Coltin Electric, Inc. v. Continental Casualty Company

Filing 126

ORDER granting 103 Motion to Amend Answer filed by Continental Casualty Company. Signed by Judge Kristi K. DuBose on 3/27/2014. copies to parties. (sdb)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
KAREN WELDIN STEWART, CIR-MI,
INSURANCE COMMISSIONER
OF THE STATE OF DELAWARE,
Plaintiff,
v.
CONTINENTAL CASUALTY
COMPANY,
Defendant and
Counterclaim Plaintiff,
v.
COLTIN ELECTRIC, INC.,
Counterclaim Defendant.

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CIVIL ACTION NO. 12-0532-KD-B

ORDER
This action is before the Court on the motion for leave to amend its responsive pleadings
filed by Defendant Continental Casualty Company (Continental) (doc. 103), the joint response in
opposition filed by Karen Weldin Stewart, CIR-MI, Insurance Commissioner of the State of
Delaware (Stewart) and Coltin Electric, Inc., (Coltin) (doc. 111), and Continental’s reply (doc.
113). Upon consideration, and for the reasons set forth herein, the motion is GRANTED.
Continental moves the Court for leave to amend its answer to assert an affirmative
defense: “The Claims raised in the Complaint are barred in part as a result of releases executed
by Coltin Electric Company during the course of the construction project1 that is the subject

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Continental provided the Project Bonds for Elkins Constructors, Inc., on the construction of a
dormitory at the University of South Alabama. Coltin Electric, Inc., was an electrical
subcontractor on the project.

matter of this case.” (Doc. 103) Continental’s motion is based on a Release of Lien executed by
Coltin on February 25, 2011 that in relevant part contains a partial release and waiver of liens or
claims against the Project Bonds issued by Continental. (Doc. 103-1, Exhibit A) Coltin
submitted the partial Release of Lien to general contractor Elkins along with the Application and
Certificate for Payment as part of the progress payment procedure. (Doc. 103-2)
Previously, the Court looked to whether the Rule 16(b) Scheduling Order should be
modified to allow Continental to file its amended answer and defense after the March 15, 2013
deadline. (Doc. 107, Order setting the response deadline to Continental’s motion) 2 The Court
explained that the Federal Rules of Civil Procedure state that such deadlines “may be modified
only for good cause and with the judge's consent.” Fed.R.Civ.P. 16(b)(4). The Court further
explained that the “good cause” standard “precludes modification unless the schedule cannot be
met despite the diligence of the party seeking the extension.” Sosa v. Airprint Systems, Inc., 133
F.3d 1417, 1418 (11th Cir. 1998) (citation and internal quotation marks omitted); see Romero v.
Drummond Co., 552 F.3d 1303, 1319 (11th Cir. 2008) (“To establish good cause, the party
seeking the extension must have been diligent.”); Ray v. Equifax Information Services, LLC,
2009 WL 977313, *1 (11th Cir. 2009). The Court found that Continental had exercised diligence
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The Court relied upon Continental’s explanation that it had served Coltin with the first request
for production on January 18, 2013, but no electronically-stored information was produced until
September 19, 2013 due in part to Coltin’s counsel’s withdrawal from the action which stayed
the case until September 16, 2013. Continental further explained that it had filed a motion to
compel production from Coltin, and then renewed its motion after the case was stayed, and
consequently received the DVD of electronically-stored emails which included the release of lien
on September 19, 2013. During review of the 4,200 emails stored on the DVD, Continental
found the release in January 2014 and filed this motion. (Doc. 107) The Court also found that
the docket indicated that the Scheduling Order had been suspended twice and amended on at
least three occasions due to the withdrawal of Coltin’s initial counsel, the appearance of new
counsel for Coltin, the substitution of Stewart as the Plaintiff, extensions of time to complete
discovery, discovery disputes, and an extension of time for expert disclosures (Doc. 107, citing
Docs. 42, 48, 68, 78, 94).

