The Humane Society of the United States et al v. National Union Fire Insurance Company of Pittsburgh, PA

Filing 151

MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 4/21/2017. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
THE HUMANE SOCIETY OF THE
UNITED STATES, et al.

:

v.

:

Civil Action No. DKC 13-1822

:
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA

:

MEMORANDUM OPINION
Presently

pending

and

ready

for

resolution

in

this

insurance coverage dispute is the motion for reconsideration and
clarification

filed

by

Plaintiff

The

United States (“HSUS” or “Plaintiff”).

Humane

Society

(ECF No. 138).

court now rules, no hearing being deemed necessary.
105.6.

of

the
The

Local Rule

For the following reasons, Plaintiff’s motion will be

denied.
I.

Background
A more complete recitation of the factual background can be

found in the prior memorandum opinion resolving the motion for
summary
Insurance

judgment
Company

“Defendant”).

filed
of

by

Defendant

Pittsburgh,

Pa.

(See ECF No. 84, at 1-7).

National
(“National

Union
Union”

Fire
or

Plaintiff, along with

Plaintiffs Jonathon Lovvorn and Kimberly Ockene (collectively,
“Plaintiffs”), filed the initial complaint in this case in the
Circuit Court for Montgomery County, and Defendant removed the

action to this court.1
claim

for

insurance

(ECF Nos. 1; 2).

coverage

against

Plaintiffs asserted a

Defendant

in

connection

with a lawsuit filed against HSUS by Feld Entertainment, Inc.
under

a

2009-2010

insurance

(ECF No. 2 ¶¶ 15; 36).

policy

(the

“2009-2010

Policy”).

The original scheduling order set August

15, 2013, as the deadline for the amendment of pleadings.
No. 11, at 2).

(ECF

The parties completed discovery on October 10,

2014, and Defendant moved for summary judgment on November 20,
2014

(ECF

No.

68).

On

July

30,

2015,

the

court

issued

a

memorandum opinion and order granting in part and denying in
part Defendant’s motion for summary judgment.
85).

(ECF Nos. 84;

The court entered judgment in favor of Defendant on a

portion of the breach of contract claim, concluding that “no
coverage is available for HSUS under the 2009-2010 Policy,” but
denied Defendant’s summary judgment motion as to the individual
plaintiffs.2

(ECF No. 84, at 25-39).

1

Mr. Lovvorn and Ms. Ockene were dismissed from this action
pursuant to a stipulation of voluntary dismissal with prejudice
under Fed.R.Civ.P. 41(a)(1)(A)(ii) on October 7, 2016.
(ECF
Nos. 110; 111).
2

Trial of this claim was scheduled to begin on May 2, 2017.
(ECF No. 124).
Since Plaintiff filed its motion for
reconsideration, the parties have advised the court that they
have resolved the pending claim and that the instant motion is
the only unresolved matter in this action. (ECF Nos. 148, at 2
(“[A]ll of the claims in the initial complaint have been
resolved via dispositive motion or settlement.”); 150 (“The
parties
have
resolved
HSUS’s
claim . . . . No
trial
is
necessary.”)).
2

On September 8, 2015, Plaintiffs expressed their intent to
seek leave to file an amended complaint for the first time (ECF
No. 86), and on September 28, Plaintiffs filed a motion for
leave to amend (ECF No. 90).
Plaintiffs
declaratory

sought

to

judgment

In the proposed amended complaint,

add

claims

under

two

for

breach

additional

of

contract

insurance

and

policies

sold by Defendant to HSUS: Policy No. 965-95-51, for the period
January 1, 2007, to June 1, 2008 (the “2007-2008 Policy”); and
Professional Liability Insurance for Corporate Counsel, Policy
No. 01-950-29-84, for the period June 1, 2009, to June 1, 2010
(the “Employed Lawyers Policy”).

(See ECF No. 90-2).

On June 10, 2016, while Plaintiffs’ motion for leave to
amend was pending, Plaintiff HSUS filed the same claims it was
seeking leave to bring in this action as a new action against
Defendant in this court.

