ARTHUR D. SPATT, District Judge.
On September 6, 2014, the Plaintiff Certified Multi-Media Solutions, Ltd. ("CMMS" or the "Plaintiff") commenced this action against the Defendant Preferred Contractors Insurance Company Risk Retention Group LLC ("PCIC" or the "Defendant"). Presently before the Court is motion by an interested non-party, St. Paul Fire & Marine Insurance Company, pursuant to Federal Rule of Civil Procedure ("Fed. R. Civ. P.") 24, seeking leave of the Court to intervene as a Plaintiff in this action.
For the reasons that follow, the motion to intervene is granted.
The following facts are drawn from the pleadings and the papers and exhibits submitted in connection with the instant motion.
On October 28, 2008, the Plaintiff CMMS entered into a written agreement with Getronics USA, Inc. ("Getronics") entitled Installation Services Subcontract Agreement (the "2008 Agreement"). Although not made clear in the record, it appears that the Agreement was executed in connection with a construction project (the "Project") located at the Gateway Center at the Bronx Terminal Market, at the intersection of Exterior Street and River Avenue in the Bronx (the "Premises"). In relevant part, the 2008 Agreement provides that Getronics hired CMMS to provide certain computer equipment and installation services.
Of importance, the 2008 Agreement contains the following provision:
At the center of the instant litigation is a general liability insurance policy, which was issued by the Defendant PCIC to CMMS. The Policy covered the period March 14, 2009 to March 14, 2010 (the "Policy").
Relevant here, the Policy contains the following exclusionary provision:
In 2009, one Anthony Balzano ("Balzano"), a non-party to this action, was employed by CMMS as a union electrician. On March 19, 2009, Balzano was working in his capacity as an electrician for CMMS on the Project, when he allegedly fell and sustained severe and permanent personal injuries.
On August 7, 2009, Balzano commenced a personal injury negligence action in the Bronx County Supreme Court (the "Bronx County Litigation") against the following named entities: BTM Development Partners, LLC ("BTM"); Target Corporation ("Target"); and Plaza Construction Corp. ("Plaza"). According to the complaint in the Bronx County Litigation, BTM was the owner and lessor of the Premises; Target was the lessee and tenant-in-possession of the Premises; and Plaza was the general contractor for the Project. Balzano alleged in the Bronx County Litigation that the actions or omissions of BTM, Target, and Plaza proximately caused his injuries.
Apparently, CMMS sought coverage under the Policy for potential liability arising out of the claims asserted in the Bronx County Litigation. In this regard, CMMS alleges that it provided PCIC with timely notice of such claims.
However, on March 12, 2010, PCIC, through its claims administrator Engle Martin Claims Administrative Services ("Engle Martin"), disclaimed coverage under the Policy. Of relevance here, PCIC, through Engle Martin, stated as follows:
[A]pplicable to our analysis of coverage is the following exclusion:
On or about March 18, 2011, Plaza, one of the defendants in the Bronx County Litigation, filed a third-party complaint against Getronics.
In turn, on or about July 12, 2011, Getronics filed a third-party complaint against CMMS. Getronics asserted that the 2008 Agreement obligated CMMS to provide it with a defense and to indemnify it for any liability and/or damages incurred in the Bronx County Litigation.
PCIC provided a defense to CMMS in the Bronx County Litigation, subject to a reservation of rights.
On or about January 6, 2012, approximately five months after CMMS was impleaded in the Bronx County Litigation, PCIC altered its position with respect to the Policy. It is this shift in PCIC's position that forms the basis of CMMS's claims in this case.
Whereas previously, PCIC had invoked the "Employer's Liability Exclusion" to disclaim coverage on the ground that Balzano was employed by CMMS at the time of the accident, PCIC now relied upon a so-called "Endorsement 23" as an additional basis for limiting coverage. That endorsement allegedly provides for a $10,000 sublimit on claims involving personal injuries sustained by employees, e.g., Balzano, of an insured, i.e., CMMS. Therefore, PCIC asserted that, even if it were required to indemnify CMMS for claims arising from Balzano's injuries, the amount of any potential liability would be capped at $10,000.
