Lloyd's Syndicate 3624 (Hiscox) v. Biological Resource Center of Illinois, LLC et al

Filing 53

MEMORANDUM Opinion and Order Signed by the Honorable John Robert Blakey on 8/14/2018. Mailed notice(gel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
LLOYD’S SYNDICATE 3624,
Plaintiff,

Case No. 18-cv-115

v.

Judge John Robert Blakey

BIOLOGICAL RESOURCE CENTER
OF ILLINOIS, LLC, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
This case involves an insurance coverage dispute between Plaintiff Lloyd’s
Syndicate (Hiscox) and the Biological Resource Center of Illinois (BRCI). Hiscox is
funding BRCI’s defense in several lawsuits in other courts, pursuant to an insurance
policy Hiscox issued to BRCI.

Hiscox brought this suit seeking a declaratory

judgment as to the scope of BRCI’s liability coverage and asserting different theories
to limit that coverage. [1]. Now, the plaintiffs in the underlying lawsuits against
BRCI seek to intervene. [34, 38, 43, 48]. For the reasons explained below, this Court
denies the motions to intervene.
I.

Background
In the suit originally before this Court (the Hiscox action), Hiscox seeks a

determination of the extent of liability coverage it must provide BRCI under the
insurance policy Hiscox issued to BRCI. [1]. Pursuant to that policy, Hiscox has
funded BRCI’s defense in ten state-court cases, subject to a reservation of rights
under the policy. See id. ¶¶ 1, 29.
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The ten cases all arise from BRCI’s alleged mishandling of human remains.
See id. ¶¶ 22–29. Hiscox contends that these cases constitute a single “claim” under
the terms of the insurance policy, and thus fall subject to the policy’s $2 million “each
claim” limit of liability, rather than the policy’s $3 million aggregate liability limit.
See id. ¶¶ 1–8. Hiscox therefore seeks a declaratory judgment that the $2 million
limit applies, and in the alternative claims that BRCI has waived or is estopped from
raising arguments against that interpretation. See id. at 20–27. In March 2018,
Hiscox moved for a judgment on the pleadings, [15], and that motion remains pending
before this Court, see [21, 26].
The claimants now seeking to intervene in the Hiscox action are plaintiffs in
the state-court actions against BRCI. These state-court plaintiffs are donors and the
families of donors who gave their bodies to BRCI based upon BRCI’s representations
that these remains would support medical or scientific research, and would be treated
with dignity and respect. See [38-1] ¶¶ 21–23, 37–41. 1 Instead, since at least 2008,
BRCI shipped the donated remains to third-parties for purposes other than medical
and scientific research. See [38-1] ¶¶ 25-27.
The first motion to intervene was filed by 35 plaintiffs currently suing BRCI in
Arizona state court (the Beecher plaintiffs) on June 14, 2018. See [34] at 4. Their
alleged interest in the Hiscox action is that the scope of BRCI’s insurance coverage

For purposes of this motion, the state-court plaintiffs’ complaints set out substantially the same facts,
so for brevity this Court cites to only one of the complaints rather than both. Compare [38-1], with
[43-1]. The Beecher plaintiffs and intervenor Jennie Rasinski did not file their state-court complaints
with this Court, but their motions to intervene indicate that the facts underlying their state-court
claims mirror those of the other intervenors. See [34] at 6–7; [48] at 2, 6.
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will affect the intervenors’ ability to recover on an eventual settlement or judgment
in their state-court case. See id. at 6–8.
On June 18, a set of plaintiffs suing BRCI in Cook County (the Hayes plaintiffs)
also moved to intervene. [38]. Their state-court suit against BRCI asserts claims for
intentional infliction of emotional distress, negligent infliction of emotional distress,
wrongful disposition of donor bodies, fraud, violation of the Illinois Consumer Fraud
Act, civil conspiracy, and negligent referral. [38-1] at 8–18. Likewise, their alleged
interest in the Hiscox action echoes the interest of the Beecher plaintiffs: determining
the scope of Hiscox’s coverage for BRCI will affect the Hayes plaintiffs’ ability to
recover any settlement or judgment against BRCI. See [38] at 6.
On June 22, the plaintiffs in a class action against BRCI in Cook County (the
Dixon plaintiffs) moved to intervene. [43]. Their complaint in state court raises
similar claims to the Hayes plaintiffs, with the addition of a claim that BRCI’s
conduct violated the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18
U.S.C. § 1961, et seq. See [43-1]. Their alleged interest in the Hiscox action mirrors
that of the other intervenors. See [43] at 2.
Finally, on July 25, Jennie Rasinski—another plaintiff suing BRCI in Cook
County—moved to intervene. [48]. Her alleged interest matches that of the other
intervenors. See id. at 4–6.
II.

