Breach of Contract – Summary Judgment – Motion for Leave to Amend

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Civil

7^th Circuit Court of Appeals

Officials: MANION, ROVNER, and HAMILTON, Circuit Judges.

Breach of Contract – Summary Judgment – Motion for Leave to Amend

No. 14-1437 Life Plans Incorporated v. Security Life of Denver Insurance Company

Ambiguous language of arbitrage agreement as related to termination made summary judgment inappropriate. District court abused discretion in not allowing Appellant to amend complaint.

“The agreement is ambiguous. These two provisions conflict with one another and do not refer to one another. They are fairly susceptible to both interpretations. Life Plans’ reading gives effect to the three-year term of commitment and harmonizes the “will continue indefinitely” clause in the termination provision with the commitment term. Security Life offers a more aggressive reading of the termination provision emphasizing the absence of language limiting the parties’ rights to terminate, but that reading effectively nullifies the three-year provision. Both readings are at least plausible. In light of this ambiguity, we consider extrinsic evidence that might shed light on the parties’ intent.”

“None of those exceptions that might justify denying amendment was present in this case. Life Plans’ request for amendment was timely. Life Plans sought amendment promptly after discovering a factual basis for its new claims and tried to mitigate any delay that could result from amending the complaint late in discovery. Though the district court expressed frustration because the request was made when there was only a month remaining before the deadline for completing discovery, the motion was filed promptly and would not have caused undue delay. Life Plans sought leave to amend just ten days after completing the deposition of Security Life’s CEO, whose testimony showed for the first time, according to Life Plans, that termination of the agreement was forced on Security Life by ING. Mindful of the impending discovery deadline, Life Plans told the court that it would not ask to re-depose any witnesses. And Security Life had completed only one deposition when amendment was sought, and that witness had already been asked about the amended complaint”

Reversed and Remanded

Rovner concurs and dissents

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.