1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 John Haller, et al., No. CV-20-01606-PHX-GMS
10 Plaintiffs, ORDER
11 v.
12 Auto-Owners Insurance Company,
13 Defendant. 14 15 16 Before the Court is Plaintiffs’ Motion to Extend Time to Amend Pleadings, Motion 17 to Amend the Complaint, and Motion to Remand. (Doc. 24.) For the following reasons, the 18 Motion is denied. 19 BACKGROUND 20 Plaintiffs John and Linda Haller purchased home insurance from Defendant Auto- 21 Owners Insurance Company. After Defendant declined to cover a water loss, Plaintiffs 22 filed suit on July 14, 2020. (Doc. 1-1 at 10.) Defendant removed the case to this Court on 23 August 14, 2020. (Doc. 1.) Shortly thereafter, on November 6, 2020, the Court entered a 24 Case Management Order setting a 60-day deadline for joining parties, amending pleadings, 25 and filing supplemental pleadings. (Doc. 13 at 1.) On April 29, 2021 Plaintiffs filed the 26 instant motion to amend. Plaintiff intends to amend the complaint to bring a negligence 27 claim against the insured’s broker, Adams Agency, LLC. 28 1 DISCUSSION 2 I. Motion to Amend 3 a. Legal Standard 4 Where a scheduling order is in place, Rule 16(b) of the Federal Rules of Civil 5 Procedure controls. Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607–08 (9th Cir. 6 1992). Rule 16(b)(4) states that a “schedule may be modified only for good cause and with 7 the judge’s consent.” See Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 8 2000). “Unlike Rule 15(a)’s liberal amendment policy which focuses on the bad faith of 9 the party seeking to interpose an amendment and the prejudice to the opposing party, Rule 10 16(b)’s ‘good cause’ standard primarily considers the diligence of the party seeking the 11 amendment.” Johnson, 975 F.2d at 609. “[C]arelessness is not compatible with a finding 12 of diligence and offers no reason for a grant of relief. . . . If [the party seeking to amend] 13 was not diligent, the inquiry should end.” Id. 14 b. Analysis 15 In this case, the Court’s Case Management Order entered on November 6, 2020 16 specified that “[t]he deadline for joining parties, amending pleadings, and filing 17 supplemental pleadings is 60 days from the date of this Order.” (Doc. 13 at 1.) Plaintiffs 18 have not demonstrated diligence in seeking to amend their complaint and seeking to 19 discover the facts on which they now claim justify amendment. Plaintiffs’ new claim is 20 based on the allegation that their loss would have been covered had the sales agent sold 21 them a “Homeowners Plus” endorsement. They assert that they did not learn that the sales 22 agent failed to procure this endorsement, however, until shortly before the discovery 23 deadline. But Plaintiffs produced the coverage application in their initial disclosure, and it 24 included an unchecked “Homeowners Plus” endorsement. (Doc. 26-3.) They further listed 25 agent Tonna Rogers and the Adams Insurance Agency in their initial disclosure, explaining 26 that they were “expected to testify regarding the sale of the policy to Plaintiffs.” Id. at 3. 27 Plaintiffs thus had this information which they could have pursued in early November. 28 Therefore, because Plaintiffs have failed to demonstrate diligence or good cause, this Court 1 will not amend its Scheduling Order to permit late amendment to the complaint. 2 II. Dismissal Without Prejudice 3 a. Legal Standard 4 Federal Rule of Civil Procedure 41(a)(2) provides that after a defendant has 5 answered the complaint, “an action may be dismissed at the plaintiff’s request only by court 6 order, on terms that the court considers proper.” Fed. R. Civ. P. 41(a)(2). “A district court 7 should grant a motion for voluntary dismissal under Rule 41(a)(2) unless a defendant can 8 show that it will suffer some plain legal prejudice as a result.” Smith v. Lenches, 263 F.3d 9 972, 975 (9th Cir. 2001). Legal prejudice means “prejudice to some legal interest, some 10 legal claim, some legal argument.” Id. at 976. “Uncertainty because a dispute remains 11 unresolved” or “the threat of future litigation” do not constitute plain legal prejudice. Id. 12 Nor is plain legal prejudice established by a showing that the defendant has already begun 13 trial preparations. Hamilton v. Firestone Tire & Rubber Co., Inc., 679 F.2d 143, 145–46 14 (9th Cir. 1982). Furthermore, “the mere inconvenience of defending another lawsuit does 15 not constitute plain legal prejudice.” Id. 16 Nonetheless, district courts retain the discretion to condition a dismissal without 17 prejudice upon the payment of “appropriate costs and attorney fees.” Westlands Water Dist. 18 v. United States, 100 F.3d 94, 97 (9th Cir. 1996). If a district court decides it should 19 condition dismissal on the payment of costs and attorney’s fees, the defendant should be 20 awarded attorney fees for work which cannot be used in any future litigation of these 21 claims. Id. 22 b. Analysis 23 Here, Plaintiffs’ Motion for Dismissal Without Prejudice is “contingent on a ruling 24 against any attorney fees and that any costs award is limited to the Defendant’s federal 25 filing fee.” (Doc. 24.) The Court is disinclined to accept this contingency. As Plaintiffs 26 have requested that their motion be contingent on such a finding, their Motion to Dismiss 27 Without Prejudice is denied. 