United States District Court, D. Kansas
MEMORANDUM AND ORDER
JULIE A. ROBINSON, District Judge.
This matter is before the Court on two motions filed by Defendant Lloyds of London Syndicate 2003 ("Lloyds"): Motion to Dismiss for Failure to State a Claim (Doc. 176), and Motion for Extension of Time to Designate Experts (Doc. 172). For the reasons explained below, the Court denies Lloyds' Motion to Dismiss and grants additional time to designate expert.
On August 9, 2013, the Tenth Circuit Court of Appeals issued its mandate reversing this Court's entry of summary judgment in favor of Plaintiff Brecek & Young Advisors, Inc. ("BYA") against Lloyds arising out of a professional liability insurance contract, and remanding for further proceedings in accordance with its order. The Court held a status conference on September 4, 2013, and after hearing statements from counsel, granted the parties' request for additional discovery and briefing. Per the scheduling order, BYA filed a motion for summary judgment setting out its position on remand; Lloyds was given the opportunity to respond and, if appropriate, file a cross-motion for summary judgment and extend the discovery deadline. Lloyds responded to BYA's motion, but did not move for cross-summary judgment.
On September 30, 2014, this Court denied Plaintiff's Motion for Summary Judgment on remand and Defendant's Motion for Leave to File Third Party Complaint (Doc. 152). In that Order, the Court laid out the parameters of the Tenth Circuit's order, specifically the law of the case and the mandate before it on remand. The Court found that the mandate must be read narrowly, and within the context of the New York law cited by the Circuit-that Lloyds is estopped from denying coverage, not that it was estopped from raising the relation-back defense. The Court held that the mandate compels it to make the determination on remand of whether, at the time of settlement of the Wahl Arbitration, Lloyds' erroneous representation that the twenty-six Wahl claims were not interrelated under the Policy negates any additional claim of detrimental reliance on the part of BYA. The Court held that consideration of this issue raised a material question of fact regarding detrimental reliance and additional damages beyond the $385, 000 already paid by Lloyds, and accordingly, Plaintiff's motion for summary judgment was denied.
The Court held a second telephone status conference on October 15, 2014. After hearing statements of counsel, the Court denied BYA's request to file a second motion for summary judgment. After counsel for Lloyds stated he did not intend to file a motion for summary judgment given the factual issues remaining, the Court granted Lloyds' request for additional discovery, set deadlines for discovery and motions, and scheduled a bench trial to start February 24, 2015.
Lloyds then sought discovery from three non-party attorneys and a law firm regarding the underlying arbitration settlements: Jeff Jamieson, who was hired by Lloyds to represent Plaintiff in the Wahl Arbitration and also hired by Fireman's Fund to represent Plaintiff in the Knots and Colander Arbitrations; Husch Blackwell, Jamieson's former law firm; and Natalie Haag, former Assistant General Counsel for Security Benefit, the parent company of Plaintiff at the time of the Wahl Arbitration. Plaintiff and the non-parties objected on the basis of attorney-client privilege, and Lloyds moved to compel on the grounds that Plaintiff waived the privilege by placing its legal representation at issue. BYA responded that it did not waive the privilege because it is not questioning the manner or sufficiency of its legal representation, nor does it contend that Lloyds' representation caused it to instruct Mr. Jamieson to alter his defense strategies with regard to the Wahl settlement. At a hearing on the motion to compel, the parties then agreed that the information sought by Lloyds has no relevance to the narrow issue remaining before the Court, and the motion was denied. The Court deferred ruling on Lloyds' motion to dismiss and motion for extension of time to designate experts while the parties discussed the need for a bench trial and possible settlement conference. The parties have now briefed those motions, which the Court discusses in turn.
A. Motion to Dismiss
Lloyds uses BYA's statement of its theory of recovery as the basis of its motion to dismiss, arguing that these "admissions" render BYA's claim for additional damages based on detrimental reliance legally insufficient and subject to dismissal or judgment on the pleadings for failure to state a claim. The Court disagrees.
To survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a complaint must present factual allegations, assumed to be true, that "raise a right to relief above the speculative level" and must contain "enough facts to state a claim to relief that is plausible on its face." Under this standard, "the mere metaphysical possibility that some plaintiff could prove some set of facts in support of the pleaded claims is insufficient; the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims." The allegations must be enough that, if assumed to be true, the plaintiff plausibly (not just speculatively) has a claim for relief. As the Supreme Court recently explained, "[a] pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions]' devoid of further factual enhancement.'" Additionally, "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." A motion for judgment on the pleadings under Rule 12(c) is governed by the same standards as a motion to dismiss under Rule 12(b)(6).
Here, the "claim" that Lloyds seeks to dismiss is BYA's claim for additional damages as a result of BYA's detrimental reliance upon Lloyds' representations of coverage. This claim is before the Court on remand from the Tenth Circuit; there is no complaint before the Court, only the Tenth Circuit mandate. Thus, the Court agrees with BYA that under these circumstances, a Rule 12(b)(6) or (c) motion is procedurally improper. Moreover, after remand, Lloyds opted not to file a cross-motion for summary judgment, or a motion for summary judgment after the Court denied BYA's motion. Indeed, Lloyds vigorously objected to BYA's motion for summary judgment on the grounds that there were material questions of fact left to be resolved at the bench trial.
In its response, BYA stresses that from the time Lloyds first raised its relation-back defense in the underlying pleadings, it has asserted that Lloyds must be estopped from denying full coverage for Wahl as a single, interrelated claim because Lloyds' representations and conduct caused BYA not to pursue other coverage from Fireman's Fund and prejudiced BYA's coverage rights with respect to the FFIC Policy. It remains BYA's burden to prove additional damages based on detrimental reliance beyond the approximate $380, 000 affirmed by the Tenth Circuit. BYA contends that Lloyds misconstrues BYA's satisfaction with Mr. Jamieson's handling of BYA's defense in the underlying arbitrations as an admission that "the defense and ultimate resolution of Wahl would [not] have been any different [absent Lloyds' representations]." BYA counters, however, that it is arguing the opposite-the defense and resolution of Wahl would have been different but for Lloyds' representations about interrelatedness. Similarly, BYA argues that Lloyds' later representation that each of the twenty-six claimants in the Wahl Arbitration was a separate claim under the Policy did not negate BYA's reliance, as that representation was consistent with Lloyds' claim that Wahl did not relate to ...