Cervetto v. Powell et al

Filing 93

MEMORANDUM OPINION AND ORDER denying 86 Motion to Intervene filed by Great West Trucking, Inc. Signed by Magistrate Judge H. Brent Brennenstuhl on 6/9/2016. cc: Counsel(CDR)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
BOWLING GREEN DIVISION
CIVIL ACTION NO. 1:14-CV-00075-HBB

MICHAEL G. CERVETTO

PLAINTIFF

VS.

MARK J. POWELL and
TRANSERVICE LOGISTICS INC.

DEFENDANTS

MEMORANDUM OPINION
AND ORDER
Before the Court is the motion of Great West Trucking, Inc. (“Great West”) for leave to
intervene in this action (DN 86). The Defendants have filed a response in opposition (DN 88),
and Great West has filed a reply (DN 91). The matter stands submitted to the undersigned for
ruling.
Nature of the Case and Motion
Plaintiff Michael G. Cervetto (“Cervetto”) initiated this action with a complaint filed on
June 12, 2014 (DN 1). Cervetto alleges that he was employed by MC Tank Transport Inc. as an
over the road truck driver (Id. at ¶ 3). On June 24, 2013, he was involved in a collision with
Defendant Mark J. Powell, who was employed as a commercial truck driver by Defendant
Transervice Logistics, Inc. (Id. at ¶ 4-6). Cervetto’s complaint seeks compensation for personal
injury occasioned by the collision. He has also demanded punitive damages. Of relevance to
Great West’s pending motion, Cervetto does not assert any claim for property damage.
On May 18, 2016, Great West filed the subject motion for leave to intervene pursuant to
Fed. R. Civ. P. 24(a). Great West alleges that it was an insurance carrier licensed and regularly
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doing business in the Commonwealth of Kentucky and, at the time of the accident, had in effect
a policy of insurance that obligated it to “provide benefits and/or compensation to its insured MC
Tank Transport, Inc., and its employees” (DN 86-1, Tendered Intervening Complaint, at ¶¶ 1 &
4). Great West further alleges that, as a result of the Defendants’ negligence, it has “been
obligated to pay benefits to its insured, totaling $31,180.00” (Id. at ¶ 5). The Defendants contest
the motion on the basis that the intervening complaint is barred by statute of limitation or,
alternatively, that the motion is not timely and they will be prejudiced.
Standard of Review
Under Fed. R. Civ. P. 24(a)(2), courts must permit anyone to intervene in an action who
claims an interest in the transaction that is the subject of the action and is so situated that
disposition of the action may impede the movant’s ability to protect its interest, unless the
existing parties adequately represent that interest. The Sixth Circuit has interpreted the language
of the rule to require the applicant to demonstrate that:
1. The application was timely filed;
2. The applicant possesses a substantial legal interest in the case;
3. The applicant’s ability to protect its interest will be impaired
without intervention, and;
4. The existing parties will not adequately represent the
applicant’s interest.
Blount-Hill v. Zelman, 636 F.3d 278, 283 (6th Cir. 2011) (citing Grutter v. Bollinger, 188 F.3d
394, 397-98 (6th Cir. 1999)). “Each of these elements is mandatory, and therefore failure to
satisfy any one of the elements will defeat intervention under the Rule.” Id. As to timeliness,
the Sixth Circuit recognizes a five-factor sub-test. The elements are:
1. The point to which the suit has progressed;
2. The purpose for which intervention is sought;
3. The length of time preceding the application during which the
proposed intervenors knew or should have known of their interest
in the case;
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4. The prejudice to the original parties due to the proposed
intervenors’ failure to promptly intervene after they knew or
reasonably should have known of their interest in the case, and;
5. The existence of unusual circumstances militating against or in
favor of intervention.
Id. (citing Jansen v. City of Cincinnati, 904 F.2d 336, 340 (6th Cir. 1990)).
Even if a motion to intervene satisfies the requirements of Fed. R. Civ. P. 24(a)(2), the
motion must be denied as futile if the applicable statute of limitations bars the claim. National
Trust for Historic Preservation v. Fed. Highway Admin., No. 3:10-CV-7-H, 2010 U.S. Dist.
LEXIS 83080, at *2-3 (W.D. Ky. Aug. 13, 2010). As this is a diversity action, the Court looks to
Kentucky state law to determine whether the proposed intervening complaint is barred by statute
of limitation. “A district court, sitting in diversity, must apply the law of the forum state in
determining the statute of limitations.” Swanson v. Wilson, 423 F. App’x 587, 592 (6th Cir.
2011). While this Court will apply the Commonwealth of Kentucky’s substantive law on the
issue, this Court will nonetheless look to the federal rules of civil procedure for procedural
guidance. See Fed. R. Civ. P. 81(c)(1) (“These rules apply to a civil action after it is removed
from a state court.”).
Discussion
Great West’s motion to intervene was filed slightly less than three years after the subject
accident. Defendants argue that the intervening complaint is not timely under KRS § 413.125,
which establishes a two-year statute of limitations for “an action for the taking, detaining or
injuring of personal property.” In the alternative, Defendants contend that the motion should be
denied under the five-factor test for timeliness. They note that this case has been pending for
almost two years, and, given Cervetto’s continued employment with MC Tank Transport, it is
unlikely that Great West would not have known about the case for some time. Defendants

