Opinion ID: 1744606
Heading Depth: 1
Heading Rank: 3

Heading: The Attempted Amendment.

Text: Davis's attempt to amend his petition to assert an ERISA claim, filed approximately 130 days before the trial date, was rejected by the district court which held it would substantially change the issues and would result in a gross injustice to the defendants. The amendment basically restated the earlier allegations of the petition but added elements and damage for emotional distress and attorney fees. Davis argues that these changes were not so substantial as to justify rejection of his proposed amendment, pointing to the similarity in the issues and the relatively long time remaining before the date set for trial. He further argues that it was unfair for the court to allow the defendants to amend their answers to assert the preemptive effect of ERISA following Pilot Life and then refuse Davis leave to amend his petition to meet the preemption problem. Iowa Rule of Civil Procedure 88 states that leave to amend, including leave to amend to conform to the proof, shall be freely given when justice so requires. We have found that amendments are the rule and denials the exception. Ackerman v. Lauver, 242 N.W.2d 342, 345 (Iowa 1976). We have, however, accorded considerable discretion to the trial court rulings on such motions, and will reverse the court only when a clear abuse of discretion has been shown. B & B Asphalt Co. v. T.S. McShane Co., 242 N.W.2d 279, 284 (Iowa 1976). Moreover, an amendment which substantially changes the issues should not be allowed, Ackerman, 242 N.W.2d at 345, nor should amendments be allowed if it is found that the movants were negligent in asserting their cause. See Neylan v. Moser, 400 N.W.2d 538, 543 (Iowa 1987) (record did not support finding seven-month delay in amending claim was negligent). It might be argued that Davis was negligent in not asserting his ERISA claim in his original petition. As he concedes, Pilot Life did not create new law; it only interpreted an existing one. His motion to amend came approximately one month after the defendants had moved to amend their answer to conform to Pilot Life and two months after Pilot Life was decided. We do not believe Davis was negligent in failing to foresee the preclusive effect given to ERISA under the Pilot Life decision. It seems that all parties were caught by surprise. As to Davis's amendment substantially changing the issues, what ERISA requires is that every employee benefit plan ... comply with Department of Labor regulations on giving notice to any participant or beneficiary whose claim for benefits has been denied, and affording a reasonable opportunity for review of the decision denying the claim. Under the civil enforcement provisions of § 502(a), a plan participant or beneficiary may sue to recover benefits due under the plan, to enforce the participant's rights under the plan, or to clarify rights to future benefits. Relief may take the form of accrued benefits due, a declaratory judgment on entitlement to benefits, or an injunction against a plan administrator's improper refusal to pay benefits.... In an action under these civil enforcement provisions, the court in its discretion may allow an award of attorney's fees to either party. Pilot Life, 481 U.S. at 53, 107 S.Ct. at 1556, 95 L.Ed.2d at 51. It is unlikely that the defendants would have wasted any discovery in preparing to defend against the common-law claims were an ERISA amendment allowed. The evidence supporting and refuting the common-law and ERISA claims would be virtually identical. The bottom line on the amendment issue is whether the district court abused its discretion in refusing it. Abuse of discretion does not entail ill will, improper motive, or intentional wrong. We have held that discretion is abused when it is exercised on clearly untenable grounds or to a clearly unreasonable extent. Ashmead v. Harris, 336 N.W.2d 197, 199 (Iowa 1983) (abuse of discretion found in district court's compelling production of documents prepared in anticipation of litigation); Hubby v. State, 331 N.W.2d 690, 697 (Iowa 1983). We have stated the test another waythat an abuse of discretion is found where the discretion is exercised on grounds or for reasons clearly unreasonable. Sheer Constr. Co. v. W. Hodgman & Sons, Inc., 326 N.W.2d 328, 334 (Iowa 1982). A United States Supreme Court case, Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962), involved a claim of abuse of discretion in denying leave to amend a complaint pursuant to Federal Rule of Civil Procedure 15(a), quite similar to Iowa Rule of Civil Procedure 88. Under the federal rule, leave to amend is a matter left to the district court's discretion, as it is in Iowa. In Foman, the complainant originally alleged an express agreement by the complainant's father not to make a will, thus assuring the complainant of an intestate share as payment for her services on behalf of her mother. The complaint was dismissed on the basis of a state statute of frauds. Foman moved to vacate the judgment and amend her petition to allege the theory of quantum meruit. The district court denied her motions, and the court of appeals affirmed. Because an express contract could not survive a statute-of-frauds objection and the quantum meruit amendment had been denied, Foman was effectively foreclosed from pursuing any theory. The Supreme Court said: The Court of Appeals ... erred in affirming the District Court's denial of petitioner's motion to vacate the judgment in order to allow amendment of the complaint. As appears from the record, the amendment would have done no more than state an alternative theory for recovery. [Federal r]ule 15(a) declares that leave to amend shall be freely given when justice so requires; this mandate is to be heeded.... If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In 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. Of course, the grant or denial of an opportunity to amend is within the discretion of the District Court, but outright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely abuse of that discretion and inconsistent with the spirit of the Federal Rules. Id. at 182, 83 S.Ct. at 230, 9 L.Ed.2d at 226. The present case is similar to Foman in that, by denying the amendment, the plaintiff is effectively denied any viable theory for recovery. In Foman, as here, the amendment did not present a significantly different theory of recovery in the sense that the defendants would be required to start over again in meeting the allegations of the amendment; the facts supporting the new theory were basically the same. The amendment would result in no demonstrable prejudice to the defendants in either case. Despite the fact that rule 88 involves substantial trial court discretion, it still provides that leave to amend, including leave to amend to conform to the proof, shall be given when justice so requires. (Emphasis added.) On the matter of justice as alluded to in rule 88, this case is quite unique. While the defendants were permitted to amend their pleadings to assert ERISA preemption, Davis was denied permission to amend to raise the ERISA theory. Approximately four months remained before trial, the preparation for the defense of the various claims would be virtually the same, and the defendants would apparently suffer no prejudice. Under these facts, we believe the district court abused its discretion because the decision to deny Davis's amendment was based on clearly untenable grounds, Ashmead, 336 N.W.2d at 199, and was done without a valid justifying reason or due consideration of the justice of the result. Foman, 371 U.S. at 182, 83 S.Ct. at 230, L.Ed.2d at 226. Accordingly, we reverse and remand with instructions to enter an order allowing the amendment.