Seneca Ins. Co. v. Alpine Ins. Assocs., Inc.
| Decision Date | 25 June 2021 |
| Docket Number | Case No.: 3:18-cv-00087-MMD-WGC |
| Parties | SENECA INSURANCE COMPANY, INC., Plaintiff v. ALPINE INSURANCE ASSOCIATES, INC., Defendant |
| Court | U.S. District Court — District of Nevada |
Before the court is Plaintiff Seneca Insurance Company's ("Seneca") Motion to Amend its Complaint (ECF No. 1) against Defendant Alpine Insurance Associates ("Alpine"). (ECF No. 39). The court heard oral arguments on Seneca's Motion on June 23, 2021. For the reasons set forth below, Seneca's Motion to Amend is granted in part and denied in part. The court will grant Seneca leave to amend its complaint in a manner consistent with this order.
On February 27, 2018, Seneca filed a complaint against Alpine, Seneca's agent and insurance broker. (ECF No. 1). Seneca alleged that Alpine caused it to make payments to or on behalf of Seneca's former insured, Strange Land, Inc. ("Strange Land"), under a Commercial Property Insurance policy, which it would not have issued absent Alpine's actions and/or omissions. (Id., 1: 24-28). On June 21, 2018, the parties filed a Joint Motion to Stay because Seneca and Strange Land were in the dispositive motion phase of parallel litigation. (ECF No. 17). Both parties agreed that Seneca's claims against Alpine would be impacted by the resolution of Seneca Insurance Company, Inc. v. Strange Land, Inc., et al., Case No. 3:14-cv-00381-WGC. Chief District Judge Miranda M. Du granted the motion and stayed proceedings. (ECF No. 18).
On November 16, 2018, this court granted Seneca's Motion for Summary Judgment against Strange Land. (Case No. 3:14-cv-00381-WGC, ECF No. 152). This court held that Seneca was entitled to rescind the property insurance policy because Strange Land made "a material misrepresentation in its application for the policy when it failed to disclose it had a prior insurance policy cancelled for non-payment of premium." (Id., 2: 3-6). In addition, the Order read, "Strange Land concedes that Ryan Garaventa [of Alpine] was aware of the cancellation issue when he tried to secure coverage to replace the cancelled policy for Strange Land." (Id., 7: 16-17).
While this court's 2018 order on Seneca's Motion for Summary Judgement effectively resolved the parallel case between Seneca and Strange Land, additional unresolved litigation remained. An order from the Second Judicial District Court in Washoe County ("State Case") dismissed Seneca's indemnity claims against Alpine. Belfor USA Group, Inc., et al. v. Strange Land, Inc., Case No. 14-02181. Seneca appealed the State Court decision to the Nevada Supreme Court. (ECF No. 39, 5: 5-6).
On April 24, 2019, Seneca filed a Joint Status Report in this matter, and both parties asked the court to stay proceedings again pending the State Case appeal. (ECF No. 21). Judge Du approved the Joint Status Report but directed the parties to file a report on the State Case appeal no later than October 28, 2019, or upon resolution of the appeal. (ECF No. 24). The Nevada Supreme Court issued an "Order of Reversal and Remand" on June 24, 2020, and allowedSeneca to pursue its indemnity claims against Alpine. (Id., 5: 10-11). The parties notified the court of this development (ECF No. 25), and the stay was lifted on October 30, 2020. (ECF No. 28). This court entered a Scheduling Order and required Alpine to provide an answer to Seneca's Complaint. (Id). Alpine filed its answer to Seneca's 2018 Complaint on November 13, 2020. (ECF No. 30). In December 2020, this court established revised discovery deadlines, but due to difficulties securing discovery responses, the court agreed to extend all pertinent deadlines (including amendment of pleadings in this matter to June 21, 2021.) (ECF No. 38, p. 5).
On May 12, 2021, Seneca filed a motion to amend its 2018 complaint to add causes of action for equitable indemnity, negligence, breach of contract, fraud, and breach of fiduciary duty against Alpine. (ECF No. 39). Pursuant to Local Rule 15-1, Seneca attached a "Proposed Amended Pleading" to its Motion. (ECF No. 39-1). Seneca alleged that subsequent to the filing of its initial complaint, its "understanding of Alpine's role in the events in question has deepened dramatically." (ECF No. 39, 6: 18-19). Seneca argued that in the Strange Land litigation, this court concluded that Alpine "was an active participant in the effort to deceive Seneca and create insurance coverage for Strange Land which Seneca would have never offered otherwise." (Id., 6: 25-27).
