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Coder v. American Bankers Insurance Company of Florida

United States District Court, Tenth Circuit

May 16, 2013

JEFF CODER and STACIE CODER, Individually and Husband and Wife And as Parents and Natural Guardians of AC1, AC2, CB1, KC, and CB2, Plaintiffs and Counterdefendants,
v.
AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA, Defendant and Counterclaimant.

ORDER

K. GARY SEBELIUS, Magistrate Judge.

This matter comes before the court upon Defendant American Bankers Insurance Company of Florida's ("American Bankers") Motion for Leave to File Second Amended Answer (ECF No. 92). The motion is fully briefed and the court is prepared to rule. For the reasons stated below, American Bankers' motion is granted.

Plaintiffs Jeff and Stacie Coder ("the Coders") filed an insurance claim with American Bankers for damages they claimed resulted from a frozen pipe bursting in their home in January 2008. American Bankers settled the original claim and paid for the water damage. In 2010, the Coders filed an additional claim under the policy for damages they alleged resulted from the January 2008 incident including structural damage, mold growth, and loss of personal property due to mold contamination. American Bankers denied the second claim on the grounds the policy did not cover the damages claimed. In March 2012, the Coders filed a complaint in state court against American Bankers alleging breach of insurance contract and for attorney's fees pursuant to K.S.A. ยง 40-256. The case was subsequently removed to federal court.

In August 2012, the court entered a scheduling order setting September 4, 2012, as the deadline to amend the pleadings.[1] American Bankers filed an amended answer in August 2012, and the parties engaged in discovery.[2] On March 12, 2013, American Bankers filed the present motion requesting leave to include the affirmative defense of mitigation of damages. The Coders are opposed to allowing American Bankers to amend its answer.

Federal Rule of Civil Procedure 15(a) governs the procedure for amending pleadings.[3] A party may amend a pleading "once as a matter of course" before trial if they do so within (A) twenty-one days of serving the pleading or (B) "if the pleading is one to which a responsive pleading is required, " twenty-one days of service of a responsive pleading or motion under Federal Rules of Civil Procedure 12(b), (e), or (f), whichever is earlier.[4] In all other cases, a party may amend its pleading only with the opposing party's written consent or the court's leave.[5] The court should freely give leave when justice so requires.[6]

While the Tenth Circuit has not yet decided whether a party must show "good cause" under Rule 16(b)(4) in addition to satisfying Rule 15(a) when seeking leave to amend after the deadline established in the scheduling order, judges in this district have consistently required such a showing.[7] Thus, when a motion to amend is filed beyond the scheduling order deadline, the moving party must show "good cause" within the meaning of Rule 16(b)(4) to allow the untimely motion.[8] Only after determining that good cause has been established will the court proceed to determine if the more liberal Rule 15(a) standard for amendment has been satisfied.[9]

Good Cause under Rule 16(b)(4)

Rule 16(b)(4) provides that a scheduling order "may be modified only for good cause and with the judge's consent."[10] The good cause standard under Rule 16(b)(4) considers the diligence of the party seeking the amendment.[11] To establish good cause, the moving party must show that despite due diligence it could not have reasonably met the amendment deadline.[12] "Carelessness is not compatible with a finding of diligence and offers no reason for a grant of relief."[13] Furthermore, a lack of prejudice to the nonmovant does not constitute good cause.[14] The party seeking an extension is normally expected to show good faith on its part and some reasonable basis for not meeting the deadline.[15] A district court's determination of good cause will be reviewed only for abuse of discretion.[16]

Here, American Bankers moved to amend its answer on March 12, 2013, approximately six months after the September 4, 2012 motion to amend deadline. American Bankers argues there is good cause for the amendment because evidence which would support the affirmative defense of mitigation of damages was not discovered until after the deadline for amendments.[17] American Bankers claims the January 31, 2013 expert report and February 18, 2013 site inspection indicated the Coders failed to install a sump pump and disconnected two downspouts on the northeast corner of the home from the underground drainage system which might have led to additional leaks. American Bankers also claims the report and inspection indicated the Coders failed to upkeep and maintain the residence, failed to use the HVAC which might have led to additional mold growth, and installed irrigation lines in close proximity to the home.[18] Finally, American Bankers claims the October 2012 depositions of the Coders revealed that they delayed contacting the insurance company when they noticed water under the foundation of the home and cracks throughout the residence.[19]

The Coders contend American Bankers has long known about the facts upon which the affirmative defense is based.[20] Two reports submitted to American Bankers prior to the amendment deadline did mention the Coders noticed cracks prior to filing the second claim.[21] Once put on notice, however, American Bankers acted with due diligence by exploring this issue during the October 2012 depositions of the Coders to see if their testimony supported the claims made in the reports.[22] Because the depositions did not occur until after the deadline to amend, American Bankers has demonstrated good cause for the delay.

The Coders appear to only be challenging whether their failure to install a sump pump is newly discovered evidence.[23] The Coders claim American Bankers knew they had not installed a sump pump following the January 2008 water damage incident but fail to cite any specific exhibits supporting their claim. Additionally, an exhibit submitted by the Coders, HDHY Engineering's March 25, 2011 report, discusses the use of a sump pump to drain water from the concrete.[24] Finally, American Bankers acted with due diligence by further examining this issue during its October 2012 deposition of Jeff Coder.[25]

The facts American Bankers relies upon to support its affirmative defense of mitigation of damages were not known until after the September 4, 2012 motion to amend deadline.[26] Accordingly, the Court holds there is good cause for why American Bankers could not meet the amendment deadline.

Rule 15(a)(2)

The court now turns to whether American Bankers has satisfied the standard for amendment under Rule 15(a)(2). Although Rule 15(a)(2) typically applies when a plaintiff moves to amend a complaint, Rule 15(a)(2) likewise applies when a defendant seeks to amend an answer to add an affirmative defense.[27] The decision to grant leave to amend after the permissive period lies within the discretion of the trial court.[28] "The purpose of the Rule is to provide litigants the maximum opportunity for each claim to be decided on its merits rather than on procedural niceties.'"[29] Refusing leave to amend is generally only justified upon a showing of undue delay, undue prejudice to the opposing party, bad faith, or futility of the amendment.[30] "The most important fact in deciding a ...


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