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in discovering the Release of Lien that gives rise to its affirmative defense and had shown good
cause for the delay in filing its motion to amend its answer. However, the parties were given an
opportunity to object to the Court’s decision.
Stewart and Coltin filed their joint opposition raising several grounds for denial including
prejudice should this Court allow the amendment near the close of discovery. They also argued
that Continental did not act in a prudent or diligent manner in bringing this affirmative defense.
(Doc. 111) Specifically, Stewart and Coltin argue that Continental knew or should have known
of the Release of Lien at issue as early as June and July 2012 when Coltin provided its Summary
of Claim to Continental after Elkins refused to pay.
Continental responds that at the time its answer was filed in October 2012, “counsel
understood (from conversations with Elkins) that the only releases submitted by Coltin in 2011
were altered forms without any language releasing the payment bond.” (Doc. 113, p. 2)
The operative language from the “altered” Release of Liens dated April 20, 20113 and
May 5, 20114 reads as follows:
The undersigned does hereby release and waive any and all liens and rights of
lien, upon or against the land wherein the Project is situated and all buildings and
structures thereon, for all labor, materials, equipment or services furnished
through the aforesaid effective date of the last paid application for payment.
(Doc. 113-2; Doc. 113-3, p. 8)
In contrast, the operative language from the “unaltered” Release of Lien at issue dated
February 25, 2011, reads as follows:

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The Release acknowledges receipt of payment for work through December 31, 2010 and
includes a release to become effective upon payment for work through January 31, 2011.

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The Release acknowledges receipt of payment for work through January 31, 2011 and includes
a release to become effective upon payment for work through February 28, 2011.

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The undersigned does hereby release Owner and its Lender and Elkins
Constructors, Inc. and does hereby fully release and waive any and all liens and
claims or rights of lien upon or against the Project Funds and Project Bonds, the
land whereon is situated the construction Project and all buildings or structures
thereon, for all labor, materials, equipment or services furnished through the
aforesaid effective date of the last paid application for payment.
(Doc. 103-1) 5 The same language is found in the Release of Lien dated February 7, 2011 (Doc.
113-1)6
In the Summary of Claim for additional compensation that was sent to Continental in
June 2012, Coltin explained that Elkins refused to “make progress payment to Coltin throughout
the Spring of 2011”, and then discussed the “unaltered” and “altered” claim waivers, stating as
follows:
Elkins based its position on Coltin’s refusal to sign unaltered claim waivers.
Notably, these unaltered waivers purported to release any rights Coltin might have
to pursue compensation for the additional performance costs it was incurring due
to the acceleration directed by Elkins. As it became clear that Elkins intended to
starve Coltin of cash, Coltin made it clear that this, too, would be a claim issue:
As you know, Coltin Electric has not received payment for any of
the work it has performed on this Project since February 2011.
Most recently, Elkins has demanded that Coltin Electric execute
waiver forms that would waive all of Coltin Electric’s pending
claims for additional compensation and performance time in order
to receive payment of pending progress fund for completed
contract work. This is unacceptable.
. . . In January and February of 2011, Coltin Electric provided
you with executed waiver forms that preserved Coltin’s claim
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The Release acknowledges receipt of payment for work through Dec. 31, 2010 (mistakenly
identified as “12.31.11”) and includes a release to become effective upon payment for work
through Feb 28, 2011.

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The Release acknowledges receipt of payment for work through November 30, 2010 and
includes a release to become effective upon payment for work through December 31, 2010.

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rights, and Elkins continued to make progress payments to Coltin
during this time. However, it appears that Elkins is now intent
upon coercing Coltin into signing a lien and claim waiver form that
purports to release our claim rights merely to receive contract
funds that we have already earned . . .
(Doc. 111-2, p. 17, Citing Exhibit 27 to the Summary of Claim: Letter dated June 9, 2011)
(emphasis added). The Court disagrees that this Summary of Claim would have put Continental
on notice that “unaltered” waivers had been signed in February 2011. A fair reading of the
Summary of Claim would lead one to believe that only “altered” waivers had been signed in
February 2011.
In any event, the Court does not find prejudice because Coltin was certainly aware of
waivers that it had signed. Upon consideration of the foregoing, the Court finds that Continental
has shown good cause to amend the Scheduling Order’s deadline for amendment to pleadings.
DONE and ORDERED this the 27th day of March 2014.

/s/ Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE

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