The Charter Oak Fire Insurance Company et al v. American Capital, Ltd. et al

Filing 42

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 2/2/10. (sat, Chambers)

THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND CHARTER OAK FIRE INSURANCE COMPANY, ET AL., v. AMERICAN CAPITAL, LTD., ET AL. : : : : : MEMORANDUM OPINION Several motions are currently pending in this matter, Civil Action No. DKC 09-0100

including the Defendants' motion for judgment on the pleadings (Paper 24), Defendants' motion for a protective order (Paper 28), Plaintiffs' motion to seal (Paper 32) and Plaintiffs'

motion for leave to file first amended complaint (Paper 37). The issues have been fully briefed and no hearing is deemed necessary pursuant to Local Rule 105.6. The motion for leave to file first amended complaint will be GRANTED. Because of this, the motion for judgment on the The motion to seal will be GRANTED

pleadings will be DENIED.

and the motion to stay discovery will be DENIED as moot. I. Background On January 16, 2009, Charter Oak Fire Insurance Company ("Charter America Oak") and Travelers Property Casualty Company filed of a

("Travelers")

(collectively,

"Plaintiffs")

complaint against American Capital LTD ("American Capital") and

Scientific

Protein

Laboratories to rescind and

LLC or

("SPL") reform

(collectively, any as insurance well as a

"Defendants") contracts

seeking

between

Plaintiffs

Defendants,

judicial declaration that neither Charter Oak nor Travelers is required to defend the Defendants in any pending heparin-related lawsuits in which Defendants are involved. From 2006 through 2009, American Capital was covered by three primary policies with Charter Oak and three umbrella

insurance policies with Travelers. The policies were in effect for three one-year periods from June 14, 2006 ­ June 14, 2007 ("2006 policy"), June 14, 2007 ­ June 14, 2008 ("2007 policy") and June 14, 2008 ­ June 14, 2009 ("2008 policy"). On behalf of

itself and SPL, American Capital seeks coverage from Charter Oak or Travelers under the insurance contracts (specifically, the 2007 policy) regarding heparin lawsuits in which it or SPL is a named defendant. The Defendants have been named as defendants in numerous lawsuits relating to tainted heparin shipped from China. The

lawsuits involving the tainted heparin allege that one or more ingredients of the heparin, including the active pharmaceutical ingredient, were produced by Changzhou SPL Company, Ltd. -- a joint venture between SPL and Tech-Pool Bio Pharma Company, a Chinese company. These underlying suits allege that the

ingredients in the heparin were tainted during production of the

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heparin and that this tainted heparin was shipped to the United States by Baxter Healthcare Corporation. To date, more than 45

lawsuits have been filed against Baxter Healthcare Corporation, American Capital and/or SPL. Plaintiffs misrepresentations allege to both that Defendants Oak and made several when

Charter

Travelers

applying for insurance, and that the insurance issued did not extend to coverage of subsidiaries of American Capital or joint ventures that those subsidiaries formed. Defendants respond by denying allegations of wrongdoing and have filed a counter claim seeking a declaration that the

contracts between Plaintiffs and Defendants are valid and that Plaintiffs lawsuits. Plaintiffs also seek a declaration that they owe no duty to defend American Capital in a non-heparin case that involves a spectator injury at the Nationwide Arena in Columbus, Ohio. The have a duty to defend Defendants in the pending

spectator brought suit in Ohio against SMG and American Capital to recover for in the injuries. sports-arena parent The lawsuit alleges and that that SMG

specializes Capital is

managements of SMG.

American has

company

American

Capital

requested that Charter Oak and Travelers provide defense and indemnity in the matter.

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As noted above, Plaintiffs filed this action on January 16, 2009. 17, Defendants filed their answer and counterclaim on April On June 10, 2009, Defendants filed their first

2009.

amended answer and counterclaims with the consent of Plaintiffs. Plaintiffs filed their answer to the counterclaim on June 29, 2009. On July 10, 2009, the Defendants filed a motion for

judgment on the pleadings and two weeks later filed a motion to stay discovery. At that time, discovery had not commenced. On

August 17, 2009, Plaintiffs filed their opposition to the motion for judgment on the pleadings and presented additional evidence. On August 24, 2009, Plaintiffs moved for leave to file a first amended complaint and Defendants filed their opposition on A

August 25, 2009.

A reply was filed on September 8, 2009.

motion to seal was filed by Plaintiffs on September 3, 2009 and is unopposed by Defendants. II. Motion for Leave to File Amended Complaint A. Standard

The Federal Rules of Civil Procedure provide that, once the right to amend as a matter of course expires, "a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when The Fourth

justice so requires." Fed. R. Civ. P. 15(a)(2).

Circuit has held that "leave to amend a complaint should be denied only when the amendment would be prejudicial to the

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opposing party, there has been bad faith on the part of the moving party, or the amendment would be futile." Edwards v. City of Goldsboro, 178 F.3d 231, 242 (4th Cir. 1999) citing Johnson v. Oroweat Foods Co., 785 the F.2d 503, of 509 (4th Cir. or 1986). declared

Furthermore,

"[i]n

absence

any

apparent

reason--such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of

amendment, etc.--the leave sought should, as the rules require, be `freely given.'" B. Analysis Foman v. Davis, 371 U.S. 178, 182 (1962).

The amended complaint that Plaintiffs wish to file sets forth additional facts regarding their claims, includes several additional arguments and removes the unjust enrichment count, leaving four causes of action. Defendants oppose the filing of the amended complaint,

arguing that it "threatens prejudice" and delay and evinces a "dilatory motive" on the part of the Plaintiffs. These

arguments are without merit. granting leave to file the

No prejudice will result from amended complaint in this case.

Discovery has not yet commenced, no briefing schedule has been issued and no trial date is on the calendar. Defendants will

have a full discovery period to address allegations in the first

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amended complaint, and now face one fewer claim.

Plaintiffs may

amend their complaint based upon additional information gained during their investigation that will clarify their allegations and streamline their claims. The information in their amended

complaint should present no surprises to Defendants as much of it is duplicative of Plaintiffs' response to the motion for judgment on the pleadings. III. Remaining Motions Three motions remain. Because the motion for leave to file

amended complaint is granted, the motion for judgment on the pleadings is now moot. The Defendants may now file a Rule 12 If

motion or an answer in response to the amended complaint. Defendants conference briefing motions. file to an Answer, the the Court will process wish to set and a

scheduling will set a

discuss

discovery parties

schedule

should

the

file

pre-trial

The motion to seal certain content in, and exhibits to, Plaintiff's brief in opposition to Defendants' rule 12(c) motion is unopposed and will be granted, for the reasons asserted. Plaintiffs have already redacted the appropriate material in the copy that was electronically filed and have filed both complete and redacted versions with the Clerk's office. The motion for a protective order staying discovery is

moot, as discovery has not begun.

Local Rule 104.4 states that

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the parties need not participate in a Rule 26(f) conference, nor commence entered. discovery until after a scheduling order has been

As no scheduling order has yet been entered in this

case, discovery has not yet commenced. IV. Conclusion For the foregoing reasons, Plaintiffs' motion for leave to file first amended complaint and motion to seal are GRANTED. Defendants' Defendants' motion motion for to judgment stay on the is pleadings DENIED as is DENIED. A

discovery

moot.

separate Order will follow. /s/ DEBORAH K. CHASANOW United States District Judge

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