Travelers Property Casualty Company of America v. Dish Network, LLC
Filing
74
OPINION (See Written Order). Entered by Judge Sue E. Myerscough on 3/24/2016. (VM, ilcd)
E-FILED
Thursday, 24 March, 2016 08:55:33 AM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA, f/k/a THE
TRAVELERS INDEMNITY COMPANY
OF ILLINOIS,
Plaintiff,
v.
DISH NETWORK, L.L.C.,
Defendants.
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No. 3:12-cv-3098
OPINION
SUE E. MYERSCOUGH, U.S. District Judge:
Defendant Dish Network, LLC has filed (d/e 49) a Motion for
Leave to File an Amended Counterclaim and Third-Party Claim.
Dish seeks: (1) to amend Dish’s counterclaim against Plaintiff
Travelers Property Casualty Company of America; and (2) to add
third-party claims against Dish’s other primary liability insurer,
ACE American Insurance Company. ACE has intervened for the
limited purpose of opposing Dish’s motion (see December 11, 2015
Page 1 of 27
text order). Initially, Dish also sought to add a third-party claim
against its excess liability insurer, National Union Fire Company of
Pittsburgh, PA, but Dish has since withdrawn that request (d/e 69).
Travelers has responded not by opposing Dish’s motion but by
filing (d/e 61) a somewhat similar Motion for Leave to Amend Its
Complaint. Travelers seeks: (1) to add a claim for recoupment of
defense costs against Dish to the extent that Travelers is ultimately
determined never to have owed defense costs to Dish; and (2) to
assert a claim against ACE seeking contribution for defense costs to
the extent that Travelers and ACE are both ultimately determined to
owe defense costs to Dish. ACE has intervened for the limited
purpose of opposing Travelers’ motion (see February 11, 2016 text
order).
Essentially, Dish seeks to amend its counterclaim against
Travelers and to add third-party claims against ACE, and Travelers
seeks to add a claim against Dish and to add a claim against ACE.
Dish and Travelers do not oppose each other’s motions, but ACE
has intervened to oppose being added to this case. For the reasons
below, the motions (d/e 49, 61) are GRANTED IN PART and
DENIED IN PART.
Page 2 of 27
I.
Background
Travelers issued primary liability insurance policies to Dish.
Dish later sought coverage under those policies after being sued by
the federal government and several state governments in a federal
lawsuit captioned United States of America and the States of
California, Illinois, North Carolina, and Ohio v. DISH Network
L.L.C., No. 3:09-cv-3073 (C.D. Ill. filed Mar. 25, 2009). In that case,
the government plaintiffs allege that Dish violated the federal
Telephone Communications Privacy Act and other statutes by
placing unsolicited advertising phone calls to consumers.
In 2012, Travelers filed this lawsuit seeking a declaration that
it has no duty to defend Dish in the underlying lawsuit. On August
8, 2012, the Court entered a scheduling order (d/e 18) setting a
September 10, 2012 deadline for amending pleadings or adding
parties. On March 24, 2014, the Court entered a summary
judgment order (d/e 38) finding that Travelers had a duty to defend
Dish in the underlying lawsuit. Travelers filed a motion to
reconsider, which the Court denied (see February 26, 2015 text
order).
Page 3 of 27
A similar coverage action between Dish and its other primary
insurer, ACE, is pending in federal court in Colorado. See ACE Am.
Ins. Co. v. DISH Network, LLC, No. 1:13-cv-560 (D. Colo. filed Mar.
4, 2013). The ACE case involves similar issues relating to the same
underlying lawsuit. Dish filed a motion to stay or to transfer the
ACE case to this Court—and Travelers filed a motion to intervene
for the purpose of joining the motion—but the ACE court denied
Dish’s motion on February 19, 2016. Id. (Doc. 169).
Another similar coverage action, between Dish and its excess
insurer, National Union, is also pending in federal court in
Colorado. See National Union Fire Insurance Company of
Pittsburgh, PA v. DISH Network, LLC, No. 1:15-cv-1053 (D. Colo.
filed May 19, 2015). On February 4, 2016, the National Union
court stayed proceedings until final judgment is entered in the
underlying lawsuit. Id. (Doc. 25). In light of that stay, Dish has
withdrawn its request to add claims against National Union in the
case before this Court (d/e 69 at 5 of 23).
Page 4 of 27
II.
