Indian Harbor Insurance Company v. NL Environmental Management Services, Inc. et al

Filing 119

MEMORANDUM OPINION AND ORDER Denying 115 Plaintiff's Motion to Amend Counterclaim. Signed by Magistrate Judge Douglas E. Arpert on 9/15/2015. (kas, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
____________________________________
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INDIAN HARBOR INSURANCE
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COMPANY,
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Plaintiff,
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Civil Action No. 13-1889 (MAS) (DEA)
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v.
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MEMORANDUM OPINION & ORDER
NL ENVIORNMENTAL MANAGEMENT :
SERVICES, INC., et al.
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Defendants.
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____________________________________:
ARPERT, Magistrate Judge.
This matter comes before the Court by way of a motion by Defendants NL Industries,
Inc. (“NL Industries”) and NL Environmental Management Services, Inc. (“EMS”) (together,
“Defendants”) for an Order granting Defendants leave to file an Amended Counterclaim.
Plaintiff opposes the motion. The Court decides the matter without oral argument pursuant to
Federal Rule of Civil Procedure 78 and Local Civil Rule 78.1.
This action concerns an insurance coverage dispute arising out of claims in a separate
lawsuit related to sediment contamination and natural resource damages in the Raritan River. In
their Complaint in the instant action, Plaintiff Indian Harbor Insurance Company (“Indian
Harbor”) seeks a declaration that Defendants are not entitled to defense or indemnification under
the relevant policy of insurance (the “Policy”), and further seeks reformation of the Policy.
EMS has counterclaimed for a declaration of coverage along with claims for breach of contract,
breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and bad

faith. Defendants seek leave to make two amendments to the existing Counterclaim. First, they
wish to add NL Industries (as a Counterclaimant) to the existing Counterclaim. Second, they
wish to “mak[e] more expressly clear that the Counterclaim includes a claim for Indian Harbor’s
denial of coverage under the insurance policy at issue (the “Policy”) for the abatement of nickel
discharges from the certain areas of the Sayerville Site.” ECF 115-1 at 1.
Defendants have moved under the liberal amendment provisions of Federal Rule of Civil
Procedure 15. However, on May 14, 2014, the Court entered a Pretrial Scheduling Order, which
set an October 1, 2014 deadline for the filing of any motion to amend the pleadings or to join
new parties. ECF No. 91. Defendants’ motion to amend the Counterclaim was filed eight
months after the deadline had elapsed and is, therefore, untimely. Consequently, before reaching
any analysis under Rule 15, the Court must first consider the whether Defendants have shown
good cause under Federal Rule of Civil Procedure 16 to permit the untimely filing. See Fed. R.
Civ. P. 16(b)(4) (schedule can be modified only for “good cause”). See, e.g., Eastern Minerals
& Chemicals Co. v. Mahan, 225 F.3d 330, 339-340 (3d Cir. 2000) (failure to satisfy Rule 16(b)’s
“good cause” requirement was sufficient to deny a motion to amend filed six months after the
deadline for amendments to pleadings); Dimensional Communications, Inc. v. OZ Optics, Ltd.,
148 Fed. Appx. 82, 84-85 (3d Cir. 2005) (reaffirming the “good cause” requirement for
determining the propriety of a motion to amend a pleading after the deadline in the Scheduling
Order has elapsed) (citing Eastern Minerals). Indeed, district courts within the Third Circuit
have consistently held that a party seeking to amend the pleadings after the deadline set by the
Court must satisfy the requirements of Rule 16(b)(4), i.e., that party must show “good cause.”
Ingris v. Borough of Caldwell, No. 14–855, 2015 WL 3613499 (D.N.J. June 09, 2015) (citing

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Karlo v. Pittsburgh Glass Works, LLC, No. 10–1283(NBF), 2011 WL 5170445, at *2 (W.D. Pa.
Oct.31, 2011) (citing cases)).
The Court concludes here that the Defendants have not established the requisite good
cause. As an initial matter, Defendants do not even attempt to meet the standard in their motion
papers. Quite to the contrary, Defendants are dismissive of Indian Harbor’s assertion that Rule
16’s “good cause” standard applies, arguing that “the arbitrarily chosen deadline in the
Scheduling Order” does not “trump[] the statute of limitations” for assessing the timeliness of
their claim. ECF No. 118 at 2. In fact, Defendants criticize the notion that the deadline in the
Pretrial Scheduling Order is “a hard and fast deadline” and argue that there is “nothing special
about the deadline … that makes it any more definitive, unmovable, or inviolable than any of the
other arbitrary dates in that Order.” Id. at 2-3. Defendants, however, miss the point. Rule 16 is
clear that “[a] schedule may be modified only for good cause and with a judge’s consent.” Fed.
R. Civ. P. 16(b)(4). Here, the deadline for filing a motion to amend had long expired at the time
Defendants filed their motion, and the Rules and cases are clear Defendants must establish that
good cause exists to allow the untimely filing.
According to Defendants, they “discovered” the basis for their amended claim while
preparing for depositions. ECF 115-1 at 3. During this preparation Defendants “carefully
reviewed each provision of the Policy” and concluded that, in addition to what was already set
out in the Counterclaim, “Indian Harbor also breached the Policy by denying coverage for claims
brought against both EMS and NL Industries … regarding the abatement of nickel discharges
….” Id. There is no explanation, however, as to why Defendants had not “carefully” reviewed
the provisions of the Policy (which they quote extensively in their Counterclaim) at any time
prior to the amendment deadline in the Scheduling Order or why they did not earlier identify this

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additional basis for their Counterclaim. As Defendants point out, Indian Harbor filed this action
over three years prior to the filing of the instant motion, and Defendants have had the Policy in
their possession since 2008. Nor do Defendants provide any explanation as to why Defendants
could not have moved to add NL Industries to the Counterclaim prior to the amendment
deadline.
“[T]he good cause standard under Rule 16(b) hinges on diligence of the movant….”
Venetec Inter., Inc. v. Nexus Med., LLC, 541 F.Supp.2d 612, 618 (D. Del. 2008);
GlobespanVirata, Inc. v. Texas Instruments Inc., Civ. No. 03–2854, 2005 WL 1638136, at *3
(D.N.J. July 12, 2005). Although Defendants argue that “Indian Harbor has not identified any
legitimate prejudice that would occur from NL’s and EMS’s amendment of the Counterclaim
after the October 1, 2014 deadline,” the good cause analysis does not depend on prejudice to the
non-moving party. Venetec, 541 F.Supp.2d at 618. Rather, to demonstrate “good cause”
pursuant to Rule 16, the moving party must show that, despite its diligence, the deadlines set
forth in the scheduling order could not reasonably be met. Id. Defendants simply have not made
that showing. Consequently,
IT IS on this 15th day of September, 2015,
ORDERED that Plaintiff’s motion [ECF No. 115] to amend its Counterclaim is DENIED.

/s/ Douglas E. Arpert
DOUGLAS E. ARPERT, U.S.M.J.

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