Wells Fargo Bank, N.A. v. American National Insurance Company, No. 2:2009cv01840 - Document 124 (C.D. Cal. 2010)
Court Description: ORDER DENYING ANICOS MOTION TO MODIFY SCHEDULING ORDER AND FOR LEAVE TO FILE THE [PROPOSED] SECOND AMENDED THIRD PARTY COMPLAINT 116 by Judge Dean D. Pregerson (lc)
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Wells Fargo Bank, N.A. v. American National Insurance Company Doc. 124 1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 WELLS FARGO BANK, N.A., as trustee for BENJAMIN CABAL 2007 INSURANCE TRUST, 18 ) Case No. CV 09-01840 DDP (RZx) ) ) ORDER DENYING ANICO’S MOTION TO ) MODIFY SCHEDULING ORDER AND FOR Plaintiff, ) LEAVE TO FILE THE [PROPOSED] ) SECOND AMENDED THIRD PARTY v. ) COMPLAINT ) [Motion filed on August 4, 2010] AMERICAN NATIONAL INSURANCE ) COMPANY, a Texas ) corporation, ) ) Defendants. ) ___________________________ ) This matter comes before the Court on a motion to modify the 19 scheduling order and for leave to amend the complaint filed by the 20 plaintiff American National Insurance Company (“ANICO”). 21 considering the papers submitted by the parties, the Court DENIES 22 the motion. 23 I. 12 13 14 15 16 17 24 After BACKGROUND On March 18, 2009, Wells Fargo Bank, N.A., as trustee for the 25 Benjamin Cabal 2007 Insurance Trust filed a complaint for 26 declaratory relief seeking to rescind the life insurance policy of 27 Benjamin Cabal. 28 against Wells Fargo and a Third Party Complaint against third party On April 20, 2009, ANICO filed a Counterclaim Dockets.Justia.com 1 defendant Examination Management Services, Inc. (“EMSI”), formerly 2 known as Profile Services, Inc. 3 more definite statement on July 29, 2009. 4 motion to dismiss and granted in part the motion for a more 5 definite statement, after which ANICO filed a First Amended Third 6 Party Complaint (“FATPC”) on September 29, 2009. 7 EMSI moved to dismiss or for a The Court denied the The FATPC alleges claims for breach of contract as a third 8 beneficiary and for negligence against EMSI. 9 74.) (FATPC ¶¶ 53-59, 70- Specifically, the FATPC alleges that the brokers who 10 submitted Mr. Cabal’s application for life insurance to ANICO 11 “arranged for [EMSI] to conduct a background investigation of Mr. 12 Cabal and provide a truthful and accurate report to ANICO for the 13 purpose of confirming the material information contained in the 14 Financial Statement Questionnaire, which was a part of the 15 application for a life insurance policy submitted to ANICO.” 16 ¶ 55.) 17 and [EMSI] was made expressly for the benefit of ANICO, in that 18 ANICO would rely on the information, among other things, in 19 determining whether to issue a policy of insurance on the life of 20 Mr. Cabal.” 21 contractual obligations to ANICO “by failing to provide accurate 22 and truthful information regarding Mr. Cabal’s assets, liabilities, 23 employment background and history, net worth, and general financial 24 information.” 25 26 27 28 (Id. According to ANICO, “[t]he agreement between the Brokers (Id.) ANICO alleged that EMSI breached its (Id. ¶ 56.) The deadlines in this case set forth in the scheduling order are as follows: • • • Last Date to Amend Pleadings: December 30, 2009; Discovery Cut-Off: March 26, 2010; Last Date to File Motions: April 26, 2010; 2 1 2 • Final Pre-Trial Conference: June 28, 2010; and • Seven Day Jury Trial: July 6, 2010. (Scheduling Order, Dkt. No. 36.) In a minute order dated June 25, 3 2010, the Court continued the final pre-trial conference to October 4 18, 2010, and the trial to October 26, 2010. 5 (Dkt. No. 113.) On August 4, 2010, ANICO filed this motion to modify the 6 scheduling order and for leave to amend the pleadings. 7 to amend the Third Party Complaint to add a claim for breach of a 8 direct contract between ANICO and EMSI based on what it claims to 9 be newly discovered evidence. ANICO seeks ANICO argues that it first learned 10 of the potential existence of a direct contract between ANICO and 11 EMSI on January 5, 2010, when EMSI served ANICO with its initial 12 Rule 26 disclosures. 