Menard, Inc. v. Farm Bureau Prop. & Cas. Ins. Co.

662 F.Supp.3d 998

MENARD, INC., Plaintiff, v. FARM BUREAU PROPERTY & CASUALTY INSURANCE COMPANY, Defendant.

4:21-CV-00404-HCA

United States District Court, S.D. Iowa, Central Division

Signed March 20, 2023

Kerrie M. Murphy, Lucas C. Jenson, Veronica Kirk, Mwh Law Group LLP, West Des Moines, IA, for Plaintiff.

Sean M. O'Brien, Benjamin J. Kenkel, Bradshaw Fowler Proctor & Fairgrave, P.C., Des Moines, IA, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO AMEND AND ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

Helen C. Adams, Chief United States Magistrate Judge

I. INTRODUCTION

Before the Court are Defendant's Motion to Amend Answer ("Motion to Amend"), and the Parties' Cross-Motions for Summary Judgment. The Court considers the Motion to Amend before considering the Cross-Motions for Summary Judgment.

Defendant Farm Bureau Property and Casualty Insurance Company ("Farm Bureau") filed its Motion to Amend Answer, seeking to add an affirmative defense. Def.'s Mot. Amend Answer ¶¶ 6-13, ECF No. 30. Plaintiff Menard, Inc. ("Menards") filed a resistance. Pl.'s Resistance Def.'s Mot. Amend Answer, ECF No. 38. The Court considers the Motion to Amend fully submitted and ready for ruling. For the reasons stated below, the Court grants Farm Bureau's Motion for Leave to Amend Answer.

Menards filed its Motion for Summary Judgment on May 19, 2022. Pl.'s Mot. Summ. J., ECF No. 25. Farm Bureau filed its Cross-Motion for Summary Judgment, combined with a Resistance, on June 7, 2022. Def.'s Resistance & Cross-Mot. Summ. J., ECF No. 26; Def.'s Br. Resistance & Br. Supp. Cross-Mot. Summ. J., ECF No. 29.¹ Menards filed its Resistance on June 28, 2022. Pl.'s Resistance Def.'s Cross-Mot. Summ. J., ECF No. 39. Menards requested oral argument if the Court deems it necessary. Pl.'s Mot. Summ. J. 1, ECF No. 25. The Court concludes oral argument is not necessary and finds the Cross-Motions ready for ruling. For the reasons stated below, the Court grants Menards's Motion for Summary Judgment and denies Farm Bureau's Motion for Summary Judgment.

II. FARM BUREAU'S MOTION TO AMEND ANSWER

A. Background

This case involves an insurance coverage dispute. Menards operates a chain of retail hardware stores. Am. Compl. for Declaratory J. ¶¶ 2, 8, ECF No. 14.² On February 16, 2021, Ms. Bowen—a customer of Menards—filed a personal injury action against Menards alleging one of its employees negligently moved green-treated wood boards and dropped one on Ms. Bowen, causing injury ("Underlying Litigation"). Underlying Litigation Pet. ¶¶ 1-17, ECF No. 1-1. Ms. Bowen's vehicle was parked near where Ms. Bowen was injured and where the boards were stored. See Am. Compl. for Declaratory J. ¶¶ 11-15, ECF No. 14. An automotive insurance policy ("Policy") issued by Farm Bureau insured Ms. Bowen's vehicle. Id. ¶ 12.

On December 27, 2021, Menards filed this action seeking a declaratory judgment that Farm Bureau's Policy provides coverage to Menards's employee as an unnamed insured, and that Menards is thereby entitled to Farm Bureau's defense and indemnification in the Underlying Litigation. Pet. for Declaratory J. 3-4., ECF No. 1. Menards filed an Amended Complaint on February 1, 2022, that corrected Farm Bureau's name in the case caption. Am. Compl. for Declaratory J., ECF No. 14. On February 9, 2022, Farm Bureau filed its Answer to Menards's First Amended Complaint. Def.'s Answer Pl.'s First Am. Compl., ECF No. 20. The Scheduling Order and Discovery Plan set the deadline to amend pleadings for March 1, 2022. Order Granting Proposed Sched. Order, ECF No. 16. Farm Bureau now seeks to amend its Answer over three months after that deadline. Def.'s Mot. Amend Answer, ECF No. 30.

B. Legal Standard and Analysis

Farm Bureau seeks to amend its Answer to include as an affirmative defense the Handling of Property exclusion ("Handling of Property") located in the Policy. Def.'s Mot. Amend Answer ¶¶ 6-13, ECF No. 30. Menards argues Farm Bureau has failed to show good cause as required by Federal Rule of Civil Procedure 16. Pl.'s Br. Supp. Resistance Def.'s Mot. Amend 4-6, ECF No. 38-1 (citing Fed. R. Civ. P. 16(b)(4)). Specifically, Menards argues Farm Bureau failed to act diligently in moving to amend and that such delay is prejudicial to Menards. Id.

