Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-02900/USCOURTS-casd-3_15-cv-02900-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441in Removal- Insurance Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SCOTT G. KELLY and JOHN T.

DeWALD,

Plaintiffs,

CASE NO. 15cv2900 JM(RBB)

ORDER DENYING MOTION TO

AMEND

v.

STARR INDEMNITY & LIABILITY

COMPANY,

Defendant.

Pursuant to Fed.R.Civ.P. 15(a), Plaintiffs Scott G. Kelly and John T. DeWald

(collectively “Plaintiffs”) move to amend the complaint to add additional parties and

claims. Starr Indemnity & Liability Company (“Starr”) opposes the motion. Pursuant

to Local Rule 7.1(d)(1), the court findsthe matters presented appropriate for resolution

without oral argument. For the reasons set forth below, the court denies the motion to

amend.

BACKGROUND

On December 23, 2015, Starr removed this diversity action from the Superior

Court, County of San Diego. The Complaint alleged two claims against Starr for

breach of contract and breach of the duty of good faith and fair dealing. The third

cause of action for negligence is asserted only against “DOE AGENTS/BROKERS.”1

Doe defendants are not considered for federal pleading purposes. See Navarro 1

Sav. & Loan Ass’n v. Lee, 446 U.S. 458, 460-61 (1980).

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The Proposed First Amended Complaint (“PFAC”) seeks to add Robert Cohen and

Benchmark Commercial Insurance Services (collectively, the “Brokers”) as nondiverse parties and add causes of action against them for negligence and breach of

fiduciary duty. 

Plaintiffs are managing members ofJohnDeWald and Associates, LLC (“JDA”),

a real estate development company. (Compl. ¶6). JDA had a business relationship

with Kenneth Brehnan (“Brehnan”). Brehnan invested in various real estate projects

managed by JDA. Prior to May 2011, Brehnan requested that certain “instruments” in

default be paid in full. At that time, however, Brehnan did not request payment for

damages and did not take any legal action against JDA. 

In November 2011, Plaintiffs allege that Brehnan made a written demand for

payment of past-due promissory notes or credit agreements and provided written notice

of the claim to Starr. (Compl. ¶11). Plaintiffs then tendered the claim to Starr who had

issued a one-year claims-made Directors & Officersliability policy to Plaintiffs for the

period of May 18, 2011 to May 18, 2012. On April 12, 2012, Brehnan forwarded a

draft complaint to Plaintiffs, threatening to file the complaint if the parties were unable

to resolve the dispute.

On May 13, 2012, Starr provided written notice to Plaintiffs that Brehnan’s

claims were excluded from the policy. Starr explained that the claim was excluded

because: (1) the claim was made before the inception of coverage; (2) the insureds had

knowledge of the facts giving rise to a potential claim prior to inception of the policy;

and (3) the professional services exclusion applied to bar coverage. (Davisson Decl.,

Exh. B). With respect to the professional services exclusion, Starr explained:

The coverage provided by Directors & Officers insuring agreements is

different from that provided by Errors & Omissions policies issued to

defray exposures arising from providing professional services. D&O

coverage does not include malpractice coverage. This point is established

emphatically by the presence of [the professional services exclusion] in

the . . . Policy.

Id. As the claims in the Brehnan complaint allegedly arose from the provision of

management services by JDA, Starr concluded that the nature of Brehnan’s claim

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triggered the professional services exclusion.

On August 9, 2012, Brehnan filed the complaint against JDA. Ultimately,

Plaintiffs and Brehnan settled their dispute.

DISCUSSION

Pursuant to Fed.R.Civ.P. 15(a), Plaintiffs move to amend the complaint to add

new parties (Brokers) and new claims (negligence and breach of fiduciary duty). Rule

15, however, does not afford any relief to Plaintiffs. Plaintiffs seek to add non-diverse

parties and claims allegedly necessary for them to obtain complete relief. 

In order to join parties, Plaintiffs must satisfy the requirements of Rules 19 or

20. Plaintiffs do not cite applicable rules, set forth no pertinent analysis, and simply

fail to meet their burden to show that joinder is appropriate under the circumstances. 

Moreover, the court has not considered the limited analysis set forth by Plaintiffs for

the first time in their reply brief. See Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir.

2007) (affirming district court decision to reject points raised for the first time in reply

brief). 

The motion to amend is denied.

IT IS SO ORDERED.

DATED: September 1, 2016

 Hon. Jeffrey T. Miller

 United States District Judge

cc: All parties

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