Preferra Insurance Company Risk Retention Group v. National Association of Social Workers, Inc.

• Court: District Court, District of Columbia
• Decided: March 25, 2025
• Docket: Civil Action No. 2024-2689
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

PREFERRA INSURANCE COMPANY RISK RETENTION GROUP,

Plaintiff, Civil Action No. 24 - 2689 (SLS) Judge Sparkle L. Sooknanan v.

NATIONAL ASSOCIATION OF SOCIAL WORKERS, INC., et al.,

Defendants.

MEMORANDUM OPINION

The Plaintiff, Preferra Insurance Company Risk Retention Group (Preferra), sued the

National Association of Social Workers, Inc. (NASW), the National Association of Social Workers

Assurance Services, Inc. (ASI), and the National Association of Social Workers Insurance

Company, Inc. (NASWIC), alleging breach of contract, breach of the covenant of good faith and

fair dealing, tortious interference with business relations, and unfair competition and false

advertising under the Lanham Act. The Defendants moved to dismiss the Complaint under Federal

Rule of Civil Procedure 12(b)(6), and Preferra filed a Motion to Amend its Complaint. For the

reasons explained below, the Court grants Preferra’s motion.

FACTUAL BACKGROUND

Preferra is a “risk retention group” formed “for the purposes of providing insurance

coverage to social workers and other professionals.” Compl. ¶ 1, ECF No. 1. It provides insurance

coverage to policyholders, which entails “underwriting, collect[ing] premiums, and cover[ing]

claims made by [the] insured.” Id. ¶ 11. The Defendants include a professional organization that

represents social workers, an organization that manages insurance programs, and a reinsurance company. Id. ¶¶ 2, 9, 10. They are all affiliated, and Preferra alleges that it has a “long and closely

related history” with them “as part of a program to provide insurance to social workers across the

United States.” Id. ¶ 7. According to Preferra, while each entity maintains a separate board of

directors, there has “historically been some overlap” with “certain individuals sitting on the boards

of more than one entity.” Id. ¶ 14. At one point Anthony Benedetto served as CEO of Preferra,

ASI, and NASWIC, and as a director of all three companies. Id. ¶¶ 27, 29.

Preferra alleges that its business relationship with the Defendants took a turn in January

2023 when NASW hired a new CEO, who was then named to Preferra’s Board of Directors. Id.

¶ 32, 38. Preferra “learned that [the new CEO] ha[d] a criminal conviction for burglary as well as

licensing issues,” and so it removed him from its Board, deepening an “adversarial” relationship

between the parties. Id. ¶¶ 39–40. NASW then replaced most of ASI’s “very experienced” Board

members, including Mr. Benedetto. Id. ¶ 41–43. The new ASI Board then terminated nearly all of

the NASWIC Board of Directors, including Mr. Benedetto. Id. ¶ 45.

On January 5, 2024, Preferra “terminated its agreements” with ASI and NASWIC

“pursuant to options under the contracts.” Id. ¶ 47. Mr. Benedetto then resigned from ASI and

NASWIC, id. ¶ 48, and remains employed by Preferra, which alleges that ASI and NASWIC have

“refused to honor their respective obligations to pay severance” to Preferra “for their respective

share of Mr. Benedetto’s base salary,” id. ¶ 51.

PROCEDURAL BACKGROUND

Preferra filed its Complaint on September 20, 2024, alleging breach of contract, breach of

the covenant of good faith and fair dealing, tortious interference with business relations, and unfair

competition and false advertising under the Lanham Act. Compl. On December 17, 2024, the

Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6) and simultaneously

2 answered the Complaint, raising various affirmative defenses and a counterclaim against

Mr. Benedetto as a third party. Defs.’ Mot. Dismiss, ECF No. 13; Answer, ECF No. 14. On January

14, 2025, Preferra opposed dismissal, Pl.’s Opp’n, ECF No. 22, and filed a Motion to Amend its

Complaint under Local Rule 15.1 to “address [the] Defendants’ arguments in the event that the

Court is inclined to grant the motion to dismiss,” id. at 1 n.1; see also Mot. Amend, ECF No. 23.

