Opinion
Civil Action 1:18-cv-00746-RM-SKC
05-23-2022
GSL GROUP, INC., Plaintiff, v. TRAVELERS INDEMNITY COMPANY, THE, Defendant.
RECOMMENDATION RE: PLAINTIFF'S MOTION TO AMEND [DKT. 181]
S. Kato Crews United States Magistrate Judge.
This case arises from alleged hail damage to GSL's commercial property and the claim GSL made on its insurance policy with Travelers. GSL retained a public adjuster to pursue the claim, and when GSL and Travelers were unable to reach an agreement on the value of the loss, they engaged in the appraisal process contained in the insurance policy. GSL selected Juan Cartaya as its appraiser and Travelers selected Trent Gillette. The appraisers ultimately reached an agreement that GSL's loss was $1.6 million, which Travelers paid to GSL.
GSL then brought this case asserting claims for common law bad faith breach of an insurance contract and unreasonable delay of benefits in violation of Colo. Rev. Stat. §§ 10-3-1115 and -1116. Travelers asserted various affirmative defenses and asserted a counterclaim seeking vacatur of the appraisal award on the grounds Mr. Cartaya was not an impartial appraiser as required by the policy. Travelers sought recoupment of the money it paid to GSL. 1
On September 16, 2021, Senior District Judge Krieger granted partial summary judgment in favor of Travelers. Specifically, she found the undisputed evidence established Mr. Cartaya was not impartial as required by the insurance policy, and the appraisal award was void ab initio. In light of that order, GSL now seeks to amend the pleadings to add a claim for breach of contract. The Court has reviewed the Motion and its related briefing, the record, and the applicable law. No hearing is necessary. For the following reasons, the Court RECOMMENDS the Motion be DENIED.
ANALYSIS
The deadline to amend the pleadings in this case lapsed on July 24, 2018. [Dkt. 24.] When a party seeks to amend their pleadings after the deadline established in the scheduling order, “a party must meet the two-part test of first showing good cause to amend the scheduling order under Rule 16(b), and then showing that amendment would be allowed under Rule 15(a).” Ayon v. Kent Denver Sch., No. 12-cv-2546-WJM-CBS, 2014 WL 85287, at *2 (D. Colo. Jan. 9, 2014). Cf. Gorsuch, Ltd., B.C. v. Wells Fargo Nat'l Bank Ass'n, 771 F.3d 1230, 1241 (10th Cir. 2014) (trial court did not abuse its discretion by using “Rule 16's good cause requirement as the threshold inquiry to consider whether amendments should be allowed after a scheduling order deadline has passed;” “[t]he district court did not err in dismissing the motion to amend if [the plaintiffs] were unable to show good cause for their delay”). 2
The Rule 16 “good cause” standard requires the moving party to show that despite its diligent efforts, it could not have reasonably met the scheduled deadline. See Pumpco, Inc. v. Schenker Int'l, Inc., 204 F.R.D. 667, 668 (D. Colo. 2001). This standard is “much different than the more lenient standard contained in Rule 15(a).” Colo. Visionary Acad. v. Medtronic, Inc., 194 F.R.D. 684, 687 (D. Colo. 2000) (quoting Dilmar Oil Co. v. Federated Mut. Ins. Co., 986 F.Supp. 959, 980 (D.S.C. 1997), aff'd, 129 F.3d 116 (4th Cir. 1997)). The Rule does not focus on the bad faith of the movant, or the prejudice to the opposing party. Instead, it focuses on the diligence of the party seeking leave to modify the scheduling order to permit the proposed amendment. Id.
GSL's proposed breach-of-contract claim is not based on new evidence unavailable at the time of the original filing. Rather, as the Court understands GSL's theory, it did not previously assert a claim for breach of contract because Travelers participated in the appraisal process and paid GSL the final appraisal award. Now that Judge Krieger has concluded the appraisal award is of no legal effect, however, GSL argues Travelers has now failed to perform its obligations under the policy.
The plain language of Judge Krieger's opinion does not open the door for this amendment. She expressly stated, “the appropriate approach is to simply allow the matter to move to resolution by litigation, with the amount of the loss evaluated by the factfinder, just as if the insured had never demanded appraisal in the first place.” [Dkt. 172 at p.15 (emphasis added).] That the award was deemed void ab initio does not constitute a factual mulligan. It is beyond dispute that the parties engaged in the appraisal process and Travelers paid the agreed amount. It simply does not follow, 3 logically or otherwise, that vacatur of an appraisal award that resulted from an insurer's participation in the contractual appraisal process permits an insured to now hold an insurer liable for failing to participate in the appraisal process. None of Plaintiff's cited cases convince the Court otherwise.
