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Young Women's Christian Association of the National Capital Area, Inc. v. Allstate Insurance Co. of Canada

March 10, 2003

YOUNG WOMEN'S CHRISTIAN ASSOCIATION OF THE NATIONAL CAPITAL AREA, INC., PLAINTIFF,
v.
ALLSTATE INSURANCE COMPANY OF CANADA ET AL., DEFENDANTS.



The opinion of the court was delivered by: Ricardo M. Urbina United States District Judge

Document No. 275

MEMORANDUM OPINION

DENYING THE PLAINTIFF'S MOTION TO AMEND OR SUPPLEMENT THE COMPLAINT; DENYING THE PLAINTIFF'S MOTION FOR A HEARING

I. INTRODUCTION

Transferred to this court last year shortly after a ruling by the Court of Appeals, *fn1 this case involves a long-running dispute between the Young Women's Christian Association of the National Capital Area ("the plaintiff") and defendants Halifax Insurance Company ("Halifax"), New Hampshire Insurance Company ("New Hampshire"), and American Home Insurance Company ("American Home") (collectively, "the defendants") over insurance payments associated with damages to precast concrete building panels. This matter comes before the court on the plaintiff's motion to amend or supplement its second amended complaint with a $25 million punitive damages claim. Because the proposed amended complaint does not meet the relation-back or notice requirements of Rule 15, the court denies the plaintiff's motion to amend or supplement its second amended complaint.

II. BACKGROUND

In 1979, the plaintiff decided to erect a new building in the District of Columbia. 2d Am. Compl. ¶ 12. The plaintiff hired Tiber Construction Company ("Tiber") as its general contractor, and Tiber in turn hired Beer Precast Concrete Limited ("Beer") as its subcontractor. Id. ¶¶ 13-14. Beer manufactured the precast concrete panels that make up most of the exterior shell of the building. Id. ¶ 16. In 1990, however, the plaintiff discovered that the precast concrete panels were deteriorating, and sued Beer and Tiber in this court for breach of contract and negligence. Id. ¶¶ 18-19. In 1994, a jury returned a verdict for the plaintiff in the amount of $4.5 million, and the district court entered judgment accordingly. Id. ¶ 19. Because Beer could not satisfy the judgment due to insolvency, the plaintiff instead filed suit against Beer's insurers. Opp'n (Halifax) at 2.

During 1994, the plaintiff filed a series of complaints ("the 1994 complaints") against the insurers. Compl.; Am. Compl.; 2d Am. Compl. On April 5, 1994, the plaintiff filed a complaint against Allstate Insurance Company of Canada ("Allstate") and Kansa General Insurance Company ("Kansa") to recover its $4.5 million judgment. Compl. ¶¶ 6-8. On June 16, 1994, the plaintiff amended its complaint to add defendants Halifax, New Hampshire, American Home, Norad Reinsurance ("Norad"), and Richmond Insurance ("Richmond"). Am. Compl. ¶¶ 33-56. On December 1, 1994, after the district court dismissed Richmond from the case, the plaintiff amended its first amended complaint to remove Richmond from the pleadings and to clarify certain aspects of the allegations against Allstate and New Hampshire. 2d Am. Compl. ¶¶ 9, 25-26, 36-37, 48-51. Subsequently, the plaintiff reached a settlement with Allstate. Young Women's Christian Ass'n of the Nat'l Capital Area, Inc. v. Allstate Ins. Co. of Canada, 275 F.3d 1145, 1148 (D.C. Cir. 2002). The district court later dismissed the claims against Kansa, entered a default judgment against Norad, and granted summary judgment as to Halifax, New Hampshire, and American Home. Id. at 1148-49. The plaintiff appealed the grants of summary judgment, and on January 15, 2002, the Court of Appeals reversed the district court's grants of summary judgment and remanded the case to this court. Id. at 1146, 1155.

On May 3, 2002, the plaintiff moved to amend or supplement its second amended complaint with a $25 million punitive damages claim against remaining defendants Halifax, New Hampshire, and American Home. The court now addresses the plaintiff's motion.

III. ANALYSIS

A. Legal Standards Pursuant to Rule 15

1. Legal Standard to Amend a Complaint Pursuant to Rule 15(a) and (c)

Under Federal Rule of Civil Procedure 15(a), a party may amend its complaint once as a matter of course at any time before a responsive pleading is served. FED. R. CIV. P. 15(a). Once a responsive pleading is filed, a party may amend its complaint only by leave of the court or by written consent of the adverse party. Id.; Foman v. Davis, 371 U.S. 178, 182 (1962). The grant or denial of leave is committed to the discretion of the district court. Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996). The court must heed Rule 15's mandate that leave is to be "freely given when justice so requires." FED. R. CIV. P. 15(a); Foman, 371 U.S. at 182; Caribbean Broad. Sys., Ltd. v. Cable & Wireless P.L.C., 148 F.3d 1080, 1083 (D.C. Cir. 1998). "If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits." Foman, 371 U.S. at 182. Denial of leave to amend therefore constitutes an abuse of discretion unless the court gives sufficient reason, such as futility of amendment, undue delay, bad faith, dilatory motive, undue prejudice, or repeated failure to cure deficiencies by previous amendments. Id.; Caribbean Broad. Sys., 148 F.3d at 1083.

Rule 15(c) allows a plaintiff to amend its complaint to add a claim or defense when that claim or defense "arose out of the conduct, transaction, or occurrence" set forth in the original pleading. FED. R. CIV. P. 15(c); United States v. Hicks, 283 F.3d 380, 388 (D.C. Cir. 2002) (discussing the relation-back doctrine). Typically, amendments that build on previously alleged facts will relate back. Hicks, 283 F.3d at 388. But "those that significantly alter the nature of a proceeding by injecting new and unanticipated claims are treated far more cautiously." Id. Courts inquire into whether the opposing party has been put on notice regarding the claim. 6A Fed. Prac. & Proc. Civ. 2d ยง 1497. If the alteration is "so ...


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