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AIG Property Casualty Co. v. Eaton Corp.

United States District Court, D. Maryland

April 12, 2019

AIG PROPERTY CASUALTY CO., Plaintiff
v.
EATON CORP., Defendant.

          MEMORANDUM

          James K. Bredar Chief Judge.

         This is a subrogation matter arising from a residential fire. Plaintiff AIG Property Casualty Company insured the residence and, pursuant to the terms of its insurance policy, paid the estate of the insured homeowners over $19 million for real and personal property damage. Following investigations into the fire, AIG sued Defendant Eaton Corporation in Anne Arundel County Circuit Court. Eaton removed the case to this Court. At present, AIG moves for leave to amend the complaint, and Eaton opposes the amendment. The motions have been fully briefed, and no. hearing is required. See Local Rule 105.6 (D. Md. 2018). For the reasons set forth below, the Court will deny AIG's motion for leave to amend the complaint.

         I. Background[1]

         The fire occurred in the early hours of January 19, 2015. (Am. Compl. ¶ 10, ECF No. 25-1.) It spread rapidly, destroying the house and, tragically, killing its six occupants-the two homeowners and four of their grandchildren. (Id.) This case is limited to payments for the property damage.

         A combined federal and local investigation found that the fire started near a Christmas tree.[2] (Id. ¶ 11.) Approximately twenty private entities, including AIG, continued investigating the fire. (AIG Status Report, ECF No. 18.) The private investigation included two additional weeks of excavation at the end of which AIG asserted that the cause of the fire was a specific, defective product. (Id.) On January 10, 2018, AIG sued Eaton for strict liability, alleging that "the fire started at a relocatable power tap ('RPT') which was used to power the lights of the Christmas tree." (Compl. ¶ 11, ECF No. 1-2.) In that initial complaint, AIG alleged that Eaton manufactured and sold the RPT. (Id. ¶ 12.) Because Eaton contended that it neither manufactured nor sold the RPT, (see AIG Status Report), this Court granted the parties' consent motion to engage in a period of limited discovery to resolve the "product identification issue." (Consent Mot., ECF No. 19; Order, ECF No. 20.)

         As a result of AIG's discovery findings, AIG seeks to change the product that is the basis of the strict liability claim. AIG now alleges that "the fire started at a plug for what [AIG] originally believed was a relocatable power tap" but what investigation revealed was "a polarized super plug ('PSP') model 2600." (Am. Compl. ¶ 11-12.) The "plug," newly referenced in the proposed amended complaint, is a small metal plug blade bearing an "Eagle" logo. (Mot. to Amend Mem. at 2, ECF No. 25-3.) AIG alleges that the PSP was manufactured and sold by Eaton's predecessor, Eagle Electric Manufacturing. (Am. Compl. ¶ 13.) In essence, AIG replaces RPT with PSP throughout the proposed amended complaint.

         For clarity, the Court will refer to the RPT as the power strip and the PSP as the super plug. Therefore, the initial complaint involved the power strip claim and the proposed amended complaint would involve the super plug claim.

         II. Analysis

         AIG moves for leave to amend. In its motion, AIG explains that, at the time it filed suit, it believed the plug blade was part of the power strip. After the limited discovery period, Eaton's responses convinced AIG that the plug blade did not belong to the power strip but, rather, to the super plug. According to AIG, it seeks to amend to "properly identify the product at issue." (Mot. to Amend Mem. at 3.) AIG's explanation, however, does nothing to clarify how the plug blade caused the fire and, thus, is the "product at issue."

         Pursuant to Federal Rule of Civil Procedure 15(a)(2), the Court should "freely give" a party leave to amend its pleadings "when justice so requires." See Jones v. Ceres Terminal, Inc., Civ. No. JKB-14-1889, 2014 WL 5088281, at *2 (D. Md. Oct. 8, 2014) ("Whether to permit the Plaintiff to file an amended complaint is a question that falls within the Court's discretion..., "). "This directive gives effect to the federal policy in favor of resolving cases on the merits instead of disposing of them on technicalities." Mayfield v. Nat'l Ass'n for Stock Car Auto. Racing, Inc., 674 F.3d 369, 379 (4th Cir. 2012). Consequently, "leave to amend a complaint should be denied 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." Edell & Assocs., P.C. v. Law Offices of Peter G. Angelos, 264 F.3d 424, 446 (4th Cir. 2001). Eaton raises futility.

         A court may deny leave to amend as futile if the proposed amended complaint would not survive a motion to dismiss for failure to state a claim. United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008); see Ross v. Cecil Cty. Dep't of Soc. Servs., Civ. No. WDQ-11-181, 2012 WL 346625, at *2 (D. Md. Jan. 31, 2012) (analyzing futility under Rule 12(b)). But, leave to amend should only be denied as futile when the proposed amended complaint is clearly insufficient on its face. Johnson v. Oroweat Foods Co., 785 F.2d 503, 510 (4th Cir. 1986). Eaton argues that amending would be futile because AIG's super plug claim is (1) implausible and (2) barred by the statute of limitation. Eaton prevails on either ground.

         A. Failure to State a Claim

         The Court turns first to plausibility.[3] "The standard for futility [for failure to state a claim] is the same as for a motion to dismiss under Rule 12(b)(6)." Bilghtwell v. Hershberger, Civ. No. DKC-11-3278, 2015 WL 5315757, at *4-5 (D. Md. Sept. 10, 2015). These parallel standards require a complaint-or a proposed amended complaint-to contain "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal,556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The Court will ...


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