The motions as they relate to the claims and
counterclaims between Dish and Travelers
Travelers seeks to amend its complaint against Dish. Dish
seeks to amend its counterclaim against Travelers. Dish does not
oppose Travelers’ motion, and Travelers has not filed any opposition
to Dish’s motion.
The Court “should freely give leave” to amend a pleading
“when justice so requires.” Fed. R. Civ. P. 15(a)(2). And although
the deadline for amending pleadings in this case passed in 2012,
the Court may modify a case’s existing schedule for “good cause.”
Fed. R. Civ. P. 16(b)(4). Indeed, district courts are vested with
broad discretion over case scheduling. Jones v. Coleman Co., 39
F.3d 749, 753 (7th Cir. 1994) (no error where court allowed
summary judgment motion to be filed after deadline had passed) (“A
district court has discretion in managing its caseload.”); Brewer v.
Wal-Mart Stores, Inc., No. 01-50357, 2003 U.S. Dist. LEXIS 10427,
*6 (N.D. Ill. June 19, 2003) (“it is within the judge’s discretion to
modify the schedule where there is a showing of good cause, or
where [the judge] sees that modification is appropriate”); see also
Jackson v. Rockford Hous. Auth., 213 F.3d 389, 393 (7th Cir. 2000)
Page 5 of 27
(“The general rule that amendment is allowed absent undue
surprise or prejudice … is widely adhered to …”).
Here, Dish argues, good cause exists to grant Dish leave to
amend because it would have been premature for Dish to bring a
counterclaim for indemnity against Travelers while Dish’s summary
judgment motion in the underlying lawsuit remained pending. See
Travelers Ins. Cos. v. Penda Corp., 974 F.2d 823, 833 (7th Cir.
1992) (“Illinois law is clear that a determination of whether [insurer]
has a duty to indemnify is not ripe until the underlying litigation is
terminated.”) (vacating summary judgment on duty to indemnify
and directing district court to dismiss duty-to-indemnify portion of
insurer’s complaint without prejudice). Dish says that only now—
with the Court having denied Dish’s motion for summary judgment
in the underlying lawsuit, and with settlement negotiations in the
underlying lawsuit having failed—is Dish’s claim for indemnity
against Travelers necessary and appropriate.
Dish adds that it has been diligent in pursuing its
counterclaims, having filed its motion for leave within several
months of the Court’s denial of Dish’s motion for summary
judgment in the underlying lawsuit and less than two weeks after
Page 6 of 27
efforts to settle the underlying lawsuit failed (d/e 50 at 12 of 20,
d/e 69 at 17-18 of 23). See Alioto v. Town of Lisbon, 651 F.3d 715,
720 (7th Cir. 2011) (“In making a Rule 16(b) good-cause
determination, the primary consideration for district courts is the
diligence of the party seeking amendment.”) (finding lack of
diligence where plaintiff “offer[ed] an insufficiently robust
explanation of why he was diligent”).
Likewise, Travelers argues that it has pursued its claims
diligently in this litigation. When the deadline for adding parties
passed in 2012, the Court had not yet determined that Travelers
had a duty to defend Dish. After the Court ruled that Travelers had
a duty to defend Dish and denied Travelers’ motion to reconsider
that ruling, Travelers pursued a resolution with Dish that would
have allowed an appeal of the Court’s ruling. When those efforts
failed—and within months of Dish’s filing a motion for leave to
amend its counterclaims—Travelers filed its own motion for leave to
amend its complaint.
Both Dish and Travelers also argue that granting the motions
will aid judicial efficiency and economy by creating a comprehensive
coverage action between Travelers and Dish. If the Court denies the
Page 7 of 27
motion, the parties say, they will be forced to maintain two separate
actions: (1) this case involving Travelers’ duty to defend Dish; and
(2) a separate case involving Travelers’ duty to indemnify Dish. It
would be more efficient, the parties say, for Travelers and Dish to
consolidate their coverage disputes in this existing case.
The Court finds good cause to amend the existing schedule to
allow Travelers and Dish to amend their claims and counterclaims
against one another as requested. Neither party objects to the
other’s request, and allowing the amendments will relieve the
parties from the burden of maintaining two separate lawsuits: one
lawsuit concerning Travelers’ duty to defend Dish, and one lawsuit
concerning Travelers’ duty to indemnify Dish. The motions (d/e 49,
61) are granted in part to allow Dish to amend its counterclaims
against Travelers and to allow Travelers to add claims for defensecost recoupment against Dish.