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further note that all disclosure and discovery deadlines have passed and the case is now at the
final pretrial motion stage. Jury trial is less than two months away, and the Defendants contend
that they should not be required to mount a defense to new claims so close in time to trial.
In reply, Great West does not address the Defendants’ equitable timeliness argument and
focuses on the question of whether the intervening complaint is barred by statute of limitation.
In support of its position that the intervening complaint is not time barred, Great West cites
Government Employees Ins. Co. v. Winsett, 153 S.W.3d 862 (Ky. Ct. App. 2004).
1. Statute of Limitation
In Winsett, Government Employees Insurance Co. (GEICO) sought to intervene in an
action on a subrogation claim. GEICO issued a policy of insurance to plaintiff Simmonds, who
was involved in a collision with defendants Winsett and Culbreth. GEICO paid property damage
benefits to Simmonds. Simmonds filed suit against Winsett and Culbreth for personal injury.
While Simmonds’ suit against Winsett and Culbreath was timely filed, GEICO’s intervention
came more than two years after the accident. The circuit court held that GEICO’s intervening
complaint was barred by the two-year statute of limitation under KRS § 413.125.
The Kentucky Court of Appeals reversed the circuit court’s dismissal of the intervening
complaint, finding that the motion was timely. The court began by observing that “a subrogee’s
claim is strictly derivative of its subrogor with no right to independently maintain a cause of
action as long is the insured is pursing the claim.” Id. at p. 864 (citing Zurich Am. Ins. Co. v.
Haile, 882 S.W.2d 681, 685 (Ky. 1994)). The court further observed “the settled law holds that
the Statute of Limitations applicable to the insured is also applicable to the insurer.” Id. (citing
Whitney v. Louisville & N.R. Co., 177 S.W.2d 139, 140 (Ky. 1944); Waters v. Transit Auth. of
River City, 799 S.W.2d 56, 58 (Ky. Ct. App. 1990); Commonwealth, Dept. of Transp. v. All

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Points Const. Co., 566 S.W.2d 171, 173 (Ky. Ct. App. 1977)). The court went on to hold that,
where an insured subrogor timely files an action, the expiration of the statute of limitation will
not bar a subsequent intervention by the subrogee. “[W]e hold that a subrogee who moves to
intervene in an action timely filed by its subrogor should be allowed to do so even though the
Statute of Limitation on the underlying claim may have run if the intervention is applied for in a
timely fashion pursuant to CR 24.” Id. at p. 865. The court further held that “[p]rior to trial or
other disposition of the case is presumptively timely.” Id. While Winsett does stand for the
proposition advocated in Great West’s reply, namely that a statute of limitation will not bar a
subrogee’s intervention in a case filed by its subrogor, Winsett does not apply to the facts in this
case.
Great West’s motion and tendered intervening complaint are cryptic. Great West states
that it provided insurance, but does not specify what type of coverage it provided or what type of
benefits it paid. Great West is vague about the specific identity of the insured from which it
derives its subrogation claim. Great West states that it was obligated to provide coverage “to its
insured MC Tank Transport, Inc., and its employees” (DN 86-1, Tendered Intervening
Complaint, at ¶ 4). However, it refers consistently in its tendered intervening complaint and
pleadings to “insured” in the singular. This leaves the question of whether it paid benefits to MC
Tank Transport or to Cervetto.
Defendants’ response sheds some light on these questions. Defendants state that “[a]fter
conferring with the attorney for Great West Trucking, Inc., it has been learned that the ‘benefits’
in question are for property damage payments made by Great West Trucking, Inc. under MC
Tank Transport’s automobile collision policy” (DN 88, p. 1-2). Great West’s reply does not
contest this assertion of fact, and the Court therefore presumes the assertion to be accurate.

