ARRAJJ et al v. AMERICAN COMMERCE INSURANCE COMPANY et al
Filing
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OPINION. Signed by Magistrate Judge James B. Clark on 11/5/14. (gmd, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
JAMES AND GIOVANNA ARRAJJ,
Civil Action No. 14-3233 (FSH)
Plaintiffs,
OPINION
v.
AMERICAN COMMERCE INSURANCE
COMPANY & SELECTIVE INSURANCE
COMPANY OF AMERICA,
Defendants.
CLARK, Magistrate Judge
THIS MATTER comes before the Court by way of motion of Plaintiffs James and
Giovanna Arrajj (“Plaintiffs”) for Leave to Amend their Complaint. (Dkt. No. 24). Defendant
Selective Insurance Company of America (“Selective)” and Defendant American Commerce
Insurance Company (“American Commerce”) oppose the motion. (Dkt. Nos. 27, 29). The Court
has considered Plaintiffs’ Motion without oral argument pursuant to Federal Rule of Civil
Procedure 78. Having considered the parties’ written submissions, for good cause shown, and for
the reasons set forth herein, the Court DENIES in part and GRANTS in part Plaintiff’s Motion
to Amend their Complaint.
I.
BACKGROUND
On May 20, 2014, Plaintiffs filed a Complaint against American Commerce and Selective
for breach of contract (flood policy) (Count I), breach of contract (homeowner’s policy) (Count
II), and breach of good faith and fair dealing (homeowner’s policy) (Count III). (Dkt. No. 1).
Plaintiffs alleged that their home was destroyed by Hurricane Sandy on October 29, 2012. (Id., at
¶ 1). Plaintiffs alleged that they purchased a National Flood Insurance Policy from Defendant
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Selective that provided coverage for the damage they sustained. (Id., at ¶ 4). They also alleged
that they purchased homeowner’s insurance from Defendant American Commerce. (Id., at ¶ 5).
Plaintiffs claimed that both Defendant Selective and American Commerce unreasonably and in
bad faith denied coverage and underpaid for the damage to Plaintiffs’ home and contents. (Id., at
¶¶ 8-9, 20-39).
The Court entered the Hurricane Sandy Case Management Order (“HSCMO”) on July 21,
2014. (Dkt. No. 12). The HSCMO provides that any motions to amend the pleadings or join new
parties shall be filed no later than sixty (60) days from entry of the HSCMO. On September 18,
2014, Plaintiffs filed the instant motion seeking leave to amend their Complaint. Plaintiffs seek to
add two causes of action to the Complaint. First, Plaintiffs seek to add a single cause of action—
Count IV for Declaratory Judgment—against Selective. (Dkt. No. 24-3, at ¶¶ 59-61). Second,
Plaintiffs seek to add a single cause of action—Count V for Violation of New Jersey Consumer
Fraud Act—against American Commerce. (Dkt. No. 24-3, at ¶¶ 62-69).
II.
DISCUSSION
Rule 15(a)(2) of the Federal Rules of Civil Procedure provides, in pertinent part, “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 justice so requires.” FED. R. CIV. P. 15(a)(2). A general
presumption exists in favor of allowing a party to amend its pleadings. Boileau v. Bethlehem Steel
Corp., 730 F.2d 929, 938 (3d Cir. 1984) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). The
Court may deny a motion to amend the pleadings only where there is: (1) undue delay, (2) bad
faith or dilatory motive, (3) undue prejudice, (4) repeated failures to cure deficiencies, or (5) futility
of amendment. Foman, 371 U.S. at 182; Long v. Wilson, 393 F.3d 390, 400 (3d Cir. 2004) (“We
have held that motions to amend pleadings [under Rule 15(a)] should be liberally granted.”)
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(citations omitted); Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002) (“Under
Rule 15(a), if a plaintiff requests leave to amend a complaint . . . such leave must be granted in the
absence of undue delay, bad faith, dilatory motive, unfair prejudice, or futility of amendment.”).
