Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_09-cv-00695/USCOURTS-azd-4_09-cv-00695-0/pdf.json

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

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Safety Dynamics, Inc., a Delaware 

Corporation, 

Plaintiff, 

v. 

General Star Indemnity Company, a 

Connecticut Corporation, 

Defendant.

No. CV-09-00695-TUC-CKJ

ORDER 

 Pending before the Court is Plaintiff’s Motion for Leave to File its Supplemental 

and Third Amended Complaint under Rule 15(a) and/or 15(d) of the Federal Rules of 

Civil Procedure. (Doc. 133). Defendant filed a Response on January 31, 2013. (Doc. 

137). In addition to opposing Plaintiff’s Motion, Defendant also moved to strike 

Plaintiff’s request for a jury trial. Plaintiff filed its Reply brief in support of its motion on 

February 8, 2013 and a Response to Defendant’s Motion to Strike Plaintiff’s Request for 

a Jury Trial on February 19, 2013. (Doc. 139). Defendant filed its Reply brief on 

February 19, 2013. (Doc. 142). 

Background 

 Defendant issued a series of policies of General Liability Insurance to Plaintiff, 

which manufactures, installs, and services gunshot detection and location systems. 

ShotSpotter, Inc. (“ShotSpotter”) is a competitor of Plaintiff. On or about September 11, 

2009, ShotSpotter and The Johns Hopkins University filed a lawsuit against Plaintiff in 

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the United States District Court for the Southern District of New York, (the “Underlying 

Litigation”). 

 On or about September 16, 2009, Plaintiff tendered the Underlying Litigation to 

Defendant. On September 28, 2009, Defendant sent Plaintiff a letter denying coverage 

for the Underlying Litigation. On or about November 12, 2009, Plaintiff filed a 

declaratory judgment action against Defendant in the Superior Court of Arizona seeking a 

declaration that there is coverage under the insurance policy for the Underlying 

Litigation. The matter was removed to this Court on December 11, 2009. 

 Plaintiff subsequently identified two additional insurance policies covering the one 

year periods beginning on January 3, 2007 and January 3, 2008. Plaintiff filed a First 

Amended Complaint on March 16, 2010 to include allegations based on the additional 

policies of insurance. On March 31, 2010, a Second Amended Complaint (“SAC”) was 

filed in this case, which alleged that Defendant breached its covenant of good faith and 

fair dealing to Plaintiff with respect to the Underlying Litigation under each of the three 

insurance policies, when it declined to accept or reasonably investigate the tenders of 

defense related to the Underlying Litigation. 

 On June 2, 2010, Safety Dynamics filed a Motion for Partial Summary Judgment. 

(Doc. 20). Defendant then filed a Motion for Summary Judgment on July 19, 2010. 

(Doc. 38). On March 4, 2011, this Court granted Defendant’s Motion for Summary 

Judgment and entered judgment in favor of Defendant against Plaintiff. The matter was 

appealed to the Ninth Circuit Court of Appeals. On October 26, 2012, the Ninth Circuit 

issued its Mandate reversing this Court’s decision. (Doc. 126). 

 

Motion to File Supplemental Pleading 

 “Upon motion of a party the court may, upon reasonable notice and upon such 

terms as are just, permit him to serve a supplemental pleading setting forth transactions or 

occurrences or events which have happened since the date of the pleading sought to be 

supplemented. A supplemental pleading may be used to allege relevant facts that occur 

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after the original pleading is filed.” Fed.R.Civ.P. 15(d); Keith v. Volpe, 858 F.2d 467, 468 

(9th Cir. 1988). 

 A supplemental pleading is a tool of “judicial economy and convenience,” as such 

supplemental pleadings are favored. Keith v. Volpe, 858 F.2d 467, 473 (9th Cir.1988). 

