Wednesday, June 14, 2017

Federal Court denies motion to amend complaint to add new allegations of bad faith settlement practices based on facts that did not exist when lawsuit was filed

In my last post I discussed Bearbones, Inc. d/b/a Morningside Bakery v. Peerless Indem. Ins. Co., 2016 WL 5928799 (D. Mass.) (unpublished), a property damage case in which the plaintiff insureds sued the insurer, Peerless, in federal court while a reference proceeding was pending.  After the reference proceeding the plaintiffs sought to file a supplemental complaint in the federal court case.

The proposed supplemental complaint alleged that during the reference proceeding Peerless engaged in various acts of trickery or deceit, including harassing the plaintiffs with requests for false stipulations which could result in them waiving their claims, and falsely claiming it never received written discovery from them. 

The court held that such actions would not represent a separate violation but a continued course of conduct that began before the lawsuit commenced.  On that ground the court denied the addition of the proposed additional count alleging such conduct.  

While I understand the logic that continuing conduct is not a separate violation, it seems to me that the plaintiffs should be allowed to amend their complaint to allege new facts in support of the allegations of bad faith settlement practices. 

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