Interstate Packaging Company v. Century Indemnity Company et al

Filing 179

ORDER: The Court finds that Plaintiff has not shown good cause foramending the Scheduling Order to permit filing of a motion to amend its Complaint. Accordingly, the Court ADOPTS Judge Knowles's Report & Recommendation 159 , and DENIES Plaintiff's Motion to File Amended and Supplemental Complaint 104 . Signed by Senior Judge John T. Nixon on 3/28/13. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(dt)

IN THE UNITED STATES DISTRICT COURT
THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
INTERSTATE PACKAGING COMPANY,
Plaintiff,
v.
CENTURY INDEMNITY COMPANY, et al.,
Defendants.

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No. 3:11-cv-00589
Judge Nixon
Magistrate Judge Knowles
JURY DEMAND

ORDER
Pending before the Court is Plaintiff Interstate Packaging Company’s Motion to File
Amended and Supplemental Complaint (“Motion” or “Motion to Amend”) (Doc. No. 104), filed
with a Memorandum in Support (Doc. No. 105). On January 22, 2013, Magistrate Judge
Knowles issued a Report and Recommendation (“R&R”), recommending that Plaintiff’s Motion
be denied. (Doc. No. 159.) Plaintiff filed Objections to the R&R (Doc. No. 165), to which
several Defendants filed Responses (Doc. Nos. 168; 170; 172; 173.) For the reasons below, the
Court ADOPTS the R&R and DENIES Plaintiff’s Motion.
I.

BACKGROUND
A. Factual Background1
1. Underlying Litigation
Interstate Packaging Company (“Interstate” or “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. (Doc. No. 1-1 at 3.) On October

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All facts in this section are undisputed and are taken from Plaintiff’s Response to certain Defendants’ Statement of
Undisputed Material Facts (Doc. No. 79), unless otherwise noted.

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28, 2009, Natural Resources Defense Council, Inc., Beatrice Holt, and Sheila Holt-Orsted
(“NRDC Plaintiffs”) filed suit against Interstate in this District (“NRDC Lawsuit”). The
Complaint in the NRDC Lawsuit (“NRDC Complaint”) alleged that Interstate disposed of waste
containing trichloroethylene (“TCE”) and perchloroethylene (“PCE”) at a landfill owned and
operated by the City of Dickson, Tennessee, in the 1970s and 1980s.
The NRDC Plaintiffs claimed that the TCE and PCE contaminated the Holts’ drinking
well and the subsurface of their property. They further claimed that members of the Holt family
had experienced serious health problems that they believed were related to their long-term
exposure to the contaminated water supply. The NRDC Plaintiffs sought an order requiring
various defendants, including Interstate, to investigate the extent of contamination, remediate the
present contamination, and abate future contamination. The NRDC Plaintiffs subsequently
settled their claims, and the NRDC Lawsuit was dismissed in November 2011.
2. Insurance Policies
The Defendants are insurers who—at various points relevant to the underlying
litigation—insured Plaintiff. Plaintiff’s insurance policies with Defendants each contained an
identical exclusion to coverage for injury or property damage caused by the insured’s polluting
activities. Specifically, the policies exclude from coverage:
bodily injury or property damage arising out of the discharge, dispersal, release or
escape of smoke, vapors, soot, fumes, acids, alkalis, tonic chemicals, liquids or
gases, waste materials or other irritants, contaminants or pollutants 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.
(Doc. No. 1-1 at 4.) Defendants declined to defend or indemnify Plaintiff against the NRDC
Lawsuit, on the basis that the NRDC Complaint alleged polluting activities that were excluded

