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Auto-Owners Insurance Co. v. Henry County Governmental Services Authority

United States District Court, N.D. Georgia, Atlanta Division

August 12, 2014

AUTO-OWNERS INSURANCE COMPANY, Plaintiff,
v.
HENRY COUNTY GOVERNMENTAL SERVICES AUTHORITY, et al., Defendants.

OPINION AND ORDER

WILLIAM S. DUFFEY, Jr., District Judge.

This matter is before the Court on Defendants Henry County's d/b/a Henry County Governmental Services Authority and Henry County Governmental Services Authority's ("HCGSA") (collectively, the "Henry County Defendants") Motion for Leave to Amend Answer to Auto-Owner's Insurance Company's ("Plaintiff") Amended Complaint for Declaratory Judgment [32].

I. BACKGROUND

At some point prior to this action, HCGSA was awarded the Neighborhood Stabilization Program ("NSP") grant by the United States Department of Housing and Urban Development. The NSP allowed HCGSA to purchase, renovate and resell foreclosed or abandoned homes in Henry County, Georgia. HCGSA hired Strategic Holdings Group, LLC ("Strategic Holdings") and J.P. Evans Realty to serve as asset managers or sub-contractors in connection with the sale or renovation of homes that qualified for the NSP.[1]

On January 14, 2010, Strategic Holdings purchased a commercial liability insurance policy (the "Policy") from Plaintiff that indemnified Strategic Holdings for bodily injury and property damage claims made by purchasers that qualified for homes under the NSP. The Henry County Defendants allege that the Policy was purchased for their benefit because Strategic Holdings, "as a term and condition of [its] business arrangement, " was required to indemnify the Henry County Defendants for claims arising out of the real estate managed by Strategic Holdings. Mot. to Amend at 3. According to the Complaint, the Henry County Board of Commissioners ("Board") was named as an additional insured under the Policy, but the Board is not named as a defendant in this action. The Complaint also asserts that certain limited liability companies, and organizations other than a partnership, joint venture or limited liability company, are insured parties under the Policy, but the Complaint does not identify any of these entities.

On April 11, 2012, Donna and Patrick Blair filed a complaint against the Henry County Defendants, Strategic Holdings, J.P. Evans Realty, and Peggy and Julius Evans in the Superior Court of Henry County, Georgia, (the "underlying lawsuit") seeking damages for personal and pecuniary injuries sustained as a result of mold discovered on the Blair's property.

The defendants in the underlying lawsuit claim that Plaintiff has a duty to defend and indemnify them for all claims asserted by the Blairs in the Superior Court. On August 8, 2013, Plaintiff filed a Complaint for a Declaratory Judgment in this Court, seeking a declaration that it does not have a duty to defend or indemnify the defendants in the underlying lawsuit. Plaintiff alleges that the Henry County Defendants are not insured under the Policy, and that all the defendants in the underlying lawsuit are prevented from seeking coverage because their claims are excluded under the Policy.

On September 20, 2013, the Henry County Defendants answered the Plaintiff's Complaint, but did not assert any counterclaims against the Plaintiff. On September 27, 2013, the Court ordered the Plaintiff to file, on or before October 21, 2013, an Amended Complaint, identifying the citizenship of Strategic Holdings and J.P. Evan's Realty.[2] As required, on October 18, 2013, Plaintiff filed an Amended Complaint. On October 22, 2013, the Henry County Defendants answered the Amended Complaint, again without asserting counterclaims against the Plaintiff.

On January 17, 2014, the Henry County Defendants moved under Rule 15(a)(2) of the Federal Rules of Civil Procedure to amend their Answer to assert counterclaims against Plaintiff. The counterclaims they seek to assert are: (1) breach of the duty to defend, (2) bad faith denial of insurance coverage, and (3) breach of contract. On March 5, 2014, the Court stayed this case until the Court ruled on the Henry County Defendants' Motion to Amend.

II. DISCUSSION

A. Legal Standard

Plaintiff's Motion to Amend is untimely under the Court's Local Rules. Local Rule 7.1(A)(2) provides that: "with certain exceptions not relevant here, "motions must be filed WITHIN THIRTY (30) DAYS after the beginning of discovery").[3] The Joint Preliminary Report and Discovery Plan (the "Plan") filed by the parties on November 4, 2013, and approved by the Court on November 6, 2013, also expressly provides that any amendments to the pleadings in this case must be filed no "LATER THAN THIRTY (30) DAYS after the [Plan] [was] filed." (Plan [24] ΒΆ 6(b), at 8.). The deadline to submit amendments under the Plan here was December 4, 2013. The Henry County Defendants filed their Motion to Amend on January 17, 2014, over six weeks after the time for amendments expired in this matter.

Rule 15 of the Federal Rules of Civil Procedure generally governs leave to amend pleadings. The Court, however, first must determine whether the schedule may be modified, under Rule 16, to allow the late filing of the Motion to Amend. See Sosa v. Airprint Sys., Inc. , 133 F.3d 1417, 1419 (11th Cir. 1998) (per curiam) (holding that courts evaluating untimely motions to amend should determine whether to alter the scheduling order under Rule 16 before determining whether the amendment is proper under Rule 15). "A schedule may be modified only for good cause and with the judge's consent." Fed.R.Civ.P. 16(b)(4). "This good cause standard precludes modification unless the schedule cannot be met despite the diligence of the party seeking extension.'" Sosa , 133 F.3d at 1418 (quoting Fed.R.Civ.P. 16 advisory committee's note (1983 Amendment, Discussion of subdivision (b))).

The Eleventh Circuit has "considered several factors to demonstrate a party's lack of diligence, including... the fact that the information providing the basis for the proposed amendment was available to the party before the deadline." Green Island Holdings, LLC v. British American Isle of Venice, Ltd., 521 F.App'x 798, 800-01 (11th Cir. 2013) (citations omitted). "A district court's decision to enforce its ...


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