American Modern Select Insurance Company v. Kendrick et al
Filing
56
MEMORANDUM OPINION AND ORDER: (1) Dfts/Third Party Plts Kendrick and Taylor's 37 Motion to Vacate and Strike Third Party Complaint of Cummins is GRANTED; (2) Court's previous 34 Order granting Cummins' leave to file Third Party Complaint is VACATED; (3) Cummins' 35 Third Party Complaint is STRICKEN. Signed by Judge Danny C. Reeves on 7/7/2014. (STC)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION
(at Lexington)
AMERICAN MODERN SELECT
INSURANCE COMPANY,
Plaintiff,
V.
BARRY KENDRICK and CHRISTIAN
TAYLOR,
Defendants and Third-Party
Plaintiffs,
V.
KENTUCKY FARM BUREAU
INSURANCE COMPANY,
Third-Party Defendant,
and
BOBBY CUMMINS,
Third-Party Defendant and ThirdParty Plaintiff,
V.
SAMANTHA KENDRICK,
Third-Party Defendant.
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Civil Action No. 5: 13-245-DCR
MEMORANDUM OPINION
AND ORDER
*** *** *** ***
This matter is pending for consideration of Defendants and Third-Party Plaintiffs Barry
Kendrick and Christian Taylor’s motion to vacate and strike the Third-Party Complaint of Third-1-
Party Defendant and Third-Party Plaintiff Bobby Cummins. [Record No. 37] Cummins’ ThirdParty Complaint adds Samantha Kendrick as a party to this action. [Record No. 35] Barry
Kendrick and Taylor argue that the Court should vacate its prior Order granting Cummins’
motion for leave to file a Third-Party Complaint. [Record No. 35] They also assert that the
Court should strike the Third-Party Complaint because it does not comply with previous orders
of the Court and the Federal Rules of Civil Procedure. [Id.] For the reasons discussed below,
the Court will grant the requested relief.
I.
This action arises out of a motor vehicle accident in which Taylor was injured while
operating a 2004 Yamaha Motorcycle (“Motorcycle”). [Record No. 1, ¶ 16] At the time of the
accident, the Motorcycle was covered by a policy provided by Plaintiff American Modern Select
Insurance Company (“AMSIC”). [Id., ¶4] On August 1, 2013, AMSIC filed a Complaint
alleging that Barry Kendrick, through his wife and authorized agent Samantha Kendrick, failed
to disclose Taylor as the owner and operator of the Motorcycle in the procurement of the policy.
[Id., ¶18] It claims that this renders the policy void and asks the Court to rescind it. [Id.] On
September 3, 2013, Barry Kendrick and Taylor filed their Answer and Counterclaim against
AMSIC claiming: (i) breach of contract; (ii) violation of the Kentucky Motor Vehicle
Reparations Act; (iii) negligence; and (iv) violation of the Unfair Claims Settlement Practices
Act. [Record No. 8]
Barry Kendrick and Taylor also filed a Third-Party Complaint on September 17, 2013
against Kentucky Farm Bureau Mutual Insurance Company (“KFB”) and Bobby Cummins.
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[Record No. 10] They claim that, as agents of AMSIC, KFB and Cummins are liable for
negligence by breaching their duty to exercise reasonable care in securing and selling insurance
to them. [Id., p. 6] They assert that if the AMSIC policy is void and unenforceable, it was due
to KFB and Cummins’ negligence. [Id., pp. 6-7]
On September 25, 2013, the Court entered a Scheduling Order directing that the parties
file any motions to join additional parties by January 1, 2014. [Record No. 14, p. 3] On March
3, 2014, Cummins filed an untimely motion for leave to file a Third-Party Complaint, which was
granted. [Record Nos. 33, 34] In seeking leave to file a Third-Party Complaint, Cummins
claimed that he “did not realize the extent, nature, and basis of his claim against Ms. Kendrick
until her deposition was completed on February 18, 2014.” [Record No. 33, p. 2] However, in
response to the current motion, Cummins states that he referenced Samantha Kendrick’s
deposition to show the approximate time he decided that she should be added as a party. [Record
No. 42, p. 4] Cummins’ Third-Party Complaint asserts that as a result of the misinformation
provided by Samantha Kendrick, Taylor was not listed as an owner or driver under the policy
when the accident occurred. [Record No. 35, ¶17] Cummins claims that, because Samantha
Kendrick was negligent in obtaining the policy, he is entitled indemnity, contribution, or
apportionment of any potential damages if he is found liable. [Id., pp. 4-5]
Barry Kendrick and Taylor then filed the motion to vacate and strike Cummins’ ThirdParty Complaint. [Record No. 37] They argue that: (i) Samantha Kendrick is not a necessary
party; (ii) Cummin’s motion for leave to file was disingenuous; and (iii) Cummins failed to
comply with the applicable rules for joinder of a third-party defendant. [Id.] In addition to the
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arguments listed previously, Cummins asserts that Samantha Kendrick’s addition as a party
would promote judicial efficiency. [Record No. 42]
II.
