Minias v. ASI Lloyds

Filing 51

ORDERED that 21 Motion for Leave to File Supplemental and Amended Answer to Petition is GRANTED in part and DENIED in part as stated herein. Signed by Magistrate Judge Karen Wells Roby. (cml)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
OSAMA MINIAS

CIVIL ACTION

VERSUS

NO:

ASI LLOYDS

SECTION: “F” (4)

14-2102

ORDER
Before the Court is a Motion for Leave to File Supplemental and Amended Answer to
Petition (R. Doc. 21) filed by Defendant, ASI Lloyds, seeking leave of court to amend its answer to
allege fraud. The motion is opposed. See R. Doc. 29. The motion was heard for oral argument on
Wednesday, April 8, 2015.
I.

Background
This action arises out of the damages sustained by the Plaintiff’s home during Hurricane

Isaac in 2012. See R. Doc. 1-1. Plaintiff alleges that he had a homeowner’s insurance policy with the
Defendant that covered loss or ensuing damage caused by the peril of wind and/or hail damage. Id.
Plaintiff alleges that he filed a claim with the Defendant to cover the cost of repairs and the damages
to the property pursuant to the policy. Id. Plaintiff alleges that when the adjuster for the Defendant
assessed the damage to the property, the adjuster failed to properly evaluate the cause and the extent
of the damages, and underestimated the value of the damages. Id. Plaintiff further alleges that after a
hailstorm in February 2013, he filed another claim with the Defendant for the damages. Id. Plaintiff
alleges that the Defendant has not made full payment on either of his claims and that his home
remains damaged because he has not been able to properly and completely repair the damages to his
property. Id.
In the instant motion, the Defendant seeks leave of court to amend its answer to the
complaint to allege the affirmative defense of fraud. See R. Doc. 21-1, at 1. Defendant argues that it
was not able to amend its complaint sooner because Federal Rule of Civil Procedure 9(b) requires a
litigant to state with particularity all allegations of fraud. Id. Defendant contends that it learned

during discovery that the Plaintiff may be committing fraud by attempting to recover for pre-existing
damage for which he previously received insurance payments. Id. Defendant contends that the
Plaintiff potentially received insurance payments for identical claims of damage from Geovera
Specialty Insurance Company (“Geovera”) related to hurricane Gustav and Louisiana Citizens
Property Insurance Corporation (“Citizens”) related to a 2011 hailstorm. Id. at 6. Having ascertained

evidence to particularly allege fraud, the Defendant now seeks leave of court to amend its answer.
II.

Standard of Review
Federal Rules of Civil Procedure 15(a), which governs the amendment of pleadings, provides

that leave to amend pleadings “shall be freely given when justice so requires.” This, and other federal
rules, “reject the approach that pleading is a game of skill in which one misstep by counsel may be
decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper
decision on the merits.” Conley v. Gibson, 355 U.S. 41, 48 (1957).
Thus, Rule 15(a) evinces a liberal and lenient amendment policy and a motion to amend
should not be denied absent a substantial reason to do so. See Jacobsen v. Osborne, 133 F.3d 315,
318 (5th Cir. 1998). Furthermore, “this ‘policy’ is strongest when the motion challenged is the first
motion to amend.” Thompson v. New York Life Ins. Co., 644 F.2d 439, 444 (5th Cir. 1981).
Permission may be granted even though the original pleading is defective in its statement of a claim
for relief or defense. Id.
Leave to amend is by no means automatic, but is within the sound discretion of the trial
court.

