United States District Court, D. Colorado
SUNFLOWER CONDOMINIUM ASSOCIATION, INC., a Colorado nonprofit corporation, Plaintiff,
OWNERS INSURANCE COMPANY, Defendant.
RECOMMENDATION OF UNITED STATES MAGISTRATE
Y. Wang United States Magistrate Judge.
matter comes before the court on Plaintiff's Motion for
Leave to File Second Amended Complaint (“Motion to
Amend”). [#40, filed March 20, 2017]. The Motion to
Amend is before the undersigned Magistrate Judge pursuant to
the Order Referring Case dated January 20, 2017 [#27] and the
memorandum dated March 23, 2017 [#41]. After carefully
reviewing the Motion and related briefing, the entire case
file, and the applicable case law, I respectfully recommend
that the Motion to Amend be GRANTED.
AND FACTUAL BACKGROUND
Sunflower Condominium Association, Inc.
(“Sunflower” or “Plaintiff”)
initiated this civil action by filing a Complaint in the
District Court for Arapahoe County, Colorado on September 28,
2016. See [#4]. The dispute arises between
Plaintiff, a multi-family homeowners association, and
Defendant Owners Insurance Company (“Owners” or
“Defendant”), regarding Defendant's alleged
breach of contract. Plaintiff originally sued Auto-Owners
Insurance Company, who removed the action to the United
States District Court for the District of Colorado on
December 2, 2016. See [#1]. On December 30, 2016,
before Auto-Owners Insurance Company had filed an answer,
Plaintiff filed an Amended Complaint naming Owners as the
sole defendant. See [#20]. The Amended Complaint
asserts two causes of action for Breach of Contract and
Declaratory Relief arising from Owners's alleged failure
to compensate Plaintiff pursuant to an insurance policy and
agreement (“Insurance Contract”) for damage
caused to covered property by a September 29, 2014 wind and
hailstorm. See generally [#20]. The court has
subject matter jurisdiction over this action pursuant to 28
filed its Answer on January 20, 2017. See [#22]. On
February 2, 2017, this court held a Scheduling Conference, at
which the undersigned Magistrate Judge set certain pre-trial
dates and deadlines, including a deadline of March 20, 2017
for the joinder of parties and amendment of pleadings and
August 2, 2017 as the discovery deadline. See [#35,
#36]. Also relevant here, this court allowed each Party to
propound twenty-five interrogatories, twenty-five requests
for production of documents, and twenty-five requests for
admissions. See [id.] On March 20, 2017,
Plaintiff filed the Motion to Amend seeking to add
allegations that Owners had acted in bad faith in refusing to
fully compensate it for the damages, and corresponding claims
for statutory bad faith pursuant to Colo. Rev. Stat.
§§ 10-3-1115, 1116 and common law bad faith.
See [#40]. Owners filed a Response on April 5, 2017
[#42], and Plaintiff filed a Reply on April 19, 2017 [#46].
The matter is now ripe for disposition.
filed the Motion to Amend before the expiration of the
deadline for amendment of pleadings and joinder of parties as
specified in this court's Scheduling Order. Therefore,
this court considers the Motion within the confines of
Federal Rule of Civil Procedure 15(a) only. See also
Fernandez v. Bridgestone/Firestone, Inc., 105 F.Supp.2d
1194, 1195 (D. Colo. 2000) (applying only Rule 15 when the
deadline set for amendment in the Scheduling Order has not
yet passed). Rule 15(a) provides that leave to amend
“shall be freely given when justice so requires.”
Fed.R.Civ.P. 15(a). The court may refuse leave to amend upon
a showing of undue delay, undue prejudice to the opposing
party, bad faith or dilatory motive, failure to cure
deficiencies by amendments previously allowed, or futility of
amendment. Frank v. U.S. West, Inc., 3 F.3d 1357,
1365 (10th Cir. 1993). A general presumption exists in favor
of allowing a party to amend its pleadings, see Foman v.
Davis, 371 U.S. 178, 182 (1962), and the non-moving
party bears the burden of showing that the proposed amendment
is improper. Jefferson County Sch. Dist. No. R-1 v.
Moody's Investor's Services, Inc., 175 F.3d 848,
859 (10th Cir. 1999). Whether to allow amendment is within
the trial court's discretion. Burks v. Oklahoma
Publ'g Co., 81 F.3d 975, 978-79 (10th Cir. 1996).
asserts that it has learned through the exchange of written
discovery the following facts, which it contends supports a
finding of bad faith. On February 15, 2016, Gary Stevens, an
independent adjuster assigned to the case by Owners, and
David Ford, an employee of Adjusters International Matrix
Business Consulting (“Matrix”), whom Sunflower
hired to assist with the adjustment of the claim, met at the
damaged property and agreed on the scope of loss. [#40 at 2].
