Interstate Packaging Company v. Century Indemnity Company et al

Filing 159

REPORT AND RECOMMENDATION: For the foregoing reasons, Plaintiff's Motion to File Amended and Supplemental Complaint 104 should be DENIED. Signed by Magistrate Judge E. Clifton Knowles on 1/22/13. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(dt)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION

INTERSTATE PACKAGING
COMPANY,
Plaintiff,

vs.

CENTURY INDEMNITY COMPANY,
et al.,
Defendants.

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CASE NO. 3:11-0589
JUDGE NIXON/KNOWLES
JURY DEMAND

REPORT AND RECOMMENDATION
This matter is before the Court upon Plaintiff’s “Motion to File Amended and
Supplemental Complaint.” Docket No. 104. Plaintiff has filed a supporting Memorandum of
Law (Docket No. 105) and a proposed “First Amended and Supplemental Complaint for
Declaratory Judgment and for Damages” (Docket No. 104-1). Four Defendants, or sets of
Defendants, have filed Responses in opposition to the Motion. Docket Nos. 112, 113, 114, 115.
Plaintiff has filed a Reply to Defendants’ Responses. Docket No. 122.
More than eight months after the above briefing was complete, Plaintiff filed a Motion
for Leave to File a Supplemental Brief in Support of the instant Motion. Docket No. 146. That
Motion for Leave has been denied in a separate Order (Docket No. 158), and the Court will
decline to consider the proposed supplemental brief.
The background information regarding the instant action has been set forth in Judge

Nixon’s Order that granted Motions for Summary Judgment filed by two Defendants, Great
American Insurance Company (“GAIC”) and Great American Insurance Company of New York
(formerly known as American National Fire Insurance Company) (“GANY”). Docket No. 88.
Briefly and generally, Plaintiff manufactures packaging, labels, bags, and pouches for customers
in the food and beverage, health and beauty, textile, household product, and pet product
industries in Tennessee. On October 28, 2009, several Plaintiffs, including Natural Resources
Defense Counsel, Inc., filed suit against Plaintiff in this Court (“NRDC Lawsuit”). The
Complaint in the NRDC lawsuit alleged that Interstate had disposed of waste containing
trichloroethylene and perchloroethylene at a landfill owned and operated by the City of Dickson,
Tennessee, in the 1970's and 1980's.1
Interstate filed the instant action in state court in May 2011 against nine insurance
companies, seeking damages and a declaratory judgment that Defendants were obligated to
defend Interstate in the NRDC lawsuit, and that Defendants “possessed coverage” for any loss
incurred as a result of that lawsuit. Docket No. 1-1. The case was removed to this Court on June
17, 2011. Docket No. 1
In its Complaint, Plaintiff recognized that at least some (and perhaps all) of the insurance
policies sued upon contained a coverage exclusion for the discharge of toxic chemicals, but that
exclusion did not apply if the discharge was “sudden and accidental.” The language of the
GAIC policy, which is typical of the language of the other policies that Plaintiff quoted in its
Complaint, provides an exclusion for which “this insurance shall not apply.” Docket No. 1-1, p.

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The NRDC Plaintiffs subsequently settled their claims, and the NRDC lawsuit was
dismissed in November 2011.
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9. Thus, the GAIC policy contains an exclusion for:
bodily injury or property damage arising out of the discharge,
dispersal, release or escape of smoke, vapors, soot, fumes, acids,
alkalis, toxins chemicals, liquids or gases, waste materials or other
irritants, contaminants or pollutant into or upon land, the
atmosphere or any water course or body of water; but this
exclusion does not apply if such discharge, dispersal, release or
escape is sudden and accidental.
Id.
On December 5, 2011, GAIC and GANY filed a Motion for Summary Judgment, arguing
that the damages sought in the NRDC lawsuit were excluded, because the discharge, dispersal,
release, or escape of the contaminants or pollutants was not sudden and accidental. Docket No.
65. Plaintiff argued that GAIC and GANY were not entitled to summary judgment, stating, “The
pollution exclusion does not apply because the actions of [Plaintiff] fall within the ‘sudden and
accidental’ acts exception.” Docket No. 86, p. 2. As discussed above, Judge Nixon granted that
Motion in an Order entered March 14, 2012. Docket No. 88. Judge Nixon essentially
determined in his summary judgment Order that GAIC and GANY had no duty to defend
Interstate or to indemnify Interstate because the discharges, disposals, releases or escapes that
were the subject of the NRDC lawsuit were not sudden or accidental.
Approximately two weeks after Judge Nixon’s summary judgment Order was entered,
Defendants American Casualty Company and Continental Casualty Company filed a Motion for
Summary Judgment on the same grounds. Docket No. 94.
Approximately one month thereafter, on April 11, 2012, Plaintiff filed a “Motion for
Reconsideration of the Court’s Order on Summary Judgment [Doc. No. 88] or in the
Alternatively, for Certification of State Law Questions to the Tennessee Supreme Court.”

