United States District Court, D. Colorado
PATRICIA WRIGHT, formerly known as Patricia Critchfield, Plaintiff,
TWIN CITY FIRE INSURANCE COMPANY, and THE WARRANTY GROUP, L.L.C., also known as TWG Holding, L.L.C., Defendants.
KRISTEN L. MIX, Magistrate Judge.
This matter is before the Court on Defendants' Motion for Leave to File an Amended Answer to Amended Complaint [#137] (the "Motion"). Plaintiff filed a Response [#147] in opposition to the Motion, and Defendant filed a Reply [#149]. The Court has reviewed the Motion, the Response, the Reply, the entire docket, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Motion [#137] is GRANTED in part and DENIED in part.
A. Factual and Procedural Background
Plaintiff initiated this action by filing a Complaint in Boulder County District Court on April 1, 2011. See Complaint [#2] at 1. On December 7, 2011, Defendants removed the case to federal court. See generally Notice of Removal [#1]. As the basis for removal, Defendants asserted federal question jurisdiction based on Plaintiff's allegations pursuant to the Employee Retirement Income Security Act ("ERISA"). Id. at 3-5. Alternatively, Defendants alleged jurisdiction based on diversity of citizenship. Id. at 5-13.
On April 4, 2012, the Court imposed a deadline of April 18, 2012 for Plaintiff to file an amended complaint. See generally Order [#38]. On April 19, 2012, Plaintiff filed a Motion to Amend the Complaint [#39], which included a proposed Amended Complaint. Despite the late filing, the Court accepted the Motion to Amend for resolution, granted it, and denied Defendant's Amended Motion to Dismiss as moot. See generally Minute Order [#40].
The Amended Complaint alleges that the former Hartford defendants and Defendant Twin City Fire Insurance Company ("Twin City") were workers' compensation insurance carriers for Defendant The Warranty Group ("TWG"). Amended Complaint [#41] at 2. Plaintiff further alleges in the Amended Complaint [#41] that "Defendants have failed, or refused to pay, fair workers' compensation benefits to the Plaintiff" and that "Defendants have unreasonably delayed or denied workers' compensation benefits to Plaintiff." Id. at 3-4. Plaintiff's Amended Complaint contains no allegations regarding disability benefits and is limited to allegations regarding workers' compensation benefits. See generally Amended Complaint [#41].
On May 18, 2012, Defendants filed their Answer to Plaintiff's Amended Complaint [#55] (the "Answer") in which they asserted 25 affirmative defenses. See Answer [#55] at 5-8.
On July 3, 2012, the Court held a Scheduling Conference during which it entered a Scheduling Order [#67], setting September 17, 2012 as the deadline for amendment of pleadings. See Sched. Order [#67] at § 9(a). During the remainder of 2012 and into 2013, the parties filed several motions seeking to adjust the deadlines set in the Scheduling Order. See generally Unopposed Motion to Modify Scheduling Order to Extend Expert Disclosure and Rebuttal Deadlines [#80]; Unopposed Motion to Extend Expert Disclosure Deadlines [#82]; Unopposed Motion to Continue Trial and Amend Case Management Order [#86]. In response to one of these motions, the Court ordered the parties to submit a proposed amended scheduling order. Minute Order [#87] at 1. On March 11, 2013, the Court entered the Amended Scheduling Order [#90], which set June 21, 2013 as the new deadline for amendment of pleadings. Am. Sched. Order [#90] at § 9(a). Following entry of the Amended Scheduling Order, the parties filed motions seeking to modify the deadlines set in it. See generally Joint Motion to Amend the Amended Scheduling Order (Doc. 90) [#96]; Second Joint Motion to Reconsider the Motion to Amend the Amended Scheduling Order (Doc. 90) [#100]. The parties attached a proposed second amended scheduling order [#100-1] to one of these motions, which the Court entered on June 11, 2013. See generally Second Am. Sched. Order [#103]. The Second Amended Scheduling Order set October 25, 2013 as the deadline for amendment of pleadings. Id. at § 9(a). On October 25, 2013, Plaintiff filed her Notice of Intent to Amend Complaint to Include a Claim for Exemplary Damages [#115], however, to date Plaintiff has not filed a Second Amended Complaint.
Subsequently, the parties have filed motions seeking to amend deadlines set in the Second Amended Scheduling Order, but have not sought to amend the deadline for amendment of pleadings. See generally Joint Motion to Amend the Second Amended Scheduling Order (Doc. 104) and Reschedule the Trial Preparation Conference [#123]; Motion to Continue Trial, Dispositive Motion Deadline, Pre-Trial Deadlines, and other Deadlines [#125].
