Certain Underwriters at Lloyd's London v. Columbia Casualty Company

• Court: District Court, S.D. California
• Decided: October 24, 2024
• Docket: 3:23-cv-02157
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 9 10 UNITED STATES DISTRICT COURT 11 SOUTHERN DISTRICT OF CALIFORNIA 12 13 CERTAIN UNDERWRITERS AT Case No.: 23-cv-02157-AJB-DDL LLOYD’S LONDON, 14 ORDER GRANTING PLAINTIFF Plaintiff, 15 CERTAIN UNDERWRITERS AT v. LLOYD’S MOTION TO FILE AN 16 AMENDED COMPLAINT COLUMBIA CASUALTY COMPANY 17 and ADMIRAL INSURANCE (Doc. No. 25) 18 COMPANY, 19 Defendants. 20 21 22 Before the Court is Plaintiff Certain Underwriters at Lloyd’s London 23 (“Underwriters”) motion for leave to file an amended complaint. (Doc. No. 25.) Defendant 24 Columbia Casualty Company (“Columbia”) filed an opposition (Doc. No. 30), to which 25 Underwriters replied (Doc. No. 31). Defendant Admiral Insurance Company (“Admiral”) 26 filed a notice of non-opposition. (Doc. No. 27.) Pursuant to Civil Local Rule 7.1.d.1, the 27 Court finds the matter suitable for determination on the papers. For the reasons set forth 28 below, the Court GRANTS Underwriters’ motion. 1 I. BACKGROUND 2 This action concerns a dispute between three insurers—Underwriters, Columbia, 3 and Admiral—over their obligations to Sharp Healthcare (“Sharp”), whom all three 4 insure.1 (Doc. No. 1 ¶¶ 17–34.) On November 22, 2023, Underwriters filed the initial 5 complaint seeking equitable contribution from Columbia, indemnification from Columbia, 6 and declaratory relief regarding both Columbia and Admiral. (Doc. No. 1.) On 7 February 26, 2024, Columbia filed a motion to dismiss for failure to state a claim. 8 (Doc. No. 16.) Columbia generally argued that, based on the plain language of the relevant 9 policies, Columbia’s policy only provides excess coverage after Underwriter’s policy is 10 exhausted and Underwriters do not allege exhaustion. (Id.) On July 15, 2024, the Court 11 granted Columbia’s motion to dismiss without prejudice and provided Underwriters a 12 deadline to file for leave to amend. (Doc. No. 24.) On July 29, 2024, Underwriters timely 13 filed the instant motion. 14 II. LEGAL STANDARD 15 Pursuant to Rule 15 of the Federal Rules of Civil Procedure,2 “a party may amend 16 its pleading only with the opposing party’s written consent or the court’s leave” after the 17 time for amendment as a matter of course has expired. Fed. R. Civ. P. 15(a)(2). “The court 18 should freely give leave when justice so requires.” Id. “Five factors are taken into account 19 to assess the propriety of a motion for leave to amend: bad faith, undue delay, prejudice to 20 the opposing party, futility of amendment, and whether the plaintiff has previously 21 amended the complaint.” Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004). “Not 22 all of the factors merit equal weight[; rather,] it is the consideration of prejudice to the 23 opposing party that carries the greatest weight.” Eminence Cap., LLC v. Aspeon, Inc., 316 24

25 26 1 From 2017 through 2021, Sharp was sued in eighteen lawsuits by patients who believed Sharp had intentionally recorded them during medical procedures. (Doc. No. 1 ¶¶ 12–13.) Sharp tendered defense of 27 the actions to Underwriters and Columbia, the former of which accepted Sharp’s defense and tendered payment both for defense and for funding of settlements. (Id. ¶¶ 35–40.) 28 1 F.3d 1048, 1052 (9th Cir. 2003). “Absent prejudice, or a strong showing” of the remaining 2 factors, there exists a “presumption under Rule 15(a) in favor of granting leave to 3 amend.” Id. The party opposing the amendment bears the burden of showing why leave 4 should be denied, including the burden of establishing prejudice. DCD Programs, Ltd. v. 5 Leighton, 833 F.2d 183, 187 (9th Cir. 1987). 6 III. DISCUSSION 7 Underwriters’ motion argues leave should be granted because the motion was timely 8 filed, the amendments are requested in good faith, no prior amendment has been requested, 9 the relief requested remains unchanged, and the amendments remedy the defects identified 10 by the Court. (Doc. No. 25-1.) In its opposition, Columbia does not assert any arguments 11 regarding bad faith, undue delay, undue prejudice, or the number of prior amendments. 12 (See generally Doc. No. 1.) Rather, Columbia focuses its entire opposition on futility, 13 arguing that the Court has already determined that the relevant policy language is 14 unambiguous and that Columbia’s policy only applies in excess of Underwriters. (Id.) The 15 Court will analyze each factor in turn. 16 First, there is no dispute that this is the first time Underwriters seek to amend the 17 complaint. Second, the Court accepts Underwriters’ assertions that the instant motion was 18 not brought in bad faith. Third, the motion was filed by the deadline provided by the Court. 19 Fourth, and most importantly, there are no allegations of undue prejudice toward either 20 Defendant. In fact, Admiral chose to file a notice of non-opposition, and Columbia failed 21 to argue prejudice. Having reviewed the proposed amendments, the Court notes that the 22 causes of action and relief sought remain largely the same as the initial complaint. The 23 proposed amendments proffer additional allegations to support theories advanced by 24 Underwriters’ advanced in its opposition to Columbia’s prior motion to dismiss. 25 Regarding futility, Columbia seeks the Court to delve into the merits of the proposed 26 amended complaint, in essence holding a motion for leave to amend under Rule 15 up to 27 the standard for a Rule 12(b)(6) motion to dismiss. The Court declines to do so as it 28 contradicts the letter and spirit of Rule 15. See Netbula, LLC v. Distinct Corp., 212 F.R.D. 1 || 534, 539 (N.D. Cal. 2003) (“Denial of leave to amend on th[e] ground [of futility] is rare. 2 Ordinarily, courts will defer consideration of challenges to the merits of a proposed 3 ||amended pleading until after leave to amend is granted and the amended pleading is 4 || filed.”); Steward v. CMRE Fin’l Servs., Inc., 2015 WL 6123202, at *2 (D. Nev. Oct. 16, 5 ||2015) (“Deferring ruling on the sufficiency of the allegations is preferred in light of the 6 ||more liberal standards applicable to motions to amend and the fact that the parties’ 7 ||arguments are better developed through a motion to dismiss or motion for summary 8 ||judgment.”). Rather, the Court notes that Underwriters has alleged additional facts, such as 9 || that it has exhausted its own limits (see Doc. No. 25-4 4] 47), addressing deficits previously 10 identified by the Court. Accordingly, it is not clear that amendment is futile. 11 As such, the Court finds that Columbia has failed to meet its burden to demonstrate 12 || why leave should be denied. 13 CONCLUSION 14 Based on the reasons stated above, the Court GRANTS Underwriters’ motion for 15 ||leave to file an amended complaint. Accordingly, no later than October 31, 2024, 16 Underwriters must file the First Amended Complaint (Doc. No. 25-3). Any pleadings 17 ||responsive to the First Amended Complaint must be filed no later than 18 || November 14, 2024. 19 IT IS SO ORDERED. 20 Dated: October 24, 2024 © 21 Hon, Anthony J.Battaglia 22 United States District Judge 23 24 25 26 27 28