Serna v. Continental American Corporation
MEMORANDUM OPINION AND ORDER denying 20 Motion to Compel Arbitration filed by Continental American Corporation, denying 22 MOTION to Modify Scheduling Order filed by Continental American Corporation; and denying 24 amended Motion to Compel Arbitration filed by Continental American Corporation. (Ordered by Judge Sidney A Fitzwater on 6/15/2017) (Judge Sidney A Fitzwater)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
MARIA HERNANDEZ, Individually
and as the Personal Representative
of the Estate of Juan Serna, Deceased,
CORPORATION d/b/a PIONEER
Civil Action No. 3:15-CV-0600-D
This is a removed action in which plaintiff Maria Hernandez (“Hernandez”),
individually and as the personal representative of the Estate of Juan Serna (“Serna”),
Deceased, sues defendant Continental American Corporation d/b/a Pioneer Balloon
Company (“Continental”), alleging that Serna was injured during the course of his
employment with Continental. Continental has filed a motion and amended motion to
compel arbitration and a motion to modify the scheduling order. Hernandez opposes both
motions and moves to modify the scheduling order on other grounds. For the reasons
explained, the court denies Continental’s motion and amended motion to compel arbitration
and motion to modify scheduling order, and grants Hernandez’s motion to modify scheduling
Serna filed this lawsuit in state court on December 18, 2014 against Continental,
alleging claims for negligence, negligence per se, and/or gross negligence related to a back
injury he incurred while handling heavy molds. Continental answered on February 3, 2015
and timely removed the case to this court based on diversity of citizenship.
Serna died on June 1, 2015, and Hernandez was substituted as the plaintiff over one
year later, on July 7, 2016. Thereafter, the parties jointly filed a motion to continue the trial.
In granting the motion, the court cited N.D. Tex. Civ. R. 40.1 and reminded the parties that
“the granting of a motion for continuance will not extend or revive any deadline that has
already expired in a case.” Oct. 26, 2016 Order at 1 (citing Rule 40.1). On February 17,
2017, over two years after the lawsuit was filed, Continental filed the instant motion to
compel arbitration. Hernandez objects to this motion for a variety of reasons, including on
the grounds that Continental waived its right to arbitrate, the motion was more than nine
months late, and Continental failed to move to modify the scheduling order. Continental now
moves to modify the scheduling order in addition to moving to compel arbitration.
Hernandez opposes the motions and moves on separate grounds to modify the scheduling
order to permit further discovery.
The court turns first to Continental’s motion to modify the scheduling order. Because
the motion to compel arbitration was filed after the applicable deadline in the scheduling
order, if the scheduling order is not modified, Continental’s motion should be denied on that
Fed. R. Civ. P. 16(b)(4) governs a party’s request to modify a scheduling order.
Cartier v. Egana of Switz. (Am.) Corp., 2009 WL 614820, at *2 (N.D. Tex. Mar. 11, 2009)
(Fitzwater, C.J.). To modify the scheduling order, a party must demonstrate good cause and
obtain the judge’s consent. Id.
“The ‘good cause’ standard focuses on the diligence of the party seeking to modify
the scheduling order.” Cut-Heal Animal Care Prods., Inc. v. Agri-Sales Assocs., Inc., 2009
WL 305994, at *1 (N.D. Tex. Feb. 9, 2009) (Fitzwater, C.J.). The good cause standard
“require[s] the movant ‘to show that the deadlines cannot reasonably be met despite the
diligence of the party needing the extension.’” Puig v. Citibank, N.A., 514 Fed. Appx. 483,
487-88 (5th Cir. 2013) (per curiam) (quoting S & W Enters., L.L.C. v. SouthTrust Bank of
Ala., NA, 315 F.3d 533, 535 (5th Cir. 2003)). “Mere inadvertence on the part of the movant,
and the absence of prejudice to the non-movant, are insufficient to establish ‘good cause.’”
