Tovares v. Gallagher Bassett Services, Inc. et al

Filing 84

ORDER granting 60 Motion for Leave to file amended answers. Signed by Chief Judge Jeffrey L. Viken on 3/25/19. (SB)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
WESTERN DIVISION
CIV. 16-5051-JLV

ANNIE TOVARES,
Plaintiff,

ORDER

vs.
GALLAGHER BASSETT SERVICES,
INC., AND PRAETORIAN INSURANCE
COMPANY,
Defendants.
INTRODUCTION

Plaintiff Annie Tovares filed an action against the defendants Gallagher
Bassett Services, Inc., and Praetorian Insurance Company alleging bad faith
and misrepresentation in violation of South Dakota law.

(Docket 1).

complaint also seeks attorney’s fees and punitive damages.

Id.

3, 2017, defendants filed their answers to plaintiff’s complaint.
39).

The

On October
(Dockets 37 &

On July 6, 2018, defendants filed a joint motion seeking leave to file

amended answers, together with a supporting brief. 1
Plaintiff resists defendants’ motion.

(Docket 69).

(Dockets 60 & 61).

For the reasons stated

below, defendants’ motion is granted.

1Consistent

with D.S.D. LR Civ. 15.1 defendants filed copies of their
proposed answers with the proposed changes underlined. (Dockets 61-1 &
61-2). Because the proposed answers are identical in the pleadings sections,
except when referencing each defendant’s name, the court will refer to the
proposed answers as “defendants’ proposed answer.”

SUMMARY OF FACTS
The following summary of facts is taken from the court’s order of
September 12, 2017, to provide background for defendants’ motion for leave to
file amended answers. 2

Praetorian issued a worker’s compensation insurance

policy to Ms. Tovares’ employer, Menard, Inc. (“Menards”).

(Docket 34 at p. 6).

Praetorian delegated its claim administration services to Gallagher.

Both

defendants understood that Praetorian would act as the principal and
Gallagher would act as Praetorian’s agent in performing claim administration
duties.

Those duties included good faith and fair dealing, processing

paperwork relating to claims, investigating claims, obtaining medical reports,
monitoring treatment, verifying coverage, adjusting, settling and defending
claims and issuing checks for payment of benefits.
On March 19, 2014, while working at Menards in Rapid City, South
Dakota, Ms. Tavares fell sideways and landed hard on a concrete floor, bruising
her left hip and arm.

Menards received actual notice of her fall and the

incident was recorded on one of its security cameras.

2Because

the court was dealing with the defendants’ Fed. R. Civ. P.
12(b)(1) motion, the plaintiff’s allegations of facts were deemed true. (Docket
34 at pp. 5-6) (referencing Great Rivers Habitat Alliance v. Federal Emergency
Management Agency, 615 F.3d 985, 988 (8th Cir. 2010)). Internal references
to plaintiff’s complaint will be omitted for purposes of this order.

2

Over the next week, Ms. Tovares began experiencing intermittent ringing
in her ears, blurry vision, light-headedness and headaches.

On March 26,

2014, she went to the Rapid City Regional Hospital emergency room.

After

obtaining her history of the work-related fall, the attending physician
prescribed a CT scan of Ms. Tovares’ head to rule out the presence of internal
bleeding or other brain injuries.
bleeding.

The CT scan was negative for internal

Her attending physician noted the “most likely cause of her

symptoms is . . . [her] head injury.”

Ms. Torvares was referred to an eye

doctor to address her blurry vision.

The eye examination disclosed no optical

injuries.

The bills for the emergency room and the eye doctor totaled

approximately $2,900 and were submitted to Gallagher, as Praetorian’s agent.
On April 30, 2014, Gallagher wrote to Ms. Tovares stating “we are in
receipt of your claim for Worker’s Compensation benefits due to an alleged
injury from an alleged accident on or around 3/19/2014.

We have

investigated this claim and found no evidence to support your claim for
benefits under South Dakota Worker’s Compensation provisions.” 3

As the

result of Gallagher’s failure to pay the medical bills, Ms. Tovares was forced to
take out a loan to pay these expenses.
On May 16, 2014, Ms. Tovares’ attorney wrote Gallagher requesting a
copy of the video documenting her fall at Menards.

Gallagher refused the

request stating that a subpoena would be required as the video belonged to
3Emphasis

in complaint (Docket 6 ¶ 24).
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Menards.

On October 9, 2014, counsel wrote Gallagher a second time

requesting a copy of the video and stating “[b]y withholding important evidence,
you force Ms. Tovares to take legal action, which makes it very difficult for her
(and other people like her) to simply get the evidence needed to determine
whether their claim is valid.”

Counsel advised Gallagher that if a positive

response was not received by October 16, 2014, a petition for hearing would be
filed with the South Dakota Department of Labor.

On October 20, 2014,

having heard nothing from Gallagher, Ms. Tovares filed a petition for hearing
with the Department of Labor.
Praetorian admitted in its answer to the petition that Ms. Tovares had
fallen on March 19, 2014, and that she sought medical attention on March 26,
2014.

