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McDonnel Group, LLC v. Starr Surplus Lines Insurance Co.

United States District Court, E.D. Louisiana

April 17, 2019

MCDONNEL GROUP, LLC
v.
STARR SURPLUS LINES INSURANCE COMPANY ET AL.

         SECTION “H” (2)

          ORDER AND REASONS ON MOTION

          JOSEPH C. WILKINSON, JR. UNITED STATES MAGISTRATE JUDGE.

         This is a civil action for declaratory relief and money damages filed by plaintiff McDonnel Group, LCC ("McDonnel") arising out of defendants Starr Surplus Lines Insurance Company ("Starr") and Lexington Insurance Company's ("Lexington") (collectively, "Insurers") alleged breach of their contractual obligations to provide insurance coverage and/or payment for all losses suffered by McDonnel under two builder's risk insurance policies ("the Policies").

         Intervenor Jung, LLC's ("Jung") Motion for Leave to File First Supplemental and Amending Complaint of Intervention, Record Doc. No. 148, is before me. Jung seeks to amend its complaint of intervention to assert claims under Louisiana Revised Statutes §§ 22:1892 and 22:1793 that it is entitled to recover as an additional insured under the Policies for all damages arising of Insurers' alleged bad faith, arbitrary and capricious refusal to pay McDonnel's claims in full. Record Doc. No. 148-1 at p. 3. Defendants filed a timely opposition memorandum. Record Doc. No. 160. Jung was permitted to file a reply brief. Record Doc. Nos. 165-67.

         I. PROCEDURAL BACKGROUND

         McDonnel filed this action against Starr on February 9, 2018, and added Lexington as a defendant on April 4, 2018, via its second amended complaint. Record Doc. Nos. 1, 15. The district judge issued a Rule 16 scheduling order on May 22, 2018, setting June 22, 2018, as the deadline for amendment of pleadings. Record Doc. No. 29 at p. 1. The amendment deadline expired without being extended. On November 7, 2018, Jung was granted leave to intervene in this matter and filed its complaint of intervention. Record Doc. Nos. 50, 51.

         The parties held a status conference on December 6, 2018, to discuss extension of scheduling order deadlines. Record Doc. No. 91. The scheduling order was subsequently modified on December 7, 2018, without extension of the previously expired amendment deadline. Record Doc. No. 92. On February 11, 2019, defendants filed their first motion for summary judgment against Jung, requesting that the court dismiss Jung's claims. Record Doc. No. 110. On February 20, 2019, defendants filed their second motion for summary judgment, arguing that Jung's claims are not covered under the Policies. Record Doc. No. 114. Both summary judgment motions are fully briefed and were submitted to the court on February 27, 2019, and March 13, 2019, respectively. On March 15, 2019, the parties filed a joint motion to further extend certain pre-trial deadlines, which was granted by the district judge on March 18, 2019. Record Doc. Nos. 138, 140. The previously expired amendment deadline was not extended. Having considered all of the submitted materials, the motion is DENIED for the following reasons.

         II. LEGAL STANDARD

         When the court has entered a scheduling order setting a deadline for the amendment of pleadings, the schedule “may be modified only for good cause and with the judge's consent.” Fed.R.Civ.P. 16(b)(4) (emphasis added). “Rule 16(b) governs amendment of pleadings after a scheduling order deadline has expired. Only upon the movant's demonstration of good cause to modify the scheduling order will the more liberal standard of Rule 15(a) apply to the district court's decision to grant or deny leave.” S&W Enters., L.L.C. v. SouthTrust Bank of Ala., NA, 315 F.3d 533, 536 (5th Cir. 2003) (emphasis added). “In determining good cause, we consider four factors: ‘(1) the explanation for the failure to timely move for leave to amend; (2) the importance of the amendment; (3) potential prejudice in allowing the amendment; and (4) the availability of a continuance to cure such prejudice.'” Sw. Bell Tel. Co. v. City of El Paso, 346 F.3d 541, 546 (5th Cir. 2003) (citing Fed.R.Civ.P. 16(b)) (quoting S & W Enters., 315 F.3d at 535); accord Fahim v. Marriott Hotel Servs., Inc., 551 F.3d 344, 348 (5th Cir. 2008); Nunez v. U.S. Postal Serv., 298 Fed.Appx. 316, 319 (5th Cir. 2008); In re Int'l Marine, LLC, 2009 WL 498372, at *1-2 (E.D. La. Feb. 26, 2009).

         If Rule 16(b) good cause is established, Rule 15(a) is liberal in favor of permitting amendment of pleadings. Leffall v. Dallas Indep. Sch. Dist., 28 F.3d 521, 524 (5th Cir. 1994); Martin's Herend Imports, Inc. v. Diamond & Gem Trading U.S. Am. Co., 195 F.3d 765, 770 (5th Cir. 1999); Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 597-98 (5th Cir. 1981). Thus, “[t]he court should freely give leave when justice so requires, ” Fed.R.Civ.P. 15(a)(2), but such leave “is by no means automatic.” Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139 (5th Cir. 1993) (quotation omitted). Relevant factors to consider include “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and futility of amendment.” Id.

         III. ANALYSIS

         As detailed above, the scheduling order deadline for amendment of pleadings expired on June 22, 2018, and has not been extended. Thus, Rule 16(b) governs amendment of pleadings in this matter, and Jung must establish "good cause" for its untimely amendment before the liberal Rule 15(a) standard might apply. As an initial matter, Jung's original memorandum in support of this motion failed to address its proposed amendment under the Rule 16(b) factors, but rather limited its briefing to the Rule 15(a) standard. Not until its reply brief was permitted did Jung argue that its proposed amendment met the Rule 16(b) "good cause" requirement. Record Doc. 165-1.

         Jung's explanations for its failure timely to move for leave to amend are that it seeks "to revise the nature of its claim against the Insurers" in light of the pending motions for summary judgment and that the "interests of justice" favor allowing amendment. Record Doc. No. 148-1 at p. 9. Jung cites facts regarding Insurers' alleged bad faith in delaying payment to McDonnel following issues of water damage and broken elevators in the Jung Hotel in March 2017. Record Doc. No. 148-1 at pp. 6-8. In explaining why its proposed revised claims were not included in its original complaint of intervention, Jung states that it acquired documents to support its bad faith claims after its intervention on November 7, 2018, during the discovery process. Record Doc. No. 165-1 at p. 3. The discovery Jung cites in support of its proposed amendment consists of document attachments to its opposition memorandum to a pending motion for summary judgment filed on March 4, 2019. I am unpersuaded by the nature and content of these materials that Jung lacked sufficient evidentiary and legal support for the new claims it now seeks to assert to include them in its original complaint of intervention at the time it was filed.

         Jung also argues that its amendment is timely by pointing to this court's recent conclusion that a proposed intervention of a separate party in this matter was timely. Id. However, the standards for timeliness of intervention under Fed.R.Civ.P. 24 and for good cause under Fed.R.Civ.P. 16(b) are different and distinct. This is a proposed amendment of a pleading, not the ...


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