Rule 14(a)(1) of the Federal Rule of Civil Procedure states that “a defending party may,
as third-party plaintiff, serve a summons and complaint on a non-party who is or may be liable
to it for all or part of the claim against it.” If fourteen days has passed since the defendant/thirdparty plaintiff filed his or her answer, that party is required to seek the leave of court to add a
third-party defendant. Fed. R. Civ. P. 14(a)(1).
“The purpose of Rule 14 is to permit additional parties whose rights may be affected by
the decision in the original action to be joined so as to expedite the final determination of the
rights and liabilities of all the interested parties in one suit.” American Zurich Ins. Co. v. Cooper
Tire & Rubber Co., 512 F.3d 800, 805 (6th Cir. 2008) (citations omitted). However, “[t]he
decision of whether to grant a motion for leave to implead is a matter committed to the discretion
of the district court, and the exercise of discretion is essentially a process of balancing the
prejudices.” Asher v. Unarco Material Handling, Inc., No. 6:06–548–DCR, 2007 WL 3046064,
at *4 (E.D. Ky. Oct. 16, 2007) (citations omitted). “Competing interests includ[e] the avoiding
of duplicative litigation versus ensuring that parties already before the court receive expeditious
adjudication.” Id. (citation omitted). The promptness of a Rule 14(a)(1) motion to implead a
third-party defendant is “an urgent factor governing the exercise of [the court’s] discretion.”
Gen. Elec. Co. v. Irvin, 274 F.2d 175, 178 (6th Cir. 1960). The Court considers, in part, the: (i)
timeliness of the motion; (ii) likelihood of trial delay; (iii) potential for complication of issues;
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and (iv) prejudice to the original plaintiff. Botkin v. Tokio Marine & Nichido Fire Ins. Co., Ltd.,
956 F. Supp. 2d 795, 802 (E.D. Ky. 2013) (citations omitted).
III.
Barry Kendrick and Taylor argue that the Court should vacate its prior order because
Cummins cannot justify his late application for leave to file his Third-Party Complaint.1 [Record
No. 37, p. 4] They assert that Cummins has failed to provide a sufficient reason for the
untimeliness of his Third-Party Complaint. Cummins filed his motion requesting leave to file
a Third-Party Complaint two months after the deadline set out in the Scheduling Order. [Record
No. 14, p. 3] In his motion requesting leave, Cummins states that he was only brought into the
case in September 2013 and did not realize the “extent, nature, and basis of his claims” until
Samantha Kendrick’s deposition was completed on February 18, 2014. [Record No. 33, p. 2]
Barry Kendrick and Taylor argue that Cummins’ assertions are disingenuous. They assert
that, because Cummins was a participant in all the communications with Samantha Kendrick
during the procurement the policy, he could learn nothing from further discovery. They also
contend that Cummins’ claims contain no new factual assertions that were not already alleged
by AMSIC. Further, they claim that Cummins could not have learned anything from Samantha
Kendrick’s deposition because it was brief and she mainly ratified her statements made prior to
the commencement of this action. [Record No. 37, pp. 2-3] Barry Kendrick and Taylor maintain
1
Barry Kendrick and Taylor also claim that Samantha Kendrick is not a necessary party under Rule
19 of the Federal Rules of Civil Procedure. While Cummins contends that Samantha Kendrick is a necessary
party in his motion requesting leave, he apparently concedes this point because he does not respond to this
argument. [See Record No. 42.] Regardless, the Court must still determine if the impleader is proper under
Rule 14 and the Scheduling Order.