Legal Standard
The intervenors move to intervene as of right under Federal Rule of Civil

Procedure 24(a)(2). Rule 24(a)(2) provides that, on a timely motion, courts must
permit intervention where the moving party “claims an interest relating to the
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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). Thus, to prevail on a motion to intervene, the
moving party must show that: (1) the motion is timely; (2) the party has an interest
related to the subject matter of the action; (3) the disposition of the action threatens
to impair or impede the party’s ability to protect that interest; and (4) the existing
parties do not adequately represent the intervenor’s interest. See Ligas ex rel. Foster
v. Maram, 478 F.3d 771, 773 (7th Cir. 2007). Courts must deny a motion to intervene
under Rule 24(a)(2) if the intervenor fails to establish any one of these requirements.
Reid L. v. Ill. State Bd. of Educ., 289 F.3d 1009, 1017 (7th Cir. 2002).
In the alternative, the intervenors seek permissive intervention under Rule
24(b). Rule 24(b) authorizes “permissive intervention” by anyone who timely moves
to intervene and “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)(2). The rule provides that, in
exercising its discretion, the district court “shall consider whether the intervention
will unduly delay or prejudice the adjudication of the rights of the original parties.”
Id. Courts may grant permissive intervention under Rule 24(b) if: (1) the party’s
claims or defenses share a common question of law or fact with the existing suit; (2)
the motion is timely; and (3) the court has jurisdiction over the claims. See Sec. Ins.
Co. of Hartford v. Schipporeit, Inc., 69 F.3d 1377, 1281 (7th Cir. 1995). Permissive
intervention presents a “wholly discretionary” determination for the district court.

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See Sokaogon Chippewa Cmty v. Babbitt, 214 F.3d 941, 949 (7th Cir. 2000).
In consideration a motion to intervene under either Rule, this Court accepts as
true “the non-conclusory allegations of the motion.” Reich v. ABC/York-Estes Corp.,
64 F.3d 316, 321 (7th Cir. 1995).
III.

Analysis
A.

Intervention as of Right

As noted above, the intervenors must satisfy all four criteria under Rule
24(a)(2) to intervene as of right in the Hiscox action. See Reid L., 289 F.3d at 1017.
This Court addresses each requirement in turn.
First, the intervenors timely filed their motions. The timeliness requirement
depends upon the totality of the circumstances, but remains flexible and subject to
this Court’s discretion. See Shea v. Angulo, 19 F.3d 343, 348–49 (7th Cir. 1994);
Zurich Capital Mkts, Inc. v. Coglianese, 236 F.R.D. 379, 383 (N.D. Ill. 2006). This
criterion sets out a reasonableness standard: potential intervenors must show
reasonable diligence in discovering suits that might affect their rights and should act
promptly in response. See Heartwood, Inc. v. U.S. Forest Serv., Inc., 316 F.3d 694,
701 (7th Cir. 2003). Here, the first three sets of intervenors learned of the Hiscox
action from BRCI’s counsel on May 2, 2018. [34] at 5. They filed their motions in
June, [34, 38, 43], which suffices under the reasonable diligence standard. See United
States v. Kemper Money Mkt. Fund, Inc., 704 F.2d 389 (7th Cir. 1983) (finding that
moving to intervene within 25 days satisfied the timeliness requirement). Likewise,
Rasinski filed her motion to intervene in July after learning of the Hiscox action in

