Strebeck v. Am. Modern Ins. Co.

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JASON STREBECK v. AMERICAN MODERN INSURANCE CO.

No. 5:23-CV-00147

United States District Court, W.D. Louisiana, Shreveport Division

September 1, 2023

DAVID C. JOSEPH, JUDGE.

REPORT & RECOMMENDATION

KAYLA DYE MCCLUSKY, UNITED STATES MAGISTRATE JUDGE.

Pending before the undersigned Magistrate Judge, on reference from the District Court are two motions: (1) a motion to dismiss for lack of jurisdiction, lack of service, and failure to state a claim [doc. #8], filed by American Western Home Insurance Company (“American Western”); and (2) a motion to amend [doc. #20], by Plaintiff Jason Strebeck. For reasons assigned below, Strebeck's motion to amend is GRANTED.^[1]Furthermore, IT IS RECOMMENDED that American Western's motion to dismiss [doc. #8] be DENIED.

Background

On August 19, 2022, Plaintiff Jason Strebeck filed a petition for damages against American Modern Insurance Company in the 11th Judicial District Court, Parish of Sabine, State of Louisiana. [doc. #1]. Therein, Strebeck argues that American Modern Insurance Company provided him with a policy of insurance for property located at 10315 Highway 175 in Zwolle, Louisiana (the “Property”). Id. Strebeck further alleges that the Property sustained significant wind and rain damage during Hurricanes Laura and Delta. Id. Strebeck further alleges that payments made by American Modern Insurance Company were inadequate to cover the costs to repair the Property. Id. Strebeck seeks damages as well as costs and attorney's fees. Id.

On February 2, 2023, non-party, American Western Home Insurance Company (“American Western”) (incorrectly named in Strebeck's petition as “American Modern Insurance Company”) removed this matter to federal court on the basis of diversity jurisdiction, 28 U.S.C § 1332. [doc. #1].

On February 9, 2023, American Western filed a motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(2) 12(b)(4), 12(b)(5), and 12(b)(6). [doc. #8]. On March 2 2023, Strebeck filed his opposition. [doc. #12]. On March 9, 2023, American Western filed its reply. [doc. #14].

On May 1, 2023, after review of the record, the undersigned noted that the parties appear to agree that the only named Defendant in the case-American Modern Insurance Company- does not exist. [doc. #19, p. 4]. Thus, non-party American Western is unable to allege the citizenship of the non-existent “American Modern Insurance Company,” such that the Court can exercise diversity jurisdiction. Accordingly, the undersigned ordered that Strebeck must either seek leave to amend his complaint to substitute the correct party or parties or file a motion to remand to state court for lack of subject matter jurisdiction. Id.

On May 8, 2023, Strebeck filed a motion to amend his complaint to name American Western Home Insurance Company as Defendant. [doc. #20].

On June 1, 2023, American Western filed its opposition. [doc. #22]. Strebeck did not file a reply.

Accordingly, briefing is complete. This matter is ripe.

Discussion

The Court may proceed only if subject matter jurisdiction is proper; thus, the undersigned will first consider Strebeck's motion to amend and substitute American Western as the proper Defendant.^[2]

I. Strebeck's Motion to Amend

Rule 15 of the Federal Rules of Civil Procedure provides that the court shall grant a party leave to amend its pleading “freely . . . when justice so requires.” FED. R. CIV. P. 15(a)(2). “Whether leave to amend should be granted is entrusted to the sound discretion of the district court ....” Quintanilla v. Texas Television, Inc., 139 F.3d 494, 499 (5th Cir. 1998) (quoted source omitted). Yet, “[i]n the context of motions to amend pleadings, ‘discretion' may be misleading, because Fed.R.Civ.P. 15 (a) ‘evinces a bias in favor of granting leave to amend.'” Martin's Herend Imports v. Diamond & Gem Trading United States of America Co., 195 F.3d 765, 770 (5th Cir. 1999) (quoting Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 597 (5th Cir. 1981)). A district court must have a “substantial reason” to deny a request for leave to amend. Lyn-Lea Travel Corp. v. American Airlines, Inc., 283 F.3d 282, 286 (5th Cir. 2002) (citation omitted).

In deciding whether to grant a party leave to amend, the court considers the following factors: (1) undue delay, (2) bad faith or dilatory motive, (3) repeated failure to cure deficiencies by previous amendments, (4) undue prejudice to the opposing party, and (5) futility of the amendment. Rosenzweig v. Azurix Corp., 332 F.3d 854, 864 (5th Cir. 2003) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Absent any of these factors, leave should be granted. Smith v. EMC Corp., 393 F.3d 590, 595 (5th Cir. 2004) (citing Foman, 371 U.S. at 182).