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from coverage, and did not fall within the “sudden and accidental” exception to the exclusion.
(See, e.g., Doc. No. 1-5 at 637.) Defendants’ denial of coverage precipitated the instant case.
B. Procedural History
Plaintiff filed the instant action in the Chancery Court of Dickson County on May 18,
2011, seeking a declaratory judgment that coverage for the NRDC Lawsuit exists under the
policies. (Doc. No. 1-1.) Plaintiffs allege generally that Defendants wrongfully denied
insurance coverage for the damages alleged in the NRDC Lawsuit and that Defendants are liable
for the policy limits, along with damages for their failure to defend and indemnify. (Id.)
Defendants removed the action to this Court on June 17, 2011, on the grounds of diversity
jurisdiction. (Doc. No. 1.)
Defendants Great American Insurance Company (“GAIC”), and Great American
Insurance Company of New York (“GANY”), filed a Motion for Summary Judgment on
December 5, 2011 (Doc. No. 65), which the Court granted on March 14, 2012. (Doc. No. 88.)
The Court held that the exclusions contained in Plaintiff’s insurance policies applied to bar
coverage for the claims as alleged in the NRDC Lawsuit. (Id. at 10.) The Court therefore found
that neither policy gave rise to a duty to defend or to indemnify. (Id. at 10–11.) The Court held,
in the alternative, that it could not find a duty to indemnify when no “true facts” had been
determined in the NRDC Lawsuit prior to the suit’s settlement. (Id. at 12.) Finally, the Court
held that even if the policies gave rise to a duty to defend to indemnify, GAIC was entitled to
summary judgment because Plaintiff did not create a genuine dispute of fact as to whether GAIC,
rather than GANY, issued either policy. (Id.)
Less than three weeks after the Court’s summary judgment Order was entered,
Defendants American Casualty Company (“ACC”) and Continental Casualty Company (“CCC”)
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filed a Motion for Summary Judgment on the same grounds as the earlier motion. (Doc. No. 94.)
Two days later, on April 11, 2012, Plaintiff filed a Motion for Reconsideration of the Court’s
Order on Summary Judgment or in the Alternative, for Certification of State Law Questions to
the Tennessee Supreme Court. (Doc. No. 99.) On April 20, 2012, Plaintiff filed the instant
Motion to Amend (Doc. No. 104), with a Memorandum in Support (Doc. No. 105). Defendants
filed Responses in Opposition to the Motion to Amend on May 4, 2012 (Doc. Nos. 112–115), to
which Plaintiff filed a Reply on May 11, 2012 (Doc. No. 122). Magistrate Judge Knowles issued
the R&R on January 22, 2013 (Doc. No. 159), to which Plaintiff filed Objections on February 5,
2013 (Doc. No. 164). Defendants filed Responses to the Objections on February 19, 2013 (Doc.
Nos. 168; 170; 172; 173), to which Plaintiff filed a Reply on February 28, 2013. (Doc. No. 1771).
II.

JUDGE KNOWLES’S REPORT AND RECOMMENDATION
In his R&R, Judge Knowles explains that Plaintiff seeks to amend and supplement the

original Complaint—in relevant part—in order to “[indicate] that [Plaintiff] is pursuing
alternative theories of relief concerning the coverage as it applies to the claims made in the
underlying case.” (Doc. No. 159 at 4 (citing Doc. No. 104 at 1–2).) The R&R explains that
Plaintiff hopes to pursue “alternative theories of relief relevant to” this Court’s prior Order
granting summary judgment to Defendants GANY and GAIC, and relevant to the pending
Motion for Reconsideration and the remaining Defendants’ motions for summary judgment. (Id.
(citing Doc. No. 105 at 3).)
Judge Knowles has recommended denying Plaintiff’s Motion to Amend for several
reasons. First, Judge Knowles found the Motion untimely. (Doc. No. 159 at 5–9.) The
Scheduling Order in this case set a deadline of March 14, 2012, for motions to amend the
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pleadings. (Doc. No. 73 at 9.) Plaintiff’s Motion to Amend (Doc. No. 104) was not filed until
April 21, 2012, more than one month after the deadline passed, and only after the Court granted
summary judgment to two Defendants. Judge Knowles rejected Plaintiff’s argument that the
Scheduling Order required only good cause for an amendment after the deadline, rather than a
showing of good cause for filing the Motion to Amend after the deadline. (Doc. No. 159 at 6–8.)
Second, Judge Knowles found that Plaintiff did not show “good cause” for modification
of the Scheduling Order, as required under Federal Rule of Civil Procedure 16. (Id. at 8–10.)
Specifically, Judge Knowles rejected Plaintiff’s argument that its prior counsel was “misled” by
Defendants into mistakenly believing that this case turned on the “sudden and accidental”
exception to the pollution exclusion. (Id. at 9.) Judge Knowles reasoned that “Plaintiff was
obviously fully aware of the provisions of the insurance policies at the time it filed the
Complaint,” and that “Plaintiff obviously could have stated in its Complaint whatever claims it
wished to make based upon the policy language.” (Id.) Finally, Judge Knowles concluded that
the reasons proffered by Plaintiff for seeking to amend the Complaint were unavailing, and that
ultimately the Motion to Amend was “an improper attempt under the guise of an ‘amendment’ to
evade the Court’s summary judgment ruling on the central issues in this case.” (Id. at 10
(quoting Doc. No. 112 at 2.)
III.