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Docket No. 99. That Motion is pending before Judge Nixon.
On April 20, 2012, Plaintiff filed the instant Motion to Amend. Docket No. 104.
According to the instant Motion:
This proposed Amended and Supplemental Complaint supplements
the original Complaint so that it reflects the settlement of the
underlying lawsuit upon which this case is based. Further, the
proposed Amended and Supplemental Complaint amends the
original Complaint by doing the following: (1) deleting one named
Defendant (Great American Insurance Company, incorrectly
named as Great Western Insurance Company), (2) clarifying
certain identifying information of the Defendants as provided in
their responses to the original Complaint, and (3) indicating that
Interstate Packaging is pursuing alternative theories of relief
concerning the coverage as it applies to the claims made in the
underlying case.
Docket No. 104, p. 1-2.
Neither the instant Motion nor the supporting Memorandum, however, specifically
identifies what “alternative theories of relief” Plaintiff is pursuing. It does, however, state that
Plaintiff:
Is pursuing alternative theories of relief concerning the coverage as
it applies to the claims made in the underlying case, which theories
of relief are relevant to the Great American Defendants’ Motion
for Summary Judgment, Interstate Packaging’s Motion for
Reconsideration of the Court’s Order granting that Motion and
CNA and Continental’s Motion for Summary Judgment.
Docket No. 105, p. 3 (emphasis added).
The supporting Memorandum also states:
The proposed amendments do not contain new causes of actions,
but are simply intended to clarify the basis for Interstate
Packaging’s existing causes of action in light of the Court’s Order
granting the Great American Defendants’ Motion for Summary
Judgment and CNA and Continental’s Motion for Summary
Judgment.
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Id., p. 4 (emphasis added).
With virtually no explanation, Plaintiff avers that it “has not unduly delayed in seeking
leave to amend its Complaint.” Docket No. 105, p. 4. Plaintiff further avers that Defendants
will not be unduly prejudiced if Plaintiff is permitted to amend its Complaint. Id. At the same
time, however, the supporting Memorandum states “[Plaintiff’s] Motion for Reconsideration is
based in part on the alternative theories of relief [Plaintiff] seeks to introduce through its
proposed Amended and Supplemental Complaint.” Id., p. 6. Thus, it is beyond question that
Plaintiff seeks to attack Judge Nixon’s summary judgment Order, at least in part, by means of
the instant Motion to Amend.
In their Responses to the instant Motion, Defendants first argue that the instant Motion is
untimely under the Case Management Order, which established March 14, 2012, as the deadline
for filing Motions to amend the pleadings. Docket No. 112, p. 3-6. The instant Motion was filed
more than a month later, on April 20, 2012. Docket No. 105. Defendants argue that, under Rule
16(b), the Court can allow the amendment only if the moving party demonstrates “good cause.”
In fact, Rule 16(b)(4) provides, “A schedule [in a scheduling order] may be modified only for
good cause and with a judge’s consent.” Good cause is measured by the movant’s “diligence in
attempting to meet the case management order’s requirements.” Leary v. Daeschner, 349 F.3d
888, 906 (6th Cir. 2003) (citation omitted). In order to show good cause, the movant must
demonstrate that, despite its diligence, it could not meet the original deadline. Id. at 907. As the
Leary Court stated, “Once the scheduling order’s deadline passes, a plaintiff first must show
good cause under Rule 16(b) for failure earlier to seek leave to amend before a court will
consider whether amendment is proper under Rule 15(a).” Id. at 909 (citations omitted). The
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Rule is designed to ensure that “at some point both the parties and the pleadings will be fixed.”
Id. at 906 (quoting Advisory Committee Notes).
Defendants argue that Plaintiff has made no attempt to address the issue of good cause,
and that the instant Motion must be denied. Defendants further argue that Plaintiff cannot show
good cause because the proposed amendments to the Complaint are based on information that
has been available to Plaintiff for months or even years. Docket No. 112, p. 5.
With regard to Plaintiff’s proposed alternative theories, Defendants argue:
[Plaintiff’s] alternative theory of relief, as set forth in its First
Amended and Supplemental Complaint for Declaratory Judgment
and for Damages [Doc. No. 104-1] is that the underlying “NRDC
Plaintiffs did not allege that any disposal by Interstate at the
Dickson County landfill constituted a discharge, dispersal, release
or escape of any sort of irritant, contaminant or pollutant,” the
exact language of the pollution exclusion at issue. . . . In effect,
Interstate’s “new” theory is that this case is not about “pollution”
as the allegations of the underlying NRDC Complaint only alleged
there was a “disposal” of contaminants and not a “discharge,
dispersal, release or escape” of contaminants at the Dickson
County landfill – so the pollution exclusion doesn’t apply.
Regardless of the merit of this argument, it was available to
Interstate from the inception of this litigation – so it cannot be the
basis for allowing an untimely amendment.
Docket No. 114, p. 2-3 (emphasis added).
Finally, Defendants argue that all Defendants will be prejudiced if the Court allows the
amendment. Four Defendants filed Motions for Summary Judgment prior to the filing of the
instant Motion to Amend. Two of those Motions have already been granted, while the other two
remain pending. It also appears that Judge Nixon’s reasoning in his summary judgment Order is
a basis for all remaining Defendants to be dismissed from this action.
In its Reply, Plaintiff contends that Rule 16 and its requirement of “good cause” is not

