Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_09-cv-01173/USCOURTS-caed-1_09-cv-01173-1/pdf.json

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

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

GBTI, INC.; GILL BROS. TRUCKING, )

et al., )

)

)

Plaintiffs, )

)

v. )

)

INSURANCE COMPANY OF THE )

STATE OF PENNSYLVANIA, et al., )

)

Defendants. )

)

1:09cv01173 LJO DLB

ORDER DENYING PLAINTIFFS’

MOTION FOR LEAVE TO AMEND

(Document 14)

Plaintiffs GBTI, Inc., Gill Bros Trucking, Harninder Gill, Harjinder Gill, Charan Gill,

Pakhar Gill and Gurdial Gill (“Plaintiffs”) filed the instant motion for leave to amend on December

18, 2009. Pursuant to Local Rule 230(g), the Court deemed the matter suitable for decision

without oral argument. As discussed below, Plaintiffs’ motion for leave to amend is DENIED.

BACKGROUND

Plaintiffs filed this action on May 29, 2009, in Fresno County Superior Court. On July 2,

2009, Defendants The Insurance Company of the State of Pennsylvania ("ICSOP") and The

American International Group Inc. dba The Truck Insurance Group, a Division of American

International Group Risk Management ("Truck") removed the action to this Court.

According to the Complaint, in December 2004, Defendants issued to Plaintiff GBTI, Inc.

a commercial automobile liability policy for the period of December 15, 2004 to December 15,

2005 (No. SFT407243601) and a commercial general liability policy for the period of December

30, 2004 to December 30, 2005 (No. SGL1807103). In December 2004, Defendants also issued

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a commercial general liability policy to Gill Bros Trucking (No. SGL1807105) for the period from

December 30, 2004 to December 30, 2005.

On August 14, 2005, a commercial tractor-trailer unit owned by Gill Bros. Trucking and

operated by GBTI, Inc. was involved in a multi-vehicle accident in Missouri. After the accident,

there was a consolidated personal injury action in the Western District of Missouri, Case No.

4:06-cv-00286 (the "Nosker Lawsuit"). In March 2007, Plaintiffs made a formal tender of

defense and indemnity of GBTI, Inc. to Defendants. Defendants rejected the request in April

2007, and Plaintiffs were forced to retain private counsel in the Nosker Lawsuit.

The complaint asserts causes of action for breach of contract and breach of the implied

covenant of good faith and fair dealing. Plaintiffs seek general, consequential and punitive

damages.

On July 10, 2009, Defendants filed a motion to dismiss. Plaintiffs did not file an

opposition. On July 29, 2009, the Court ruled on the motion to dismiss. By its order, the Court: 

(1) dismissed Defendant Truck from the action; (2) directed the Clerk to enter judgment in favor

of Defendant Truck and against Plaintiffs; (3) struck allegations in the complaint addressing Gill

Bros. Policy no. SGL1807105; (4) struck the punitive damages allegations, including paragraph

39 and the punitive damages prayer at page 9, line 26; and (5) ordered Defendant ICSOP to file

an answer to the remaining allegations.

On July 30, 2009, Plaintiffs filed a demand for jury trial.

On July 31, 2009, the Clerk entered judgment pursuant to the Court's order.

On August 10, 2009, Defendant ICSOP filed its answer.

On October 7, 2009, the Court held a scheduling conference. The Court entered a

scheduling order on October 10, 2009. Pursuant to the order, the non-expert discovery cut-off is

April 1, 2011, and the expert discovery cut-off is May 1, 2011.

On December 18, 2009, Plaintiffs filed the instant motion to amend to state a claim for

punitive damages against ICSOP.

On January 15, 2010, Defendant ICSOP opposed the motion, contending that Plaintiffs

were improperly attacking the Court's dismissal order.

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Plaintiffs filed a reply on January 21, 2010.

