United States District Court, N.D. California
ORDER GRANTING DEFENDANT INDIAN HARBOR’S MOTION
FOR LEAVE TO FILE AMENDED ANSWER
WILLIAM ALSUP UNITED STATES DISTRICT JUDGE
insurance action, defendant insurer moves for leave to amend
its answer to plaintiff’s first amended complaint. To
the extent stated below, the motion is
Santa Clara Valley Water District hired plaintiff Brosamer
& Wall, Inc. to be its general contractor for portions of
the Lower Berryessa Creek Flood Protection Project in Santa
Clara County, California. Defendant Zurich American Insurance
Company insured Brosamer against builders risk. Defendant
Indian Harbor Insurance Company insured Brosamer against
professional and contractor pollution legal liability,
covering Brosamer for two separate periods, 2017–18 and
2018–19 (Dkt. No. 13 ¶¶ 16, 17, 21, 30).
November 2018, the District accused Brosamer of using
deficient materials on some of the levees within the project.
Specifically, a pavement maintenance path and levees
11–14 side slopes developed cracks. The District had
previously rejected those levees in July 2018. The District
demanded remediation. Ten days later, Brosamer filed an
insurance claim with Indian Harbor under its 2018–19
policy (Dkt. No. 40-1). The operative complaint does not
state when Brosamer filed an insurance claim with Zurich. In
March 2019, Indian Harbor denied Brosamer coverage. In April
2019, Zurich also denied Brosamer coverage. Brosamer sent
letters to both contesting their denials as improper. This
action soon followed (Dkt. No. 13 ¶¶ 39, 40, 47,
2019, Indian Harbor conducted an examination under oath of a
Brosamer representative. The examination showed that the
person who filled out the 2018–19 policy application in
August 2018 had previously known about the District’s
rejection (Dkt. No. 37-3).
2019, all parties agreed on a joint discovery plan (Dkt No.
30-1). The initial case management conference occurred eight
days later. The case management conference permitted the
parties to move for leave to amend pleadings by October 31,
2019, and the fact discovery deadline became February 14,
2020 (Dkt. No. 32). At the end of July 2019, Indian Harbor
sent Brosamer a supplemental coverage letter after
reevaluating its position. The letter again denied Brosamer
coverage (Dkt. 41-5 at 1–13).
Indian Harbor now seeks leave to amend its answer (Dkt. No.
37). Brosamer contests three of those amendments.
First, Indian Harbor proposes adding an affirmative
defense about a misstatement and omission in the
2018–19 policy application. The proposed amendment
states in full: “Indian Harbor has no liability to
Brosamer & Wall under the 2018–2019 policy because
of a misstatement or omission in the application for that
policy” (Dkt. No. 37-2 ¶ 111). Second, in
a general allegation admission paragraph, Indian Harbor
proposes adding the specific policy number that Brosamer
tendered. The admission states in full: “Indian Harbor
admits that Brosamer & Wall tendered to Indian Harbor a
claim for insurance benefits under policy number
PEC004186705 with respect to the Project (the
‘Claim’). Indian Harbor has neither knowledge nor
information sufficient to form a belief about the remaining
allegations contained in Paragraph 10, and therefore denies
the allegations therein” (id. ¶ 10).
Third, Indian Harbor added “Professional
Loss” to one of its existing affirmative defenses. The
proposed amendment states in full: “Indian Harbor has
no liability to Brosamer & Wall to the extent the claim
does not involve ‘Professional Service’ or
‘Professional Loss’ under the
policies” (id. ¶ 109). This order follows
full briefing and oral argument (Dkt. Nos. 37, 39, 41).
15(a)(2) permits a party to amend its pleadings with the
court’s leave, advising that “[t]he court should
freely give leave when justice so requires.” In ruling
on a motion for leave to amend, four factors are considered:
(1) prejudice to the opposing party; (2) undue delay; (3)
futility of amendment; and (4) bad faith. DCD Programs,
Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987).
This order holds that the proposed amendments are permitted,
for the below reasons.
An Affirmative Defense About a Misstatement Or. Omission on
the 2018–19 Policy Application.
Harbor proposes adding an affirmative defense that Brosamer
misstated or omitted information in its 2018–19 policy
application. Brosamer argues that Indian Harbor should have
raised this defense earlier because it knew the facts
beforehand. Brosamer also contends that the amendment
contradicts Indian Harbor’s prior legal theory. Here,
the proposed amendment comes early in the case, and plenty of
time remains to conduct discovery thereon.
oral arguments, Brosamer cited to Jackson v. Bank of
Hawaii. In Jackson, our court of appeals
affirmed a district court’s denial of the
plaintiffs’ motion to amend their complaint because the
plaintiffs filed the motion nearly a year after discovery had
concluded, which would have required the defendants to
relitigate and caused them prejudice. 902 F.2d 1385,
1387–89 (9th Cir. 1990). In contrast to
Jackson, nearly six months of the discovery ...