Amerisure Mutual Insurance Company v. Federal Insurance Company

Filing 74

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that 67 Defendant Federal Insurance Company's Motion for Leave to Amend Its Counterclaim is DENIED. Signed by Magistrate Judge Shirley Padmore Mensah on 6/6/16. (CAR)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
AMERISURE MUTUAL INSURANCE CO.,
Plaintiff,
v.
FEDERAL INSURANCE CO.
Defendant.

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Case No. 4:15-CV-509-SPM

MEMORANDUM AND ORDER
This case is before the Court on the Motion for Leave to Amend Its Counterclaim filed by
Defendant and Counterclaim Plaintiff Federal Mutual Insurance Company (Doc. 67). The motion
has been fully briefed. For the reasons stated below, Federal’s motion will be denied.
I.

FACTUAL AND PROCEDURAL BACKGROUND

This case involves a dispute between two insurers, Amerisure Mutual Insurance
Company (“Amerisure”) and Federal Mutual Insurance Company (“Federal”), over their
coverage obligations with respect to a lawsuit brought against their insureds (KBS, CBRE, and
St. Louis Parking) in state court. On February 16, 2015, Amerisure filed a declaratory judgment
action in Missouri state court, seeking a declaration that Federal owes coverage obligations to St.
Louis Parking with respect to the underlying lawsuit. Federal removed this case to this Court on
March 23, 2015. (Doc. 1). On May 1, 2015, Federal filed an answer and a counterclaim for
declaratory judgment. (Doc. 13). On May 12, 2015, the Court entered a Case Management Order
stating, inter alia, that all motions for amendment of pleadings must be filed by August 22, 2015;
that discovery must be completed by October 5, 2015; that any dispositive motions must be filed
by November 17, 2015; and that a jury trial would take place on May 23, 2016. (Doc. 17). On
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June 11, 2015, Federal filed its amended answer and counterclaim, in which it sought a
declaration that Amerisure owes a duty to defend KBS and CBRE under Amerisure’s insurance
policy. Federal did not allege a counterclaim of vexatious refusal to defend.
On November 17, 2015, Federal moved for summary judgment on its counterclaims.
(Doc. 40). In addition, in both the motion and the memorandum in support of the motion, Federal
requested a summary judgment finding that Amerisure is liable for the limits of its policy and for
attorney’s fees and expenses based on Amerisure’s “vexatious refusal to defend” KBS and
CBRE. (Docs. 40 & 41). In its opposition, Amerisure moved to strike the portion of the motion
and brief addressing vexatious refusal to defend, pointing out that Federal had not pleaded any
such cause of action. (Doc. 50). In its Reply, Federal stated that it would not pursue its claim for
vexatious refusal to defend at this time but that it reserved the right to do so if the Court found
that Amerisure had breached its duty to defend KBS or CBRE. On April 29, 2016, the Court
ruled on Federal’s motion for summary judgment and Amerisure’s cross-motion for summary
judgment and found, inter alia, that Amerisure had an obligation to defend KBS and CBRE in
the underlying lawsuit, with the defense obligations to KBS applying on a primary basis and the
defense obligations to CBRE to be shared with Federal on a pro rata basis. (Doc. 29). The Court
also granted Amerisure’s motion to strike the section of Federal’s motion for summary judgment
purporting to seek summary judgment on vexatious refusal to defend.
Although the Court’s summary judgment ruling fully resolved the question of
Amerisure’s duty to defend KBS and CBRE, it left open certain issues with regard to the scope
of Amerisure’s duty to indemnify KBS and CBRE. The parties requested additional time to
conduct discovery on that issue, and the Court found that discovery for that limited purpose was
warranted. On May 12, 2016, the Court entered an Amended Case Management Order permitting
discovery “limited to facts probative of the extent to which the underlying claims arise out of St.
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Louis Parking’s management of the parking garage” and set a discovery completion deadline of
October 30, 2016. Dispositive motions are due November 7, 2016, and trial was set for January
17, 2017. (Doc. 65).
On May 18, 2016, Federal filed the instant motion, asking this Court for leave to amend
its counterclaim to add a claim of vexatious refusal to defend KBS and CBRE.
II.

