HONORABLE RICHARD A. JONES 1
WESTERN DISTRICT OF WASHINGTON
10 WASHINGTON CITIES INSURANCE No. 2:19-cv-00054-RAJ 11 AUTHORITY, Plaintiff, 13 v.
15 Defendant. 16
17 I. INTRODUCTION 18 This matter comes before the Court on Plaintiff’s Motion for Leave to File First 19 Amended Complaint. Dkt. # 37. Defendant opposes this motion. Dkt. # 39. For the 20 reasons below, Plaintiff’s motion is GRANTED. 21 II. BACKGROUND 22 Plaintiff Washington Cities Insurance Authority (“WCIA” or “Plaintiff”) filed suit 23 against its reinsurer, Defendant Ironshore Indemnity, Inc. (“Defendant”), on January 11, 24 2019. Dkt. # 1. The claim at issue arises from Defendant’s denial of coverage for a 2018 25 settlement related to a separate police misconduct lawsuit, which Plaintiff alleges falls 26 within Defendant’s reinsurance policy. Dkt. # 37 at 1-2. In its Complaint, Plaintiff 27 1 asserted a breach of contract claim, requested equitable estoppel to prevent Defendant 2 from asserting policy defenses to coverage, and sought declaratory relief confirming that 3 the arbitration provision, as well as the choice of law and venue provisions in its 4 insurance contract with Defendant were void. Dkt. # 1 at 9-10. 5 Plaintiff filed a motion for summary judgment regarding arbitrability and choice 6 of law on May 23, 2019. Dkt. # 17. That same day, Defendant filed a motion to compel 7 arbitration. On March 6, 2020, the Court denied Defendant’s motion to compel 8 arbitration and granted Plaintiff’s motion, which held, among other things, that 9 Washington law applied to Plaintiff’s claims, as opposed to New York law, as alleged by 10 Defendant. Dkt. # 32 at 7. On March 25, 2020, the Court issued an order resetting trial 11 date and related dates, including the deadline to file amended pleadings. Dkt. # 36. The 12 new deadline to file amended pleadings was set for May 23, 2020. Id. at 1. 13 On May 18, 2020, the parties engaged in a telephone conference in which Plaintiff 14 sought a stipulation for an order to amend its complaint. Dkt. # 37 at 2. Specifically, 15 Plaintiff sought to remove its request for declaratory relief, which the Court had granted, 16 and to include two additional claims: (1) bad faith claims handling and (2) violations of 17 the Washington Insurance Fair Conduct Act (“IFCA”), RCW 48.30.015. Id. at 4. 18 Plaintiff had notified Defendant of its IFCA claim on May 6, 2020. Id. at 5. The parties 19 could not reach an agreement, and, on May 21, Plaintiff filed this motion to amend its 20 complaint. Dkt. # 37. 22 If the time for amendment as a matter of right has passed, a party may amend its 23 pleading with the opposing party’s written consent or the court’s leave. Fed. R. Civ. P. 24 15(a)(2). “The court should freely give leave when justice so requires.” Id. Under Rule 25 15, the policy favoring amendments should be applied liberally. Johnson v. Mammoth 26 Recreations, Inc., 975 F.2d 604, 607 (9th Cir. 1992). “[L]eave to amend should be 27 granted unless amendment would cause prejudice to the opposing party, is sought in bad 1 faith, is futile, or creates undue delay.” Id. Between these factors, “the consideration of 2 prejudice to the opposing party [] carries the greatest weight.” Eminence Capital, LLC v. 3 Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). In the absence of prejudice or a 4 strong showing of the other factors, “there exists a presumption under Rule 15(a) in favor 5 of granting leave to amend.” Id. “Undue delay by itself [] is insufficient to justify 6 denying a motion to amend.” Bowles v. Reade, 198 F.3d 752, 758 (9th Cir. 1999). 