LEGAL STANDARDS
Federal Rule of Civil Procedure 16(b)(4) permits modification of scheduling orders “for

good cause and with consent of the judge.” The Sixth Circuit prescribes two relevant
considerations for a determination of good cause. First, the movant must establish that the
existing schedule order “cannot reasonably be met despite the diligence” of that party. Leary v.

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Daeschner, 349 F.3d 888, 906 (6th Cir. 2003) (citation omitted). Second, the court must
consider “whether the opposing party will suffer prejudice by virtue of the amendment.” Id.
If a movant shows good cause for a modification to the scheduling order, the Court then
must determine whether an amendment should be permitted under Rule 15. See Fed. R. Civ. P.
15. Rule 15(a)(2) provides that “[t]he court should freely give leave [to amend] when justice so
requires.” Again, the Sixth Circuit suggests factors for the Court to consider when entertaining a
motion to amend, including: 1) “the delay in filing, 2) the lack of notice to the opposing party, 3)
bad faith by the moving party, 4) repeated failure to cure deficiencies by the previous
amendments, 5) undue prejudice to the opposing party, and 6) futility of the amendment.” Miller
v. Admin. Office of the Courts, 448 F.3d 887, 898 (6th Cir. 2006) (citation omitted).
Under Rule 72(b) and Local Rule 72.03(b), after considering a party’s written objections
to a report and recommendation, the district judge shall make a de novo determination of any
part of the report and recommendation that was properly objected to. Fed. R. Civ. P. 72(b)(3).
The District Judge “may accept, reject, or modify, in whole or in part, the recommended
disposition” of the magistrate judge. Id.
IV.

PLAINTIFF’S OBJECTIONS TO THE R&R
The Court proceeds by describing Plaintiff’s Objections to the R&R and Defendants’

various Responses, before analyzing the R&R and Plaintiff’s Motion to Amend.
A. Plaintiff’s Objection for Failure to Find Good Cause for Modification
Plaintiff first objects to Judge Knowles’s finding that Plaintiff did not show good cause
for modification of the Scheduling Order to permit an untimely Motion to Amend. (Doc. No.
165 at 5.) Plaintiff argues that “the proposed amendments do not contain new causes of action,
but are simply intended to clarify the basis for [Plaintiff’s] existing causes of action in light of
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the Court’s [previous summary judgment order.]” (Id.) Plaintiff proposes amending the
Complaint to plead that this case does not depend just on whether there was a “sudden and
accidental” discharge of pollutants, but also whether the NRDC’s allegation of “disposal” is
actually excluded from coverage under the exclusion for “discharge, dispersal, release or
escape.” (Id. at 6.)
With respect to its delay in raising this theory, Plaintiff argues that the Defendants
“misled” Plaintiff and its former counsel into focusing on the “sudden and accidental” exception,
rather than the issue of coverage for “disposal,” and further that this theory did not come to
Plaintiff’s attention until after the Court entered summary judgment in favor GANY and GAIC.
(Id. at 7.) Plaintiff asserts that “while Defendants now claim that Interstate Packaging has no
excuse for not having presented 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,” and
further that “prior counsel simply missed the issue due to the Defendants’ representations in their
letters denying coverage.” (Id. at 10–11.) Plaintiff goes so far as to claim that “Defendants are
seeking to profit from their own misleading communications to their insured.” (Id. at 10.)
Plaintiff also contends that it exercised diligence and did not delay in seeking
modification of the Scheduling Order. (Id. at 9.) Plaintiff points out that its Motion to Amend
was filed several months prior to the deadlines for discovery and dispositive motions in the case,
leaving “an abundance of time” for the parties to conduct discovery and prepare dispositive
motions. (Id. at 10.) Plaintiff asserts that it has been proactive in attempting to remedy the
mistake by obtaining new counsel and filing the Motion to Amend within approximately one

