted). Under Texas law:

The statute provides that "subscribers . . . may exchange reciprocal or interinsurance contracts with other subscribers . . . to provide indemnityamong those subscribers for a loss for which insurance coverage may be obtained under other law." Tex. Ins. Code Ann. § 942.002(a).

A "subscriber" is defined as "an individual, partnership, or corporation who, through an attorney in fact, enters into a reciprocal or interinsurance contract." Id. § 942.001(4). A "reciprocal or interinsurance contract" is defined as "an insurance policy or other contract that provides indemnity among a group of subscribers for certain losses," id. § 942.001(3), and the statute provides that such a contract may be executed by an attorney in fact appointed by the subscribers of an exchange, id. § 942.051.

True v. Robles, 571 F.3d 412, 415 (5th Cir. 2009). USAA has subscribers in all states. (Proposed Amended Complaint ¶ 5.) Plaintiff originally became a member of USAA when she subscribed to a USAA automobile insurance policy. (Id. ¶ 44.)

USAA CIC is an indemnity insurance company incorporated and licensed in Texas, with a principal place of business in San Antonio, Texas. (Id. ¶ 3.) USAA CIC is a wholly owned affiliate of USAA. (Id. ¶¶ 3, 24.) All of the USAA affiliates have the same principal and legal address in San Antonio. (Id. ¶ 20.) The USAA affiliates are managed by the members of USAA's Executive Counsel. (Id. ¶ 26.) USAA purchases sales, marketing, management and other services from its affiliates. (Id. ¶ 27.) Certain expenses are allocated by USAA to its affiliates according to various formulas for services such as rental or office space, utilities, mail processing, salaries, and employee benefits. (Id.) The USAA Group files a consolidated federal income tax return which includes the wholly owned domestic subsidiaries. (Id.)

The first page of the policy contains the title "Fire Policy Packet" with the USAA logo in the upper left corner. (ECF No. 101-2 at 3.) On the Declarations pages, the USAA logo appears in the upper left corner, and the center top in smaller letters reads "USAACASUALTY INSURANCE COMPANY." (Id. at 5 - 6.) There is a "Quick Reference" page with the title "YOUR DWELLING POLICY" in large letters. (Id. at 7.) The USAA logo appears in the upper left corner next to the words "USAA GROUP." (Id.)

The Quick Reference page is divided into two columns. (Id.) The left column contains an outline of the policy provisions, and the right column contains the heading in ordinary size text: "RECIPROCAL PROVISIONS. . .apply when United Services Automobile Association, or USAA is named on the Declarations as the company." (Id.) Further below, the policy reads: "In your policy these sets of words have the same meaning: Policy means Contract; You, Your or Insured means Subscriber. We, us, our, USAA or Company means Reciprocal or Interinsurance Exchange[.]" The same column also states: "Your Policy is issued as part of an Interinsurance Exchange by the President of USAA as Attorney-in-Fact under the authority given him by the subscribers." The column contains the following language: "Participation: By purchasing this policy, you are a member of USAA and subject to its bylaws. You are entitled to dividends as may be declared by us . . . ." (Id.)

Many pages of standardized policy language, exclusions, and endorsements follow the Quick Reference page. (Id. at 8 - 42.) "USAA Confidential" is stamped in a rectangle at the bottom of every page of the packet. (Id. at 1 - 42.)

The settlement remittances and statement that Plaintiff received after the fire were forwarded by a cover with the letter-head imprinted with the USAA logo and address. (Id. ¶¶ 34, 36.) The remittances were made by USAA, drawn on the wholly owned USAA Federal Savings Bank without reference to an affiliate. (Id. ¶ 35.) The settlementremittances were issued with the signature of Dennis P. McLaughlin, above the lines "Large Loss Operations," "USAA Casualty Insurance Company," and "USAA CLAIMS." (Id. ¶ 37.)

DISCUSSION

A. Legal Standard

Rule 15(a)(1) of the Federal Rules of Civil Procedure permits a litigant to amend a pleading "once as a matter of course," subject to certain time constraints. However, when a party seeks to amend a complaint more than 21 days after the filing of a responsive pleading, the other party's consent or leave of court is required in order to amend the complaint. Fed. R. Civ. P. 15(a)(2). In such a case, the court is to grant leave to amend "freely" when "justice so requires." Id.; see also Foman v. Davis, 371 U.S. 178, 182 (1962) ("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 allowance of the amendment, futility of amendment, etc.—the leave sought should, as the rules require, be 'freely given.'").

The standard is elevated when the motion to amend is filed after the court's scheduling order deadline for amendment of pleadings. A motion to amend that is filed beyond the deadline established in a scheduling order requires an amendment of the scheduling order. To obtain an amendment of the scheduling order, a party must demonstrate good cause. Johnson v. Spencer Press of Maine, Inc., 211 F.R.D. 27, 30 (D. Me. 2002); El-Hajj v. Fortis Benefits Ins. Co., 156 F. Supp. 2d 27, 34 (D. Me. 2001); Fed.R. Civ. P. 16(b)(4). A court's decision on good cause "focuses on the diligence (or lack thereof) of the moving party more than it does on any prejudice to the party-opponent." Steir v. Girl Scouts of the USA, 383 F.3d 7, 12 (1st Cir. 2004). "Particularly disfavored are motions to amend whose timing prejudices the opposing party by 'requiring a re-opening of discovery with additional costs, a significant postponement of the trial, and a likely major alteration in trial tactics and strategy.'" Id. (quoting Acosta-Mestre v. Hilton Int'l of P.R., Inc., 156 F.3d 49, 52 (1st Cir. 1998)).

Additional considerations are relevant when a plaintiff seeks to join a new party. "Fed. R. Civ. P. 21 requires a party to file a motion and obtain leave of court to add additional parties." MacFarlane v. McKean, 4 F.3d 982 (1st Cir. 1993). Rule 21 provides the district court with discretion to add or drop parties. "Although Rule 21 permits the addition of a new party at any stage, the court typically will deny a request that comes so late in the litigation that it will delay the case." Giannetta v. Boucher, 981 F.2d 1245 (1st Cir. 1992) (internal quotation marks omitted).

...