Evridges, Inc. v. The Travelers Lloyds Insurance Company

Filing 35

REPORT AND RECOMMENDATIONS re 23 Motion for Leave to File Document filed by Evridges, Inc., 18 Motion to Dismiss filed by Landmark American Insurance Company, 13 Motion for Leave to File Document filed by Evridges, Inc., 29 Motion to Bifurcate filed by Landmark American Insurance Company. Signed by Judge Andrew W. Austin. (ml)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
EVRIDGES, INC.
V.
THE TRAVELERS LLOYDS
INSURANCE COMPANY

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A-15-CV-179-LY

REPORT AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
TO:

THE HONORABLE LEE YEAKEL
UNITED STATES DISTRICT JUDGE
Before the Court are:
•

Plaintiff’s Opposed Motion for Leave to File Plaintiff’s First Amended Complaint
and Join Additional Party (Dkt. No. 13);

•

Defendant Landmark American Insurance Company’s Motion for Partial Dismissal
under Rules 8, 9(b) and 12(b)(6), (Dkt. No. 18);

•

Plaintiff’s Opposed Motion for Leave to File Plaintiff’s Second Amended Complaint
(Dkt. No. 23); and

•

Defendant Landmark American Insurance Company’s Motion to Bifurcate pursuant
to Federal Rule of Civil Procedure 42(b) (Dkt. No. 29);

along with the parties’ various Response and Rely briefs. The District Court referred the motions to
the undersigned for report and recommendation pursuant to 28 U.S.C. §636(b) and Rule 1(c) of
Appendix C of the Local Rules of the United States District Court for the Western District of Texas.
I. GENERAL BACKGROUND
On February 2, 2015, Plaintiff Evridges, Inc. (“Evridges”) filed this insurance coverage
lawsuit against The Travelers Lloyds Insurance Company (“Travelers”) in the 452nd District Court
for McCulloch County, Texas, alleging that Travelers failed to pay it in accordance with its insurance
policy for property damage sustained during a March 9, 2013 storm event. See Evridges, Inc. v. The

Travelers Lloyds Ins. Co., No. 2015034 (452nd Dist. Ct., McCulloch County, Tex. Feb. 2, 2015). On
March 2, 2015, Travelers removed the case to this Court based upon diversity jurisdiction pursuant
to 28 U.S.C. § 1332(a). See Dkt. No. 1.
On June 30, 2015, Evridges filed a motion seeking leave to amend its complaint, to add
Landmark American Insurance Company (“Landmark”) as a defendant in this case. Dkt. No. 13.
In its claim against Landmark, Evridges seeks to recover under a policy issued by Landmark for
property damage allegedly suffered during a second storm event which occurred on June 14, 2014,
more than a year after the first storm. Travelers opposes the motion, arguing it is improper under
Federal Rule of Civil Procedure 20(a) since Evridges seeks to assert claims against Landmark that
do not arise from the same transactions or occurrences as the claims Evridges has asserted against
Travelers, and because the claims against Landmark do not present common questions of law or fact
with the claims against Travelers. See Dkt. No. 16.
Fifteen days after the motion seeking the joinder of Landmark was filed—and before the
Court had made Landmark a party to the case—Landmark filed an Answer and a Motion for Partial
Dismissal under FED. R. CIV. P. 8, 9(b) and 12(b)(6). Dkt. No. 18. This led to Evridges responding
to the motion to dismiss, and to it filing a motion seeking leave to file a Second Amended
Complaint, to respond to the alleged pleading deficiencies in the claims it was seeking to state
against Landmark. Dkt. Nos. 22 & 23. Evridges did not, however, reply to Travelers’ arguments
opposing the initial motion seeking leave to join Landmark in the case. Nor did Landmark ever state
a position regarding whether it should be made a party to the case. Noting the fact that the parties
had jumped the gun and had not addressed whether Landmark was a proper party, on August 31,
2015, the undersigned directed that both Evridges and Landmark file pleadings addressing the
propriety of joining Landmark as a defendant to the case. Each did so. Dkt Nos. 28 & 30.
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Unsurprisingly, Evridges contends that the claims should be joined and tried together. For its part,
Landmark states that it does not oppose being joined in the suit, though it simultaneously filed a
Motion to Bifurcate, in which it argues that if it is joined, the Court should bifurcate “the causes of
action against Travelers from those against Landmark,” but because “the damage allegations made
by Plaintiff overlap and are relevant to all parties, the parties should be allowed to conduct joint
discovery.” Dkt. No. 29. On September 15, 2015, Travelers filed a reply, and continues to assert
that Landmark should not be made a party to this case. Dkt. No. 31.
II. ANALYSIS
A.

