Imperial Plaza, Association of Apartment Owners of v. Fireman's Fund Insurance Company

Filing 84

ORDER AFFIRMING IN PART AND REVERSING AND REMANDING IN PART THE MAGISTRATE JUDGE'S ORDER AMENDING THE RULE 16 SCHEDULING ORDER re 69 ; 76 , re 81 , 73 . Signed by JUDGE ALAN C KAY on 05/16/2013. (eps) -- the Court AFFIRMS the m agistrate judge's Order Granting Defendant Fireman's Fund Insurance Company's Motion to Amend Rule 16 Scheduling Order (ECF Nos. 69 & 76 ) except for the portions referring to the expert witness disclosure deadlines, which the Court REMANDS to the magistrate judge to be addressed according to the principles set forth in this order CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
)
ASSOCIATION OF APARTMENT OWNERS )
)
OF IMPERIAL PLAZA,
)
Plaintiff, )
)
)
vs.
)
)
FIREMAN’S FUND INSURANCE
)
COMPANY,
)
Defendant. )
)

Civ. No. 11-00758 ACK-KSC

ORDER AFFIRMING IN PART AND REVERSING AND REMANDING IN PART THE
MAGISTRATE JUDGE’S ORDER AMENDING THE RULE 16 SCHEDULING ORDER
PROCEDURAL & FACTUAL BACKGROUND1/
This case arises from a dispute between an insurance
company and the owners of a property as to whether an insurance
agreement covers arsenic damage to the property.

For the

purposes of considering the current motion, the Court presents a
brief factual background.
The Association of Apartment Owners of Imperial Plaza
(“Plaintiff” or “Imperial Plaza”) owned a building covered by an
insurance policy issued by Fireman’s Fund Insurance Company
(“Defendant” or “FFIC”).

Def.’s Mtn. to Amend at 4.

1/

The

The facts as recited in this Order are for the purpose
of disposing of the current appeal and are not to be construed as
findings of fact that the parties may rely on in future
proceedings.
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building suffered damage from, inter alia, floor deflections,
wall cracks, and arsenic contamination.

April 9 Motion for

Summary Judgment (“MSJ”) Order at 23.2/

Both parties plan to

submit evidence regarding the source of the water that may have
caused some of the various types of damage suffered by the
building.

Def.’s Mtn. to Amend at 3-5, Plntf.’s Opp. at 2-3.

Plaintiff hired Colin Murphy to conduct tests on the building;
Mr. Murphy issued a report on June 9, 2010, indicating that
arsenic had contaminated the fourth floor concrete floor slab.
April 9 MSJ Order at 3-4.

Plaintiff tendered a claim to FFIC

regarding the damage to the building.

Id at 4, Def.’s Mtn. to

Amend at 4.
Defendant hired a consultant, Allana, Buick, and Bers,
Inc. (“ABB”) to investigate the damage.
4.

Def.’s Mtn. to Amend at

Mr. Wolf of ABB completed an investigation of the damage to

the Building and sent a report to Defendant in 2011.
to Amend at 6.

Def.’s Mtn.

Based on the information in Mr. Murphy’s and Mr.

Wolf’s reports, Defendant denied Plaintiff’s claim for insurance
coverage.

Def.’s Mtn. to Amend at 4.

passed away.

In October 2011, Mr. Wolf

Def.’s Mtn. to Amend Ex. A.

On December 13, 2011, Plaintiff filed a Complaint
asking for

declaratory relief that Fireman’s Fund Insurance

2/

To provide context for the current discovery dispute, the
Court uses facts in the record submitted by the parties.
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Company (“Defendant” or “FFIC”) must pay benefits to Plaintiff
under an insurance policy issued by FFIC.

ECF No. 1.

The magistrate judge issued a Federal Rule of Civil
Procedure (“Rule”) 16 Scheduling Order on April 6, 2012.
15.

ECF No.

The magistrate judge issued an Amended Rule 16 Scheduling

Order on May 18, 2012 (“Amended Scheduling Order”).

ECF No. 18.

The Amended Scheduling Order set deadlines, inter alia, for each
party to disclose the identity and written reports under Rule
26(a)(2) of any expert witness the party intended to use at
trial.

Id at 2 ¶ 11.

