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Indianapolis Life Insurance Co. v. Hentz

January 6, 2009

INDIANAPOLIS LIFE INSURANCE COMPANY, PLAINTIFF
v.
DEBORAH HENTZ, TRUSTEE, ET AL. DEFENDANTS
RICHARD W. WALLACE ET AL., THIRD-PARTY PLAINTIFFS
v.
AMERUS GROUP CO. ET AL. THIRD-PARTY DEFENDANTS



The opinion of the court was delivered by: Chief Judge Kane

MEMORANDUM

Before the Court is Counterclaim and Third-Party Plaintiffs ("Movants") motion to amend pursuant to Rule 15(a) of the Federal Rules of Civil Procedure. (Doc. No. 91.) The motion is fully briefed and ripe for disposition. For the following reasons, the motion will be granted in part.

I. BACKGROUND

The dispute in this case arises out of a series of insurance transactions that took place between early 2005 and May 2006. The Movants generally allege that the policies turned out to be worth less than originally promised by the Defendants. Indianapolis Life commenced the present action by filing a complaint for declaratory judgment on November 1, 2006. (Doc. No. 1.) The Movants answered the complaint, asserted a counterclaim against Indianapolis Life, and brought AmerUs Life, AmerUs Group, and Saide into the action by way of a third-party complaint filed on November 22, 2006. (Doc. No. 3.) On September 30, 2008, the Court issued a memorandum and order granting in part the Defendants' joint motions to dismiss. (Doc. No. 80.) Count I (fraudulent inducement), Count VIII (consumer fraud), and Count XI (RICO) were dismissed for failure to plead with particularity as required by Rule 9(b) of the Federal Rules of Civil Procedure. The Movants now seek to amend their counterclaim and third-party complaint to cure pleading deficiencies identified by the Court in these Counts. (Doc. No. 91.) The motion is separately opposed by Defendants AmerUs Group, AmerUs Life, and Indianapolis Life (Doc. No. 93) (collectively "AmerUs Entities") and Frederick Saide (Doc. No. 94) ("Saide").

II. STANDARD OF REVIEW AND CHOICE OF LAW

A. Standard of Review

The Federal Rules of Civil Procedure embody the federal system's liberal approach to pleading. See Arthur v. Maersk, Inc., 434 F.3d 196, 202 (3d Cir. 2006) (citing Bensel v. Allied Pilots Ass'n, 387 F.3d 298, 310 (3d Cir. 2004). Rule 15(a)(2) directs that "[t]he court should freely give leave [to amend] when justice so requires." Accordingly, a court should grant leave to amend unless equitable considerations such as undue delay or bad faith render it otherwise unjust. Id. at 204 (citing Foman v. Davis, 371 U.S. 178, 183 (1962)). The Third Circuit has made clear that the touchstone for the denial of leave to amend is undue prejudice to the non-moving party. Lorenz v. CSX Corp., 1 F.3d 1406, 1413-14 (3d Cir. 1993).

A court may also deny leave to amend if the amendment would be futile. In re Merck & Co., Inc., Sec. Derivative & ERISA Litig., 493 F.3d 393, 400 (3d Cir. 2007). An amendment is futile when the complaint as amended would fail to state a claim upon which relief could be granted. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997). Therefore, the court applies the same standard of legal sufficiency as applies under Rule 12(b)(6) when assessing futility. Id. The Supreme Court's recent opinion in Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007), has altered the standard of review for a motion to dismiss pursuant to Rule 12(b)(6). Phillips v. County of Allegheny, 515 F.3d 224, 230 (3d Cir. 2008). In construing the Rule 12(b)(6) standard generally, the Court required the plaintiff to provide more than a formulaic recitation of a claim's elements that amounted to mere labels and conclusions. Twombly, 127 S.Ct. at 1964-65. Additionally, the Court held that the complaint's "factual allegations must be enough to raise a right to relief above the speculative level." Id. The Third Circuit has held that this language in Twombly applies generally to all motions brought under Rule 12(b)(6). Phillips, 515, F.3d at 232. Despite Twombly, it is still true that "courts accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Id. (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)).

B. Choice of Law

As discussed in this Court's memorandum and order adjudicating the motions to dismiss, the Court will apply Delaware substantive law to evaluate the state claims brought in the proposed amended complaint ("PAC"). (Doc. No. 80 at 7.)

III. DISCUSSION

A. Non-Compliance with Local and Federal Rules

The AmerUs Entities and Saide contend that the motion should be denied because of non-compliance with local and federal rules. (Doc. Nos. 93, 94.) They claim that the Movants violated Local Rule 7.1*fn1 by failing to seek concurrence in the motion. (Id.) They also argue that the PAC ...


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