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month of the Court’s summary judgment order and the deadline for amending the pleadings.
(Id.)
B. Plaintiff’s Objection for Failure to Consider Lack of Prejudice to Defendants
Plaintiff next contends that Judge Knowles erred by not considering whether Defendants
would actually be prejudiced by allowing Plaintiff to amend the Complaint and, not surprisingly,
offers several reasons why Defendants would not be prejudiced. (Id. at 12.) First, Plaintiff
asserts that it is not adding any new claims and that its proposed amendments are meritorious.
(Id. at 13.) Plaintiff argues that the amended complaint would simply “require [Defendants] to
address one additional legal argument in their summary judgment motions,” reiterating that it
merely “seeks to assert the alternative legal theory that the pollution exclusion does not apply to
allegations of ‘disposal’ at all.” (Id. at 13–14.) Plaintiff argues that the proposed amendment
would require no additional discovery, because whether “disposal” implicates the pollution
exclusion is a purely legal issue. (Id. at 14.) Next, Plaintiff argues that Defendants will not be
prejudiced by the proposed amendments because, under the current Scheduling Order, there is
still sufficient time to conduct discovery and prepare dispositive motions.2 (Id. at 15.) Plaintiff
argues that because Defendants have “resisted” additional discovery efforts and filed a motion to
stay discovery, that they will not be prejudiced by the potential of duplicative discovery efforts.
(Id.)
Finally, Plaintiff argues that Defendants have not been prejudiced with respect to their
pending motions for summary judgment. (Id. at 16–17.) Plaintiff asserts that the Sixth Circuit
has never held that entry of summary judgment alone is a sufficient basis to deny an amendment.

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Currently, the discovery deadline in this case is April 15, 2013, and the dispositive motions deadline is September
1, 2013.

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(Id. at 17.) Plaintiff further argues that the pendency of its Motion for Reconsideration cuts in
favor of allowing an amendment to the Complaint. (Id. at 18.) Plaintiff’s rationale appears to be
that because the Court has not yet ruled on the Motion for Reconsideration, amending the
Complaint to include theories presented in that motion would not prejudice Defendants.3
Finally, Plaintiff argues that this Court’s grant of summary judgment to the GANY and GAIC
was interlocutory and not a final judgment because of the presence of other Defendants, and that
therefore the Court should be amenable to revising its earlier ruling. (Id. at 19.)
C. Plaintiff’s Objection for Failure to Consider the Unique Circumstances of this Case
Finally, Plaintiff alleges that Judge Knowles erred by failing to consider the
“circumstances of this case and the very limited nature of the amendment Interstate Packaging
seeks to make.” (Id. at 21.) Plaintiff argues that under the Federal Rule of Civil Procedure
15(b)(1), parties should be granted latitude to amend the pleadings when doing so will aid in
presenting the merits of the case and will not prejudice defendants. (Id. at 22.) Plaintiff reasserts
that it seeks only to alter its legal theory of recovery and asserts that Defendants have been
unable to present “any case that has refused an amendment under circumstances such as those
present in this case.” (Id. at 23.) Plaintiff concludes that if the Court denies the instant Motion,
Plaintiff “will be denied the opportunity to fully present its claims on the merits, which is
antithetical to the interests of justice.” (Id. at 25.)
V.

