Mt. Hawley Insurance Company v. Adell Plastics, Inc.

Filing 40

MEMORANDUM AND ORDER Granting 21 Motion for Leave to File An Amended Counterclaim. Signed by Judge James K. Bredar on 8/18/2017. (bas, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
MT. HAWLEY INSURANCE COMPANY
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Plaintiff
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vs.

Civil Action No. JKB-17-0252
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ADELL PLASTICS, INC.
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Defendant
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MEMORANDUM AND ORDER
Now pending before the Court is the motion of Adell Plastics, Inc. seeking leave to file
an amended counterclaim (ECF No. 21) in which they propose to allege bad faith against their
insurance carrier. Mt. Hawley Insurance Company opposes the motion (ECF No. 27), and Adell
has replied (ECF No. 34).
The Court has carefully reviewed the three submissions and the many attachments. The
salient principles are that parties should be permitted to amend their pleadings freely, provided
they do so within the time provided in the Scheduling Order, and provided that the proposed
amendment(s) is not fatally flawed or futile.
An allegation of bad faith is a particularly heavy charge when made against an insurance
carrier. Such an allegation should be carefully considered before it is lodged. Apart from its
significance in the pending litigation, regulators tend to take notice of such contentions and, if
proven, tend to act against insurors so accused. Accordingly, it is particularly important in this
context that the Court faithfully perform the familiar Iqbal/Twombly gatekeeping function. With
that in mind the Court has scrutinized the proposed first amended counterclaim (ECF No. 21-3).
That scrutiny reveals, among other allegations, the contentions in proposed paragraphs 42, 43,

and 44. The content of paragraph 43 in particular is damning. The sum and substance of the
allegation is that the carrier denied coverage before properly investigating the circumstances, and
before examining records easily obtainable that demonstrate that the exclusion they propose to
apply is unavailable. (Of course, the Court makes no determination whatsoever as to the
accuracy of this heavy charge—only that the claim of bad faith is not futile.)
Accordingly, the motion (ECF No. 21) is GRANTED, and the Clerk is instructed to
docket the document set out as Exhibit No. 3 (ECF No. 21-3) as the operative ANSWER,
STATEMENT OF AFFIRMATIVE DEFENSES, AND FIRST AMENDED COUNTERCLAIM
in this case.
DATED this 18th day of August, 2017.

BY THE COURT:

_____________/s/_____________________
James K. Bredar
United States District Judge

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