7 Once the district court has set a schedule, however, it may be modified only for 8 good cause and with the judge’s consent. Fed. R. Civ. P. 16(b)(4). The “good cause” 9 standard under Rule 16 focuses primarily on the diligence of the party seeking the 10 amendment. See Johnson, 975 F.2d at 608. A court may find good cause if the pretrial 11 deadline “cannot reasonably be met despite the diligence of the party seeking the 12 extension.” Fed. R. Civ. P. 16 advisory committee’s notes (1983 amendment). If a party 13 seeks to amend a pleading after the deadline for amending pleadings in the scheduling 14 order has passed, the party must first show good cause under Rule 16, and if successful, it 15 must then demonstrate that amendment is proper under rule 15. Id. 17 Defendant argues that Plaintiff’s motion for leave to amend its complaint by 18 adding a bad faith claim and an IFCA claim cannot succeed without a showing of good 19 cause pursuant to Rule 16. Dkt. # 39 at 10. The Court will consider each additional 20 claim in turn. 21 A. Common Law Bad Faith Claim 22 Plaintiff filed the instant motion for leave to amend its complaint on May 21, 23 2020, two days prior to the deadline for amending pleadings. Dkt. # 37. Plaintiff did not 24 move the Court to modify the case schedule. Defendant does not argue that Plaintiff 25 violated the case schedule by adding the bad faith claim. Therefore, Plaintiff’s motion 26 for leave to amend its complaint to add a bad faith claim is considered under Rule 15. 27 1 Defendant argues that Plaintiff’s motion is a result of undue delay, which, alone, 2 provides a valid reason for denying leave to amend. The Court disagrees. See Bowles v. 3 Reade, 198 F.3d 752, 758 (9th Cir. 1999) (“Undue delay by itself [] is insufficient to 4 justify denying a motion to amend.”). Indeed, in Texaco, Inc. v. Ponsoldt, 939 F.2d 794, 5 799 (9th Cir.1991)—the case cited by Defendant in support of this proposition—the 6 Ninth Circuit concluded that plaintiff’s undue delay to amend until after discovery was 7 over and just four and a half months before the trial date would have unreasonably 8 prejudiced the defendant. Here, following the Court’s modification of its case schedule, 9 the deadline for the completion of discovery is more than ten months away. The Court 10 finds, therefore, that Defendant will not be prejudiced by the amendment. Further, 11 Defendant does not allege, and the Court does not find any evidence, that Plaintiff’s 12 amendment is sought in bad faith or that the amendment is futile. In the absence of these 13 factors, the Court concludes that Plaintiff’s motion for leave to amend its complaint 14 should be granted in line with the presumption under Rule 15(a) in favor of granting 15 leave to amend. See Eminence Capital, 316 F.3d at 1052. 16 B. Washington Insurance Fair Conduct Act Claim 17 IFCA permits a party that is unreasonably denied a claim for coverage by an 18 insurer to bring a claim to recover the actual damages sustained. See RCW 48.30.015. A 19 party filing an IFCA claim must provide written notice of the basis for the cause of action 20 to the insurer twenty days prior to filing the action. RCW 48.30.015(8)(a).
Free access — add to your briefcase to read the full text and ask questions with AI
