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Central Puget Sound Regional Transit Authority v. Lexington Insurance Co.

United States District Court, W.D. Washington, Seattle

November 12, 2014

CENTRAL PUGET SOUND REGIONAL TRANSIT AUTHORITY, Plaintiff,
v.
LEXINGTON INSURANCE COMPANY, Defendant.

ORDER ON PLAINTIFF'S MOTIONS TO AMEND COMPLAINT AND CERTIFY QUESTION TO SUPREME COURT

MARSHA J. PECHMAN, Chief District Judge.

THIS MATTER comes before the Court on Plaintiff's motions to amend complaint and to certify question of state law to the Washington Supreme Court. (Dkt. Nos. 14, 20.) Having considered the Parties' briefing and all related papers, the Court finds that leave to amend would be futile and DENIES the motion to amend complaint. Plaintiff's motion to certify question is therefore DISMISSED as moot.

Background

This case involves a dispute over indemnification allegedly owed to Plaintiff Central Puget Sound Regional Transit Authority by Defendant Lexington Insurance Company. (Dkt. No. 12 at 1-2.) Plaintiff asserts causes of action for breach of contract, bad faith, and violation of the Washington Consumer Protection Act, stemming from Defendant's handling of Plaintiff's indemnification claims arising out of its third-party liability insurance policy. (Id.) Plaintiff now seeks to amend its complaint to include an additional cause of action for violation of Washington's Insurance Fair Conduct Act. (Id.) Recognizing that the logic of this Court's ruling in Cox v. Cont'l Cas. Co., Case No. C13-2288MJP, 2014 WL 2560433 (W.D. Wash. June 6, 2014), forecloses an Insurance Fair Conduct Act claim under the facts here, Plaintiff requests the Court grant leave to amend and then certify to the Washington Supreme Court the question of whether it may state an Insurance Fair Conduct Act claim. (Dkt. Nos. 19, 20.)

Discussion

I. Legal Standards

A. Leave to Amend

Whether to grant leave to amend "is within the sound discretion of the trial court" guided by Fed.R.Civ.P. 15's underlying purpose of facilitating decisions on the merits. United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981). In considering whether to permit amendment, courts consider the following factors: (1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4) futility of amendment, and (5) whether plaintiff has previously amended the complaint. Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990). Futility can, by itself, justify denial of a motion for leave to amend. Bonin v. Calderon, 59 F.3d 815 (9th Cir. 1995). The consideration of prejudice to the opposing party, however, "carries the greatest weight." Sonoma Cnty. Ass'n of Retired Employees v. Sonoma Cnty., 708 F.3d 1109, 1117 (9th Cir. 2013).

B. Certification to the Supreme Court

This Court may certify a question to the Washington Supreme Court when "it is necessary to ascertain the local law of this state in order to dispose of [a] proceeding and the local law has not been clearly determined." RCW 2.60.020. The certification process is designed to "build a cooperative judicial federalism" and serve the interests of judicial efficiency and comity. Lehman Bros. v. Schein, 416 U.S. 386, 391 (1974). Use of the certification procedure "rests in the sound discretion of the federal court." Id.

Certification is particularly appropriate when there is no appellate authority interpreting a statute at issue, when the state law issue is especially complex, and when the issue has significant policy implications. Perez-Farias v. Global Horizons, Inc., 668 F.3d 588, 589, 593 (9th Cir. 2011). Stated differently, certification is appropriate where the law "is not entirely settled, " and an answer to the question would "have far-reaching effects." Keystone Land & Dev. Co. v. Xerox Corp., 353 F.3d 1093, 1097 (9th Cir. 2003).

II. Leave to Amend

A. Futility

Resolution of this motion turns on whether the proposed amendment to include an Insurance Fair Conduct Act ("IFCA") claim is futile under the logic of this Court's ruling in Cox v. Cont'l Cas. Co., Case No. C13-2288MJP, 2014 WL 2560433 (W.D. Wash. June 6, 2014), because Plaintiff holds a third-party professional liability insurance policy and the IFCA applies only to "first party claimants." Defendant argues that amendment is futile because this case presents the exact question decided by the Court in Cox. (Dkt. No. 17 at 5-9.) Plaintiff agrees that Cox presents a problem for its position, but argues that the text ...


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