Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-00393/USCOURTS-azd-2_08-cv-00393-1/pdf.json

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

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Olivia O. Hans, 

Plaintiff, 

vs.

Homesite Indemnity Company, et al., 

Defendant. 

_________________________________

Homesite Indemnity Company,

Defendant/Counter Claimant

vs.

Olivia O. Hans,

Plaintiff/Counter Defendant

_________________________________

Homesite Indemnity Company,

Defendant, Counter Claimant/

Third Party Plaintiff

vs.

Robert Hanna,

Third Party Defendant

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No. CV 08-00393-PHX-JAT

ORDER

Case 2:08-cv-00393-JAT Document 52 Filed 10/30/08 Page 1 of 6
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Pending before this Court is Defendant Homesite Indemnity Company’s Motion for

Leave to File First Amended Answer (“Motion to Amend”) (Doc. # 39). The Court now

rules on the Motion.

I. FACTUAL BACKGROUND

The facts relevant to this Motion are as follows. Plaintiff Olivia Hans (“Plaintiff” or

“Ms. Hans”) filed suit against Defendant Homesite Indemnity Company (“Defendant” or

Homesite’) in Maricopa County Superior Court on January 15, 2008. The lawsuit stems

from a physical altercation in which Plaintiff was injured at the Prescott Valley, Arizona

residence of Janice Hanna (“Ms. Hanna” or “the insured”) by Ms. Hanna’s son, Robert

Hanna. Defendant Homesite issued the homeowner’s insurance policy (“Policy”) carried by

Ms. Hanna on her Prescott Valley residence. 

Succinctly put, Plaintiff is now suing Homesite as an assignee of the rights of Robert

Hanna – the son of the insured – under a “Damron Agreement.” Relying upon an intentional

tort exclusion in the Policy, Homesite did not provide a defense on behalf of Robert Hanna

in conjunction with the incident that occurred at Ms. Hanna’s home. As a result of that

physical altercation and resulting injury, Mr. Hanna stipulated to a judgment against him in

the amount of $675,000 in consideration of a non-execution agreement and assigned his

rights to Plaintiff. Based on Homesite’s denial of defense and indemnification to Mr. Hanna,

Plaintiff now brings claims for breach of contract, bad faith breach of contract, and breach

of the covenant of good faith and fair dealing against Homesite. 

Homesite removed the state court action to this Court on February 28, 2008, and filed

its answer and Counterclaim on March 10, 2008. Homesite now seeks leave to file an

amended answer to assert additional affirmative defenses based on information obtained after

filing its answer in March. Specifically, after obtaining information regarding the amount

of Plaintiff’s special and actual damages as well as records regarding Mr. Hanna’s mental

condition, Homesite seeks to assert the following three additional affirmative defenses: (1)

the Damron Agreement was entered into as a product of fraud or collusion in light of

Plaintiff’s damages and/or Mr. Hanna’s alleged mental condition, (2) the stipulated damages

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in an amount in excess of twenty times the actual damages violates Homesite’s procedural

due process rights, and (3) Plaintiff’s own selection of a punitive damages award in excess

violates Homesite’s procedural due process rights. 

Plaintiff opposes the Motion on the basis that there are no grounds for the proposed

amendment. Specifically, Plaintiff asserts that there is no evidence to support Homesite’s

allegations that Mr. Hanna lacked the requisite mental capacity to enter into the Damron

Agreement, and that, to the contrary, the evidence reflects that the stipulated damages in the

Damron Agreement were reached through negotiation and good faith. Plaintiff further argues

that the multiplier of damages alone is not evidence of an arbitrary or irrational punitive

award. For these reasons, Plaintiff urges the Court to deny Homesite’s Motion to Amend.

II. LEGAL STANDARD

Motions to amend pleadings to add claims or parties are governed by Federal Rule of

Civil Procedure 15(a), which provides:

A party may amend the party’s pleading once as a matter of course at any time

before a responsive pleading is served or, if the pleading is one to which no

responsive pleading is permitted and the action has not been placed upon the

trial calendar, the party may so amend it at any time within 20 days after it is

served. Otherwise a party may amend the party’s pleading only by leave of

court or by written consent of the adverse party; and leave shall be freely given

when justice so requires.

Fed. R. Civ. P. 15(a). While the decision to grant or deny a motion to amend is within the

discretion of the district court, “Rule 15(a) declares that leave to amend ‘shall be freely given

when justice so requires’; this mandate is to be heeded.” Foman v. Davis, 371 U.S. 178, 182

(1962); see, e.g., Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330 (1971);

United States v. SmithKline Beecham, Inc., 245 F.3d 1048, 1052 (9th Cir. 2001) (“A district

court’s discretion to deny leave to amend . . . is not absolute.”) (citing Foman);

Cal. Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d. 1466, 1472

(9th Cir. 1987). “In exercising its discretion[,] . . . ‘a court must be guided by the underlying

purpose of Rule 15—to facilitate decision on the merits rather than on the pleadings or

technicalities. . . . Thus, ‘Rule 15’s policy of favoring amendments to pleadings should be

applied with extreme liberality.’” Eldridge v. Block, 832 F.2d 1132, 1135 (9th Cir. 1987)

Case 2:08-cv-00393-JAT Document 52 Filed 10/30/08 Page 3 of 6
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(citations omitted); Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079

(9th Cir. 1990) (stating that leave to amend is generally allowed with “extraordinary

liberality”). “This liberality . . . is not dependent on whether the amendment will add causes

of action or parties.” DCD Programs, LTD. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987).

