Fed. Ins. Co. v. Fire Sprinkler Tech., Inc.
| Decision Date | 10 May 2021 |
| Docket Number | Civil Action No. 1:20-cv-10403-ADB |
| Parties | FEDERAL INSURANCE COMPANY, Plaintiff, v. FIRE SPRINKLER TECHNOLOGY, INC. and NEW ENGLAND FIRE SYSTEMS, INC., Defendants. |
| Court | U.S. District Court — District of Massachusetts |
BURROUGHS, D.J.
Federal Insurance Company ("Plaintiff") filed this action against Defendants Fire Sprinkler Technology, Inc. ("FST") and New England Fire Systems, Inc. ("NEFS"). [ECF No. 1]. Plaintiff asserts claims for breach of contract and negligence against FST and NEFS that arise from two flooding incidents at Forestdale Park Senior Living, 341 Forrest Street, Malden, Massachusetts (the "Subject Property"). [Id.]. Currently before the Court are Defendant FST's motions (1) to amend its answer to include new factual allegations and to assert crossclaims of contribution and common law indemnity against co-defendant NEFS ("motion to amend the answer"), [ECF No. 21], and (2) to assert a third-party complaint against two new parties, Senior Living Residences, LLC ("SLR") and Wozny/Barbar & Associates, Inc. ("Wozny") ("motion to assert a third-party complaint"), [ECF No. 24]. Defendant NEFS opposes the motion to amend the answer, [ECF No. 23], and Wozny, one of the new potential third-party defendants, opposes the motion to assert a third-party complaint, [ECF No. 25]. For the reasons set forth below, both motions, [ECF Nos. 21, 24], are GRANTED.
The following summary is drawn from Plaintiff's complaint. [ECF No. 1]. Plaintiff, an Indiana corporation with its principal place of business in New Jersey, is licensed to issue insurance policies in Massachusetts. [Id. ¶ 1]. FST is a Massachusetts corporation, with its principal place of business in Rhode Island, that is engaged in the business of inspecting, maintaining, servicing, and testing fire suppression systems. [Id. ¶ 3]. NEFS, incorporated and with its principal place of business in Massachusetts, designs and installs fire suppression systems. [Id. ¶¶ 4, 9]. Plaintiff insured the Subject Property. [Id. ¶ 8]. NEFS installed and/or designed the fire suppression system at the Subject Property. [Id. ¶ 10]. FST inspected, maintained, serviced, and/or tested the fire suppression system at the Subject Property. [Id. ¶ 12]. At all relevant times, the Subject Property was owned and operated by VOA Malden MT, LLC ("VOA Malden"). [Id. ¶ 7].
The Subject Property's fire suppression system is a dry pipe system. [ECF No. 1 ¶ 13]. On November 24, 2018, water that had accumulated in the dry pipe system froze, which caused a pipe to crack and led to water damage to the Subject Property. [Id. ¶ 15]. A few months later, on January 21, 2019, accumulated water in the dry pipe system again froze, causing another crack and more water damage. [Id. ¶ 19]. VOA Malden submitted claims for the damage to Plaintiff, and Plaintiff paid VOA Malden $ 1,237,699.98 for necessary repairs. [Id. ¶¶ 22-23].
Pursuant to the terms of the insurance policy between Plaintiff and VOA Malden, Plaintiff is subrogated to VOA Malden's rights. [ECF No. 1 ¶ 24]. Plaintiff alleges that the improper design, installation, and/or maintenance of the dry pipe sprinkler systems caused the freezing incidents that led to the water damage at the Subject Property. [Id. ¶¶ 25-44].
Plaintiff filed its four-count complaint on February 28, 2020, alleging negligence and breach of contract against NEFS for its installation and design of the dry pipe system (Counts I and II) and against FST for its maintenance and servicing of the dry pipe system (Counts III and IV). [ECF No. 1 ¶¶ 25-44]. FST and NEFS filed their answers on April 22, 2020 and May 8, 2020, respectively. [ECF Nos. 4, 9].
On May 7, 2020, the Court issued a schedule pursuant to Federal Rule of Civil Procedure 16(b) that required all motions to amend pleadings to be served by July 15, 2020 and set December 15, 2020 as the date for the close of fact discovery. [ECF No. 8]. On December 2, 2020, shortly before the close of fact discovery, the parties filed a joint motion to extend the deadlines in the scheduling order. [ECF No. 18]. The next day the Court entered a revised scheduling order that has fact discovery closing on May 28, 2021 and dispositive motions due on November 1, 2021. See [ECF Nos. 18, 19]. The parties' joint motion to extend the schedule did not request an extension of the deadline to serve amended pleadings, which had already passed by the time the joint motion was filed and before FST's currently pending motions were filed. See [ECF No. 18].