28 1 III. Motion to Remand 2 a. Legal Standard 3 “[A]ny civil action brought in a State court of which the district courts of the United 4 States have original jurisdiction, may be removed by the defendant . . . to the district court 5 of the United States for the district and division embracing the place where such action is 6 pending.” 28 U.S.C. § 1441(a). There is a “strong presumption” against removal, and 7 “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in 8 the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Libhart v. 9 Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979)). 10 One way a district court may have removal jurisdiction is if the plaintiff and 11 defendant are citizens of different states and the “matter in controversy exceeds . . . 12 $75,000, exclusive of interest and costs.” 28 U.S.C. § 1332(a). Where it is unclear from the 13 face of the complaint whether the requisite amount in controversy is pled, the removing 14 defendant bears the burden of establishing, by a preponderance of the evidence, that the 15 amount in controversy exceeds $75,000. Guglielmino v. McKee Foods Corp., 506 F.3d 16 696, 699 (9th Cir. 2007). 17 A defendant must point to “the underlying facts supporting its assertion that” the 18 amount-in-controversy requirement is met. Gaus, 980 F.2d at 567 (emphasis in original). 19 Therefore, the “amount-in-controversy inquiry in the removal context is not confined to 20 the face of the complaint.” Valdez v. Allstate Ins. Co.,
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 John Haller, et al., No. CV-20-01606-PHX-GMS
10 Plaintiffs, ORDER
11 v.
12 Auto-Owners Insurance Company,
13 Defendant. 14 15 16 Before the Court is Plaintiffs’ Motion to Extend Time to Amend Pleadings, Motion 17 to Amend the Complaint, and Motion to Remand. (Doc. 24.) For the following reasons, the 18 Motion is denied. 19 BACKGROUND 20 Plaintiffs John and Linda Haller purchased home insurance from Defendant Auto- 21 Owners Insurance Company. After Defendant declined to cover a water loss, Plaintiffs 22 filed suit on July 14, 2020. (Doc. 1-1 at 10.) Defendant removed the case to this Court on 23 August 14, 2020. (Doc. 1.) Shortly thereafter, on November 6, 2020, the Court entered a 24 Case Management Order setting a 60-day deadline for joining parties, amending pleadings, 25 and filing supplemental pleadings. (Doc. 13 at 1.) On April 29, 2021 Plaintiffs filed the 26 instant motion to amend. Plaintiff intends to amend the complaint to bring a negligence 27 claim against the insured’s broker, Adams Agency, LLC. 28 1 DISCUSSION 2 I. Motion to Amend 3 a. Legal Standard 4 Where a scheduling order is in place, Rule 16(b) of the Federal Rules of Civil 5 Procedure controls. Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607–08 (9th Cir. 6 1992). Rule 16(b)(4) states that a “schedule may be modified only for good cause and with 7 the judge’s consent.” See Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 8 2000). “Unlike Rule 15(a)’s liberal amendment policy which focuses on the bad faith of 9 the party seeking to interpose an amendment and the prejudice to the opposing party, Rule 10 16(b)’s ‘good cause’ standard primarily considers the diligence of the party seeking the 11 amendment.” Johnson, 975 F.2d at 609. “[C]arelessness is not compatible with a finding 12 of diligence and offers no reason for a grant of relief. . . . If [the party seeking to amend] 13 was not diligent, the inquiry should end.” Id. 14 b. Analysis 15 In this case, the Court’s Case Management Order entered on November 6, 2020 16 specified that “[t]he deadline for joining parties, amending pleadings, and filing 17 supplemental pleadings is 60 days from the date of this Order.” (Doc. 13 at 1.) Plaintiffs 18 have not demonstrated diligence in seeking to amend their complaint and seeking to 19 discover the facts on which they now claim justify amendment. Plaintiffs’ new claim is 20 based on the allegation that their loss would have been covered had the sales agent sold 21 them a “Homeowners Plus” endorsement. They assert that they did not learn that the sales 22 agent failed to procure this endorsement, however, until shortly before the discovery 23 deadline. But Plaintiffs produced the coverage application in their initial disclosure, and it 24 included an unchecked “Homeowners Plus” endorsement. (Doc. 26-3.) They further listed 25 agent Tonna Rogers and the Adams Insurance Agency in their initial disclosure, explaining 26 that they were “expected to testify regarding the sale of the policy to Plaintiffs.” Id. at 3. 27 Plaintiffs thus had this information which they could have pursued in early November. 28 Therefore, because Plaintiffs have failed to demonstrate diligence or good cause, this Court 1 will not amend its Scheduling Order to permit late amendment to the complaint. 