The extremely liberal policy in favor of amendments, however, is subject to some

limitations. The United States Supreme Court has established that motions to amend

should be granted unless the district court determines that there has been a showing of:

(1) undue delay; (2) bad faith or dilatory motives on the part of the movant; (3) repeated

failure to cure deficiencies by previous amendments; (4) undue prejudice to the opposing

party; or (5) futility of the proposed amendment. Foman, 371 U.S. at 182; see SmithKline

Beecham, 245 F.3d at 1052; Texaco, Inc. v. Ponsoldt, 939 F.2d 794, 798 (9th Cir. 1991);

W. Shoshone Nat’l Council v. Molini, 951 F.2d 200, 204 (9th Cir. 1991); Cal. Architectural

Bldg. Prods., 818 F.2d. at 1472; Poling v. Morgan, 829 F.2d 882, 886 (9th Cir. 1987).

“Generally, this determination should be performed with all inferences in favor of granting

the motion.” Griggs v. Pace Am. Group, Inc., 170 F.3d 877, 880 (9th Cir. 1999) (citing DCD

Programs, 833 F.2d at 186). Significantly, “[t]he party opposing amendment bears the

burden of showing prejudice,” futility, or one of the other permissible reasons for denying

a motion to amend. DCD Programs, 833 F.2d at 187; see Richardson v. United States,

841 F.2d 993, 999 (9th Cir. 1988) (stating that leave to amend should be freely given unless

opposing party makes “an affirmative showing of either prejudice or bad faith”).

III. DISCUSSION

Presumably arguing that the proposed amendment would be futile, Plaintiff asserts

that there is no basis for the amendment as the evidence does not support Homesite’s newly

asserted defenses. 

Regarding the futility of amendments to add claims, “[a] district court does not err in

denying leave to amend where the amendment would be futile . . . or would be subject to

dismissal.” Saul v. United States, 928 F.2d 829, 843 (9th Cir. 1991) (citations omitted);

see Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988) (“A motion for leave to

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amend may be denied if it appears to be futile or legally insufficient.”) (citation omitted).

A motion for leave to amend is futile if it can be defeated on a motion for summary

judgment. Gabrielson v. Montgomery Ward & Co., 785 F.2d 762, 766 (9th Cir. 1986).

“However, a proposed amendment is futile only if no set of facts can be proved under the

amendment to the pleadings that would constitute a valid and sufficient claim or defense.”

Miller, 845 F.2d at 214; see Foman, 371 U.S. at 182 (stating that “[i]f the underlying facts

or circumstances relied upon by a [movant] may be a proper subject of relief, he ought to be

afforded an opportunity to test his claim on the merits”); DCD Programs, 833 F.2d at 186

(stating that “a motion to make an ‘[a]mendment is to be liberally granted where from the

underlying facts or circumstances, the plaintiff may be able to state a claim’”)

(quoting McCartin v. Norton, 674 F.2d 1317, 1321 (9th Cir. 1982)).

Plaintiff, as the party opposing the proposed amendment as futile, has the burden to

show its futility. See DDC Programs, 833 F.2d at 187. Plaintiff has not met that burden

here. Plaintiff does not argue that the proffered defenses are not recognized defenses either

generally or under the facts of this case, nor does she offer any authority to support her

position that the Motion to Amend should be denied. Instead, Plaintiff argues only that the

evidence does not support the new defenses identified in Homesite’s Motion to Amend. 

In ruling on the Motion to Amend, however, this Court need not decide whether

Homesite will ultimately prevail on the defense. See Boykin v. CFS Enterprise, Inc., Civ.

No. 08-2249-CM-GLR, 2008 U.S. Dist. LEXIS 78481 (D. Kan. Oct. 6, 2008). Rather, it

considers whether Homesite has alleged enough to offer evidence and proceed with the

defense. The Court concludes that Homesite has done so. Homesite points to several factual

allegations in its Motion which, if proved true, might constitute a valid and sufficient

defense. Specifically, Homesite identifies Mr. Hanna’s mental condition and the alleged

incongruity between Plaintiff’s special damages and the stipulated damage amount in the

Damron Agreement as factors bearing upon the validity of that agreement. This Court,

therefore, cannot conclude that “there is no set of facts that can be proved under the

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Homesite filed its Motion for Leave to File First Amended Answer on August 12,

2008 which was one month before the September 12, 2008 amendment deadline set in the

Court’s Rule 16 Scheduling Order.

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amendment” to the answer that would constitute a valid and sufficient defense. Given the

foregoing, Plaintiff has failed to establish that Homesite’s proposed amendments are futile.

Furthermore, this Court finds no other factors that would mitigate against granting

Homesite’s Motion to Amend. Other than a cursory and otherwise unexplained statement

that the information regarding the multiplier of damages was not new to Homesite, Plaintiff

points to no other basis for denying Homesite’s Motion to Amend, and this Court is aware

of none. Homesite’s Motion was filed well within the amendment deadline set by this Court

in its Rule 16 Scheduling Order.1

 The Motion to Amend is Homesite’s first request to

supplement its affirmative defenses, and there have been no repeated failures by Homesite

to cure deficiencies by previous amendments. There is no evidence of bad faith or dilatory

motives on the part of Homesite or undue prejudice that would result from granting the

Motion to Amend. Homesite maintains, and Plaintiff does not dispute that, at this stage in

the litigation, no deposition discovery has been conducted, and no substantive motions have

been filed. Given the foregoing, this Court concludes that there is no basis for denying

Homesite’s requested amendment. 

IT IS THEREFORE ORDERED granting Defendant Homesite Indemnity

Company’s Motion for Leave to File First Amended Answer (Doc. # 39). The Clerk of the

Court shall file the Amended Answer lodged at Doc. # 40.

DATED this 29th day of October, 2008.

Case 2:08-cv-00393-JAT Document 52 Filed 10/30/08 Page 6 of 6