III.
The motions as they relate to ACE
Dish also seeks to add third-party claims for defense and
indemnification against ACE. Travelers seeks to add claims against
ACE for defense-cost contribution in the event that ACE and
Travelers are both found to have a duty to defend Dish. Dish and
Page 8 of 27
Travelers do not oppose each other’s motions, but ACE has
intervened to oppose being added to this case.
Essentially, Dish and Travelers seek to streamline the
resolution of Dish’s coverage issues by adjudicating all of the issues
between Dish and its primary insurers—Travelers and ACE—in a
single court. Dish and Travelers both argue that a single,
comprehensive coverage action is the best vehicle for efficiently and
effectively adjudicating the disputes between Dish and its insurers.
ACE, meanwhile, opposes being brought into this litigation and
prefers to continue litigating its coverage dispute with Dish in the
ongoing ACE case in Colorado.
For the reasons below, the motions (d/e 49, 61) are denied
with respect to the parties’ requests to amend their pleadings to
bring third-party claims against ACE.
A.
Good cause
Both Dish and Travelers acknowledge that the deadline for
adding parties has passed. But Dish argues that good cause exists
to allow it to add third-party claims against ACE. Fed. R. Civ. P.
16(b)(4) (court may modify existing schedule for “good cause”).
Good cause exists here, Dish says, because its claim for
Page 9 of 27
indemnification against ACE was not previously ripe: when the
deadline to add parties in this case passed, the ACE case had not
yet been filed, and the Court had not decided any liability issues in
the underlying lawsuit.
Likewise, Travelers argues that it has acted in a timely manner
and that adding claims against ACE is appropriate only now
because when the deadline for adding parties in this case passed
the Court had not yet ruled that Travelers had a duty to defend
Dish in the underlying lawsuit.
ACE disagrees. According to ACE, Dish and Travelers’ attempt
to join ACE in this action is “blatant forum-shopping” (d/e 56 at 2,
d/e 70 at 2). ACE says that Dish has not justified its “inexcusable”
delay in seeking to join ACE in this case (d/e 56 at 7). Dish, ACE
says, has known that Dish’s policies with Travelers and ACE were
potentially implicated by the underlying lawsuit since the
underlying lawsuit was filed in 2009, as evidenced by Dish’s having
sought coverage from Travelers and ACE soon after the underlying
lawsuit was filed. ACE says that Dish could have asserted its
claims against ACE in this case over 3 years ago—when Dish filed
its answer and counterclaim in 2012—instead of allowing this case
Page 10 of 27
and the ACE case in Colorado to continue simultaneously until
Dish received a favorable ruling from this Court on Travelers’ duty
to defend Dish. ACE suspects that this Court’s ruling that
Travelers has a duty to defend Dish is the real impetus for Dish’s
request to bring ACE into this case—not, as Dish claims, the
summary judgment ruling and failed settlement negotiations in the
underlying litigation. ACE says that this constitutes inappropriate
forum-shopping and that Dish has failed to justify its delay.
As for Travelers, ACE says that Travelers, like Dish, had ample
opportunity to add claims against ACE in this case over 3 years ago,
before the deadline for joining parties passed in September 2012.
But Travelers chose not to amend its complaint to join ACE when it
had the chance, ACE says, and Travelers has not justified its
belated effort to do so now. ACE argues that it has justifiably relied
on the ACE court’s decision: (1) that Travelers was not a necessary
party to the ACE case; and (2) that the ACE case could proceed
independently of Travelers. See Recommendation of United States
Magistrate Judge, ACE v. Dish, 1:13-cv-560, D. Colo. Aug. 13, 2013
(Doc. 34 at 22-23) (adopted by District Judge March 3, 2014 (Doc.
44)). ACE says that the delay “severely prejudices” ACE’s rights
Page 11 of 27
because, if the Court grants the motion, ACE will be required to “restart” the litigation that has been ongoing for over 3 years in the
ACE case—resulting in an unnecessarily delayed determination of
ACE’s rights and obligations under its policies with Dish (d/e 70 at
2). ACE says that it has incurred substantial legal costs litigating
the ACE case over the past 3 years and preparing the summary
judgment motions that remain pending before the ACE court. To
force ACE to re-start its litigation with Dish in this case, ACE says,
would delay a final adjudication of the dispute between ACE and
Dish and would force ACE to incur unnecessary and duplicative
costs, without benefit.