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applicable in the case at bar. Plaintiff argues in part:
Plaintiff’s motion is not untimely as alleged by Defendants. For
the most part, Defendants have relied upon the hyper-technical
argument that the deadline set in the Case Management Order for
freely allowing amendments has expired. . . . Rule 16 only comes
into play when modification of a scheduling order is necessary in
order to permit a proposed amendment to a pleading because the
deadline has expired. . . . In such cases, the party seeking to amend
must show “good cause” for modifying the scheduling order before
a Court will consider the proposed amendment. . . . Here, as
further set forth below, the Case Management Order permits
amendments to pleadings after March 14, 2012, upon a showing of
“good cause” for the amendment itself, not for a modification to
the scheduling order . . . .
...
Contrary to Defendants’ contention, [Plaintiff] has not set forth the
incorrect standard governing its Motion because the Case
Management Order permits amendments to pleadings after March
14, 2012, where there is “good cause” for the amendment. . . . Rule
16, on the other hand, requires a showing of “good cause” for
modifying the scheduling order to permit the amendment . . . .
Under the current Case Management Order, this Court can
entertain motions to amend submitted after March 14, 2012,
without the party further requesting a modification of the Order.
Docket No. 122, p. 2-3 (citations omitted) (italics in original).
With all due respect, it is Plaintiff which is relying upon a “hyper-technical argument,”
not Defendants. Defendants’ arguments are quite simple. The Initial Case Management Order
states in relevant part, “The deadline for filing Motions to amend the pleadings shall be March
14, 2012, unless leave of Court is obtained for good cause shown.” Docket No. 73, p. 9.
Plaintiff implies that the deadline set in the Case Management Order for “freely allowing
amendments” has not expired. There is, however, no “deadline” in the Case Management Order
for “freely allowing amendments.” Instead, there is a “deadline” of March 14, 2012, “for filing
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Motions to amend the pleadings . . . .”
Plaintiff wishes to read the operative language of the Case Management Order to mean
that the deadline for filing Motions to amend the pleadings is March 14, 2012, unless leave of
Court for filing the amendment itself is obtained for good cause shown. The more logical
reading of the language, however, is that the deadline for filing Motions to amend the pleadings
is March 14, 2012, unless leave of Court for filing a Motion to Amend after March 14, 2012, is
obtained for good cause shown.
Under Plaintiff’s theory, the March 14, 2012, “deadline” is simply rendered inoperative,
and any party can filed a Motion to Amend at any time (if they can show good cause for the
filing of the amendment). This is certainly not what the Court intended when it entered the Case
Management Order. Additionally, Fed. R. Civ. P. 16(b)(3)(A), which is headed in part
“Required Contents,” states in relevant part, “The scheduling order must limit the time to . . .
amend the pleadings . . . .”
Moreover, “good cause” is a concept specifically referenced in Rule 16. The words
“good cause,” however, are nowhere to be found in Rule 15. Thus, it makes no sense to
condition the allowance of an amendment upon a showing of good cause. It makes imminent
sense, however, to condition a modification of the March 14, 2012, deadline for filing Motions
to amend the pleadings on a showing of good cause.2
While Plaintiff did not address the issue of good cause in its Motion or supporting
Memorandum, it makes a belated attempt to do so in its Reply. Plaintiff argues in part as