American Western argues that amendment is futile because Strebeck's claims against American Western are untimely and do not relate back under Federal Rule of Civil Procedure 15(c). [doc. #22, p. 4].

It appears uncontested that, absent relation back, Strebeck's amended claims are untimely. His insurance policy states that “[n]o action can be brought against [American Western] unless there has been full compliance with all of the terms under Section I of this policy and the action is started within two years after the date of loss.” [doc. #12-1, p. 52 ¶ 15]. See Melendez v. Southern Fid. Ins. Co., 503 F.Supp.3d 504, 510 (E.D. La. Nov. 25, 2020) (“In this case, the two-year period defined in the insurance policy within which to bring suits is controlling.”). According to Strebeck's petition for damages, the dates of loss are August 27, 2020, and October 9, 2020. Thus, at the latest, Strebeck had until October 9, 2022, to timely file his claims against American Western. Strebeck filed his original petition for damages against the incorrect Defendant on August 19, 2022; he filed his motion to amend and substitute American Western as the correct Defendant on May 8, 2023. Therefore, without relation back, his claims are untimely, and amendment is futile.

Accordingly, the undesigned must consider whether Strebeck's amended complaint relates back to his original petition.

“Under the doctrine of relation back, a complaint amended to add a new party, claim, or defense that arises out of the conduct, occurrence, or transaction alleged in a timely original pleading and that would otherwise be time-barred, may be treated, for purposes of the statute of limitations, as having been filed on the date of the original complaint.” Ultraflo Corp. v. Pelican Tank Parts, Inc., 926 F.Supp.2d 935, 945-46 (S.D. Tex. Feb. 22, 2013) (citing Krupski v. Costa Crociere S.p.A., 560 U.S. 538, 541 (2010)).

Federal Rule of Civil Procedure 15(c) governs the relation back of amended pleadings.

The Rule provides:

An amendment to a pleading relates back to the date of the original pleading when:

(A) the law that provides the applicable statute of limitations allows relation back;

(B) the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out-or attempted to be set out-in the original pleading; or

(C) the amendment changes the party or the naming of the party against whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if, within the period provided by Rule 4(m) for serving the summons and complaint, the party to be brought in by amendment:

(i) received such notice of the action that it will not be prejudiced in defending on the merits; and

(ii) knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party's identity.

FED. R. CIV. P. 15(c)(1).

American Western argues that Strebeck did not comply with the requirements of Federal Rule 4(m), and, therefore, it neither received notice of this action such that it will not be prejudiced in defending it on the merits, nor did it know or should have known that the action would have been brought against it but for Strebeck's mistake concerning the proper party's identity.^[3][doc. #22, pp. 4-5].

Rule 4(m) requires a defendant to be served “within 90 days after the complaint is filed.” FED. R. CIV. P. 4(m). “In most cases, this ‘period starts to run upon removal to the federal district court, not the date the action was originated in state court.'” Garcia v. Hoveround Corp., Civ. No. SA-22-cv-00911-XR, 2023 WL 1975375, at *3 (W.D. Tex. Feb. 13, 2023) (quoting 4B CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1137 (4th ed. 2022)). However, for purposes of Rule 15(c)(1)(C), “the Rule 4(m) period begins when the original complaint is filed in state or federal court.” Id. (citing See Lee v. Airgas-Mid S., Inc., 793 F.3d 894, 898 (8th Cir. 2015) (“Rule 15(c)(1)(C) looks to the Rule 4(m) period for serving the original complaint.”) (citations omitted); Mendez v. Jarden Corp., 503 Fed.Appx. 930, 937 (11th Cir. 2013) (measuring the Rule 4(m) period from the time the original complaint was filed in state court); Garvin v. City of Philadelphia, 354 F.3d 215, 2020 (3d Cir. 2003) (“The parties to be brought in by amendment must have received notice of the institution of the action within 120 days^[4] following the filing of the action....”); Barrow v. Wethersfield Police Dep't, 66 F.3d 466, 469 (2d Cir. 1995) (“[A]n amended complaint relates back to the original if the second and third criteria are fulfilled within 120 days of the filing of the original complaint....”) (emphasis added)); see also Goss v. Bureau Veritas N Am., Inc., 21-cv-02574, 2022 WL 444477, at *4-5 (S.D. Tex. Feb. 14, 2022). “Because a notice of removal may be filed up to a year after an action's commencement, see 28 U.S.C. § 1446(c)(1), resetting the clock upon removal would allow relation-back long after claims are time-barred.” Id. “As ‘notice is the...