The answer denied any health care provider indicated the March 19

injury was a major contributing cause of any medical condition or need for
treatment.

The answer concluded with a declaration that “discovery [must be]

conducted and expert opinions . . . obtained to determine the exact nature of
[Ms. Tovares’] alleged injuries, [her] current medical condition, and whether
[her] medical treatment was related to the incident . . . .”
On February 6, 2015, the defendants offered $3,000, with a denial of
compensability, to settle Ms. Tovares’ claim.

Ms. Tovares rejected the offer,

stating she was owed $3,225.12, together with interest, to fully satisfy the
medical bills.

On March 19, 2015, a check was tendered from “Gallagher

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Bassett Services, Inc., for Praetorian Ins. Co.” for $3,225.12.

Ms. Tovares

dismissed her petition with the Department of Labor.
DEFENDANTS’ PROPOSED ANSWER
Defendants’ proposed answer seeks to add the following affirmative
defenses:
1.

Defendant[s] specifically assert . . . the affirmative defense of
failure to exhaust administrative remedies. Plaintiff failed to
obtain an administrative ruling that any workers’
compensation claim was compensable or that any benefits
were due and owing pursuant to the South Dakota workers’
compensation laws. Plaintiff did not obtain a finding the
medical bills subject of this litigation were compensable under
the South Dakota workers’ compensation laws.

2.

Plaintiff dismissed with prejudice any administrative claim for
benefits thereby waiving her claims asserted herein.

3.

To the extent a failure to exhaust administrative remedy is
considered a failure to comply with conditions precedent,
Plaintiff has failed to meet the conditions precedent to
bringing this claim.

(Dockets 61-1 at p. 4; 61-2 at p. 4).
ANALYSIS
The court set January 10, 2018, as the deadline to amend pleadings.
(Docket 36 ¶ 3).

Defendants filed their motion for leave to file amended

answers on July 6, 2018, six months after the court’s deadline for doing so.
Defendants’ “belated motion to amend [their] answer and plead . . .
affirmative . . . defense[s] implicat[e] three different . . . rules of civil procedure.”
Sherman v. Winco Fireworks, Inc., 532 F.3d 709, 714 (8th Cir. 2008).

Fed. R.

Civ. P. 8(c) requires defendants to plead their affirmative defenses in their
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answer.

Id. at p. 715.

“Generally, failure to plead an affirmative defense

results in a waiver of that defense.” Id. (citing First Union National Bank v.
Pictet Overseas Trust Corp., 477 F.3d 616, 622 (8th Cir. 2007)).

“However,

when an affirmative defense is raised in the trial court in a manner that does
not result in unfair surprise, technical failure to comply with Rule 8(c) is not
fatal.”

Id. (internal quotation marks and citation omitted).
“In addition to Rule 8(c),” defendants’ motion “implicat[es] both Rule

15(a) and Rule 16(b).”

Id.

Rule 15(a) governs pretrial amendment of

pleadings and states that where an amendment is not sought “as a matter of
course”—as defined by the Rule—“a party may amend its pleading only with
the opposing party’s written consent or the court’s leave.”
15(a)(2).

Fed. R. Civ. P.

Rule 16(b) directs “[a] schedule may be modified only for good cause

and with the judge’s consent.”

Fed. R. Civ. P. 16(b)(4).

“The interplay between Rule 15(a) and Rule 16(b) is settled in this
circuit.”

Sherman, 532 F.3d at 716.

In the United States Court of Appeals

for the Eighth Circuit, “[i]f a party files for leave to amend outside of the court’s
scheduling order, the party must show cause to modify the schedule.” Id.
(internal citation omitted).

“Rule 16(b)’s good-cause standard governs when a

party seeks leave to amend a pleading outside of the time period established by
a scheduling order, not the more liberal standard of Rule 15(a).”

Id.

“When a

party seeks to amend a pleading after the scheduling deadline for doing so, the
application of Rule 16(b)’s good-cause standard is not optional.
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To permit

district courts to consider motions to amend pleadings under Rule 15(a)
without regard to Rule 16(b) ‘would render scheduling orders meaningless and
effectively . . . read Rule 16(b) and its good cause requirement out of the
Federal Rules of Civil Procedure.” ”

Id. (citing Sosa v. Airprint Systems, Inc.,

133 F.3d 1417, 1419 (11th Cir. 1998)).
Because defendants filed the motion for leave to file an amended answer
outside of the court’s scheduling order “the liberal policy favoring amendments
no longer applie[s,]” and defendants “need to make a showing of good cause.”
Kozlov v. Associated Wholesale Grocers, Inc., 818 F.3d 380, 395 (8th Cir. 2016)
(internal quotation marks omitted) (citing Fed. R. Civ. P. 16(b)(4)) (“A schedule
may be modified only for good cause and with the judge’s consent.”)). “When
considering good cause for an amended [answer], the diligence of the party
seeking the amendment is an important consideration.”

Id. Courts “focus in

the first instance (and usually solely) on the diligence of the party who sought
modification of the order.

