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Gargano v. Owners Insurance Co.

United States District Court, D. Colorado

March 18, 2014




This matter is before the Court on Defendant Owners Insurance Company's Motion for Leave to Amend Pleadings to Add Statute of Limitations Defense. (Doc. # 89.) For the following reasons the motion is granted.


This diversity action concerns allegations that when Plaintiff attempted to make a claim against her insurance for Uninsured Motorist ("UM") benefits, Defendant acted in bad faith and unreasonably delayed payment.[1] Plaintiff was involved in the accident with an uninsured motorist on May 31, 2009. On July 30, 2009, Plaintiff's counsel informed Defendant that she was represented. (Doc. # 19-1, at 29.) On December 16, 2009, Plaintiff filed a separate proceeding in state court to determine the damages Plaintiff incurred in the accident. ( Id., at 43.) She informed Defendant of the state action in correspondence received by Defendant on October 22, 2010. ( Id., at 29.) The uninsured motorist failed to respond to the lawsuit and Defendant intervened to represent its interests on December 2, 2010. ( Id., at 51-54.) The state court entered default judgment due to the uninsured motorist's failure to appear, then held a hearing to determine Plaintiff's damages from May 21-25, 2012. (Doc. # 26-3, at 2-7.) Meanwhile, on April 26, 2012, Plaintiff filed the instant action. (Doc. # 1.)

Trial was originally set to begin on November 18, 2013, with the Final Pretrial Conference scheduled for November 1, 2013. During the Final Pretrial Conference, the Court ruled on several motions in limine, including one to exclude litigation conduct concerning the state proceedings. The Court granted this motion, finding that the parties adhered to the procedures set forth in State Farm Mut. Auto Ins. Co. v. Brekke, 105 P.3d 177, 190 (Colo. 2004). The Court further informed the parties that the instant action is not the appropriate forum to revisit the state proceedings. Moreover, the Court determined that Defendant's conduct in those proceedings is not an example of the type of "extraordinary facts that would justify allowing a jury to consider an attorney's litigation conduct as a part of a bad faith claim." See Parsons ex rel. Parsons v. Allstate Ins. Co., 165 P.3d 809, 819 (Colo.App. 2006) (internal citations omitted). Accordingly, the Court determined that the only evidence it would admit at trial would concern conduct prior to Defendant's intervention in the state court proceedings on December 2, 2010.

However, buried in its reply brief on the motion to excluded litigation conduct, Defendant raised, for the first time, a statute of limitation defense. (Doc. # 79, at 7.) On October 29, 2013, the Court ordered simultaneous briefing from the parties on "whether Plaintiff's claims that Defendant acted in bad faith and violated C.R.S. ยงยง 10-3-1115 and -1116 by failing to investigate a potential UM claim in August 2009 is barred by the statute of limitation and/or whether Defendant has waived reliance on this defense." (Doc. # 87.) Plaintiff filed a brief consistent with the Court's order. (Doc. # 90.) On October 31, 2013, the day before the Final Pretrial Conference, Defendant moved to amend its answer to assert a statute of limitations defense. (Doc. # 89.) Recognizing the great consequence of that motion, particularly in light of the Court's ruling limiting evidence to conduct prior to Defendant's intervention the state proceedings, this Court vacated the trial, ordered the parties to call in to reset the trial date, and granted Plaintiff twenty one days to respond to Defendant's motion. (Doc. # 92.) Plaintiff so responded. (Doc. # 101.) Therefore, the Court has received briefing on both the motion to amend and the substance of the statute of limitations issue and those issues are ripe for the Court's review.



"Where a party seeks to amend its pleadings after the deadline for such amendments set forth in the scheduling order, the Tenth Circuit has not definitively stated whether the good cause' standard of Federal Rule of Civil Procedure 16(b) to modify the scheduling order must be met." Avon v. Kent Denver Sch., No. 12-cv-2546-WJM-CBS, 2014 WL 85287, *2 (D. Colo. Jan. 9, 2014) (citing Bylin v. Billings, 568 F.3d 1224, 1231 (10th Cir. 2009)). However, the majority of courts have held that the party must meet the two-part test of first showing good cause to amend the scheduling order under Rule 16(b), and that an amendment should be allowed under Rule 15(a). Id. (citing Bylin, 568 F.3d at 1231) ("Most circuits have held that when a party amends a pleading after a deadline set by a scheduling order, Rule 16 and its good cause' standard are implicated.... This circuit, however, has not ruled on that question in the context of an amendment to an existing pleading.")).

Because Defendant filed its motion after the deadline for amending pleadings, the Court employs the two-step analysis. First, the Court must determine whether Defendant has shown good cause to modify the Scheduling Order under Fed.R.Civ.P. 16(b). Then, the Court must evaluate whether Defendants have satisfied the standard for amendment of pleadings under Fed.R.Civ.P. 15(a). District courts are "afforded wide discretion" to apply the "good cause" standard. Bylin, 568 F.3d at 1231 (discussing Rule 16).

Under Rule 16(b)(4), the scheduling order "may be modified only for good cause and with the judge's consent, " requiring the moving party to show that a deadline "cannot reasonably be met despite the diligence of the party seeking the extension." Fed.R.Civ.P. 16, advisory committee's note. Another court has explained,

Rule 16(b)'s good cause standard is much different than the more lenient standard contained in Rule 15(a). Rule 16(b) does not focus on the bad faith of the movant, or the prejudice to the opposing party. Rather, it focuses on the diligence of the party seeking leave to modify the scheduling order to permit the proposed amendment. Properly construed, good cause means that the scheduling deadlines cannot be met despite a party's diligent efforts. In other words, this Court may "modify the schedule on a showing of good cause if [the deadline] cannot be met despite the diligence of the party seeking the extension.

Carriker v. City & Cnty. of Denver, Colo., No. 12-CV-02365-WJM-KLM, 2013 WL 2147542 (D. Colo. May 16, 2013).

In the instant case, Defendant states that the "allegations of Plaintiff's pleadings related solely to conduct that occurred after October 2010 and during the pendency of the underlying action...." Therefore, Defendant contends that it was not on notice that pre-October 2010 conduct was potentially a part of Plaintiff's allegations and therefore did not know of the need for the statute of limitations defense.[2] The Court reviewed Plaintiff's Amended Complaint and finds in ambiguous. Although there are some broad statements that could be construed as including conduct prior to the pendency of her state proceedings, all of the allegations that specify a date relate to conduct after Plaintiff filed her state court claims in December of 2009. ...

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