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CSAA Insurance Exchange v. Broan-Nutone LLC

United States District Court, E.D. California

August 31, 2017

CSAA INSURANCE EXCHANGE, as subrogee of Pedro Casteneda, Maria DeRodriguez, Tongo Inthilath, Andrew and Dena Savage, and Audrey Ngo, Plaintiff,
v.
BROAN-NUTONE LLC, Defendant.

          ORDER

          TROY L. NUNLEY, UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff CSAA Insurance Exchange's (“Plaintiff”) Motion for Leave to File Amended Complaint (ECF No. 8) and Defendant Broan-Nutone LLC's (“Defendant”) Motion to Sever and Dismiss (ECF No. 10). Both parties filed oppositions to the other party's motion. (ECF Nos. 11 & 14.) The Court has reviewed the briefing filed by both parties. For the reasons set forth below, the Court hereby GRANTS Plaintiff's motion to amend and DENIES Defendant's motion to sever and dismiss.

         I. Factual and Procedural Background

         Plaintiff commenced this action in the Superior Court of California, County of Sacramento on November 15, 2016. (ECF No. 1-1.) Plaintiff brings this action as subrogee for five of its insureds - Pedro Casteneda, Maria DeRodriguez, Tongo Inthilath, Andrew and Dena Savage, and Audrey Ngo (‘the insureds”).[1] (ECF No. 1-1.) Plaintiff alleges claims of product defect, failure to warn, negligence, negligent failure to recall, breach of implied warranty, and breach of the Consumer Legal Remedies Act. (ECF No. 1-1 at 6-9.) Plaintiff alleges each of its insureds bought a fan manufactured between the years 1999-2003 by Defendant. (ECF No. 1-1 ¶ 10.) Plaintiff alleges the fans malfunctioned causing fires on five separate occasions between November 9, 2013, and May 1, 2016, at each of the insureds' residences. (ECF No. 1-1 ¶¶ 15- 18.) Plaintiff alleges each fan was equipped with the same 27 AWG winding wire and thermal alloy-link cutoff. (ECF No. 1-1 ¶¶ 23-25.) Plaintiff further alleges the two parts together caused the defect resulting in the fires at the insureds' homes. (ECF No. 1-1 ¶ 25.)

         Plaintiff filed an amended complaint in state court on December 15, 2016. (ECF No. 8 at 3.) Defendant removed the action to this Court on the very same day, but attached the original complaint filed in state court rather than the amended complaint. (ECF No. 3 at 8.) Plaintiff moved to amend on February 23, 2017. (ECF No. 8.) Defendant moved to sever the claims of the insureds on March 9, 2017. (ECF No. 10.)

         II. Standard of Law

         A. Motion to Amend

         Granting or denying leave to amend a complaint rests in the sound discretion of the trial court. Swanson v. United States Forest Serv., 87 F.3d 339, 343 (9th Cir. 1996). When the Court issues a pretrial scheduling order that establishes a timetable to amend the complaint, Federal Rule of Civil Procedure (“FRCP”) 16 governs any amendments to the complaint. Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 2000). To allow for amendment under FRCP 16, a plaintiff must show good cause for not having amended the complaint before the time specified in the pretrial scheduling order. Id. The good cause standard primarily considers the diligence of the party seeking the amendment. Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). “Moreover, carelessness is not compatible with a finding of diligence and offers no reason for a grant of relief.” Id. The focus of the inquiry is on the reasons why the moving party seeks to modify the complaint. Id. If the moving party was not diligent then good cause cannot be shown and the inquiry should end. Id.

         Even if the good cause standard is met under FRCP 16(b), the Court has the discretion to refuse the amendment if it finds reasons to deny leave to amend under FRCP 15(a). Johnson, 975 F.2d at 610. Under Rule 15(a)(2), “a party may amend its pleading only with the opposing party's written consent or the court's leave, ” and the “court should freely give leave when justice so requires.” The Ninth Circuit has considered five factors in determining whether leave to amend should be given: “(1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4) futility of amendment; and (5) whether plaintiff has previously amended his complaint.” In re Western States Wholesale Natural Gas Antitrust Litigation, 715 F.3d 716, 738 (9th Cir. 2013) (citing Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990)). “[T]he consideration of prejudice to the opposing party carries the greatest weight.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

         B. Motion to Sever

         Generally a party is permitted to join any claims in its action it has against an opposing party. Fed.R.Civ.P. 18. However, on a parties' motion or on its own motion, a court may sever any claim against a party. Fed.R.Civ.P. 21 (“Rule 21”). The Court has broad discretion in determining whether or not to sever claims under Rule 21. Brunet v. United Gas Pipeline Co., 15 F.3d 500, 505 (5th Cir. 1992). “There is no established test in the Ninth Circuit for when a district court should exercise its broad discretion and sever a claim under Rule 21.” Arcure v. California Dept. of Developmental Services, No. 1:13-cv-00541-LJO-BAM, 2014 WL 346612, at *6 (E.D. Cal. Jan. 30, 2014). “Claims may be severable under Rule 21 if they arise from different factual situations or pose different legal questions.” Khanna v. State Bar of Cal., No. C-07-2587 EMC, 2007 WL 2288116, at *2 (N.D. Cal. Aug. 7, 2007). Claims may also be severed where it will serve the ends of justice and lead to prompt and efficient disposition of litigation. Id. “Fairness is a critical consideration in determining whether severance is appropriate[, ]” and therefore it must be determined whether any party would suffer prejudice. Pena v. McArthur, 889 F.Supp. 403, 407 (E.D. Cal. 1994). “As a general matter, Rule 21 severance creates two discrete, independent actions, which then proceed as separate suits for the purpose of finality and appealability.” Gaffney v. Riverboat Services of Indiana, 451 F.3d 424, 441 (7th Cir. 2006).

         III. Analysis

         Defendant's motion to sever seeks to separate each insureds' claims into separate cases. Plaintiff seeks to amend to add two claims by new insureds allegedly resulting from the same fans. As the Courts decision on the motion to sever will similarly affect the new insureds, the Court first determines whether severing would be appropriate and then turns to the question of amending the complaint.

         A. Mo ...


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