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Sentry Insurance A Mutual Company v. Brand Management Inc.

August 10, 2012


The opinion of the court was delivered by: Roanne L. Mann, United States Magistrate Judge:


In 2010, plaintiff Sentry Insurance a Mutual Company ("Sentry") filed a complaint against Brand Management, Inc. ("Brand"), Sentry v. Brand, 10-CV-347 (ENV) (the "Brand Action"), in which it asserted, inter alia, a breach of contract claim against Brand. In August 2011, Sentry brought an action against Budget Services, Inc. ("Budget") and Budget's owner, Hershel Weber ("Weber"), Sentry v. Budget et al., 11-CV-3966 (ENV) (the "Budget Action"), in which Sentry alleged claims against Budget and Weber that arose out of the same facts as in the Brand Action. On January 19, 2012, the Honorable Eric N. Vitaliano, the District Judge assigned to both cases, consolidated the Brand Action and Budget Action.

Currently pending before this Court are various pretrial motions in both the Brand Action and the Budget Action. The Court addresses each motion in turn below.


In order to provide the proper context for this Court's rulings, it is helpful to briefly address the unique procedural posture of these two cases.

On January 27, 2010, Sentry filed the Brand Action, which arose out of two Workers' Compensation policies that Sentry issued to Brand (the "Policies"). See Complaint ¶¶ 5-6, Electronic Case Filing ("ECF") Document Entry ("DE") #1.*fn1 Months later, at an initial conference, this Court gave the parties until July 16, 2010 to amend the pleadings and join additional parties as of right -- a deadline that was memorialized in a scheduling order, pursuant to Rule 16 of the Federal Rules of Civil Procedure ("FRCP"). See Minute Entry (May 7, 2010) ("5/7/10 Minute Entry"), DE #6. Consistent with the Court's Rule 16 deadline, on June 30, 2010, plaintiff filed an amended complaint adding claims against a new defendant, Dynamic Claim Services, Inc. See Amended Complaint, DE #7.*fn2 Thereafter, the parties sought an extension of the discovery deadline. See Proposed Scheduling Order (Sept. 22, 2010), DE #13. Notably, no party sought to extend the July 16, 2010 deadline to add new parties or amend the complaint. See id. Discovery in the Brand Action closed on April 1, 2011. See Order (Sept. 27, 2010) ("9/27/10 Order"), DE #16.

At the conclusion of discovery in the Brand Action, Judge Vitaliano set the matter down for a bench trial beginning on July 20, 2011. See Scheduling Order (June 20, 2011). On July 20, 2011, however, Brand informed Judge Vitaliano that it had voluntarily commenced bankruptcy proceedings, resulting in an automatic stay of the case. See Minute Entry (July 20, 2011), DE #49.

Shortly thereafter, Sentry commenced the Budget Action, bringing claims against Budget (an entity related to Brand and named with Brand in the Policies) and against Weber as an alter ego of Budget and related entities. See Budget Complaint (Aug. 17, 2011) ¶¶ 44-55, Budget DE #1.*fn3 Fact discovery proceeded in the Budget Action. See, e.g., Minute Entry (Nov. 8, 2011) ("11/8/11 Minute Entry"), Budget DE #15 (setting initial fact discovery deadline of April 27, 2012). Eventually, after the Brand bankruptcy proceeding was dismissed, see Letter (Oct. 3, 2011), DE #53, Sentry moved to consolidate the Budget and Brand Actions, see Motion to Consolidate Cases (Dec. 2, 2011), DE #55, and Judge Vitaliano granted the motion on January 19, 2012. See Order (Jan. 19, 2012).

Following consolidation, Sentry filed two motions in the Brand Action, seeking: (1) to amend its complaint against Brand a second time; and (2) to reopen discovery. In addition, several discovery-related disputes arose between the parties in the Budget Action, which led to the motions currently pending before this Court. The Court heard argument on the various motions at a settlement conference in the two actions on May 4, 2012. See Minute Entry (May 4, 2012), DE #114. On May 27, 2012, discovery in the Budget Action closed. See Endorsed Order (Feb. 23, 2012), DE #65.

