Opinion ID: 2734199
Heading Depth: 3
Heading Rank: 3

Heading: Denial of the Haydens’ Motion to Amend

Text: The Haydens also argue that the District Court abused its discretion by denying their Motion to Amend, contending that the District Court “focused almost exclusively on why the joinder of an additional defendant was improper, while paying little notice to how the Haydens’ new allegations would affect or aid their bad faith case.” Appellant’s Br. 13. We disagree. The District Court denied the Haydens’ Motion to Amend for the reasons set forth in its order denying the Motion to Join DRS, which, in turn, referenced the Haydens’ delay, lack of subject matter jurisdiction, and distinctions between the new allegations and the original allegations against Westfield. Thus, although delay alone would not be a sufficient basis to deny a motion to amend, Cureton v. Nat’l Collegiate Athletic Ass’n, 252 F.3d 267, 273 (3d Cir. 2001); Cornell & Co. v. Occupational Safety & Health Review Comm’n, 573 F.2d 820, 823 (3d Cir. 1978), the record here amply supports the District Court’s decision. Indeed, as to the proposed allegations against DRS, the record demonstrates that in addition to the rationale articulated by the District Court, any amendment would have been futile. Leave to amend may be denied for futility if “the complaint, as amended, would fail to state a claim upon which relief could be granted,” Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000); In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 11 1434 (3d Cir. 1997), or where a federal court would lack subject matter jurisdiction over the amended complaint, see Miklavic v. USAir Inc., 21 F.3d 551, 557-58 (3d Cir. 1994). Futility is apparent here because DRS had not been joined as a defendant and the District Court lacked subject matter jurisdiction over the Haydens’ proposed claim against DRS. Furthermore, as to the proposed allegations against Westfield, the record reflects that allowing an amendment at such a late stage would have been prejudicial to Westfield. “A district court may deny leave to amend a complaint if a plaintiff’s delay in seeking amendment is undue, motivated by bad faith, or prejudicial to the opposing party.” Cureton, 252 F.3d at 272-73 (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Factors to consider include “whether allowing an amendment would result in additional discovery, cost, and preparation to defend against new facts or new theories.” Cureton, 252 F.3d at 273. Here, the new allegations the Haydens sought to raise against Westfield arose out of a distinct event—the February 2013 repairs to their roof—and would have subjected Westfield to a new wave of discovery despite the Haydens’ failure to comply with the District Court’s order to compel. Moreover, the Haydens filed their Motion to Amend on May 23, 2013, after full briefing on Westfield’s motion for summary judgment, so that adding new allegations would have required a new round of dispositive motions. Whereas Westfield would have been prejudiced by the introduction of new allegations after eighteen months of litigation, the Haydens were not prejudiced by the denial of their motion, as they could still assert their new claims in a future action, and, indeed, have 12 since done so in state court. Under these circumstances, denial of the Motion to Amend was proper.7 d. Denial of the Haydens’ Motion to Voluntarily Dismiss Their Complaint Finally, the Haydens argue the District Court abused its discretion by denying their Motion to Dismiss. After a summary judgment motion has been filed, “an action may be dismissed at the plaintiff’s request only by court order, on terms that the court considers proper,” Fed. R. Civ. P. 41(a)(2), and the decision to allow voluntary dismissal is left to the sound discretion of the district court, Ferguson v. Eakle, 492 F.2d 26, 29 (3d Cir. 1974); Ockert v. Union Barge Line Corp., 190 F.2d 303, 304 (3d Cir. 1951). That said, “Rule 41 motions should be allowed unless [the] defendant will suffer some prejudice other than the mere prospect of a second lawsuit.” In re Paoli R.R. Yard P.C.B. Litig., 916 F.2d at 863 (internal quotation marks omitted). 7 The Haydens argue that “[t]he continuing conduct on the part of the insurer is directly relevant to [their] bad faith claim against Westfield,” relying on W.V. Realty, Inc. v. Northern Insurance Co., 334 F.3d 306, 314 (3d Cir. 2003) (“W.V. Realty”). Appellant’s Br. 11. Plaintiffs’ reliance on W.V. Realty is misplaced. W.V. Realty recognized certain circumstances where courts have permitted bad faith claims to survive motions to dismiss based on conduct that occurred after the insured filed suit, including where insurers made misrepresentations to the court, filed baseless or abusive motions, or engaged in other conduct “beyond a discovery violation[] suggesting that the conduct was intended to evade the insurer’s obligations under the insurance contract.” 334 F.3d at 314. Neither the Haydens’ Motion to Amend nor their proposed Second Amended Complaint alleged sufficient facts to illustrate how Westfield’s conduct in hiring DRS to replace the tarp on the Haydens’ roof constituted continuing bad faith. Rather, the Haydens simply alleged that DRS was negligent in replacing the tarp and that Westfield was responsible. In any event, this argument does not change our holding that denial of amendment was appropriate because of prejudice to Westfield. 13 We conclude, however, that there was sufficient prejudice to warrant denial of dismissal here. Chief among the factors to consider in determining whether a defendant will suffer prejudice are the extent to which litigation has progressed and the extent to which the defendant will be exposed to new litigation in another forum. See Ferguson, 492 F.2d at 28-29; Ockert, 190 F.2d at 304 (noting that voluntary dismissal is “an increasingly burdensome matter to one’s opponent” after an answer is filed and case preparation progresses). Our decision in Ferguson is instructive. There, we determined that the district court abused its discretion in permitting the plaintiffs’ voluntary dismissal because of the prejudice to the defendants who were “ordered to defend anew” in state court “[f]ourteen months after they became defendants in one case . . . and at least two months after they had expected that all discovery had been completed.” Ferguson, 492 F.2d at 29. Recognizing that the plaintiffs were primarily motivated by a desire to combine the action with a suit against a different defendant in state court (one whose joinder in the federal action would have destroyed diversity), we held that their desire to “kill two birds with one stone” was not a compelling reason to dismiss at such a late date, and we “express[ed] extreme doubt that these circumstances would have been persuasive” even if the motion to dismiss had been presented prior to the close of discovery. Id. at 29 & n.8. Those same considerations apply with even more force here. The Haydens’ Motion to Dismiss came seventeen months after the start of litigation and six months after the close of discovery, and as the District Court noted, it is apparent that their 14 primary, if not only, reason for dismissal was to litigate against both Westfield and DRS in state court, i.e., to “kill two birds with one stone.” The Haydens contend that Westfield will suffer little prejudice because it can use the same arguments, depositions, testimony, and documents in state court as it did in federal court, but Westfield’s ability to recycle its federal court litigation materials is little consolation, particularly when Westfield evidently never received much of the discovery it sought from the Haydens, even after its successful motion to compel. Under these circumstances, the District Court did not abuse its discretion in denying the Haydens’ Motion to Dismiss.