On January 28, 2025, the Defendants opposed Preferra’s Motion to Amend, arguing that Preferra’s

proposed changes would not “cure the defects” in the Complaint. Defs.’ Reply at 2, ECF No. 25.

Preferra’s motion is fully briefed.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 15(a)(1), “[a] party may amend its pleading once

as a matter of course [within] . . . 21 days after service of a motion under Rule 12(b).” Fed. R. Civ.

P. 15(a)(1). Outside of that time, Rule 15(a)(2) allows a party to amend its pleading “only with the

opposing party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). “In the absence of

any apparent or declared reason” like “undue delay, bad faith or dilatory motive on the part of the

movant,” “leave [to amend] . . . should . . . be ‘freely given.’” Foman v. Davis, 371 U.S. 178, 182

(1962). A court may deny leave to amend if it would lead to “undue prejudice to the opposing

party,” or if it “would not survive a motion to dismiss.” Richardson v. United States, 193 F.3d 545,

548–49 (D.C. Cir. 1999) (citing Foman, 371 U.S. at 182); Henok v. Kessler, 78 F. Supp. 3d 452,

458 (D.D.C. 2015). But it is “an abuse of discretion to deny leave to amend unless there is sufficient

reason, such as ‘undue delay, bad faith or dilatory motive repeated failure to cure deficiencies by

previous amendments or futility of amendment.’” Joel v. Howard Univ., No. 24-cv-1655, 2025

WL 358769, at *1 (D.D.C. Jan. 31, 2025) (quoting Foman, 371 U.S. at 182) (cleaned up).

3 DISCUSSION

The Defendants moved to dismiss the Complaint on December 17, 2024, and Preferra

sought to amend on January 14, 2025, which exceeds the 21-day window provided in Rule 15(a)(1)

by seven days. Rule 15(a)(2) thus applies, and the Defendants oppose amendment.

It is “common ground” in this Circuit “that Rule 15 embodies a generally favorable policy

toward amendments,” Davis v. Liberty Mut. Ins., 871 F.2d 1134, 1136–37 (D.C. Cir. 1989)

(internal citations omitted), and the Court considers Preferra’s requested amendment through that

lens. Preferra argues that there is “no undue delay, bad faith, or undue prejudice to [the]

Defendants.” Mot. Amend at 2. It adds that the proposed amendment “does not add any additional

claims,” and merely responds to the Defendants’ allegations that “certain elements [in the

Complaint] were not pled with sufficient detail.” Id. The Defendants counter that the proposed

Amended Complaint simply “offer[s] more conclusory language and speculation” and cannot

survive a motion to dismiss because it is “based on . . . legal conclusions disguised as factual

allegations.” Defs.’ Reply at 5, 6.

The Court is not persuaded by the Defendants’ arguments. Courts must “freely” give leave

to amend unless the non-moving party establishes “undue delay, bad faith, dilatory

motive, . . . repeated failure to cure deficiencies . . . , undue prejudice . . . , [or] futility of the

amendment.” Foman, 371 U.S. at 182. The Defendants allege only that the proposed amendment

would be futile. See Defs.’ Reply at 7. But Preferra’s proposed amendments are responsive to the

Defendants’ arguments in support of dismissal. The Amended Complaint contains nine proposed

additions, which Preferra claims will shed additional light on existing factual contentions. See Mot.

Amend. Given that “the underlying facts or circumstances relied upon by [Preferra] may be a

proper subject of relief, [it] ought to be afforded an opportunity to test [its] claim[s] on the merits.”

4 Foman, 371 U.S. at 182; see, e.g., Pietch v. McKissack & McKissack, 677 F. Supp. 2d 325, 329–30

(D.D.C. 2010) (granting the plaintiff’s motion to amend the complaint and denying the defendant’s

motion to dismiss). The Defendants are of course free to challenge the sufficiency of the

amendments under Rule 12(b)(6) when they respond to the Amended Complaint.

CONCLUSION

For these reasons, the Court grants the Plaintiff’s Motion to Amend, ECF No. 23, and

orders the Plaintiff to file its Amended Complaint within seven days.

A separate order will issue.

SPARKLE L. SOOKNANAN United States District Judge

Date: March 25, 2025