United States District Court, S.D. New York
OPINION AND ORDER
GREGORY H. WOODS, UNITED STATES DISTRICT JUDGE
Plaintiff Hartford Fire Insurance Company seeks leave to
amend its answer and third-party complaint-after the close of
all discovery―to plead three additional affirmative
defenses. Despite counsel's lack of diligence in seeking
leave to add those defenses to the case at an earlier stage,
the motion is GRANTED.
insurance dispute arises out of alleged losses incurred at a
construction project located at 66 Boerum Place in Brooklyn,
New York. Plaintiff CAC Atlantic, LLC holds an ownership
interest in the property and was issued a Builder's Risk
Insurance Policy (the “Policy”) by Defendant
Hartford Fire Insurance Company. The Policy covers
“risks of direct physical ‘loss' to Covered
Property from any external cause except those causes of
‘loss' listed in the Exclusions.” Decl. of
Sanjit Shah in Supp. of Mot. for Leave to Amend (ECF No. 84),
Ex. 2, § A.3.
2016, Plaintiff filed a complaint in the New York State
Supreme Court, seeking to recover at least $16, 500, 000 in
proceeds under the Policy for losses sustained in relation to
the construction project. Defendant timely removed the case
to this Court on July 8, 2016. On July 18, 2016, Defendant
filed an answer as well as a counterclaim for declaratory
judgment. ECF No. 6. In its answer, Defendant pleaded two of
the Policy's several exclusions as affirmative defenses:
(1) an exclusion for defective, deficient, or flawed
workmanship and (2) an exclusion for dishonest or criminal
acts. Id. at ¶¶ 13-14. Shortly thereafter,
on August 1, 2016, Defendant filed a third-party complaint
against ACHS Management Corp., Harco Construction LLC, and
Harco Consultants Corp., each of whom are listed as named
insureds in the Policy. ECF No. 24. In its third-party
complaint, Defendant seeks the same relief it seeks in its
counterclaim against Plaintiff, namely, a judgment declaring
that is not required to pay out insurance proceeds as a
result of the alleged loss. Id. ¶¶ 22-31.
Defendant pleads the same two exclusions in its third-party
complaint. Id. ¶¶ 10-11.
August 1, 2016, the Court entered a case management plan and
scheduling order, which provided that any motion to amend the
pleadings was to be filed no later than August 31, 2016, that
fact discovery in this matter was to be completed by December
16, 2016, and that expert discovery was to be completed by
February 17, 2017. ECF No. 25. After several extensions, the
period for fact discovery closed on February 15, 2017, and
the period for expert discovery closed on March 31, 2017.
See ECF No. 67. The Court never granted-nor did any
party request-an extension of the deadline to amend the
April 7, 2017, Defendant filed a letter requesting that the
Court hold a pre-motion conference to discuss its proposed
motion for summary judgment. ECF No. 76. In that letter,
Defendant expressed its intention to move on the ground that
the alleged loss fell within certain exclusions that had been
pleaded in neither the answer nor the third-party complaint.
In a response letter, Plaintiff objected to Defendant filing
a motion for summary judgment on those grounds, in large part
because those exclusions had not been pleaded in the answer.
ECF No. 77.
a pre-motion conference held on April 17, 2017, the Court
established a briefing schedule for a motion for leave to
amend the answer to plead the additional exclusions.
Defendant filed its motion on May 17, 2017. ECF No. 82.
Defendant seeks leave to amend both the answer and the
third-party complaint to plead three additional Policy
exclusions as affirmative defenses: (1) an exclusion for loss
caused by delay; (2) an exclusion for loss caused by latent
defect; and (3) an exclusion for loss caused by acts, errors,
or omissions in planning, zoning, and development.
Id. Plaintiff filed an opposition to the motion on
June 5, 2017, ECF No. 86, and Defendant filed a reply in
support of its motion on June 12, 2017, ECF No. 87.
the Federal Rules of Civil Procedure, a party may amend a
pleading once as a matter of right within 21 days of serving
it or, “if the pleading is one to which a responsive
pleading is required, 21 days after service of a responsive
pleading or 21 days after service of a motion under Rule
12(b), (e), or (f), whichever is earlier.” Fed.R.Civ.P.
15(a)(1). After that point, absent written consent from the
opposing party, leave to amend must be obtained from the
district court. Fed.R.Civ.P. 15(a)(2). Rule 15(a)(2) provides
that courts “should freely give leave when justice so
requires.” “Reasons for a proper denial of leave
to amend include undue delay, bad faith, futility of
amendment, and perhaps most important, the resulting
prejudice to the opposing party.” AEP Energy Servs.
Gas Holding Co. v. Bank of Am., N.A., 626 F.3d 699, 725
(2d Cir. 2010) (citation omitted); see also Id.
(“The rule in this Circuit has been to allow a party to
amend its pleadings in the absence of a showing by the
nonmovant of prejudice or bad faith.”).
parties correctly recognize, however, “where the court
has already entered a scheduling order in the case, a party
requesting leave to amend must satisfy the ‘good
cause' standard set forth in Rule 16(b).”
Cummins, Inc. v. New York Life Ins., No. 10-cv-9252
(TPG), 2012 WL 3870308, at *3 (S.D.N.Y. Sept. 6, 2012);
see In re Wireless Telephone Servs. Antitrust
Litig., No. 02-cv-2637 (DLC), 2004 WL 2244502, at *5
(S.D.N.Y. Oct. 6, 2004) (“Rule 16(b) governs the
instant motion for leave to amend.”); see also
Parker v. Columbia Pictures Indus., 204 F.3d 326, 340
(2d Cir. 2000) (“Several circuits have ruled that the
Rule 16(b) ‘good cause' standard, rather than the
more liberal standard of Rule 15(a), governs a motion to
amend filed after the deadline a district court has set for
amending the pleadings. . . . We now join these courts in
holding that despite the lenient standard of Rule 15(a), a
district court does not abuse its discretion in denying leave
to amend the pleadings after the deadline set in the
scheduling order where the moving party has failed to
establish good cause.”). The purpose of Rule 16(b) is
“to offer a measure of certainty in pretrial
proceedings, ensuring that at some point both the parties and
the pleadings will be fixed.” Id. at 339-40.
determining whether good cause exists, “the primary
consideration is whether the moving party can demonstrate
diligence.” Kassner v. 2nd Ave. Delicatessen
Inc., 496 F.2d 229, 244 (2d Cir. 2007). But diligence is
not the only consideration. “The district court, in the
exercise of its discretion under Rule 16(b), also may
consider other relevant factors including, in particular,
whether allowing the amendment of the pleading at this stage
of the litigation will prejudice [the opposing party].”
explained below, the Court finds that counsel for Defendant
has failed to show that it acted diligently in seeking leave
to make its desired amendment. Nevertheless, because the
Court cannot discern significant prejudice to Plaintiff and
Third-Party Defendants from allowing the amendment, and
because the Court is hesitant to saddle Defendant itself with
its counsel's failure by precluding Defendant from
pursuing the three ...