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United States District Court, Southern District of New York

September 11, 2003


The opinion of the court was delivered by: Denise Cote, District Judge


Defendant Insurance Company of North America ("INA") has moved for leave to amend its answer to file a counterclaim for reformation. This declaratory judgment action for insurance coverage under a marine protection and indemnity policy (the Page 2 "Policy") brought under 28 U.S.C. § 1332, 1333, 2201, was filed on January 3, 2003. The Amended Complaint, filed on February 11, alleges causes of action for a declaratory judgment of the rights of the parties under the Policy, reformation, breach of contract, professional negligence, negligent misrepresentation, and equitable estoppel. The two causes of action alleged against INA are for a declaratory judgment and reformation. INA's Answer, including a counterclaim seeking a declaratory judgment of the rights of the parties under the Policy and a crossclaim for indemnification, was filed on March 20. On June 10, after limited discovery, INA filed the instant motion for leave to amend its answer and add a counterclaim. For the reasons stated below the motion is granted.


Plaintiff Florida Day Cruises, Inc. ("FDC") is a Florida corporation that operates cruise ships which offer day and evening cruises with gambling in international waters. INA is a Pennsylvania corporation that provides various types of insurance policies, including protection and indemnification policies ("P&I" coverage) to the maritime industry. Defendant Willis of Alabama, Inc. ("Willis") is an Alabama corporation that operates as an insurance broker for entities seeking insurance coverage in various industries, including the maritime industry.

The following facts are as alleged in the amended complaint or undisputed. In July 2001, FDC sought a marine policy with P&I Page 3 coverage for its vessel the M/V Texas Treasure which conducted daily excursions from Nueces County, Texas. Willis, acting as a broker for INA, obtained the insurance coverage at issue. A non-party, International Special Risks, Inc. ("ISR") acted as an agent for INA with regard to INA's dealings with Willis for the procurement of insurance from FDC.

On July 9, 2001, Willis informed INA, through ISR, that according to the applicable charter agreement, FDC was required to carry P&I coverage with no more than a $15,000 deductible. On July 12, Willis informed INA, through ISR, that coverage should be bound effective July 13. The P&I coverage provided by Willis on July 12 included $1.0 million for any one accident or occurrence, a $15,000 deductible for any one accident or occurrence, and indemnification for any payments made to cover any damage caused by the assured vessel to any dock or pier. On July 28, the M/V Texas Treasure allided with a dock. FDC paid $433,145.65 to repair the damage caused to the dock by the allision and has provided INA with copies of the repair invoices.

INA refuses to reimburse FDC. INA asserts several affirmative defenses, including affirmative defenses that contend that the Policy does not cover claims for this type of damage and that a $230,000 deductible would apply to such damages if they were covered under the Policy. Page 4


Under Rule 15(a), Fed.R. Civ. P., once a responsive pleading has been served, a party may amend its pleadings "only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." The Supreme Court has emphasized that amendment should normally be permitted and that a refusal to grant leave must be justified by grounds such as undue delay, bad faith, or futility. Foman v. Davis, 371 U.S. 178, 182 (1962); Kropelnicki v. Siegel, 290 F.3d 118, 130 (2d Cir. 2002). The adequacy of an amendment "is to be judged by the same standards as those governing the adequacy of a filed pleading." Ricciuti v. N.Y.C. Transit Auth., 941 F.2d 119, 123 (2d Cir. 1991). Thus, a proposed amendment to a pleading is futile if it cannot withstand a motion to dismiss pursuant to Rule 12(b)(6). Lucente v. IBM, 310 F.3d 243, 258 (2d Cir. 2002).*fn1 A district court "enjoys wide discretion in its handling of pre-trial discovery." Am. Sav. Bank, FSB v. UBS PaineWebber, Inc., 330 F.3d 104, 108 (2d Cir. 2003).

INA seeks to add a counterclaim for reformation to establish that the Policy contains a term requiring a $230,000 deductible. Page 5 It asserts that its motion is based on the May 20, 2003, deposition of the placing broker for ISR, Bonnie Levine (the "Levine Deposition"), who gave testimony, according to INA, that establishes that the deductible for the Policy is $230,000. INA's motion does not reflect any undue delay, bad faith or futility and is therefore granted.

FDC's arguments in opposition to the motion are unavailing. FDC's argument that the Levine Deposition does not provide a "factual foundation" for the proposed counterclaim fails. INA does not have to establish a factual basis for its motion and FDC has not requested that this motion be converted into one for summary judgment.

FDC next argues that INA's motion is untimely since it violates, without adequate explanation, the May 30, 2003, deadline (the "May 30 Deadline") for the amendment of pleadings set in the Pretrial Scheduling Order of April 14, 2003. This argument is unpersuasive. INA has not engaged in undue delay in bringing its motion. It brought its motion approximately three weeks after the Levine Deposition and only ten days after the May 30 Deadline. Moreover, there is no prejudice here, because INA had already pleaded an affirmative defense containing the same factual assertion and because discovery is not scheduled to close until September 12, 2003. INA's motion will thus be construed as a request for a 10 day extension of the May 30 Deadline and is granted nunc pro tunc. Page 6

Finally, FDC's argument, based on D.C. Comics v. Kryptonite Corp., No. 00 Civ. 5562(AGS), 2002 WL 1303110 (S.D.N.Y., June 13, 2002), that INA's motion is superfluous since FDC's amended complaint contains a claim for reformation and since INA has already asserted an affirmative defense containing the same factual assertion is misplaced. Unlike the situation here, the court in D.C. Comics rejected the plaintiff's proposed amendment because it sought essentially identical relief to that the plaintiff was already seeking. Id. at *5.*fn2 INA's counterclaim for reformation is not seeking identical relief, because its affirmative defense regarding the deductible does not seek to reform the Policy. Additionally, a defendant's ability to assert counterclaims is not impaired simply because the claim resembles one of the plaintiff's causes of action.


For the reasons stated, INA's motion for leave to amend its Page 7 answer to add a counterclaim is granted.*fn3


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