DISCUSSION

Plaintiffs request an amendment to cure a defect in the original complaint in order to state

a claim for punitive damages against Defendant ICSOP pursuant to Federal Rule of Civil

Procedure 15. Rule 15(a) provides that the Court "should freely give leave [to amend] when

justice so requires." The United States Supreme Court has stated: 

[i]n the absence of any apparent or declared reason – such as undue delay, bad

faith or dilatory motive on the part of the movant, repeated failure to cure

deficiencies by amendments previously allowed, undue prejudice to the opposing

party by virtue of allowance of the amendment, futility of amendment, etc. – the

leave sought should, as the rules require, be "freely given."

Foman v. Davis, 371 U.S. 178, 182 (1962). The Ninth Circuit has summarized the factors to be

considered to include the following: (1) undue delay; (2) bad faith; (3) prejudice to the opponent;

and (4) futility of amendment. Loehr v. Ventura County Cmty. Coll. Dist., 743 F.2d 1310, 1319

(9th Cir. 1984). Granting or denial of leave to amend rests in the sound discretion of the trial

court. Swanson v. United States Forest Serv., 87 F.3d 339, 343 (9th Cir. 1996). Despite the

policy favoring amendment under Rule 15, leave to amend may be denied if the proposed

amendment is futile or would be subject to dismissal. Saul v. United States, 928 F.2d 829, 843

(9th Cir. 1991).

Defendant ICSOP argues that Plaintiffs are improperly attacking the Court's Order by

attempting to state a claim for punitive damages after the Court previously ordered that Plaintiffs'

initial allegations be struck from the Complaint. The Court agrees.

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Assuming, without deciding, that Plaintiffs’ Fed. R. Civ. P. 15 motion is procedurally

correct, it is substantively deficient due to prejudice, bad faith, futility of amendment and lack of

The proposed FAC names Truck in the caption and in the opening paragraph, and also references

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"defendants" throughout the pleading. ICSOP argues that the motion to amend to include Truck is procedurally

improper and Plaintiffs should have filed a motion to modify, alter or amend the Judgment pursuant to Fed. R. Civ.

P. 59 or 60. In reply, Plaintiffs assert that the FAC alleges two causes of action against ICSOP, as evidenced by the

headings under each cause of action. Plaintiffs are willing to remove any reference to Truck's name contained

within the general factual allegations of the FAC if necessary. As the Court is denying leave to amend and Truck

has been dismissed from the action, additional amendment is not required.

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diligence. See Loehr, 743 F.2d at 1319 (identifying factors courts consider as undue delay,

prejudice, bad faith and futility).

1. Prejudice

Plaintiffs assert that ICSOP will not be prejudiced by the amendment because (1)

Defendants have been previously provided notice of Plaintiffs' intent to seek punitive damages;

and (2) the deadline for dispositive motions is February 7, 2011. However, ICSOP has already

expended resources to bring a motion to strike the claim for punitive damages. Plaintiffs did not

oppose that motion due to a “calendaring error” and they made no effort to seek relief from the

Court for that error. Accordingly, the Court finds that ICSOP would be prejudiced by having to

expend further resources to bring an additional motion to strike or dismiss or to broaden

discovery for purposes of a dispositive motion regarding punitive damages after the allegations

were struck from the original complaint.

2. Futility

The Court also finds that the request to amend is futile. In its Order, the Court struck the

original punitive damages allegations, including paragraph 39. In the proposed FAC, Plaintiffs

restate the same paragraph that the Court previously struck. FAC, ¶ 35. Plaintiffs additional

proposed amendments appear to be merely a re-wording of the previous allegations. For

example, in the original complaint, Plaintiffs alleged that Defendants were liable for

"[u]nreasonably and in bad faith failing to fairly and promptly conduct an independent

investigation and analysis of the potential for coverage under any of the Policies as applied to the

underlying action brought by the Noskers against the Plaintiffs." Complaint, ¶34.c. The proposed

FAC alleges that Defendants are liable for "[w]illfully failing to conduct a full, complete, and

unbiased investigation of the potential for coverage under the Policies in regards to the underlying

action brought by the Noskers against the Plaintiffs in conscious disregard of Plaintiffs rights to a

defense under the Policies.” FAC, ¶30.a. The Court already has addressed the sufficiency of

Plaintiffs’ punitive damages allegations and found them lacking ultimate facts of Defendants’

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purported malice, oppression or fraud. Plaintiffs have not asserted any new factual allegations in

the proposed FAC. 