“Following that meeting, Mr. Stevens and Mr. Ford only
needed to determine the unit cost to repair the
property.” [Id. at 3]. Sunflower received Mr.
Stevens's estimate of damage to the property one month
later, on March 13, 2016. [Id.] After receiving the
estimate, Matrix requested on multiple occasions that Owners
pay “any undisputed damages based on Mr. Stevens'
estimate.” [Id.] Owners ignored the requests,
and rather retained an engineer to examine the damaged
property. [Id.] Sunflower alleges that
“[t]here was no legitimate basis to retain an engineer
given that the parties had already agreed on the scope of the
damage, ” and Owners “hired the engineer to delay
paying the claim and/or to provide it with an excuse to pay
less than the full damage caused by the storm.”
[Id.] In September 2016, Owners finally paid $515,
458.91, the undisputed portion of the claim, almost six
months after it had received Mr. Stevens's estimate.
[Id.] Sunflower contends that Owners's delay
“forced Sunflower up against the statute of limitations
and required Sunflower to hire a lawyer and file this suit in
order to protect its interests.” [Id.]
asserts a single argument that amendment of the operative
pleading at this juncture will cause it undue prejudice.
Specifically, Owners contends that Sunflower has known the
above information “since the beginning of this lawsuit,
” and yet waited until after Owners had
“exhausted a large share of its written discovery,
” before seeking to expand the scope of the lawsuit,
knowing that Owners would now have “too little written
discovery to adequately defend against Sunflower's
substantial and expansive new claims of liability.”
[#42 at 1-2]. For support, Owners references the following
allegations found in the original and Amended Complaints:
“Matrix repeatedly asked Defendant to pay for the
undisputed amount of the claim. . . . Defendant finally paid
Sunflower $515, 458.91 for the undisputed amount of its claim
in August of 2016, ” [#20 at ¶¶ 35, 36];
after Mr. Stevens and Mr. Ford agreed on the scope of loss
and “Stevens provided his estimate to Defendant,
Defendant engaged an engineer to examine the Sunflower
Property, ” [#20 at ¶¶ 29, 30]; “Matrix
repeatedly asked Defendant to pay for the undisputed amount
of the claim, ” [#20 at ¶ 35]; and
“Defendant finally paid Sunflower $515, 458.91 for the
undisputed amount of its claim in August 2016, ” [#20
at ¶ 36].
argues on Reply that it did not know prior to receiving
Owners's initial disclosures and “look[ing] closer
at the sequence of events” that Owners had “no
legitimate basis to hire an engineer” to inspect the
damaged property. [#46 at 3]. Sunflower describes the initial
disclosures as containing “information and
correspondence regarding the inspections completed by
Defendant's adjuster and engineer, along with
correspondence and documentation related to Defendant's
hiring of the engineer.” [Id.]
in this context arises when “the amendment unfairly
affects the defendants ‘in terms of preparing their
defense to the amendment.'” Minter v. Prime
Equipment Co., 451 F.3d 1196, 1208 (10th Cir. 2006)
(quoting Patton v. Guyer, 443 F.2d 79, 86 (10th Cir.
1971)). This occurs most often “when the amended claims
arise out of a subject matter different from what was set
forth in the complaint and raise significant new factual
issues.” Id. Sunflower notes in the Motion to
Amend that Owners originally agreed not to oppose the
amendment if Sunflower would not oppose Owners seeking an
additional ten interrogatories, five requests for production,
and four requests to admit. [#40 at 1-2]. Sunflower
represents that it would not oppose the proposal so long as
the request was for a reciprocal amount of additional
discovery. Owners would not agree to asking the court for
reciprocal additional discovery requests. See
[id. at 2; #42 at 2]. According to the Parties'
briefs, Owners has propounded seventeen of its twenty-five
interrogatories, eleven of its twenty-five requests for
production, and four of its twenty-five requests for
admission. See [#46 at 4].
Rule 15(a), “the court should freely give leave when
justice so requires.” Gorsuch Ltd. B.C., 771
F.3d at 1242. In light of this governing principal, the fact
that discovery does not close until August 2, 2017, and the
ability of this court to address Owners' single asserted
concern, i.e., inability to propound adequate written
requests regarding the bad faith claims, this court
respectfully RECOMMENDS that the Motion to Amend be GRANTED.
Indeed, this court notes that it does not appear that Owners
has propounded all of its allotted written discovery
requests to date, and a party's dissatisfaction with how
many written requests it can propound during discovery
regarding a specific claim or theory is not one of the
enumerated reasons that courts have read into Rule 15(a) for
denying a motion to amend. See Frank, 3 F.3d at
1365. Considering that neither Party ...