13 unsigned rate sheet, which ANICO now argues constitutes an express 14 agreement between ANICO and EMSI. 15 the name and contact information of the person who interviewed 16 Benjamin Cabal on behalf of EMSI. 17 did not follow up, except to notice the deposition of EMSI’s person 18 most knowledgeable for March 26, 2010, the discovery cut-off date. 19 The deposition was later continued by agreement to April 9, 2010. 20 Those disclosures included copies of an EMSI’s disclosures also included (Bialack Decl. ¶¶ 5-7.) ANICO ANICO now argues that it did not learn of “the facts necessary 21 to prove that EMSI breached a direct contract with ANICO” until 22 April 9, 2010. 23 the pleadings at that time. 24 concerning the preparation of the Pre-Trial Conference Order on 25 June 10, 2010, ANICO indicated it intended to argue that EMSI 26 breached a direct contract. 27 a direct contract was not part of the pleadings and that ANICO 28 should not try to “slip in” an additional claim via the Pre-Trial (Mot. 3:1-3.) However, ANICO did not move to amend Instead, during negotiations with EMSI EMSI’s counsel objected that breach of 3 1 Conference Order. 2 amend until nearly two months later, on August 4, 2010. 3 II. 4 ANICO did not file this motion for leave to LEGAL STANDARD “Generally, Federal Rule of Civil Procedure 15(a) liberally 5 allows for amendments to pleadings.” Coleman v. Quaker Oats Co., 6 232 F.3d 1271, 1294 (9th Cir. 2000). However, where a party seeks 7 to amend the pleadings after the deadline for amendment in the 8 scheduling order has passed, the court “should address the issue 9 under Federal Rule of Civil Procedure 16,” rather than under Rule 10 15. 11 604, 607-09 (9th Cir. 1992)). 12 leave to amend “must show good cause for not having amended [the] 13 complaint[] before the time specified in the scheduling order 14 expired.” 15 of the party seeking the amendment.’” Id. (quoting Johnson, 975 16 F.2d at 609). 17 that it was “unable to comply with the scheduling order’s deadlines 18 due to matters that could not have reasonably been foreseen at the 19 time of the issuance of the scheduling order, and that it was 20 diligent in seeking an amendment . . . .” 21 Credit, Inc., 256 F.R.D. 684, 687 (E.D. Cal. 2009). Id. (citing Johnson v. Mammoth Recreations, Inc., 975 F.2d Id. Under Rule 16(b), the party seeking “This standard ‘primarily considers the diligence A party may establish good cause by demonstrating Kuschner v. Nationwide 22 If the moving party is able to satisfy the good cause standard 23 under Rule 16, it must next demonstrate that the proposed amendment 24 is permissible under Rule 15. 25 Rule 15, leave to amend should be “freely give[n] . . . when 26 justice so requires.” 27 whether amendment under Rule 15 is appropriate, a court must 28 consider four factors: “bad faith, undue delay, prejudice to the See Johnson, 975 F.2d at 608. Fed. R. Civ. P. 15(a). 4 Under In determining 1 opposing party, and futility of the amendment.” 2 v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). 3 III. DISCUSSION 4 DCD Programs, Ltd. The Court finds that the proposed modification of the 5 scheduling order and amendment to the pleadings are inappropriate 6 because Plaintiff has not been diligent in seeking leave to amend, 7 amendment at so late a date is presumptively prejudicial, and 8 allowing amendment on the eve of trial would cause further delay 9 and disrupt the efficient management of this case. 10 First, even assuming for the sake of argument that ANICO did 11 not learn of the potential existence of a contract until after the 12 deadline for amendment had passed, ANICO has not been diligent in 13 pursuing amendment. 14 ANICO in January 2010. 15 at that point. 16 most knowledgeable in April. 