“[T]he fact that the supplemental pleading technically states a new cause of action should 

not be a bar to its allowance, but only a factor to be considered by the court in the 

exercise of its discretion, along with such factors as possible prejudice or laches.” Volpe, 

858 F.2d at 474. The purpose of a supplemental complaint is to “promote as complete an 

adjudication of the dispute between the parties as possible by allowing the addition of 

claims which arise after the initial pleadings are filed.” William Inglis & Sons Baking 

Co. v. ITT Continental Baking Co., Inc., 668 F.2d 1014, 1057 (9th Cir. 1981). 

 “While some relationship must exist between the newly alleged matters and the 

subject of the original action, they need not all arise out of the same transaction.” Volpe, 

858 F.2d at 474. In addition to satisfying the minimal requirement of “some 

relationship,” a supplemental pleading will not be allowed if doing so would be unjust to 

defendants. In this regard, the standard is the same as the one under Rule 15(a). See Glatt 

v. Chicago Park Dist., 87 F.3d 190, 194 (7th Cir. 1996). 

 In determining whether an amended pleading should be permitted, “[f]ive factors 

are frequently used to assess the propriety of a motion for leave to amend: (1) bad faith, 

(2) undue delay, (3) prejudice to the opposing party, (4) futility of amendment; and (5) 

whether Plaintiff had previously amended his complaint.” Allen v. City of Beverly Hills, 

911 F.2d 367, 373 (9th Cir. 1990). The party opposing amendment bears the burden of 

showing that these factors are present. DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 

187 (9th Cir. 1987). Prejudice to the opposing party is the most important of these 

factors. See Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th 

Cir.2003) (per curiam). 

 Plaintiff filed its Second Amended Complaint on March 31, 2010. In its Motion, 

Plaintiff seeks to supplement the Complaint with allegations that occurred after March 

31, 2010. Specifically, Plaintiff alleges that; (1) Defendant breached the covenant of 

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good faith and fair dealing when it decided not to renew Plaintiff’s 2009 insurance 

policy; (2) Defendant acted in bad faith by refusing to accept tenders of coverage and 

failing to reasonably investigate claims submitted by Plaintiff to Defendant after the 

filing of Plaintiff’s Second Amended Complaint; and (3) Defendant acted in bad faith by 

failing to disclose a 2006 policy of insurance, which did not come to Plaintiff’s attention 

until after the filing of its Second Amended Complaint. Additionally, Plaintiff’s 

proposed Supplemental and Third Amended Complaint contains additional and new 

alleged facts to support Plaintiff’s allegations. 

 Defendant contends that Plaintiff is seeking to amend the Complaint and 

Plaintiff’s request should be denied because Plaintiff has not made the requisite showing 

of good cause. See Fed.R.Civ.P. 16(b)(4). However, since the new allegations raised in 

Plaintiff’s proposed Supplemental and Third Amended Complaint reflect events that 

occurred subsequent to the filing of Plaintiff’s Second Amended Complaint, it is 

appropriately coined a supplemental and not an amended pleading. See 6A Charles A. 

Wright, Arthur R. Miller and Mary Kay Kane, Federal Practice & Procedure § 1504, at 

183-84 (2d ed.1990). Regardless, the Court finds that good cause exists to permit an 

amendment. 

 “Unlike Rule 15(a)'s liberal amendment policy which focuses on the bad faith of 

the party seeking to interpose an amendment and the prejudice to the opposing 

party, Rule 16(b)'s ‘good cause’ standard primarily considers the diligence of the party 

seeking the amendment.” Johnson, 975 F.2d at 609; Noyes v. Kelly Svcs., 488 F.3d 1163, 

1174 n. 6 (9th Cir.2007). “The inquiry ends, however, if the party seeking the amendment 

has not shown diligence.” Id. Once good cause is shown for purposes of Rule 16(b), the 

moving party must also demonstrate that amendment would be proper under Rule 15. 

Johnson, 975 F.2d at 609. 