Plaintiff was required to disclose its

expert witnesses by October 29, 2012, and Defendant was required
to disclose its expert witnesses by November 28, 2012.

Id.

The

Amended Scheduling Order also provided that “Disclosure of the
identity and written report of any person who may be called
solely to contradict or rebut the evidence of a witness
identified by another party . . . shall occur within thirty (30)
days after the disclosure by the other party.”

Id.

On April 4, 2012, Defendant submitted a Rule 26(a)(1)
Initial Disclosures statement naming Mr. Wolf or other
representatives of ABB as individuals “who may have discoverable
information relevant to Defendant’s claims and defenses.”
No. 13.

ECF

At this point in time, Mr. Wolf had been deceased for

over five months.

Def.’s Mtn. to Amend Ex. A.

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On October 29, 2012, Plaintiff filed its expert witness
disclosure for Colin Murphy.

ECF No. 19.

Plaintiff also asked

for, and Defendant agreed to, four separate extensions of time to
file Colin Murphy’s report, which extended Plaintiff’s deadline
to November 21, 2012.

Plntf.’s Objection at 3, ECF No. 64.

Defendant’s deadline was consequently extended to December 21,
2013 (“Deadline”).

Plaintiff filed Colin Murphy’s report on

November 20, 2012; in this report, Mr. Murphy noted the existence
of three additional probable sources of water that could have
caused damage to the building.
No. 77.

ECF No. 22; Def.’s Opp. at 6, ECF

However, Defendant did not file a Rule 26(a)(2)

disclosure for any expert witness by the December 21, 2013
Deadline.

See ECF Nos. 22-36.
On January 14, 2013, Defendant obtained new counsel,

who filed a Motion to Amend the Rule 16 Scheduling Order on
January 30, 2013 (“Motion to Amend”).

ECF Nos. 33 & 37.

The

Motion to Amend argued that Defendant had “good cause” to extend
the deadline to disclose a replacement expert because Defendant’s
expert, Mr. Wolf, died in 2011; although Defendant had never
disclosed Mr. Wolf as an expert witness under Rule 26(a)(2).
Motion to Amend at 6, Ex. A, ECF No. 37-1.

Neither party

disputes that Mr. Wolf passed away on October 16, 2011, almost
two months before Plaintiff filed its Complaint on December 13,
2011.

Id at Ex. A, Plntf.’s Appeal at 3, ECF No. 1.

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Plaintiff

filed an Objection to Defendant’s Motion to Amend on March 15,
2013.

ECF No. 64.

Defendant filed a Reply in support of its

Motion to Amend on March 19, 2013.

ECF No. 67.

The magistrate judge held a hearing regarding the
Motion to Amend on March 25, 2013 and granted Defendant’s Motion
(“Order Granting Motion to Amend”).

ECF Nos. 69 and 76.

Plaintiff timely filed an Appeal of the March 25 Order on April
5, 2013.

ECF No. 73.3/

19, 2013.

ECF No. 77.

Defendant filed an Opposition on April
The Court determines that this matter may

be considered without a hearing under Local Rule 7.2(e).
STANDARD
I.

Appeal From a Magistrate Judge’s Order
Under Local Rule 74.1, any party may appeal from a

magistrate judge’s order determining a non-dispositive pretrial
matter or, if a reconsideration order has issued, the magistrate
judge’s reconsideration order on such a matter.

The district

judge shall consider the appeal and shall set aside any portion
of the magistrate judge’s order found to be clearly erroneous or
contrary to law.

See L.R. 74.1; see also 28 U.S.C. §

3/

Plaintiff initially filed an appeal of the magistrate
judge’s oral order issued on March 25, 2013. ECF No. 73.
However, subsequent to Plaintiff’s appeal, the magistrate judge
issued his written order on April 16, 2013, which corresponds to
the oral order. ECF No. 76. Plaintiff then filed an appeal of
the written order on April 23, 2013. ECF No. 81. Plaintiff
explained that the appeal should apply to both the oral and the
written order. Accordingly, this Court’s current order addresses
both of Plaintiff’s appeals (ECF Nos. 73 and 81) on the docket.
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626(b)(1)(A); Fed. R. Civ. P. 72(a).

The district judge may also

reconsider sua sponte any matter determined by a magistrate
judge.