GSL chose its theory of the case when it filed this action back in 2018, alleging, in relevant part, a bad faith breach of an insurance contract. The facts did not change based on Judge Krieger's order, which suggests GSL could have brought a breach of contract claim against Travelers when it originally filed this action. GSL has thus demonstrated a lack of diligence in seeking this amendment now. This is particularly true where the precise contours of GSL's contract claim are not clear. GSL has not cited any provisions or portions of the insurance contract that Travelers is alleged to have breached outside of the general obligation to investigate, adjust, and pay damages, which Travelers has in fact done.
Even if the Court were to find good cause for the amendment, the Court concludes the motion does not satisfy Rule 15(a)(2). The purpose of Rule 15(a) unquestionably is to facilitate a decision on the merits. Bob Marshall All. v. Lujan, 804 F.Supp. 1292, 1298 (D. Mont. 1992) (the court's exercise of discretion must “be guided by the underlying purpose of Rule 15 - to facilitate decision on the merits, rather than on the pleadings or technicalities”). However, “there is no absolute right to repeatedly amend a complaint.” Fluker v. Fed. Bureau of Prisons, No. 07-cv-02426-CMA-CBS, 2009 WL 1065986, at * 4 (D. Colo. Apr. 21, 2009). 4
In considering the “needs of justice,” the court must take into consideration the interests of all parties.
Several factors are typically considered by the courts in determining whether to allow amendment of a complaint. These include whether the amendment will result in undue prejudice, whether the request was unduly and inexplicably delayed, was offered in good faith, or that the party had sufficient opportunity to state a claim and failed. Where the party seeking amendment knows or should have known of the facts upon which the proposed amendment is based but fails to include them in the original complaint, the motion to amend is subject to denial.Las Vegas Ice & Cold Storage Co. v. Far W. Bank, 893 F.2d 1182, 1185 (10th Cir. 1990) (internal citation omitted) (emphasis added); see also Arkansas-Platte & Gulf P'ship v. Dow Chem. Co., 886 F.Supp. 762, 765 (D. Colo. 1995) (“Leave to amend should be freely given based on the balancing of several factors, including futility, delay, bad faith, dilatory motive, repeated failure to cure deficiencies, and prejudice to the opposing party.”). Ultimately, a motion to amend must be left to the sound discretion of the district court. State Distribs., Inc. v. Glenmore Distilleries Co., 738 F.2d 405, 416 (10th Cir. 1984).
Judge Krieger determined the case was to proceed to trial on the questions of whether Travelers owes any additional benefits to GSL, whether GSL must return part or all of the $1.6 million, and whether Travelers acted unreasonably or in bad faith. [Id.] To permit amendment at this juncture would be inconsistent with that order and, therefore, the Court perceives no good cause therein.
Moreover, it is difficult to conceive how a request to amend could come any later than the present motion. Discovery closed in 2020 and, as noted, dispositive motions have been ruled upon. All that remains is to convene a final pretrial 5 conference and proceed to a trial on the merits. Adding a new claim to the case at this late stage would cause undue delay, wreak havoc on the Court's docket, and contrary to GSL's suggestion, would prejudice Travelers. This new legal theory would require reopening discovery and possibly the filing of additional dispositive motions. Both the Court and Defendants are entitled to expect that by a date certain, Plaintiff's claims will be fixed, and the case will proceed on that basis. Cf. Carbajal v. St. Anthony Cent. Hosp., No. 12-cv-02257-REB-KLM, 2015 WL 1499864, at *2 (D. Colo. Mar. 27, 2015) (denying plaintiff's motion for leave to amend filed after the close of discovery and after motions for summary judgment had been filed and observing the liberalized pleading rules do not permit a plaintiff to wait until the last minute to refine the theories upon which they will pursue their case). While the Court does not impute any bad faith to GSL or its counsel in seeking this amendment, the delay is palpable.
* * *
The Court RECOMMENDS the Motion to Amend [Dkt. 181] be denied, for the reasons stated above. 6
The parties have 14 days after service of this recommendation to serve and file any written objections in order to obtain reconsideration by the District Judge to whom this case is assigned. Fed.R.Civ.P. 72(b). The party filing objections must specifically identify those findings or recommendations to which the objections are made. The District Court need not consider frivolous, conclusive or general objections. A party's failure to file such written objections to proposed findings and recommendations contained in this report may bar the party from a de novo determination by the District Judge of the proposed findings and recommendations. United States v. Raddatz, 447 U.S. 667, 676-83 (1980); 28 U.S.C. § 636(b)(1). Additionally, the failure to file written objections to the proposed findings and recommendations within 14 days after being served with a copy may bar the aggrieved party from appealing the factual findings and legal conclusions of the Magistrate Judge that are accepted or adopted by the District Court. Thomas v. Arn, 474 U.S. 140, 155 (1985); Moore v. United States, 950 F.2d 656, 659 (10th Cir. 1991).