Centurion Industries Inc v. Harrington Benefit Services Inc
Filing
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OPINION AND ORDER GRANTING 39 MOTION to Amend/Correct 1 Complaint by Plaintiff Centurion Industries Inc. Clerk DIRECTED to show the Amended Complaint filed. Defendant to file an Answer to the Amended Complaint within fourteen (14) days. Signed by Magistrate Judge Roger B Cosbey on 8/17/11. (cer)
UNITED STATES DISTRICT COURT
NORTHER DISTRICT OF INDIANA
FORT WAYNE DIVISION
CENTURION INDUSTRIES, INC.,
Plaintiff,
v.
HARRINGTON BENEFIT SERVICES,
INC., d/b/a HARRINGTON HEALTH
d/b/a FISERV HEALTH-KANSAS,
Defendant.
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CAUSE NO. 1:10-CV-339
OPINION AND ORDER
Before the Court is Plaintiff Centurion Industries, Inc.’s (“Centurion”) Motion for Leave
to File Amended Complaint (Docket # 39), seeking leave to amend its complaint primarily to
allege additional claims against Defendant Harrington Benefit Services, Inc. (“Harrington”). In
particular, Centurion seeks to assert that Harrington breached a fiduciary duty it owed to
Centurion under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et.
seq., and committed the tort of conversion under Indiana state law. Harrington opposes
Centurion’s motion, arguing a failure to establish good cause for the untimely amendments and
that Harrington will be prejudiced if Centurion is given leave to amend. (Docket # 42.)
For the following reasons, Centurion’s motion will be GRANTED.
I. FACTUAL AND PROCEDURAL HISTORY
This case began with Centurion filing a complaint against Harrington on September 30,
2010, alleging breach of contract, negligence, and bad faith, arising out of Harrington’s actions
as the third-party administrator for Centurion’s self-funded employee health benefit plan.
(Docket # 1.) Harrington filed its answer in general denial and affirmative defenses on
November 24, 2010. (Docket # 13.)
On November 30, 2010, the parties submitted their report of their conference under
Federal Rule of Civil Procedure 26(f) (Docket # 14), and at the initial scheduling conference on
December 7, 2010, the Court adopted the report as its scheduling order, thus making February
15, 2011, the last date for Centurion to seek leave of Court to amend its pleadings. (Docket #
20.) At the same time, the Court set September 30, 2011, as the last date for the completion of
all discovery (Docket # 20); on June 15, 2011, however, that deadline was extended by
agreement to November 30, 2011. (Docket # 38.)
Now, Centurion wishes to amend its complaint to add three more counts: two separate
allegations that Harrington breached its fiduciary duties to Centurion under ERISA, and one
count of criminal conversion under Indiana state law. Essentially, Centurion argues in its July
22, 2011, motion that through discovery it learned facts and information giving rise to these legal
claims and wishes to add them now, even though the deadline to amend its complaint expired
five months earlier. Indeed, the tardiness of Centurion’s motion is really the only basis that
Harrington advances in opposition to it, other than the rather cursory suggestion that it will be
prejudiced given the upcoming November 30, 2011, discovery deadline.
II. STANDARD ON A MOTION TO AMEND
Under Federal Rule of Civil Procedure 15, a party may amend its pleading once as a
matter of course within twenty-one days after serving it, or if the pleading is one to which a
responsive pleading is required, twenty-one days after service of a responsive pleading or
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twenty-one days after service of a motion under Federal Rule of Civil Procedure 12(b), (e), or
(f), whichever is earlier. Fed. R. Civ. P. 15(a)(1). Otherwise, a plaintiff may amend only by
leave of the court or by written consent of the adverse party. Fed. R. Civ. P. 15(a)(2). Leave to
amend is freely given when justice so requires. Fed. R. Civ. P. 15(a)(2). However, this right is
not absolute, Brunt v. Serv. Employees Int’l Union, 284 F.3d 715, 720 (7th Cir. 2002), and can
be denied for undue delay, bad faith, dilatory motive, prejudice, or futility. Ind. Funeral Dirs.