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Even if the Court were to accept Plaintiff’s reading of the Case Management Order,
Plaintiff has failed to show good cause for filing the amendment itself.
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follows:
[I]f this Court were to determine [that the instant Motion] is not
timely under the Case Management Order [Plaintiff] submits good
cause exists to permit the proposed amendments . . . In this case,
Defendants gladly accepted for many years [Plaintiff’s] premium
dollars for insurance. The purpose of insurances to insure against
a loss. . . . Yet when faced with a valid claim each of Defendants
offered a bogus excuse for refusing to provide the insurance
coverage for which [Plaintiff] had paid: Specifically, they relied
upon the pollution exclusion, which [Plaintiff] now asserts does
not apply to this case. Because they all denied coverage based
upon this exclusion, Defendants initially led [Plaintiff] to believe
that the only issue in this case was whether the “sudden and
accidental” exception to the exclusion applied to provide coverage.
When Defendants now claim that [Plaintiff] has no excuse for not
having presented in its argument that the pollution exclusion does
not apply, they fail to acknowledge that it was Defendants who
first claimed that the exclusion did apply. Therefore, Defendants
are seeking to profit from their own misleading communications to
their insured, Interstate Packaging.
Further, the need for the proposed amendments, which only refine
[Plaintiff’s] legal theories and do not add claims, became apparent
after the Court granted the Great American Defendant’s Motion for
Summary Judgment on the basis of the pollution exclusion.
Docket No. 122, p. 4-5 (citations omitted).
Simply put, Plaintiff’s arguments do not show good cause for modifying the scheduling
order to permit the filing of the Amended Complaint. Plaintiff’s claim that Defendants somehow
misled it is not persuasive. Plaintiff was obviously fully aware of the provisions of the insurance
policies at the time it filed the Complaint, which quotes a number of the insurance policies.
Plaintiff obviously could have stated in its Complaint whatever claims it wished to make based
upon the policy language.
Furthermore, Plaintiff certainly knew Defendants’ position when GAIC and GANY filed
their Motion for Summary Judgment on December 5, 2011. Plaintiff offers no explanation for
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why it did not assert its theory that there was a “disposal” of contaminants and not a “discharge,
dispersal, release or escape” of contaminants in its Complaint or in its Response to the Motion
for Summary Judgment.
It is obvious that Plaintiff was content with its original Complaint until Judge Nixon
granted GAIC and GANY summary judgment. As discussed above, it appears that most or all of
Defendants may be dismissed from this action on the same theory that there was no sudden and
accidental discharge. The Court agrees with Defendants that the instant Motion “is an improper
attempt under the guise of an ‘amendment’ to evade the Court’s summary judgment ruling on
central issues in this case.” Docket No. 112, p. 2. But, Plaintiff is not entitled to a second bite at
the apple.
Thus, the Court concludes that Plaintiff has not shown good cause for modifying the
scheduling order to permit the filing of a Motion to Amend more than a month after the deadline
set forth in the Case Management Order. Defendants have further shown that they will be
prejudiced by such a modification.
For the foregoing reasons, Plaintiff’s Motion to File Amended and Supplemental
Complaint” (Docket No. 104) should be DENIED.
Under Rule 72(b) of the Federal Rules of Civil Procedure, any party has fourteen (14)
days after service of this Report and Recommendation in which to file any written objections to
this Recommendation with the District Court. Any party opposing said objections shall have
fourteen (14) days after service of any objections filed to this Report in which to file any
response to said objections. Failure to file specific objections within fourteen (14) days of
service of this Report and Recommendation can constitute a waiver of further appeal of this

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Recommendation. See Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466, 88 L. Ed. 2d 435 (1985),
reh’g denied, 474 U.S. 1111 (1986); 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72.

E. Clifton Knowles
United States Magistrate Judge

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