NITTA CASINGS INC. v. SOMPO JAPAN INSURANCE CO. et al

Filing 23

MEMORANDUM OPINION AND ORDER granting in part and denying in part 18 Motion for Leave to File an Amended Complaint; that Plaintiff shall file its Amended Complaint in conformance with this Opinion no later than 14 days from the date of this Order. Signed by Magistrate Judge Douglas E. Arpert on 11/16/2015. (mmh)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
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NITTA CASINGS INC.,
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Plaintiff ,
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Civil Action No. 14-6850 (FLW) (DEA)
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v.
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MEMORANDUM OPINION &
SOMPO JAPAN INSURANCE CO., et al., :
ORDER
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Defendants.
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ARPERT, Magistrate Judge.
This matter comes before the Court on a motion by Plaintiff to amend the complaint to
add an additional defendant and to add a declaratory judgment claim against defendant
Sterling & Sterling, LLP (“Sterling”). Sterling has opposed the motion insofar as it seeks to
allow a new claim against Sterling. The Court has carefully considered the parties’
submissions and decides the matter without oral argument pursuant to Federal Rule of Civil
Procedure 78 and Local Civil Rule 78.1. For the reasons below, Plaintiff’s motion is granted
in part and denied in part.
I. BACKGROUND 1
Plaintiff is a company engaged in the manufacturing and distribution of sausage
casings and related equipment. Plaintiff provides its employees certain health and welfare
benefits, including life insurance and long-term disability coverage. Prior to 2008, Plaintiff

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The facts herein are only those relevant to the instant motion and are derived from Plaintiff’s proposed
Amended Complaint unless otherwise specified. They do not represent any factual findings of the Court.

obtained life insurance coverage for its union and salaried employees through MetLife
Insurance (“MetLife”). In 2008, Plaintiff switched providers from MetLife to Hartford Life
Insurance Company (“Hartford”). Sterling, an insurance broker, assisted Plaintiff with
making this change.
At or about the time Plaintiff switched life insurance providers, six of its employees
were receiving long-term disability (“LTD”) benefits. In June 2013, one of these six
employees died. Hartford denied life insurance benefits for this employee because it was not
disclosed at the time Plaintiff procured the Hartford life insurance policy that this employee
was receiving LTD benefits. Hartford advised Plaintiff that it did not receive notice that any
of the six employees were receiving LTD benefits in 2008.
Plaintiff paid the value of the life insurance benefits directly to the survivors of its
deceased employee. On or about October 13, 2014, Plaintiff filed this lawsuit in the Superior
Court of New Jersey and it was subsequently removed to this court. Plaintiff seeks to amend
its Complaint to add Hartford as a defendant and to add a declaratory judgment count against
Sterling. Specifically, as to Sterling, Plaintiff’s Amended Complaint seeks a declaration that
“as a result of Sterling’s negligent failure to procure the proper insurance, Sterling must fund
all future LTD and life insurance amounts that otherwise would have been covered under the
insurance Sterling was retained to procure from Hartford.” Proposed Amended Complaint ¶
43. The original Complaint contains a single count of negligence against Sterling.
II. Analysis
Pursuant to Federal Rule of Civil Procedure 15(a), “a party may amend its pleading
only with the opposing party’s written consent or the court's leave” and “[t]he court should
freely give leave when justice so requires.” The decision to grant leave to amend rests within

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the sound discretion of the trial court. Zenith Radio Corp. v. Hazeltine Research Inc., 401
U.S. 321, 330 (1970). In determining a motion for leave to amend, courts consider the
following factors: (1) undue delay on the part of the party seeking to amend; (2) bad faith or
dilatory motive behind the amendment; (3) repeated failure to cure deficiencies through
multiple prior amendments; (4) undue prejudice on the opposing party; and/or (5) futility of
the amendment. See Great Western Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d
159, 174 (3d Cir. 2010) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).
Here, Sterling argues that the declaratory judgment count that Plaintiff seeks to assert
is futile. An amendment is futile if it “is frivolous or advances a claim or defense that is
legally insufficient on its face.” Harrison Beverage Co. v. Dribeck Imp., Inc., 133 F.R.D. 463,
468 (D.N.J. 1990) (internal quotation marks and citations omitted). To evaluate futility, the
District Court uses “the same standard of legal sufficiency” as applied to a motion to dismiss
under Rule 12(b)(6). Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000). To determine if a
pleading would survive a Rule 12(b)(6) motion, the Court must accept all facts alleged in the
pleading as true and draw all reasonable inferences in favor of the party asserting them. Lum
v. Bank of Am., 361 F.3d 217, 223 (3d Cir. 2004). “[D]ismissal is appropriate only if,
accepting all of the facts alleged in the [pleading] as true, the p[arty] has failed to plead
‘enough facts to state a claim to relief that is plausible on its face [.]’” Duran v. Equifirst
Corp., Civil Action No. 2:09-cv-03856, 2010 WL 918444, *2 (D.N.J. March 12, 2010)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929
(2007)). Put succinctly, the alleged facts must be sufficient to “allow[ ] the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). In determining futility,

