Barn II, Inc. an Illinois Corporation, d/b/a Conklin Barn II Dinner Theatre v. West Bend Mutual Insurance Company

Filing 27

ORDER entered by Magistrate Judge Jonathan E. Hawley on 1/18/2018. For the foregoing reasons, the Plaintiff's Motion for Leave to File its Amended Complaint Reinstating Count I Instanter (Doc. 24 ) is GRANTED. The Clerk is directed to file the Plaintiff's proposed Amended Complaint (Doc. [24-1]) attached to the Motion. SEE FULL WRITTEN ORDER. (JS, ilcd)

E-FILED

Thursday, 18 January, 2018 10:53:45 AM
Clerk, U.S. District Court, ILCD

IN THE
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION
BARN II, INC., an Illinois
Corporation, d/b/a CONKLIN
BARN II DINNER TEHATRE,
Plaintiff,

Case No. 1:17-cv-01184-MMM-JEH

v.
WEST BEND MUTUAL
INSURANCE COMPANY,
Defendant.
Order
Now before the Court is the Plaintiff’s Motion for Leave to File its
Amended Complaint Reinstating Count I Instanter (Doc. 24), the Defendant’s
Response (Doc. 25) thereto, and the Plaintiff’s Reply (Doc. 26). For the reasons
set forth below, the Plaintiff’s Motion for Leave to File its Amended Complaint
Reinstating Count I Instanter is GRANTED.
I
On April 28, 2017, the Defendant, West Bend Mutual Insurance Company
(West Bend), removed this case from the Circuit Court of Woodford County,
Illinois to federal court on the basis of diversity jurisdiction. Before the case was
removed to federal court, the Plaintiff’s, Barn II, Inc.’s, original Complaint
included four counts against Defendant including:

1) a count for improper

claims practice under 215 ILCS 5/154.5, 215 ILCS 5/154.6, and 215 ILCS 5/155; 2)
a count for breach of contract; 3) a count pursuant to the Illinois Consumer Fraud
and Deceptive Business Practices Act; and 4) a count petitioning for declaratory
judgment pursuant to 735 ILCS 5/2-701.
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On May 5, 2017, the Plaintiff

voluntarily dismissed Count I of its original Complaint without prejudice and
dismissed Count III with prejudice.
Following removal of this case, the Court set a discovery schedule in place
on June 20, 2017 which included a deadline of August 15, 2017 for the
amendment of pleadings and for discovery to close on May 31, 2018.

On

December 20, 2017, the Plaintiff filed its Motion for Leave to File its Amended
Complaint in which Count I is entitled “Vexatious and Unreasonable Denial of
Claim Pursuant to 215 ILCS 5/155 of the Illinois Insurance Code” (Section 155
claim or Count I). The Plaintiff argues that since it voluntarily dismissed Count
I, the parties engaged in extensive discovery which has produced evidence that
supports the Plaintiff’s previously filed Count I. The Plaintiff also argues that it
had no idea of the evidence supporting its previously filed Count I that would be
discovered pursuant to discovery at the time it submitted the Discovery Plan. In
its Response, the Defendant argues the Plaintiff was fully aware of the grounds
for West Bend’s denial of its claim from the September 11, 2015 denial letter, the
engineer’s report referenced in that denial letter, and the second denial letter
dated October 18, 2016. The Defendant further contends the Plaintiff knew the
identity of the witnesses prior to filing suit that it asserts should have been
interviewed by West Bend as part of its coverage determination. In reply, the
Plaintiff argues the Defendant misses the point relative to the Plaintiff’s
understanding of its denial.