Addington v. Farmer's Elevator Mut. Ins. Co., 650 F.2d 663, 666 (5th Cir. 1981). In

exercising its discretion, the trial court must determine that there is a “substantial reason” for the
delay. Mayeaux v. La. Health Serv. and Indem. Co., 376 F.3d 420, 425 (5th Cir. 2004). The Court
may consider such factors as (1) undue delay, bad faith, or dilatory motive on the part of the movant;
(2) repeated failure to cure deficiencies by amendments previously allowed; (3) undue prejudice to

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the opposing party by virtue of allowance of the amendment; and (4) futility of the amendment.
Gregory v. Mitchell, 634 F.2d 199, 203 (5th Cir. 1981).
Although Rule 15(a) governs the amendments of pleadings, the Fifth Circuit has established
that Rule 16(b) “governs the amendment of pleadings after a scheduling order deadline has expired.”
S & W Enters., L.L.C. v. S. Trust Bank of Ala., NA, 315 F.3d 533, 536 (5th Cir. 2003). Rule 16
provides that a scheduling order may only be modified for good cause shown and with the Judge’s
consent. See Fed. R. Civ. Pro. 16(b)(4). Therefore, only after the movant has satisfied the good cause
requirement of Rule 16(b) will the more liberal standard of 15(a) apply. S&W Enters., LLC, 315 F.3d
at 536.
In determining whether a party has provided good cause under Rule 16(b) to amend a
pleading after the scheduling order deadline, courts may examine four factors: “(1) the explanation
for the untimely conduct; (2) the importance of the requested untimely action; (3) the potential
prejudice in allowing the untimely conduct; and (4) the availability of a continuance to cure such
prejudice.” Huey v. Super Fresh/Sav-A-Center, Inc., No. 07-1169, 2008 WL 2633767, at *1 (E.D.
La. June 25, 2008) (citing S & W Enters., LLC, 315 F.3d at 535. “The good cause standard requires
the party seeking relief to show that the deadlines cannot reasonably be met despite the diligence of
the party needing the extension.” S & W Enters., LLC, at 535 (internal quotations and citations
omitted).
III.

Analysis
The Defendant filed the instant motion on March 23, 2015, which is about four months after

