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Galliano v. Borough of Seaside Heights

May 4, 2006


The opinion of the court was delivered by: Honorable Tonianne J. Bongiovanni United States Magistrate Judge


This matter comes before the Court on Plaintiffs' Motion to File a Second Amended Complaint. Plaintiffs seek leave to assert a claim for declaratory relief against Defendants and the entities providing insurance coverage to Defendants. The Court finds the proposed amendment would be futile and therefore, Plaintiffs' Motion to File a Second Amended Complaint shall be denied.

I. Factual Background

This case arises from a series of alleged civil rights violations ending with the April 9, 2002 shooting deaths of three individuals by a Seaside Heights Police Officer. The First Amended Complaint names, inter alia, the Borough of Seaside Heights, the Township of Dover and the Country of Ocean as defendants (collectively "the Municipal Defendants").

II. The Proposed Amendment

The proposed Second Amended Complaint seeks to add Ocean County Joint Insurance Fund, Municipal Excess Liability Joint Insurance Fund, American Reinsurance Company ("American Re")*fn1 , and North River Insurance Company as additional defendants (collectively "the Insurance Defendants"). Plaintiffs seek a judgment against the Municipal and Insurance Defendants "establishing the amount of insurance coverage available to insure the liability of" the Municipal Defendants against Plaintiffs' claims. (Plaintiffs' Second Amended Complaint, p. 40).

The proposed amendment asserts that the amount of Municipal Defendants, insurance coverage is related to the quantity of "events," "accidents" or "occurrences," giving rise to Plaintiffs' claims. Plaintiffs contend that settlement attempts have been futile as the Defendants and their insurers have expressed the "erroneous" view that the claims asserted by Plaintiffs constitute a single "accident," "occurrence" or "event," for insurance coverage purposes. They believe that if there is to be any prospect of resolution without the need for additional litigation, the Court must first decide the issues pertaining to insurance coverage. It is Plaintiffs' position that allowing the proposed amendments would not prejudice Defendants since the short period of additional time needed to decide this issue will enhance the prospects of settlement.

Plaintiffs argue that the Third Circuit has held insurance coverage disputes are particularly appropriate for resolution in a declaratory judgment action, which need not await resolution of the underlying claims. In asserting this proposition, Plaintiffs rely on ACandS, Inc. v. Aetna Casualty & Sur. Co., 666 F.2d 819 (3rd Cir. 1981).

Plaintiffs further assert that as intended third-party beneficiaries of the insurance agreements between the Insurance Defendants and Municipal Defendants, Plaintiffs have standing to assert this claim. (citing Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 272-274 (1941)).

The proposed Second Amended Complaint asserts that Plaintiffs' claims against the Municipal Defendants constitutes an actual controversy within the jurisdiction of this Court, and Plaintiffs are "interested parties" within the meaning of 28 U.S.C. § 2201.

The Defendants primary opposition to the proposed amendment is futility as the claim would be unable to survive a motion to dismiss. Defendants argue that the new claim is not sufficiently grounded in fact, fails to state a claim ripe for judicial determination, and that Plaintiffs lack standing to assert such a claim. Additionally, Defendants assert the proposed amendment would cause undue delay.

III. Legal Standard - Rule 15(a)

Although leave to amend the pleadings under FED. R. CIV. P. 15(a) is generally given freely pursuant to Foman v. Davis, 371 U.S. 178, 182 (1962), the Court may deny a motion to amend where there is "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of the amendment." Id. On a motion to amend a complaint, the Court looks only at the pleadings. Pharmaceutical Sales and Consulting Corp. v. J.W.S. Delavau, Co., Inc., 106 F.Supp. 2d 761, 765 (D.N.J. 2000).

A proposed amendment is futile if the complaint, as amended, would not survive a motion to dismiss. Foman, 371 U.S. at 182. Since judgment has not been entered for Plaintiffs, the blurred question of procedure and jurisdiction the Court must resolve is ...

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