BERNANDO JIMENEZ JOSE JIMENEZ v. RUTGERS CASUALTY INSURANCE COMPANY (2025)

ORDER

Plaintiffs Bernando Jimenez (“Bernando”) and Jose Jimenez (“Jose”) sued Defendant Rutgers Casualty Insurance Company, alleging breach of a home insurance policy contract and seeking reformation of the contract. (See generally Compl., ECF No. 1-1.)¹ The Court denied Defendant's motion to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6). (See Mar. 17, 2023 Mem. & Order, ECF No. 14 at 6.) Defendant then answered the complaint. (See generally ECF No. 16.) Before the Court is Defendant's motion for leave to amend its answer pursuant to Federal Rule of Civil Procedure 15(a)(2), which Plaintiffs oppose. (Def.’s Mot., ECF No. 33; Pls.’ Resp., ECF No. 35; Def.’s Reply, ECF No. 39.) For the reasons set forth below, Defendant's motion is granted.

I. BACKGROUND

Bernando purchased a home at 241-13 Mayda Road in Queens County, New York (the “Property”) on June 30, 2005 and moved in with his brother Jose and other family members. (Ehrlich Decl. Ex. 5 (“Bernando Dep.”), ECF No. 34-5 at 10:21–25, 12:14–12:22.) Bernando bought the home himself and not together with Jose because Bernando had a better credit rating. (See id. 11:21–12:13.) In November 2005, Defendant issued a home insurance policy (the “Policy”) to Bernando which renewed annually through November 7, 2020. (See Def.’s Mot. Dismiss Mem., ECF No. 11-10 at 7; Def.’s Mot., ECF No. 33 at 3.) The original deed to the Property was in Bernando's name only. (See Ehrlich Decl. Ex. 4, ECF No. 34-4 at 10, 12–13.) On October 5, 2012, Bernando transferred ownership of the property to Jose, but never added his brother on the Policy because he did not know he had to. (See id. at 2; Bernando Dep., ECF No. 34-5 at 28:10–13.)

On December 15, 2020 the Property was destroyed in a fire. (See Pls.’ Resp. Ex. 1, ECF No. 35-1 at 2.) Defendant refused to pay under the Policy because Bernando—the only insured under the Policy—did not reside at the Property on the date of the fire and had not informed Defendant that he had transferred ownership of the Property to Jose. (See id. at 2–3.)

Plaintiffs sued Defendant in state court on May 24, 2021, alleging breach of contract and requesting the Court reform the contract by reason of mutual mistake to name both Bernando and Jose as insureds on the Policy. (See Compl., ECF No. 1-1 ¶¶ 15–32.) On June 25, 2021, Defendant timely removed the action to federal court. (See Notice of Removal, ECF No. 1.) On October 26, 2021, Defendant moved to dismiss Plaintiffs’ claims pursuant to Rule 12(b)(6), arguing that the Policy did not cover the loss and reformation of the Policy was not available under New York law. (See Def.’s Mot. Dismiss Mem., ECF No. 11-10 at 11–15.) The Court denied the motion on March 17, 2023 and referred the parties to the undersigned for pretrial case management. (Mar. 17, 2023 Mem. & Order, ECF No. 14 at 6.) On March 30, 2023, Defendant answered the complaint and asserted a counterclaim. (See generally, Answer, ECF No. 16.) The Court entered a discovery scheduling order on May 25, 2023, setting March 29, 2024 as the deadline for motions to amend pleadings. (See ECF No. 22 at 1.) On April 17, 2024, the Court granted the parties’ joint motion to extend certain discovery deadlines, including, as relevant here, extending the deadline to amend pleadings to May 29, 2024. (See Joint Mot., ECF No. 26 at 1; Apr. 17, 2024 Order.)

On May 29, 2024, Defendant moved to amend its answer to add the following statute of limitations defense:

“Coverage for the Action is time barred by the applicable statute of limitations including but not limited to New York Civil Practices [sic] and Rules § 213(6), the six year statute of limitations for reformation actions.”

(Ehrlich Decl. Ex. 7, ECF No. 34-7 ¶ 47.)² Plaintiffs did not consent to amendment and oppose the motion. (See Ehrlich Decl., ECF No. 34 ¶ 2; Pls.’ Resp., ECF No. 35.)