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that Cummins is seeking relief from the Scheduling Order simply because he changed his mind
concerning Samantha Kendrick’s presence to this case. [Record No. 43, p. 2] Cummins
responds that he did not intend to insinuate that new facts were discovered during Samantha
Kendrick’s deposition. Rather, he maintains that her deposition was around the time that his
counsel re-evaluated the case and fully understood the need to add her as a party. [Record No.
42, p. 4] Cummins also claims that the late filing was due in part to his late addition to this
action.
Rule 16 authorizes the court to enter a scheduling order limiting the time a party may join
other parties, amend pleadings, file motions, and complete discovery. Further, a scheduling
order “may be modified only for good cause and with the judge’s consent.” Fed. R. Civ. P.
16(b). A court may modify a scheduling order when good cause is shown but may do so only
“if it cannot reasonably be met despite the diligence of the party seeking the extension.” Fed.
R. Civ. P. 16, advisory committee’s note; see also Inge v. Rock Fin. Corp., 281 F.3d 613, 625
(6th Cir. 2002) (stating that good cause is measured by the party’s “diligence in attempting to
meet the case management order’s requirements” (quotation omitted)). “Disregard of the 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 v. Mammoth Recreations, Inc.,
975 F.2d 604, 610 (9th Cir. 1992). Therefore, Cummins must show good cause for relief from
the Scheduling Order.
Through his previous motion, Cummins represented that he “did not realize the extent,
nature, and basis of his claim against Ms. Kendrick until her deposition was completed on
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February 18, 2014.” [Record No. 33, p. 2] This implied that some new evidence was obtained
during her deposition. However, in response to the present motion, Cummins attempts to qualify
his previous statement. Specifically, he claims that Samantha Kendrick’s deposition was
referenced only to provide the approximate date that he decided she should be made a party.
[Record No. 42, p. 4] In fact, he admits that no new facts or evidence was discovered through
her deposition. [Id.] Moreover, Cummins does not point to any specific fact or change in
circumstance causing him to attempt to add Samantha Kendrick outside the time provided that
did not exist prior to the deadline. Thus, Cummins possessed all of the facts and evidence
needed to determine whether to add Samantha Kendrick as a party prior to the deadline set by
the Court. Additionally, even though Cummins stated that he determined that Samantha
Kendrick should be added as a party near February 18, 2014, he did not file his motion seeking
permission to file the Third-Party Complaint until March 3, 2014. [Record No. 33]
In summary, Cummins has not provided any facts or evidence demonstrating that he was
unable to file his Third-Party Complaint before the deadline set by the Scheduling Order.
Failure to assert claims within the time limit set can be construed as carelessness or baseless
delay which “is not compatible with a finding of diligence and offers no reason for a grant of
relief.” Shane v. Bunzl Distribution USA, Inc., 275 F. App’x 535, 537 (6th Cir. 2008) (citing
Johnson, 975 F.2d at 609). In short, the record does not indicate that Cummins tried to diligently
meet the Court’s scheduling requirements. Counsel for Cummins all but admits this in her
affidavit, which states that she did not realize that Samantha Kendrick should be added as a party
until the deadline had passed. [Record No. 42-1] Without some evidence of an attempt to meet
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the Court’s deadlines, Cummins’ assertions do not sufficiently demonstrate the requisite
diligence or good cause for relief from the Scheduling Order.
Barry Kendrick and Taylor also assert that Cummins is forcing them to sue a third party
who they did not choose to sue. [Record No. 37, p. 5 (citing Gartner v. Lombard Bros., 197 F.2d
53, 54-55 (3d Cir. 1952)] “Under Fed. R. Civ. P. 14(a), a third party complaint is permitted only
when the third party plaintiff is attempting to transfer liability for the plaintiff’s claim against
him.” Baker v. Pierce, 812 F.2d 1406 (6th Cir. 1987). However, if a third-party plaintiff is
attempting to make a claim that “it was him, not me,” then impleader is inappropriate. Gookin
v. Altus Capital Partners, Inc., No. 05-179-JBC, 2006 WL 7132020, at *2 (E.D. Ky. Mar. 24,
2006).
