United States District Court, D. Maryland
THE HUMANE SOCIETY OF THE UNITED STATES, et al.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.
DEBORAH K. CHASANOW United States District Judge.
multi-faceted insurance coverage dispute, several matters are
ready for resolution. First, Plaintiffs The Humane Society of
the United States (“HSUS”), Jonathon Lovvorn, and
Kimberly Ockene (collectively, the “Plaintiffs”)
seek leave to amend their complaint. (ECF No. 90). Second,
the parties dispute whether Plaintiffs have satisfied - or
can satisfy -their discovery obligations concerning legal
defense costs being sought. (ECF Nos. 89; 92; 93). For the
following reasons, Plaintiffs’ motion for leave to
amend will be denied, and the court will grant the parties 60
days of additional discovery regarding defense costs in the
underlying Feld Litigation.
Plaintiffs’ Motion for Leave to Amend
complete recitation of the factual background can be found in
the court’s prior memorandum opinion on summary
judgment. (See ECF No. 84, at 1-7). The initial
complaint in this case was filed in the Circuit Court for
Montgomery County, and Defendant National Union Fire
Insurance Company of Pittsburgh, PA (“National
Union” or “Defendant”) removed the action
to this court. (ECF No. 1). As currently applicable,
Plaintiffs assert a claim for insurance coverage against
Defendant in connection with a lawsuit filed against them by
Feld Entertainment, Inc. HSUS is a national nonprofit
organization dedicated to protecting animals, and Mr. Lovvorn
and Ms. Ockene are employed as attorneys with HSUS. According
to Plaintiffs, Defendant:
breached the terms of the [Management Liability, Professional
Liability, Crime Coverage and Kidnap and Ransom/Extortion
Coverage for Non Profit Organizations, Policy No.
01-932-56-98, for the policy period June 1, 2009, to June 1,
2010 (the “2009-2010 D&O Policy”)] by
refusing to pay the losses that Plaintiffs may, are, or will
be obligated to pay because of the Feld Litigation.
(ECF No. 2 ¶ 36). Plaintiffs also seek a declaratory
judgment that Defendant is obligated to pay all losses that
Plaintiffs may become legally obligated to pay in the Feld
Litigation. (Id. ¶ 46).
original scheduling order set August 15, 2013, as the
deadline for the amendment of pleadings. (ECF No. 11, at 2).
Although the discovery deadlines were extended, the deadline
to amend pleadings and add parties was not modified. A
subsequent scheduling order established that the parties
would complete discovery on or before October 10, 2014, and
file dispositive motions by November 20. (ECF No. 62).
discovery concluded, Defendant moved for summary judgment.
(ECF No. 68). On July 30, 2015, the court issued a memorandum
opinion and order granting in part and denying in part
Defendant’s motion for summary judgment. (ECF Nos. 84;
85). The court entered judgment in favor of Defendant on a
portion of Plaintiffs’ breach of contract claim,
concluding that “no coverage is available for HSUS
under [Coverage C of] the 2009-2010 [D&O] Policy.”
(ECF No. 84, at 25). Defendant’s summary judgment
motion was denied as to the individual plaintiffs, Mr.
Lovvorn and Ms. Ockene. (See Id. at
25-39).The parties participated in telephonic
conferences on August 26 and September 9. On September 8,
Plaintiffs for the first time expressed their intent to seek
leave to file an amended complaint. (See ECF No.
response to the court’s letter order confirming matters
discussed during the conference call, Plaintiffs filed the
pending motion for leave to amend. (ECF No. 90). Defendant
responded in opposition (ECF No. 91), and Plaintiffs replied
(ECF No. 94). In the proposed amended complaint, Plaintiffs
seek to add claims for breach of contract and declaratory
judgment under two additional insurance policies that
Defendant sold to HSUS: Policy No. 965-95-51, for the period
January 1, 2007, to January 1, 2008 (the “2007-2008
D&O Policy”); and Professional Liability Insurance
for Corporate Counsel, Policy No. 01-950-29-84, for the
period June 1, 2009, to June 1, 2010 (the “Employed
Lawyers Policy”). (See ECF No.
Standard of Review
deadline established by the scheduling order for the
amendment of pleadings was August 15, 2013, and that deadline
has long since passed. (ECF No. 11). Consequently, Plaintiffs
must do more than satisfy the liberal standard of
Fed.R.Civ.P. 15(a); they must first meet the mandates of
Fed.R.Civ.P. 16(b)(4), which calls for “good
cause” to modify a scheduling order. See Nourison
Rug Corp. v. Parvizian, 535 F.3d 295, 298-99
(4th Cir. 2008); Elat v. Ngoubene, 993
F.Supp.2d 497, 519-20 (D.Md. 2014) (applying a two-prong test
under Rules 16(b)(4) and 15(a) in analyzing an untimely
motion for leave to amend).
schedule may be modified only for good cause and with the
judge’s consent.” Fed.R.Civ.P. 16(b)(4); see
Nourison, 535 F.3d at 298 (“[D]istrict courts
require the effective case management tools provided by Rule
16. Therefore, after the deadlines provided by a scheduling
order have passed, the good cause standard must be satisfied
to justify leave to amend the pleadings.”). The movant
satisfies the good cause requirement by showing that, despite
due diligence, it could not have brought the proposed claims
in a reasonably timely manner. See Montgomery v. Anne
Arundel County, Md., 182 F.App’x 156, 162
(4thCir. 2006); Rassoull v. Maximus,
Inc., 209 F.R.D. 372, 374 (D.Md. 2002); Potomac
Elec. Power Co. v. Elec. Motor Supply, Inc., 190 F.R.D.