On February 11, 2021, FST filed its motion to amend the answer. [ECF No. 21]. NEFS filed its opposition on February 22, 2021. [ECF No. 23]. On March 8, 2020, FST filed its motion to assert a third-party complaint. [ECF No. 24]. Wozny filed its opposition to the motion to assert a third-party complaint on March 16, 2020. [ECF No. 25]. Plaintiff does not oppose either motion. [ECF No. 21 at 6; ECF No. 24 at 6].
Under Federal Rule of Civil Procedure 15(a), a party may amend its pleading once as a matter of course within twenty-one days after serving it or, if the pleading is one to which a responsive pleading is required, within twenty-one days after a motion to dismiss or answer has been filed. Fed. R. Civ. P. 15(a)(1). Otherwise, a party may only amend the pleading "with the opposing party's written consent or the court's leave." Fed. R. Civ. P. 15(a)(2). Rule 15 instructs that leave to amend should be "freely give[n] . . . when justice so requires." Id. "At a certain point," however, "this amendment-friendly regime may cease to govern." United States ex rel. D'Agostino v. EV3, Inc., 802 F.3d 188, 192 (1st Cir. 2015).
In cases where a district court has issued a scheduling order under Rule 16(b) and the amendment sought contravenes a deadline imposed by the court, "Rule 16(b)'s more stringent good cause standard supplants Rule 15(a)'s leave freely given standard." D'Agostino, 802 F.3d at 192 (). "If [the Court] considered only Rule 15(a) without regard to Rule 16(b), [it] would render scheduling orders meaningless and effectively would read Rule 16(b) and its good cause requirement out of the Federal Rules of Civil Procedure." Sosa v. Airprint Sys., Inc., 133 F.3d 1417, 1419 (11th Cir. 1998); see also O'Connell v. Hyatt Hotels of P.R., 357 F.3d 152, 155-56 (1st Cir. 2004) (citing Sosa with approval).
"Rule 16(b)'s 'good cause' standard emphasizes the diligence of the party seeking the amendment." O'Connell, 357 F.3d at 155. Under this inquiry, "[p]rejudice to the opposing party remains relevant but is not the dominant criterion." Id. Rather, "'[i]ndifference' by the moving party" may preclude leave to amend "irrespective of prejudice because such conduct isincompatible with the showing of diligence necessary to establish good cause." Id. (citation omitted). "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 trial, and a likely major alteration in trial tactics and strategy.'" Steir v. Girl Scouts of the USA, 383 F.3d 7, 12 (1st Cir. 2004) (quoting Acosta-Mestre v. Hilton Int'l of P.R., Inc., 156 F.3d 49, 52 (1st Cir. 1998)). "As a case progresses, . . . the burden on a plaintiff seeking to amend a [pleading] becomes more exacting." Id.
In addition to good cause, futility presents another potential bar to amendment. In the context of a motion to amend, "futility means that the complaint, as amended, would fail to state a claim upon which relief could be granted." O'Leary v. New Hampshire Boring, Inc., 323 F.R.D. 122, 126 (D. Mass. 2018) (citing Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir. 1996)). "If leave to amend is sought before discovery is complete and neither party has moved for summary judgment, the accuracy of the 'futility' label is gauged by reference to the liberal criteria of Federal Rule of Civil Procedure 12(b)(6)." Hatch v. Dep't for Child., Youth & Their Families, 274 F.3d 12, 19 (1st Cir. 2001). Under this standard, an amendment will not be deemed futile unless it fails to support a "plausible entitlement to relief." Rodriguez-Ortiz v. Margo Caribe, Inc., 490 F.3d 92, 95 (1st Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 559 (2007)).
Finally, judicial economy may also be considered when deciding motions to amend. See EMC Corp. v. Pure Storage, Inc., 310 F.R.D. 194, 202-03 (D. Mass. 2015); Rockingham Cty. Nursing Home v. Harnois, No. 11-cv-11057, 2014 WL 176580, at *9-10 (D. Mass. Jan. 10, 2014).
Under the original scheduling order, the deadline for amendments to the pleadings was July 15, 2020. [ECF No. 8]. Because the parties' joint motion to extend discovery deadlines made no reference to a new deadline for amended pleadings, see [ECF No. 18 at 3], all amendments to pleadings should have been filed by July 15, 2020. Given the untimeliness of the motions to amend, the Court reviews the requests under Rule 16(b)'s "good cause" standard, which is based on diligence and prejudice to the non-moving parties, and also considers the futility of the proposed amendment and judicial economy.1
Although a close call, the Court concludes that there is good cause to allow the motion to assert a third-party complaint, that the claims asserted against Wozny are not futile, and that allowing the addition of the parties and claims serves the important interest of judicial economy.
Wozny opposes the motion to assert a third-party complaint, claiming that FST's delay in asserting the claims is unjustified and prejudicial, and that the proposed claims against Wozny...
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