National Union Fire Insurance Company of Pittsburgh, PA v. Intrawest ULC et al

Filing 206

AMENDED ORDER granting 51 Motion to Intervene Under Rule 24. The Clerk shall file the Complaint in Intervention Against National Union Fire Insurance Company of Pittsburgh, PA (Doc. No. 51-1), by Magistrate Judge Kathleen M. Tafoya on 2/18/14. (sgrim) Modified on 2/18/2014 to indicate signature date on document was amended pursuant to chambers instructions. (sgrim)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Magistrate Judge Kathleen M. Tafoya
Civil Action No. 13–cv–00079–PAB–KMT

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA,
Plaintiff,
v.
INTRAWEST ULC f/k/a INTRAWEST CORPORATION,
FEDERAL INSURANCE COMPANY,
NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, and
CONTINENTAL CASUALTY COMPANY,
Defendants.

AMENDED ORDER

This matter is before the court on Intrawest U.S. Holdings, Inc., Intrawest Resorts, Inc.,
Upper Bench Development Corporation, Intrawest California Holdings, Inc., Sierra Three Star
Development Corporation, The Stratton Corporation, and Intrawest Stratton Development
Corporation’s (“Intervenors”) “Motion to Intervene Under Rule 24” (Doc. No. 51 [Mot.], filed
April 29, 2013). Plaintiff filed its response in opposition on May 20, 2013 (Doc. No. 73
[Resp.]), and the Intervenors filed their reply on June 13, 2013 (Doc. No. 78 [Reply]). This
motion is ripe for ruling.

FACTS
In the Complaint, Plaintiff seeks a declaratory judgment, pursuant to 28 U.S.C. §§ 2201
and 2202, that the extent of insurance coverage it provides under an Owner Controlled Insurance
Program (the “OCIP Program”) to Intrawest and all insureds is collectively $5,000,000. (Doc.
No. 1, ¶ 1.)
The Intervenors are insureds under the OCIP and claim they have significant interests in
the outcome of this litigation. The Intervenors developed various projects covered by the OCIP
in Vermont, California, and Colorado or were parent companies to the developers of various
projects. The Intervenors claim at least two substantial interests in this litigation. First, the
Intervenors explain that each of the projects developed by the California and Vermont entities is
the subject of litigation in the respective jurisdictions. Each of those projects was enrolled in the
OCIP. Each entity claims entitlement to proceeds under the National Union policies. The
collective benefits to which these entities are entitled substantially exceed $5,000,000. Thus,
each entity has as material interest in the outcome of National Union s request for declaratory
relief, which seeks to limit the total insurance available for all projects to $5,000,000. Second,
the Intervenors seek to assert breach of contract and bad faith claims against National Union.
(See Mot., Ex. A.)
ANALYSIS
1.

Legal Standard
Federal Rule of Civil Procedure 24(a)(2) provides that, on timely motion, the court must

permit intervention as of right to anyone who:
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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)(2). Under Tenth Circuit law interpreting this rule, “an applicant may
intervene as a matter of right if (1) the application is timely, (2) the applicant claims an interest
relating to the property or transaction which is the subject of the action, (3) the applicant’s
interest may be impaired or impeded, and (4) the applicant’s interest is not adequately
represented by existing parties.” Elliott Indus. Ltd. P’ship v. B.P. Am. Prod. Co., 407 F.3d 1091,
1103 (10th Cir. 2005).
Further, the Tenth Circuit “follows a somewhat liberal line in allowing intervention.”
Utah Ass’n of Counties v. Clinton, 255 F.3d 1246, 1249 (10th Cir. 2001). “[T]he factors
mentioned in the Rule are intended to capture the circumstances in which the practical effect on
the prospective intervenor justifies its participation in the litigation. Those factors are not rigid,
technical requirements.” San Juan Cnty., Utah v. United States, 503 F.3d 1163, 1195 (10th Cir.
2007). Thus, “[i]ntervention should be granted of right if the interests favoring intervention
outweigh those opposed.” Id.
Federal Rule of Civil Procedure 24(b)(1)(B) provides that, on timely motion, the court
may permit intervention to anyone who “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)(B). The decision whether or not to
grant a motion for permissive intervention is within the district court’s sound discretion. See,
e.g., City of Stilwell v. Ozarks Rural Elec. Co-op. Corp., 79 F.3d 1038, 1043 (10th Cir. 1996). In

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exercising this discretion, “the court must consider whether the intervention will unduly delay or
prejudice adjudication of the original parties’ rights.” Fed. R. Civ. P. 24(b)(3).
2.

Evaluation
The Intervenors argue that they are entitled to intervention as of right and that permissive

intervention is appropriate. (Mot. at 6–11.) Plaintiff argues that the Intervenors are not entitled
to intervention as of right and their motion for permissive intervention should be denied. (Resp.
Intrawest Mot. at 3–10.)
a.

Intervention as of Right
1.

Timeliness

Plaintiff does not dispute that the motion to intervene is timely. This action was filed on
January 14, 2013 (Doc. No. 1), and the motion was filed just over three months later, on April
29, 2013. The court finds that the motion is timely filed.
2.