Evridges’ Motion for Leave to File Amended Complaint
As mentioned at the outset, Evridges requests leave to add Landmark to the case to recover

under an insurance policy issued by Landmark for property damage allegedly suffered during a storm
that occurred more than a year after the first. Although Evridges has framed its motion as one to
amend (under FED. R. CIV. P. 15), the motion seeks to add a new party in the case, which is governed
by FED. R. CIV. P. 20(a). See Hinson v. Norwest Financial South Carolina, Inc., 239 F.3d 611, 618
(4th Cir. 2001) (“[A] court determining whether to grant a motion to amend to join additional
plaintiffs must consider both the general principles of amendment provided by Rule 15(a) and also
the more specific joinder provisions of Rule 20(a)”). Travelers argues that the joinder of Landmark
is improper under Rule 20(a) because Evridges seeks to assert claims against Landmark that do not
arise from the same transactions or occurrences as the claims Evridges has asserted against Travelers,
and they do not present common questions of law or fact.
Claims against two or more defendants may be joined in one action if the plaintiff alleges
facts that show: (1) that the right to relief asserted against the defendants arises out of the same
transaction, occurrence, or series of transactions or occurrences, and (2) that a question of law or fact
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in common to both defendants will arise in the action. FED. R. CIV. P. 20(a). Actions arise out of
the same series of transactions or occurrences if there is some connection or logical relationship
between them. Hanley v. First Investors Corp., 151 F.R.D. 76, 79 (E.D. Tex.1993). “District courts
have the discretion to refuse joinder in the interest of avoiding prejudice and delay, ensuring judicial
economy, or safeguarding principles of fundamental fairness.” Acevedo v. Allsup’s Convenience
Stores, Inc., 600 F.3d 516, 521 (5th Cir. 2010) (internal citations omitted).
Evridges has failed to demonstrate that joinder of Landmark is proper in this case. Evridges’
causes of actions against Travelers and Landmark involve two different insurance claims made to
two separate insurers under two separate insurance policies for property damage allegedly caused
by two separate storm events occurring fifteen months apart.1 Travelers and Landmark each
independently investigated, evaluated, and determined whether to pay the claims submitted
separately to them for storm events occurring 15 months apart, and decided whether to pay those
claims based on their separate insurance policies. Given that there were two independent claims
made on separate policies, Evridges’ claims against Landmark do not arise out of the same
transaction, occurrence or series of transactions or occurrences as Evridges’ claims against Travelers.
See Dolan v. Safeco Ins. Co. of Indiana, 297 F.R.D. 210, 212 (E.D.N.Y. 2014) (defendants were
improperly joined where insurance claims were made under separate insurance policies); Ducree
v. Liberty Mutual Ins. Co., 2007 WL 781968, at *2 (E.D. La. Mar. 12, 2007) (plaintiffs’ failed to
satisfy the first prong of Rule 20(a) since claims involved three different insurance policies and

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With regard to Travelers, Evridges seeks to recover under a policy issued by Travelers with
effective dates of coverage from January 26, 2013, to January 26, 2014, for property damage
allegedly sustained during a March 9, 2013 storm. With regard to Landmark, Evridges seeks to
recover under a Landmark policy with effective dates of coverage from January 26, 2014, to January
26, 2015, for property damage allegedly sustained during a June 14, 2014 storm.
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damage occurred at three different locations); Campo v. State Farm and Cas. Co., 2007 WL 2155792
at *3 (E.D. La. July 26, 2007) (plaintiffs did not satisfy the common transaction or occurrence
requirement where each property was different and involved different insurance policies); Beaulieu
v. Concord Group Ins. Co., 208 F.R.D. 478, 480 (D.N.H. 2002) (defendants were improperly joined
where claims arose out of two distinct car accidents separated by a span of fifteen months).
In addition, Evridges has failed to demonstrate that the claims asserted against Travelers and
Landmark share common questions of law or fact. While Evridges is asserting breach of contract
claims against both defendants, as explained above, those claims are based on two distinct insurance
contracts with different periods of coverage. Under Texas law, Evridges will have to establish
coverage under each policy independently and must plead and prove facts showing that its requested
damages are covered by the specific policy at issue. Hamilton Properties v. American Ins. Co., 2014
WL 3055801 at * 4 (N.D. Tex. July 7, 2014). Similarly—and even more clearly—Evridges’ extracontractual claims against Travelers and Landmark present distinct issues of law and fact, given that
those claims will turn on how each insurer handled the claim Evridges made to it.
Finally, the joinder of Landmark would not serve the interest of judicial economy. “[T]he
court has discretion to deny joinder if it determines that the addition of the party under Rule 20 will
not foster the objectives of the rule, but will result in prejudice, expense or delay.” 7 Charles Alan
Wright, Arthur R. Miller and Mary Kay Kane, FEDERAL PRACTICE AND PROCEDURE § 1652 (3d ed.
2001). Because Evridges’ claims against Landmark and Travelers are based upon different policies
and different storms, the joinder of Landmark in this case will only complicate discovery, pretrial
matters and eventually the trial in this case. Landmark acknowledges as much in its motion to
bifurcate, where it argues that the Court should allow its joinder, but then immediately bifurcate the
trials against Landmark and Travelers. The joinder of Landmark would only complicate what is a
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relatively straightforward two-party lawsuit between Evridges and Travelers. The fact that Evridges
believes that the facts relating to what damage resulted from which storm may intertwine is not
enough to overcome the inefficiencies that would result from joinder. The evidence presented to the
Court demonstrates that after each storm one or more experts investigated and documented the
damage at issue. While there might be a need to conduct discovery from investigators on one claim
in the lawsuit regarding the other claim, that is not enough of an overlap to join together what are
otherwise totally distinct lawsuits. Based upon the foregoing, the Court recommends that the District
Court DENY Evridges’ Motion for Leave to File Plaintiff’s First Amended Complaint and Join
Additional Party.
B.