See L.R. 74.1.
Under the “clearly erroneous” standard, the magistrate

judge’s ruling must be accepted unless, after reviewing the
entire record, this Court is “left with the definite and firm
conviction that a mistake has been committed.” U.S. v. Hinkson,
585 F.3d 1247, 1260 (9th Cir. 2009)(citing United States v. U.S.
Gypsum Co., 333 U.S. 364, 395 (1948)).

The district judge may

not simply substitute his or her judgment for that of the
magistrate judge.
Cir. 2009).

See U.S. v. Hinkson, 585 F.3d 1247, 1261 (9th

Instead, the scope of review is limited “to

determining whether the [] court reached a decision that falls
within any of the permissible choices the court could have made.”
Id.

The magistrate judge’s findings pass the clear error

standard if they are not “illogical or implausible” and have
“support in inferences that may be drawn from the facts in the
record.”

Id.

(quoting Anderson v. City of Bessemer City, N.C.,

470 U.S. 564, 577 (1985)).
II. Amendment of a FRCP 16 Scheduling Order
Under FRCP Rule 16(b), a modification to a scheduling
order may be allowed only for “good cause” and with the judge’s
consent.

This Court may modify a pretrial schedule “if it cannot

reasonably be met despite the diligence of the party seeking the

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extension.”

Johnson v. Mammoth Recreations, Inc., 975 F.2d 604,

609 (citing Fed. R. Civ. P. 16 Advisory Committee Notes for the
1983 Amendment).

The Ninth Circuit has stated that “the focus of

the inquiry is upon the moving party’s reasons for seeking
modification . . . [i]f that party was not diligent, the inquiry
should end.”

Johnson v. Mammoth Recreations, Inc., 975 F.2d 604,

609 (9th Cir. 1992).

Allowing parties to disregard the Rule 16

Scheduling Order would “undermine the court’s ability to control
its docket, disrupt the agreed-upon course of the litigation, and
reward the indolent and the cavalier.”

Johnson, 975 F.2d at 610.

DISCUSSION
I.

Whether Defendant Has Established “Good Cause” to Amend the

FRCP 16 Amended Scheduling Order.
Plaintiff’s main argument for reversing the March 25,
2013 Order is that Defendant presented “literally no evidence . .
. of any diligence on FFIC’s part before the [expert witness
disclosure deadline] had passed.”

Plntf.’s Appeal at 1-2.

Plaintiff does not contest the magistrate judge’s decision to
move the trial date and its associated deadlines.

Plntf.’s

Appeal at 2.
The Court generally sympathizes with the condition of
the case Defendant’s new counsel found themselves in, but the
Ninth Circuit has set rigid standards of diligence; and courts

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have been hesitant to allow new counsel to be excused from
deadlines with which their predecessors failed to comply.
The Court concludes that the magistrate judge’s failure
to consider whether or not Defendant’s counsel was diligent in
seeking an expert witness before the expiration of the Rule 16
expert witness Deadline is contrary to law.

See Na Pali Haweo

Cmty. Ass’n v. Grande, 252 F.R.D. 672, 675 (D. Haw. 2008) (“A
decision is ‘contrary to law’ if it applies an incorrect legal
standard or fails to consider an element of the applicable
standard.”); See also Hunt. Nat’l Broadcasting Co., 872 F.2d 289,
292 (9th Cir. 1989).

Under the Ninth Circuit standard, a Court

must determine if the Rule 16 deadline could not reasonably be
met despite a party’s diligence.

See Johnson v. Mammoth

Recreations, Inc., 975 F.2d 604, 609 (citing Fed. R. Civ. P. 16
Advisory Committee Notes for the 1983 Amendment).

Inherent in

the standard is the requirement that a court should examine if
the deadline could reasonably have been met and the party’s
diligence in attempting to meet that deadline.

See Johnson v.

Mammoth Recreations, Inc., 975 F.2d at 609 (“carelessness is not
compatible with a finding of diligence and offers no reason for a
grant of relief”).
Accordingly, a question before the Court in this case
is whether Defendant’s counsel exerted sufficient diligence to

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meet the Deadline to disclose its expert witnesses.4/
16.

See Rule

While circumstances prevented Defendant from presenting Mr.

Wolf in particular, there are no factual findings regarding
Defendant’s counsel’s diligence to call an expert witness before
the Deadline expired.
The fact that Mr. Wolf is deceased does not have as
much weight in the diligence factor as Defendant would like the
Court to believe.

