United States District Court, W.D. Washington, Seattle
C. COUGHENOUR, UNITED STATES DISTRICT JUDGE.
matter comes before the Court on Defendants Adam and April
Rodgers' motion for leave to file counterclaims (Dkt. No.
12). Having thoroughly considered the parties' briefing
and the relevant record, the Court finds oral argument
unnecessary and hereby GRANTS the motion for the reasons
April Rodgers was severely injured after being ejected from a
Polaris Ranger all-terrain vehicle (the “subject
vehicle”) that she was riding in as a passenger. (Dkt.
No. 12-2 at 3.) The subject vehicle was owned and operated by
non-party Dennis Thomas. (Id.) Mr. Thomas had
purchased, licensed, and insured the subject vehicle for use
on public roads. (Id.)
time of the accident, Defendants had an insurance policy (the
“Policy”) with Plaintiff Economy Preferred
Insurance Company. (Id. at 1.) The Policy provided
underinsured motorist coverage (“UIM”) in the
amount of $250, 000 per person and personal injury protection
(“PIP”) in the amount of $10, 000 per person.
(Id.) Given the severity of Ms. Rodgers'
injuries and the fact that Mr. Thompson was underinsured,
Defendants made a claim with Plaintiff under the Policy's
UIM and PIP provisions. (Id.)
denied the PIP claim, asserting that “an ATV is not a
covered auto under the policy.” (Id. at 4.)
The PIP provision defined “Auto” to not include
“self-propelled equipment designed for use principally
off public roads.” (Id.) Plaintiff also denied
Defendants' UIM claim because the subject vehicle
“was not designed for use mainly on public
roads.” (Id. at 5.) After denying coverage,
Plaintiff filed this lawsuit seeking a declaration that
Plaintiff was not obligated to provide coverage under either
the PIP or UIM provision. (See Dkt. No. 1.)
now seek leave to amend their answer to assert the following
counterclaims: (1) breach of contract; (2) bad faith; (3)
violation of the Insurance Fair Conduct Act, Revised Code of
Washington Section 48.30.015; (4) violation of the Washington
State Consumer Protection Act, Revised Code of Washington
Section 19.86 et seq.; and (5) negligence.
(Id. at 7.) Plaintiff objects to Defendants'
motion, arguing that the counterclaims are futile. (Dkt. No.
13 at 1.)
Motion to Amend Legal Standard
Motions to amend an answer to assert counterclaims are
analyzed under the liberal amendment standard of Federal Rule
of Civil Procedure 15(a). See Fed. R. Civ. P. 13,
Advisory Committee Notes 2009 Amendments (“An amendment
to add a counterclaim will be governed by Rule 15.”).
Regarding pleading amendments, district courts “should
freely give leave when justice so requires.”
Fed.R.Civ.P. 15(a)(2). The generosity in granting leave to
amend is “to be applied with extreme liberality.”
Eminence Capital, LLC v. Aspeon, Inc., 316
F.3d 1048, 1051- 52 (9th Cir. 2003). Courts are to consider
five factors in determining whether to grant leave to amend:
(1) bad faith; (2) undue delay; (3) prejudice to the opposing
party; (4) futility of amendment; and (5) whether the
pleading has previously been amended. See, e.g.,
United States v. Corinthian Colls., 655 F.3d 984,
995 (9th Cir. 2011).
motion is timely, not made in bad faith, would not prejudice
Plaintiff, and Defendants have not previously amended their
answer. The only ground that Plaintiff raises in opposition
to Defendants' motion is that the proposed counterclaims
would be futile. (See Dkt. No. 13.) An amendment is
futile when “no set of facts can be proved under the
amendment to the pleadings that would constitute a valid and
sufficient claim or defense.” Missouri ex rel.
Koster v. Harris, 847 F.3d 646, 656 (9th Cir. 2017)
(quoting Miller v. Rykoff-Sexton, Inc., 845 F.2d
209, 214 (9th Cir. 1988)). Granting or denying leave to amend
rests in the sound discretion of the trial court and will be
reversed only for abuse of discretion. Swanson v. U.S.
Forest Serv., 87 F.3d 339, 343 (9th Cir. 1996).
asserts that Defendants' counterclaims are futile because
the Policy's UIM and PIP provisions exempt the subject
vehicle from coverage. (Dkt. No. 13 at 1-4.) Plaintiff argues
that the subject vehicle was not “designed for use
mainly on public roads” but “designed for use
principally off public roads.” (Id.) In
support of its position that the subject vehicle is exempt
from coverage, Plaintiff cites from the Owner's Manual of
a 2017 Polaris Ranger XP 1000 EPS Utility Vehicle.
(Id. at 4.) Plaintiff notes that the manual states
that “[t]he Ranger is an off-road vehicle, ” and
instructs operators to “[a]void paved surfaces”
and “not operate [it] on public roads.”
(Id.) Thus, Plaintiff argues that the subject
vehicle is not covered under the Policy's plain language,
and Plaintiff cannot be liable for any of Defendants'
proposed counterclaims. (Id.)
argument confuses the standard that the Court must apply to
Defendants' motion. At this stage, the Court asks whether
Defendants' proposed counterclaims are sufficient to
withstand a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6). See Miller, 845 F.2d at 214
(citing 3 J. Moore, Moore's Federal Practice
¶ 15.08 (2d ed. 1974) (“[the] proper test to be
applied when determining the legal sufficiency of a proposed
amendment is identical to the one used when considering the
sufficiency of a pleading challenged under Rule
this standard, Defendants have plausibly alleged that
Plaintiff is liable for the counterclaims asserted.
Defendants assert that the subject vehicle was purchased,
licensed, and insured for use on public roads. (Dkt. No. 12-2
at 4.) Defendants further assert that Plaintiff denied its
claims under the Policy without conducting an adequate
investigation into the subject vehicle. (Id. at 5.)
Defendants allege that, had Plaintiff done so, it would have
discovered that the subject vehicle was in fact covered under
the Policy's UIM and PIP provisions. (Id.)
Accepting these allegations as true, which the Court must do,
Defendants' have plausibly alleged that Plaintiff
wrongfully denied their claim by failing to conduct an