In a related letter dated June 28, 2012, PCIC, through its counsel, described the alleged application of Endorsement 23 more particularly:
On September 6, 2014, more than two years after PCIC articulated its new coverage position, CMMS commenced this federal action. In this case, CMMS contends that PCIC's reliance upon Endorsement 23 to disclaim and/or limit coverage under the Policy was untimely and therefore invalid. CMMS asserts that PCIC is obligated to provide it with a defense and indemnify it for liability and/or damages incurred in the Bronx County Litigation to the full extent of the Policy's $1 Million limits, and seeks a declaratory judgment to that effect.
On September 14, 2014, approximately one week after the instant action was commenced, New York Supreme Court Justice Kenneth L. Thompson, Jr. granted summary judgment to Getronics on its third-party claims against CMMS in the Bronx County Litigation. In particular, Justice Thompson held, as a matter of law, that paragraph 11(a) of the 2008 Agreement, which is quoted above, contractually obligates CMMS to provide Getronics with a defense and indemnify it for liability and/or damages incurred in the Bronx County Litigation.
At the time of Balzano's injury, Getronics was insured by St. Paul Fire & Marine Insurance Company ("Travelers"). As a consequence, prior to Justice Thompson's decision, outlined above, Travelers had been providing a defense to Getronics in the Bronx County Litigation, allegedly expending a sum in excess of $80,000 to do so (the "Defense Costs"). Allegedly, these costs are continuing.
However, when Justice Thompson held that, pursuant to the 2008 Agreement, CMMS was obligated to defend and indemnify Getronics, Travelers sought to take two related actions: (i) it sought to "tender" the defense of Getronics to CMMS, thereby transferring to CMMS the obligation of providing a defense to Getronics in the Bronx County Litigation; and (ii) it sought to recoup from CMMS those Defense Costs already expended in furtherance of providing that defense.
In this regard, on November 20, 2014, approximately two months after Justice Thompson's decision, Travelers sent a letter to CMMS (the "Tender Letter"), which stated, in relevant part, as follows:
On December 1, 2014, CMMS responded to the Tender Letter, in relevant part, as follows:
On January 16, 2015, Travelers filed a motion, pursuant to Fed. R. Civ. P. 24, seeking to intervene as a Plaintiff in this action. In particular, Travelers seeks to obtain a judicial determination as to PCIC's coverage obligations under the Policy, namely, whether PCIC, as the insurer of CMMS, is obligated to accept Travelers' tender of Getronics' defense in the Bronx County Litigation and also whether PCIC is responsible for reimbursing the Defense Costs that were already borne by Travelers.
Travelers contends that its interest in the resolution of these issues is sufficiently related to the coverage issues asserted by CMMS, so that it makes sense to adjudicate them together. In this regard, in support of the instant motion, Travelers submitted a proposed intervener complaint (the "Intervener Complaint"). The allegations in the Intervener Complaint substantially mirror the facts outlined above and seek relief in the form of a declaratory judgment, as follows: that CMMS's obligation to provide a defense and indemnity to Getronics is covered under the Policy issued by PCIC; that PCIC is, therefore, required to reimburse Travelers for past Defense Costs; that PCIC is also responsible for all future costs incurred in defending Getronics in the Bronx County Litigation; and that PCIC is liable for any damages incurred by Travelers as a result of PCIC's failure to assume these obligations.
The motion was fully briefed on February 9, 2015, and is presently before the Court. PCIC opposed the motion and contends that Travelers is unable to demonstrate its entitlement to intervene in this case. CMMS takes no position with respect to Travelers' motion.
The Court will now discuss the applicable law and address the parties' respective contentions.
Fed. R. Civ. P. 24 provides for two types of intervention in a civil lawsuit: intervention as of right and permissive intervention.
