United States District Court, W.D. Washington, Seattle
ORDER GRANTING MOTIONS TO AMEND ANSWER AND MOTION TO
RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE.
matter comes before the Court on Defendant Citizens Insurance
Company of America (“Citizens”)'s Motion to
Amend Answer (Dkt. #32), and Motion to Compel (Dkt. #17).
Plaintiff Asko Processing, Inc. (“Asko”) opposes
these Motions. Dkts. #34 and #20. For the reasons set forth
below, the Court GRANTS both of Citizens' Motions.
background facts of this case have recently been set forth it
the Court's Order denying summary judgment (Dkt. #42),
and are incorporated by reference.
originally filed this suit in King County Superior Court on
September 29, 2016, against Defendants Citizens and Kibble
& Prentice Holding Company (“Kibble”). Dkt.
#9-1 at 2. After Asko amended its Complaint, Citizens filed
an Answer on March 7, 2017. Dkt. #9-1 at 106-110. Citizens
asserted several affirmative defenses, but did not assert the
affirmative defense of offset. Id. The parties
conducted substantial discovery. On July 20, 2017, Asko
attended a mediation with Defendants, where it settled with
Kibble only. Dkt. #35 at 2. Trial in state court was set for
November 13, 2017. Id. The parties held a discovery
conference on September 5, 2017, where counsel discussed
Citizens' position on “the offset issue, ”
including that Citizens believed it “was entitled to
offset the settlement sum in the event Citizens was found
liable to Asko.” Dkt. #33 at 2.
removed to this Court on September 15, 2017. Dkt. #1. On
October 26, 2017, Asko and Citizens each filed a Motion for
Summary Judgment. Dkts. #12 and #15. These Motions were
recently denied by the Court.
November 8, 2017, the parties filed a Joint Status Report
that did not mention amending Citizens' Answer. Dkt. #19
at 6 (“Defendant's Proposed Schedule…
Deadline for amending pleadings NA”). On November 14,
2017, the Court entered a Scheduling Order with a due date
for amended pleadings of December 12, 2017. Dkt. #26. On
November 22, 2017, Citizens filed the instant Motion.
Legal Standard to Amend
to Fed.R.Civ.P. 15(a)(2), a “court should freely give
leave [to amend] when justice so requires, ”
Fed.R.Civ.P. 15(a)(2). Courts apply this policy with
“extreme liberality.” Eminence Capital, LLC
v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003).
Five factors are commonly used to assess the propriety of
granting leave to amend: (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); Foman v. Davis, 371 U.S.
178, 182 (1962). In conducting this five-factor analysis, the
court must grant all inferences in favor of allowing
amendment. Griggs v. Pace Am. Group, Inc., 170 F.3d
877, 880 (9th Cir. 1999). In addition, the court must be
mindful of the fact that, for each of these factors, the
party opposing amendment has the burden of showing that
amendment is not warranted. DCD Programs, Ltd. v.
Leighton, 833 F.2d 183, 187 (9th Cir. 1987); see
also Richardson v. United States, 841 F.2d 993, 999 (9th
Citizens' Motion to Amend Answer
seeks leave to amend their Answer to add the affirmative
defense of “offset.” Dkt. #32 at 1; Dkt. #33-1 at
5 (“To the extent any judgment is entered against
Citizens, the amount of the judgment will be offset and
reduced by any amount Plaintiff has received in settlement
from former Defendant Kibble & Prentice.”). This is
the only change. This defense is necessary “in order to
prevent double recovery and to preclude Citizens from being
required to pay damages which are attributable to
Kibble's conduct.” Dkt. #32 at 4-5. Citizens'
Motion walks through the above factors the Court is to
consider. First, Citizens argues its Motion is not in bad
faith because “the affirmative defense has a basis in
fact, and is not being interjected for an improper purpose
such as delay.” Id. at 5. There is no undue
delay, according to Citizens, because “Citizens'
potential right to offset Kibble's settlement payment
arose when Kibble settled the case on July 20, 2017, ”
and because Citizens raised the issue promptly with Asko in
the September discovery conference. Id. Citizens
points out that this Motion is timely under the Court's
Scheduling Order. Id. Citizens contends that Asko
will suffer no undue prejudice and that this proposed
amendment is not futile. Id. at 6.
argues there is undue delay if the Court considers the state
court procedural history. Specifically, Asko states that
“Citizens never asserted offset as an affirmative
defense to any of Asko's complaints, nor did it seek to
amend its answer to do so, until after Asko settled with
K&P, ” that “Citizens also never mentioned
offset in response to a discovery request from Asko
specifically asking it to describe its affirmative defenses,
and that “four months passed since the settlement with
K&P before Citizens took any steps to amend its
answer.” Dkt. #34 at 6. Asko argues there is undue
prejudice because it settled its claims against Kibble
“with the understanding that damages would no longer be
in dispute because Citizens had never presented any expert
witness to address damages… and had never at any time
asserted offset as an affirmative defense either in its
answer or in response to discovery requests…”
Dkt. #34 at 5. Asko argues futility because Citizens'
right to offset as an insurer only applies if the total
damages available to Asko under the made whole doctrine is
less than the $990, 000 sought in the instant case plus the
settlement amount, or in other words “[i]f the K&P
settlement was for anything less than $2, 970, 425, then Asko
can never be made whole for its entire BI loss [calculated by
Asko as $4, 160, 425].” Id. at 7-8 (citing
Hall v. Encompass Ins. Co. of America, 2015 WL
5562221, *4 (W.D. Wash. Sept. 21, 2015); Dkt. #21, Ex. A at
68:14-23 and Ex. 133).
Reply, Citizens argues that “[t]he right to potentially
offset a codefendant's settlement payment only arises
after that codefendant enters a settlement agreement with the
plaintiff.” Dkt. #36 at 2. Citizens argues that Asko
will “not truly suffer any real prejudice”
because: a) “[n]othing suggests Asko's settlement
with Kibble was premised upon or dependent on the fact
Citizens had not pled offset as an affirmative defense; b)
“Asko was or should have been well aware at the time of
mediation that Rule 15 liberally allows amendments to the
pleadings;” and c) “Citizens' proposed
amendment will not substantially alter the nature of this
litigation” by “require[ing] new discovery that
is not already required to be performed in order to ...