Premature Motions
As noted above, before the Court granted Evridges leave to join Landmark as a party,

Landmark answered and filed a motion to dismiss. This led to Evridges filing a Motion for Leave
to File its Second Amended Complaint to cure the alleged pleading deficiencies in its First Amended
Complaint—a pleading that had not even been accepted by the Court yet. Because the Court had not
yet ruled on Evridges’ first request to amend its complaint when Evridges filed its Second Motion
to Amend, the Second Motion to Amend was prematurely filed and should be dismissed. Similarly,
Landmark’s Motion for Partial Dismissal (Dkt. No. 18) and Motion for Bifurcation (Dkt. No. 29)
were also premature, since the Court had not yet made Landmark a party to the case, and they too
should be dismissed.2 Thus, if the district judge adopts the undersigned’s recommendation that the

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Evridges argues that Landmark effectively made itself a party to the case because it
“answered Evridges First Amended Petition, appeared before this Honorable Court through counsel
for all purposes, and . . . filed its own Motion for Partial Dismissal.” Dkt. No. 28 at 2. Evridges
misunderstands the Federal Rules of Civil Procedure with regard to amendments and joinder. Under
Rules 15(a)(2) and 20(a), Evridges is required to obtain leave of court in order to add Landmark as
a defendant in this case, regardless of Landmark’s agreement or opposition. “[W]hen a plaintiff fails
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joinder of Landmark be denied, the Court recommends that the district judge also dismiss Evridges’
Motion for Leave to File Second Amended Complaint, (Dkt. No. 23), Landmark’s Motion for Partial
Dismissal (Dkt. No. 18), and Landmark’s Motion for Bifurcation (Dkt. No. 29).
III. RECOMMENDATION
Based upon the foregoing, the undersigned RECOMMENDS that the District Court DENY
Plaintiff’s Opposed Motion for Leave to File Plaintiff’s First Amended Complaint and Join
Additional Party (Dkt. No. 13). The undersigned FURTHER RECOMMENDS that the District
Court DISMISS all remaining motions (Landmark American Insurance Company’s Motion for
Partial Dismissal under Rules 8, 9(b) and 12(b)(6) (Dkt. No. 18), Plaintiff’s Opposed Motion for
Leave to File Plaintiff’s Second Amended Complaint (Dkt. No. 23), and Landmark American
Insurance Company’s Motion to Bifurcate pursuant to Federal Rule of Civil Procedure 42(b) (Dkt.
No. 29)).
IV. WARNINGS
The parties may file objections to this Report and Recommendation. A party filing
objections must specifically identify those findings or recommendations to which objections are
being made. The District Court need not consider frivolous, conclusive, or general objections. See
Battle v. United States Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations
contained in this Report within fourteen (14) days after the party is served with a copy of the Report

to join all parties under Rule 20(a) in his first complaint (or in his complaint as amended by right),
leave of the court must be obtained to join such additional persons.” Ellis v. CommScope, Inc. of
North Carolina, 2008 WL 4191482, at *1 (N.D. Tex. Sept. 11, 2008). In fact, “[m]ost courts have
held . . . that an amendment changing parties requires leave of court even though made at a time
when Rule 15 indicates it could be done as of course.” 7 Charles Alan Wright, Arthur R. Miller and
Mary Kay Kane, FEDERAL PRACTICE AND PROCEDURE § 1688 (3d ed. 2001).
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shall bar that party from de novo review by the District Court of the proposed findings and
recommendations in the Report and, except upon grounds of plain error, shall bar the party from
appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the
District Court. See 28 U.S.C. § 636(b)(1)(c)homas v. Arn, 474 U.S. 140, 150-53, 106 S. Ct. 466,
472-74 (1985); Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en
banc).
To the extent that a party has not been served by the Clerk with this Report &
Recommendation electronically pursuant to the CM/ECF procedures of this District, the Clerk is
directed to mail such party a copy of this Report and Recommendation by certified mail, return
receipt requested.
SIGNED this 9th day of October, 2015.

_____________________________________
ANDREW W. AUSTIN
UNITED STATES MAGISTRATE JUDGE

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