Intervention as of right, which is governed by Rule 24(a), provides that, upon a timely motion, the Court must permit anyone to intervene who "(1) is given an unconditional right to intervene by a federal statute; or (2) claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest." Fed. R. Civ. P. 24(a)(1)-(2).
As to the second prong of this standard, in order "to intervene as of right pursuant to Rule 24(a)(2), a movant must show that (1) the application is timely; (2) the applicant claims an interest relating to the subject matter of the action; (3) the protection of the interest may as a practical matter be impaired by the disposition of the action; and (4) the interest is not adequately protected by an existing party."
By contrast, permissive intervention is governed by Rule 24(b) and confers upon the Court discretion to permit intervention by anyone who "(A) is given a conditional right to intervene by a federal statute; or (B) has a claim or defense that shares with the main action a common question of law or fact." Fed. R. Civ. P. 24(b)(1)(A)-(B). With regard to permissive intervention, the Court's analysis is guided by the same four factors that it considers for intervention as of right. See
In addition, the Rules direct the Court, "[i]n exercising its discretion," to "consider whether the intervention will unduly delay or prejudice the adjudication of the original parties' rights." Fed. R. Civ. P. 24(b)(3);
Travelers does not contend that any federal statute provides it with an unconditional right to intervene in this action. Accordingly, Fed. R. Civ. P. 24(a)(1) is not implicated here. However, Travelers contends that each of the four factors relevant to the analysis under Rule 24(a)(2) is satisfied, and thus intervention as of right is appropriate on that basis.
"[A] district court has discretion to evaluate the timeliness of a motion to intervene in light of `all the circumstances,' including `(1) how long the applicant had notice of the interest before it made the motion to intervene; (2) prejudice to existing parties resulting from any delay; (3) prejudice to the applicant if the motion is denied; and (4) any unusual circumstances militating for or against a finding of timeliness.'"
At the outset, the Court notes that PCIC did not address the issue of timeliness at all in opposition to the instant motion. In any event, the Court finds that, under the facts of this case, as to timeliness, the relevant factors weigh in Travelers' favor.
Although the timeliness inquiry is "not confined strictly to chronology,"
In fact, PCIC has not identified any basis for deeming the instant motion untimely. The Court can discern of no prejudice to PCIC resulting from the length of time that Travelers took to make the instant motion. Nor can it perceive any unusual circumstances militating against a finding of timeliness. On the contrary, as Travelers aptly points out, this case has barely progressed past the pleading stage, with dispositive motions by both parties still pending before the Court. Therefore, in the Court's view, there is no substantial risk of prejudice to the existing parties' rights by deeming the application timely.
Accordingly, the first factor relating to intervention as of right, namely, the timeliness of the motion to intervene, weighs in favor of Travelers.
A closer question is presented with regard to whether Travelers has an interest in the subject matter of this case which is sufficient to justify intervention. "Under Rule 24(a)(2), the proposed intervenor must have a `direct, substantial, and legally protectable' interest in the subject matter of the action."
Travelers describes its interest in this litigation as follows:
Travelers Memo of Law at 11.
In opposition, PCIC contends that Travelers is neither a party to nor a thirdparty beneficiary of the underlying Policy and thus lacks standing to intervene as a Plaintiff in this action. PCIC relies upon
However, in the Court's view, Travelers' interest in ensuring that CMMS will have sufficient access to the proceeds of PCIC's Policy to meet its obligations under the 2008 Agreement, namely, to assume from Travelers the defense and indemnity of Getronics in the Bronx County Litigation and to reimburse Travelers for its Defense Costs, is a sufficiently direct, substantial, and protectable interest to satisfy the second prong of the intervention standard.
In reaching this conclusion, the Court notes that
The court relied upon New York Insurance Law § 3420 to deny DeCarlo's motion to intervene. That statute limits the circumstances under which insurance carriers can be subjected to suit under New York law. In particular, if a personal injury plaintiff obtains a judgment against an insurance carrier's insured, the underlying plaintiff cannot automatically sue the carrier to enforce the terms of the policy. Rather, the underlying plaintiff must first obtain a judgment against the insured, which must remain unsatisfied for thirty days after service of notice of entry.