Alpine filed its opposition on June 4, 2021, and stated that Seneca's proposed amendments were futile. (ECF No. 42). Specifically, Alpine asserted that the amendments would be futile because (1) the statute of limitations barred Seneca's fraud, negligence, and breach of fiduciary duty claims, (2) Nevada law does not allow Equitable and Express Indemnity Claims to coexist and (3) the Good Faith Settlement Agreement between Alpine and Strange Landprecluded all of Seneca's proposed amendments. (Id., pgs. 2-3). Seneca filed its Reply on June 11, 2021 (ECF No. 44); Errata June 16, 2021 (ECF No. 45).
Prior to Oral Argument on June 23, 2021, Alpine submitted "Supplemental Documents to Aid the Court in Its Analysis of Certain Issues Raised in Seneca's Reply Brief in Support of Its Motion for Leave to File First Amended Complaint." (ECF No. 46, June 21, 2021). This court construed Alpine's filing as a surreply, which requires a request for leave of court pursuant to LR 7-2(b). Although Alpine did not first seek leave of court to file its surreply, this court nevertheless considered Alpine's supplemental documents in this decision.
An amended pleading supersedes the original. Valadez-Lopez v. Chertoff, 656 F.3d 851, 857 (9th Cir. 2011). Claims not realleged in the amended complaint are deemed waived. London v. Coopers & Lyabrand, 644 F.2d 811, 814 (9th Cir. 1981). The court should freely give leave [to amend] when justice so requires. Fed. R. Civ. P. 15(a)(2). The Ninth Circuit has stated that there is a "presumption" under Rule 15(a) in favor of granting leave to amend. Bancroft Life & Cas. ICC, Ltd. v. FFD Res. IV, Inc., No. 3:11-CV-00214-LRH-WGC (D. Nev. Jan. 4, 2012) (citing Eminence Capital LLC v. Aspeon, Inc., 316 F.3d 1048, 1051-1052 (9th Cir. 2003)). The policy favoring amendment should be applied with "extreme liberality." Price v. Kramer, 200 F.3d 1237, 1250 (9th Cir. 2000). The burden is on the opposing party to demonstrate why the amendment should not be granted. Foman v. Davis, 371 U.S. 178, 182 (1962).
The Court may deny a motion to amend due to "undue delay, bad faith or dilatory motive on the part of the movant, undue prejudice to the opposing party by virtue of allowance of the amendment, and futility of the amendment. Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)). Not all the factors merit equal weight. Eminence Capital, 316 F.3d 1048, 1052. As the Ninth Circuit and others have held, it is the consideration of prejudice to the opposing party that carries the greatest weigh. Id. Absent prejudice, or a strong showing of any of the remaining Foman factors, there exists a presumption under Rule 15(a) in favor of granting leave to amend. Id.
Futility "can, by itself, justify the denial of a motion for leave to amend." Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). Leave to amend should be denied as futile "only if no set of facts can be proven under the amendment to the pleadings that would constitute a valid and sufficient claim." Barahona v. Union Pac. R.R., 881 F.3d 1122, 1134 (9th Cir. 2018). (quoting Sweaney v. Ada County, 119 F.3d 1385, 1393 (9th Cir. 1997)). A plaintiff is not required to produce evidence supporting the amended complaint at the pleading stage; rather an amended complaint must plead facts sufficient to plausibly state a claim. See Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988), overruled on other grounds by Ashcroft v. Iqbal, 556 U.S. 662 (2009) (citation omitted) ( that standard for considering whether amendment would be futile is the same standard used when considering the sufficiency of a pleading challenged under Rule 12(b)(6)). The test to be applied to determine "legalsufficiency" (i.e., futility) of a proposed amendment is the same standard used when "considering the sufficiency of a pleading challenged under Rule 12(b)(6)." Bancroft, No. 3:11-CV-00214-LRH-WGC, at p. 5. (citing Rykoff-Sexton, supra, at 214). A proposed amendment would not be considered futile if questions of fact need to be resolved in determining whether an actionable claim exists. Id. (citing Rykoff-Sexton, supra, at 214).
The court grants Seneca's Motion to Amend in part and allows it to add causes of action for negligence, breach of contract, fraud, and breach of fiduciary duty because they are timely made, in good faith, are not futile and because, as noted below in paragraph (c), an extension of the discovery deadline will eliminate any prejudice to Alpine.
The court denies Seneca's Motion to Amend in part and will not permit Seneca to add an Equitable Indemnity cause of action because Nevada case law holds that Equitable Indemnity Claims cannot coexist alongside Express Indemnity Claims.
Due to the multiple stays issued in this case and difficulties in securing discovery responses, this court extended the deadline to file motions to amend pleadings to June 21, 2021. (ECF No. 38, pg. 5). Seneca made its motion to amend its complaint on May 12, 2021. (ECF No. 39). The court finds that Seneca's Motion to Amend is timely.
Alpine provided no showing that Seneca made its Motion to Amend in bad faith. Due to the...
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