General Fidelity Insurance Company v. Quanta Specialty Lines Insurance Company, et al

Filing 99

ORDER signed by Judge John A. Mendez on 9/22/2015 DENYING 88 and 89 Motions for Leave to File Amended Pleadings. (Zignago, K.)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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GENERAL FIDELITY INSURANCE
COMPANY,

No.

1:14-cv-01325-JAM-GSA

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Plaintiff,
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ORDER DENYING DEFENDANTS’
MOTIONS FOR LEAVE TO AMEND

v.
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QUANTA SPECIALTY LINES INSURANCE
COMPANY; BELLA VISTA ESTATES;
LAUREL TREE HOMES, INC.; DAVID
DYCK; LAMBETH CONSTRUCTION OF
CALIFORNIA, INC.; LAMBETH
CONSTRUCTION, INC.; RENE DIAZ;
MONICA DIAZ; DAVID BELTRAN; ALMA
BELTRAN; QUANTA
INDEMNITY COMPANY; LAMBETH
CONSTRUCTION, LLC; NORMA AGUILAR;
JESSE AGUILAR; TONY ADAYAN, JR.;
JOSEPH TORRES; BRENDA TORRES;
RICARDO ZARAGOZA; MARIA ZARAGOZA;
JOSE LUIS ZEPEDA; ISIAS PACHECO;
MARGARITA PAULINO; RICARDO BUSTOS
TAPIA; ANDRES TORRES; GABRIEL
TOVAR; MARIA ZONIA TOVAR;
FRANCISCO VARGAS; PAULINO VAZQUEZ;
ROBERTO VARGAS; LORIANE ZAMORA;
NORMA ZUNIGA; GABRIEL TAMEZ; JESUS
M. VILLAGRANA; ARACELI VILLAGRANA;
JOSE ZUL,
Defendants.
__________________________________
AND RELATED CROSS-CLAIMS AND
COUNTER-CLAIMS.

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Currently before the Court are two motions. 1

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The first is

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brought by Defendant and Cross-Defendant Bella Vista Estates

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(“Bella Vista”) (Doc. #88) seeking leave to file amended

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pleadings.

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Defendant Laurel Tree Homes, Inc. (“Laurel Tree”) (Doc. #89) also

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seeking leave to file an amended pleading.

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Claimant, and Cross-Claimant Quanta Indemnity Company (“Quanta”)

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and Plaintiff and Counter-Defendant General Fidelity Insurance

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Company (“Fidelity”) each filed separate oppositions (Doc. #90,

The second is brought by Defendant and Cross-

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91, respectively).

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Defendant, Counter-

Reply (Doc. #95).

Bella Vista and Laurel Tree filed a joint

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I.

FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

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This matter is an insurance coverage action in which

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Fidelity and Quanta are seeking a judicial determination that

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they have no defense or indemnity obligations under their

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respective commercial general liability insurance policies (in

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which Bella Vista and Laurel Tree are named) in connection with

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two underlying state actions.

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Ruben Betancourt, et al. v. Bella Vista Estates, et al. (“the

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Betancourt action”), and the second was entitled Rene Diaz, et

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al. v. Bella Vista Estates, et al. (“the Diaz Action”).

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these suits were filed in Fresno County Superior Court by

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homeowners for alleged construction defects.

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Laurel Tree were named as defendants in each action.

The first action was entitled

Both of

Bella Vista and

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The motions were determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled
for August 19, 2015.
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Fidelity initiated this action in August 2014 (Doc. #1) and

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filed the First Amended Complaint (“FAC”) (Doc. #17) on October

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7, 2014.

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Vista and Laurel Tree (among others) and a counter-claim against

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Fidelity (Doc. #29).

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answer (Doc. #36) to the FAC and a joint answer (Doc. #37) to

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Quanta’s cross-claim through their original counsel, Jeffrey

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Wall.

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West Corzine, LLP and Ian Corzine to associate in as co-counsel

Quanta filed an answer, a cross-claim against Bella

Bella Vista and Laurel Tree filed a joint

According to Bella Vista and Laurel Tree, they retained

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for them on January 9, 2015.

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Tree MTA at p. 5.