A. Defendant Selective Insurance Company of America
Plaintiffs’ proposed declaratory judgment claim (Count IV) seeks a declaration pursuant to
28 U.S.C. § 2201 that “Selective is in breach of its obligation to pay fully the amount due under
the policy . . . .” (Dkt. No. 24-3, at ¶ 61). Pursuant to the Declaratory Judgment Act, 28 U.S.C. §
2201:
In a case of actual controversy within its jurisdiction . . . any court
of the United States, upon the filing of an appropriate pleading, may
declare the rights and other legal relations of any interested party
seeking such declaration, whether or not further relief is or could be
sought. Any such declaration shall have the force and effect of a
final judgment or decree and shall be reviewable as such.
Defendant Selective contends that Plaintiffs’ motion should be denied because proposed Count IV
for declaratory judgment is wholly redundant of Plaintiffs’ Count I for breach of the flood
insurance policy. (Dkt. No. 27) (citing Jakubowski v. FEMA, No. 12-2202, 2013 U.S. Dist. LEXIS
43789, *18 (D.N.J. Mar. 27, 2013) (denying, in part, plaintiff’s motion to amend his complaint in
a flood insurance case to include a count for declaratory judgment because it was redundant of the
plaintiff’s breach of contract counts). Count I of the Complaint alleges that Defendant Selective
breached the insurance contract when it failed to pay and refused to reimburse Plaintiffs what they
owed for damages caused by Hurricane Sandy. (Dkt. No. 1, at ¶¶ 40-44).
In Jakubowski, the Court explained that “in the context of a flood insurance suit a plaintiff
may not bring a declaratory judgment claim unless there is a continuing controversy between the
parties that will not be resolved by the existing cause of action.” See Jakubowski, 2013 U.S. Dist.
LEXIS 43789 at *18 (citing Scritchfield v. Mutual of Omaha Ins. Co., 341 F. Supp. 2d 675 (E.D.
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Tex. 2004)). In Scritchfield v. Mutual of Omaha Ins. Co., 341 F. Supp. 2d 675 (E.D. Tex. 2004),
an insured sought to assert a cause of action for declaratory relief “to declare the flood events at
issue are covered events under the policy.” Id. at 682. Rejecting plaintiff’s position, the Court
held that the National Flood Insurance Act did not provide for declaratory relief, and there was no
actual case or controversy that would allow a claim under the Declaratory Judgment Act. See id.
In so holding, the Court concluded:
Even though there is a dispute about the rights and obligations of the
parties under the contract that does not automatically ripen into an
affirmative remedy under the Declaratory Judgment Act, especially
if other adequate remedies already exist. 10B Charles A. Wright
Arthur R. Miller & Mary Kay Kane, Fed. Prac. & Proc. §§ 2751,
2758 (3d ed. 1998). Plaintiffs would get nothing from a declaratory
judgment that they would not get from prevailing on their breach of
contract claims. There is no claim that there is a need to interpret
the contract language because of possible future events. Since no
actual relief can be granted, and no real controversy exists, the
request for declaratory judgment is dismissed.
Id. The Court finds this reasoning persuasive. The proposed declaratory judgment cause of action
is unnecessary and repetitive in light of the breach of contract claim. The dispute between the
parties is whether Selective paid Plaintiffs all monies they are entitled to under their flood
insurance policy, which will be resolved by the Court in addressing the breach of contract claim
in Count I. Accordingly, Plaintiffs’ proposed amendment to add a declaratory judgment claim in
Count IV is DENIED.
B. Defendant American Commerce Insurance Company
Plaintiffs also seek to add a claim for violation of New Jersey Consumer Fraud Act against
American Commerce. (Dkt. No. 24-3, at ¶¶ 62-69). Defendant American Commerce contends
that Plaintiffs’ motion for leave to amend should be denied because allowing the proposed
amendment is prejudicial to American Commerce. (Dkt. No. 29).
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The issue of undue prejudice requires that the Court to focus on the hardship to the
Defendants if the amendment were permitted. Adams v. Gould, Inc., 739 F.2d 858 (3d Cir. 1984).