DEFENDANTS’ RESPONSES TO PLAINTIFF’S OBJECTIONS
Because several Defendants filed a Responses to Plaintiff’s Objections (Doc. Nos. 168;

170; 172; 173), the Court will summarize them generally and collectively, but notes that each has
been fully considered for purposes of deciding the instant Motion.
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Defendants have, however, already responded to the Motion for Reconsideration.

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Defendants assert that Plaintiff’s Objections raised for the first time the argument that
Plaintiff’s prior counsel missed crucial issues. (Doc. No. 168 at 2–3.) Defendants argue that this
does not meet the “good cause” requirement for the untimely filing of the Motion to Amend, and
further that this Court should not consider arguments not made before Judge Knowles. (Id.)
Further, Defendants dispute Plaintiff’s claim that Judge Knowles failed to consider the issue of
prejudice to Defendants. (Id. at 3.) Defendants specifically cite to the portion of the R&R in
which Judge Knowles states: “Defendants have further shown that they will be prejudiced by
such a modification [to the Scheduling Order].” (Doc. No. 159 at10.) They further assert that
the Court is not required to consider prejudice as a second prong of the Rule 16 analysis if
Plaintiff first fails to meet the “good cause” requirement. (Doc. No. 168 at 8.)
The Response from Defendants Century Indemnity Company (“CIC”) and ACE Fire
Underwriters Insurance Company (“ACE”) also challenges Plaintiff’s assertion that it was
misled by Defendants’ letters denying coverage. (Doc. No. 173.) CIC and ACE cite the
language of the letter sent to Plaintiff, which—in explaining the why the pollution exclusion
applies—states in relevant part: “a review of the [NRDC] allegations demonstrate[s] that
[Plaintiff] . . . routinely disposed of TCE and PCE . . . over a significant number of years.
Nowhere in the allegations is there any reference to either a ‘sudden’ or ‘accidental’ discharge of
contaminants.” (Id. at 5–6 (citing Doc. No. 1-5 at 637).) Thus, Defendants argue, Plaintiff was
on notice that Defendants believed the “disposal” of contaminants triggered the exclusion and
that the “sudden and accidental” exception did not apply. (Id.)
Beyond those matters, Defendants largely reiterate and endorse the findings and
conclusions of Judge Knowles. Defendants reiterate that the Motion to Amend was untimely
under the Scheduling Order and that Plaintiff has not shown good cause for modifying the order.
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(Doc. No. 170 at 2.) Specifically, Defendants argue that Plaintiff’s arguments regarding its prior
counsel being “misled” and “missing issues” fall short of good cause because the theory has
always been available to Plaintiff. (See Id. at 6.) Instead, Defendants assert that Plaintiff is
asking for nothing more than a “do over.” (Id.)
Finally, Defendants argue that allowing the amendment would result in “clear prejudice.”
(Doc. No. 170 at 2.) Defendants assert that they have “incurred substantial costs” in preparing
motions directed at the original Complaint, and that if a new complaint was permitted,
“Defendants will be forced to incur the additional costs of re-starting the entire summary
judgment process.” (See Id. at 12.)
VI.

ANALYSIS
As an initial matter, the Court agrees entirely with Judge Knowles’s determination that