Rule 16(b)(4) of the Federal Rules of Civil Procedure permits modification to the trial and discovery schedule but "only for good cause and with the judge's consent." Fed. R. Civ. P. 16(b)(4); Sherman v. Winco Fireworks, Inc., 532 F.3d 709, 716 (8th Cir. 2008). "The primary measure of good cause is the movant's diligence in attempting to meet the order's requirements." Sherman, 532 F.3d at 716-17 (quoting Rahn v. Hawkins, 464 F.3d 813, 822 (8th Cir. 2006), abrogated on other grounds by Rivera v. Illinois, 556 U.S. 148, 129 S.Ct. 1446, 173 L.Ed.2d 320 (2009)); Fed. R. Civ. P. 16(b) advisory committee's note to 1983 amendment. " 'Where there has been no change in the law, no newly discovered facts, or any other changed circumstance . . . after the scheduling deadline for amending pleadings,' the Court may conclude that the moving party has failed to show good cause." Chambers v. N. Am. Co. for Life & Health Ins., 4:11-cv-00579-JAJ-CFB, 2016 WL 7427333, at *3 (S.D. Iowa June 13, 2016) (quoting Hartis v. Chi. Title Ins. Co., 694 F.3d 935, 948 (8th Cir. 2012)); Sherman, 532 F.3d at 713. And though case management orders are an important tool for streamlining litigation, " 'mindless subservience to the dictates' of such an order should not overshadow the Court's fundamental obligation to achieve a just adjudication of a civil claim, especially in the absence of any prejudice to a nonmoving party." In re Lutheran Brotherhood Variable Ins. Prods. Co. Sales Pracs. Litig., No. 99-MD-1309 (PAM), 2002 WL 31371945, at *5 (D. Minn. Oct. 7, 2002) (quotation omitted); see also Chambers, 2016 WL 7427333, at *3.

Once diligence is determined, prejudice to the nonmoving party may be considered. Sherman, 532 F.3d at 717 (citing Bradford v. DANA Corp., 249 F.3d 807, 809 (8th Cir. 2001)). The decision to grant leave to amend under Rule 16(b) is within the Court's discretion. Bradford, 249 F.3d at 809.

1. Diligence

Menards argues Farm Bureau knew when the petition for declaratory judgment was filed that the case concerned a potential loading injury that occurred when Menards's employee moved green-treated boards near a customer. Pl.'s Br. Supp. Resistance Def.'s Mot. Amend 4, ECF No. 38-1 (citing Pet. for Declaratory J. ¶13, ECF No. 1.). Further, Menards argues Farm Bureau has extensive knowledge about its own policies of insurance and thus should have been able to quickly identify the Handling of Property affirmative defense. Id.

Farm Bureau argues it received Menards's Amended Initial Disclosures and corresponding supplementation on March 2, 2022, and March 17, 2022, respectively. Def.'s Mot. Amend Answer ¶ 8, ECF No. 30. Those disclosures contained the deposition transcripts in the Underlying Litigation of the named insured and Menards's employee. Id. Farm Bureau argues that while the Handling of Property affirmative defense "could have been included as a generally applicable affirmative defense" in Farm Bureau's Answer filed on February 9, 2022, Farm Bureau "did not possess the underlying depositions which directly implicate the [affirmative defense] until after the deadline to amend pleadings." Id. ¶ 10.

Menards claims its Amended Initial Disclosures and "transcripts of all depositions taken in the underlying liability action" were served earlier than Farm Bureau represents, on March 1, 2022, which was the deadline to amend pleadings and the deadline to provide initial disclosures. Pl.'s Br. Supp. Resistance Def.'s Mot. Amend 4, ECF No. 38-1. Menards points out Farm Bureau did not notify the Court or Menards of the potential need to amend Farm Bureau's Answer in the "Joint Agenda for April 21, 2022, Status Conference," filed by Farm Bureau on April 18, 2022. Joint Status Report, ECF No. 23. Because the report represented there were no issues to discuss and the Parties were on track to meet their deadlines, the Court canceled the status conference. Text Order Canceling Status Conference, ECF No. 24.

The Court finds Farm Bureau, in moving to amend its Answer, relied on newly discovered information or changed circumstances that directly implicated the Handling of Property exclusion. Although Farm Bureau may have been able to anticipate the potential application of the Handling of Property exclusion at an earlier date, deciding the issue solely upon a three-month delay on the present facts would undermine just adjudication of the claim.

2. Prejudice

Next, the Court turns to the prejudice factor of the analysis. "Motions that would prejudice the nonmoving party by 'requiring a re-opening of discovery with additional costs, a significant postponement of the trial, and a likely major alteration in trial tactics and strategy' are particularly disfavored." Kozlov v. Associated Wholesale Grocers, Inc., 818 F.3d 380, 395 (8th Cir. 2016) (citation omitted). The burden is on Menards to show unfair prejudice.

Both Parties agree that Farm Bureau's proposed amendment will not require a continuance of trial in this case. Def.'s Mot. Amend Answer ¶ 11, ECF No. 30; Pl.'s Br. Supp. Resistance Def.'s Mot. Amend 5-6, ECF No. 38-1. Menards argues, however, that Farm Bureau had the benefit of seeing Menards's Motion for Summary Judgment before filing its Motion to Amend, and further argues that Menards will need to "change direction, invest significant time, and resources in its strategy for motion practice." Pl.'s Br. Supp. Resistance 5-6, ECF No. 38-1.

As discussed below, this case is resolved on summary judgment. In Menards's Resistance to Farm Bureau's Cross-Motion for Summary Judgment, Menards addressed the Handling of Property exclusion. Pl.'s Resistance Def.'s Cross-Mot. Summ. J. 6-8, ECF No. 39. Notably,...