 All of the new allegations raised in Plaintiff’s proposed supplemental and third 

amended complaint relate to additional allegations of bad faith. Some of these new 

claims did not occur until November 2010. On October 28, 2010, this Court continued 

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the discovery deadlines relating to the bad faith claim and damages pending the decision 

on the motions for summary judgment. (Doc. 73). Subsequently, judgment was entered 

in favor of Defendants and Plaintiffs appealed. Despite this case being over three years 

old, the parties have just recently begun litigating the alleged bad faith claims and a 

significant portion of the parties’ time on this case was spent on appeal. As such, based 

upon the history of this litigation, the Court finds that Plaintiff has acted diligently in 

raising these new claims and has sufficiently established good cause to permit 

amendment. 

 The claims and factual assertions raised in Plaintiff’s proposed pleading, address 

instances of bad faith on the part of the Defendant. Discovery into these areas is in its 

initial stages.1

 Accordingly, this Court does not find any prejudice to the Defendant by 

permitting Plaintiff to incorporate these additional claims and factual assertions. 

 Defendant argues that Plaintiff’s allegation of bad faith regarding Defendant’s 

decision not to renew the policy is futile because an insurer may refuse to renew an 

insurance policy for any reason or no reason at all. The test for futility “is identical to the 

one used when considering the sufficiency of a pleading challenged under Rule 

12(b)(6).” Miller v. Rykoff–Sexton, Inc., 845 F.2d 209, 214 (9th Cir.1988) (citing Baker v. 

Pacific Far East Lines, Inc.,451 F.Supp. 84, 89 (N.D.Cal.1978)). In support of its 

position, Defendant cites to a thirty year old California state case. See Greene v. Safeco 

Ins. Co. of America, 140 Cal.App.3d 535, 538, 189 Cal.Rptr. 616, 618 (1983). However, 

Defendant has not identified any Arizona authority to support its position.2

 Accordingly, 

 

1

 In the Parties’ February 4, 2013 Joint Report submitted in accordance with this 

Court’s January 10, 2013 Order setting this matter for a Rule 16 Scheduling Conference, Defendant contended that it plans to conduct extensive discovery into the alleged damages and claims of insurance bad faith. Further Defendant acknowledged in the Joint 

Report that there had been almost no discovery into the alleged damages and claims of bad faith. (Doc. 138). 

2

 The Court in Greene analyzed California statutes in determining that in California, an insurer is not liable for not renewing a policy, regardless of the reasoning. Defendant has failed to establish that Arizona law similarly protects insurers. Furthermore, Plaintiff alleges bad faith due to Defendant’s alleged misleading statement in its denial of insurance renewal notification, while in Greene, the Plaintiff alleged bad 

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Defendant has failed to establish that Plaintiff’s claim regarding the non-renewal of 

Plaintiff’s insurance policy is futile. See DCD Programs, Ltd., 833 F.2d at 187. 

 The Court will grant Plaintiff’s Motion. Plaintiff is granted leave to file a Third 

Amended Complaint to include all of the allegations and claims identified in the Second 

Amended Complaint and Plaintiff’s proposed Supplemental and Third Amended 

Complaint, so that all the claims in this action may be presented in a single pleading. See 

Uribe v. Taylor, 2011 WL 1670233 (E.D. Cal. 2011). The Court will not grant any 

further motions to amend or supplement the pleadings absent sufficient good cause 

shown. 

Motion to Strike Request for Jury Trial 

 While the right to a trial by jury for civil suits is guaranteed by the Seventh 

Amendment, that right can be waived. Solis v. County of Los Angeles, 514 F.3d 946, 953 

(9th Cir. 2008). The right to a jury trial is waived if a demand for a jury trial is not 

properly served and filed, in accordance with the Federal Rules of Civil Procedure. 

Fed.R.Civ.P. 38(d). Pursuant to the federal rules, a party may demand a jury trial by 

serving the other party with a “written demand, which may be included in a pleading, no 

later than 14 days after the last pleading directed to the issue is served. Fed.R.Civ.P. 