In its Reply, and at the Court’s direction, the

Plaintiff detailed the evidence produced during discovery which it stated
supports Count I’s reinstatement.
II
Though the Plaintiff sought leave to amend pursuant to FEDERAL RULE OF
CIVIL PROCEDURE 15(a), the question of whether to allow the Plaintiff to amend
its Complaint at this stage – after the deadline for amendment of pleadings has
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expired – must be evaluated under FEDERAL RULE OF CIVIL PROCEDURE 16(b). See
Trustmark Ins. Co. v. Gen. & Cologne Life Re of America, 424 F.3d 542, 553 (7th Cir.
2005) (“To amend a pleading after the expiration of the trial court's Scheduling
Order deadline to amend pleadings, the moving party must show ‘good cause’”);
FED. R. CIV. P. 16(b)(4) (“A schedule may be modified only for good cause and
with the judge’s consent”) (emphasis added); Mintel Int’l Grp., Ltd. v. Neergheen,
636 F. Supp. 2d 677, 689 (N.D. Ill. 2009) (applying the Rule 16(b) standard where
the parties’ deadline to amend the pleadings passed nearly two months before
the plaintiff filed a motion for leave to amend its complaint to add an additional
count). At this stage of the litigation, the Plaintiff must show “good cause.”
Trustmark Ins. Co., 424 F.3d at 553. Good cause requires a showing of diligence
by the party seeking the amendment. Id. The heightened good-cause standard
of Rule 16(b)(4) is applied before considering whether the requirements of Rule
15(a)(2) are satisfied. Alioto v. Town of Lisbon, 651 F.3d 715, 719-20 (7th Cir. 2011).
The evidence which the Plaintiff argues supports the reinstatement of
Count I was produced during discovery on August 28, 2017, August 29, 2017,
October 3, 2017, and December 1, 2017 in the form of deposition testimony by
witnesses who were there at the barn at the time of the relevant storm, who were
on their way to the barn on the evening of the storm, who were
construction/maintenance people at the barn the morning after the storm, and
who were “weather people.” The first handful of depositions did not occur until
after the amendment of pleadings deadline already passed and the last few
depositions thus far occurred less than three weeks before the Plaintiff sought to
amend the Complaint. While the Plaintiff may have known the identity of the
witnesses who it asserts should have been interviewed by West Bend, there is no
indication that the Plaintiff knew exactly what their testimony would be; thus,
there is no indication the Plaintiff knew their testimony would support
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reinstatement of Count I. Given that the Plaintiff sought to reinstate Count I just
weeks after the last of those depositions Plaintiff says support that count and
given that discovery does not close in this case until May 31, 2018, the Court
finds the Plaintiff was diligent in seeking to amend its Complaint to reinstate its
Count I.
Because the Plaintiff argues the amendment be allowed pursuant to Rule
15’s provision that a court should freely give leave to a party to amend its
pleading “when justice so requires,” and the Defendant appears to argue futility
precludes the amendment, the Court will briefly conduct an inquiry under Rule
15. See Bausch v. Stryker Corp., 630 F.3d 546, 562 (7th Cir. 2010) (explaining that
under Rule 15(a)(2), leave to amend may be denied where there is undue delay,
bad faith on the movant’s part, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the opposing party if the
amendment is allowed, or futility).
The Defendant argues that the facts do not support a Section 155 claim in
this case, and the rule that a bona fide dispute as to coverage defeats a Section 155
claim would apply in this case. Indeed, damages may not be awarded under
Section 155 if, among other things, there is a bona fide dispute concerning the
scope and application of insurance coverage. Wheeler v. Assurant Specialty Prop.,
125 F. Supp. 3d 834, 840 (N.D. Ill. 2015). Here, however, the Plaintiff alleges in its
proposed amended complaint that West Bend failed and breached its duty to
deal fairly with its insured because, among other things, it failed to objectively
investigate its claim prior to denying it, failed to interview and/or consider input
from various witnesses, failed to consider its own inspection report conducted on
May 27, 2015, vexatiously and unreasonably concluded that the damage to the
barn on the night of the storm was caused by “long term deterioration,”
vexatiously and unreasonably denied the Plaintiff’s claim thereby forcing it to
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permanently close, and vexatiously and unreasonably failed to re-evaluate the
denial of Plaintiff’s claim after significant discovery had been completed. Given
such allegations at this stage of the case, the Court cannot say a bona fide dispute
as to coverage so obviously applies here as to defeat as futile the Plaintiff’s
amendment. Compare Spearman Indus., Inc. v. St. Paul Fire and Marine Ins. Co., 138
F. Supp. 2d 1088, 1102 (N.D. Ill. 2001) (granting partial summary judgment on
bad faith count pursuant to Section 155 where there was no evidence of bad faith,
vexatious behavior, or unreasonableness on the part of the defendant concerning
its investigation, litigation, and denial of the claim). This is particularly so where
the question of whether conduct is vexatious or unreasonable is a factual one
determined by looking at the totality of the circumstances. See Wheeler, 125 F.
Supp. 3d at 841, citing Med. Protective Co. v. Kim, 507 F.3d 1076, 1086 (7th Cir.
2007). Any further analysis of the Plaintiff’s allegations at this time would be
beyond that necessary to determine whether Plaintiff should be allowed to
reinstate Count I. Finally, the Court does not find that the Plaintiff unduly
delayed in seeking to amend, acted in bad faith, or repeatedly failed to cure
deficiencies or that allowing the amendment would be unduly prejudicial to the
Defendant. The amendment is allowed.
III
For the foregoing reasons, the Plaintiff’s Motion for Leave to File its
Amended Complaint Reinstating Count I Instanter (Doc. 24) is GRANTED. The
Clerk is directed to file the Plaintiff’s proposed Amended Complaint (Doc. 24-1)
attached to the Motion.
It is so ordered.
Entered on January 18, 2018.
s/Jonathan E. Hawley
U.S. MAGISTRATE JUDGE
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