II. DISCUSSION

A. Legal Standard

After the time expires for amending a pleading as of right, “a party may amend its pleading only with the opposing party's written consent or the court's leave.” Fed. R. Civ. P. 15(a)(2). “The court should freely give leave when justice so requires.” Id. However, “ ‘it is within the sound discretion of the district court to grant or deny leave to amend.’ ” Carroll v. Trump, 680 F. Supp. 3d 491, 504 (S.D.N.Y.) (quoting McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007)), aff'd in part, appeal dismissed in part, 88 F.4th 418 (2d Cir. 2023). “[M]otions to amend should generally be denied in instances of futility, undue delay, bad faith or dilatory motive, repeated failure to cure deficiencies by amendments previously allowed, or undue prejudice to the non-moving party.” Pereira ex rel. Capala v. Capala, No. 17-CV-3434 (ILG)(SMG), 2018 WL 4259982, at *2 (E.D.N.Y. Sept. 6, 2018) (quoting Burch v. Pioneer Credit Recovery, Inc., 551 F.3d 122, 126 (2d Cir. 2008)); see also Equal Emp. Opportunity Comm'n v. Hillstone Rest. Grp., Inc., 346 F.R.D. 26, 30 (S.D.N.Y. 2024). The non-moving party bears the burden of establishing why leave to amend should not be granted. See Lion-Aire Corp. v. Lion Air Installation, Inc., 747 F. Supp. 3d 488, 515 (E.D.N.Y. 2024).

B. Futility

[A]n affirmative defense is considered futile “ ‘where it is either clearly meritless based on the well-pleaded factual allegations contained within the pleadings or would have no impact on the outcome of the action itself.’ ” FC Online Mktg., Inc. v. Burke's Martial Arts, LLC, No. 14-CV-3685 (SJF)(SIL), 2016 WL 11481193, at *7 (E.D.N.Y. Sept. 30, 2016) (quoting Tavares v. Lawrence & Mem'l Hosp., No. 3:11-CV-770, 2013 WL 1385266, at *3 (D. Conn. Apr. 3, 2013), which in turn cites Quanta Specialty Lines Ins. Co. v. Investors Capital Corp., 403 F. App'x 530, 532–33 (2d Cir. 2010)), adopted sub nom. FC Online Mktg., Inc. v. Burke's Martial Arts, LLC, No. 14-CV-3685 (SJF)(SIL), 2016 WL 6236312 (E.D.N.Y. Oct. 25, 2016); see also Sparrow Fund Mgmt. LP v. MiMedx Grp., Inc., No. 18-CV-4921 (PGG)(KHP), 2021 WL 12101061, at *2 (S.D.N.Y. Sept. 28, 2021). “Thus, if the underlying facts and circumstances upon which the moving party relies support the claim or defense sought to be added, the party should generally be allowed to test that claim or defense on the merits.” Gurniak v. Emilsen, 995 F. Supp. 2d 262, 267 (S.D.N.Y. 2014) (citing United States ex rel. Maritime Admin. v. Cont'l Ill. Nat'l Bank & Trust Co. of Chicago, 889 F.2d 1248, 1254 (2d Cir. 1989)).

The Court will permit amendment because the record supports Defendant's proposed affirmative defense. In New York, contract actions “based upon mistake” “must be commenced within six years.” N.Y. C.P.L.R. § 213(6). “A cause of action seeking reformation of an instrument on the ground of mistake ․ is governed by the six-year statute of limitations pursuant to [N.Y. C.P.L.R. §] 213(6), which begins to run on the date the mistake was made.” Lopez v. Lopez, 20 N.Y.S.3d 134, 136 (2d Dep't 2015); see also Porwick v. Fortis Benefits Ins. Co., No. 99-CV-10122 (GBD), 2004 WL 2793186, at *4 (S.D.N.Y. Dec. 6, 2004) (applying N.Y. C.P.L.R. § 213(6) in action seeking reformation of an insurance contract based on mistake). In the Complaint, Plaintiffs allege that “[b]y mutual mistake and inadvertence, the named insured referred to in the Policy on the date of the loss” (i.e., December 15, 2020) was Bernando. (Compl., ECF No. 1-1 ¶ 23.) However, Bernando testified at his deposition that he intentionally purchased the property as the sole owner in 2005 because he had the better credit rating and that, after he transferred the deed to Jose in 2012, he never contacted Defendant to add Jose to the Policy because he did not know he had to. (See Bernando Dep., ECF No. 34-5 at 28:10–13; Ehrlich Decl. Ex. 4, ECF No. 34-4 at 2.) According to Defendant, this testimony “clarified that the alleged mistake at issue occurred in 2012” when Bernando transferred the Property to Jose, not at some later time, and therefore Plaintiffs’ claim seeking to reform the Policy to correct the mistake has been time-barred since 2018. (See Def.’s Mot., ECF No. 33 at 3; Def.’s Reply, ECF No. 39 at 3.)