2 II. Dismissal Without Prejudice 3 a. Legal Standard 4 Federal Rule of Civil Procedure 41(a)(2) provides that after a defendant has 5 answered the complaint, “an action may be dismissed at the plaintiff’s request only by court 6 order, on terms that the court considers proper.” Fed. R. Civ. P. 41(a)(2). “A district court 7 should grant a motion for voluntary dismissal under Rule 41(a)(2) unless a defendant can 8 show that it will suffer some plain legal prejudice as a result.” Smith v. Lenches, 263 F.3d 9 972, 975 (9th Cir. 2001). Legal prejudice means “prejudice to some legal interest, some 10 legal claim, some legal argument.” Id. at 976. “Uncertainty because a dispute remains 11 unresolved” or “the threat of future litigation” do not constitute plain legal prejudice. Id. 12 Nor is plain legal prejudice established by a showing that the defendant has already begun 13 trial preparations. Hamilton v. Firestone Tire & Rubber Co., Inc., 679 F.2d 143, 145–46 14 (9th Cir. 1982). Furthermore, “the mere inconvenience of defending another lawsuit does 15 not constitute plain legal prejudice.” Id. 16 Nonetheless, district courts retain the discretion to condition a dismissal without 17 prejudice upon the payment of “appropriate costs and attorney fees.” Westlands Water Dist. 18 v. United States, 100 F.3d 94, 97 (9th Cir. 1996). If a district court decides it should 19 condition dismissal on the payment of costs and attorney’s fees, the defendant should be 20 awarded attorney fees for work which cannot be used in any future litigation of these 21 claims. Id. 22 b. Analysis 23 Here, Plaintiffs’ Motion for Dismissal Without Prejudice is “contingent on a ruling 24 against any attorney fees and that any costs award is limited to the Defendant’s federal 25 filing fee.” (Doc. 24.) The Court is disinclined to accept this contingency. As Plaintiffs 26 have requested that their motion be contingent on such a finding, their Motion to Dismiss 27 Without Prejudice is denied. 28 1 III. Motion to Remand 2 a. Legal Standard 3 “[A]ny civil action brought in a State court of which the district courts of the United 4 States have original jurisdiction, may be removed by the defendant . . . to the district court 5 of the United States for the district and division embracing the place where such action is 6 pending.” 28 U.S.C. § 1441(a). There is a “strong presumption” against removal, and 7 “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in 8 the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Libhart v. 9 Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979)). 10 One way a district court may have removal jurisdiction is if the plaintiff and 11 defendant are citizens of different states and the “matter in controversy exceeds . . . 12 $75,000, exclusive of interest and costs.” 28 U.S.C. § 1332(a). Where it is unclear from the 13 face of the complaint whether the requisite amount in controversy is pled, the removing 14 defendant bears the burden of establishing, by a preponderance of the evidence, that the 15 amount in controversy exceeds $75,000. Guglielmino v. McKee Foods Corp., 506 F.3d 16 696, 699 (9th Cir. 2007). 17 A defendant must point to “the underlying facts supporting its assertion that” the 18 amount-in-controversy requirement is met. Gaus, 980 F.2d at 567 (emphasis in original). 19 Therefore, the “amount-in-controversy inquiry in the removal context is not confined to 20 the face of the complaint.” Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004). 21 Defendant may submit “facts presented in the removal petition as well as any summary 22 judgment-type evidence relevant to the amount in controversy at the time of the removal.” 23 Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003) (internal 24 quotations omitted). Such evidence may include a settlement letter or a judicial admission 25 by the plaintiff. See Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002) (“A 26 settlement letter is relevant evidence of the amount in controversy if it appears to reflect a 27 reasonable estimate of the plaintiff’s claim.”); Singer v. State Farm Mut. Auto. Ins. Co., 28 116 F.3d 373, 376 (9th Cir. 1997) (accepting a plaintiff's judicial admission as evidence of 2|| the amount in controversy). 3 b. Analysis 4 Here, Plaintiffs have not demanded a dollar amount in their complaint. Accordingly, 5 || it 1s Defendant’s burden to prove by a preponderance of the evidence that the amount in 6|| controversy exceeds $75,000. Singer, 116 F.3d at 376. Defendant alleges that Plaintiffs seek a contracts award that could be in excess of $64,000, (Doc. 25-1). In addition to 8 || Plaintiffs’ contract claim, however, they have also asserted the tort of bad faith, for which 9|| they have sought general and punitive damages. Combined with the reasonable attorneys’ || fees that would accompany such claims, the Court finds that the amount in controversy at the inception of this matter is above $75,000. Indeed, there is also evidence that Plaintiffs initially demanded more than $75,000 in mediation. See Cohn, 281 F.3d at 840 (“A 13 || settlement letter is relevant evidence of the amount in controversy if it appears to reflect a reasonable estimate of the plaintiff’s claim.”). The Court thus declines to remand this 15 || matter based on the amount in controversy requirement. 16 CONCLUSION 17 IT IS THEREFORE ORDERED that Plaintiffs’ Motion to Extend Time to Amend 18 || Pleadings, Motion to Amend the Complaint, and Motion to Remand, (Doc. 24), is DENIED. 20 Dated this 24th day of August, 2021. 21 Wi 22 A Whacrsay Sooo) 73 Chief United states District Judge 24 25 26 27 28
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