3. Bad Faith

Plaintiffs assert that they have not sought leave to amend to delay the matter in bad faith.

The Court disagrees and finds that the motion is brought in bad faith. Plaintiffs are attempting to

allege a claim for punitive damages that the Court expressly struck from the original complaint.

Plaintiffs did not oppose the motion to strike and they have made no attempt to amend or to seek

relief from the Court’s July 2009 Order.

ICSOP asserts that to challenge the Court's order striking punitive damages, Plaintiffs

should have filed a motion for reconsideration, not a motion to amend. Even if the instant motion

is treated as one for reconsideration, however, it does not satisfy procedural requirements. Local

Rule 78-230(j) requires, in part, that a motion for reconsideration set forth "what new or different

facts or circumstances are claimed to exist which did not exist or were not shown upon such prior

motion, or what other grounds exist for the motion" and "why the facts or circumstances were not

shown at the time of the prior motion." Local Rule 78-230(j). Here, there are no allegations pled

by Plaintiffs indicating any new or different facts or circumstances that were not shown or

available to them at the time of the motion to dismiss and strike. As noted, the allegations in the

proposed FAC are primarily a re-wording and/or combining of the Complaint’s original

allegations.

ICSOP also asserts that the motion is insufficient to constitute a Fed. R. Civ. P. 60(b)

motion for relief. Rule 60(b) provides that on a motion, the court:

may relieve a party or its legal representative from a final judgment, order or

proceeding for the following reasons:

(1) mistake, inadvertence, surprise, or excusable neglect;

(2) newly discovered evidence that, with reasonable diligence, could not

have been discovered in time to move for a new trial under Rule 59(b);

(3) fraud (whether previously called intrinsic or extrinsic),

misrepresentation, or misconduct by an opposing party;

(4) the judgment is void;

(5) the judgment has been satisfied, released or discharged; it is based on

an earlier judgment that has been reversed or vacated; or applying it

prospectively is no longer equitable; or

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(6) any other reason that justifies relief.

Fed. R. Civ. P. 60(b). Plaintiffs have presented no evidence to support a modification or

amendment of the existing order. They provide no facts to explain the failure to file an opposition

to the motion to strike due to a calendaring error, to explain what efforts were made to address

the failure upon learning an error occurred or to explain why they waited five months after the

Court's order to file the instant motion. The failure to timely file a pleading does not constitute

excusable neglect. See, e.g., Meadows v. Dominican Republic, 817 F.2d 517, 521-22 (9th Cir.

1987) (failure to answer not considered excusable neglect where party was aware of legal

consequences).

4. Lack of Diligence (Undue Delay)

While the Ninth Circuit considers delay alone to provide an insufficient basis for denying

leave to amend or supplement, it is a relevant factor for courts to consider. Loehr, 743 F.2d at

1319-20. Here, Plaintiffs have not been diligent in seeking amendment. They filed the complaint

on May 27, 2009, the Order striking the punitive damage claim was filed July 29, 2009, and

judgment entered on July 31, 2009. Approximately five months lapsed before Plaintiffs filed the

instant motion. The motion also was filed more than two months after the October 7, 2009

scheduling conference. Plaintiffs do not explain why they did not request modification of the

Court's July 2009 order or why they waited until December 2009 to request leave to amend.

They also have not asserted that there are any new facts that were unavailable to them at the time

of the original complaint or at the time of the motion to strike. 

ORDER

For the above reasons, the Court DENIES Plaintiffs’ motion for leave to amend.

IT IS SO ORDERED.

Dated: February 1, 2010 /s/ Dennis L. Beck

3b142a UNITED STATES MAGISTRATE JUDGE

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