Complaint, The Humane Soc’y of the

U.S. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., No. PWG
16-2029 (D.Md. June 10, 2016), ECF No. 1.
before the Honorable Paul W. Grimm.

That case is pending

Plaintiffs did not withdraw

their motion for leave to amend or inform the court of the
filing of the new action.
On July 11, 2016, the court denied the motion for leave to
amend.

Plaintiffs’

motion

had

addressed

only

the

liberal

standards of Rule 15(a) and not the good cause necessary to
modify the scheduling order under Rule 16(b).
3

(ECF Nos. 98;

99).

The court held that, even considering the arguments on

good

cause

Plaintiffs
scheduling

that

had

failed
order

been

to

advanced

show

because

good

they

only

in

cause

failed

to

the

for

reply

brief,

modifying

establish

the

that

they

exercised diligence in seeking leave to amend.

(ECF No. 98, at

8-16).

long

The

court

found

that

Plaintiffs

had

known

the

underlying facts in this matter and could have either included
the

proposed

claims

in

the

complaint

or

added

those

claims

before the expiration of the scheduling order deadline.3

(Id. at

12).

not

Instead,

Plaintiffs

had

“deliberately

elected

to

include any claim under either the 2007-2008 D&O Policy or the
Employed Lawyers Policy in the complaint” and had “waited until
more than two months following the summary judgment opinion to
seek leave to amend the complaint.”

(Id. at 11-12).

Plaintiffs

first sought leave to amend the complaint more than two years
after

the

discovery

scheduling
had

order

concluded,

deadline,

and

two

3

nearly

months

a

after

year

after

Defendant’s

Plaintiff incorrectly asserts that it first sought
coverage under the 2007-2008 Policy after the summary judgment
order was issued and did not seek leave to add a claim under
this policy until it had a “formal denial in hand.”
(ECF No.
138-7, at 12-13).
After Plaintiffs sought coverage under the
2007-2008 Policy in August 2015 (ECF No. 138-19), Defendant
denied coverage on October 28, 2015 (ECF No. 138-20).
Plaintiffs’ motion for leave to amend had already been filed on
the ground that Defendant was “likely to reject coverage.” (ECF
No. 90-1, at 3).
The court held that Plaintiffs could have
included claims under the 2007-2008 Policy “when they commenced
this action, and certainly before the expiration of the
scheduling order deadline.” (ECF No. 98, at 12).
4

summary judgment motion had been decided.

The court determined

that this delay showed a lack of diligence and would prejudice
Defendant.
necessary
Plaintiffs

(Id.
to

at

13-14).

consider

had

failed

Finally,

Plaintiffs’
to

show

Rule

good

although
15

cause

it

arguments
for

was

not

because

modifying

the

scheduling order under Rule 16, the opinion also noted that
denial of leave to amend under Rule 15 was appropriate when the
amendment

would

prejudice

the

non-moving

party,

and

“determine[d] that Defendant would be prejudiced by Plaintiffs’
proposed amendments.”
II.

(Id. at 16 & n.7).

Motion for Reconsideration
In the instant motion, HSUS asks for reconsideration of the

denial of leave to amend in light of the January 27, 2017,
decision by the Court of Appeals of Maryland in a case filed
against Defendant by The Fund for Animals (“FFA”), an affiliate
of HSUS, regarding coverage for the same Feld litigation under
HSUS’s 2007-2008 Policy.

(ECF No. 138); see Nat’l Union Fire

Ins. Co. of Pittsburgh, Pa. v. The Fund for Animals, Inc., 451
Md. 431 (2017).

Plaintiff argues that the decision of the Court

of Appeals affirming the entry of a judgment of liability on the
2007-2008 Policy in favor of FFA and against National Union is
entitled to collateral estoppel effect in this case.
138-7, at 17-18).
leave

to

amend

(ECF No.

Plaintiff contends that it should be granted
its

complaint

to
5

add

its

own

claim

against

National Union under the 2007-2008 Policy because liability has
already

been

determined.

Therefore,

Plaintiff

argues,

there

would be no prejudice to Defendant and no impact on the imminent
trial

in

this

case

on

its

pending

claim

incurred by the two individual plaintiffs.
A.

for

defense

costs

(See id. at 17-22).

Standard of Review

Plaintiff

moves

for

reconsideration

under

Fed.R.Civ.P.

54(b), which governs reconsideration of an interlocutory order.
See Fayetteville Inv’rs v. Commercial Builders, Inc., 936 F.2d
1462, 1469-70 (4th Cir. 1991).

Rule 54(b) provides that “any

order or other decision, however designated, that adjudicates
fewer than all the claims or the rights and liabilities of fewer
than all the parties . . . may be revised at any time before the
entry of a judgment adjudicating all the claims and all the
parties’ rights and liabilities.”
United

States

Court

of

Appeals

Fed.R.Civ.P. 54(b).
for

the

Fourth

In the

Circuit,

the

precise standard governing a motion for reconsideration of an
interlocutory order is unclear.
at 1472.

Fayetteville Inv’rs, 936 F.2d

While the standards articulated in Rules 59(e) and

60(b) are not binding in an analysis of Rule 54(b) motions, Am.
Canoe Ass’n v. Murphy Farms, Inc., 326 F.3d 505, 514 (4th Cir.
2003), courts frequently look to these standards for guidance in
considering such motions, Akeva, LLC v. Adidas Am., Inc., 385
F.Supp.2d 559, 565-66 (M.D.N.C. 2005).
6

Public policy favors an end to litigation
and recognizes that efficient operation
requires
the
avoidance
of
re-arguing
questions that have already been decided.
Most courts have adhered to a fairly narrow
set of grounds on which to reconsider their
interlocutory orders and opinions.
Courts
will reconsider an interlocutory order in
the following situations: (1) there has been
an intervening change in controlling law;
(2) there is additional evidence that was
not previously available; or (3) the prior
decision was based on clear error or would
work manifest injustice.
Akeva, 385 F.Supp.2d at 565-66 (citations omitted); see also
Beyond Sys., Inc. v. Kraft Foods, Inc., No. PJM–08–409, 2010 WL
3059344, at *1-2 (D.Md. Aug. 4, 2010) (applying this three-part
test when evaluating a motion for reconsideration under Rule
54(b)).

A motion for reconsideration under Rule 54(b) may not

be used merely to reiterate arguments previously rejected by the
court.
B.

Beyond Sys., Inc., 2010 WL 3059344, at *2.
Analysis

A motion for reconsideration must be filed no later than
fourteen days after entry of the order under Local Rule 105.10.
Plaintiff’s motion was filed on March 15, 2017, 247 days after
entry of the court’s July 11, 2016, order denying leave to amend
and 47 days after the issuance of the Court of Appeals decision
on January 27, 2017.

Plaintiff acknowledges that its motion for

reconsideration is untimely, but urges the court to suspend the

7

Local Rule because its request “stems from the Court of Appeals’
recent decision and mandate.”

(ECF No. 138-7, at 19).

This argument for suspension of the Local Rule demonstrates
the

flawed

reasoning

reconsideration.

underlying

Plaintiff’s

arguments

for

Plaintiff argues that the Court of Appeals’

decision in The Fund for Animals case justifies reconsideration
because it is both a controlling change in law and new evidence,
(ECF

No.

138-7,

at

17-18),

but

any

impact

of

the

Court

of

Appeals’ decision on the merits of Plaintiff’s proposed claim
against

Defendant

controlling
motion

for

law

is

that

leave

not

an

governed

to

amend

intervening

the
its

disposition

change
of

complaint.

in

the

Plaintiff’s

Plaintiff

has

identified no change in the law governing motions to modify a
scheduling order or for leave to amend a complaint that would
merit

reconsideration

of

the

court’s

holdings

that

Plaintiff

failed to show good cause for modifying the scheduling order and
that

its

proposed

Similarly,
evidence”

this
(id.

amendments

decision
at

17),

does
that

would
not

would

prejudice

“provide[]
have

been

a

Defendant.
form

of

relevant

new

to

a

showing of good cause.
Plaintiff also argues that it “must be able to assert a
claim

under

the

2007

Policy

(ECF No. 138-7, at 18).

to

prevent

manifest

injustice.”

