UNITED NATIONAL INSURANCE COMPANY et al v. INDIAN HARBOR INSURANCE COMPANY

Filing 100

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE HARVEY BARTLE, III ON 12/9/15. 12/9/15 ENTERED AND COPIES E-MAILED.(kw, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

UNITED NATIONAL INSURANCE
COMPANY
v.
INDIAN HARBOR INSURANCE
COMPANY

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CIVIL ACTION

NO. 14-6425

MEMORANDUM
Bartle, J.

December 9, 2015
Before the court is the motion of plaintiff

Penn-America Insurance Company (“Penn-America”) for leave to
file its first amended complaint.
Penn-America has sued defendant Indian Harbor
Insurance Company (“Indian Harbor”), its professional liability
insurer, in this diversity action for breach of contract, breach
of duties, waiver, and estoppel in connection with two
underlying coverage disputes arising out of claims against
Penn-America by its insureds. 1

Plaintiff seeks compensatory

damages stemming primarily from defense costs and/or settlement
payments made in connection with these underlying disputes.
Pursuant to the court’s Scheduling Orders, fact
discovery closed on July 31, 2015 and expert discovery ended on
1. The claims of plaintiff United National Insurance Company
have previously been dismissed. The court has also previously
entered judgment in favor of Indian Harbor on the plaintiffs’
claim for reformation.

October 16, 2015.

Summary judgment motions were filed by

October 30, 2015, as scheduled.
It was not until October 26, 2015, several months
after the close of fact discovery and a few days before the
summary judgment motions were due, that Penn-America filed the
pending motion for leave to file its first amended complaint.
Indian Harbor opposes the motion.
Rule 15(a) of the Federal Rules of Civil Procedure
provides that except in situations not relevant here, a party
may amend its pleading only with the written consent of the
opposing party or with leave of court.

The Rule further

provides that “the court should freely give leave when justice
so requires.”

See Fed. R. Civ. P. 15(a)(2).

The Supreme Court

in Foman v. Davis, 371 U.S. 178, 182 (1962) has declared that
undue delay, bad faith, dilatory motive, undue prejudice, and
futility are among the reasons why a court in its discretion may
deny an amendment.

Our Court of Appeals “ha[s] interpreted

these factors to mean that ‘prejudice to the non-moving party is
the touchstone for the denial of an amendment.’”

See Lorenz v.

CSX Corp., 1 F.3d 1406, 1413-14 (3d Cir. 1993) (quoting Cornell
& Co. v. Occupational Safety & Health Review Comm'n, 573 F.2d
820, 823 (3d Cir. 1978)).
The various new paragraphs of Penn-America’s proposed
amended complaint fit into three general categories.
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First,

there are paragraphs of a technical nature concerning
jurisdiction and venue.

These appear to be unnecessary since

jurisdiction and venue are clearly proper and have not been
challenged.

The second category simply adds detailed factual

allegations which are quite unnecessary under the notice
pleading standard of Rule 8 of the Federal Rules of Civil
Procedure and the Supreme Court’s decisions in Ashcroft v.
Iqbal, 556 U.S. 662 (2009), and Bell Atl. Corp. v. Twombly, 550
U.S. 544 (2007).

With respect to categories one and two, Penn-

America’s motion to amend is a dilatory maneuver and waste of
time and expense for all concerned.
Finally, Penn-America proposes changes of a
substantive nature by adding allegations in support of new
claims for relief under 42 Pa. Cons. Stat. § 8371 for bad faith
and under the Pennsylvania Unfair Insurance Practices Act, 40
Pa. Cons. Stat. §§ 1171.1 et seq.

These changes are material.

Initially, we note that there is no private right of
action under the Pennsylvania Unfair Insurance Practices Act.
Only the Insurance Commissioner may enforce it.

See Fay v. Erie

Ins. Grp., 723 A.2d 712, 714 (Pa. Super. Ct. 1999).

Thus, to

the extent the proposed amended complaint brings claims under
this statute, the amendment is futile.

And, to the extent Penn-

America seeks to add a reference to either statute to provide
additional support for its breach of duties claim, the amendment
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is unnecessary.

Penn-America already pleaded in the original

complaint that Indian Harbor breached a duty of care.

Allowing

Penn-America to amend the complaint to bolster its breach of
duties claim is also a dilatory maneuver and waste of time and
expense for all concerned.
Most significantly, based on the chronology of events,
Penn-America has engaged in undue delay in waiting until the
eleventh hour to seek to file its amended complaint.
is prejudicial to Indian Harbor.

This delay

If Penn-America’s motion to

amend were to be granted, Indian Harbor in fairness would be
entitled, at least as to the material changes, to an extended
period of additional discovery and more time to present expert
reports.

The pending summary judgment motions would become moot

and extra time would have to be afforded for future summary
judgment motions.

All of this, of course, would result in

significant additional expense and undue prejudice to the nonmoving party.

See Lorenz, 1 F.3d at 1413-14.

The case,

currently in the April 2016 trial pool, would have to be
postponed for many months, if not longer.

Under Rule 1 of the

Federal Rules of Civil Procedure, the civil rules “should be
construed, administered, and employed by the court and the
parties to secure the just, speedy and inexpensive determination
of every action and proceeding.”

See Fed. R. Civ. P. 1.

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What

Penn-America seeks flies in the face of this foundational rule
which governs our construction of all the other civil rules. 2
Accordingly the motion of Penn-America for leave to
file its first amended complaint will be denied.

2.
The plaintiff, in its proposed amended complaint, is also
deleting its claims for relief based on waiver and estoppel.
Again, it is unnecessary to amend a pleading to give up a claim
or legal theory.
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