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June, which also suffices. See id.; [48] at 3. The intervenors falter, however, on the
remaining criteria.
The intervenors do not claim a valid interest related to the subject matter of
the Hiscox action. A party seeking to intervene must show a “direct, significant, and
legally protectable interest in the subject matter at issue” in the original suit. Wis.
Educ. Ass’n Council v. Walker, 705 F.3d 640, 658 (7th Cir. 2013). In assessing this
requirement, courts consider “the issues to be resolved by the litigation and whether
the potential intervenor has an interest in those issues.” Hanover Ins. Co. v. L & K
Dev., No. 12-C-6617, 2013 WL 1283823, at *2 (N.D. Ill. Mar. 25, 2013) (quoting Reich,
64 F.3d at 322). But a third party who attempts to intervene because he has some
outstanding monetary claim against one of the original parties has nothing more than
a “betting interest in the outcome” of the original action, which does not satisfy Rule
24(a). Reich, 64 F.3d at 322.
Here, the intervenors present the very sort of “betting interest” in the outcome
of the Hiscox action that does not support intervention under Rule 24(a). See Flying
J, Inc. v. Van Hollen, 578 F.3d 569, 571 (7th Cir. 2009) (noting that “the fact that you
might anticipate a benefit from a judgment in favor of one of the parties to a lawsuit,”
as a creditor might, “does not entitle you to intervene in their suit”). The intervenors
here are third parties with outstanding monetary claims against BRCI. As stated in
their motions, they seek to intervene to ensure that the outcome of the Hiscox action
protects the amount of any recovery they eventually secure against BRCI. See [34]

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at 6–8; [38] at 6; [43] at 2; [48] at 4–5. The Seventh Circuit has long rejected such
interests as grounds for intervention as of right.
In Meridian Homes Corporation v. Nicholas W. Prassas & Company, 683 F.2d
201 (7th Cir. 1983), two brothers had enforceable rights to the profits of a partnership
but were not themselves partners, id. at 204. They sought to intervene in an action
regarding the partnership agreement. Id. at 203. The Seventh Circuit affirmed the
district court’s denial of the brothers’ motion to intervene. Id. The court held that
while the amount the brothers would receive might be affected by the interpretation
of the partnership agreement, they had no legal interest in the agreement itself. Id.
The intervenors here present an analogous and equally unavailing interest in the
Hiscoz action. The Hiscox action involves the parties’ disputed interpretation of the
“claims made” section of the insurance policy Hiscox issued to BRCI. [1] ¶¶ 102–15.
This Court’s interpretation of that provision certainly could affect the amount of
funds available to the intervenors should they prevail in their state-court cases
against BRCI. But they hold no legal interest in the insurance contract between
Hiscox and BRCI. See Meridian, 683 F.2d at 204.
Additionally, the disposition of the Hiscox action does not threaten to impair
or impede the intervenors’ ability to protect their interest in pursuing their claims
against BRCI. Impairment exists when resolving a legal question in the original case
“would, as a practical matter, foreclose the rights of the proposed intervenor in a
subsequent proceeding.” Shea v. Angulo, 19 F.3d 343, 347 (7th Cir. 1994). That
“foreclosure” is “measured by the general standards of stare decisis.” Revelis v.

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Napolitano, 844 F. Supp. 2d 915, 925 (N.D. Ill. 2012); see also Blake v. Pallan, 554
F.2d 947, 954 (9th Cir. 1977); Nuesse v. Camp, 385 F.2d 694, 701–02 (D.C. Cir. 1967).
Thus, where the intervenor would remain free to pursue any claim against one of the
parties regardless of the outcome in the action they seek to join, their interests are
not impaired. See Shea, 19 F.3d at 347. Such is the case here.
As with the intervenors in Meridian, although this Court’s decision as to
Hiscox’s coverage of BRCI “may affect the interest” of the present intervenors in
purely monetary terms, “it would not have any preclusive effect” on their claims
against BRCI, and thus would not “impair their ability to protect their interest.” 683
F.2d at 204. Because the intervenors fail to assert an interest in the transaction that
forms the subject of the action actually before this Court, they have no protectable
interest that could be impaired by the resolution of that action.
Lastly, the original parties adequately represent the intervenors’ stated
interest. Where a prospective intervenor has the same goal as the party to a suit, a
presumption exists that their representation in the suit is adequate. Shea, 19 F.3d
at 347; see also United States v. South Bend Cmty. Sch. Corp., 710 F.2d 394, 396 (7th
Cir. 1983), cert. denied sub nom. Brookins v. South Bend Cmty. Sch. Corp., 466 U.S.
926 (1984). In such circumstances, the proposed intervenor “must demonstrate, at
the very least, that some conflict exists.” Meridian, 683 F.2d at 205. Assuming the
truth of the intervenors’ allegations, they have the same goal as BRCIL—namely,
that the insurance policy should be interpreted to cover the maximum amount on
separate claims—and therefore cannot meet this burden.