Plaintiffs argue “there is no statute of limitations issue” because the Policy renewed annually on November 7th of every year until the fire, and that each renewal was a “new and separate contract” that restarted the statute of limitations clock. (See Pls.’ Resp., ECF No. 35 at 2.) However, under New York law, annual renewals of insurance contracts, “effected with no further discussions between [Plaintiffs] and the broker or independent acts of malpractice, constitute only new instances of damage, and are therefore, irrelevant for limitations analysis.” Hudson Envelope Corp. v. Klausner, 249 A.D.2d 31, 32 (N.Y. App. Div. 1998); Cf. Goldmark, Inc. v. Certain Underwriters at Lloyd's London, No. 05-CV-3463 (FB)(RER), 2009 WL 10705786, at *3 (E.D.N.Y. June 8, 2009) (applying N.Y. C.P.L.R. § 213(2) and finding that limitations period restarted where insurance policy was renewed with a “revised and customized” insurance policy obtained “pursuant to ongoing discussions”). If Defendant can show that the Policy was renewed annually “with no further discussions between [Plaintiffs] and the broker,” it may be able to prevail on its argument that Plaintiffs’ claim is time-barred under New York law. While the Court does not opine on whether the affirmative defense will be successful, the record supports a finding that Defendant should be permitted to test the defense on the merits. See Gurniak, 995 F. Supp. 2d at 267. Accordingly, the Court finds that Plaintiffs have failed to show that Defendant's proposed statute of limitations defense would be futile.

C. Undue Delay

Plaintiffs also claim that Defendant's motion to amend was filed “too late” and “made after inordinate delay” because Defendant failed to raise the affirmative defense in its answer or in its motion to dismiss, even though “defendant knew exactly what and when [it] knew the relevant facts” to support its proposed statute of limitations defense. (Pls.’ Resp., ECF No. 35 at 2–3.)

As a threshold matter, Defendant's motion is “per se timely” because it was filed by the deadline in the Court's discovery scheduling order proposed by the parties and so-ordered by the Court. Vasto v. Credico (USA) LLC, No. 15-CIV-9298 (PAE), 2016 WL 3926466, at *2 (S.D.N.Y. July 18, 2016) (citing Loftex USA LLC v. Trident Ltd., No. 11-CIV-9349 (PAE), 2012 WL 5877427, at *4 (S.D.N.Y. Nov. 20, 2012) (proposed amendment did not reflect bad faith or undue delay where plaintiff “abided by the schedule proposed by the parties and set by the Court”) and Duling v. Gristede's Operating Corp., 265 F.R.D. 91, 97 (S.D.N.Y. 2010) (no undue delay when motion to amend was made within deadline stipulated in scheduling order)). Further, Defendant's proposed amendment came after discovery revealed relevant facts about Bernando's purchase of the Property and his reasoning for the mistake of not adding Jose to the Policy. See Alicea v. City of New York, No. 1:16-CV-07347 (JLR), 2023 WL 3724131, at *4 (S.D.N.Y. May 30, 2023). Accordingly, Plaintiffs have not met their burden to show that Defendant acted with undue delay.

D. Undue Prejudice

Finally, Plaintiffs argue that they would be prejudiced by the proposed amendment “[a]s discovery is now closed.” (See Pls.’ Resp., ECF No. 35 at 4.)

“In “gauging prejudice,” the Court considers, “among other factors, whether an amendment would ‘require the opponent to expend significant additional resources to conduct discovery and prepare for trial’ or ‘significantly delay the resolution of the dispute.’ ” Ruotolo v. City of New York, 514 F.3d 184, 192 (2d Cir. 2008) (quoting Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993)). However, beyond a conclusory statement that they would be prejudiced, Plaintiffs do not identify what additional discovery they would have needed if the statute of limitations defense had been included in Defendant's answer or what additional discovery they would seek now to respond to the defense. In other words, Plaintiffs have not “persuasively asserted that granting [Defendant's] request would require [them] to expend additional resources to conduct discovery, [or would] delay resolution of this matter[.]” Lion-Aire Corp., 747 F. Supp. 3d at 515; see also New London Assocs., LLC v. Kinetic Soc. LLC, No. 18-CV-7963 (DLC), 2019 WL 2918163, at *2 (S.D.N.Y. July 8, 2019) (granting motion to amend answer where plaintiff “[had] failed to identify any additional discovery it would need to conduct in order to respond effectively to the proposed affirmative defenses”). And Plaintiffs will be able to oppose the viability of the proposed affirmative defense in their summary judgment briefing, thus mitigating the prejudicial effects (if any) of amendment. Accordingly, Plaintiffs have not met their burden of showing that amendment would unduly prejudice them.

III. CONCLUSION

For the foregoing reasons, Defendant's motion to amend its answer to assert a statute of limitations defense is granted. By April 14, 2025, Defendant shall file its amended answer.

The deadline in the Court's November 1, 2024 Order is vacated. By April 22, 2025, the parties shall confer and shall file a joint status letter stating (even if their positions differ): (1) whether they intend to proceed to dispositive motion practice or file a joint pretrial order, and proposed deadlines for same; (2) whether they seek additional discovery and, if so, propose the scope and deadlines for same; and (3) whether they seek a settlement conference or referral to mediation.

SO ORDERED.

FOOTNOTES

1.   All citations to documents filed on ECF are to the ECF document number and pagination in the ECF header unless otherwise noted.

2.   Defendant has submitted the proposed amended answer (ECF No. 34-8) and a redline copy (ECF No. 34-7).

MARCIA M. HENRY United States Magistrate Judge