Price v. United Guar. Residential Ins. Co., 2005 WL 265164, at *4 (N.D. Tex. Feb. 2, 2005)
(Fish, C.J.) (citing Geiserman v. MacDonald, 893 F.2d 787, 791 (5th Cir. 1990)). Instead,
the movant must show that, despite its diligence, it could not reasonably have met the
scheduling deadline. See S & W Enters., 315 F.3d at 535; Am. Tourmaline Fields v. Int’l
Paper Co., 1998 WL 874825, at *1 (N.D. Tex. Dec. 7, 1998) (Fitzwater, J.) (citing 6A
Charles Alan Wright, et al., Federal Practice & Procedure § 1522.1 at 231 (2d ed. 1990));
Sw. Bell Tel. Co. v. City of El Paso, 346 F.3d 541, 546 (5th Cir. 2003) (citing S & W Enters.,
315 F.3d at 535).
“In determining whether the movant has met its burden under Rule 16(b)(4), the court
considers four factors: (1) the party’s explanation, (2) the importance of the requested relief,
(3) potential prejudice in granting the relief, and (4) the availability of a continuance to cure
such prejudice.” Cartier, 2009 WL 614820, at *3 (citing S & W Enters., 315 F.3d at 536).
The court considers the four factors holistically and “does not mechanically count the number
of factors that favor each side.” EEOC v. Serv. Temps, Inc., 2009 WL 3294863, at *3 (N.D.
Tex. Oct. 13, 2009) (Fitzwater, C.J.), aff’d, 679 F.3d 323 (5th Cir. 2012).
Continental has not briefed the good cause factors in its motion, but the grounds on
which it relies enable the court to apply the pertinent four-factor test.1 Continental contends
that “[o]nce Plaintiff Juan Serna passed away in June 2015 . . . [t]here was no Plaintiff to
“When a party . . . does not address the good cause standard under Rule 16(b)(4), this
court typically denies the motion for that reason alone.” Wachovia Bank, Nat’l Ass’n v.
Schlegel, 2010 WL 2671316, at *3 (N.D. Tex. June 30, 2010) (Fitzwater, C.J.) (citing Serv.
Temps, 2009 WL 3294863, at *1) (addressing motions for leave to amend). But the court has
made exceptions in cases where the movant does not address the Rule 16(b)(4) good cause
standard, but the grounds on which it relies to establish good cause are relatively clear. See,
e.g., Nieves v. John Bean Techs. Corp., 2014 WL 2587577, at *2 (N.D. Tex. June 10, 2014)
(Fitzwater, C.J.) (“Nieves neither identifies the correct standard nor cites Rule 16(b)(4) in her
brief, but the grounds on which she relies enable the court to apply the pertinent four-factor
test.”); Cartier, 2009 WL 614820, at *2 (“Cartier does not brief its motion under the Rule
16(b)(4) good cause standard or related case law, but the grounds on which it relies to
establish good cause are relatively clear.”). Accordingly, because the grounds on which
Continental relies enable the court to apply the pertinent four-factor test, the court will
consider on the present briefing whether Continental has met the good cause standard of Rule
16(b)(4) to amend the scheduling order.
depose and no other party on which to serve with Motions.” D. Br. 3. It maintains that, due
to the length of time between Serna’s death and Hernandez’s substitution as plaintiff in July
2016, “every single deadline in the Court’s Scheduling Order had expired through no fault
on the part of [Continental].” Id. Continental posits that, “[b]ecause there was no Plaintiff
until July 2016, there was nothing that [Continental] could have done in order to meet the
scheduling order deadlines.” Id. It maintains that this delay requires the court to modify the
scheduling order so that “the parties can conduct discovery and file pertinent motions as they
see fit in advance of trial.” Id.
Hernandez’s response to Continental’s motion also fails to address the four-part test,
but she asserts that there are “two glaring omissions” from the motion. First, she posits that
the “impetus for seeking to modify the Scheduling Order in this case was Plaintiff’s
Response to its Motion to Compel Arbitration . . . which pointed out that Defendant’s
deadline to file that motion was April 1, 2016.” P. Br. 1. Second, Hernandez contends that
Continental failed without explanation to disclose the arbitration agreement until December
28, 2016, and, due to this delay, Continental has waived arbitration. Id.
The court turns to the factors to determine whether Continental has established good
cause to modify the scheduling order.
The first factor is Continental’s explanation. Continental offers no explanation for the
delay of several months that preceded Serna’s death. On February 3, 2015 Continental filed
its answer in state court, alleging that the “claim asserted in the Petition against Defendant
is within the scope of the Dispute Resolution Agreement entered between Plaintiff and
Defendant requiring that such claim is subject to final and binding arbitration.” Ans. 3.
