First American Title Insurance Company v. McGonigle et al
Filing
143
MEMORANDUM AND ORDER denying 136 Motion to Amend Complaint. Signed by District Judge Monti L. Belot on 2/22/2013. (alm)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
FIRST AMERICAN TITLE INSURANCE
COMPANY,
)
)
)
Plaintiff,
)
)
v.
)
)
JERRY MCGONIGLE, et al.,
)
)
Defendants.
)
)
)
JERRY AND GEORGIA MCGONIGLE,
)
)
Defendants/Third )
-Party Plaintiffs)
v.
)
)
MARY RICH, et al.
)
)
)
Third Party
)
Defendants.
)
)
CIVIL ACTION
No.
10-1273-MLB
MEMORANDUM AND ORDER
This case comes before the court on defendants Jerry McGonigle
and Georgia McGonigle’s motion for leave to amend their third party
complaint against plaintiff.
(Doc. 136).
briefed and is ripe for decision.
The motion has been fully
(Docs. 138, 141).
The McGonigles’
motion is denied for the reasons herein.
Facts and Procedural History1
I.
This case arose after the McGonigles purchased a home and the
surrounding acreage in Hutchinson, Kansas, in 2008 from Danny and Mary
1
The majority of the facts is taken from the parties proposed
pretrial order which was submitted to the court for review.
Beth Rich.
The purchased land included the Panorama Dam.
In 1981,
the Riches entered into an agreement with the City of Hutchinson
concerning the duties of both the Riches and the City concerning the
dam.
The agreement required the Riches to remove trees from close
proximity to the dam, and to perform maintenance and repairs.
The
City also had the right to inspect the dam and give notice of needed
repairs.
In the event that the Riches did not make said repairs, the
City could complete the repairs and bill the Riches.
This agreement
was binding upon the parties and their assigns and was filed with the
Register of Deeds.
In 1999, a title insurance commitment was issued by First
American to the Riches.
agreement.
The commitment did not include the 1981
In 2008, plaintiff issued a title insurance commitment to
the McGonigles for the property.
1981 agreement.
The commitment did not include the
At some point after the sale closed, the McGonigles
learned of the 1981 agreement.
On January 8, 2009, a meeting was held at Panorama Dam with the
McGonigles and representatives for the City and the Kansas Division
of
Water
Resources
(DWR).
The
McGonigles
were
told
that
the
maintenance of the dam was their responsibility and the DWR expressed
several concerns about the dam and suggested several repairs.
On
December 4, 2009, the McGonigles received an estimate for the repairs
to the dam.
The estimate was approximately $850,000.
The McGonigles
sent a demand letter to plaintiff, seeking coverage under the title
commitment.
Plaintiff denied the claim and filed this action seeking
a declaratory judgment that it has no duty to defend or honor the
McGonigles’ claims.
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The McGonigles filed a counter claim against plaintiff, and
cross claims against the Riches,
Aste Realty, Karen Gilliland and
Terry
amended
Brigman.
The
additional occasions.
McGonigles
(Docs. 54, 88).
their
complaint
on
two
The City filed an answer and
cross claim against the McGonigles and the Riches, seeking specific
performance.
The parties submitted a proposed pretrial order to the
court in December 2012.
The proposed pretrial order states that both
the Riches and Aste Realty contend that the 1981 agreement is
unenforceable because the DWR had exclusive jurisdiction over the dam.
The City sought specific performance of the agreement.
All parties
agreed to proceed to a bench trial on March 26, 2013.
On January 11, 2013, the City moved for summary judgment on the
basis that the 1981 agreement was unenforceable.
(Doc. 130).
All
parties, including the McGonigles, agree with the City’s position and
the motion is uncontested. (Docs. 135, 139). In light of this motion
and the anticipated result, the McGonigles move to amend their
complaint and add a claim of negligence against plaintiff.
136).
II.
(Doc.
Plaintiff objects.
Analysis
Rule 15 of the Federal Rules of Civil Procedure allows a party
to amend the party's pleading once as a matter of course before a
responsive pleading is served.