HONORABLE RICHARD A. JONES 1
WESTERN DISTRICT OF WASHINGTON
10 WASHINGTON CITIES INSURANCE No. 2:19-cv-00054-RAJ 11 AUTHORITY, Plaintiff, 13 v.
15 Defendant. 16
17 I. INTRODUCTION 18 This matter comes before the Court on Plaintiff’s Motion for Leave to File First 19 Amended Complaint. Dkt. # 37. Defendant opposes this motion. Dkt. # 39. For the 20 reasons below, Plaintiff’s motion is GRANTED. 21 II. BACKGROUND 22 Plaintiff Washington Cities Insurance Authority (“WCIA” or “Plaintiff”) filed suit 23 against its reinsurer, Defendant Ironshore Indemnity, Inc. (“Defendant”), on January 11, 24 2019. Dkt. # 1. The claim at issue arises from Defendant’s denial of coverage for a 2018 25 settlement related to a separate police misconduct lawsuit, which Plaintiff alleges falls 26 within Defendant’s reinsurance policy. Dkt. # 37 at 1-2. In its Complaint, Plaintiff 27 1 asserted a breach of contract claim, requested equitable estoppel to prevent Defendant 2 from asserting policy defenses to coverage, and sought declaratory relief confirming that 3 the arbitration provision, as well as the choice of law and venue provisions in its 4 insurance contract with Defendant were void. Dkt. # 1 at 9-10. 5 Plaintiff filed a motion for summary judgment regarding arbitrability and choice 6 of law on May 23, 2019. Dkt. # 17. That same day, Defendant filed a motion to compel 7 arbitration. On March 6, 2020, the Court denied Defendant’s motion to compel 8 arbitration and granted Plaintiff’s motion, which held, among other things, that 9 Washington law applied to Plaintiff’s claims, as opposed to New York law, as alleged by 10 Defendant. Dkt. # 32 at 7. On March 25, 2020, the Court issued an order resetting trial 11 date and related dates, including the deadline to file amended pleadings. Dkt. # 36. The 12 new deadline to file amended pleadings was set for May 23, 2020. Id. at 1. 13 On May 18, 2020, the parties engaged in a telephone conference in which Plaintiff 14 sought a stipulation for an order to amend its complaint. Dkt. # 37 at 2. Specifically, 15 Plaintiff sought to remove its request for declaratory relief, which the Court had granted, 16 and to include two additional claims: (1) bad faith claims handling and (2) violations of 17 the Washington Insurance Fair Conduct Act (“IFCA”), RCW 48.30.015. Id. at 4. 18 Plaintiff had notified Defendant of its IFCA claim on May 6, 2020. Id. at 5. The parties 19 could not reach an agreement, and, on May 21, Plaintiff filed this motion to amend its 20 complaint. Dkt. # 37. 22 If the time for amendment as a matter of right has passed, a party may amend its 23 pleading with the opposing party’s written consent or the court’s leave. Fed. R. Civ. P. 24 15(a)(2). “The court should freely give leave when justice so requires.” Id. Under Rule 25 15, the policy favoring amendments should be applied liberally. Johnson v. Mammoth 26 Recreations, Inc., 975 F.2d 604, 607 (9th Cir. 1992). “[L]eave to amend should be 27 granted unless amendment would cause prejudice to the opposing party, is sought in bad 1 faith, is futile, or creates undue delay.” Id. Between these factors, “the consideration of 2 prejudice to the opposing party [] carries the greatest weight.” Eminence Capital, LLC v. 3 Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). In the absence of prejudice or a 4 strong showing of the other factors, “there exists a presumption under Rule 15(a) in favor 5 of granting leave to amend.” Id. “Undue delay by itself [] is insufficient to justify 6 denying a motion to amend.” Bowles v. Reade, 198 F.3d 752, 758 (9th Cir. 1999). 7 Once the district court has set a schedule, however, it may be modified only for 8 good cause and with the judge’s consent. Fed. R. Civ. P. 16(b)(4). The “good cause” 9 standard under Rule 16 focuses primarily on the diligence of the party seeking the 10 amendment. See Johnson, 975 F.2d at 608. A court may find good cause if the pretrial 11 deadline “cannot reasonably be met despite the diligence of the party seeking the 12 extension.” Fed. R. Civ. P. 16 advisory committee’s notes (1983 amendment). If a party 13 seeks to amend a pleading after the deadline for amending pleadings in the scheduling 14 order has passed, the party must first show good cause under Rule 16, and if successful, it 15 must then demonstrate that amendment is proper under rule 