ACE characterizes Travelers’ motion as being motivated by
Travelers’ fear of being “left alone” to satisfy Dish’s defense costs, as
Travelers did not seek to entangle ACE in this case until after
Travelers received an unfavorable ruling from this Court (d/e 70 at
10). The time to attempt to consolidate these coverage actions, ACE
says, has passed, and Travelers has waived its right to join ACE at
this late juncture. The Court, ACE says, should not tolerate
Travelers’ unjustified delay and should not prejudice ACE by
granting Travelers’ motion.
Page 12 of 27
Dish replies that, while ACE focuses on Dish’s supposed lack
of diligence and alleged forum-shopping, Dish in fact has been
diligent and is not forum-shopping. In Dish’s view, there has been
no undue delay here. Until shortly before Dish filed this motion,
Dish says, the “need to consolidate” was “more abstract” (d/e 69 at
18 of 23). In particular, the potential existed that the underlying
lawsuit would resolve or that the need for coverage actions would be
minimal. But now, Dish says, the day when ACE and Travelers
must resolve their obligations to Dish looms on the horizon.
Dish characterizes ACE as having taken the “unsupportable”
position that, because Dish has known that coverage under its
policies with ACE and National Union were “potentially implicated”
for several years, Dish had the duty to immediately sue all three
insurers, consolidate all the cases, and “somehow orchestrate” the
entire litigation from the beginning (d/e 69 at 19-20 of 23). No legal
authority supports this argument, Dish says, and it was ACE itself
that sued Dish in Colorado while knowing that Travelers’ lawsuit
against Dish was pending before this Court. Dish emphasizes that
it is the party that has been sued by different insurers in different
forums. Far from having “chosen” the current piecemeal litigation,
Page 13 of 27
Dish “sought to avoid unnecessary litigation” by “choosing not to
sue Travelers or ACE because they both had initially agreed to
defend” (d/e 69 at 17 of 23) (emphasis added). ACE, Dish says,
cannot complain that Dish failed to streamline the litigation when
ACE contributed to the litigation’s current piecemeal nature.
Travelers similarly replies that it did not “wait[]” until this
Court had entered an unfavorable ruling against Travelers before
seeking to join ACE (d/e 72 at 2). Rather, Travelers says, its motion
to amend is merely a response to Dish’s motion to amend. If Dish
is allowed to add a claim for defense and indemnification against
ACE, Travelers says, then Travelers should be permitted to assert
its claim for defense-cost contribution from ACE.
Travelers also echoes Dish’s argument that ACE filed its
lawsuit in the ACE case in Colorado knowing full well that the
Travelers action was pending before this Court. At a minimum,
Travelers says, ACE “contributed to the current situation of parallel
insurance coverage proceedings in two different jurisdictions” (d/e
72 at 5).
The Court does not agree that Dish and Travelers have
engaged in inappropriate forum-shopping. Dish and Travelers
Page 14 of 27
plainly would prefer to litigate in one forum all of the various
coverage disputes relating to the underlying litigation, and that
preference is understandable and reasonable. Nonetheless, the
Court does not find good cause to modify the existing schedule to
allow Dish and Travelers to assert third-party claims against ACE.
The deadline to add parties in this case passed three and a half
years ago, and ACE and Dish have already been litigating the ACE
case in the District of Colorado for more than three years. Fully
briefed summary judgment motions in the ACE case are currently
pending, and the ACE court recently denied Dish’s motion to
transfer the case to this Court. The ACE court plainly intends to
resolve the coverage dispute between ACE and Dish, and this Court
finds no good cause at this late date to allow those issues to be
brought into this litigation. See Highlands Ins. Co. v. Lewis Rail
Serv. Co., 10 F.3d 1247, 1251 (7th Cir. 1993) (affirming denial of
insured’s motion for leave to file third-party complaint) (“Adding
parties at such a late date would have substantially delayed the
proceedings and unnecessarily complicated them,” and insured
“retain[ed] … the option of suing those parties in federal and/or
state court.”).
Page 15 of 27
B.
Interests of justice
Dish and Travelers argue that the interests of justice favor
allowing them to add claims against ACE. See Fed. R. Civ. P.
15(a)(2) (“The court should freely give leave [to amend] when justice
so requires.”). The Court considers whether the movant has
satisfied Rule 16(b)(4)’s “good cause” standard before considering
whether Rule 15(a)(2)’s requirements have been satisfied. Alioto v.