LEGAL STANDARD

Under Rule 15 of the Federal Rules of Civil Procedure, a party who wishes to amend a
pleading more than 21 days after the original pleading was served may do so “only with the
opposing party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a). The court “should
freely give leave [to amend pleadings] when justice so requires.” Id. However, where a party
seeks leave to amend its pleading after the deadline established in the court’s scheduling order,
the Court applies the “good cause” standard of Rule 16(b)(4) rather than the Rule 15(a) standard.
See Sherman v. Winco Fireworks Inc., 532 F.3d 709, 716 (8th Cir. 2008); Peterka v. City of
Maplewood, No. 4:14CV00823 ERW, 2015 WL 2145342, at *2 (E.D. Mo. May 7, 2015); Nine v.
Williams, No. 4:11-CV-353 (CEJ), 2012 WL 3815627, at *2 (E.D. Mo. Sept. 4, 2012). Under
Rule 16(b)(4), “[a] schedule [set forth in a court order] may be modified only with good cause
and with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). Under Rule 16(b)(4), “the primary
measure of good cause is the movant’s diligence in attempting to meet the order’s requirements.”
Sherman, 532 F.3d at 716 (citing Rahn v. Hawkins, 464 F.3d 813, 822 (8th Cir. 2006)). Good
cause requires a change in the law, newly discovered facts, or other changed circumstances after
the deadline for amending pleadings. Hartis v. Chicago Title Ins. Co., 694 F.3d 935, 948 (8th
Cir. 2012). “While the prejudice to the nonmovant resulting from modification of the scheduling
order may also be a relevant factor, generally, [the court] will not consider prejudice if the
movant has not been diligent in meeting the scheduling order’Ws deadlines.” Sherman, 532 F.3d
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at 717 (citing Rahn, 464 F.3d at 822; Barstad v. Murray County, 420 F.3d 880, 883 (8th Cir.
2005); Freeman v. Busch, 349 F.3d 582, 589 (8th Cir. 2003)).
III.

