Opinion
CV-2023-0028
11-30-2023
PATRIOT INSURANCE CO., Plaintiff, v. ANGELINA'S RISTORANTE AND WINE BAR, INC., DAVID GIARUSSO, JR., and CARLOS PEREZ, JR., Defendants.
CONSOLIDATED ORDER ON PENDING MOTIONS
JOHN O'NEIL, JR. JUSTICE.
Before the Court are the following pending motions: (1) Plaintiff's motion to advance the case on the docket, (2) Defendants' motion to strike Plaintiffs reply brief, (3) Plaintiffs motion to exceed the page limits in its reply, and (4) Defendants' motion to supplement their counterclaim.
DISCUSSION
As a preliminary matter, the Court considers Plaintiffs M.R. Civ, P. 57 motion to advance the case MOOT following oral argument at hearing. The next motions before the Court concern Plaintiffs reply brief in support of its motion for judgment on the pleadings. Defendants filed a motion to strike Plaintiffs reply for raising issues not addressed in Defendants' opposition and exceeding the permitted number of pages. See M.R. Civ. P. 7(e)-(f). In response, Plaintiff filed a motion to exceed the page limit or, in the alternative, to refile a conforming version of the reply brief. The Court DENIES Defendants' motion to strike and GRANTS Plaintiffs motion to exceed the page limit. However, the Court will permit Defendants to file a surreply brief.
Finally, the Court turns to Defendants' M.R, Civ. P. 15(d) motion to supplement their counterclaim based on information obtained through discovery as well as Plaintiffs alleged failure to meaningfully participate in mediation on August 24, 2023, pay its share of the mediator's fees, and facilitate settlement of the underlying litigation. Plaintiff did not submit a response to the motion. Defendants' proposed supplemented counterclaim broadly includes the following:
Count II of Defendants' counterclaim is unaffected by the proposed changes apart from renumbering.
• Count I alleges that Plaintiff breached its contractual obligation to Defendants under its commercial general liability policy by failing to defend them in the underlying litigation and seeks actual damages.
Defendants now wish to amend the counterclaim to (1) allege that Plaintiff breached the insurance contract's implied covenant of good faith and fair dealing by failing to reasonably investigate Defendants' claims, and to (2) request additional relief in the form of consequential and general damages.
• Count III alleges that Plaintiff violated 24-A M.R.S.A. § 2436-A by knowingly misrepresenting the facts and law regarding its duty to defend Defendants in litigation resulting from the self-protective use of reasonable force and failing to investigate Defendants' claim of such self-defense as it relates to coverage in the underlying action.
Defendants would supplement this counterclaim by alleging that Plaintiff further violated § 2436-A by, without just cause, failing to meaningfully participate in mediation, pay its portion of the mediator's fee, and effectuate the prompt, fair, and equitable settlement of the underlying action when liability was reasonably clear.
• Count IV, which is entirely new to Defendants' counterclaim, alleges that Plaintiff violated § 2436(2) by denying Defendants' claim for coverage, and correspondingly refusing to defend them in the underlying litigation, without conducting any investigation beyond examining the complaint and the insurance policy.
The proposed counterclaims in Counts I and IV are based on information Defendants obtained in the course of discovery or that otherwise preexisted the filing of their original pleading. Consequently, the Court will treat these additions as proposed amendments pursuant to M.R. Civ. P. 15(a). See Hill v. Kwan, 2009 ME 4, ¶ 15, 962 A.2d 96 (explaining that a Rule 15(a) amended pleading "refers to matters that occurred before filing of the original pleading, but which were overlooked at the time") (citation omitted).
In contrast, Defendants correctly submitted the proposed Count III counterclaims through a motion to supplement because they concern Plaintiffs participation in mediation and settlement efforts, which naturally occurred after Defendants filed their original counterclaim. See M.R. Civ. P. 15(d) (clarifying that a supplemental pleading "set[s] forth transactions or occurrences or events which have happened since the date of the pleading sought to be supplemented"); M.R. Civ. P. 13(e) (noting that counterclaims may be presented by supplemental pleading by leave of court when they "either matured or [were] acquired by the pleader after serving [the original pleading]").
The Court will first address Defendants' motion to amend Counts I and IV before turning to their motion to supplement Count III.