Continental therefore had knowledge of the agreement and could have filed the motion to
compel before Serna died. Moreover, the parties filed a joint status report on May 2,
2016—one month after the scheduling order catch-all deadline for unspecified motions—in
which the parties advised the court that there were no “pending or contemplated motions”
at that time. Jt. Status Report 2 (emphasis added).
Nor has Continental set forth an explanation for the seven-month delay between the
date Hernandez was substituted as plaintiff (July 7, 2016) and the date Continental file the
motion to compel arbitration (February 17, 2017). Although Continental explains why it did
not act between the date of Serna’s death (June 1, 2015) and the date Hernandez was
substituted as plaintiff (July 7, 2016), it has not provided an explanation for almost five
months between when suit was filed and Serna died, and over seven months between when
Hernandez became the plaintiff and filed its motion to compel.
Second, Continental seems to assert that it is important to modify the scheduling order
to give sufficient time for discovery and unspecified “pertinent motions” prior to trial, D. Br.
3, but it does not explicitly address why it is important for Continental to be able to file a
motion to compel arbitration. The court finds that Continental has not shown the importance
of extending the filing deadline to permit such a motion.
Third, because neither party addresses the issue of prejudice, the court finds that this
factor is neutral. And because the fourth factor addresses the availability of a continuance
to cure such prejudice, and no prejudice has been shown, this factor is neutral as well.
Having considered the four factors holistically, the court finds that Continental has
failed to demonstrate good cause to modify the scheduling order.
As noted above, the good cause standard requires that the movant show that the
deadline could not have reasonably been met despite the moving party’s diligence. But
Continental has failed to demonstrate that it acted with diligence during most of the two-year
period in question. Setting aside the interval between when Serna died (June 1, 2015) and
Hernandez was substituted as plaintiff (July 7, 2016), Continental has failed to demonstrate
that it acted diligently when it neither moved to compel arbitration before Serna’s death or
waited over seven months after Hernandez was substituted as plaintiff to file the motion.
Without a showing of diligence, Continental cannot meet the good cause standard.
Additionally, Continental has failed to demonstrate that amending the scheduling order is
Accordingly, the court denies Continental’s motion to modify the scheduling order.
The court also denies Continental’s motion to compel arbitration because, pursuant to the
March 31, 2015 scheduling order, the motion is untimely.2
The court now turns to Hernandez’s motion to modify the scheduling order.
As explained above, Hernandez must show good cause; that is, that despite her
diligence, she could not reasonably have met the scheduling order’s deadlines. See Cartier,
2009 WL 614820, at *2. Although Hernandez, like Continental, fails to explicitly address
the factors set forth in S & W Enterprises, the court finds that the grounds on which she relies
are sufficient to apply these factors.
Hernandez asserts that because “little discovery has been completed in this case due
to Mr. Serna’s death on June 1, 2015,” the scheduling order should be modified. P. Br. 3.
Only two months elapsed between the date the court filed the scheduling order and the date
Serna died. The parties therefore lacked sufficient time to conduct discovery and file the
usual pretrial motions, such as motions for summary judgment. There is no lack of diligence
on Hernandez’s (or Continental’s) part under such circumstances.
Without such an
extension, the parties will likely be deprived of a reasonable opportunity to conduct pretrial
discovery, meaning that the modification is important for trial. Because both parties have
requested extensions, there is hardly any prejudice to Continental that needs to be cured. For
While there is a presumption in favor of arbitration, this presumption does not
override the parties’ obligation to comply with the scheduling orders of this court. See Rule
these reasons, the court concludes that Hernandez has established good cause, and her motion
to modify the scheduling order is granted.3
Because many of the proposed deadlines have already expired, the court directs the
parties to confer and submit a proposed amended scheduling order within 21 days of the date
this memorandum opinion and order is filed.
For the reasons explained, Continental’s motion and amended motion to compel
arbitration and motion to modify scheduling order are denied, and Hernandez’s motion to
modify scheduling order is granted.
June 15, 2017.
SIDNEY A. FITZWATER
UNITED STATES DISTRICT JUDGE
Hernandez requests that the court rule first on Continental’s motion to compel
arbitration, presumably so that Continental will be foreclosed from filing a timely motion to
compel arbitration under the applicable deadline in the amended scheduling order. Because
Continental has failed to establish good cause for its request, however, the court will reset
the catch-all motion deadline for all motions other than motions to compel arbitration.
Continental is therefore precluded from filing such a motion after the scheduling order is
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