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G & M Fashions, LLC v. Nationwide Insurance Co.

United States District Court, E.D. Michigan, Southern Division

July 21, 2017

G & M FASHIONS, LLC, Plaintiff,
v.
NATIONWIDE INSURANCE COMPANY, Defendant.

          OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR LEAVE TO AMEND TO ASSERT COUNTERCLAIM (DKT. 17)

          TERRENCE G. BERG, UNITED STATES DISTRICT JUDGE

         I. Introduction

         Plaintiff G & M Fashions is suing Defendant Nationwide Insurance Company for not paying the entirety of Plaintiff's insurance claim for fire loss to its inventory and structures. Defendant initially paid part of Plaintiff's claim, but refused to pay more, so Plaintiff brought this lawsuit for breach of the insurance contract. After engaging in discovery, Defendant believes that the initial partial payment should not have been made and now seeks to amend its answer to add a counterclaim to recover that payment. For the reasons outlined below, Defendant's motion for leave to amend in order to assert its counterclaim is GRANTED.

         II. Standard of Review

         A party who can no longer amend its pleadings as a matter of course “may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a).

         Granting a motion for leave to amend pleadings is a matter within the discretion of the District Court. See Prater v. Ohio Educ. Ass'n, 505 F.3d 437, 445 (6th Cir. 2007). Though a discretionary matter, the leave sought should be “freely given” unless the amendment sought would result in undue prejudice to the opposing party - such as the amendment being sought with undue delay, bad faith, or futility. Crestwood Farm Bloodstock v. Everest Stables, Inc., 751 F.3d 434, 444 (6th Cir. 2014); citing Foman v. Davis, 371 U.S. 178, 182 (1962).

         The Sixth Circuit has emphasized that “case law in this Circuit manifests liberality in allowing amendments.” Newberry v. Silver-man, 789 F.3d 636, 645 (6th Cir. 2015); citing Janikowski v. Bendex Corp., 823 F.2d 945, 951 (6th Cir. 1987). This policy reflects the desire to try cases on their merits, not on the technicalities of the pleadings. Janikowski, 823 F.2d at 951.

         III. Analysis

         Motions for leave to amend should be granted unless the Court finds undue delay, significant prejudice, bad faith, or futility. See Crestwood Farm Bloodstock v. Everest Stables, Inc., 751 F.3d 434 (6th Cir. 2014); Foman v. Davis, 371 U.S. 178, 182 (1962). Plaintiff opposes Defendant's motion for leave to amend for all four reasons. The Court will address each of Plaintiff's responses in turn.

         a. Undue Delay

         Defendant argues that there has not been undue delay because Defendant recently confirmed misrepresentations in Plaintiff's insurance claim. Dkt. 17. Pg. ID 679. Defendant stated in its Joint Discovery Plan that “Nationwide will seek to amend its pleadings after discovery to seek to recoup its payments mistakenly made.” Dkt. 17-2, Pg. IDs 484-85. Furthermore, Defendant repeated that it will seek to file amended pleadings if it discovers that it mistakenly paid a claim in the answer to the complaint and the affirmative defenses. Dkt. 17-3, Pg. ID 698.

         Plaintiff responds that Defendant should have filed a counterclaim at the beginning of the lawsuit if Defendant had always intended to do so. Dkt. 19, Pg. ID 726. Plaintiff cites a recent Sixth Circuit case to support the premise that Defendant should have an increased burden to justify why it did not move earlier. Dkt. 19, Pg. ID 726; see also Newburg/Six Mile Ltd. P'ship II v. Adlabs Films USA, Inc., 483 Fed. App'x 85 (6th Cir. 2012). Plaintiff also argues that Defendant has made no explanation as to why it could not have obtained the information earlier that led to Defendant filing this motion. Dkt. 19, Pg. ID 727. Finally, Plaintiff argues that Defendant has been in possession of the information that led to this motion for some time, making the delay undue. Dkt. 19, Pg. IDs 727-28.

         Defendant replies that it warned Plaintiff from the start of the case that this counterclaim may be filed. Dkt. 21, Pg. ID 881. Further, Defendant points to recent events in the discovery process, such as the deposition of the contractor who did an independent inventory on March 9, 2017, that led to Defendant filing this motion. Dkt. 21, Pg. ID 882. Finally, Defendant points to disputes the parties had in discovery which affected Defendant's ability to file the motion at an earlier time. Dkt. 21, Pg. IDs 882-83.

         Plaintiff's reliance on Newburgh is misplaced. In that case, the moving party attempted to file its motion to amend over a month after the close of discovery and passage of the dispositive motion cutoff date. Newburgh, 483 F. App'x at 93. Discovery does not end for this case until September 29, 2017 ...


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