CX Reinsurance Company Limited v. Kirson

Filing 94

Memorandum Opinion and Order denying 72 MOTION for Leave to File Amended Pleadings. Signed by Judge Roger W Titus on 11/13/2017. (jf3s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

CX REINSURANCE COMPANY
LIMITED,
Plaintiff
v.
DEVON S. JOHNSON,
Intervenor

*
*
*
*
*
*
*
*
*
*
*
*

Case No. RWT 15-cv-3132

MEMORANDUM OPINION AND ORDER
Before the Court is Intervenor’s Motion for Leave to File Amended Pleading
[ECF No. 72].

After considering the Motion, Plaintiff’s Opposition [ECF No. 73], and

Intervenor’s Reply [ECF No. 76], this Court will deny Intervenor’s motion for failure to
demonstrate good cause, as well as the prejudice and futility of his proposed amendments.
I.

BACKGROUND
CX Reinsurance Company Limited (“CX”) provided commercial general liability

insurance for Benjamin L. Kirson (“Kirson”) in connection with various residential buildings
that Kirson leased to others. ECF No. 17 ¶ 8, 9. On February 23, 2016, CX sued Kirson,
seeking rescission of its insurance contract based on alleged misrepresentations of material facts
in Kirson’s application for insurance.

Id. ¶ 1.

On August 10, 2016, Devon S. Johnson

(“Johnson”), having won a state court judgment of $1,628,000 against Kirson for personal
injuries resulting from lead-paint exposure, moved to intervene alleging an interest in the
insurance policies. ECF No. 19 ¶ 2, 4. On January 18, 2017, the Court permitted Johnson to
intervene, but with limited discovery. ECF No. 38. Johnson filed his Answer to CX’s First

Amended Complaint on the same day. ECF No. 39. On July 24, 2017—over six months later—
Johnson moved to amend his Answer because of a settlement between CX and Kirson.
ECF Nos. 72, 72-1 at 3–4. Johnson now seeks to change admissions to denials, add affirmative
defenses, and assert two new counterclaims against Plaintiff. ECF No. 72-4.
II.

ANALYSIS
A scheduling order may only be modified “for good cause and with the judge’s consent.”

Fed. R. Civ. P. 16(b)(4). In reviewing good cause, courts consider the “diligence of the moving
party,” as well as “the danger of prejudice to the non-moving party, the length of delay and its
potential impact on judicial proceedings.” Montgomery v. Anne Arundel Cty., 182 F. App’x.
156, 162 (4th Cir. 2006); Tawwaab v. Va. Linen Serv., 729 F. Supp. 2d 757, 768–69
(D. Md. 2010) (internal quotations omitted). Once the deadlines for amending as a matter of
course have passed, a party may only amend a pleading “with the opposing party’s written
consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). Courts generally permit amended
pleadings under Rule 15(a)(2) but not if “they would be prejudicial to the 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).
Johnson fails to demonstrate good cause for modifying the scheduling order.

The

deadline under the scheduling order to amend pleadings was April 15, 2016. See ECF No. 14.
Although Johnson was not a party at that time, he waited more than six months after becoming a
party to file his Motion for Leave to Amend. See ECF No. 72. Johnson cannot demonstrate
good cause because all of the information relevant to the amendments was known at the time of
his original filing. See id. Johnson attempts to rely on the settlement between CX and Kirson as
a “new fact.” See ECF No. 72-1 at 4. However, any settlement itself is irrelevant to the legal
2

issues in dispute—alleged material misrepresentations made by Kirson in his insurance
application with CX. In any event, the settlement does not and cannot explain the changing of
admissions to denials, see ECF No. 72-4 at 2–10, and the addition of two new affirmative
defenses, see ECF No. 72-4 at 11. Accordingly, the Court finds that Johnson lacked diligence in
seeking to amend his pleading.
Additionally, CX would be prejudiced by Johnson’s amendments at this late stage in the
litigation. CX relied on Johnson’s original Answer when it agreed to settlement terms with
Kirson. ECF No. 73 at 6–7. The legal position of this case and CX’s cost-benefit based on the
remaining length of this litigation would be materially altered if Johnson were permitted to
amend his pleading at this late date.

Furthermore, to the extent that Johnson raises new

counterclaims on a theory of his alleged status as a third-party beneficiary, see id. at 16–21, this
Court has already rejected that legal premise. See ECF No. 46 (denying a temporary restraining
order in this case and rejecting Intervenor’s legal argument that he is a third party beneficiary to
the insurance contract in dispute). Therefore, Johnson’s amendments would be both prejudicial
and futile.
III.

CONCLUSION
This Court finds that Johnson has failed to demonstrate good cause for his Motion, and

his proposed amendments would be both prejudicial and futile. Accordingly, it is, this 13th day
of November, 2017, by the United States District Court for the District of Maryland,
ORDERED, that Intervenor’s Motion for Leave to File Amended Pleading [ECF No. 72]
is hereby DENIED.

/s/
ROGER W. TITUS
UNITED STATES DISTRICT JUDGE
3