Counts I and IV - Defendants' Motion to Amend
The Court first observes that the counterclaims Defendants seek to assert in Counts I and IV are compulsory because they concern Plaintiff s purported duty to defend, which is the cental issue in Plaintiffs complaint. See M.R. Civ. P. 13(a)(1) (requiring parties to assert, as a counterclaim, "any claim which at the time of serving the pleading the party has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim"); KeyBank Nat'l Ass'n v. Sargent, 2000 ME 153, ¶ 17, 758 A.2d 528 (listing the factors to consider in determining whether counterclaims are compulsory); see also Morse Bros., Inc. v. Mason, 2001 ME 5, ¶¶ 3-5, 764 A.2d 267 (concluding that omitted counterclaims were compulsory when both the initial claims and the subsequent claims related to obligations and entitlements arising from membership in and separation from a trust).
Omitting compulsory counterclaims from the original pleading, however, is not immediately fatal. By leave of court, parties may amend their original pleadings to include counterclaims omitted "through oversight, inadvertence, or excusable neglect, or when justice requires." M.R. Civ. P. 13(e). Defendants neither referenced Rule 13(e) nor argued that it should apply. However, M.R. Civ. P. 15(a) reiterates that leave to amend a pleading is to "be freely granted when justice so requires," which the Law Court interprets to mean that the motion should be granted so long as the moving party is not acting in bad faith or for delay, the opposing party is not unduly prejudiced, and the resulting amendment is not futile. See Chrysler Credit Corp. v. Bert Cote's L/A Auto Sales, 1998 ME 53, ¶ 15, 707 A.2d 1311; Bangor Motor Co. v. Chapman, 452 A,2d 389, 392 (Me. 1982); Glynn v. City of S. Portland, 640 A.2d 1065, 1067 (Me. 1994).
Here, there is no indication that granting the motion would be futile or unduly prejudicial to Plaintiff, and there is no evidence that Defendants filed it in bad faith or in an effort to cause delay. Nonetheless, the Court DENIES Defendants' motion to amend Counts I and IV. The Maine Rules of Civil Procedure must be "construed to secure the just, speedy and inexpensive determination of every action." M.R. Civ. P. 1. Plaintiff filed a motion for judgment on the pleadings concerning its duty to defend in the underlying action on April 3, 2023, following the close of pleadings on March 27, 2023, and the parties have since exchanged four briefs on the issue. Granting Defendants' motion to amend a counterclaim that was originally filed eight months ago would force the parties to relitigate Plaintiffs motion, causing an expensive and significant delay to the resolution of the core issue in this case-whether the duty to defend exists.
Count III - Defendants' Motion to Supplement
The Court lastly turns to Defendants' motion to supplement Count III with new allegations regarding Plaintiffs participation in mediation and settlement efforts. The purpose of M.R. Civ. P. 15(d) is to save parties "the expense and aggravation of commencing a new lawsuit when events bearing on, arising out of, or relating in some reasonable way to the matters originally pleaded occur after the [counterclaim] has been filed." Rancourt v. City of Bangor, 400 A.2d 354, 356 (Me. 1979). For this reason, courts ordinarily grant the motion unless the adverse party can show that doing so would prejudice their position or "unreasonably delay[]" litigation. Id.
Defendants' proposed supplemental counterclaims contained within Count HI are not compulsory because they did not exist at the time Defendants filed their original pleading. See M.R. Civ. P, 13(a)(1).
Ultimately, however, the "resolution of Rule 15(d) motions is committed to the sound discretion of the trial court." Id. at 357. Thus, in consideration of the unnecessary expense and delay discussed above with respect to Defendants' motion to amend Counts I and IV, the Court likewise DENIES Defendants' motion to supplement Count III.
CONCLUSION
Accordingly, the entry is as follows:
Plaintiffs motion to advance the case is MOOT. Defendants' motion to strike Plaintiffs reply brief is DENIED. Plaintiffs motion to exceed the page limits is GRANTED. Defendants' motion to supplement Count III and to amend Counts I and IV of their counterclaim is DENIED.
Defendants are entitled to file a surreply brief to Plaintiffs motion for judgment on the pleadings.
The clerk is directed to incorporate this Order into the docket by reference pursuant to M.R. Civ. P. 79(a).