“[P]rejudice to the non-moving party is the touchstone for the denial of the amendment.” Bechtel
v. Robinson, 886 F.2d 644, 652 (3d Cir. 1989). However, “[t]o justify the denial of a motion to
amend, the asserted prejudice must amount to more than mere inconvenience to the non-moving
party.” Voilas et al. v. General Motors Corp., et al., 173 F.R.D. 389, 396 (D.N.J. 1997) (internal
citations and quotations omitted). In determining what constitutes unfair prejudice, courts consider
whether allowing the amended pleading would (1) require the non-moving party to expend
significant resources to conduct discovery and prepare for trial, (2) significantly delay resolution
of the dispute, or (3) prevent a party from bringing a timely action in another jurisdiction. Long,
393 F.3d at 400.
Generally, courts have not found unfair prejudice when a party moves to amend when
discovery is still open. See, e.g., Luppino v. Mercedes-Benz USA, LLC, No. 09-cv-5582 (JLL)
(JDD), 2014 U.S. Dist. LEXIS 123932, at *13-14 (D.N.J. Sept. 4, 2014); Transweb v. 3M
Innovative Props. Co., et al., No. 10-4413 (FSH), 2011 U.S. Dist. LEXIS 59095, at *25-26 (D.N.J.
June 1, 2011) (finding no unfair prejudice where schedule would not be impacted and several
months of fact discovery remained); Leibholz v. Hariri and Celgene Corp., No. 05-5148 (DRD),
2007 U.S. Dist. LEXIS 54896 (D.N.J. July 27, 2007) (granting amendment where discovery was
still open and final pretrial conference had not been set, among other factors). “[I]n contrast, ‘[i]f
the proposed amendment requires the reopening of discovery, the prejudice to the non-moving
party will be considered greater than if the proposed amendment presents only a new issue of
law.’” Luppino, 2014 U.S. Dist. LEXIS 123932, at *13 (quoting Voilas, 173 F.R.D. at 396
(internal citations and quotations omitted)).
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Plaintiffs assert that Defendants will not suffer any prejudice through an amendment
because discovery has not yet been completed and the requests do not involve any new facts in
this case such that additional discovery would be necessary.
Defendant American Commerce, on the other hand, contends that the new count is based
on new facts not previously of record, including an alleged ongoing, widespread and continuous
scheme to defraud its insured’s in the payment of benefits under their policies of insurance.
American Commerce explains that it has already served written discovery and Plaintiff has already
responded. According to American Commerce, this amendment would require it to spend
significant additional resources to conduct additional discovery and prepare for trial, including a
motion to conduct additional discovery. American Commerce even makes a request for additional
discovery should the Court grant Plaintiffs’ motion. Finally, American Commerce contends that
the pending deadlines may have to be extended to accommodate for this additional discovery.
The Court finds that the amendment to add a claim for violation of New Jersey Consumer
Fraud Act against American Commerce will not unduly prejudice Defendant. Plaintiffs moved to
amend the Complaint within the deadline set forth in the HSCMO and the discovery deadline has
not yet passed. The current deadline for discovery is November 18, 2014. Plaintiff further claims
that no further discovery is necessary. However, even if additional discovery is needed, the Court
finds that any potential prejudice may be minimized through careful case management regarding
any remaining, necessary discovery. If, however, the parties cannot complete this additional
discovery within the current deadline, they can request an extension from the Court. Accordingly,
Plaintiffs’ proposed amendment to add a violation of the New Jersey Consumer Fraud Act in Count
V is GRANTED.
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III.
CONCLUSION
For the foregoing reasons, having considered the parties’ written submissions, this Court
hereby DENIES in part and GRANTS in part Plaintiff’s Motion to Amend their Complaint (Dkt.
No. 24).
Dated: November 5, 2014
s/James B. Clark, III
HONORABLE JAMES B. CLARK, III
UNITED STATES MAGISTRATE JUDGE
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