38(b). 

 Since this case is a removed action, Plaintiff’s demand for a jury trial is governed 

by Federal Rule of Civil Procedure 81(c). Mondor v. United States District Court for the 

Central District of California, 910 F.2d 585, 586 (9th Cir. 1990). “A party who, before 

removal, expressly demanded a jury trial in accordance with state law need not renew the 

demand after removal.” Fed.R.Civ.P. 81(c)(3)(A).3

 Additionally, if a party files a 

 faith for not renewing her insurance policy. As such, Greene is distinguishable from this 

case. 

3

 Pursuant to Fed.R.Civ.P. 81(c)(3)(B), “if all the necessary pleadings have been served at the time of removal, a party entitled to a jury trial must be given one if the party serves a demand within 14 days after it is served with a notice of removal filed by another party.” Fed.R.Civ.P. 81(c)(3)(B)(ii). However, this section is not applicable in 

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demand for a jury trial in state court prior to the case’s removal to federal court, it is 

sufficient if it satisfies the federal but not the state’s requirements. Mondor, 910 F.2d at 

587. Plaintiff initially filed its Complaint in the Superior Court of Arizona. Pursuant to 

the Arizona Rules of Civil Procedure: 

Any person may demand a trial by jury of any issue of triable of right by 

jury. The demand may be made by any party serving upon the other party a 

demand therefor in writing at any time after the commencement of the 

action, but not later than the date of setting the case for trial or ten days 

after a motion to set the case for trial is served, whichever first occurs. The 

demand for trial by jury may be endorsed on or be combined with the 

motion to set [the case for trial], but shall not be endorsed on or be 

combined with any other motion or pleading filed with the court. 

 Ariz.R.Civ.P. 38(b). Prior to removal of this action, Plaintiff filed a Certificate 

of Compulsory Arbitration in the Superior Court of Arizona in accordance with Arizona 

Rule of Civil Procedure, 72(e)(1). Arizona law requires that a Certificate of Compulsory 

Arbitration be served simultaneously with a Complaint, which certifies whether the case 

is appropriate for compulsory arbitration in accordance with the local rule of the Superior 

Court. Ariz.R.Civ.P. 72(b). Plaintiff included on the face of this certificate a jury 

demand endorsement.4

 However, pursuant to Arizona law, a jury demand must be filed 

independent of another motion or pleading. Ariz.R.Civ.P. 38(b). The sole exception is 

that it may be endorsed or combined with a motion to set the case for trial. Id. Plaintiff 

contends that a Certificate of Compulsory Arbitration is neither a pleading nor a motion 

and thus was technically in compliance with Rule 38(b). 

 The Certificate of Compulsory Arbitration is not a pleading pursuant to Arizona 

law. See Ariz.R.Civ.P. 7(a). Additionally, it does not appear that it is a motion as it does 

 this case as Plaintiff was served with notice of Defendant’s notice of removal on 

December 11, 2009. However, Plaintiff did not file a request for a jury trial in federal court within 14 days after receiving notice of the removal. 

4

 The Certificate of Compulsory Arbitration was not filed with this Court at the 

time of removal, however, Plaintiff has included a copy of the Certificate with its 

Response. The Certificate is stamped by the Clerk of the Superior Court indicating that it was filed with that Court on November 12, 2009. Beside the caption on this Certificate, it states “Jury Demand Endorsed Hereon.” 

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not request the court make any specified finding and only certifies a fact. See Black’s 

Law Dictionary, 1106 (9th ed. 2009). However, Rule 38(b) was drafted to prevent 

confusion by requiring a separate filing for a jury request or including it in the motion 

setting the case for trial. See Ariz.R.Civ.P. 38(b), cmt (1961). As such, to permit a jury 

endorsement to be included on a Certificate of Compulsory Arbitration does not appear to 

be in compliance with the purpose of the rule. However, regardless of whether Plaintiff’s 

Certificate of Compulsory Arbitration and jury endorsement sufficiently met the Arizona 

or federal requirements, the Court finds that Plaintiff subsequently waived any request he 

may have made for a jury trial. 

