United States District Court, E.D. Louisiana
KAREN WELLS ROBY, Magistrate Judge.
Before the Court is a Motion for Leave to File Supplemental and Amended Answer to Petition (R. Doc. 21) filed by Defendant, ASI Lloyds, seeking leave of court to amend its answer to allege fraud. The motion is opposed. See R. Doc. 29. The motion was heard for oral argument on Wednesday, April 8, 2015.
This action arises out of the damages sustained by the Plaintiff's home during Hurricane Isaac in 2012. See R. Doc. 1-1. Plaintiff alleges that he had a homeowner's insurance policy with the Defendant that covered loss or ensuing damage caused by the peril of wind and/or hail damage. Id. Plaintiff alleges that he filed a claim with the Defendant to cover the cost of repairs and the damages to the property pursuant to the policy. Id. Plaintiff alleges that when the adjuster for the Defendant assessed the damage to the property, the adjuster failed to properly evaluate the cause and the extent of the damages, and underestimated the value of the damages. Id. Plaintiff further alleges that after a hailstorm in February 2013, he filed another claim with the Defendant for the damages. Id. Plaintiff alleges that the Defendant has not made full payment on either of his claims and that his home remains damaged because he has not been able to properly and completely repair the damages to his property. Id.
In the instant motion, the Defendant seeks leave of court to amend its answer to the complaint to allege the affirmative defense of fraud. See R. Doc. 21-1, at 1. Defendant argues that it was not able to amend its complaint sooner because Federal Rule of Civil Procedure 9(b) requires a litigant to state with particularity all allegations of fraud. Id. Defendant contends that it learned during discovery that the Plaintiff may be committing fraud by attempting to recover for pre-existing damage for which he previously received insurance payments. Id. Defendant contends that the Plaintiff potentially received insurance payments for identical claims of damage from Geovera Specialty Insurance Company ("Geovera") related to hurricane Gustav and Louisiana Citizens Property Insurance Corporation ("Citizens") related to a 2011 hailstorm. Id. at 6. Having ascertained evidence to particularly allege fraud, the Defendant now seeks leave of court to amend its answer.
II. Standard of Review
Federal Rules of Civil Procedure 15(a), which governs the amendment of pleadings, provides that leave to amend pleadings "shall be freely given when justice so requires." This, and other federal rules, "reject the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the merits." Conley v. Gibson, 355 U.S. 41, 48 (1957).
Thus, Rule 15(a) evinces a liberal and lenient amendment policy and a motion to amend should not be denied absent a substantial reason to do so. See Jacobsen v. Osborne, 133 F.3d 315, 318 (5th Cir. 1998). Furthermore, "this policy' is strongest when the motion challenged is the first motion to amend." Thompson v. New York Life Ins. Co., 644 F.2d 439, 444 (5th Cir. 1981). Permission may be granted even though the original pleading is defective in its statement of a claim for relief or defense. Id.
Leave to amend is by no means automatic, but is within the sound discretion of the trial court. Addington v. Farmer's Elevator Mut. Ins. Co., 650 F.2d 663, 666 (5th Cir. 1981). In exercising its discretion, the trial court must determine that there is a "substantial reason" for the delay. Mayeaux v. La. Health Serv. and Indem. Co., 376 F.3d 420, 425 (5th Cir. 2004). The Court may consider such factors as (1) undue delay, bad faith, or dilatory motive on the part of the movant; (2) repeated failure to cure deficiencies by amendments previously allowed; (3) undue prejudice to the opposing party by virtue of allowance of the amendment; and (4) futility of the amendment. Gregory v. Mitchell, 634 F.2d 199, 203 (5th Cir. 1981).
Although Rule 15(a) governs the amendments of pleadings, the Fifth Circuit has established that Rule 16(b) "governs the amendment of pleadings after a scheduling order deadline has expired." S & W Enters., L.L.C. v. S. Trust Bank of Ala., NA, 315 F.3d 533, 536 (5th Cir. 2003). Rule 16 provides that a scheduling order may only be modified for good cause shown and with the Judge's consent. See Fed. R. Civ. Pro. 16(b)(4). Therefore, only after the movant has satisfied the good cause requirement of Rule 16(b) will the more liberal standard of 15(a) apply. S&W Enters., LLC, 315 F.3d at 536.
In determining whether a party has provided good cause under Rule 16(b) to amend a pleading after the scheduling order deadline, courts may examine four factors: "(1) the explanation for the untimely conduct; (2) the importance of the requested untimely action; (3) the potential prejudice in allowing the untimely conduct; and (4) the availability of a continuance to cure such prejudice." Huey v. Super Fresh/Sav-A-Center, Inc., No. 07-1169, 2008 WL 2633767, at *1 (E.D. La. June 25, 2008) (citing S & W Enters., LLC, 315 F.3d at 535. "The good cause standard requires the party seeking relief to show that the deadlines cannot reasonably be met despite the diligence of the party needing the extension." S & W Enters., LLC, at 535 (internal quotations and citations omitted).
The Defendant filed the instant motion on March 23, 2015, which is about four months after the November 15, 2014 amendment deadline set in the Scheduling Order. See R. Doc. 8. As such, the Court must apply Rule 16(b) to determine whether the Defendant has good cause for filing the motion after the Scheduling Order deadline. During the hearing, the Court concluded good cause exists because the Defendant filed the subject motion shortly after it received the claims files from the Plaintiff's previous insurance companies, Geovera and Citizens. The Defendant received the claim file from Citizen on March 17, 2015 and the claim file from Geovera on March 23, 2015, the date it filed the subject motion. Receipt of the claims files provided the Defendant with evidence to support its fraud claim, and thus, the Court concludes that good cause exists.
Having determined that good cause exists under Rule 16(b), the Court must consider whether leave to amend should be granted under Rule 15(a). The issues under Rule 15(a) were narrowed down during the hearing to undue delay, ...