The Travelers Indemnity Company of America v. Starr Indemnity & Liability…

Background

Travelers brought this action against Starr seeking a declaration that Starr had duties to defend and indemnify TDX Construction Corporation, the Trustees of Columbia University in the City of New York, and the City of New York in litigation pending in New York Supreme Court. Travelers later moved to amend its complaint by adding three paragraphs alleging that the City was an additional insured under an endorsement to Starr’s policy. The proposed allegations concerned coverage for governmental agencies and subdivisions in connection with operations performed under a permit or authorization, and alleged that the City had issued work permits relevant to the underlying accident.

Travelers sought Starr’s consent to the amendment, but Starr did not consent and asked Travelers to provide copies of the relevant permits. Travelers did not provide those copies. Travelers filed the motion within the court-approved deadline for amendment and before discovery closed.

Arguments and legal standard

Under Rule 15(a)(2) of the Federal Rules of Civil Procedure, courts generally should allow a party to amend a complaint when fairness requires. An amendment may be denied as futile if the proposed amended complaint could not survive a motion to dismiss for failure to state a claim. Because Travelers filed its motion before discovery ended, the court evaluated whether the proposed allegations could satisfy that pleading standard. At this stage, the court treated Travelers’s factual allegations as true and drew reasonable inferences in Travelers’s favor; it did not require Travelers to prove the allegations yet.

Starr’s sole objection was that Travelers had not demonstrated that a permit or similar document existed. The court held that Starr applied the wrong standard. The proposed amendment was not futile because Travelers’s allegations were sufficient at the pleading stage. The court also stated that data from the New York City Department of Buildings’ website suggested that at least one relevant permit had been issued. Travelers had additionally submitted a discovery request seeking relevant permits from Starr.

Ruling

The court granted Travelers leave to amend its complaint. The ruling concerned whether Travelers could add the allegations at that stage; it did not decide the ultimate insurance-coverage issues. A case-management conference remained scheduled for April 29, 2022, and the court stated that the order resolved docket number 16.