Allstate Life Insurance Company v. Robert W. Baird & Co. Inc., et al.

Filing 462

ORDER The Joint Motion of Allstate Life Insurance Company, Covin Plaintiffs and Counterclaimant Wells Fargo Bank, N.A. Requesting Modification of Case Management Order (Doc. 373 ) is DENIED. The Town of Prescott Valley's Motion for Leave to File Amended Counterclaims (Doc. 377 ) is GRANTED. The Underwriters' Motion to Amend Third-Party Complaint and Counterclaim (Doc. 443 ) is DENIED. Signed by Judge G Murray Snow on 1/23/2012.(KMG)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 11 12 13 14 ) ) ) ) In re: Allstate Life Insurance Company) ) Litigation ) ) ) ) ) ) Lead Case No. CV-09-8162-PCT-GMS Consolidated with: Case No. CV-09-8174-PCT-GMS ORDER 15 16 Pending before the Court are three motions: 1) Joint Motion of Allstate Life Insurance 17 Company, Covin Plaintiffs and Counterclaimant Wells Fargo Bank, N.A. Requesting 18 Modification of Case Management Order (Doc. 373); 2) the Town of Prescott Valley’s 19 Motion for Leave to File Amended Counterclaims (Doc. 377); and 3) the Underwriters’ 20 Motion to Amend Third-Party Complaint and Counterclaim (Doc. 443). As set forth below, 21 the Joint Motion of Allstate Life Insurance Company, the Covin Plaintiffs, and Wells Fargo 22 is denied. The Town’s Motion for Leave to Amend is granted. The Underwriters’ Motion to 23 Amend is denied. BACKGROUND1 24 25 On February 10, 2011, the Court issued a Case Management Order which stated that 26 27 1 28 For a more detailed description of the background and facts, see the Court’s Order of November 4, 2010. (Doc. 212). 1 “[t]he deadline for joining parties, amending pleadings, and filing supplemental pleadings 2 is June 17, 2011.” (Doc. 257) (emphasis in original). On June 17, 2011, Allstate Life 3 Insurance Company, the Covin Plaintiffs, and Wells Fargo moved to modify the Case 4 Management Order to extend the deadline for amending pleadings from June 17 to October 5 31, 2011. (Doc. 373). Also on June 17, the Town of Prescott Valley moved for leave to 6 amend its Counterclaims against Wells Fargo to include newly discovered factual 7 information. (Doc. 377). On December 9, 2011, the Underwriters moved for leave to amend 8 their Third-Party Complaint and Counterclaim to add a new cause of action against Wells 9 Fargo. (Doc. 443). 10 11 DISCUSSION 1. Legal Standard 12 Although the decision whether to grant or deny a motion to amend is within the 13 “sound discretion of the trial court,” United States v. Webb, 655 F.2d 977, 979 (9th Cir. 14 1981), Rule 15(a)(2) instructs the Court to “freely give leave [to amend] when justice so 15 requires.” The Court may consider the following factors in determining whether to grant a 16 motion to amend: “(1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4) 17 futility of amendment and (5) whether [the party] has previously amended [the] complaint.” 18 Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990). 19 Where a scheduling order is in place, Rule 16(b) of the Federal Rules of Civil 20 Procedure controls. Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607–08 (9th Cir. 21 1992). Rule 16(b)(4) states that a “schedule may be modified only for good cause and with 22 the judge’s consent.” See also Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 23 2000). “Unlike Rule 15(a)’s liberal amendment policy which focuses on the bad faith of the 24 party seeking to interpose an amendment and the prejudice to the opposing party, Rule 25 16(b)’s ‘good cause’ standard primarily considers the diligence of the party seeking the 26 amendment.” Johnson, 975 F.2d at 609. “[C]arelessness is not compatible with a finding of 27 diligence and offers no reason for a grant of relief. . . . If [the party seeking to amend] was 28 not diligent, the inquiry should end.” Id. -2- 1 2. Legal Analysis 2 A. 3 Allstate, the Covin Plaintiffs, and Wells Fargo (collectively “Plaintiffs”) move to 4 modify the Case Management Order to extend the deadline for amending pleadings from 5 June 17, 2011 to October 31, 2011. (Doc. 373). In connection with their motion, Plaintiffs 6 did not propose any specific amendments. Rather, Plaintiffs requested that the Court extend 7 the deadline for amending pleadings because Plaintiffs “believe they may discover additional 8 factual information supporting their claims when document production is complete and initial 9 depositions are taken.” (Doc. 373 at 3). Their