Town of Lisbon, 651 F.3d 715, 719 (7th Cir. 2011) (noting that
“[t]he two-step process is consistent with nearly every one of our
sister circuits”). Here, the Court has already determined that Dish
and Travelers have not satisfied Rule 16(b)(4)’s “good cause”
requirement with respect to their request to add third-party claims
against ACE. Therefore, the Court need not consider whether
under Rule 15(a)(2) justice requires allowing the parties to amend
their pleadings. Nevertheless, for the sake of completeness, the
Court conducts that inquiry now.
Dish argues that having two separate courts adjudicate ACE’s
and Travelers’ respective duties to Dish would be a “senseless
waste” of judicial resources (d/e 50 at 16 of 20). The ACE and
Travelers policies are “substantially identical,” Dish says, and ACE
Page 16 of 27
and Travelers have offered “the same essential defenses to their
respective duties to defend under nearly identical policy language”
(d/e 69 at 13 of 23). Thus, Dish says, there is “no compelling
reason” to adjudicate the two coverage disputes in separate forums.
(Id.) Dish further argues that ACE cannot claim prejudice because
ACE had notice of the facts alleged in Dish’s proposed third-party
claim against ACE, and very little discovery has occurred.
Travelers agrees with Dish. In Travelers’ Motion to Intervene
in the ACE case, Travelers argues that Dish’s arguments in support
of Dish’s claims for coverage under the Travelers policy and under
the ACE policy are “substantially similar” (Motion to Intervene, ACE
v. Dish, 1:13-cv-560, D. Colo. Dec. 7, 2015 (Doc. 155 at ¶ 8)); that
Travelers’ and ACE’s legal arguments are “substantially similar
and[] in many cases identical” (id. at ¶ 18); and that letting the ACE
case and this case remain separate will “manifestly result in a great
duplication, and thus waste, of judicial and litigant resources” (id.
at ¶ 19). Further, Travelers argues that inconsistent rulings “would
wreak havoc” on Travelers and ACE’s ability to “ultimately
determine and apportion their obligations to DISH, if any.” Reply in
Supp. of Motion to Intervene, ACE v. Dish, 1:13-cv-560, D. Colo.
Page 17 of 27
Jan. 11, 2016 (Doc. 163 at 5). Indeed, Travelers says, if ACE and
Travelers remain in separate coverage actions, consolidation will
“eventual[ly]” be necessary, and perhaps even “yet another new
lawsuit” will be needed to resolve the issues between Travelers and
ACE. Id. Travelers says that Dish, ACE, and Travelers will all
benefit by having “all issues in relation to defense and indemnity of
Dish in the underlying litigation decided in the same place and, if
possible, at the same time.” Motion to Intervene, ACE v. Dish, 1:13cv-560, D. Colo. Dec. 7, 2015 (Doc. 155 at ¶ 19).
ACE disagrees. ACE says that joining ACE to this case would
neither streamline the resolution of Dish’s coverage issues nor
result in a comprehensive coverage action. In fact, ACE says,
adding ACE to this case would impede judicial efficiency, because
joining ACE would require litigating ACE’s duty to defend Dish.
ACE and Dish already filed, in June 2015 in the ACE case, motions
for summary judgment on ACE’s duty to defend Dish, and the
motions remain pending. Allowing Dish to add claims against ACE
in this case, ACE says, would unnecessarily delay resolution of
those summary judgment motions. Further, ACE says, Colorado
law applies in the ACE case. Although Dish says that this Court
Page 18 of 27
has gained expertise in the complex issues in the underlying
litigation, ACE argues that the issues relating to the coverage
questions are “routine rather than unusual,” and that the ACE
court is more familiar with Colorado law (d/e 56 at 9 (quoting Order
Denying Dish’s Motion to Certify, ACE v. Dish, 1:13-cv-560, D.
Colo. Mar. 3, 2014 (Doc. 44 at 5))).
Travelers replies that any prejudice from any delay is trumped
by the benefit of avoiding inconsistent coverage rulings relating to
Dish’s policies. If ACE is not joined to this case, Travelers says,
there exists a significant risk of inconsistent rulings regarding
Travelers’ and ACE’s duties under the substantially similar policies
they have with Dish. According to Travelers, the only relevant
substantive difference between the Travelers policy and the ACE
policy is that they were issued for different policy periods during the
time period during which Dish allegedly violated federal law.
Travelers notes that a different federal court has already ruled that
a different insurer, Arch Specialty, had no duty to defend Dish
under policy language similar to the policy language at issue here.
