Campmed Casualty & Indemnity Company, Inc. v. Specialists On Call, Inc. et al

Filing 53

MEMORANDUM OPINION AND ORDER - Pending before the Court is Plaintiff's Motion for Leave to File First Amended Original Complaint (Dkt. 41 ). After reviewing the relevant pleadings, the Court grants Plaintiffs motion. Signed by Judge Amos L. Mazzant, III on 3/1/2017. (baf, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

CAMPMED CASUALTY & INDEMNITY
COMPANY, INC.
v.
SPECIALISTS ON CALL, INC.,
LEONARD DASILVA, M.D.; LINDA
BANK, and TOMMIE BANK

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Civil Action No. 4:16-CV-00452
Judge Mazzant

MEMORANDUM OPINION AND ORDER
Pending before the Court is Plaintiff’s Motion for Leave to File First Amended Original
Complaint (Dkt. #41).

After reviewing the relevant pleadings, the Court grants Plaintiff’s

motion.
BACKGROUND
This is an insurance coverage dispute related to whether Campmed Casualty & Indemnity
Company Inc. (“Campmed”) is obligated to defend Specialists on Call (“SOC”) in the underlying
litigation filed by Linda and Tommie Bank. On December 19, 2016, Campmed filed its motion
for leave to amend its complaint (Dkt. #41). On December 28, 2016, SOC filed a response (Dkt.
#44). On January 2, 2017, Dr. Leonard DaSilva (“DaSilva”) filed a response that adopted and
incorporated the entirety of SOC’s response (Dkt. #46). On January 6, 2017, Campmed filed a
reply (Dkt. #50).
LEGAL STANDARD
Rule 15(a) of the Federal Rules of Civil Procedure provides that a party may amend its
pleading once without seeking leave of court or the consent of the adverse party at any time
before a responsive pleading is served. Fed. R. Civ. P. 15(a). After a responsive pleading is

served, a party may amend only with the opposing party’s written consent or the court’s leave.”
Id. Rule 15(a) instructs the court to “freely give leave when justice so requires.” Id. The rule
‘“evinces a bias in favor of granting leave to amend.’” Jones v. Robinson Prop. Grp., L.P.,
427 F.3d 987, 994 (5th Cir. 2005) (quoting Lyn–Lea Travel Corp. v. Am. Airlines, Inc., 283 F.3d
282, 286 (5th Cir. 2002)). But leave to amend “is not automatic.” Matagorda Ventures, Inc. v.
Travelers Lloyds Ins. Co., 203 F. Supp. 2d 704, 718 (S.D. Tex. 2000) (citing Dussouy v. Gulf
Coast Inv. Corp., 660 F.2d 594, 598 (5th Cir. 1981)). Whether to allow amendment “lies within
the sound discretion of the district court.” Little v. Liquid Air Corp., 952 F.2d 841, 845–46
(5th Cir. 1992). A district court reviewing a motion to amend pleadings under Rule 15(a) may
consider “whether there has been ‘undue delay, bad faith or dilatory motive, . .. undue prejudice
to the opposing party, and futility of amendment.’” Jacobsen v. Osborne, 133 F.3d 315, 318 (5th
Cir. 1998) (quoting In re Southmark Corp., 88 F.3d 311, 314–15 (5th Cir. 1996)).
ANALYSIS
Campmed seeks to leave to amend its original complaint to add the following allegations:
14.
SOC’s and DaSilva’s counterclaims in this action (Doc. 12 and Doc. 19)
claim that if SOC had known Campmed would challenge coverage based on SOC
having received the Banks’ claim after the Campmed policy period had expired,
SOC would have purchased an Extended Reported Period tail-coverage
endorsement under the policy, and thus Campmed should be estopped to assert
lack of coverage under the policy. (See Doc. 12, ¶ 36 and 37; Doc. 19, ¶¶ 37 and
38). In response to the counterclaims, Campmed has re-offered the tail coverage
to SOC on the same terms that were available (and in fact offered) to SOC when
SOC and DaSilva claim that SOC would have purchased the tail coverage
endorsement. See attached Exhibit 1. SOC has so far declined Campmed’s reoffer of the tail coverage endorsement.
15.
Because SOC told Campmed that the Banks’ claim “was made” during the
policy period when in fact it was not, Campmed did not know that coverage was
precluded. Now that all parties to this action and the underlying suit know the
claim was in fact made after the Campmed policy had expired, SOC should have
to pay for the tail coverage that it seeks. SOC is not entitled to free coverage, and
failing to pay for the required tail coverage endorsement will leave SOC—and Dr.
DaSilva—without insurance coverage for the Banks’ claim and suit.
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(Dkt. #41 at ¶¶ 14–15).

SOC and Dr. DaSilva (collectively, “Defendants”) respond that

Campmed’s motion for leave should be precluded for introducing allegations that are
inadmissible under Rule 408 of the Federal Rules of Evidence.
The Court finds that Rule 408 is not an appropriate reason to deny Campmed’s proposed
amended complaint. Rule 408 is a rule of evidence governing the admissibility of settlement
discussions as evidence at trial. Fed. R. Evid. 408. Specifically, Rule 408 states that “conduct or
a statement made during compromise negotiations about [a disputed] claim” is not admissible “to
prove or disprove the validity or amount of [the] claim.” Id. The Court is unable to determine
whether Campmed’s extension of tail coverage to SOC actually constituted a settlement offer.
And even if the allegations were made during settlement negotiations, Rule 408 is a rule
governing the admission of evidence in court and not a rule of pleading. Disputes over Rule 408
should be resolved as evidentiary matters with motions in limine rather than opposing an
amended complaint. Campmed has not implicated Rule 408 by offering the statements into
evidence, and the Court will not use a rule of evidence to bar preemptively Campmed’s first
amended complaint. Since the Federal Rules instruct leave to amend to be freely given when
justice so requires, the Court determines such leave is proper in this case.

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CONCLUSION
Therefore, Campmed Casualty & Indemnity Company Inc.’s Motion for Leave to File
First Amended Original Complaint (Dkt. #41) is GRANTED.
IT IS SO ORDERED.

SIGNED this 1st day of March, 2017.

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AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE