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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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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In re: Allstate Life Insurance Company)
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Litigation
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Lead Case No. CV-09-8162-PCT-GMS
Consolidated with:
Case No. CV-09-8174-PCT-GMS
ORDER

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Pending before the Court are three motions: 1) Joint Motion of Allstate Life Insurance

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Company, Covin Plaintiffs and Counterclaimant Wells Fargo Bank, N.A. Requesting

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Modification of Case Management Order (Doc. 373); 2) the Town of Prescott Valley’s

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Motion for Leave to File Amended Counterclaims (Doc. 377); and 3) the Underwriters’

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Motion to Amend Third-Party Complaint and Counterclaim (Doc. 443). As set forth below,

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the Joint Motion of Allstate Life Insurance Company, the Covin Plaintiffs, and Wells Fargo

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is denied. The Town’s Motion for Leave to Amend is granted. The Underwriters’ Motion to

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Amend is denied.
BACKGROUND1

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On February 10, 2011, the Court issued a Case Management Order which stated that

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For a more detailed description of the background and facts, see the Court’s Order
of November 4, 2010. (Doc. 212).

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“[t]he deadline for joining parties, amending pleadings, and filing supplemental pleadings

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is June 17, 2011.” (Doc. 257) (emphasis in original). On June 17, 2011, Allstate Life

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Insurance Company, the Covin Plaintiffs, and Wells Fargo moved to modify the Case

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Management Order to extend the deadline for amending pleadings from June 17 to October

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31, 2011. (Doc. 373). Also on June 17, the Town of Prescott Valley moved for leave to

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amend its Counterclaims against Wells Fargo to include newly discovered factual

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information. (Doc. 377). On December 9, 2011, the Underwriters moved for leave to amend

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their Third-Party Complaint and Counterclaim to add a new cause of action against Wells

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Fargo. (Doc. 443).

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DISCUSSION
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Legal Standard

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Although the decision whether to grant or deny a motion to amend is within the

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“sound discretion of the trial court,” United States v. Webb, 655 F.2d 977, 979 (9th Cir.

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1981), Rule 15(a)(2) instructs the Court to “freely give leave [to amend] when justice so

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requires.” The Court may consider the following factors in determining whether to grant a

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motion to amend: “(1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4)

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futility of amendment and (5) whether [the party] has previously amended [the] complaint.”

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Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990).

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Where a scheduling order is in place, Rule 16(b) of the Federal Rules of Civil

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Procedure controls. Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607–08 (9th Cir.

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1992). Rule 16(b)(4) states that a “schedule may be modified only for good cause and with

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the judge’s consent.” See also Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir.

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2000). “Unlike Rule 15(a)’s liberal amendment policy which focuses on the bad faith of the

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party seeking to interpose an amendment and the prejudice to the opposing party, Rule

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16(b)’s ‘good cause’ standard primarily considers the diligence of the party seeking the

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amendment.” Johnson, 975 F.2d at 609. “[C]arelessness is not compatible with a finding of

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diligence and offers no reason for a grant of relief. . . . If [the party seeking to amend] was

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not diligent, the inquiry should end.” Id.
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2.

Legal Analysis

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A.

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Allstate, the Covin Plaintiffs, and Wells Fargo (collectively “Plaintiffs”) move to

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modify the Case Management Order to extend the deadline for amending pleadings from

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June 17, 2011 to October 31, 2011. (Doc. 373). In connection with their motion, Plaintiffs

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did not propose any specific amendments. Rather, Plaintiffs requested that the Court extend

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the deadline for amending pleadings because Plaintiffs “believe they may discover additional

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factual information supporting their claims when document production is complete and initial

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depositions are taken.” (Doc. 373 at 3). Their requested deadline of October 31, 2011 has

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passed, and Plaintiffs still have not proposed any specific amendments. Plaintiffs’ motion to

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modify the scheduling order is therefore denied as moot.