B. The Motion
In the Motion, Defendants seek to amend their Answer [#55] to delete certain affirmative defenses and add the two affirmative defenses of (1) release, accord, and satisfaction, and (2) statute of limitations. See Motion [#137] at 1. Defendants argue that "[g]ood cause exists for extending the deadline to file an amended pleading because evidence and information that Defendants have only recently been able to confirm establishes the viability of [the] two additional defenses." Id. Specifically, Defendants argue that their affirmative defense of release, accord, and satisfaction is based on a settlement agreement Plaintiff executed in her underlying workers' compensation action on January 29, 2013. Id. at 7. Defendants further argue that they sought discovery from Plaintiff relating to her workers' compensation claim prior to the expiration of the deadline to amend pleadings but that she did not produce responsive documents prior to the deadline. Id. at 8; see also Plaintiff's Objections and Responses to Twin City Fire Insurance Company's and the Warranty Group, Inc.'s First Combined Set of Interrogatories and Requests for Production of Documents [#137-12] at 15 (RFP 12: "Produce the entire file constituting or related to your workers' compensation claim, W.C. No. 4-741-823." Response: "See Plaintiff's Objections and Responses to Requests for Production Nos. 1 and 2. See also the disclosures [sic] documents of both parties."). Defendants maintain that they sent Plaintiff a letter on January 29, 2013 "in which Defendants asked Plaintiff to produce documents responsive to Request No. 12, but never received a response to the letter." Motion [#137] at 8 (citing to Motion, Ex. 11 [#137-11]). Defendant avers that in September 2013, Plaintiff agreed to produce her file relating to her workers' compensation claim, but that Plaintiff "said it would take some time to produce because her lawyers needed to perform a privilege review." Id. Defendants maintain that they understood that Plaintiff intended to produce the file in October 2013. Id. Defendants state that "Plaintiff never produced the file in 2013. Plaintiff finally started producing the file around March 24, 2014." Id.
Defendants state that after learning of the January 29, 2013 settlement agreement, defense counsel "mentioned it to Plaintiff's counsel who said that there was an explicit agreement that the underlying workers' compensation settlement agreement did not apply to this insurance bad faith action." Id. at 7. They maintain that "[n]othing in Defendants' files indicated any such agreement, " which is why Defendant sought discovery regarding the workers' compensation claim. Id. at 8. Now that Plaintiff has produced the requested file relating to her workers' compensation claim, Defendants maintain that it is "only [this] recently obtained information that would allow them to meet their Rule 11 obligations to assert release, accord and satisfaction." Id. at 9.
Regarding the statute of limitations defense, Defendants similarly argue that it was only through Plaintiff's supplemental interrogatory responses served on October 11, 2013, that Defendants were made aware that Plaintiff's claims may trigger this defense. Id. at 9-10. Defendants maintain that this interrogatory response was not enough to meet their Rule 11(b)(2) obligation of ensuring that they only assert an affirmative defense that is legally supportable. Defendants state that "[w]hile Plaintiff has alleged conduct by Defendants that had allegedly harmed her in her supplemental interrogatory responses, she did not, at the time, make any statements as to when she knew or should have known about this conduct that allegedly injured her." Id. at 10. Defendants maintain that they "wanted to ask her questions about this [at] her deposition, " but that Plaintiff repeatedly failed to attend her scheduled deposition. Id. Defendants argue that because the two-year statute of limitations "accrues when both the injury and its cause are known or should have been known through the exercise of reasonable diligence, '" id. (quoting Harmon v. Fred S. James & Co. of Colorado, Inc., 899 P.2d 258, 260 (Colo.App. 1994)), understanding when Plaintiff knew or should have known about her alleged injury was necessary before Defendants could assert the statute of limitations as an affirmative defense. Id. Because they were not able to question Plaintiff at her deposition, Defendants argue that they "waited for Plaintiff to produce her underlying worker's compensation file to see if there was other evidence that may support whether they had a Rule 11 basis to assert this defense." Id. at 11. Defendants aver that the workers' compensation claim documents produced by Plaintiff allowed them to "determine[ ] that they do have a Rule 11 basis to assert this affirmative defense...." Id. Therefore, Defendants argue that "waiting for discovery that would support their Rule 11 obligations in asserting these defenses" is good cause for their delay in seeking to amend their Answer. Id.
Turning to the standard for amendment of pleadings under Fed.R.Civ.P. 15, Defendants argue that there was no undue delay in this case because Defendants filed the Motion once they had enough information to confirm that there is a legal basis to assert the two affirmative defenses. Id. at 13. Defendants further argue that there is no prejudice to Plaintiff. Id. at 12-13. They also argue that the Motion was not filed in bad faith or for a dilatory motive. Id. at 13. In addition, Defendants maintain that the proposed amendments are not futile. Id. at 13-14.
In her Response, Plaintiff argues that Defendants have unduly delayed in bringing the Motion and that if the Motion is granted, Plaintiff will be prejudiced. Response [#147] at 1. Plaintiff maintains that Defendants knew of their basis for asserting release, accord, and satisfaction as an affirmative defense "as early as January 2013, when the [settlement] agreement was entered into, " and that "Defendants' assertions that they somehow needed additional information from Plaintiff to satisfy their obligations under [Fed. R. Civ. P.] ...