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Bella Vista MTA at p. 5; Laurel

On February 27, 2015, the parties filed a Joint Scheduling

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Report (Doc. #84).

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they expected to amend their answers and to file cross/counter

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claims against the other parties.

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Scheduling Order (Doc. #85) on March 3, 2015, indicating there

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would be no further amendments to pleadings “except with leave of

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court, good cause having been shown.”

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In it, Bella Vista and Laurel Tree indicated

The Court issued a Pretrial

The current motions were filed on May 29, 2015.

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II.

OPINION

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A.

Legal Standard

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Bella Vista and Laurel Tree (collectively “the Moving

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Parties”) seek leave to amend their pleadings.

In both motions,

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the Moving Parties rely on the standard set out in Federal Rule

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of Civil Procedure 15(a)(2), which provides: “[A] party may amend

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its pleading only with the opposing party's written consent or

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the court's leave.

The court should freely give leave when
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justice so requires.”

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pretrial scheduling order in this matter in accordance with

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Federal Rule of Civil Procedure 16(b)(1).

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However, the Court has already issued a

Although “Rule 15(a) liberally allows for amendments to
pleadings,” Coleman v. Quaker Oats Co., 232 F.3d 1271,
1294 (9th Cir. 2000), that policy does not apply after
a district court has issued “a pretrial scheduling
order that established a timetable for amending the
pleadings, and the deadline [has] expired.” Id.
Rather, under those circumstances, parties seeking to
amend their [pleadings] “must show good cause for not
having amended their complaints before the time
specified in the scheduling order expired.” Id.
(citing Johnson v. Mammoth Recreations Inc., 975 F.2d
604, 608–09 (9th Cir. 1992)); see also Aliota v. Town
of Lisbon, 651 F.3d 715, 719–20 (7th Cir. 2011)
(identifying the majority of circuit courts that “apply
the heightened good-cause standard of Rule 16(b)(4)
before considering whether the requirements of Rule
15(a)(2) were satisfied.”). “This standard ‘primarily
considers the diligence of the party seeking the
amendment.’” Id. (quoting Johnson, 975 F.2d at 609).

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Robert Half Int'l Inc. v. Ainsworth, No. 14CV2481-WQH DHB, 2015

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WL 4662429, at *15 (S.D. Cal. 2015).

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apply the standards established by Federal Rule of Civil

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Procedure 16(b)(4).

Accordingly, the Court will

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B.

Discussion

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Bella Vista seeks to file a First Amended Answer in response

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to the FAC, including a counterclaim against Fidelity, a cross-

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claim against Quanta and a third-party complaint against North

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American Capacity Insurance Company, Financial Pacific Insurance

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Company, and American Safety Indemnity Company (the latter three

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collectively “proposed Third-Party Defendants”) (Exhibit F to Ian

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Corzine Declaration, Doc. #88-1), alleging the following causes

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of action: (1) Breach of the Covenant of Good Faith and Fair

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Dealing; (2) Breach of Contract; (3) Declaratory Relief;

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(4) Equitable Indemnity; and, (5) Contribution and Apportionment
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of Fault.

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to Corzine Decl., Doc. #88-1) in response to Quanta’s cross-

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claim.

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It also seeks to file a First Amended Answer (Exh. G

Laurel Tree seeks leave to amend its answer to the FAC and

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its answer to Quanta’s cross-claim.

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Exh. H and I (respectively) to Corzine Decl. (Doc. #89-1).

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Laurel Tree MTA at p. 4;

The Moving Parties contend they have good cause for these

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proposed amendments and request the Court grant them leave.

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Bella MTA at p. 4; Laurel Tree MTA at pp. 6-7.

Bella Vista

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argues it did not discover the basis for the proposed claims

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until after new counsel, Ian Corzine of West Corzine, LLP,

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associated in as co-counsel.

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Bella Vista and Laurel Tree determined that the previous answers

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to Fidelity’s and Quanta’s claims were “insufficiently specific.”

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In its Opposition, Fidelity contends the Moving Parties have

In addition, new counsel for both

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not established good cause for allowing amendment and the

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addition of parties at this late date.