17 objected to ANICO’s attempt to insert a breach of direct contract 18 claim in the Pre-Trial Conference Order in June. 19 waited nearly seven months after receiving EMSI’s initial 20 disclosures, nearly four months after deposing EMSI’s person most 21 knowledgeable, and nearly two months after EMSI objected to file 22 this motion. 23 except to suggest that it had no way of anticipating that EMSI 24 would object to its attempt to pursue a claim outside the pleadings 25 until EMSI’s counsel actually raised the objection. 26 offers no explanation for why it waited nearly two months after 27 EMSI’s counsel objected to file the motion. EMSI produced a copy of the rate sheet to Yet, ANICO did not move for leave to amend Nor did it do so after it deposed EMSI’s person Nor did it do so after EMSI’s counsel Instead, ANICO ANICO has offered no explanation for this delay 28 5 Even so, ANICO 1 Second, the Court is not satisfied that ANICO had no reason to 2 know of its breach of a direct contract claim until this year. 3 “Relevant to evaluating the delay issue is whether the moving party 4 knew or should have known the facts and theories raised by the 5 amendment in the original pleading.” 6 902 F.2d 1385, 1388 (9th Cir. 1990) (emphasis added). 7 ANICO should have known of the existence of its own contract with 8 EMSI from at least the outset of this litigation. 9 offered no explanation as to why it was unaware that it had entered 10 into a direct contract with EMSI until EMSI produced the rate sheet 11 this January. 12 known of the existence of the direct contract prior to the cut-off 13 date for amending the pleadings and actually knew of its potential 14 claim in January of this year. 15 Jackson v. Bank of Hawaii, Presumably, ANICO has Therefore, the Court finds that ANICO should have Third, permitting amendment at so late a date is presumptively 16 prejudicial and would otherwise disrupt the case management 17 deadlines. 18 asserted after the close of discovery, and after dispositive 19 motions have been filed, briefed, and decided.” 20 Clinic, 166 F.3d 1157, 1162 (9th Cir. 1999). 21 potential prejudice to EMSI, the Court would likely need to extend 22 the discovery cut-off and the motion cut-off should the amendment 23 be permitted. 24 continuance of the trial date. “Prejudice and undue delay are inherent in an amendment Campbell v. Emory In order to avoid Doing so would most likely necessitate further 25 Ultimately, the Court’s decision to deny the motion rests 26 primarily on ANICO’s failure to pursue diligently the proposed 27 amendment. ANICO has not answered any of the following questions: 28 6 1 • Why was it unaware of the existence of its own contract until EMSI produced the rate sheet? • Why, after receiving the rate sheet that purportedly evidences a direct contract with EMSI, did it fail to seek leave to amend? • What facts necessary to its breach of direct contract claim did ANICO learn during the deposition of EMSI’s person most knowledgeable that it could not have discovered previously with reasonable diligence? • Why, after deposing EMSI’s person most knowledgeable and supposedly learning of the facts supporting its new claim, did it not seek leave to amend? • Why, after EMSI’s counsel objected to its attempt to insert a new claim into the Pre-Trial Conference Order, did it wait nearly two more months to bring this motion? 2 3 4 5 6 7 8 9 10 11 Given ANICO’s silence or unsatisfactory explanations with respect 12 to its repeated delay, the Court concludes that it has not 13 demonstrated good cause to modify the scheduling order. 14 Furthermore, even assuming good cause had been shown, amendment at 15 so late a date would still be improper as it is inherently 16 prejudicial and would unduly disrupt other case management dates. 17 IV. 18 19 CONCLUSION For the foregoing reasons, ANICO’s motion is DENIED. IT IS SO ORDERED. 20 21 22 Dated: September 13, 2010 DEAN D. PREGERSON United States District Judge 23 24 25 26 27 28 7
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