Ins. Trust v. Trustmark Ins. Corp., 347 F.3d 652, 655 (7th Cir. 2003).
Moreover, the requirements of Rule 15 must be read in conjunction with the requirements
of Federal Rule of Civil Procedure 16 because once the district court has filed a pretrial
scheduling order pursuant to Rule 16 establishing a time table for amending pleadings, that
rule’s standards control. Alioto v. Town of Lisbon, __ F.3d __, 2011 WL 2642369, at *3 (7th Cir.
July 7, 2011); BKCAP, LLC v. Captec Franchise Trust 2000-1, 3:07-cv-637, 2010 WL 1222187,
at *2 (N.D. Ind. Mar. 23, 2010) (citing Johnson v. Mammoth Recreations, Inc., 975 F.2d 604,
607-08 (9th Cir. 1992)); see also Lauer v. Patriot Paint Co., No. 1:06-CV-0244, 2007 WL
2068595, at *2 (N.D. Ind. July 17, 2007); Kortum v. Raffles Holdings, Ltd., No. 01 C 9236, 2002
WL 31455994, at *3 (N.D. Ill. Oct. 30, 2002). Rule 16(b)(3)(A) requires that the scheduling
order “limit the time to join other parties, amend the pleadings, complete discovery, and file
motions.”
Thus, “a party seeking to amend a pleading after the date specified in a scheduling order
must first show ‘good cause’ for the amendment under Rule 16(b); then, if good cause is shown,
the party must demonstrate that the amendment is proper under Rule 15.” BKCAP, 2010 WL
1222187, at *2 (quoting Tschantz v. McCann, 160 F.R.D. 568, 571 (N.D. Ind. 1995)); see Alioto,
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2011 WL 2642369, at *3 (collecting cases). “A court’s evaluation of good cause is not coextensive with an inquiry into the propriety of the amendment under . . . Rule 15.” Tschantz, 160
F.R.D. at 571 (quoting Johnson, 975 F.2d at 609). “Rather, the good cause standard focuses on
the diligence of the party seeking the amendment.” BKCAP, 2010 WL 1222187, at *2 (citing
Tschantz, 160 F.R.D. at 571); see Trustmark Ins. Co. v. Gen. & Cologne Life Re of Am., 424 F.3d
542, 553 (7th Cir. 2005). “In other words, to demonstrate good cause, a party must show that
despite its diligence, the time table could not reasonably have been met.” BKCAP, 2010 WL
1222187, at *2 (citing Tschantz, 160 F.R.D. at 571).
III. DISCUSSION
As noted, the deadline for Centurion to amend its complaint expired on February 15,
2011, that is, five months before the instant motion. Centurion argues, however, that it has good
cause for its untimely request to amend because the basis for its new claims was just recently
revealed through Harrington’s discovery responses.
More particularly, Centurion explains that it served a request for production of
documents on Harrington on March 17, 2011, and it responded on June 13, 2011.1 Those
responses allegedly revealed to Centurion for the first time that Harrington exercised
discretionary control over Centurion’s plan assets such that it was a fiduciary of the plan. In
fact, Centurion claims that Harrington used that discretion to, in effect, hide money owed to
Centurion (hence, the conversion claim) after those funds were recovered from various health
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Harrington says that it actually responded with “written responses and objections to Centurion’s document
requests on April 19, 2011.” (Def.’s Opp’n to Pl.’s Mot. for Leave to Am. Compl. 2 n.2.) Harrington’s response
seems a bit disingenuous, however, as Centurion maintains in its reply that it did not actually receive any documents
until mid-June, and it was the documents that triggered the present motion—not Harrington’s response under Federal
Rule of Civil Procedure 34(b)(2)(B).
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care providers who had erroneously been paid by Harrington.
Harrington’s argument is essentially that if Centurion had been truly diligent, it would
have started the document discovery sooner, would have received the documents earlier, and
thus would have been in a position to amend before the February 15, 2001, deadline. Thus, as
Harrington sees it, because Centurion waited until after the pleading deadline to even begin
document discovery, it cannot show—essentially as a matter of law—“that despite [its] diligence
the time table could not have reasonably been met.” Jannx Med. Sys., Inc. v. Methodist Hosps.,
Inc., No. 2: 08-CV-286-PRC, 2011 WL 1296392 at *2 (N.D. Ind., Mar. 30, 2011) (quoting
Tschantz, 160 F.R.D. at 571).