the “good cause” requirement from the Scheduling Order clearly refers to good cause for filing a
motion to amend after the deadline, rather than good cause for the amendment itself. (See Doc.
No. 159 at 6–7; 73 at 9 (“The deadline for filing Motions to amend the pleadings shall be March
14, 2012, unless leave of Court is obtained for good cause shown.”).) Plaintiff’s assertion to the
contrary is curious. Certainly Judge Knowles is well-apprised of the meaning of provisions
within his scheduling orders. Thus, the Court proceeds to analyze Plaintiff’s untimely filing of
the instant Motion to Amend under Rule 16, rather than the more permissive standard of Rule 15.
Before analyzing the case under Rule 16, the Court acknowledges disagreement among
the parties about the significance of the prejudice element in Rule 16 analysis. Plaintiff asserts
that Sixth Circuit case law, namely Leary, establishes a two-part analysis, in which the Court
first determines whether good cause is shown for motion to amend, and then whether Defendants
will be prejudiced by the amendment. (Doc. No. 165 at 7.) Defendants disagree, asserting that
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controlling precedent requires a showing of good cause by Plaintiff, regardless of whether
defendant is prejudiced by the amendment. (See, e.g., Doc. No. 170 at 6–7.) Instead,
Defendants argue, prejudice “is merely a consideration that informs . . . the ‘good cause’
requirement” under Leary. (Id. at 7 (quoting Korn v. Paul Revere Life Ins. Co., 382 F.App’x
443, 449 (6th Cir. 2010).)
Rule 16 states, in relevant part, “[t]he district judge—or a magistrate judge when
authorized by local rule—must issue a scheduling order . . . [t]he scheduling order must limit the
time to join other parties, amend the pleadings, complete discovery, and file motions . . . .” Fed.
R. Civ. P. 16(b). The Rule is designed to ensure that “at some point both the parties and the
pleadings will be fixed.” Fed. R. Civ. P. 16, 1983 advisory committee’s notes. The Rule permits
modification to the scheduling order “only for good cause and with the judge’s consent.” Fed. R.
Civ. P. 16(b)(4). Further, a court may modify the scheduling order only if the deadlines “cannot
reasonably be met despite the diligence of the party seeking the extension.” Leary, 349 F.3d at
906 (citing Fed. R. Civ. P. 16, 1983 advisory committee’s notes). The Sixth Circuit has linked
these two requirements, stating that good cause is measured by the movant’s diligence in
attempting to meet the deadlines. Inge v. Rock Fin. Corp., 281 F.3d 613, 625 (6th Cir. 2002).
In addition, the Leary court concluded that “while prejudice to the defendant is not an
express component of Rule 16, it is nonetheless a ‘relevant consideration,’” so much so that it “is
required” to be considered by a court in determining whether to permit a Rule 16 motion to
amend. Leary, 349 F.3d at 906, 909. Later, in Korn, the Sixth Circuit appeared to clarify the
role of the prejudice element in good cause analysis, holding that “prejudice . . . is merely a
consideration that informs whether [a plaintiff] has satisfied the ‘good cause’ requirement.” 382
F.App’x at 450. Ultimately then, the Court believes Plaintiff must justify its failure to file a
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timely Motion to Amend, independent of the resultant prejudice—or lack thereof—to
Defendants. In addition, however, the Court will consider any such prejudice in determining
whether the amendment is warranted.
The Court finds that under Rule 16 and the Sixth Circuit’s decision in Leary, Plaintiff has
not shown good cause for modification of the Scheduling Order to permit its Motion to Amend.
Plaintiff has not argued that it could not through reasonable diligence have previously raised its
theory, but merely discusses why it did not. Plaintiff acknowledges that its proposed amendment
is an effort to advance a different legal theory of recovery than was argued at the summary
judgment stage. Plaintiff’s only justification for the untimeliness of its motion is that its original
counsel “missed” this new theory, because prior counsel was allegedly “misled” by Defendants
into focusing solely on the “sudden and accidental” exception. The Court finds this argument
simply unavailing.
Plaintiff is the master of the Complaint. Caterpillar Inc. v. Williams, 482 U.S. 386, 392
(1987). As Judge Knowles pointed out, Plaintiff knew of Defendants’ theories of defense upon
the filing of GANY and GAIC’s motion for summary judgment in December 2011. (Doc. No.
159 at 9–10.) Moreover, the issues of defense and indemnity ultimately turn on the allegations in
the NRDC Complaint, and whether the allegations potentially fall within the pollution exclusion.
See Travelers Indem. Co. of Am. v. Moore & Assocs. Inc., 216 S.W.3d 302, 305 (Tenn. 2007).
The theory that NRDC Plaintiffs’ allegation of “disposal” does not fall within the exclusion for