Plaintiff contends that because the

Court of Appeals of Maryland has held that Defendant wrongfully
8

denied insurance coverage, it would be unjust to allow Defendant
to benefit from its wrongful denial by not reconsidering denial
of leave to amend in order to allow Plaintiff to add a claim
under the 2007-2008 Policy in this case.
cannot
FFA’s

recover
action

from

or

in

Defendant
a

under

separate

the

action,

Even if Plaintiff
2007-2008

there

is

Policy

no

in

manifest

injustice here; any benefit to Defendant would result solely
from

Plaintiff’s

strategic

decision

not

to

raise

this

claim

earlier in this case.
Plaintiff

also

makes

an

argument

for

manifest

injustice

based on an apparent cost sharing agreement between it and FFA.
It states that Plaintiff and FFA agreed that FFA should pay the
entire $10.675 million settlement in the underlying litigation,
but that Plaintiff paid $4.475 million of the settlement because
FFA “is a small charity and lacked the financial resources”
necessary to satisfy the settlement.

(Id. at 3, 18).

Plaintiff

states that FFA will recover only FFA’s share in its litigation,
and argues that it would be unjust if HSUS could not recover its
share

as

well.

(Id.

at

18-19).

Assuming

arguendo

that

Plaintiff cannot recover the settlement payment it apparently
incurred

voluntarily

in

FFA’s

action,

there

is

no

manifest

injustice in it not recovering on a claim that it failed to
assert.

9

Plaintiff
litigation.

made

deliberate,

strategic

choices

in

this

As noted in the opinion denying leave to amend, it

could have included claims under both the 2007-2008 and 20092010 Policies in the complaint – as FFA did in its action, after
receiving the same denial letter in 20104 – or it could have
sought leave to amend years ago.

Instead, Plaintiff waited

until after summary judgment was granted against it on the 20092010 Policy belatedly to attempt to assert claims for the “same
damages” (ECF No. 149, at 12), under “totally separate” policies
(ECF No. 94, at 3).
2007-2008

Policy

strategic

FFA’s success in pursuing a claim under the

may

decisions,

give
but

Plaintiff
it

provides

reason
no

to

regret

its

justification

for

reconsideration of the court’s order denying leave to amend.
Plaintiff’s motion for reconsideration is untimely and offers no
persuasive justification for suspending Local Rule 105.10 or for
reconsidering
Accordingly,

denial

of

Plaintiff’s

leave
motion

to
for

amend

the

complaint.

reconsideration

of

the

denial of leave to amend will be denied.

4

Fund for Animals, Inc. v. Nat’l Union Fire Ins. Co. of
Pittsburgh, Pa., 226 Md.App. 644, 655, 657 & n.7, aff’d, 451 Md.
431 (2017) (noting that FFA brought breach of contract claims
under both the 2007-2008 and 2009-2010 Policies after National
Union “informed HSUS and the FFA that National Union was
disclaiming coverage for both of them in the [Feld] Case under
the 2010 Policy and under the 2007 Policy” on May 26, 2010).
10

C.

Leave to File an Amended Complaint

Although

Plaintiff

reconsideration,
different
motion.

denotes

Plaintiff

amended

in

complaint

this

essence
than

it

motion
seeks
did

as

leave
with

one
to

the

for

file

a

original

(Compare ECF No. 90-2, with ECF No. 138-3).

Among

other differences, Plaintiff no longer seeks to add a claim
under the Employed Lawyers Policy.
Whether

Plaintiff’s

motion

is

(ECF No. 138-7, at 10 n.4).
construed

as

a

motion

for

reconsideration or as a new motion for leave to file an amended
complaint, the motion will be denied.
Plaintiff argues that it can demonstrate good cause under
Rule 16(b)(4) because it has acted in good faith, the length of
its delay has prevented unnecessary discovery and litigation,
and its proposed amendment would not prejudice Defendant because
it would prevent Defendant’s unjust enrichment.
at

20-22).