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Both the intervenors and BRCI believe the insurance policy covers more than
the limit asserted by Hiscox. Both parties seek the maximum monetary coverage
under the insurance contract.

Thus, the intervenors and BRCI have the same

objective in this litigation: ensuring that Hiscox pays for as much of BRCI’s defense
costs as permitted by the insurance contract. See Shea, 19 F.3d at 347–48; see also
Bottoms v. Dresser Indus., Inc., 797 F.2d 869, 872–73 (10th Cir. 1986).
True, the intervenors and BRCI have adversary interests in their state-court
cases, as the intervenors note. But on a motion to intervene, conflicts of interest in
other matters do not present a per se bar to finding that a party adequately
represents the potential intervenor—instead, any such conflict must actually affect
the parties’ interests in this case. See Shea, 19 F.3d at 348; Meridian, 683 F.2d at
205; Bottoms, 797 F.2d at 873.

Whatever their positions in state court, the

intervenors point to no conflict of interest in this case, or to any other factor
undermining the conclusion that, with respect to Hiscox’s coverage of BRCI, the
intervenors share precisely the same objective as BRCI.
In sum, the intervenors do not satisfy all four requirements to intervene as a
matter of right, and this Court denies their motions under Rule 24(a)(2).
B.

Permissive Intervention

This Court may grant a motion for permissive intervention where the
intervenors timely file their motion, have a claim or defense that shares a common
question of law or fact with the existing case, and intervention will not unduly delay
or prejudice the adjudication of the original parties’ rights. See Fed. R. Civ. P. 24(b);
Schipporeit, Inc., 69 F.3d at 1281.
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Here, the intervenors do not meet the first element supporting permissive
intervention. Their claims do not share a common question of law or fact with the
Hiscox action. As discussed above, the Hiscox action presents an insurance coverage
dispute between an insurer and a business covered under one of its policies. See [1].
By contrast, the intervenors allege various theories based in fraud, negligence, and
other torts, all of which arise from BRCI’s alleged mishandling of human remains.
See [34] at 4, 7–8; [38-1] at 8–18; [43-1]; [48] at 6.
The law governing such claims does not relate in any way to the insurance
coverage dispute raised by the Hiscox action, nor do the underlying facts.

The

intervenors’ claims against BRCI require discovery into facts regarding the
underlying mishandling of donated bodies. The Hiscox action requires only the
examination of documents that comprise the insurance relationship between Hiscox
and BRCI. Thus, the intervenors do not possess claims that share the same questions
of law or fact as the Hiscox action. 2
Moreover, as this discussion indicates, the intervenors’ claims would require
extensive additional discovery unrelated to the Hiscox action.

Permitting

intervention in such circumstances would thus “unduly delay” the “adjudication of

This analysis addresses the claims that the intervenors have indicated they hold against BRCI. To
the extent that their proposed cross-complaints assert claims directly against Hiscox, see [45-1] at 4
(seeking declaratory judgment as to the scope of Hiscox’s liability coverage of BRCI); [46] at 5 (same);
[43-2] at 3–4 (same), the intervenors fail to explain how they possess any protectable legal interest in
the contract between Hiscox and BRCI, as discussed above. Generally, third parties may not sue on a
contract except in particular circumstances that no intervenor alleges here. See, e.g., Vidimos, Inc. v.
Laser Lab Ltd., 99 F.3d 217, 219–220 (7th Cir. 1996); see also City of Yorkville ex rel. Aurora Blacktop
Inc. v. Am. S. Ins. Co., 654 F.3d 713, 716–17 (7th Cir. 2011) (applying Illinois law). In any event, the
intervenors’ failure to address that issue entirely means that they have waived that argument as to
the present motions. See, e.g., Crespo v. Colvin, 824 F.3d 667, 674 (7th Cir. 2016).
2

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the rights of the original parties,” Fed. R. Civ. P. 24(b)(1)(B)(2), which is ripe for
resolution in light of the fully-briefed motion for judgment on the pleadings, [15].
Accordingly, this Court denies the motions to intervene under Rule 24(b).
IV.

Conclusion
For the reasons explained above, this Court denies the intervenors’ motions

[34, 38, 43, 48].

Hiscox’s motion for judgment on the pleadings remains under

advisement and this Court will rule by separate order. All other dates and deadlines
stand.
Dated: August 14, 2018
Entered:
____________________________
John Robert Blakey
United States District Judge

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