United States Fidelity and Guaranty Company v. United States Sports Specialty Association

Filing 200

MEMORANDUM DECISION granting 185 Motion for Leave to File Fourth Amended Complaint. Signed by Judge Ted Stewart on 06/25/2012. (tls)

IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

UNITED STATES FIDELITY AND
GUARANTEE CO.,
Plaintiff,

MEMORANDUM DECISION AND
ORDER GRANTING MOTION FOR
LEAVE TO FILE FOURTH
AMENDED COMPLAINT

vs.

UNITED STATES SPORTS SPECIALTY
ASSOCIATION and NELSON, CHIPMAN
& BURT,
Defendants.
UNITED STATES SPORTS SPECIALTY
ASSOCIATION,

Case No. 2:07-CV-996 TS

Counterclaimant,

vs.

UNITED STATES FIDELITY AND
GUARANTEE CO.,
Counterclaim Defendant.
UNITED STATES SPORTS SPECIALTY
ASSOCIATION,
Third-party Plaintiff,

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vs.

NELSON, CHIPMAN & BURT, CLIFFORD
PAYNE, LEWIS QUIGLEY, and
AMERICAN SPECIALTY INSURANCE
SERVICE, INC.,
Third-party Defendants.
This matter is before the Court on Plaintiff United States Fidelity and Guarantee
Company’s (“USF&G”) Motion for Leave to File Fourth Amended Complaint.1 Defendants
Nelson, Chipman & Burt, and Third-party Defendants Clifford Payne and Lewis Quigley
(collectively referred to hereinafter as “Defendants”) have opposed Plaintiff’s Motion.
I. PROCEDURAL BACKGROUND
On August 13, 2009, this Court certified three questions pertaining to this matter to the
Utah Supreme Court. This case was stayed pending a response. The Utah Supreme Court issued
a decision on the certified questions on February 13, 2012. A status conference was then held in
this matter and a new trial date was set for November 6, 2012. An amended scheduling order
was adopted on April 9, 2012. Pursuant to the Amended Scheduling Order, amended pleadings
were due by March 30, 2012. Plaintiff filed the instant Motion in a timely manner on March 30,
2012.
II. DISCUSSION
Plaintiff seeks leave to file a fourth amended complaint to clarify its claims and
allegations against Defendants. Defendants oppose Plaintiff’s Motion because: (1) the proposed

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Docket No. 185.
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amended complaint is incompatible with the incorporated portions of the United States Sports
Specialty Association (“USSSA”) complaint and cannot be reconciled by a mere caveat; (2)
Plaintiff has already denied or disclaimed the incorporated portions of the previous complaint;
(3) Defendants should not have to parse out what is alleged; (4) Plaintiff’s fraud claims lack
particularity; and (5) the proposed amended complaint adds no new facts or legal theories that
were not already in the case.
Federal Rule of Civil Procedure 15(a)(2) provides that a party may amend its pleading
with the court’s leave and instructs that “[t]he court should freely give leave when justice so
requires.” “Refusing leave to amend is generally only justified upon a showing of undue delay,
undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by
amendments previously allowed, or futility of amendment.”2 Defendants’ arguments for denying
leave to amend are rooted in assertions of undue prejudice and futility.
Defendants’ claims of undue prejudice are premised on their objection to Plaintiff’s
adopting by reference under Federal Rule of Civil Procedure 10(c) ninety-four paragraphs from
Counterclaimant and Third-party Plaintiff USSSA’s complaint. Rule 10(c) allows a statement in
a pleading to be “adopted by reference elsewhere in the same pleading or in any other pleading or
motion.” However, “[t]he later pleading must adopt specific portions or all of the earlier
pleading ‘with a degree of clarity which enables the responding party to ascertain the nature and
extent of the incorporation.’”3

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Frank v. U.S. West, Inc., 3. F.3d 1357, 1365 (10th Cir. 1993) (citing Castleglen, Inc. v.
Resolution Trust Corp., 984 F.2d 1571, 1585 (10th Cir. 1993)).
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Gen. Accident Ins. Co. of Am. v. Fid. & Deposit Co. of Md., 598 F. Supp. 1223, 1229 (E.
D. Penn 1984).
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Here, because of the relationship of USSSA and Plaintiff, the broad adoption by Plaintiff
of ninety-four paragraphs of USSSA’s complaint does not provide sufficient clarity to enable
Defendants to adequately respond to Plaintiff’s proposed Fourth Amended Complaint.
Therefore, the Court will require Plaintiff re-state the referenced material with sufficient clarity
to put Defendants on notice of the claims against them. Any resultant prejudice to Defendants
will be ameliorated by the requirement of a more definite statement by Plaintiff.
The requirement of a more definite statement will also remedy Defendants’ assertions of
futility as such are based on the incompatibility of Plaintiff’s Fourth Amended Complaint and
incorporation by reference of USSSA’s allegations. Defendants’ remaining arguments do not
merit denial of Plaintiff’s Motion under the liberal standard set out in Rule 15(a).
III. CONCLUSION
For the foregoing reasons, the Court will grant Plaintiff’s Motion for Leave to File Fourth
Amended Complaint (Docket No. 185). Plaintiff shall have fourteen (14) days within which to
file an amended complaint that complies with the terms of this Order.
DATED June 25, 2012.
BY THE COURT:

__________________________
TED STEWART
United States District Judge

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