Axis Reinsurance Company v. Telekenex, Inc. et al

Filing 101

Order by Hon. Samuel Conti granting in part and denying in part 85 Motion for Leave to File.(sclc1, COURT STAFF) (Filed on 4/10/2013)

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1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE NORTHERN DISTRICT OF CALIFORNIA 9 For the Northern District of California United States District Court 10 AXIS REINSURANCE COMPANY, Plaintiff, 11 12 13 14 15 16 17 v. TELEKENEX, INC.; ANTHONY ZABIT; KAREN SALAZAR; BRANDON CHANEY; DEANNA CHANEY; MARK PRUDELL; JOY PRUDELL; MARK RADFORD; NIKKI RADFORD; JOSHUA SUMMERS; JULIA SUMMERS; IXC HOLDINGS, INC.; STRAITSHOT COMMUNICATIONS, INC.; and STRAITSHOT RC, LLC, 18 Defendants. 19 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 12-2979 SC ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR LEAVE TO FILE SECOND AMENDED COUNTERCLAIM 20 21 Axis Reinsurance Company ("Axis") brings this action against 22 the above-captioned Defendants to obtain a judicial declaration 23 that the insurance policy it issued to Telekenex, Inc. does not 24 cover any amounts awarded in an underlying action captioned 25 Straitshot Communications, Inc. v. Telekenex, Inc., et al., No. 26 C10-268 TSZ (W.D. Wash). 27 Inc., Anthony Zabit, Karen Salazar, Brandon Chaney, and Deanna 28 Chaney (the "Telekenex Defendants") now move for leave to file a Defendants Telekenex, Inc., IXC Holdings, 1 second amended counterclaim. 2 pleading would add one new fact paragraph and a sixth entitlement 3 to relief under Washington's Insurance Fair Conduct Act, Wash Rev. 4 Code § 48.30. 5 the motion on the ground that the amended pleading would be futile, 6 ECF No. 90 ("Opp'n), and the Telekenex Defendants have filed a 7 reply in support of the motion, ECF No. 92 ("Reply"). 8 finds this matter appropriate for determination without oral 9 argument. United States District Court For the Northern District of California 10 11 ECF No. 85 ("Mot."). The amended Plaintiff Axis Reinsurance Company ("Axis") opposes Civ. L.R. 7-1(b). The Court For the reasons set forth below, the motion is GRANTED in part and DENIED in part. Under Federal Rule of Civil Procedure 15(a)(1), a party may 12 amend its pleading as a matter of course within twenty-one days 13 after serving it or twenty-one days after the filing of a 14 responsive pleading or a Rule 12(b), (e), or (f) motion. 15 Thereafter, "a party may amend its pleading only with the opposing 16 party's written consent or the court's leave." 17 15(a)(2). 18 leave [to amend] when justice so requires," and the Ninth Circuit 19 has stressed Rule 15's policy of favoring amendments. 20 Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989). 21 However, leave need not be granted "where the amendment of the 22 complaint would cause the opposing party undue prejudice, is sought 23 in bad faith, constitutes an exercise in futility, or creates undue 24 delay." 25 Fed. R. Civ. P. Rule 15(a)(2) provides that courts should "freely give Ascon Id. The Court finds that the Telekenex Defendants' proposed new 26 cause of action would be futile in light of the Court's prior 27 ruling. 28 Washington's Insurance Fair Conduct Act. Telekenex seeks to add a new counterclaim under 2 However, in ruling on 1 Axis's prior motion for partial summary judgment, the Court already 2 found that California's insurance statute, rather than Washington 3 law, governed the Telekenex Defendants' insurance claims. 4 68 ("Dec. 19 Order") at 18-21.1 5 "a separate conflict of laws inquiry must be made with respect to 6 each issue in the case." 7 Cal. 4th 906, 920 (Cal. 2001). 8 fail to enunciate why the choice-of-law issues presented here 9 differ from those at issue in the Court's prior ruling. ECF No. As the Telekenex Defendants argue, Wash. Mut. Bank, FA v. Super. Ct., 24 However, the Telekenex Defendants In that United States District Court For the Northern District of California 10 ruling, the Court used the governmental-interest analysis to 11 determine that California Insurance Code section 533 applied to 12 this case. 13 of-law analysis is practically identical to the analysis for 14 determining the applicability of the Washington Insurance Fair 15 Conduct Act.2 16 case, and the Court declines to depart from it. Dec. 19 Order at 18-21. Unsurprisingly, that choice- The Court's prior analysis is now the law of the The only other amendment proposed by the Telekenex Defendants 17 18 is the addition of a single fact paragraph. See ECF No. 86-1 19 ("Proposed Second Amended Counterclaim") ¶ 64 ("Axis has breached 20 its duties, resulting in actual harm and consequential damages to 21 1 22 Axis Reinsurance Co. v. Telekenex, Inc., -- F. Supp. 2d. --, 2012 WL 6632180, 2012 U.S. Dist. LEXIS 179647 (N.D. Cal. 2012). 23 2 24 25 26 27 28 Under the governmental-interest analysis, the Court must first determine whether the applicable law of California and Washington materially differ. Frontier Oil Corp. v. RLI Ins. Co., 153 Cal. App. 4th 1436, 1442-43 (2007). There does not appear to be any dispute that they do. Under the second and third steps the Court needs to determine whether both California and Washington have an interest in applying their own law and, if they do, which state's interest would be more impaired if its law were not applied. Id. at 1454-55. The Court already addressed these issues at length in its prior order, See Dec. 19 Order at 19-21, and does not revisit them here. 3 1 the Telekenex Defendants in an amount to be proven at trial."). 2 Axis does not oppose this amendment and there is no indication that 3 it is contrary to the Court's prior ruling. 4 GRANTS the Telekenex Defendants leave to add this paragraph. 5 According, the Court Axis also objects to the Telekenex Defendants' proposed 6 second amended counterclaim on the ground that a number of its 7 other paragraphs are contrary to the Court's December 19 Order. 8 Opp'n at 9-11. 9 the Telekenex Defendants' original pleading and, thus, do not That may be so, but these paragraphs appeared in United States District Court For the Northern District of California 10 constitute amendments. 11 Proposed Second Amended Counterclaim. 12 declines to strike them now. 13 Compare ECF No. 65 ("Counterclaim") with Accordingly, the Court For the foregoing reasons, the Telekenex Defendants' motion 14 for leave to amend is GRANTED in part and DENIED in part. The 15 Telekenex Defendants may amend their counterclaim to add the 16 proposed paragraph 64. 17 cause of action under the Washington Insurance Fair Conduct Act. However, they may not amend to plead a new 18 19 IT IS SO ORDERED. 20 21 22 Dated: April 10, 2013 UNITED STATES DISTRICT JUDGE 23 24 25 26 27 28 4

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