Interest Relating to the Property or Transaction That Is the Subject of
this Action

“Under rule 24(a)(2), the applicants must claim . . . an interest relating to the property or
transaction which is the subject of the action.” Utah Assoc. of Counties, 255 F.3d at 1250
(internal quotation marks omitted). “The Tenth Circuit requires that the interest be ‘direct,
substantial, and legally protectable.’ ” Forest Guardians v. U.S. Dep’t of Interior, No.
CIV-02-1003 JB/WDS, 2004 WL 3426413, at *5 (D.N.M. Jan. 12, 2004). “Although the
intervenor cannot rely on an interest that is wholly remote and speculative, the intervention may

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be based on an interest that is contingent upon the outcome of the litigation.” San Juan Cnty.,
Utah v. United States, 503 F.3d at 1203.
The Intervenors argue they have a strong interest in the funds available under National
Union’s policies as well as a interest in the contracts comprising the OCIP policies. Specifically,
the Intervenors argue they have a material interest in the limits available under the National
Union OCIP Policies because each of the Intervenors has an active claim for coverage from
National Union that National Union has refused to cover unqualifiedly. The Intervenors also
argue they have bad faith and other claims against National Union arising from National Union’s
alleged mishandling of the OCIP.
The court agrees that the Intervenors’ active claims to the insurance proceeds are
adequate to establish an interest in the subject of the litigation and that the threat of economic
injury resulting from an adverse decision in this case states the requisite interest under Rule
24(a)(2).
2.

Danger That Interest May Be Impaired or Impeded

“To satisfy the impairment element of the intervention test, a would-be intervenor must
show only that impairment of its substantial legal interest is possible if intervention is denied.
This burden is minimal.” Wildearth Guardians v. U.S. Forest Serv., 573 F.3d 992, 995 (10th
Cir. 2009) (quoting Utah Ass’n of Counties v. Clinton, 255 F.3d at 1253).
The Intervenors argue that if they are not permitted to intervene in this lawsuit, they will
be forced to file lawsuits across the country addressing similar issues. The Intervenors also
argue that individual lawsuits would require duplication of discovery for all parties, and could
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result in conflicting decisions on the same or substantially similar issues. The Intervenors assert
they would be prejudiced if their motion to intervene is denied.
Plaintiff argues that the added discovery based on these separate and discrete issues will
significantly delay the resolution of the OCIP limits issue currently before the court. Plaintiff
also argues the parties to this lawsuit will be prejudiced by the unnecessary delay caused by this
additional discovery. However, the court notes that there are multiple pending motions,
including motions to dismiss and for summary judgment and discovery motions, including
motions to stay, that have not been ruled on. Moreover, the discovery and dispositive motions
deadlines have not passed, and to the extent the parties need additional discovery due to
intervention, the parties may move to extend those deadlines.
The court finds that the prejudice or impairment to the Intervenors outweighs any
potential prejudice to the Plaintiff.
3.

Adequate Representation by Existing Parties

Finally, the Intervenors argue that the existing parties cannot adequately represent the
Intervenors’ interests in this litigation.
“Even if an applicant satisfies the other requirements of Rule 24(a)(2), it is not entitled to
intervene if its ‘interest is adequately represented by existing parties.’ ” San Juan Cnty., 503
F.3d at 1203. The Tenth Circuit has recognized a general presumption that “representation is
adequate when the objective of the applicant for intervention is identical to that of one of the
parties.” Id. at 1204 (citing City of Stilwell, 79 F.3d at 1042) (internal quotations omitted). “An
intervenor need only show the possibility of inadequate representation.” Wildearth Guardians,
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573 F.3d at 996. The burden is minimal; “[t]he possibility of divergence of interest need not be
great in order to satisfy the burden of the applicants.” Id. (citing Coalition of Ariz./N.M.
Counties for Stable Econ. Growth v. Dep’t of the Interior, 100 F.3d 837, 844–45 (10th Cir.
1996)); see also San Juan Cnty., 503 F.3d at 1203 (“a prospective intervenor need make only a
minimal showing to establish that its interests are not adequately represented by existing
parties”).
The Intervenors argue Intrawest ULC cannot represent the Intervenors’ interests because
Intrawest ULC may lack standing to bring the relevant counterclaims against National Union
because Intrawest ULC is not the entity that developed any of the projects at issue and it is not a
defendant in any of the actions for which the Intervenors seek defense and indemnity.
Citing Pujol v. Shearson American Exp. Inc., 877 F. 2d 132, 135 (1st Cir. 1989), Plaintiff
argues that subsidiaries of parent corporations are adequately represented by their parent
company. Plaintiff also argues that there can be no claim that the Intervenors will not be
adequately represented by Intrawest because they will be represented by identical counsel.
The Intervenors argue that Intrawest ULC and the Intervenors have common interests on
the policy limits issue, but that the Intervenors have separate and additional interests that
Intrawest ULC may not be able to bring because each Intervenor is a separate legal entity and the
various Intervenors developed the projects at issue and are the insureds entitled to the proceeds
under the OCIP Policies. “When the intervenor’s interests are similar—but not identical—to
those of party, however, intervention should generally be allowed unless it is clear that the party
will provide adequate representation for the absent intervenor.” Sun Const. Co., Inc. v. Torix
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General Contractors, LLC, Civil No. 07–cv–01355–LTB, 2007 WL 4178505, at *3 (D. Colo.
Nov. 26, 2007) (citing 7C Wright, Miller & Kane, Federal Practice and Procedure § 1909 (“[A]ll
reasonable doubts should be resolved in favor of allowing the absentee, who has an interest
different from that of any existing party, to intervene so that the absentee may be heard in his
own behalf.”)). Here, because the Intervenors’ interests are similar, but not identical, to those of
the parties, intervention should be allowed.
3.

Conclusion
Accordingly the court finds that the interests favoring intervention outweigh those

opposed,” San Juan Cnty., Utah, 503 F.3d at 1195, and the Intervenors have sufficiently
demonstrated they are entitled to intervention as a matter of right pursuant to Fed. R. Civ. P.
24(a)(2). Therefore, the court
ORDERS that the “Motion to Intervene Under Rule 24” (Doc. No. 51) is GRANTED.
The Clerk shall file the “Complaint in Intervention Against National Union Fire Insurance
Company of Pittsburgh, PA” (Doc. No. 51-1).
Dated this 18th day of February, 2014.

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