Woods et al v. ProBuilders Specialty Insurance Company et al
ORDER granting 151 MOTION to Strike Defendants' Affirmative Defenses, striking Defendants' Answers 148 and 149 , and denying as moot 165 MOTION in Limine regarding Advice of Counsel, by Judge Christine M. Arguello on 3/24/14. Defendants are directed to refile their Answers by 3/28/14. (dkals, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Christine M. Arguello
Civil Action No. 11-cv-02151-CMA-KMT
BRIAN WOODS, individually, and
d/b/a LOG AND TIMBER HOMES OF SOUTHERN COLORADO,
NATIONBUILDERS INSURANCE SERVICES, INC. d/b/a NBIS, and
PROBUILDERS SPECIALITY INSURANCE COMPANY,
ORDER GRANTING MOTION TO STRIKE
This matter is before the Court on Plaintiffs’ Motion to Strike Defendants’
Affirmative Defenses. (Doc. # 151.) Defendants responded to the motion, (Doc. # 157),
and Plaintiff’s replied, (Doc. # 159). For the following reasons, Plaintiffs’ motion is
On July 5, 2011, Plaintiffs filed their complaint in state court. (Doc. # 2.)
Defendants removed the case to this Court on August 17, 2011. (Doc. # 1.)
Defendants have previously sought leave to amend their answers to add an advice of
counsel defense, and the Court denied that request on March 15, 2013. (Doc. # 95.)
The discovery cutoff deadline was August 8, 2013. (Doc. # 98.) On September 30,
2013, the Court granted Plaintiff’s request to amend its complaint to add a prayer for
relief requesting an award of punitive damages. (Doc. # 141.) On October 14, 2013,
Defendants filed their answers to the amended complaint and included two new
affirmative defenses: (1) reliance on the advice of counsel, and (2) material
misrepresentation in the application for insurance. (Doc. ## 148, 149.) In the instant
motion, Plaintiff moves to strike those defenses as improper absent leave this Court or
consent from Plaintiffs. (Doc. # 151.) Defendants respond that pleading the additional
defenses was not improper, but in the alternative ask for leave from this Court to amend
their answers. (Doc. # 157.)
PLAINTIFFS’ MOTION TO STRIKE
Pursuant to Fed. R. Civ. P. 15(a)(2), if a party may no longer file an amended
pleading as a matter of course, then a party must seek leave of the court or written
consent to amend from the opposing party. As both parties point out, there is no
binding authority on whether this Court should employ what has been called the
“permissive, narrow, or moderate” position to whether a defendant must seek leave
of court to add an affirmative defense. See Hydro Eng'g, Inc. v. Petter Investments,
Inc., 2:11-CV-00139-RJS, 2013 WL 1194732, *2 (D. Utah Mar. 22, 2013) (discussing
permissive, narrow, or moderate positions with regard to amending counterclaims).
However, persuaded by the well-reasoned analysis and thorough review of the relevant
case law, this Court joins the Hydro Engineering Court and holds that the moderate
approach strikes the appropriate balance between the narrow and permissive
approaches. See id. at *2-3 (adopting moderate approach and collecting cases).
Indeed, “[i]f every amendment, no matter how minor or substantive, allowed defendants
to assert counterclaims or defenses as of right, claims that would otherwise be barred or
precluded could be revived without cause. This would deprive the Court of its ability to
effectively manage the litigation.” EEOC v. Morgan Stanley & Co., Inc., 211 F.R.D. 225,
227 (S.D.N.Y. 2002).
Under the moderate approach, courts permit counterclaims or affirmative
defenses when a plaintiff files an amended complaint which changes the theory or
scope of the case. Tralon Corp. v. Cedarapids, Inc., 966 F. Supp. 812, 832 (N.D. Iowa
1997) aff'd, 205 F.3d 1347 (8th Cir. 2000). In such circumstances, “the defendant is
allowed to plead anew as though it were the original complaint filed by the Plaintiff. . . .
The obvious corollary is that if an amended complaint does not change the theory or
scope of the case, a [defendant] must seek leave of court pursuant to Rule 15(a) before
it can amend its answer to assert a counterclaim.” Id.; see also Morgan Stanley, 211
F.R.D. at 227 (applying moderate approach to defendant’s attempt to add an affirmative
In the instant case, Plaintiffs’ amendment added a prayer for punitive damages
related to its original claim for bad faith. (Doc. ## 99; 142.) But, this amendment did not
change the theory of the case or expand the scope of its claims. See Vista Eng'g
Technologies, LLC v. Premier Tech., Inc., CV 09-00008-E-BLW, 2010 WL 2103960
(D. Idaho May 25, 2010) (adding prayer for punitive damages does not change the
theory of the case or expand the scope of the claims). Plaintiff requested compensatory
damages at the outset of this case, and it merely added an additional form of damages
following a favorable verdict at trial. Under Colorado law, Plaintiffs were not permitted
to request punitive damages in its initial complaint. See Colo. Rev. Stat. § 13-21102(1.5)(a) (“a claim for exemplary damages . . . may not be included in any initial claim
for relief.) Yet, Plaintiffs consistently placed Defendants on notice that they intended to
seek punitive damages. See (Doc. ## 15, at 10; 65, at 4). Moreover, Plaintiffs have
not asserted additional material facts and instead merely characterize the previously
asserted facts as “attended by circumstances indicating willful and wanton conduct.”
