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Diocese of St. Cloud v. Arrowood Indemnity Co.

United States District Court, D. Minnesota

January 2, 2019

DIOCESE OF ST. CLOUD; CHURCH OF SAINT JOSEPH, ST. JOSEPH; CHURCH OF OUR LADY OF VICTORY, FERGUS FALLS; CHURCH OF SAINT JAMES, RANDALL; CHURCH OF SAINT LOUIS BERTRAND, FORESTON; CHURCH OF THE ASSUMPTION, EDEN VALLEY; CHURCH OF SAINT OLAF, ELBOW LAKE; CHURCH OF THE HOLY ANGELS OF ST. CLOUD, ST. CLOUD, f/k/a Holy Angels Congregation of St. Cloud, St. Cloud; CHURCH OF IMMACULATE CONCEPTION, NEW MUNICH; CHURCH OF THE SACRED HEART, STAPLES; CHURCH OF SAINT ANDREW, ELK RIVER; CHURCH OF SAINT PAUL, ST. CLOUD; and CHURCH OF ST. MARY'S CATHEDRAL OF ST. CLOUD, ST. CLOUD, f/k/a Church of the Immaculate Conception, St. Cloud, Plaintiffs,
v.
ARROWOOD INDEMNITY COMPANY, individually and as successor to Royal Indemnity Company, Connecticut Indemnity Company, The Fire & Casualty Insurance Company, Security Insurance Company of Hartford, Connecticut Specialty Insurance Company, New Amsterdam Casualty Company, and Orion Capital Companies; ST. PAUL FIRE AND MARINE INSURANCE COMPANY; and HARTFORD ACCIDENT AND INDEMNITY COMPANY, Defendants.

          Vadim Trifel and John H. Faricy, Jr., FARICY LAW FIRM, P.A., and Thomas A. Janson, JANSON LAW OFFICE, for plaintiffs.

          Olivia M. Cooper and Robert D. Brownson, BROWNSON NORBY, PLLC, and Dennis N. Ventura and Kathleen M. Hart, TRESLLER LLP, for Defendant Arrowood Indemnity Corporation.

          Dale O. Thornsjo and Lance D. Meyer, O'MEARA LEER WAGNER & KOHL, P.A., for defendant St. Paul Fire and Marine Insurance Company.

          Joshua D. Weinberg, SHIPMAN & GOODWIN LLP, and Robert L. McCollum, MCCOLLUM CROWLEY, for defendant Hartford Accident and Indemnity Company.

          MEMORANDUM OPINION AND ORDER AFFIRMING MAGISTRATE JUDGE RULING

          JOHN R. TUNHEIM UNITED STATES DISTRICT JUDGE

         The Diocese of St. Cloud (the “Diocese”) and thirty individual Catholic parishes in Minnesota (collectively “Plaintiffs”) brought this insurance coverage action to determine which parties will pay compensation to victims of clerical abuse who have filed claims in state court. Seventeen of the parishes have since been dismissed, leaving only thirteen parishes and the Diocese. (Magistrate Judge Order at 4, Sept. 24, 2018, Docket No. 192.)

         Plaintiffs brought a claim for declaratory relief against a fellow Catholic religious organization, The Order of St. Benedict, and its insurers, Continental Insurance Company and Travelers Indemnity Company. In January 2018, the Court dismissed that claim on ripeness and standing grounds. Diocese of St. Cloud v. Arrowood Indem. Co., No. 17-2002, 2018 WL 296077, at *5 (D. Minn. Jan. 4, 2018).

         Plaintiffs also brought claims for declaratory relief against their insurers, Arrowood Indemnity Company (“Arrowood”), Church Mutual Insurance Company (“Church Mutual”), St. Paul Fire and Marine Insurance Company, and Hartford Accident and Indemnity Company (collectively “Plaintiffs' Insurers”). They brought additional claims against Arrowood alone for breach of contract, promissory estoppel, bad faith/breach of fiduciary duty, fraudulent misrepresentation, and tortious interference with contractual relations. The Court found that Plaintiffs failed to allege facts sufficient to state a claim upon which relief could be granted with respect to their claims against Arrowood for promissory estoppel, bad faith/breach of fiduciary duty, fraudulent misrepresentation, and tortious interference with contractual relations. Diocese of St. Cloud v. Arrowood Indem. Co. (“March Order”), No. 17-2002, 2018 WL 1175421, at *8-9 (D. Minn. Mar. 6, 2018). The Court thus dismissed those claims, leaving only claims for declaratory relief against all of Plaintiffs' Insurers[1] and a breach of contract claim against Arrowood. See id.

         On May 11, 2018, the Court issued the Pretrial Scheduling Order. (Pretrial Scheduling Order, May 11, 2018, Docket No. 167.) All motions seeking to amend the pleadings or add parties were to be filed and heard prior to August 1, 2018. (Id. at 3.)

         Nevertheless, on August 1, 2018, Plaintiffs filed a Motion to Amend the Complaint and Modify the Pretrial Scheduling Order. (Pls.' Mot. to Amend Compl., Aug. 1, 2018, Docket No. 170.) Plaintiffs sought to bring a new claim against Church Mutual and sought to join five new defendants. (Id. at 1.) Three proposed defendants are new insurance companies: Nationwide Affinity Insurance Company of America (“Nationwide”), as successor to Western Casualty & Surety Company; Employers Insurance Company of Wausau (“Employers”); and Western National Mutual Insurance Company (“Western National”), as successor to Mutual Creamery Insurance Company. (Id.) Two proposed defendants are Arrowood Entities: Arrowpoint Capital Corporation and Arrowpoint Group, Inc. (Id.) Plaintiffs also sought to add more detailed allegations against Arrowood, (id.), to cure the deficiencies that resulted in the Court's earlier partial dismissal. Apparently recognizing that its Motion was untimely, Plaintiffs also sought to extend the August 1 deadline to August 20. (Id.)

         United States Magistrate Judge Leo Brisbois held a hearing on Plaintiffs' Motion on August 20, 2018. (Minute Entry, Aug. 20, 2018, Docket No. 183.) He ultimately denied Plaintiffs' Motion, finding that the Motion was untimely and that Plaintiffs could not show good cause to modify the schedule because Plaintiffs were not diligent in seeking the extension. (Magistrate Judge Order at 5-7.)

         Presently before the Court is Plaintiffs' Partial Objection to the Magistrate Judge's decision to deny their Motion. (Pls.' Objs. to Magistrate Judge Decision (“Objs.”), Oct. 9, 2018, Docket No. 193.)[2] Plaintiffs argue that they were diligent in their efforts to search their records, that permissive joinder of additional defendants is warranted, and that their proposed amended complaint cures the deficiencies that resulted in the Court's earlier partial dismissal. (Id. at 1, 5-6.) Because the Magistrate Judge did not clearly err in finding that Plaintiffs could not show good cause to modify the scheduling order, the Court will overrule Plaintiffs' objection and affirm the Magistrate Judge's decision.

         DISCUSSION

         I. STANDARD OF REVIEW

         The Court may only set aside a magistrate judge's decision on a nondispositive issue if it “is clearly erroneous or is contrary to law.” Fed.R.Civ.P. 72(a); see also 28 U.S.C. § 636(b)(1)(A); D. Minn. LR 72.2(a). As such, the Court's review of such a decision is “extremely deferential.” Reko v. Creative Promotions, Inc., 70 F.Supp.2d 1005, 1007 (D. Minn. 1999).

         II. MOTION TO MODIFY THE ...


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