Interpreting this provision of state law, the court in
In this regard, the court in
The Court finds that this decision is not analogous to the situation in this case. In particular, in the Court's view, § 3420 does not bar Travelers' coverage claim because Travelers is neither a personal injury plaintiff seeking to make a claim under the terms of the PCIC Policy, nor is its interest in the Policy contingent on any future event that is beyond the control of the parties. On the contrary, in the Court's view, Travelers' relationship to PCIC is more akin to that of co-insurers who share a common insured in CMMS.
In this regard, the Court is persuaded by the decision in
This Court finds the reasoning in that case to be applicable here. There is no question that Travelers is not an injured third-party claimant seeking to enforce coverage under the PCIC Policy. Rather, Travelers is an insurer of Getronics whose own continued coverage obligations will necessarily be shaped by the Court's determination of PCIC's obligations in this action. As the court in
The Court finds this reasoning analogous to the present situation because the scope of Travelers' obligations to Getronics is necessarily affected by the availability of coverage under the PCIC Policy, i.e., the ultimate issue in this litigation. If PCIC prevails in this case, and the Court determines either (a) that the Policy does not provide coverage to CMMS or (b) that coverage is capped at $10,000, then CMMS may not be able to contribute to the defense and indemnity of Getronics, as it is required to do under the 2008 Agreement. It also may not be able to reimburse Travelers for the Defense Costs that it has already incurred.
As a direct result, Travelers may be left solely to bear the cost of defending and indemnifying Getronics' in the Bronx County Litigation, despite Justice Thompson's holding that CMMS is liable in contractual indemnity to Getronics, as a matter of law. As a practical matter, it may also be left without a source of reimbursement for its Defense Costs, which are alleged to exceed $80,000.
If, however, the Court determines that PCIC has a coverage obligation under the Policy, Travelers' own obligations may be alleviated, in whole or in part. In the Court's view, this constitutes a substantial and protectable interest that militates in favor of permitting intervention. In addition, under the facts and circumstances of this case, the Court finds that New York Insurance Law § 3420 does not bar Travelers from intervening.
Accordingly, the second factor relating to intervention as of right, namely, a direct, substantial, and legally protectable right of Travelers in the subject matter of this action, weighs in favor of Travelers.
For substantially the reasons stated above, the Court further finds that the third factor also favors Travelers. In this regard, the Court reiterates that, if Travelers is denied participation in this action, and CMMS fails to adequately establish coverage under the Policy, Travelers risks a costly continuation of its defense and indemnity obligations to Getronics. It may also be unable to recoup the allegedly substantial Defense Costs already incurred. In the Court's view, such an outcome would impair the protection of Travelers' interest.
Further, although not specifically addressed by the parties, the Court notes that Travelers' ability to effectively enforce the 2008 Agreement may well be impaired by the precedential effect that an adverse judgment in this action could have. As the court in
In this regard, the Court also takes note of
The Court finds the reasoning of these cases applicable to the facts of this case. If Travelers is excluded from this contest between CMMS and PCIC, its recourse may likely be limited to commencing litigation anew to enforce the 2008 Agreement and Justice Thompson's award of summary judgment in the Bronx County Litigation. That action would, in all likelihood, revisit the same issues concerning the availability and limits of the PCIC Policy that will inevitably be central to a determination in this case. However, Travelers' interests may well be prejudiced in that subsequent action by a determination of this Court that PCIC does not owe coverage to CMMS under the Policy — a determination which would have been rendered without its involvement.
Accordingly, in the Court's view, this is a case "[w]here stare decisis as a practical matter will impair [Travelers'] ability to vindicate its interests in a separate lawsuit" and concludes that this fact is sufficient to supply "the requisite impairment of interest to satisfy Rule 24(a)."
"In general, Rule 24(a)(2) requires a showing that the representation of [a proposed intervener's] interest `may be' inadequate, and that the burden of making that showing is `minimal.'"