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the Court considers only the pleading, exhibits attached to the pleading, matters of public
record, and undisputedly authentic documents if the party’s claims are based upon same. See
Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).
As noted above, the Fourth Count of the proposed Amended Complaint seeks a
declaration that “as a result of Sterling’s negligent failure to procure the proper insurance,
Sterling must fund all future LTD and life insurance amounts that otherwise would have been
covered under the insurance Sterling was retained to procure from Hartford.” Plaintiff
explains that by way of this Count it is requesting that, if Sterling is ultimately found to have
acted negligently, the Court should declare that “Sterling is liable for amounts owed to five
living employees, rather than simply to the sole decedent.” ECF No. 20 at 5.
Federal courts are authorized to grant declaratory relief by the Declaratory Judgment
Act, 28 U.S.C. § 2201(a). The Act provides that “[i]n 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.” 28 U.S.C. § 2201(a).
A court has discretion to dismiss a declaratory judgment claim when issuing a
declaratory judgment would serve no useful purpose. Aluminum Co. of Am. v. Beazer E., Inc.,
124 F.3d 551, 560 (3d Cir. 1997). The Court should consider “(1) the likelihood that the
declaration will resolve the uncertainty of obligation which gave rise to the controversy; (2)
the convenience of the parties; (3) the public interest in a settlement of the uncertainty of
obligation; and (4) the availability and relative convenience of other remedies.” Bituminous
Coal Operators' Ass'n, Inc. v. Int'l Union, United Mine Workers of Am., 585 F.2d 586, 596–97
(3d Cir.1978), abrogated on other grounds by Carbon Fuel Co. v. United Mine Workers of

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Am., 444 U.S. 212, 100 S.Ct. 410, 62 L.Ed.2d 394 (1979). The Third Circuit has explained
that one of the most important principles in deciding whether to exercise discretion is the
“practical help, or utility, of that judgment.” Step–Saver Data Sys., Inc. v. Wyse Tech., 912
F.2d 643, 647 (3d Cir. 1990).
The Court here finds that the additional declaratory judgment claim that Plaintiff seeks
to assert in its proposed Amended Complaint serves no useful purpose. Distilled to its
essence, and as described by Plaintiff itself, the proposed claim seeks a declaration of what
damages are owed by Sterling should Sterling be found liable under the negligence claim
already asserted in the original Complaint. See ECF No. 20 at 5 (“Nitta requests that, if its
Third Count for ‘Negligence Against Sterling’ results in a finding that Sterling acted
negligently, then the Court should declare that Sterling is liable for the amounts owed to the
five living employees, rather than simply to the sole decedent.”). The issue of what damages
flow from an alleged breach of an insurance broker’s duty 2 to procure insurance is already
subsumed within the existing negligence claim. The proposed declaratory judgment claim is,
therefore, redundant; it adds nothing to this action. Plaintiff’s motion to amend its Complaint
to add the declaratory judgment claim against Sterling is, therefore, denied.
Plaintiff also seeks to add Hartford as a defendant, and the proposed Amended
Complaint contains a Count against Hartford seeking a declaration that the six employees are
entitled to coverage under life insurance policies sold by Hartford. There is no opposition to
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“[A]n insurance broker who agrees to procure a specific insurance policy for another but fails to do so may be
liable for damages resulting from such negligence. Aden v. Fortsh, 169 N.J. 64, 79, 776 A.2d 792, 801 (2001).
“It has long been recognized that ‘[t]he damages which may be recovered for breach of an agreement to furnish
an insurance policy is the loss sustained by reason of the breach, ‘the amount that would have been due under the
policy provided it had been obtained.’” Lydon v. Chubb Grp. of Ins. Cos., No. A-4344-09T1, 2012 WL 3731811,
at *14 (N.J. Super. Ct. App. Div., Aug. 30, 2012) (quoting Robinson v. Janay, 105 N.J. Super. 585, 591
(App.Div. 1969) and citing Rider v. Lynch, 42 N.J. 465, 476, 480 (1964) (“if the broker neglects to procure the
coverage, or otherwise fails to act with proper skill and care, he becomes liable in damages not exceeding the
amount of insurance he was employed to effect”)).

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this amendment. Having considered the amendment in light of the relevant factors
enumerated above, the Court shall permit this amendment.
III. Conclusion and Order
For the reasons set forth above;
IT IS on this 16th day of November, 2015,
ORDERED that Plaintiff’s motion [ECF No. 18] for leave to file an Amended
Complaint is granted in part and denied in part; and it is further
ORDERED that Plaintiff shall file its Amended Complaint in conformance with this
Opinion no later than 14 days from the date of this Order.

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

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