Applied Underwriters Captive Risk Assurance Company, Inc. v. Ramesh Pitamber & Kusum Pitamber et al

Filing 155

ORDER - The defendants' amended motion for leave to file a fourth amended answer (filing 153 ) is granted. The defendants' superseded motion for leave to amend (filing 151 ) is denied as moot. The plaintiff's motion to dismiss (fil ing 137 ) is denied as moot. The defendants' fourth amended answer shall be filed on or before July 12, 2019. The plaintiff's responsive pleading or motion shall be filed on or before July 26, 2019. Ordered by Chief Judge John M. Gerrard. (LKO)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
APPLIED UNDERWRITERS
CAPTIVE RISK ASSURANCE
COMPANY, INC., An Iowa
Corporation,

8:17-CV-61

Plaintiff and
counter defendant,
vs.
RAMESH PITAMBER & KUSUM
PITAMBER, A California
Partnership, et al.,
Defendants,
counterclaimants,
and third-party
plaintiffs,

ORDER

vs.
CALIFORNIA INSURANCE
COMPANY, a California Corporation,
and APPLIED UNDERWRITERS,
INC., a Nebraska Corporation,
Third-party
defendants.
Before the Court are the plaintiff's motion (filing 137) to dismiss several
of the defendants' counterclaims pursuant to Fed. R. Civ. P. 12(b)(6), and the
defendants' motion (filing 153) for leave to file an amended answer pursuant
to Fed. R. Civ. P. 15(a)(2). The Court will grant the motion for leave to file an

amended answer, and deny the motion to dismiss as moot.1
The defendants initially asserted two counterclaims against the plaintiff.
See filing 21. But in their third amended answer (filed over objection) they
asserted several more. See filing 109. So, the plaintiff moved to dismiss all but
one of them. Filing 137; see filing 138. Among other things, the plaintiff argues
that the defendants' counterclaims are conclusory, aren't legally recognized
claims, and fail to include the specific allegations necessary to provide notice
consistent with Fed. R. Civ. P. 8. See filing 138.
In response, the defendants filed their motion for leave to file a fourth
amended answer (filing 151). The reason for another amended answer, the
defendants say, is that because the plaintiff argues the counterclaims were
insufficiently detailed, the defendants should be allowed to amend their
counterclaims to incorporate all the information they currently have. Filing
153. The Court agrees.
The problem the Court faces is inefficiency. The standards for the
plaintiff's Rule 12(b)(6) motion are well-understood: To survive a motion to
dismiss under Rule 12(b)(6), a pleading must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face. Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009). A claim has facial plausibility when it
contains factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged. Id. While the Court

1

The Court recognizes that procedurally, there are counterclaims and third-party claims

here, and that the defendants are also counterclaimants and third-party plaintiffs, and that
two of the third-party defendants aren't also plaintiffs. But so far as the Court can tell, there
are really just two sides to this case, each asserting claims against the other—so, except
where the procedural details matter, for the sake of simplicity the Court will just refer to the
"plaintiff" and "defendants" and their "claims" and "counterclaims."

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must accept as true all facts pleaded by the non-moving party and grant all
reasonable inferences from the pleadings in favor of the non-moving party,
Gallagher v. City of Clayton, 699 F.3d 1013, 1016 (8th Cir. 2012), a pleading
that offers labels and conclusions or a formulaic recitation of the elements of a
cause of action will not do. Iqbal, 556 U.S. at 678.
The standards for allowing an amended pleading are also familiar: The
Court should freely give leave to amend a pleading when justice so requires.
Rule 15(a)(2); see Kozlov v. Associated Wholesale Grocers, Inc., 818 F.3d 380,
394 (8th Cir. 2016). But parties do not have an absolute right to amend their
pleadings, even under this liberal standard. Sherman v. Winco Fireworks, Inc.,
532 F.3d 709, 715 (8th Cir. 2008); see Sorace v. United States, 788 F.3d 758,
767 (8th Cir. 2015). And futility is a valid basis for denying leave to amend.
Munro v. Lucy Activewear, Inc., 899 F.3d 585, 589 (8th Cir. 2018), cert. denied,
139 S. Ct. 941 (2019). Specifically, futility means the Court has reached the
legal conclusion that the amended pleading could not withstand a motion to
dismiss under Rule 12(b)(6). Id. at 589.
In other words, both motions before the Court ask essentially the same
questions, but about different pleadings. Now, it's not uncommon for a court to
face both a motion to dismiss and a motion for leave to amend—but usually,
the Court rules on the motion to dismiss and, upon dismissing some claims, is
asked to decide whether a proposed amended pleading remedies the
deficiencies that led to the dismissal. It doesn't make a lot of sense to do both
at the same time.
It's also recognized by the Federal Rules of Civil Procedure that a
common and appropriate response to a motion to dismiss is for the pleader to
amend the pleading to (hopefully) fix the problem. See Rule 15(a)(1)(B). Here,
the defendants can't amend their pleading as of right, because they've already

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used their one amendment "as a matter of course." See Rule 15(a). But the
same principle applies. The defendants asserted several new counterclaims in
their third amended complaint. Compare filing 109, with filing 83. The plaintiff
did argue that the defendants had unduly delayed in asserting them—but the
Magistrate Judge decided otherwise, see filing 106, and the plaintiff did not
object to that ruling. The Court concludes that "justice so requires" the
defendants, as the pleading parties, to have at least one opportunity to plead
over the arguments raised by the plaintiff's motion to dismiss.
And, more importantly, the Court finds that judicial efficiency is served
by doing so. Rather than decide whether the defendants did state a claim, and
then decide separately whether the defendants could state a claim, it makes
far more sense to skip to the end by permitting the defendants' amended
pleading and then determining whether it is sufficient. This case is already
growing whiskers, and while restarting with an amended pleading and a
responsive pleading or motion might set case progression back a few days in
the short term, it will be more efficient in the long term. Accordingly,
1.

The defendants' amended motion for leave to file a fourth
amended answer (filing 153) is granted.

2.

The defendants' superseded motion for leave to amend (filing
151) is denied as moot.

3.

The plaintiff's motion to dismiss (filing 137) is denied as
moot.

4.

The defendants' fourth amended answer shall be filed on or
before July 12, 2019.

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5.

The plaintiff's responsive pleading or motion shall be filed on
or before July 26, 2019.

Dated this 10th day of July, 2019.
BY THE COURT:

John M. Gerrard
Chief United States District Judge

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