United States District Court, D. Nevada
J. YOUCHAH UNITED STATES MAGISTRATE JUDGE.
the Court is Plaintiff's Motion for Leave to File Second
Amended Complaint (ECF No. 58). The Court has considered the
Motion, Defendant's Response (ECF No. 64), and
Plaintiff's Reply (ECF No. 66).
Motion seeking to file a second amended complaint comes after
the Court issued an order Denying Defendant's Motion for
Summary Judgment and granting Plaintiff summary judgment on
her breach of contract and declaratory relief claims. ECF No.
47. The Court also concluded that Plaintiff is entitled to
$120, 000 in additional uninsured motorist benefits from
Defendant, but the Court declined to certify its ruling as a
final order under Fed.R.Civ.P. 54(b). Id. Finally,
the Court granted Plaintiff's motion for leave to amend
her complaint (ECF No. 45) ordering Plaintiff to file her
amended complaint within 10 days of the Court's Order
entered on February 27, 2019. Id.
complied with the Court' Order and filed an amended
complaint on February 28, 2019. ECF No. 49. Defendant then
filed a motion to dismiss the amended complaint or in the
alternative for summary judgment (ECF No. 52). Thereafter,
Plaintiff filed the presently pending motion for leave to
file a second amended complaint (ECF No. 48).
Rule of Civil Procedure 15 sets out the various times and
applicable rules for seeking to amend a complaint. Pursuant
to Fed.R.Civ.P. 15(a)(2), a party may amend a complaint (when
amendment as a matter of right is not available) if the
opposing party consents or upon leave of court. Here,
Plaintiff's motion seeking leave to file an amended
complaint was granted on February 27, 2019. ECF No. 47.
Plaintiff's Amended Complaint (ECF No. 49) asserted the
same cause of action with which Defendant currently takes
issue. Specifically, Plaintiff's Amended Complaint
asserted “Extra Contractual Causes of Action” in
which Plaintiff's wording is virtually identical to the
wording in Plaintiff's proposed second amended complaint
up to Paragraph 48. Paragraphs 49 through 58 in the proposed
second amended complaint are new. However, these paragraphs
do change the substance of the assertion made in
Plaintiff's Extra Contractual Cause of Action that
appeared in her Amended Complaint.
Paragraph 49 through 51 of Plaintiff's proposed second
amended complaint recite Plaintiff's assertions regarding
the outcome of the Motion for Summary Judgment and a
statement made by Defense counsel at a May 16, 2019 hearing
before the Court. Paragraph 52 through 56 cite
Defendant's failure to abide by the Court's non-final
Order on summary judgment, and Paragraph 58 alleges an award
of punitive damages is appropriate.
takes particular issue with Paragraph 57, which states:
“That the Other insurance clause found in the contract
of insurance between the parties fails to comply with NRS
687B.145(1) and the OTHER insurance clause as written and
implemented by USAA is therefore against public
policy.” Defendant argues that it will be prejudiced by
this paragraph because (1) “Plaintiff has already
prevailed on her breach of contract and declaratory relief
claims, yet seeks to add an allegation that the ‘Other
Insurance' clause in USAA-GIC's policy fails to
comply with NRS 687B.145(1) and is against public policy and
is unenforceable”; (2) this allegation supposedly goes
“to the heart” of Plaintiff's breach of
contract and declaratory relief claims on which she has
already prevailed; and (3) allowing Plaintiff to assert
additional allegation in support of claims on which she
prevailed denies Defendant the opportunity to litigate the
validity of those allegations. ECF No. 64 at 4:13-21.
Defendant also states that Plaintiff's motion seeking to
file her second amended complaint should be denied as
“prejudicial” because insurers are allowed to
“litigate coverage issues without the threat of
liability for bad faith.” Id. at 4:25-26.
Defendant cites no case law for this proposition, but the
Court does not disagree that, generally, insurance litigation
does not automatically give rise to a claim of bad faith.
However, as explained in Searcy v. Esurance, 243
F.Supp.3d 1146, 1153, (D.Nev 2017), “Nevada law
… allows a separate bad faith action based on
post-filing refusal to consider new evidence… [and]
such claims generally are not claim precluded.”
Searcy, 243 F.Supp.3d at 1153 also quotes Guar.
Nat. Ins. Co. v. Potter, 919 P.2d 267, 272 (Nev. 1996)
for the proposition that “[b]ad faith is established
where the insurer acts unreasonably and with knowledge that
there is no reasonable basis for its conduct.” Here,
Plaintiff did not file a separate action for bad faith, but
seeks to add a claim of bad faith and a request for punitive
damages to her existing claim based on Defendant's post
summary judgment conduct. The Order granting Plaintiff
summary judgment on her breach of contract and declaratory
relief claims is not a final appealable order (ECF No. 47).
However, given the Nevada law, which clearly holds that
separate actions for bad faith based on post-filing conduct
of an insurer are not generally “claim precluded,
” it is axiomatic that including such a claim in an
existing filing would not be precluded.
Court understands the difference between these two events;
that is, in the first example, the determination that the
insurer breached a contract and failed to fulfill whatever
order was made by the court is final, after which
the bad faith claim is filed; whereas, in the second example,
as is true here, there is no final appealable order.
But, this difference is not compelling. If Plaintiff had
included a bad faith claim in her initial complaint, based on
a then good faith belief and investigation of facts that
Defendant's conduct was sufficient to warrant such a
claim, Defendant might file a motion to dismiss; however,
such a motion at the early stage of litigation would not be
successful if Plaintiff set out sufficient facts to withstand
such a challenge. In this instance, as in others noted by
Plaintiff, Plaintiff did not learn of sufficient facts to
warrant a bad faith claim until she engaged in discovery and
the Court granted summary judgment as a matter of law that
Defendant's interpretation of its contract with Plaintiff
was wrong. ECF No. 58-1. That this claim is potentially
prejudicial to Defendant is not determinative and does not
render this claim futile.
same judge, who understands the facts of this case, will
consider additional facts pertaining to bad faith. This is
efficient and far better than dragging the parties back into
court years after the findings on summary judgment, if
appealed, are ruled on by the Circuit Court. Defendant may
file a motion to dismiss or a motion for summary judgment
regarding Plaintiffs Extra Contractual Causes of Action in
her Second Amended Complaint, but Plaintiffs filing to
include the addition of this claim will be granted as first
ordered by the Court in February 2019 (ECF No. 47).
HEREBY ORDERED that Plaintiffs Motion for Leave to File
Second Amended Complaint (ECF No. 58) is GRANTED.
FURTHER ORDERED that the Clerk of the Court shall separate
and electronically file the Second Amended ...