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motions as to why good cause exists to support amendment of

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pleadings at this late date or why the Moving Parties could not

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determine they had viable claims at an earlier date, specifically

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contending that “Bella Vista and Laurel Tree [have] not raised a

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single fact or circumstances that [they] did not know or was not

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knowable with diligence before the date agreed to by the parties

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to amend the pleadings.”

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Fidelity Opp. at pp. 10-

Fidelity points to the sparse explanation provided in both

Id. at p. 15.

In its separate Opposition, Quanta also challenges Bella

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Vista’s contention that good cause has been shown to allow

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amendment to the pleadings.

Quanta Opp. at pp. 10-11.
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The Court agrees that the moving parties too casually gloss

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over their burden to establish that the pretrial schedule could

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not reasonably be met despite their diligence.

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S. California Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002)

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(quoting Johnson, at 609.).

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specifically contends:

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Bella Vista’s confirmation that its carriers . . . have

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wrongfully refused to defend it in the ongoing construction

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defect actions despite the fact that a potential for coverage

See Zivkovic v.

In its motion, Bella Vista

“Good cause underlying this motion is

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existed for each of the insurers’ policies.”

Bella Vista MTA at

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p. 7.

“Good cause

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underlying this motion is counsel’s determination that the

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previously-filed answers were insufficiently specific and failed

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to include necessary affirmative defenses.”

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p. 7.

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why Bella Vista and Laurel Tree could not have made these

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amendments months ago.

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fashion that good cause exists because they believe they have

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viable claims and the Court should therefore grant their motions.

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For its motion, Laurel Tree contends:

Laurel Tree MTA at

Neither of these assertions provides any explanation for

They simply assert in a conclusory

It is clear from the Joint Scheduling Report that as early

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as February the Moving Parties had the intention to amend the

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parties’ respective pleadings and to assert new claims on Bella

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Vista’s behalf.

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their counsel would move for leave to so amend within ten days.

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JSR at p. 2.

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current motions were filed and with little explanation for the

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delay.

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v. Wells Fargo Bank, Nat. Ass'n, No. 14CV1034-GPC JMA, 2015 WL

JSR at p. 8.

They presented to the Court that

However, it was not until 91 days later that the

This does not support a finding of diligence.

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See Sako

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5022326, at *2 (S.D. Cal. 2015) (“Courts have held that waiting

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two months after discovering new facts to bring a motion to amend

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does not constitute diligence under Rule 16.”).

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The Moving Parties attempt to bolster their arguments in the

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joint Reply (Doc. #95).

In it, they argue their representations

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in the Joint Scheduling Report did not guarantee a motion would

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be filed in ten days, but rather set forth their “reasonable

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expectation that such a request to amend would be forthcoming by

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[that deadline].”

Reply at p. 4.

The Moving Parties also argue

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their communications with the proposed Third-Party Defendants did

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not reveal the basis for new claims until, at the earliest, March

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2015.

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difficulty obtaining the consent of the other parties to amend.

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The Court is not persuaded by these arguments and as pointed out

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by Fidelity in its Opposition, the Court’s Scheduling Order

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precluded amendments “without leave of court.”

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They contend they were further delayed when they ran into

This case was initiated over a year ago.

The Moving

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Parties’ initial answers to the FAC and Quanta’s cross-claim were

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filed over five months before these motions were filed.

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action was filed over 20 months ago, and the Betancourt action

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was filed over seven years ago.

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a stake in the outcome of this litigation.

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Moving Parties have not established they were diligent in seeking

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to amend their pleadings -- amendments that would not only

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possibly delay the proceedings but introduce several new parties

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and various new claims at this late date.

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DENIES Bella Vista’s and Laurel Tree’s requests for leave

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pursuant to Federal Rule of Civil Procedure 16.

The Diaz

There are dozens of parties with

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The Court finds the

The Court hereby

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Because the Court so finds, it need not address Fidelity and

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Quanta’s additional arguments regarding the futility and bad

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faith of Bella Vista’s counterclaims, cross-claims, and third-

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party complaint.

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III.

ORDER

For the reasons set forth above, the Court DENIES Bella

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Vista’s and Laurel Tree’s Motions for Leave to File Amended

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Pleadings.

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IT IS SO ORDERED.
Dated: September 22, 2015

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