See Order and Opinion, Dish Network Corp., et al v. Arch Specialty
Ins. Co., et al, No 09-cv-447, D. Colo. Oct. 22, 2013 (Doc. 190).
Page 19 of 27
That decision, Travelers says, is at odds with this Court’s ruling in
this case that Travelers does have a duty to defend Dish. Thus,
Travelers says, if Dish’s claims against Travelers and ACE are not
adjudicated in the same forum, the risk is high that the courts will,
based on identical or nearly identical facts, render inconsistent
decisions as to Travelers’ and ACE’s duties to defend.
Dish agrees with Travelers that piecemeal litigation of its
coverage issues “gives rise to the specter of inconsistent outcomes
and prejudicial results” (d/e 69 at 13 of 23). For example, if this
Court were to hold that Travelers has a duty to indemnify Dish, and
if the ACE court were to hold that ACE has no such duty, then Dish
would be left with “an unwarranted gap in coverage.” (Id.)
ACE disagrees about how similar the ACE case is to this case.
ACE notes that Dish tried to dismiss the ACE case on the ground
that ACE had not joined Dish’s other insurers, including Travelers.
Dish argued that without joinder the controversy “c[ould] not be
completely resolved or settled.” Motion to Dismiss, ACE v. Dish,
1:13-cv-560, D. Colo. June 21, 2013 (Doc 22 at 13). But the ACE
court disagreed:
Page 20 of 27
[W]hile it is true that [the Travelers case and the ACE
case] have some common questions of law … and fact …
ACE also notes that the cases have some questions that
are unique to each case, as the two cases involve one
different underlying claim, different insurance
companies, different insurance policies with different
policy language, and different policy periods.
Recommendation of United States Magistrate Judge, ACE v. Dish,
1:13-cv-560, D. Colo. Aug. 13, 2013 (Doc. 34 at 22) (quotation
omitted) (adopted by District Judge on March 3, 2014 (Doc. 44)).
The ACE court was “not persuaded” that Travelers needed to be
joined to settle the coverage dispute between Dish and ACE. Id. at
22-23.
ACE argues that there is no risk of inconsistent judgments
and no risk of any party incurring inconsistent obligations if the
ACE case and this case remain separate. This case and the ACE
case “concern obligations of distinct insurers under distinct
insurance policies with distinct coverage terms” (d/e 70 at 7).
Although Travelers says the only difference between the policies is
that they were issued for different periods of time, ACE says that in
fact there are “substantial and important differences” between the
two policies—differences the ACE court recognized (id. at 8). See
Recommendation of United States Magistrate Judge, ACE v. Dish,
Page 21 of 27
1:13-cv-560, D. Colo. Aug. 13, 2013 (Doc. 34 at 21-22) (adopted by
District Judge on March 3, 2014 (Doc. 44)). Thus, ACE says, the
two cases are not “identical” coverage cases, as there are
“numerous distinctions” between the two policies’ language, the
reservations of rights the two insurers issued to Dish, the different
grounds upon which each insurer disputes coverage, and the
nature of Dish’s counterclaims (d/e 70 at 8).
In fact, ACE says, it is ACE, not Travelers, that faces a risk of
inconsistent rulings if the Court allows ACE to be brought into this
case. The ACE court has already rejected the argument that there
are identical facts at issue in the ACE case and this case.
Recommendation of United States Magistrate Judge, ACE v. Dish,
1:13-cv-560, D. Colo. Aug. 13, 2013 (Doc. 34 at 22) (adopted by
District Judge on March 3, 2014 (Doc. 44)). And the ACE court has
already ruled that Travelers is not a necessary party to the ACE
case. Id. If this Court rules otherwise and allows ACE to be
brought into this case, ACE will have been subjected to inconsistent
rulings by this Court and by the ACE court.
Further, ACE argues, the threat of inconsistent outcomes for
Dish does not justify bringing ACE into this case. The possibility
Page 22 of 27
that this Court and the ACE court “might reach different
conclusions regarding similar issues as to different policies,” ACE
says, “does not make ACE a necessary party” to the case before this
Court (d/e 70 at 7) (emphasis removed). See Fed. Ins. Co. v.