Fed. R. Civ. P. 15(a).
Subsequent
amendments are allowed only by leave of court or by written consent
of the adverse party. Leave to amend, however, is to be “freely given
when justice so requires.” Id. The decision to grant leave to amend,
after the permissive period, is within the district court's discretion
and will not be disturbed absent an abuse of that discretion. Woolsey
-3-
v. Marion Labs., Inc., 934 F.2d 1452, 1462 (10th Cir. 1991).
Leave
to amend should be denied when the court finds undue delay, undue
prejudice to the non-moving party, or bad faith of the moving party.
Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993).
The McGonigles essentially argue that they should be allowed to
amend their complaint to add an additional claim of negligence due to
the City’s abrupt change of position. In their proposed third amended
counterclaim (Doc. 136, exh. 1 at count sixteen), the McGonigles
assert that plaintiff’s failure to identify the 1977 or 1981 agreement
in the October 30, 2008, title policy was a “. . . breach of its
common law duty.”
The exact nature of the “common law duty” is not
specified.
McGonigles
The
have
consulted
an
“expert”
whose
“preliminary” opinion is that plaintiff violated unspecified “industry
standards” by not disclosing the existence of the 1981 agreement. The
“expert” does not mention the 1977 agreement.
Based on the deposition excerpts provided, it would appear that
plaintiff’s title search did not go back beyond December 1, 1999, the
date of a prior title examination. (Depo. of Julie Quint). The court
does not know, and certainly expresses no opinion, whether that is an
acceptable practice in the title insurance industry.
“expert” sheds no light on the issue.
The McGonigles’
The three cited Kansas cases,
Ford v. Guarantee Abstract and Title Co., Inc., 220 Kan. 244, 266
(1976) and two decisions of the Kansas Court of Appeals, while dealing
with negligence by title insurance companies, do not address the
issue, either.
In their proposed third amended complaint, the McGonigles further
assert that had they known of the 1977 and/or 1981 agreements, they
-4-
would not have purchased the property.
square
with
the
McGonigles’
stated
This allegation is hard to
reason
for
their
proposed
amendment: the “unique and unexpected change of position by the City
of Hutchinson . . .”
(Doc. 136 at 2).
It’s clear that the McGonigles
have been aware of the agreements throughout this litigation and
plaintiff’s failure to disclose the agreements in the 2008 title
policy.
The McGonigles have not satisfactorily explained why, having
this knowledge, they could not have made negligence claims in their
original
and
amended
counterclaims,
regardless
of
the
City
of
Hutchinson’s position.
Contrary to the McGonigles’ assertions, adding a negligence claim
at this final stage of the case will complicate and probably delay
final resolution, whether through settlement or trial.
If the court
allows the opinion of the McGonigles “expert” (such as it is), then
plaintiff will be entitled to search for its expert, who has yet to
be retained.
Plaintiff suggests that adding a negligence claim may
result in comparison of fault against others, although they are not
identified.
The deadline to amend the McGonigles’ complaint has long passed.
This case is almost three years old and trial is set for next month.
The court is not persuaded by the McGonigles’ position of surprise.
The defense of exclusive jurisdiction was explicitly presented by two
parties in the proposed pretrial order.
contentions
in
the
proposed
pretrial
potentially had exclusive jurisdiction.
Additionally, plaintiff’s
order
suggested
that
DWR
Therefore, the court finds
that the McGonigles have not been blindsided by the City’s position
in its motion for summary judgment.
-5-
Therefore, the court finds that allowing the McGonigles to amend
their complaint would result in both undue delay and prejudice to
plaintiff.
Fed. R. Civ. P. 1.
III. Conclusion
Defendants Jerry and Georgia McGonigle’s motion to amend their
complaint against plaintiff is denied.
(Doc. 136).
IT IS SO ORDERED.
Dated this
22nd
day of February 2013, at Wichita, Kansas.
s/ Monti Belot
Monti L. Belot
UNITED STATES DISTRICT JUDGE
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