Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_09-cv-00980/USCOURTS-azd-2_09-cv-00980-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Breach of Contract

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Londen Land Company, LLC, an Arizona

limited liability company, 

Plaintiff, 

vs.

Title Resources Guaranty Company, a

Texas corporation, et al., 

Defendants.

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CIV-09-980-PHX-MHB

ORDER

Pending before the Court is Plaintiff Londen Land Company, LLC’s (“Londen”)

Motion for Leave to Amend Complaint (Doc. #23). After considering the arguments raised

by the parties in their briefing, the Court now issues the following ruling.

BACKGROUND

On September 23, 2002, Londen purchased approximately 142.23 acres of

unimproved real property located Northwest of the Northwest Corner of Highway 79 and the

Hunt Highway in Florence, Arizona (the “Property”). On September 26, 2002, Londen

obtained a Policy of Title Insurance from Defendant Title Resources Guaranty Company

(“TRGC”), insuring title to the Property (the “Policy”).

On November 9, 2005, Londen transferred the Property to Florence Ventures, LLC

(“Florence Ventures”) for nominal consideration pursuant to a Special Warranty Deed.

Londen asserts that the Special Warranty Deed requires it to “warrant and forever defend the

Case 2:09-cv-00980-MHB Document 38 Filed 01/07/10 Page 1 of 4
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right and title” to the Property. Florence Ventures is a limited liability company wholly

owned and controlled by Londen, which is the only Member thereof.

In August 2007, Londen contends that it learned of the existence of a restrictive

easement, recorded in favor of Salt River Project, which encumbered approximately 2.64

acres of the Property (the “SRP Easement”). The Policy apparently did not identify the

existence of, or except from coverage, the SRP Easement. The SRP Easement restricts the

height of buildings within thirty feet of the SRP Easement and requires that SRP be granted

the right of ingress and egress to maintain SRP transmission lines.

On September 6, 2007, Londen provided a written claim on the Policy to TRGC, as

a result of an alleged negative impact of the SRP Easement on the Property. By letter dated

September 25, 2007, TRGC responded to the claim from Londen, and acknowledged that the

easement was missed and not excepted to in the Policy.

Thereafter, TRGC retained an appraiser to conduct an appraisal on the Property to

determine its diminution in value and the insured’s actual loss. By letter dated December 4,

2007, TRGC informed Londen that its appraiser had determined the diminution of value to

the Property as a result of TRGC missing the SRP Easement on the Policy as of September

6, 2007 was $13,590.00.

Londen, subsequently, hired its own independent appraiser to determine the amount

of the diminution of value of the Property as of September 6, 2007. The Londen appraiser

determined that the diminution of value to the Property was $258,000.00.

DISCUSSION

In its Motion, Londen is seeking leave to amend the Complaint to eliminate any

questions of standing that may exist since TRGC has alleged, both in its pleadings and orally

to the Court, that it believes the original Complaint is defective and that Londen lacks

standing to raise the alleged cause of action.

In response, TRGC argues that the proposed First Amended Complaint does not add

any new counts or claims. Rather, TRGC states that the proposed pleading simply

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embellishes on the facts relied upon by Londen. TRGC also contends that the proposed First

Amended Complaint does not change anything with respect to the standing issue or cure the

defects in Londen’s case.

Londen, however, asserts in its Reply that not only does the proposed amended

pleading clarify certain factual allegations, but it also pleads a new legal theory in the

alternative of the previous legal theory. Further, contrary to the statement made by TRGC

that the “the Proposed First Amended Complaint does not change anything with respect to

the standing issue,” Londen alleges that the proposed amended pleading directly addresses,

and changes the standing issue.

Federal Rule of Civil Procedure 15(a) declares that “[t]he court should freely give

leave [to amend] when justice so requires.” The Ninth Circuit has noted that “Rule 15’s

policy of favoring amendments should be applied with extreme liberality.” Eldridge v.

Block, 832 F.2d 1132, 1135 (9th Cir. 1987) (citation omitted). A court may deny a motion

to amend, however, if there is a showing of undue delay or bad faith on the part of the

moving party, undue prejudice to the opposing party, or futility of the proposed amendments.

See Foman v. Davis, 371 U.S. 178, 182 (1962). The party opposing amendment bears the

burden of showing prejudice, futility, or one of the other recognized reasons for denying a

motion to amend. See DCD Programs, LTD. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987).

TRGC appears to be asserting a futility argument and states “[w]e now live in a notice

pleading world,” such amendment is not necessary. The Court finds this reasoning

unpersuasive. In the original Complaint filed by Londen, Londen alleged its right to bring

the action on the basis that it has retained “an interest or estate” in the subject property by

virtue of it being the sole owner of Florence Ventures – the entity that holds legal title to the

property. TRGC raised as an affirmative defense that the relationship between Londen and

Florence Ventures is not sufficient to give Londen standing to bring this action as the holder

of “an interest or estate” in the insured property. As stated in its pleadings, Londen filed its

request for leave to amend, in order to add, as an alternative theory, its entitlement to bring

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this action on the basis that Londen has “liability by reason of covenants of warranty” made

by Londen in the transfer of the property to an entity wholly owned and controlled by

Londen. Londen alleges that this theory directly addresses, and eliminates, any issue relating

to standing. Moreover, TRGC does not allege and the Court does not find any undue delay,

bad faith, or prejudice. Accordingly, the Court will grant Londen’s request for leave to

amend complaint.

IT IS ORDERED that Londen’s Motion for Leave to Amend Complaint (Doc. #23)

is GRANTED. The Clerk of the Court shall file the lodged proposed First Amended

Complaint;

IT IS FURTHER ORDERED that TRGC’s Motion for Summary Judgment (Doc.

#21), which addresses the original Complaint, is DENIED as moot, without prejudice and

with leave to refile all or part of said motion;

IT IS FURTHER ORDERED that TRGC shall respond to the First Amended

Complaint within 20 days from the date this Order is filed.

DATED this 6th day of January, 2010.

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