15. Id. 17 Defendant argues that Plaintiff’s motion for leave to amend its complaint by 18 adding a bad faith claim and an IFCA claim cannot succeed without a showing of good 19 cause pursuant to Rule 16. Dkt. # 39 at 10. The Court will consider each additional 20 claim in turn. 21 A. Common Law Bad Faith Claim 22 Plaintiff filed the instant motion for leave to amend its complaint on May 21, 23 2020, two days prior to the deadline for amending pleadings. Dkt. # 37. Plaintiff did not 24 move the Court to modify the case schedule. Defendant does not argue that Plaintiff 25 violated the case schedule by adding the bad faith claim. Therefore, Plaintiff’s motion 26 for leave to amend its complaint to add a bad faith claim is considered under Rule 15. 27 1 Defendant argues that Plaintiff’s motion is a result of undue delay, which, alone, 2 provides a valid reason for denying leave to amend. The Court disagrees. See Bowles v. 3 Reade, 198 F.3d 752, 758 (9th Cir. 1999) (“Undue delay by itself [] is insufficient to 4 justify denying a motion to amend.”). Indeed, in Texaco, Inc. v. Ponsoldt, 939 F.2d 794, 5 799 (9th Cir.1991)—the case cited by Defendant in support of this proposition—the 6 Ninth Circuit concluded that plaintiff’s undue delay to amend until after discovery was 7 over and just four and a half months before the trial date would have unreasonably 8 prejudiced the defendant. Here, following the Court’s modification of its case schedule, 9 the deadline for the completion of discovery is more than ten months away. The Court 10 finds, therefore, that Defendant will not be prejudiced by the amendment. Further, 11 Defendant does not allege, and the Court does not find any evidence, that Plaintiff’s 12 amendment is sought in bad faith or that the amendment is futile. In the absence of these 13 factors, the Court concludes that Plaintiff’s motion for leave to amend its complaint 14 should be granted in line with the presumption under Rule 15(a) in favor of granting 15 leave to amend. See Eminence Capital, 316 F.3d at 1052. 16 B. Washington Insurance Fair Conduct Act Claim 17 IFCA permits a party that is unreasonably denied a claim for coverage by an 18 insurer to bring a claim to recover the actual damages sustained. See RCW 48.30.015. A 19 party filing an IFCA claim must provide written notice of the basis for the cause of action 20 to the insurer twenty days prior to filing the action. RCW 48.30.015(8)(a). IFCA’s pre- 21 suit notice provision has been construed by courts as a mandatory condition precedent to 22 an IFCA lawsuit. MKB Constructors v. Am. Zurich Ins. Co., 49 F. Supp. 3d 814, 840 23 (W.D. Wash. 2014). 24 Defendant here asserts that Plaintiff failed to provide the requisite 20-day notice 25 prior to moving to add its IFCA claim. Dkt. # 39 at 5. It is undisputed that Plaintiff 26 mailed Defendant notice of its IFCA claim on May 6, 2020. Id.; Dkt. # 37 at 5. 27 Defendant claims that, including the three days which the statute allows for mailing, 1 Plaintiff could not validly amend its Complaint to include the IFCA claim until June 2, 2 2020. Id. Because this date fell after the May 23, 2020 deadline for amended pleadings, 3 Defendant argues, Plaintiff violated the case schedule and must establish good cause to 4 amend its complaint. The Court disagrees. 5 Plaintiff did not file an IFCA claim on May 21, 2020. On that day, Plaintiff 6 moved the Court for permission to file an IFCA claim, but no additional claim had been 7 filed. Indeed, the Court could not have considered the Plaintiff’s motion to amend until 8 June 12, 2020 at the earliest pursuant to LCR 7(d), which would have given Defendant 9 more than 20 days’ notice. The Court therefore finds that Plaintiff provided Defendant 10 with the required 20-day pre-suit notice pursuant to RCW 48.30.015(8)(a) and concludes 11 that Plaintiff’s motion for leave to amend was timely filed. All other factors related to 12 the IFCA claim being the same as the factors related to Plaintiff’s bad faith claim, 13 discussed above, the Court GRANTS Plaintiff’s motion for leave to amend its complaint. 15 For the foregoing reasons, Plaintiff’s Motion for Leave to File Amended 16 Complaint is GRANTED. Dkt. # 37. 17 DATED this 12th day of November, 2020. 18 A 19
20 The Honorable Richard A. Jones 21 United States District Judge 22
23 24 25 26 27