Where there has been no change in the law, no

newly discovered facts, or any other changed circumstance . . . after the
scheduling deadline for amending pleadings, then [the court] may conclude
that the moving party has failed to show good cause.” Hartis v. Chicago Title
Ins. Co., 694 F.3d 935, 948 (8th Cir. 2012) (internal citation and quotation
marks omitted).

“Motions that would prejudice the nonmoving party by

‘requiring a re-opening of discovery with additional costs, a significant
postponement of the trial, and a likely major alteration in trial tactics and
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strategy’ ” are particularly disfavored.”

Kozlov, 818 F.3d at 395 (citing Steir v.

Girl Scouts of the U.S.A., 383 F.3d 7, 12 (1st Cir. 2004)).
Defendants assert their “affirmative defenses were inadvertently omitted
. . . but had been otherwise disclosed in discovery.”

(Docket 61 at pp. 2-3).

Defendants submit “[p]laintiff will not suffer undue prejudice, in part due to
the lack of significant discovery . . . and the lack of a pending trial[.]”

Id. at

p. 2.
Plaintiff’s response argues defendants’ “motion is futile . . . . [made] in
bad faith. . . . [and the] delay would unfairly prejudice [plaintiff].”
69 at pp. 1-2).

(Docket

The only suggestion of futility offered by plaintiff is that she

had “no administrative remedies to exhaust[.]” Id. at p. 1. Addressing her
assertion the affirmative defenses are made in “bad faith,” plaintiff states the
defendants “paid [her] workers comp [sic] claim in full, with interest, without
reserving any dispute.”

Id.

The prejudice plaintiff suggests she will suffer is

that if she “did have some administrative remedy open to her, the delay in the
Defendants’ assertion of the defense [of exhaustion of administrative remedies]
would likely harm her ability to pursue the remedy with the [South Dakota]
Department of Labor.”

Id. at p. 2.

Plaintiff’s response does not address defendants’ representation to the
court.

See Docket 69. The court accepts defense counsel’s declaration the

failure to include the three affirmative defenses was an inadvertent mistake.
See Fed. R. Civ. P. 11(b)(c) & (c)(3) (“By presenting to the court a . . . written
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motion . . . an attorney . . . certifies to the best of the person’s knowledge,
information, and belief, formed after an inquiry reasonable under the
circumstances . . . the factual contentions have evidentiary support . . . .”).
This factor favors granting defendants’ motion.
Plaintiff’s response lacks the specificity necessary to permit the court to
analyze the required factors addressing defendants’ motion. Plaintiff does not
address whether she will be required to engage in additional discovery or if she
will be compelled to make any major change in her trial tactics.

Kozlov, 818

F.3d at 395. The court finds these factors favor granting defendants’ motion.
Plaintiff does not dispute these affirmative defenses were disclosed in
discovery.

See Docket 69.

Having been exposed to the possible addition of

these defenses during the course of discovery, plaintiff cannot claim surprise in
response to defendants’ motion.

This factor favors granting defendants’

motion.
No trial date has been set by the court. Plaintiff will suffer no prejudice
by modifying the time for resolution of plaintiff’s claim. Kozlov, 818 F.3d at
395.

This factor favors granting defendants’ motion.
The court finds defendants’ motion is not far removed from the court’s

deadline for amending pleadings.

In this case there have been no earlier

motions for extensions of time to amend pleadings or multiple orders moving
deadlines.

Although filed beyond the deadline established, the court finds

defendants’ motion appears to have been promptly filed upon noting the
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defenses had not been asserted in defendants’ answers.

There is no intent to

disregard or frustrate the court’s management and control of its calendar.
This factor favors granting defendants’ motion.
The court finds Rule 16(b)(4) is met.

This is not a case were the motion

to amend “would prejudice the nonmoving party by ‘requiring a re-opening of
discovery with additional costs, a significant postponement of the trial, and a
likely major alteration in trial tactics and strategy[.]’ ”

Kozlov, 818 F.3d at 395

(citing Steir, 383 F.3d at 12).
The court also acknowledges Kontrick v. Ryan, 540 U.S. 443 (2004) (“An
answer may be amended to include an inadvertently omitted affirmative
defense, and even after the time to amend ‘of course’ has passed, ‘leave [to
amend] shall be freely given when justice so requires.’ ” Id. at 459 (citing Fed.
R. Civ. P. 15(a)). Because no significant prejudice will befall plaintiff by
permitting the filing of the amended answer, the court finds justice requires
granting defendants’ motion under Fed. R. Civ. P. 15(a)(2).
ORDER
Having considered the arguments of counsel and finding good cause
pursuant to Fed. R. Civ. P. 16(b)(4) and Fed. R. Civ. P. 15(a)(2), it is
ORDERED that defendants’ motion for leave to file amended answers
(Docket 60) is granted.

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IT IS FURTHER ORDERED that defendants shall file “a clean original” of
their amended answers (Dockets 61-1 & 61-2) “within 7 days.” D.S.D. Civ. LR
15.1.
Dated March 25, 2019.
BY THE COURT:
/s/ Jeffrey L. Viken
JEFFREY L. VIKEN
CHIEF JUDGE

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