The Court will first address the pending motions in the Brand Action, followed by the outstanding discovery motions in the Budget Action.


I. Sentry's Motion to Amend*fn4

Sentry seeks to amend its complaint in the Brand Action, pursuant to Rule 15 of the FRCP. See Letter Motion for Premotion Conference (Apr. 3, 2012) ("4/3/12 Pl. Mot."), DE #75. In particular, Sentry moves to (1) add Weber as a defendant, so that it may hold Weber liable as an alter ego, and (2) assert additional facts to bolster its unjust enrichment claim. See id. Both Brand and the Budget Defendants oppose Sentry's motion. See Budget Response to Motion Letter (Apr. 9, 2012) ("4/9/12 Budget Opp."), DE #78; Brand Response in Opposition to Motion Letter (Apr. 9, 2012), DE #80.*fn5

Typically, once an answer is served, Rule 15 allows a plaintiff to amend its complaint "only with the opposing party's written consent or the court's leave," Fed. R. Civ. P. 15(a)(2), and a court should "freely give" leave to amend "when justice so requires." Id.; Anderson News, LLC v. Am. Media, Inc., 680 F.3d 162, 185 (2d Cir. 2012) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).

Nevertheless, where, as here, the Court has set a scheduling order pursuant to Rule 16, the Court must first address whether the party seeking to amend has shown "good cause" for modifying the scheduling order. See Fed. R. Civ. P. 16(b)(4); Kassner v. 2nd Ave. Delicatessen, Inc., 496 F.3d 229, 243-44 (2d Cir. 2007). One purpose of Rule 16 is to "offer a measure of certainty in pretrial proceedings, ensuring that 'at some point both the parties and the pleadings will be fixed.'" Parker v. Columbia Pictures Indus., 204 F.3d 326, 340 (2d Cir. 2000) (quoting Fed. R. Civ. P. 16 advisory committee's note (1983)). If the party seeking the amendment satisfies the "good cause" standard of Rule 16, the Court must then determine whether the movant also meets the liberal standards of Rule 15. See Kassner, 496 F.3d at 244.

"Whether good cause exists turns on the diligence of the moving party." Holmes v. Grubman, 568 F.3d 329, 335 (2d Cir. 2009) (internal quotations and citations omitted). A party is not diligent if a request to reopen discovery is based on information "that the party knew, or should have known," in advance of the deadline sought to be extended. See Sokol Holdings, Inc. v. BMB Munai, Inc., No. 05 Civ. 3749 (KMW) (DF), 2009 WL 2524611, at *8 (S.D.N.Y. Aug. 14, 2009) (collecting cases), aff'd, 2009 WL 3467756 (S.D.N.Y. Oct. 28, 2009).

The parties erroneously analyze Sentry's motion to amend under Rule 15 standards. See 4/3/12 Pl. Mot. at 2-3; 4/9/12 Budget Opp. at 2. Where, as here, a Rule 16 scheduling order has been entered, the Court in the first instance must determine whether the party seeking to amend has met the "good cause" requirement of Rule 16. Pursuant to this Court's May 7, 2010 scheduling order in the Brand Action, the parties had until July 16, 2010 to amend their pleadings and join additional parties. Sentry did not move to amend its complaint until April 3, 2012 -- almost two years after the deadline to amend had passed. Sentry's motion is silent as to when it uncovered the facts underlying its proposed amendments. In short, there is no factual basis for a finding by this Court that Sentry acted diligently in seeking to amend. Therefore, Sentry has not shown good cause under Rule 16 for amending its complaint so late in the litigation, which, notably, was originally deemed trial ready as of July 2011. Therefore, the motion to amend the Brand complaint is denied.

II. Sentry's Motion to Reopen Discovery

Sentry also moves to reopen discovery in the Brand Action, even though discovery in that case closed sixteen months ago, on April 1, 2011. See Letter Motion for Discovery (Apr. 9, 2012) ("4/9/12 Pl. Mot."), DE #77; 9/27/10 Order. In particular, Sentry seeks written discovery from Brand related to its alter ego claim against Weber in the Budget Action. ...

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