372, 375 (D.Md. 1999) (“Properly construed, ‘good
cause’ means that scheduling deadlines cannot be met
despite a party’s diligent efforts.” (citation
and internal quotation marks omitted)). The factors courts
consider in determining good cause are the “danger of
prejudice to the non-moving party, the length of delay and
its potential impact on judicial proceedings, the reason for
the delay, and whether the movant acted in good faith.”
Tawwaab v. Va. Linen Serv., Inc., 729 F.Supp.2d 757,
768-69 (D.Md. 2010) (citation and internal quotation marks
omitted). As Judge Williams explained:
Courts in the [United States Court of Appeals for the] Fourth
Circuit deny leave to amend a complaint past the deadline
established by a scheduling order where the moving party has
been careless in developing his claims or where he has failed
to satisfactorily account for his failure to do so.
Compare Whichard v. Specialty Restaurants Corp., 220
F.R.D. 439, 441 (D.Md. 2004) (denying plaintiff’s
motion to join an additional defendant five months after the
court imposed deadline because plaintiff had ample notice
before the deadline that the original defendant might not be
the right party) with Long v. Blair, No.
2:09-CV-00349, 2010 WL 1930220 (S.D.W.Va. May 12, 2010)
(holding that good cause existed where the plaintiff did not
establish a sufficient evidentiary basis to support new
claims until after the deadline for amending his complaint
and moved to amend immediately after the new evidence came to
Id. at 769. The dictates of Rule 16(b) are not to be
taken lightly, as “a judge’s scheduling order is
not a frivolous piece of paper, idly entered, which can be
cavalierly disregarded by counsel without peril.”
Potomac Elec., 190 F.R.D. at 375 (citation and
internal quotation marks omitted).
16(b) is not satisfied, there is no need to consider Rule
15(a). See Nourison, 535 F.3d at 299; Marcum v.
Zimmer, 163 F.R.D. 250, 254 (S.D.W.Va. 1995)
(“[T]he focus of the inquiry is upon the moving
party’s reasons for seeking modification. If that party
was not diligent, the inquiry should end.”). Once the
movant has met the burden of showing good cause, however, the
inquiry shifts to Rule 15(a), which provides that
“court[s] should freely give leave [to amend a
pleading] when justice so requires.” Fed.R.Civ.P.
15(a)(2). Denial of leave to amend is appropriate
“only when the amendment would be prejudicial
to the opposing party, there has been bad faith on the part
of the moving party, or the amendment would be futile.”
Edwards v. City of Goldsboro, 178 F.3d 231, 242
(4thCir. 1999) (emphasis in original) (quoting
Johnson v. Oroweat Foods Co., 785 F.2d 503, 509
(4th Cir. 1986)). Leave to amend may be denied as
futile “if the proposed amended complaint fails to
satisfy the requirements of the federal rules, ”
including federal pleading standards. Katyle v. Perm Nat.
Gaming, Inc., 637 F.3d 462, 471 (4th Cir.
2011) (quoting United States ex rel. Wilson v. Kellogg
Brown & Root, Inc., 525 F.3d 370, 376
(4th Cir. 2008)).
proposed amendments add claims for breach of contract and
declaratory judgment under two additional insurance policies
that Defendant sold to HSUS, the 2007-2008 D&O Policy and
the Employed Lawyers Policy. In their motion, Plaintiffs
addressed only the liberal standards of Rule 15(a) regarding
amendments to pleadings. According to Plaintiffs:
The [c]ourt should grant Plaintiffs’ motion for leave
to amend because: (1) Plaintiffs have a good-faith basis to
add claims under the 2007-2008 D&O Policy and the
Employed Lawyer[s] Policy because [Defendant] has breached .
. . its coverage obligations under these policies; (2)
[Defendant] will not be prejudiced by amendment; and (3)
amendment is not futile.
. . . [I]n granting [Defendant] summary judgment [on
Plaintiffs’] claim for coverage under Coverage C . . .
in the 2009-2010 D&O Policy, the [c]ourt opened the
prospect for coverage under the 2007-2008 D&O Policy,
causing Plaintiffs to give notice under [the 2007-2008
(ECF No. 90-1, at 4-5). Plaintiffs further assert that
“granting Plaintiffs’ motion to amend will
promote interests of judicial economy by allowing disputes
over coverage under all three [p]olicies to be resolved in
one litigation, thereby avoiding costly and unnecessarily
duplicative litigation and the possibility of inconsistent
results.” (Id. at 5). In the pending motion,
however, Plaintiffs neglect to consider Rule 16(b) and their
burden to show good cause to modify the existing scheduling
to Defendant, Plaintiffs’ failure to address good cause
under Rule 16(b) in their pending motion is alone sufficient
to warrant denial. Defendant argues that:
Plaintiffs would not have been able to meet their burden . .
. because they cannot show that they were diligent in seeking
leave to amend in light of their admission that they
believed, as far back as 2010, that the 2007-2008 D&O
Policy and the . . . Employed Lawyers Policy covered the Feld
Litigation. Despite this belief, Plaintiffs waited more than
two years after the [s]cheduling [o]rder deadline for
amendments, close to a year after the 15-month discovery
period ended, and nearly two months after this [c]ourt
decided [Defendant’s] dispositive motion, to file a
[m]otion for [l]eave to [a]mend their complaint.
(ECF No. 91, at 1). Assuming arguendo that Plaintiff
can satisfy Rule 16(b), Defendant contends that Rule 15(a)
mandates denial of Plaintiffs’ motion because
Plaintiffs acted in bad faith and, furthermore, because the
proposed amended ...