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Church Mutual Insurance Coutu v. Marshall

United States District Court, D. Colorado

March 28, 2018

CHURCH MUTUAL INSURANCE COMPANY., Plaintiff,
v.
PHILLIP MARSHALL COUTU, POWER ADJUSTERS, INC., JUDAH LEON BENSUSAN, ATLANTIS CLAIMS SERVICES, LLC, Defendants.

          OPINION AND ORDER

          RAYMOND P MOORE, United States District Judge

         Among other things, pending before the Court is the February 12, 2018 Report and Recommendation of U.S. Magistrate Judge Nina Y. Wang (“the R&R”) (ECF No. 166), recommending that Plaintiff Church Mutual Insurance Company's (“plaintiff”) Motion for Leave to File Second Amended Complaint (“the motion to amend”) (ECF No. 128) be granted. Defendants, Phillip Marshall Coutu (“Coutu”), Power Adjusters, Inc., Judah Leon Bensusan (“Bensusan”), and Atlantis Claims Services, LLC (collectively, “defendants”), have filed Objections to the R&R (ECF No. 170), and plaintiff has filed a response (ECF No. 176).

         1.The R&R

         The Magistrate Judge recommended that this Court grant the motion to amend. (ECF No. 166.) First, the Magistrate Judge found that plaintiff should be allowed to add a claim for exemplary damages pursuant to Colo. Rev. Stat. § 13-21-102. (Id. at 5-8.) The Magistrate Judge found, inter alia, that plaintiff had alleged a plausible fraudulent concealment claim, including that defendants owed a duty to disclose their extensive business relationship and pecuniary interest in an arbitration award. (Id.) Second, the Magistrate Judge found that plaintiff should be allowed to amend its claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and the Colorado Organized Crime Control Act (“COCCA”). (Id. at 8-20.) The Magistrate Judge found that it would not be futile to amend those claims because plaintiff had alleged a plausible pattern of racketeering activity, RICO enterprise, and standing. (Id.)

         2.Legal Standards

         a. Review of a Report and Recommendation

         A party is entitled to a de novo review of those portions of the report and recommendation to which specific objection is made. See Fed.R.Civ.P. 72(b)(2), (3). “[O]bjections to the magistrate judge's report and recommendation must be both timely and specific to preserve an issue for de novo review by the district court or for appellate review.” United States v. 2121 E. 30 St., 73 F.3d 1057, 1060 (10th Cir. 1996). Furthermore, arguments not raised before the magistrate judge need not be considered by this Court. Marshall v. Chater, 75 F.3d 1421, 1426 (10th Cir. 1996) (“Issues raised for the first time in objections to the magistrate judge's recommendation are deemed waived.”).

         “When no timely objection is filed, the court need only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.” Fed.R.Civ.P. 72, Adv. Comm. Notes, subdivision (b) (1983); see also Summers v. Utah, 927 F.2d 1165, 1167 (10th Cir. 1991) (“In the absence of timely objection, the district court may review a magistrate's report under any standard it deems appropriate.”).

         b. Amendment of Pleadings

         Pursuant to Fed.R.Civ.P. 15(a)(2) (“Rule 15”), a party may amend its pleading with the opposing party's consent or leave of court, with the court “freely giv[ing] leave when justice so requires.” This standard means that leave to amend is not justified when there has been “undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or the futility of amendment.” Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993). “A proposed amendment is futile if the complaint, as amended, would be subject to dismissal.” Anderson v. Suiters, 499 F.3d 1228, 1238 (10th Cir. 2007) (quotation and internal quotation omitted).

         3. Defendants' Objections

         Defendants object on the following grounds. First, defendants object to allowing plaintiff to add a claim for exemplary damages because they did not owe a duty of disclosure to plaintiff, and thus, plaintiff fails to state a claim for fraudulent concealment or civil conspiracy. (ECF No. 170 at 7.) In doing so, defendants incorporate by reference a prior objection to a prior report and recommendation. (Id.)

         Second, defendants argue that amendment of plaintiff's RICO and COCCA claims would be futile. (Id. at 9-20.) Defendants argue that plaintiff has failed to plead a pattern of racketeering activity with particularity. (Id. at 9-16.) Defendants further argue that plaintiff has failed to plead a RICO enterprise. (Id. at 16-18.) Defendants also argue that plaintiff lacks RICO standing. (Id. at 18-20.)

         4.Discussion

         a. Plaintiff's Claim ...


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