National Casualty Company v. National Strength and Conditioning Association
Filing
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ORDER granting 30 Motion for Leave to File First Amended Counterclaim. Signed by Judge Janis L. Sammartino on 4/03/2020. (jpp)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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NATIONAL CASUALTY COMPANY,
Case No.: 18-CV-1292 JLS (KSC)
Plaintiff,
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ORDER GRANTING MOTION FOR
LEAVE TO FILE FIRST AMENDED
COUNTERCLAIM
v.
NATIONAL STRENGTH AND
CONDITIONING ASSOCIATION,
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(ECF No. 30)
Defendant,
NATIONAL STRENGTH AND
CONDITIONING ASSOCIATION,
Counter-Claimant,
v.
NATIONAL CASUALTY COMPANY,
Counter-Defendant.
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Presently before the Court is Defendant and Counter-Claimant National Strength
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and Conditioning Association’s (“NSCA”) Motion for Leave to File First Amended
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Counterclaim (“Mot.,” ECF No. 30). Also before the Court is Plaintiff and Counter-
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Defendant National Casualty Company’s (“NCC”) Opposition to (“Opp’n,” ECF No. 39)
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and the NSCA’s Reply in Support of (“Reply,” ECF. 42) the Motion. Having carefully
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18-CV-1292 JLS (KSC)
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considered the NSCA’s proposed amendments, the Parties’ arguments, and the law, the
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Court GRANTS the NSCA’s Motion.
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BACKGROUND
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This case came before the Court on June 14, 2018, when NCC filed its original
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declaratory relief action against the NSCA regarding NCC’s duty as the NSCA’s insurer
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to prosecute, indemnify, and/or defend the NSCA in two underlying civil lawsuits. See
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generally ECF No. 1 (“Compl.”). The NSCA filed its initial Counterclaim on July 12,
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2018, see generally ECF No. 7, and the instant Motion on June 24, 2019. See generally
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ECF No. 30.
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LEGAL STANDARD
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Under Federal Rule of Civil Procedure 15(a), a plaintiff may amend their complaint
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once as a matter of course within specified time limits. Fed. R. Civ. P. 15(a)(1). “In all
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other cases, a party may amend its pleading only with the opposing party’s written consent
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or the court’s leave. The court should freely give leave when justice so requires.” Fed. R.
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Civ. P. 15(a)(2). Courts generally grant leave to amend absent a showing of “undue delay,
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bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies
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by amendments previously allowed, undue prejudice to the opposing party by virtue of
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allowance of the amendment, [or] futility of amendment.” Foman v. Davis, 371 U.S. 178,
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182 (1962). “Rule 15(a) ‘is to be applied with extreme liberality,’ and whether to permit
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amendment is a decision ‘entrusted to the sound discretion of the trial court.’” EFG Bank
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AG, Cayman Branch v. Transam. Life Ins. Co., No. 216CV08104CASGJSX, 2019 WL
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5784739, at *3 (C.D. Cal. Nov. 4, 2019) (quoting Morongo Band of Mission Indians v.
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Rose, 893 F.2d 1074, 1079 (9th Cir. 1990); Jordan v. Cty. of Los Angeles, 669 F.2d 1311,
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1324 (9th Cir. 1982)).
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DISCUSSION
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The NSCA requests leave to file its First Amended Counterclaim (“FACC”) to
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include new allegations concerning NCC’s alleged breaches of its duty to defend and its
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other obligations to the NSCA in the two underlying civil lawsuits. Mot. at 5–6. The
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FACC also includes a new counterclaim for violations of California’s Unfair Competition
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Law (“UCL”), California Business and Professions Code § 17200, based on the same
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conduct giving rise to the NSCA’s counterclaims. Id. at 6. Lastly, the FACC makes clear
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that the NSCA is seeking punitive damages from NCC. Id.