 After the case was removed to federal court on December 11, 2009, the Court set 

the matter for a Federal Rule of Civil Procedure 16 Scheduling Conference. (Doc. 7). 

The Court’s Order scheduling the conference directed the parties to meet and submit to 

the Court a joint report in accordance with Fed.R.Civ.P. 26(f). One of the items that the 

parties were required to include in their joint report was whether a jury trial had been 

requested and whether the request for a jury trial was contested. (Doc. 7). The parties 

submitted a joint report in which the Plaintiff and the Defendant acknowledged that they 

met and conferred prior to submitting the report. The joint report asserted to the court in 

writing that “no jury trial has been requested.” (Doc. 8). 

 On March 8, 2010, the Court held a scheduling conference. During the 

conference, the issue of scheduling the case for a bench trial was discussed. The Court 

specifically inquired as to whether the trial in this case was going to be a court trial 

without a jury, to which Plaintiff responded in the affirmative. The Court then scheduled 

a bench trial for January 11, 2011. (Doc. 10). As such, Plaintiff waived any request he 

may have had for a jury trial. See Fed.R.Civ.P. 39(a). Additionally, in Plaintiff’s 

Response to Defendant’s Motion to Strike Request for Jury Trial, Plaintiff acknowledges 

that the parties joint report expressly waived a request for a jury trial as to those issues 

contained in that joint report.5

 (Doc. 139). 

 

5

 At the time of the filing of the joint report, the only issues raised by the Plaintiff 

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 Subsequent to the filing of the joint report, Plaintiff filed a First Amended 

Complaint on March 16, 2010. (Doc. 11). Defendant filed an Answer on April 1, 2010. 

(Doc. 15). Plaintiff filed a Second Amended Complaint on March 31, 2010. (Doc. 13). 

Plaintiff’s Second Amended Complaint raised new allegations against the Defendant for 

breaching the covenant of good faith and fair dealing related to its handling of the tenders 

of defense related to the Underlying Litigation. Defendant filed its Answer to Plaintiff’s 

Second Amended Complaint on April 14, 2010. (Doc. 17). Plaintiff did not request a 

jury trial in any of these pleadings. 

 An amended pleading can revive the right to request a jury trial that had 

previously been waived, if the amended pleading raises new issues of fact. See Lutz v. 

Glendale Union High School, 403 F.3d 1061, 1066 (9th Cir. 2005)(holding that absent 

new issues of fact, an amended pleading does not revive the right to request a jury trial 

that has already been waived). In order to determine whether an amended pleading 

contains new issues of fact, the Court must surmise whether the claims in the original and 

amended pleadings “turn on the same matrix of facts.” Las Vegas Sun, Inc. v. Summa 

Corp., 610 F.2d 614, 620 (9th Cir. 1979). If the claims all arise from the same “matrix of 

facts” then the amended pleading does not renew the right to request a waived jury 

request. See Lutz, 403 F.3d at 1066-1067. Moreover, the revival of the request for a jury 

trial only applies to the new issues raised in the amended pleading. See Las Vegas Sun, 

Inc. 610 F.2d at 620. 

 While Plaintiff raised potentially new issues of facts in its Second Amended 

Complaint, Plaintiff did not file a jury demand within 14 days after Defendant’s Answer 

to Plaintiff’s Second Amended Complaint. See Fed.R.Civ.P. 38(b); see also Lutz, 403 

F.3d at 1066. As such, Plaintiff waived his right to a jury trial on the issues raised in its 

Second Amended Complaint. See Fed.R.Civ.P. 38(d). 

 Plaintiff now raises for the first time in federal court, a request for a jury trial in its 

 in its Complaint was a Declaratory Judgment action and breach of contract claims. These 

claims were the subject of the joint report. 