“discharge, dispersal, release, or escape” is a theory that could have been developed by simply
comparing the language of the exclusion to the NRDC Complaint, independent of any
representations by Defendants. Therefore, that theory has been available to Plaintiff since the
NRDC Plaintiffs filed their complaint in 2009.
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Further, based in part on the language of the CIC and ACE letter denying coverage, the
Court rejects Plaintiff’s argument that its counsel was “misled” concerning the ultimate issue of
the case. (See Doc. 1-5 at 467.) It is not Defendants’ responsibility to inform the opposition of
promissing legal arguments. Moreover, there is simply nothing in the language of the letter that
appears misleading, deceptive, or untoward. Instead, the letter appears to notify Plaintiff simply
that—in the opinion of Defendants—the “disposal” of pollutants alleged by the NRDC Plaintiffs
fell within the exclusion to coverage, but did not fall within the exception for “sudden and
accidental” “discharge, dispersal, release or escape.” Plaintiff’s assertions to the contrary are
without merit.
To the extent Plaintiff’s new theory is viable—which the Court finds doubtful—it is
perhaps unfortunate that Plaintiff’s prior counsel did not raise it. However, the Court cannot
conclude that this failure to raise the theory—or conscious choice not to raise it, as the case may
have been—amounts to “good cause” for the purposes of amending the Scheduling Order under
Rule 16. A scheduling order should be amended when a party “cannot meet the deadlines
despite [its] diligence.” Leary, 349 F.3d at 906. That standard is simply not satisfied here. It is
not that Plaintiff could not have brought this theory before the deadline, it just did not, or chose
not to, or in Plaintiff’s words, “missed it.” Only after this Court ruled that Plaintiff’s alleged
polluting activities were excluded from coverage did Plaintiff attempt to raise the new theory.
That Plaintiff’s new counsel would have litigated this case differently than prior counsel—in the
Court’s view and in the absence of any persuasive case law—does not constitute the “good
cause” required to allow an untimely amendment and force defendants to relitigate the case.
After all, as at least one Defendant pointed out, such a strategy could be pursued by any
unsuccessful litigant.
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Finding that Plaintiff has not shown good cause for untimely filing its instant Motion, the
Court proceeds to consider prejudice as required under Leary. Here, the prejudice to Defendants,
while perhaps not onerous, should not be minimized. Whereas the initial briefings focused on
the issue of whether Plaintiff’s polluting activities were “sudden and accidental,” Defendants
would be required under the proposed amended complaint to litigate whether the polluting
activities were excluded at all. At a minimum, this would require further briefing. And although
only two Defendants have obtained summary judgment at this point, several others have filed
motions for summary judgment, presumably upon the same legal theories as prevailed in the first
such motion. Changing the focus of the litigation from whether alleged polluting activities were
sudden and accidental to whether the activities triggered the coverage exclusion at all is not an
insignificant change.
Additionally, contrary to Defendants assertions, litigating the new theory would not
necessarily be “purely legal.” (See Doc. No. 165 at 14.) If the Court found the language of the
insurance contract was not plain and unambiguous, the parties would be required to present proof
of their intent upon entering into the contract, potentially necessitating deposition testimony of
witnesses and experts. See Kiser v. Wolfe, 353 S.W.3d 741, 747 (Tenn. 2011). The Court
acknowledges Plaintiff’s argument that the discovery deadline in the case has not lapsed, and
agrees that this fact may mitigate the potential prejudice to Defendants from an amended
complaint. However, allowing a shift in the focus of the litigation, after the point at which the
pleadings were supposed to be fixed, necessarily requires additional expenditure of time and
resources by Defendants. Thus, the Court finds that Defendants would be prejudiced by
allowing Plaintiff to amend its Complaint.

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VII.

CONCLUSION
For the reasons above, the Court finds that Plaintiff has not shown good cause for

amending the Scheduling Order to permit filing of a motion to amend its Complaint.
Accordingly, the Court ADOPTS Judge Knowles’s Report & Recommendation (Doc. No. 159),
and DENIES Plaintiff’s Motion to File Amended and Supplemental Complaint (Doc. No. 104).
It is so ORDERED.
Entered this the __28th ____ day of March, 2013.

________________________________
JOHN T. NIXON, SENIOR JUDGE
UNITED STATES DISTRICT COURT

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