requested deadline of October 31, 2011 has 10 passed, and Plaintiffs still have not proposed any specific amendments. Plaintiffs’ motion to 11 modify the scheduling order is therefore denied as moot. Joint Motion for Modification of Scheduling Order 12 B. 13 The Town of Prescott Valley moves for leave to amend its Counterclaim against Wells 14 Fargo to include newly discovered factual information. (Doc. 377). The Town’s motion and 15 proposed amendment were submitted by the June 17, 2011 deadline set by the Court for 16 amending pleadings, and the Wells Fargo has expressly stated that it does not oppose the 17 amendment. (Doc. 401) (“Wells Fargo . . . does not oppose the Motion of the Town of 18 Prescott Valley to amend its purported counterclaim against the Trustee. Wells Fargo 19 concedes the proposed amendment does not add new claims.”). The Court therefore gives the 20 Town leave to file its proposed amended Counterclaims. The new factual allegations do not, 21 however, affect the Court’s determination in its November 18, 2011 Order that the Town has 22 failed to state a claim for contribution. (See Doc. 433). Town’s Motion for Leave to Amend 23 C. 24 The Underwriters move for leave to amend their First Amended Complaint to add a 25 securities violation claim against Wells Fargo. (Doc. 443). The sole claim in the 26 Underwriters’ initial complaint against Wells Fargo was a contribution claim. On March 24, 27 2011, the Underwriters moved to amend this complaint to add a negligent misrepresentation Underwriters’ Motion for Leave to Amend 28 -3- 1 claim against Wells Fargo. (Doc. 281). On November 18, 2011, the Court granted the 2 Underwriters’ motion. (Doc. 433). This resulted in the Underwriters filing a First Amended 3 Complaint which included their new negligent misrepresentation claim. (Doc. 441). Also on 4 November 18, 2011, the Court dismissed the Underwriters’ contribution claim, in part 5 because the Underwriters failed to allege qualifying substantive violations of law for which 6 the Underwriters were seeking contribution. (Doc. 433). On December 9, 2011, the 7 Underwriters moved for leave to amend their First Amended Complaint to add a substantive 8 securities violation claim against Wells Fargo under Arizona Revised Statutes § 44- 9 1991(A)(2)–(3) (20023). (Doc. 443). 10 This December 9th motion to amend was filed nearly six months after the June 17, 11 2011 deadline set by the Court for amending pleadings. Accordingly, to give the 12 Underwriters leave to amend, the Court would have to modify its scheduling order, which 13 it may only do “for good cause.” FED. R. CIV. P. 16(b)(4). “Unlike Rule 15(a)’s liberal 14 amendment policy which focuses on the bad faith of the party seeking to interpose an 15 amendment and the prejudice to the opposing party, Rule 16(b)’s ‘good cause’ standard 16 primarily considers the diligence of the party seeking the amendment.” Johnson v. Mammoth 17 Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). The Underwriters have not 18 demonstrated diligence. They do not claim to have recently discovered facts that were 19 previously unavailable to them, nor do they provide any other reason for why they could not 20 have included the Arizona securities claim in their earlier complaints. As stated by the 21 Underwriters, they seek to add the substantive securities claim to “address the deficiencies” 22 outlined in the Court’s November 18 order dismissing their contribution claim. (Doc. 443 at 23 3). The Underwriters, however, offer no explanation that suggests that their failure to 24 previously allege a violation of Arizona securities law was consistent with a diligent pursuit 25 of their case. The Court, therefore, will not modify the scheduling order to allow the 26 Underwriters leave to amend. 27 28 CONCLUSION The Court will not amend the scheduling order. The Town is granted leave to file its -4- 1 proposed amended counterclaims. 2 IT IS THEREFORE ORDERED: 3 1. The Joint Motion of Allstate Life Insurance Company, Covin Plaintiffs and 4 Counterclaimant Wells Fargo Bank, N.A. Requesting Modification of Case Management 5 Order (Doc. 373) is DENIED. 6 7 8 9 10 2. The Town of Prescott Valley’s Motion for Leave to File Amended Counterclaims (Doc. 377) is GRANTED. 3. The Underwriters’ Motion to Amend Third-Party Complaint and Counterclaim (Doc. 443) is DENIED. DATED this 23rd day of January, 2012. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -5-