(Doc. # 142, at 4.) Thus, Defendants are not forced to respond to an entirely new cause
of action or theory of recovery. Accordingly, Defendants were required to seek leave
from this Court prior to amending their answers to include additional affirmative
defenses and their answers are stricken on that basis.
DEFENDANTS’ MOTION FOR LEAVE TO AMEND
In the alternative, Defendants argue that if they may not amend their
counterclaim as of right, then they are entitled to leave of court to do so. Typically, this
Court will not entertain motions made in a response. See D.C.COLO.LCivR 7.1(III)(d).
However, because trial is scheduled in two weeks and in the interest of judicial
economy, the Court will make an exception in this instance. Nonetheless, the Court
limits this discussion to whether Defendants may amend their answers to include the
material misrepresentation defense because their request to amend their answers to
include the advice of counsel defense has already been denied (Doc. # 95), and this
Court will not revisit that determination.
"Where a party seeks to amend its pleadings after the deadline for such
amendments set forth in the scheduling order, the Tenth Circuit has not definitively
stated whether the ‘good cause’ standard of Federal Rule of Civil Procedure 16(b) to
modify the scheduling order must be met.” Avon v. Kent Denver Sch., No. 12-cv-2546WJM-CBS, 2014 WL 85287, *2 (D. Colo. Jan. 9, 2014) (citing Bylin v. Billings, 568 F.3d
1224, 1231 (10th Cir. 2009)). However, the majority of courts have held that the party
must meet the two-part test of first showing good cause to amend the scheduling order
under Rule 16(b), and that an amendment should be allowed under Rule 15(a). Id.
(citing Bylin, 568 F.3d at 1231) (“Most circuits have held that when a party amends
a pleading after a deadline set by a scheduling order, Rule 16 and its ‘good cause’
standard are implicated. . . . This circuit, however, has not ruled on that question in the
context of an amendment to an existing pleading.”)).
Because Defendants filed their motion after the deadline for amending pleadings,
the Court employs the two-step analysis. First, the Court must determine whether
Defendant has shown good cause to modify the Scheduling Order under Fed. R. Civ. P.
16(b). Then, the Court must evaluate whether Defendants have satisfied the standard
for amendment of pleadings under Fed. R. Civ. P. 15(a). District courts are “afforded
wide discretion” to apply the “good cause” standard. Bylin, 568 F.3d at 1231
(discussing Rule 16).
Under Rule 16(b)(4), the scheduling order “may be modified only for good cause
and with the judge’s consent,” requiring the moving party to show that a deadline
“cannot reasonably be met despite the diligence of the party seeking the extension.”
Fed. R. Civ. P. 16, advisory committee’s note. Another court has explained,
Rule 16(b)’s good cause standard is much different than the more lenient
standard contained in Rule 15(a). Rule 16(b) does not focus on the bad
faith of the movant, or the prejudice to the opposing party. Rather, it
focuses on the diligence of the party seeking leave to modify the
scheduling order to permit the proposed amendment. Properly construed,
good cause means that the scheduling deadlines cannot be met despite a
party’s diligent efforts. In other words, this Court may “modify the schedule
on a showing of good cause if [the deadline] cannot be met despite the
diligence of the party seeking the extension.
Carriker v. City & Cnty. of Denver, Colo., No. 12-CV-02365-WJM-KLM, 2013 WL
2147542 (D. Colo. May 16, 2013).
In the instant case, Defendants have failed to establish good cause because they
have not provided any reason why they could not have reasonably met the deadline to
amend despite their diligence. While the Court could deny Defendants’ motion on that
basis alone, it also finds that Defendant has not established good faith under the lessstringent Fed. R. Civ. P. 15. While Rule 15 instructs courts to “freely give leave when
justice so requires,” a Court may refuse such leave upon a showing of “undue delay,
undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure
deficiencies by amendments previously allowed, or futility of amendment.” Frank v.
U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993).
Here, unwarranted delay is manifest. Defendants have failed to offer any reason
why they failed to plead material misrepresentation as an affirmative defense or to seek
leave to amend before this late date. And, as Magistrate Judge Tafoya found a year
ago when she ruled on Defendants’ initial motion to amend, a late amendment would
prejudice Plaintiffs. To permit the addition of this new defense now that the period for
discovery has long expired and trial is imminent would unfairly prejudice plaintiffs
by requiring them to respond to defense they had yet to take discovery on. Thus,
Defendants' motion, contained in its response, is denied insofar as it seeks leave to
add a new defense.
Based on the foregoing, it is ORDERED that:
1. Plaintiffs’ Motion to Strike Defendants’ Affirmative Defenses (Doc. # 151)
2. Defendants’ Answers (Doc. ## 148, 149) are STRICKEN. The Court
DIRECTS Defendants to refile their Answers by March 28, 2014.
3. Defendants’ Motion to Amend their Answer, contained in their response
(Doc. # 157) is DENIED.
4. In light of the Court’s determination that Defendants will not be permitted to
raise an advice of counsel defense, Plaintiff’s Motion in Limine Regarding
Advice of Counsel (Doc. # 165) is DENIED AS MOOT.
DATED: March 24, 2014
BY THE COURT:
CHRISTINE M. ARGUELLO
United States District Judge
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