Plaintiff

also

asserts

that

(ECF No. 138-7,

“[t]here

is

little

question that HSUS can meet the liberal standard for amendment
under Rule 15(a)(2),” and makes the conclusory statements that
amendment would not prejudice Defendant or be futile.

(Id. at

19-20).
Plaintiff has again failed to demonstrate good cause for
modifying the scheduling order under Rule 16.

As previously

noted, “[l]ack of diligence and carelessness are the ‘hallmarks
of failure to meet the good cause standard.’”
11

(ECF No. 98, at

13 (quoting W.Va. Hous. Dev. Fund v. Ocwen Tech. Xchange, Inc.,
200 F.R.D. 564, 567 (S.D.W.Va. 2001))).

Plaintiff could have

brought this claim before the scheduling order deadline, and
Plaintiff

continues

substantial

delay

to

in

offer

seeking

no
to

justification

include

this

for

claim

its
here.5

Plaintiff sought to add this new claim just six weeks before
trial was scheduled to begin, nearly 20 months after the court’s
summary judgment order.

Moreover, if the parties have in fact

resolved the remaining claim in this action, then Plaintiff is
seeking to delay disposition of this action solely to add this
new

claim.

Defendant,

Such
and

unpersuasive.

an

amendment

Plaintiff’s

would

arguments

undoubtedly
to

the

prejudice

contrary

are

Accordingly, construing the motion as a motion

for leave to amend, it is also denied.
III. Request for Clarification
Plaintiff

also

requests

the

alternative

relief

of

“clarification” of the order denying leave to amend to state
that the decision was without prejudice to Plaintiff advancing
5

Instead, Plaintiff makes the creative but unconvincing
argument that the length of its delay in seeking leave to amend
weighs in favor of amendment because, by delaying until after
FFA’s claim under the 2007-2008 Policy had been litigated,
tried, and appealed, it has saved the parties in this action (or
at least has saved itself) from unnecessary discovery and
litigation. (ECF No. 138-7, at 21). Regardless of whether the
decision in FFA’s case would be entitled to collateral estoppel
effect here, the outcome of that proceeding has no bearing on
whether Plaintiff diligently pursued its own claim under the
2007-2008 Policy against Defendant.
12

that claim in a new action.

(ECF No. 138-7, at 22-23).

As

noted above, Plaintiff has already advanced its proposed claim
in a separate action.

(See id.).

At the time it filed the

instant motion, Defendant’s motion to dismiss that action as
barred by res judicata was pending and ripe for disposition.
Motion to Dismiss or Stay, The Humane Soc’y of the U.S. v. Nat’l
Union Fire Ins. Co. of Pittsburgh, Pa., No. PWG 16-2029 (D.Md.
September 19, 2016), ECF No. 9.

Plaintiff requests that this

court

leave

direct

that

its

denial

of

to

amend

was

without

prejudice, in order to “avoid[] unnecessary litigation about the
potential preclusive effects of the order.”

(ECF No. 138-7, at

23).
In support of its request, Plaintiff cites to Wright &
Miller, to the effect that a court may direct that leave to
amend is without prejudice to advancing the new matter in a
separate action, and a single unpublished decision from Nevada.
(Id. (citing Reed v. Tracy, 2013 WL 4875949, at *2 (D.Nev. Sept.
11,

2013)

(denying

leave

to

amend

but

permitting

pro

se

plaintiff to assert unrelated claims against new defendants in a
separate action), aff’d, 647 F.App’x 730 (9th Cir. 2016) (mem.);
18 Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper,
Federal

Practice

and

Procedure

§ 4412

(3d

ed.

2016))).

Plaintiff’s citation to a fragment from Wright & Miller clouds
what is at issue.

