Budd Co. v. Travelers Indemnity Co.

109 F.R.D. 561, 5 Fed. R. Serv. 3d 514, 1986 U.S. Dist. LEXIS 30193
CourtDistrict Court, E.D. Michigan
DecidedJanuary 22, 1986
DocketCiv. A. No. 84-CV-1362-DT
StatusPublished
Cited by6 cases

This text of 109 F.R.D. 561 (Budd Co. v. Travelers Indemnity Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Budd Co. v. Travelers Indemnity Co., 109 F.R.D. 561, 5 Fed. R. Serv. 3d 514, 1986 U.S. Dist. LEXIS 30193 (E.D. Mich. 1986).

Opinion

ORDER GRANTING DEFENDANT’S MOTION FOR LEAVE TO FILE COUNTERCLAIM AND DENYING PLAINTIFF’S MOTION TO STRIKE REQUESTS FOR ADMISSIONS

COHN, District Judge.

I.

This declaratory action involves the manner of accounting for common discovery expenses incurred in personal injury products liability litigation on a multi-district docket. Plaintiff, the Budd Company (Budd), was the named defendant in eleven cases on the multi-district docket. Defendant, The Travelers Indemnity Company (Travelers), was Budd’s insurer on from one to three of the cases at various times. Travelers called Budd’s attention to the fact that on cases for which Budd was self-insured, the legal expenses for common discovery should be pro-rated. Budd took the position that since Travelers was the insurer on the first Budd case transferred to the multi-district docket, it should be responsible for the totality of Budd’s legal expenses for common discovery so long as this first case continued on the multi-district docket. Travelers took the position that the legal expenses should be pro-rated in proportion to the number of cases it was [563]*563obligated on during each billing period of the law firm representing Budd. The parties eventually worked out a pro-rata sharing scheme for the legal expenses.

Of particular importance here, however, Budd never notified Travelers that it was added as a defendant in two claims, Bowers v. Budd and Hale v. Budd; Travelers thus sought recovery for any overpayment to the law firm attributable to these claims. In my opinion of July 1, 1985, I essentially upheld defendant Travelers’s position that it was not responsible for expenses arising out of the defense of Bowers and Hale.

In my opinion, I instructed Travelers to submit a form of judgment resolving the issues consistent with my decision. Travelers’s form of judgment included recovery for overpayment of expenses related to the Bowers and Hale claims. The motion was denied for reasons discussed below. In my denial order of October 17, 1985, I allowed Travelers to file a motion for leave to file a counterclaim.

Travelers now moves for leave to file a counterclaim pursuant to Federal Rule of Civil Procedure 13(f), on the grounds that the counterclaim comports with the form of the opinion. Budd objects on two grounds. First, it argues that Travelers knew of the facts that are the basis for the counterclaim in sufficient time to file the counterclaim with its answer. Second, it argues that it would be unfairly prejudiced by allowing the counterclaim at this late date, since it says it was not put on notice before trial that Travelers would seek recovery for any overpayment.

Travelers has also served requests for admissions on Budd pursuant to Federal Rule of Civil Procedure 36. Budd moves to strike the requests on the grounds that they seek discovery as to matters already decided. Budd has not submitted the contested requests to me but says they seek admissions as to certain facts underlying its claims. Travelers says the requests merely seek to confirm the amounts overpaid by Travelers.

For the reasons stated below, Travelers’s motion will be granted and Budd’s motion will be denied.

II.

A.

Rule 13(f)1 provides that a pleader may obtain leave of the court to amend his pleadings and assert a counterclaim that was omitted “through oversight, inadvertence, or excusable neglect, or when justice requires.” 6 C. Wright & A. Miller, Federal Practice and Procedure § 1430, at 152 (1971) (emphasis added). Generally, courts have been quite liberal about granting leave to amend under Rule 13(f). Silvers v. TTC Industries, Inc., 484 F.2d 194, 198 (6th Cir.1973). “A motion for leave to amend is addressed to the sound discretion of the Court, and must be decided upon the facts and circumstances of each particular case.” Kaplan v. United States, 42 F.R.D. 5, 7 (C.D.Cal.1967).

The phrase permitting amendments “when justice requires” is intended to be “especially flexible and enables the court to exercise its discretion and permit amendment whenever it seems desirable to do so.” Wright & Miller, supra, at 155. The “justice” phrasing is an “independent ground upon which the court may grant leave to set up a counterclaim by amendment....” Smith Contracting Corp. v. Trojan Constr. Co., 192 F.2d 234 (10th Cir.1951). In Smith, the court allowed a defendant lessee to plead an omitted counterclaim for overpayment when the plaintiff lessor was not prejudiced.

In Louisville Trust Co. v. Glenn, 66 F.Supp. 872 (W.D.Ky.1946), defendant taxpayer was allowed to file a counterclaim for a credit on its taxes where the court had decided upon trial that the defendant had erroneously overpaid. The proposed counterclaim dealt solely with the form of [564]*564judgment and relief to which the defendant was entitled based upon the court’s ruling. This is precisely the case as to Travelers. In my opinion, I said, “Holding Travelers responsible for the cost of defending cases where liability fell outside of the period of Travelers’s coverage would result in Budd receiving more coverage than it contracted for.” Op. at 9. If Travelers has in fact overpaid legal fees, then justice requires that it be allowed to recover from Budd where the overpayments were due to Budd’s failure to notify Travelers of its joinder as defendant as to claims for which Travelers was not responsible. Travelers’s proposed counterclaim deals solely with the form of judgment and comports with the relief to which it is entitled based on my opinion.

B.

It is true that courts have often denied leave to file a counterclaim when the movant had a considerable period of time to file or when judgment has already been entered after trial. See, e.g., Imperial Enterprises, Inc. v. Fireman’s Fund Insurance Co., 535 F.2d 287 (5th Cir.1976), reh’g denied, 540 F.2d 1085 (5th Cir.1976); New Britain Mach. Co. v. Yeo, 358 F.2d 397 (6th Cir.1966); Kirbens v. Wodis, 295 F.2d 372 (7th Cir.1961). However, these cases are not controlling; the decisions of the district courts were adverse to the movants in all three of these cases and the counterclaims were an attempt to upset or ameliorate the impact of the court’s ruling. In other cases, the counterclaims lacked merit or would have really unfairly prejudiced the plaintiff. See, e.g., Kaplan, supra; Larson v. Arnold E. Verdi Trucking, Inc., 28 F.R.D. 377 (E.D.Pa.1961). There is no prejudice to Budd in allowing Travelers to amend to file its counterclaim, as discussed below.

Also to be distinguished are cases where the defendant filed a counterclaim after trial when the issue raised by the counterclaim was not tried. See, e.g., Fowler v. Sponge Prods. Corp.,

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Giorgio Foods, Inc. v. United States
804 F. Supp. 2d 1315 (Court of International Trade, 2011)
Koyo Seiko Co., Ltd. v. United States
442 F. Supp. 2d 1360 (Court of International Trade, 2006)
United States v. Optrex America, Inc.
29 Ct. Int'l Trade 1494 (Court of International Trade, 2005)
Tomoegawa (U.S.A.), Inc. v. United States
763 F. Supp. 614 (Court of International Trade, 1991)
The Budd Company v. The Travelers Indemnity Company
820 F.2d 787 (Sixth Circuit, 1987)

Cite This Page — Counsel Stack

Bluebook (online)
109 F.R.D. 561, 5 Fed. R. Serv. 3d 514, 1986 U.S. Dist. LEXIS 30193, Counsel Stack Legal Research, https://law.counselstack.com/opinion/budd-co-v-travelers-indemnity-co-mied-1986.