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The NSCA contends that it should be granted leave to amend because NCC will not
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suffer prejudice because no discovery has been taken in the action, and both parties will
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have ample opportunity to conduct extensive discovery concerning the issues raised in the
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FACC. 1 Id. at 8–9. Further, the NSCA contends that it has not acted in bad faith because
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it sought leave to amend at an early stage in the litigation and it raises valid claims against
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NCC. Id. at 9. The NSCA also asserts that the instant Motion is timely and does not unduly
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delay the litigation. Id. at 9. Finally, the NSCA maintains that the proposed FACC is not
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futile because “the facts pled support the relief sought, and NSCA should have the
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opportunity to seek all available relief in this Court for [NCC]’s misconduct.” Id. at 10.
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In its Opposition, NCC does not contest that the NSCA should be granted leave to
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plead the new allegations contained in the FACC, including that NCC breached its duty to
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the NSCA with respect to the underlying civil lawsuits. See generally Opp’n. Instead,
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NCC opposes the Motion solely on the ground that the NSCA’s proposed UCL
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counterclaim is futile because the remedies available under the UCL are limited to
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restitution and injunctive relief.
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injunctive relief are equitable remedies, they are not available unless the NSCA lacks an
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adequate remedy at law. Id. at 4. As a result, NCC claims that the proposed UCL cause
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of action is futile because the NSCA has an adequate remedy at law in the form of monetary
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damages for NCC’s alleged wrongful conduct. Id.
Id. at 3. NCC contends that, because restitution and
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As the NSCA points out and as the Court agrees, however, NCC fails to consider
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that the request for injunctive relief outlined in the FACC pertains not only to the NSCA,
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It appears that the Parties have since engaged in discovery and that fact discovery closed on March 6,
2020. See ECF No. 48 ¶ 1.
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but also to other of NCC’s insureds. Reply at 4. The NSCA’s request for injunctive relief
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should be denied only if “there is no reasonable probability that past acts complained of
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will recur.” Cal. Serv. Station etc. Ass’n. v. Union Oil Co., 232 Cal. App. 3d 44, 57 (1991).
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Here, NCC’s alleged wrongful acts are, by their very nature, capable of repetition. The
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Court therefore is not persuaded that the proposed UCL counterclaim is futile. Regardless,
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denial of a leave to amend on the basis of futility alone is rare and, “[o]rdinarily, courts
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will defer consideration of challenges to the merits of a proposed amended pleading until
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after leave to amend is granted and the amended pleading is filed.” Utterkar v. Ebix, Inc.,
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No. 14-CV-02250-LHK, 2015 WL 5027986, at *3 (N.D. Cal. Aug. 25, 2015) (citing
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Netbula, LLC v. Distinct Corp., 212 F.R.D. 534, 539 (N.D. Cal. 2003)).
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In sum, “[a]bsent prejudice, or a strong showing of any . . . [other] factors, there
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exists a presumption under Rule 15(a) in favor of granting leave to amend.” Eminence
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Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). In considering whether
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prejudice, bad faith, undue relay, or futility exist, “it is the consideration of prejudice to the
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opposing party that carries the greatest weight.” Id. Here, NCC concedes that the FACC
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is not prejudicial or made in bad faith and that it will not cause undue delay. See generally
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Opp’n. Consequently, the Court finds leave to amend appropriate. See Eminence Capital,
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316 F.3d at 1048.
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CONCLUSION
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Based on the foregoing, the Court GRANTS the NSCA’s Motion for Leave to File
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First Amended Counterclaim (ECF No. 30). The NSCA SHALL FILE the First Amended
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Counterclaim, previously filed at ECF No. 38-1–7, within seven (7) days of the electronic
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docketing of this Order. The Parties SHALL MEET AND CONFER 2 and SHALL FILE
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a joint status report within fourteen (14) days of the electronic docketing of this this Order
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In light of the current COVID-19 public emergency, see, e.g., Order of the Chief Judge No. 18 (S.D.
Cal. filed Mar. 17, 2020); Executive Order N-33-20, Executive Department of the State of California
(March 19, 2020), the Parties are encouraged to meet and confer telephonically.
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concerning the impact, if any, of this Order and the NSCA’s FACC on the pending
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summary judgment motions. See ECF Nos. 49, 56.
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IT IS SO ORDERED.
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Dated: April 3, 2020
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