Joint Motion for Modification of Scheduling Order

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B.

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The Town of Prescott Valley moves for leave to amend its Counterclaim against Wells

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Fargo to include newly discovered factual information. (Doc. 377). The Town’s motion and

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proposed amendment were submitted by the June 17, 2011 deadline set by the Court for

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amending pleadings, and the Wells Fargo has expressly stated that it does not oppose the

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amendment. (Doc. 401) (“Wells Fargo . . . does not oppose the Motion of the Town of

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Prescott Valley to amend its purported counterclaim against the Trustee. Wells Fargo

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concedes the proposed amendment does not add new claims.”). The Court therefore gives the

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Town leave to file its proposed amended Counterclaims. The new factual allegations do not,

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however, affect the Court’s determination in its November 18, 2011 Order that the Town has

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failed to state a claim for contribution. (See Doc. 433).

Town’s Motion for Leave to Amend

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C.

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The Underwriters move for leave to amend their First Amended Complaint to add a

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securities violation claim against Wells Fargo. (Doc. 443). The sole claim in the

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Underwriters’ initial complaint against Wells Fargo was a contribution claim. On March 24,

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2011, the Underwriters moved to amend this complaint to add a negligent misrepresentation

Underwriters’ Motion for Leave to Amend

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claim against Wells Fargo. (Doc. 281). On November 18, 2011, the Court granted the

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Underwriters’ motion. (Doc. 433). This resulted in the Underwriters filing a First Amended

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Complaint which included their new negligent misrepresentation claim. (Doc. 441). Also on

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November 18, 2011, the Court dismissed the Underwriters’ contribution claim, in part

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because the Underwriters failed to allege qualifying substantive violations of law for which

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the Underwriters were seeking contribution. (Doc. 433). On December 9, 2011, the

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Underwriters moved for leave to amend their First Amended Complaint to add a substantive

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securities violation claim against Wells Fargo under Arizona Revised Statutes § 44-

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1991(A)(2)–(3) (20023). (Doc. 443).

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This December 9th motion to amend was filed nearly six months after the June 17,

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2011 deadline set by the Court for amending pleadings. Accordingly, to give the

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Underwriters leave to amend, the Court would have to modify its scheduling order, which

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it may only do “for good cause.” FED. R. CIV. P. 16(b)(4). “Unlike Rule 15(a)’s liberal

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amendment policy which focuses on the bad faith of the party seeking to interpose an

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amendment and the prejudice to the opposing party, Rule 16(b)’s ‘good cause’ standard

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primarily considers the diligence of the party seeking the amendment.” Johnson v. Mammoth

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Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). The Underwriters have not

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demonstrated diligence. They do not claim to have recently discovered facts that were

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previously unavailable to them, nor do they provide any other reason for why they could not

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have included the Arizona securities claim in their earlier complaints. As stated by the

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Underwriters, they seek to add the substantive securities claim to “address the deficiencies”

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outlined in the Court’s November 18 order dismissing their contribution claim. (Doc. 443 at

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3). The Underwriters, however, offer no explanation that suggests that their failure to

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previously allege a violation of Arizona securities law was consistent with a diligent pursuit

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of their case. The Court, therefore, will not modify the scheduling order to allow the

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Underwriters leave to amend.

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CONCLUSION
The Court will not amend the scheduling order. The Town is granted leave to file its
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proposed amended counterclaims.

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IT IS THEREFORE ORDERED:

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1.

The Joint Motion of Allstate Life Insurance Company, Covin Plaintiffs and

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Counterclaimant Wells Fargo Bank, N.A. Requesting Modification of Case Management

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Order (Doc. 373) is DENIED.

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2.

The Town of Prescott Valley’s Motion for Leave to File Amended

Counterclaims (Doc. 377) is GRANTED.
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The Underwriters’ Motion to Amend Third-Party Complaint and Counterclaim

(Doc. 443) is DENIED.
DATED this 23rd day of January, 2012.

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