SafeNet, Inc., 758 F.Supp.2d 251, 260 (S.D.N.Y. 2010) (“Even if …
this Court concluded that [one insurer’s policies] were void and
another court held that the [other insurer’s] policies were not voided
by the very same conduct, such a result would not require any
party to breach either court order and thus does not yield
inconsistent obligations”); Delgado v. Plaza Las Americas, Inc., 139
F.3d 1, 3 (1st Cir. 1998) (“‘Inconsistent obligations’ are not … the
same as inconsistent adjudications or results. … Inconsistent
obligations occur when a party is unable to comply with one court’s
order without breaching another court’s order concerning the same
incident. … Inconsistent adjudications or results, by contrast,
occur when a defendant successfully defends a claim in one forum,
yet loses on another claim arising from the same incident in
another forum. … Unlike a risk of inconsistent obligations … a
risk of inconsistent adjudications … does not necessitate joinder of
all parties into one action ….”).
Page 23 of 27
The Court finds that the interests of justice do not support
bringing ACE into this case. Joining ACE to this case will not serve
judicial economy. As explained above, ACE and Dish are already
litigating their coverage dispute in the ACE case in Colorado and
have been doing so for more than 3 years. Allowing Dish and
Travelers to bring issues relating to the ACE policy into this case
will only impede the ACE court’s resolution of those issues—a
resolution the ACE court signaled its intent to effectuate just last
month when it denied Dish’s motion to transfer the ACE case to
this Court. Order, ACE v. Dish, 1:13-cv-560, D. Colo. Feb. 19,
2016 (Doc. 169). Dish says that the dispositive motions pending in
the ACE case do not counsel denying Dish’s motion, as the motions
will simply either be decided in Colorado or in this Court “upon
transfer” (d/e 69 at 17 of 23). But now that the ACE court has
denied Dish’s motion to transfer the ACE case to this Court, clearly
there will not be any transfer. As such, the motions are best left for
ruling where they were filed.
As for the risk of inconsistent outcomes, the Court sees no
reason to disturb the ACE court’s previous ruling that Travelers was
not a necessary party in the ACE case. See Recommendation of
Page 24 of 27
United States Magistrate Judge, ACE v. Dish, 1:13-cv-560, D. Colo.
Aug. 13, 2013 (Doc. 34 at 22) (noting that the two cases “have some
questions that are unique to each case … involve one different
underlying claim, different insurance companies, different
insurance policies with different policy language, and different
policy periods”) (quotation omitted) (adopted by District Judge on
March 3, 2014 (Doc. 44)); see also West Gulf Maritime Ass’n v. ILA
Deep Sea Local 24, etc., 751 F.2d 721, 728 (5th Cir. 1985) (“The
federal courts have long recognized that the principle of comity
requires federal district courts – courts of coordinate jurisdiction
and equal rank – to exercise care to avoid interference with each
other’s affairs.”).
And even if the ACE and Travelers policies were so similar that
contrary rulings from the ACE court and this court would
constitute “inconsistent” outcomes for Dish, such an “inconsistent”
adjudication would not be enough to justify joining ACE under
these circumstances. See Fed. Ins. Co., 758 F.Supp.2d at 260
(inconsistent rulings on two insurers’ policies does not require
either insurer to breach a court order “and thus does not yield
inconsistent obligations”); Delgado, 139 F.3d at 3 (“a risk of
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inconsistent adjudications … does not necessitate joinder of all
parties into one action”).
C.
Section 1404 and prematurity
ACE also argues that, if the Court allows Dish and Travelers to
add third-party claims against ACE, the Court will be required to
transfer the claims to the existing ACE case in Colorado under 28
U.S.C. § 1404(a) and the “first-to-file” rule. ACE also argues that
resolving ACE’s duty to indemnify Dish is premature, as it cannot
be determined until the underlying litigation concludes.
Having already denied Dish’s and Travelers’ requests to add
claims against ACE, the Court does not address ACE’s additional
arguments in opposition to being brought into this case.
IV.
Conclusion
For the reasons above, Dish’s Motion for Leave to File an
Amended Counterclaim and Third-Party Claim (d/e 49) and
Travelers’ Motion for Leave to Amend Its Complaint (d/e 61) are
GRANTED IN PART and DENIED IN PART. Travelers is granted
leave to file an amended complaint on or before April 22, 2016.
Dish is granted leave to file an amended answer and counterclaim
on or before May 20, 2016. In their amended pleadings, Travelers
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and Dish may not add claims or counterclaims against ACE or any
other third party.
ENTERED: March 24, 2016
FOR THE COURT:
s/ Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE
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