Cummins’ Third-Party Complaint alleges that he relied on representations negligently
made by Samantha Kendrick. Cummins claims that, if he is liable, she is also liable for
indemnity, contribution, or apportionment because his potential negligence would be secondary.
[Record No. 35, p. 4] This is not a case where Cummins is essentially pleading a complete
defense. See Gookin 2006 WL 7132020, at *3. Rather, he is asserting that if he is liable, then
the third-party defendant is derivatively liable and must reimburse him, in whole or in part, for
anything he must pay. [See Record No. 35.] Derivative liability is found when it is dependent
on a finding of liability in the original action.
Gookin 2006 WL 7132020, at *3 (citations
omitted). Third-party complaints have been found permissible when there is an allegation of a
relationship between the third-party plaintiff and the prospective third-party defendant, or a duty
has been alleged. Diar v. Genesco, Inc., 102 F.R.D. 288, 291 (N.D. Ohio 1984) (citation
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omitted). Here, Cummins has alleged that Samantha Kendrick breached her duty to make
factually correct statements in her procurement of the policy. Thus, Barry Kendrick and Taylor’s
motion will not be granted on this ground.
Barry Kendrick and Taylor also argue that the Third-Party Complaint should not be
permitted under Rule 14 of the Federal Rules of Civil Procedure. [Record No. 37, p. 4] In
determining whether to allow a third-party complaint, courts consider: (i) timeliness of the
motion; (ii) likelihood of trial delay; (iii) potential for complication of issues; and (iv) prejudice
to the original plaintiff. Botkin, 956 F. Supp. 2d at 802 (citations omitted). In the present case,
Cummins’ Third-Party Complaint is untimely. Courts have considered whether parties seeking
leave to file a third-party complaint “deliberately delayed or [were] derelict in filing the motion.”
Id. As discussed above, Cummins had several months to file his Third-Party Complaint before
the expiration of the deadline. The promptness of a motion seeking to file a third-party
complaint is considered an “urgent factor” for a court’s consideration. Irvin, 274 F.2d at 178.
Cummins has not provided the Court with any sufficient reason for his delay. Thus, this factor
strongly weighs in favor of striking the Third-Party Complaint.
Cummins argues that delay of February 24, 2015 trial date is unlikely because
“significant discovery” has already been completed concerning Samantha Kendrick. [Record
No. 42, p. 5] However, when Samantha Kendrick’s deposition was taken, she was only
considered a witness. With her addition as a party, further discovery may be necessary. For
example, Cummins claims that he completely relied on Samantha Kendrick’s representations
when issuing the policy. However, Barry Kendrick and Taylor argue that Cummins also relied
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on other information provided by a database or software system. [Record No. 43, p. 3] Thus,
additional discovery concerning this factual dispute might be necessary if Samantha Kendrick
remains a party to this action. In short, delay of the scheduled trial and an extension of the
remaining deadlines would be a real possibility.
Cummins also argues that there is no reason to believe that adding Samantha Kendrick
would complicate resolution of the issues in this proceeding. [Record No. 42, p. 5] He claims
that, because she was already a witness and her testimony will likely be the same, her presence
as a third-party defendant would not complicate the matter. [Id.] While it may be true that the
testimony of Samantha Kendrick would not change, Cummins’ Third-Party Complaint advances
indemnity, contribution, and apportionment theories of liability. [Record No. 35, p. 4] Litigation
of these remedies and the addition of a new party will almost certainly further complicate the
issues at trial. Therefore, this factor weighs in favor of striking the Third-Party Complaint.
IV.
For the reasons outlined above, it is hereby
ORDERED as follows:
1.
Defendants/Third Party Plaintiffs Barry Kendrick and Christian Taylor’s Motion
to Vacate and Strike the Third-Party Complaint of Third-Party Defendant/Third-Party Plaintiff
Bobby Cummins [Record No. 37] is GRANTED.
2.
The Court’s previous Order granting Bobby Cummins’ leave to file his Third-
Party Complaint [Record No. 34] is VACATED.
3.
Bobby Cummins’ Third-Party Complaint [Record No. 35] is STRICKEN.
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This 7th day of July, 2014.
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