the November 15, 2014 amendment deadline set in the Scheduling Order. See R. Doc. 8. As such, the
Court must apply Rule 16(b) to determine whether the Defendant has good cause for filing the
motion after the Scheduling Order deadline. During the hearing, the Court concluded good cause
exists because the Defendant filed the subject motion shortly after it received the claims files from
the Plaintiff’s previous insurance companies, Geovera and Citizens. The Defendant received the
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claim file from Citizen on March 17, 2015 and the claim file from Geovera on March 23, 2015, the
date it filed the subject motion. Receipt of the claims files provided the Defendant with evidence to
support its fraud claim, and thus, the Court concludes that good cause exists.
Having determined that good cause exists under Rule 16(b), the Court must consider whether
leave to amend should be granted under Rule 15(a). The issues under Rule 15(a) were narrowed
down during the hearing to undue delay, bad faith, or dilatory motive on the part of the Defendant.
Defendant argues that it could not have alleged fraud before the amendment deadline because
it did not receive discovery from the Plaintiff until after the amendment deadline due to the
Plaintiff’s delay in providing discovery responses. See R. Doc. 21-1, at 3. Defendant contends that it
received discovery responses from the Plaintiff on January 12, 2015, deposed Plaintiff’s expert on
February 10, 2015, and received the claims files from Plaintiff’s prior insurance carriers on March 17
and 23, 2015. Id. at 6-7. Upon receiving the claims files from the Plaintiff’s prior insurance carriers,
Defendant argues that it was able to determine that the claims at issue are nearly identical to the
previous claims submitted to the prior insurance carriers. Id. Furthermore, Defendant admits that it
was previously suspicious of whether the Plaintiff was trying to recover for pre-existing conditions
but argues that it needed discovery to gather sufficient facts to allege fraud with sufficient
particularity. Id. at 3.
Plaintiff avers that all of the information necessary to file an affirmative answer was available
to the Defendant prior to the initiation of this litigation. See R. Doc. 29, at 1. Plaintiff argues that the
Defendant was in possession of every piece of information on which it now relies via the contents of
its own claims file. Id. at 2.
In response, Defendant argues that the Plaintiff’s assertion that the Defendant’s claims file
contained everything it needed to allege fraud is patently false. See R. Doc. 31-2, at 1. Defendant
contends that it was aware of the prior hailstorm claims with Citizens but it did not possess specific
knowledge of the fact that Citizens paid for the replacement of the Plaintiff’s roof and that the
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Plaintiff failed to repair the roof. Id. at 2. Defendant asserts that being aware of the possibility of
fraud is a far cry from being able to allege fraud with particularity, which requires allegations of who,
what, when, where, and how. Id.
During oral argument, the Court inquired as to the timing of the Defendant’s discovery of the
Plaintiff’s 2008 Gustav claim through Geovera and the 2011 hailstorm claim through Citizens.
Defendant’s counsel represented that the only claim his client knew of pre-litigation was the 2011
hailstorm claim because the Defendant was alerted of the claim in 2013 by a universal underwriting
exchange system. Counsel asserted that upon notification of the prior hailstorm claim, the Defendant
requested proof of repair but the Plaintiff failed to provide the proof. As for the Gustav claim through
Geovera, Defendant’s counsel represented that the claim was only discovered post-litigation after he
spoke with a representative of Geovera and was told that the Plaintiff recovered $20,000. Counsel
asserted that the Plaintiff denied recovering from the pre-existing claims in his discovery responses
and during his deposition.
The Court notes that to allege fraud, as the Defendant here, Rule 9(b) requires a litigant to
plead with particularity the circumstances constituting fraud, but allows knowledge, intent, and
malice to be averred generally. The Fifth Circuit has held that “[a]t a minimum, Rule 9(b) requires
that a plaintiff set forth the ‘who, what, when, where, and how’ of the alleged fraud. U.S. ex rel.
Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997) (citing Williams v.
WMX Tech., Inc., 112 F.3d 175, 179 (5th Cir.1997)). The purpose of the heightened standard for
pleading fraud is to ensure that an opposing litigant will have sufficient information to defend against
the fraud allegation. U.S. ex rel. Stewart v. The Louisiana Clinic, No. CIV.A. 99-1767, 2002 WL
257690, at *2 (E.D. La. Feb. 22, 2002) (citing Tuchman v. DSC Communications Corp., 14 F.3d
1061, 1067 (5th Cir. 1994)).
Given the heightened pleading standard for fraud, the Court finds that it was reasonable for
the Defendant to wait until receipt of the claims files to seek leave of court to amend its answer.
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Nonetheless, the Defendant was on notice pre-litigation of the 2011 hailstorm claim when it received
a report in 2013 regarding the pre-existing damage to the Plaintiff’s home. Rather than immediately
issue a subpoena to Citizens for the claim file in 2014, when the case was initiated, the Defendant
was dilatory and waited to issue the subpoena in February 2015. Defendant’s delay was
unreasonable, and thus, its request to amend its answer to allege fraud as to the 2011 hailstorm
damage to the roof is denied as untimely. As for the pre-existing Gustav claim, the Court finds that
the Defendant discovered the claim post-litigation and timely issued a subpoena. Therefore, the
Defendant was not dilatory alleging the pre-existing Gustav claims and shall be granted leave of
court to amend its complaint accordingly.
IV.

Conclusion
IT IS ORDERED that Defendant, ASI Lloyds’s Motion for Leave to File Supplemental

and Amended Answer to Petition (R. Doc. 21) is GRANTED in part and DENIED in part. It is
GRANTED as to the Defendant’s request to allege fraud pertaining to pre-existing claims from
Hurricane Gustav and is DENIED as to its request to allege fraud pertaining to pre-existing roof
damage claims from the 2011 hailstorm.
New Orleans, Louisiana, this 17th day of June 2015.

KAREN WELLS ROBY
UNITED STATES MAGISTRATE JUDGE

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