In this case, Travelers concedes that, at the present time, it has somewhat overlapping interests with CMMS, namely, both parties are seeking to achieve maximum coverage under the PCIC Policy. However, Travelers asserts that the parties' positions relative to one another in this litigation may change if, for example, CMMS and PCIC decide to settle their dispute for less than the full amount of coverage under the Policy. According to Travelers this would work to its disadvantage by increasing its own obligations to Getronics. Thus, Travelers contends that it may well be forced to take an adversarial posture relative to CMMS in order to prevent a settlement that will impair Travelers' interests. Such a favorable result will be impossible if Travelers is not permitted to intervene.
The Court is unpersuaded by this argument, which has previously been rejected in this district.
In addition, Travelers asserts that CMMS lacks an actual incentive to vigorously protect its interest in the Policy. In particular, Travelers asserts that it is currently providing a defense and indemnity to Getronics in the Bronx County Litigation. It asserts that it will continue to do so, even if PCIC prevails in this litigation and the Court determines that the Policy does not provide coverage to CMMS and, by extension, to Getronics. Therefore, according to Travelers, CMMS lacks incentive to represent Travelers' interest because, no matter the outcome of this action, as a practical matter, CMMS will not be called upon to assume the cost of Getronics' defense and indemnity. In the Court's view, this concern is sufficient to satisfy Travelers' "minimal" burden of showing that CMMS's representation of its interests "may be" inadequate.
In reaching this conclusion, the Court notes that the question of whether CMMS will adequately represent Travelers' interests in this action is a close one. However, in the Court's view, an overly rigid application of this rule would not further the ends of justice. In this regard, the Court evokes the following reasoning of Judge Frank Altimari, when he was a judge of this Court, in
In this case, even if CMMS and Travelers are arguably working toward similar ends in terms of maximizing the availability of coverage under the PCIC Policy, Travelers should not be denied entrance into this action. This Court is of the view that CMMS's potentially adequate representation of Travelers' interest is outweighed by other compelling factors, including and especially the pragmatism of resolving all known issues relating to coverage provided under the PCIC Policy in a single lawsuit involving all concerned parties. In addition, as discussed above, Travelers has convincingly established that it has a substantial and protectable interest in the subject matter of this action that may well be impaired if it is not permitted to intervene.
Therefore, the Court finds that, although the fourth factor does not strongly favor either party, Travelers has nevertheless met its minimal burden of showing inadequate representation. Accordingly, the Court finds that Travelers has demonstrated its entitlement to intervene in this action as of right.
Having so held, the Court need not specifically address whether Travelers is also entitled to permissible intervention under Fed. R. Civ. P. 24(b) at this time.
For the reasons stated in this opinion, Travelers' motion to intervene as of right pursuant to Fed. R. Civ. P. 24(a)(2) is granted. Travelers shall file and effectuate personal service of its proposed Intervener Complaint within 20 days of the date of this order.
Moreover, the Court notes that CMMS and PCIC have engaged in substantial motion practice during the pendency of the instant motion. In particular, on November 17, 2014, PCIC filed a motion, pursuant to Fed. R. Civ. P. 12(b)(6), to dismiss the complaint for failure to state a claim upon which relief can be granted. That motion was fully briefed on May 15, 2015 and is currently pending before the Court.
In addition, on April 27, 2015, CMMS filed a motion, pursuant to Fed. R. Civ. P. 56, for summary judgment on its single cause of action for a declaratory judgment. That motion was fully briefed on June 9, 2015, and is also currently pending before the Court.
In light of the Court's opinion that Travelers is entitled to participate as a Plaintiff in this action, provision must be made for it to be heard on these pending motions, if it so chooses. Accordingly, Travelers shall have a period of 30 days from the date of this order to file responses to PCIC's motion to dismiss and CMMS's motion for summary judgment. CMMS and PCIC will then have a period of 20 days to respond to Travelers' filings.
It is