Based upon the facts in the record, it appears

that Defendant’s first attempt to contact Mr. Wolf took place on
January 24, 2013, which is over thirty days past the Deadline.
Def.’s Motion to Amend ¶ 3, Dec. of Keith Kato.

Plaintiff

correctly notes that the record is virtually silent regarding any
actions Defendant may have taken in an attempt to meet the
Deadline, regardless of whether Mr. Wolf was alive or deceased.
See generally, Def.’s Motion to Amend.
Additionally, the record as currently presented does
not establish that Mr. Wolf’s death prevented Defendant from
meeting the Deadline.

Defendant wants an extension to name an

expert witness in place of Mr. Wolf.

4/

Under the standard set in

Defendant also argues that Plaintiff asked for, and
Defendant granted, stipulations to extend the time for
disclosure. Plntf.’s Opp. at 5. The Court concludes that, even
if this argument supports an amendment of the Rule 16 scheduling
order, the district court should examine the diligence of
Defendant. Johnson, 975 F.2d at 609 (9th Cir. 1992) (“the focus
of the inquiry is upon the moving party’s reasons for seeking
modification . . . [i]f that party was not diligent, the inquiry
should end.”).
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Johnson, Defendant would need to demonstrate that it could not
reasonably have obtained an expert witness in place of Mr. Wolf
before the Deadline expired.

In this case, Mr. Wolf had passed

away on October 16, 2011, almost two months before Plaintiff
filed the Complaint in the instant action and over one year
before Defendant’s Deadline expired on December 21, 2012.

See

ECF No. 1 and ECF No. 18 ¶ 11.
As this Court noted above, the record does not reveal
any attempts by Defendant to obtain an expert witness before the
Deadline; and “the focus of the inquiry is upon the moving
party’s reasons for seeking modification . . . [i]f that party
was not diligent, the inquiry should end.”

Johnson v. Mammoth

Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992), In re
Western States Wholesale Natural Gas Antitrust Litigation, – F.3d
-, 2013 WL 1449919 (9th Cir. Apr. 10, 2013)(same).

Accordingly,

the Court will remand the issue to the magistrate judge for a
factual finding regarding Defendant’s diligence before the
Deadline expired.
Defendant argues in its opposition to the appeal that
Plaintiff had knowledge of Mr. Wolf’s role in the investigation
of Plaintiff’s insurance claim before the lawsuit was filed.
Def.’s Opp. at 13.

However, knowledge of the existence of a

potential expert witness does not comply with FRCP 26(a)(2)(B),
which lists the requirements for expert witness disclosure.

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See

Soriano v. Wal-Mart Stores, Inc., Civ. No. 10-00023 SOM-LEK, 2010
WL 5464873 (D. Haw. 2010) (rejecting party’s argument that
initial disclosures were sufficient to meet expert witness
disclosure deadline).
Defendant also argues that new counsel entered an
appearance in this case on January 10, 2013, less than a month
after the Deadline had passed.

Def.’s Opp. at 10.

The Court is

certainly sympathetic to Defendant’s counsel’s predicament of
stepping into the shoes of the previous counsel.

However, this

reason does not address the legal requirement that a party must
show that the Deadline could not have been reasonably met.

See

Alvarado Orthopedic Research, L.P. v. Linvatec Corp., Civ. No.
11cv0246 IEG (RBB) (S.D. Cal. 2012) (noting that the arrival of
new counsel does not merit an extension of case deadlines);
Yeager v. Yeager, Civ. No. 2:06-CV-001196 JAM-EFB (E.D. Cal.
2009)(same); Harshaw v. Bethany Christian Services, No 1:08-cv104 2010 WL 8032038 (W.D. Mich. 2010) (“The defendants may not
simply ignore the lack of diligence of their former counsel on
this score and shift the focus to the diligence of their new
counsel.”).
Defendant urges this Court to follow Himmelfarb v. JP
Morgan Chase Bank Nat. Ass’n, Civ. No. 10-00058 DAE-KSC, 2011 WL
4498975 (D. Haw. 2011).

In Himmelfarb, the district court

allowed new counsel to extend the deadline to file a

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counterclaim.