Given the record here, however, it is apparent that good cause has been shown.
Centurion demonstrated, and Harrington does not dispute, that it was only when Centurion
received the documents requested through discovery that, as this Court observed in Lauer, 2007
WL 2068595, at *2, the “precise contours of its [claims]” were revealed. Indeed, Lauer is
instructive in that there, as here, the discovery leading to the amended claims occurred well after
the pleading deadline but “well within the discovery cutoff.” Id. (citing Stallings v. Union Pac.
R.R., No. 01 C 1056, 2003 WL 21317297, at *5 (N.D. Ill. June 6, 2003) (noting that “only
through ongoing discovery and investigation was [the plaintiff] able to determine the validity of
[the proposed amendment]”). A similar case, not cited by either party but instructive
nonetheless, is Medical Informatics Engineering, Inc. v. Orthopedics Northeast P.C., No. 1:06cv-173, 2008 WL 141504, at *3 (N.D. Ind. Jan. 11, 2008). There, the new claims to be added
first became apparent through a deposition taken ten months after the pleading deadline, but still
before the close of discovery. Finding good cause from such a scenario, the Medical Informatics
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Court also observed that if the motion were to be denied, it would only likely lead to the filing of
another lawsuit, followed then by a motion to consolidate given the unity of parties, facts, and
legal assertions and defenses. Id. That same reasoning would seem to apply here with equal
force and adds to a finding of good cause.
Finally, Harringon does not accuse Centurion of any undue delay in filing the current
motion after receipt of the documents, and indeed, it would appear that Centurion acted with
some promptness given that it first had to process the new information. See BKCAP, 2010 WL
1222187, at *2. And it should be noted that even if the Court accepts Harrington’s proposition
that Centurion should have started the discovery process well before the pleading deadline, it
apparently took Harrington three months to respond with documents and this suggests that even
if Centurion had asked for the documents much earlier, it still would not have received them
within the pleading deadline.
Turning to Rule 15(a), Harrington does not claim that Centurion’s motion should be
denied because of bad faith, undue delay, dilatory motive, or futility. See Ind. Funeral Dirs. Ins.
Trust, 347 F.3d at 655. At best, Harrington makes the rather conclusory assertion that it will be
prejudiced because the amendment will “require additional written discovery” and it observes,
with depositions still to do and expert discovery to be completed, there is little time to do all that
before November 30, 2011. See generally Caterpillar, Inc. v. Estate of Lacefield-Cole, 520 F.
Supp. 2d 989, 995 (N.D. Ill. 2007) (explaining that “the ability to freely amend must be balanced
against the prejudice to the opposing party as a result of the amendment”).
Harrington’s brief argument is devoid of any suggestion concerning the “additional
written discovery” it is contemplating, so Lauer is once again instructive. As the Court there
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observed, with additional discovery ahead even without an amendment, and with adequate time
left to do discovery with the amendment, “any prejudice . . . is capable of being cured.” Lauer,
2007 WL 2068595 at *4. Indeed, Centurion is already on record as saying in its reply that it will
not oppose any extension of discovery necessitated by the amendment, and the Court will grant a
reasonable extension to all existing deadlines and dates if it will erase any notion that either
party will be prejudiced because of it.
Therefore, in light of Rule 15(a)(2)’s mandate to freely grant leave when justice so
requires, and because Harrington makes no showing of prejudice from any of the proposed
amendments, Centurion’s motion will be GRANTED.
IV. CONCLUSION
Centurion’s Motion for Leave to File Amended Complaint (Docket # 39) is GRANTED,
and the Clerk is directed to show the Amended Complaint filed. Harrington is to file an answer
to the Amended Complaint within fourteen days.
SO ORDERED. Enter for August 17, 2011.
S/Roger B. Cosbey
Roger B. Cosbey
United States Magistrate Judge
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