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proposed Supplemental and Third Amended Complaint. Plaintiff may request a jury trial 

as to any new issues of fact raised in its proposed filing. See Lutz, 403 F.3d at 1066. 

Defendant argues that the new allegations contained within the proposed filing arise from 

the same “matrix of facts” as the issues in the Second Amended Complaint and thus 

Plaintiff’s right to request a jury trial was not revived. See Id; Trixler Brookerage Co. v. 

Raiston Purina Co., 505 F.2d 1045, 1050 (9th Cir. 1974). 

 Plaintiff’s proposed filing differs from its Second Amended Complaint in four 

respects. First, Plaintiff alleges additional facts which clarify or elaborate on the claims 

found in the Second Amended Complaint. These new facts do not create new issues and 

thus are insufficient to revive Plaintiff’s right to a jury trial. See Trixler, 505 F.2d at 

1050 (finding the defendants, having waived their right to a jury trial on the original 

complaint, were not entitled to a jury trial on a more detailed statement of the same 

claims in the amended complaint). 

 Plaintiff also raises three new allegations against Defendant all stemming from 

Defendant’s alleged breach of the covenant of good faith and fair dealing. First, Plaintiff 

alleges that Defendant acted in bad faith when it refused to accept or reasonably 

investigate additional tenders of defense from the Underlying Litigation. Plaintiff’s 

Second Amended Complaint raised the same issues related to prior tenders of defense 

from the Underlying Litigation. The factual allegations underlying this claim are 

ultimately that the Defendant acted in bad faith towards the Plaintiff in the handling of 

the tenders related to the Underlying Litigation. As such, the claims of bad faith 

regarding additional tenders of defense stem from the same “matrix of facts” as the 

claims in Plaintiff’s Second Amended Complaint. 

 Next, Plaintiff alleges that Defendant acted in bad faith when it failed to disclose a 

2006 policy of insurance at the time it denied Plaintiff’s tenders of defense related to the 

Underlying Litigation. Once again this claim relates to the same “matrix of facts” as the 

claims in the Second Amended Complaint, specifically that Plaintiff acted in bad faith in 

the handling of Plaintiff’s tenders of defense related to the Underlying Litigation. 

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 Finally, Plaintiff alleges that Defendant acted in bad faith when it decided not to 

renew Plaintiff’s 2009 insurance policy. This allegation does not directly relate to the 

handling of Plaintiff’s tenders of defense from the Underlying Litigation. However, it 

does relate to the circumstances surrounding the non-renewal, after Defendant received 

the tenders of defense from the Underlying Litigation. Moreover, Plaintiff’s proposed 

Supplemental and Third Amended Complaint establishes that its claim for bad faith in 

not renewing the policy is related to the tenders of defense from the Underlying 

Litigation. Accordingly, the Court finds that this claim similarly stems from the same 

“matrix of facts” as the bad faith claims in Plaintiff’s Second Amended Complaint. 

 As such, the Court finds that Plaintiff has not revived its right to request a jury 

trial. See Las Vegas Sun, Inc. v. Summa Corp., 610 F.2d 614, 620 (9th Cir. 1979). 

 Accordingly, IT IS ORDERED: 

 1. Plaintiff’s Motion for Leave to File its Supplemental and Third Amended 

Complaint under Rule 15(a) and/or 15(d) of the Federal Rules of Civil Procedure, (Doc. 

133), is GRANTED. 

 2. Defendant’s Motion to Strike Request for Jury Trial, (Doc. 137), is 

GRANTED. 

 3. Plaintiff is directed to file a Third Amended Complaint to include all of the 

allegations and claims identified in the Second Amended Complaint and Plaintiff’s 

proposed Supplemental and Third Amended Complaint, so that all the claims in this 

action may all be presented in a single pleading, within 30 days of the date of this Order. 

 Dated this 25th day of March, 2013. 

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