Id at *3.5/

However, the decision does not

address how the appearance of new counsel meets the Ninth
Circuit’s diligence standard that requires an examination of the
efforts counsel attempted before the deadline passed.

See

Johnson, 975 F.2d at 609; see also, In re Western States
Wholesale Natural Gas Antitrust Litigation, – F.3d -, 2013 WL
1449919 (9th Cir. Apr. 10, 2013) (citing Johnson, 975 F.2d at
609) (affirming Johnson’s holding that “Rule 16(b)’s ‘good cause’
standard primarily considers the diligence of the party seeking
the amendment”).
The Court observes, however, that Himmelfarb cites to
C.F. ex rel. Farnan v. Capistrano Unified School Dist., in which
the Ninth Circuit amended a Rule 16 scheduling order to allow a
defendant to amend his answer.

654 F.3d 975 (9th Cir. 2011).

The court in that case found that the issuance of a summary
judgment order changed the “tenor of the case” significantly,
justifying an amendment of the scheduling order.

Id at 984.

Defendant in this case argues that Plaintiff’s expert witness
report filed on November 20, 2012 noted three additional probable
sources of water that could have caused the damage to the
building; these three additional sources disclosed in Plaintiff’s

5/

For other cases that reach a similar result to
Himmelfarb, see Young v. Cate, No. CIV S-11-2491 KJM-JFM, 2012 WL
3205231 (E.D. Cal. 2012) and Millenkamp v. Davisco Foods Int’l,
No. CV 03-439-S-EJL, 2005 WL 1863183 (D. Idaho 2005).
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November 20, 2012 report were not previously disclosed to
Defendant or mentioned in Plaintiff’s earlier reports.

Def.’s

Opp. at 6, ECF No. 77.
On remand, the magistrate judge may consider whether,
according to C.F., good cause exists for extending the deadline
in light of the additional sources of water mentioned in
Plaintiff’s November 20, 2012 report.

Compare Large v. Regents

of the University of California, No. 2:08-cv-02835-MCE-DAD, 2012
WL 3647485 (E.D. Cal. 2012)(finding good cause to amend the
scheduling order based on new facts presented in the case) with
Cueto v. Overseas Shipholding Group, Inc., Civil No. 10cv1243
LAB(NLS), 2012 WL 28357 (S.D. Cal. 2012)(denying request for
amendment of scheduling order despite new facts submitted in
plaintiff’s expert witness reports because of defendant’s lack of
diligence).
As mentioned previously, the record is silent regarding
Defendant’s previous counsel’s efforts to disclose expert
witnesses before the deadline passed.

Accordingly, the Court

REMANDS this discovery dispute to the magistrate judge for an
evidentiary hearing regarding whether good cause exists under
Rule 16 according to the principles above.

Additionally, in the

event that good cause is not found, the magistrate judge should
determine whether alternative sanctions under Rule 16(f) would be
more appropriate than denying Defendant the opportunity to

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present an expert witness at trial.

See Wendt v. Host Int’l,

Inc., 125 F.3d 806, 814 (9th Cir. 1997).

The court has

discretion under the Federal Rules of Civil Procedure to issue
alternative penalties such as monetary sanctions and to provide
sufficient time to Plaintiff to prevent any resulting prejudice.
Id; see also AZ Holding, L.L.C. v. Frederick et al., No. CV-080276-PHX-LOA, 2009 WL 2432745 (D. Ariz. 2009).
CONCLUSION
For the foregoing reasons, the Court AFFIRMS the
magistrate judge’s Order Granting Defendant Fireman’s Fund
Insurance Company’s Motion to Amend Rule 16 Scheduling Order (ECF
Nos. 69 & 76) except for the portions referring to the expert
witness disclosure deadlines, which the Court REMANDS to the
magistrate judge to be addressed according to the principles set
forth in this order.
IT IS SO ORDERED.
DATED:

Honolulu, Hawai#i, May 16, 2013.

________________________________
Alan C. Kay
Sr. United States District Judge

Ass’n of Apartment Owners of Imperial Plaza v. Fireman’s Fund Ins. Co., Civ.
No. 11-00758 ACK-KSC: ORDER AFFIRMING IN PART AND REVERSING AND REMANDING IN
PART THE MAGISTRATE JUDGE’S ORDER AMENDING THE RULE 16 SCHEDULING ORDER.

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