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Evanston Insurance Co v. Prime Time Healthcare LLC

United States District Court, D. Nebraska

July 10, 2018

EVANSTON INSURANCE COMPANY, Plaintiff,
v.
PRIME TIME HEALTHCARE LLC, Defendant.

          ORDER

          Susan M. Bazis United States Magistrate Judge

         This matter is before the Court on Evanston Insurance Company's (“Evanston”) Motion for Leave to File Amended Answer and Cross-Claim (Filing No. 80), Prime Time Healthcare LLC's (“Prime Time”) Motion for Leave to File Cross-Claim Against Risk Placement Services, Inc. (“RPSI”) (Filing No. 83), and Robert Rensing Agency, Inc.'s and Jeffrey Brown's (collectively, the “Rensing Defendants”) Motion to Extend Deadline to Amend Pleadings and for Leave to File Cross-Claim Against Evanston (Filing No. 97). For the reasons set forth below, Evanston's Motion for Leave to File Amended Answer and Cross-Claim will be granted. The Rensing Defendants' Motion to Extend Deadline to Amend Pleadings and For Leave to File Cross-Claim will be granted. Prime Time's Motion for Leave will be denied as moot.

         BACKGROUND

         This suit arises out of an insurance coverage dispute. Evanston brought suit against Prime Time on April 12, 2016 (Filing No. 1), seeking a declaration that an insurance policy furnished by Evanston to Prime Time does not provide coverage for a car accident involving a Prime Time employee. Prime Time thereafter filed a Third-Party Complaint (Filing No. 15) against the Rensing Defendants-Prime Time's insurance agents. The Third-Party Complaint alleges that if the Evanston policy is deemed not to provide coverage, then the Rensing Defendants were negligent by failing to procure coverage. The Rensing Defendants filed their Answer to Prime Time's Third-Party Complaint on July 26, 2016 (Filing No. 22), and then filed a Third-Party Complaint against RPSI on March 30, 2017. (Filing No. 60.) RPSI is the wholesale insurance broker the Rensing Defendants used to procure coverage from Evanston. RSPI filed its Answer on June 5, 2017. (Filing No. 68.) Prime Time filed a Cross-Claim against RPSI on November 21, 2017. (Filing No. 92.)

         The Court issued its Order Setting Final Schedule for Progression of Case (Filing No. 73) on June 27, 2017. The Order set November 1, 2017 as the deadline for the parties to file motions to amend pleadings or add parties. Evanston filed its Motion for Leave to File Amended Answer and Cross-Claim on November 1, 2017. The Rensing Defendants filed their Motion to Extend Deadline to Amend Pleadings and for Leave to File Cross-Claim Against Evanston on December 1, 2017.

         DISCUSSION

         1. Prime Time's Motion for Leave to File Cross-Claim Against RPSI

         RPSI did not oppose Prime Time's Motion for Leave to File Cross-Claim. (Filing No. 90.) Accordingly, Prime Time filed its Cross-Claim against RPSI on November 21, 2017 (Filing No. 92). RPSI filed its Answer to Prime Time's Cross-Claim on December 4, 2017 (Filing No. 99). In light of these filings, Prime Time's Motion for Leave will be denied as moot.

         2. Evanston's Motion for Leave to File Amended Answer and Cross-Claim

         Evanston requests that it be permitted to amend its Answer to Counterclaim (Filing No. 20) to include a cross-clam against the Rensing Defendants for fraudulent concealment, fraudulent and negligent misrepresentation, indemnification, contribution and equitable subrogation.[1] (Filing No. 80.) Evanston maintains that its proposed amended pleading is based on facts similar to those alleged in the original complaint and counterclaim filed by Prime Time against Evanston and, thus, will involve the same witnesses and facts. Evanston's proposed cross-claim generally alleges that the Rensing Defendants made misrepresentations or concealed information when they notified Evanston that Prime Time had purchased a commercial automobile policy through Travelers Casualty Insurance Company of America (the “Traveler's Policy”).

         The Rensing Defendants oppose the motion, arguing that adding these claims would be futile. The Rensing Defendants deny that they made any misrepresentations or concealed information. Further, they contend that Evanston has no viable claims because they did not owe Evanston a duty regarding any information about the Traveler's policy. The Rensing Defendants argue that in order for a relationship between insurance agents and insurance companies to result in the imposition of a duty, an agency relationship must exist. The Rensing Defendants maintain that no duty existed because in order to obtain bids and quotes for the Evanston policy, they were not permitted to communicate directly with Evanston. Instead, they had to communicate with Evanston through RPSI, a company that acts as an intermediary between insurance agents and insurance providers. The Rensing Defendants maintain that they never held themselves out as being an agent of Evanston and had no authority to bind coverage on behalf of Evanston.

         Under Federal Rule of Civil Procedure 15, the Court should “freely give leave” to amend a pleading “when justice so requires.” Fed.R.Civ.P. 15. Nevertheless, a party does not have an absolute right to amend and “denial of leave to amend may be justified by undue delay, bad faith on the part of the moving party, futility of the amendment or unfair prejudice to the opposing party.” Amrine v. Brooks, 522 F.3d 823, 833 (8th Cir. 2008) (quotation and citation omitted). Whether to grant a motion for leave to amend is within the sound discretion of the district court. Popoalii v. Corr. Med. Servs, 512 F.3d 488, 497 (8th Cir. 2008).

         While leave to amend may be denied based on futility, a motion to amend should be dismissed on the merits “only if it asserts clearly frivolous claims or defenses.” Gamma-10 Plastics, Inc. v. Am. President Lines, 32 F.3d 1244, 1255 (8th Cir. 1994) (quotation omitted). See also Becker v. University of Nebraska, 191 F.3d 904, 908 (8th Cir. 1999) (“Likelihood of success on the new claim or defenses is not a consideration for denying leave to amend unless the claim is clearly frivolous”).

         The Court is unable to conclude that the proposed new claims are clearly frivolous. Although the Rensing Defendants argue that an agency relationship between and insurer and insurance agents must exist before a duty is imposed, they have not supplied any direct authority for this proposition. Also, the question of whether Evanston has viable causes of action “should be determined on the merits rather than as part of a motion to amend.” Doyle v. Eli Lilly & Co., No. 8:06CV412, 2008 WL 215802 (D. Neb. ...


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