The entire sentence is:
13

“Unless the court

can be persuaded to direct that denial of leave to amend is
without prejudice to advancing the new matter in a separate
action,
Arthur

preclusion
R.

Procedure

Miller,
§ 4412

should

apply.”

18

Charles

Alan

Cooper,

Federal

Practice

&

Edward

H.

(3d

ed.

2016).

As

the

full

Wright,
and

discussion

illustrates, the decision turns on often difficult concepts of
claim preclusion, or res judicata, and those issues have not
adequately been addressed by the parties in this case.
similarly

unclear

whether

the

parties

yet

have

It is

completely

addressed the relevant issues in the second case.
Plaintiff’s filing of a second action while this case was
pending and before leave to amend had been denied implicated the
rule against duplicative litigation.
It is undisputed that it is within a
district court’s power to stay or dismiss a
suit that is duplicative of another federal
court suit.
See Colorado River Water
Conservation Dist. v. United States, 424
U.S. 800, 817 (1976) (“As between federal
district courts, . . . the general principle
is to avoid duplicative litigation.”). This
rule against duplicative litigation, also
referred to as “claim splitting,” is the
“‘other action pending’ facet of the res
judicata doctrine.’”
Davis v. Sun Oil Co.,
148 F.3d 606, 613 (6th Cir. 1998). Like res
judicata,
claim
splitting
“prohibits
a
plaintiff
from
prosecuting
its
case
piecemeal, and requires that all claims
arising out of a single wrong be presented
in one action.”
Myers v. Colgate–Palmolive
Co., 102 F.Supp.2d 1208, 1224 (D.Kan. 2000)
(internal citations omitted).
Thus, when a
suit
is
pending
in
federal
court,
a
14

plaintiff has no right to assert another
action “on the same subject in the same
court, against the same defendant at the
same time.”
Curtis v. Citibank, N.A., 226
F.3d 133, 138–39 (2d Cir. 2000).
In a claim splitting case, as with the
traditional
res
judicata
analysis,
the
second suit will be barred if the claim
involves the same parties or their privies
and “arises out of the same transaction or
series of transactions” as the first claim.
See Trustmark Insur. Co. v. ESLU, Inc., 299
F.3d 1265, 1269–70 (11th Cir. 2002).
The
court must “assess whether the second suit
raises issues that should have been brought
in the first.” Curtis, 226 F.3d at 140.
Very often, the doctrine of claim
splitting applies to bar a plaintiff from
filing a new lawsuit after the court in an
earlier action denied leave to amend the
complaint to add those claims. See Northern
Assurance Co. of Am. v. Square D. Co., 201
F.3d 84, 87–88 (2d Cir. 2000) (citing string
of cases dismissing claim in second suit
that was duplicative of claim sought to be
amended to first suit); In re Kevco, Inc.,
309 B.R. 458, 465–66 (Bkrtcy.N.D.Tex. 2004)
(same). The preclusion of a claim not only
prohibits
a
plaintiff
from
filing
duplicative suits and from circumventing an
earlier ruling of the court, it is in
keeping with “the rule that a plaintiff must
bring suit against the same defendant on all
claims that relate to the same conduct,
transaction or event at the same time.”
Curtis, 226 F.3d at 139.
Sensormatic

Sec.

Corp.

v.

Sensormatic

F.Supp.2d 574, 579 (D.Md. 2004).

Elecs.

Corp.,

329

Thus, the issue of whether

claim preclusion or some other doctrine precludes Plaintiff from
pursuing a separate action must be decided by Judge Grimm in the

15

separate action.
this

case.

What

It would not be appropriate to address it in
was

before

this

court

was

solely

whether

Plaintiffs had established good cause to alter the scheduling
order and satisfied the liberal standards regarding amendments
to pleadings in this action.

The court will decline Plaintiff’s

invitation

Grimm

to

advise

Judge

on

the

dispositive

motion

before him by “clarifying” its denial of leave to amend the
complaint.
IV.

Conclusion
For the foregoing reasons, the motion for reconsideration

and clarification filed by Plaintiff HSUS will be denied.
separate order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

16

A