DISCUSSION

Federal argues that it has good cause for amending its pleadings at this stage, because
there was a “change in circumstance”: the Court’s April 29, 2016 summary judgment ruling that
Amerisure did have a duty to defend KBS and CBRE. Federal argues that its claim that
Amerisure vexatiously refused to defend KBS and CBRE hinged on whether Amerisure had a
duty to defend KBS and CBRE, and that “[i]t was not until this Court ruled on April 29, 2016
that Amerisure, in fact, had a duty to defend KBS and CBRE that Federal could have claimed
vexatious refusal to defend KBS and CBRE.” Federal’s Reply, Doc. 70, at p. 2. Federal argues
that without such a ruling, a vexatious refusal to defend claim would have been premature.
Federal’s argument is without merit. Ever since Federal filed its first counterclaim on
April 1, 2015, Federal has included in its pleadings allegations that Amerisure has a duty to
defend KBS and CBRE. (Doc. 13, ¶¶ 35, 46; Doc. 18, ¶¶ 42, 53). Federal offers no explanation
for why it had to wait for a Court ruling on the correctness of those allegations before including
them as part of a vexatious refusal to defend claim. If Federal had a sufficient factual and legal
basis to make those allegations in its counterclaim in April of 2015, then it had a sufficient
factual and legal basis to include them in a vexatious refusal to defend claim well before the
August 22, 2015 deadline for amending pleadings. Moreover, Federal offers no legal support for
its suggestion that a party acts with diligence when it waits for a court’s summary judgment
ruling on a duty to defend claim before adding to its pleadings a vexatious refusal to defend
claim. If Federal’s suggestion were accepted, then any claim whose viability was dependent on
the merits of another claim could be withheld until after an entire round of pleading, discovery,
alternative dispute resolution, dispositive motions, and court rulings had already been completed,
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and then included in an amended pleading. Such a situation would be pointlessly inefficient and
expensive, and is unwarranted where the second claim could easily have been asserted at or near
the beginning of the case.
The Court further notes that Federal was actually aware that it had a vexatious refusal to
defend claim long before it received the Court’s summary judgment ruling on the duty to defend.
On November 17, 2015—five months before the Court ruled on summary judgment and six
months before Federal filed the instant motion for leave to amend—Federal requested a
summary judgment finding that Amerisure was liable for the limits of its policy and for
attorney’s fees and expenses based on Amerisure’s “vexatious refusal to defend” KBS and
CBRE. Federal offers no explanation for why it was capable of moving for summary judgment
on a vexatious refusal to defend claim before receiving the Court’s ruling on the question of the
duty to defend, but was not capable of including such a claim in its pleadings before receiving
the Court’s ruling.
Other than the fact that it had not yet received the Court’s ruling on the duty to defend,
Federal asserts no basis for finding good cause. Federal does not argue that there has been a
change in the relevant law since the deadline for amending pleadings, nor does Federal argue that
there are newly discovered facts that give rise to the new claim. Indeed, Federal acknowledges
that the new claim “is based on the same facts as the counts previously pled by Federal related to
the defense and indemnity of KBS and CBRE.” Federal’s Reply, Doc. 70, at p. 3. It is clear to
the Court that Federal was aware of all of the facts and law required to bring its vexatious refusal
to defend claim long before it attempted to amend its pleadings.
Federal argues that this case is similar to Cowden v. BNSF Railway Co., No. 4:08CV1534
ERW, 2013 WL 1282248 (E.D. Mo. Mar. 26, 2013), in which the district court granted summary
judgment in the defendant’s favor, the Eighth Circuit reversed and remanded, the district court
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issued a new scheduling order with a new discovery deadline, and the district court permitted the
plaintiff to amend his complaint to add a new claim. Cowden is distinguishable. In Cowden, the
plaintiff argued that because the new scheduling order permitted additional discovery related to
whether certain regulations were violated, he was also permitted to amend his complaint in
pursuing those theories of liability. Id. at *5. The court agreed, stating, “because this Court finds
that the proposed amendments are within the scope of the Eighth Circuit’s mandate, it would not
be inconsistent to allow amendment of the pleadings, especially in light of the additional
discovery contemplated by the appellate court.” Id. The court also found that the plaintiff’s
delays in moving to amend were not undue in light of the court’s grant of summary judgment,
the plaintiff’s motion to amend judgment under Rule 59(e), and the appellate proceedings in the
case. Id. Here, in contrast to Cowden, there is no appellate mandate or scheduling order that
contemplates discovery related to Federal’s new theory of liability. The only remaining
discovery concerns a single issue that Federal does not contend relates to a vexatious refusal to
defend claim. In addition, Federal has not been participating in appellate or other proceedings
here that might have excused its delay.
For the above reasons, the Court concludes that Federal did not diligently pursue its
proposed amended counterclaim. The record shows that Federal knew of all of the facts and law
necessary to make the claim before the deadline for amending pleadings, yet did not attempt to
include the claim in its pleadings until more than eight months after the deadline for moving to
amend pleadings and more than seven months after the close of discovery. Federal has provided
no valid reason for the delay. Because Federal cannot show that it has diligently pursued this
claim, it cannot satisfy the good cause standard of Rule 16(b)(4). In light of Federal’s lack of
diligence, the Court need not address the question of whether Amerisure would be prejudiced by
permitting the amendment.
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Accordingly,
IT IS HEREBY ORDERED that Federal’s Motion for Leave to Amend Its
Counterclaim (Doc. 67) is DENIED.

SHIRLEY PADMORE MENSAH
UNITED STATES MAGISTRATE JUDGE
Dated this 6th day of June, 2016.

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