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While Defendants’ response does not explicitly state that Great West’s payment of property
damage benefits was to MC Tank Transport, as opposed to Cervetto, this is the only logical
conclusion. It is improbable that Great West would have made payment for property damage
under a vehicle collision policy issued to MC Tank Transport for damage to property other than
that owned by MC Tank Transport.
The problem with applying Winsett to the present case is that MC Tank Transport, Great
West’s subrogor, is not a party to this action and did not file the underlying complaint. The facts
of this case are similar to those in Amer. Premier Ins. Co. v. McBride, 159 S.W.3d 342 (Ky. Ct.
App. 2004). In that case, American Premier insured a vehicle driven by Roberson. Roberson
was involved in a collision with McBride and American Premier paid property damage benefits
to Roberson. American Premier then filed an action against McBride on its subrogation interest
to recover the property damage benefits it paid to Roberson. The Kentucky Court of Appeals
held that American Premier’s claim was barred by the two-year statute of limitation under KRS §
413.125. The court arrived at this conclusion by observing that the limitation period applicable
to American Premier’s subrogation claim was the same as the statute of limitation which would
be applied to its insured if he proceeded directly against the alleged tortfeasor.1 The court also
noted that the statute of limitation began running at the time of the accident, rather than on any
later date when payment of benefits was made.
Consequently, the fact that Cervetto timely filed this action does not inure to Great
West’s benefit insofar as calculating the statute of limitations because he is not Great West’s
subrogor. The applicable statute of limitation is determined by the time in which MC Tank
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Winsett observed that among Kentucky state courts, “there appears to be confusion in the law” as to the applicable
statute of limitation, but concluded that, regardless of what statute applied, the limit was two-years. 153 S.W.3d at
864. American Premier, on the other hand, concluded that the statute of limitation under Kentucky’s Motor Vehicle
Reparations Act did not apply to property damage subrogation claims and that KRS § 413.125 is the applicable
statute. 159 S.W.3d at 346-50.

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Transport could have brought a direct action against the Defendants for property damage. Under
KRS § 413.125, that time was two years. Great West is bound by that same time limit, and the
intervening complaint is time barred. Filing of the intervening complaint would therefore be a
futility.
2. Timeliness of Motion to Intervene
Even if not barred by statute of limitation, the motion to intervene would be denied as
untimely.

While the Court notes that the Kentucky Court of Appeals indicated that any

intervention by a subrogor into a lawsuit filed by a subrogee would presumptively be deemed
timely if done any time prior to trial or other disposition of the case, that portion of the court’s
holding is not binding on this Court as it goes to an issue of procedure rather than substantive
law. Here, Fed. R. Civ. P. 24(a)(2) and federal case law interpreting that rule control the issue of
intervention, including the five-factor test for timeliness set forth in Blount-Hill, 636 F.3d at 283.
Defendants argue in their response to Great West’s motion that they will be prejudiced by
the lateness of the proposed intervention, as it will interject a new issue of damages in the case
after discovery has closed, experts have been identified, and the parties are engaged in final trial
motions, with a trial date approximately two months away. Defendants also note in their
response that the case has been pending for nearly two years and, during that time, Cervetto has
continued in employment with MC Tank Transport. They argue that it is unlikely that Great
West would have been without the means of learning of the pendency of this case at an earlier
date.
Great West did not address the timeliness issue in its reply, choosing to focus solely on
the statute of limitation issue and, thus, leaves unrebutted the challenges to the timeliness of the
motion and the Defendants’ assertion of prejudice. The Court concludes that Great West has

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failed to demonstrate that its motion is timely, a mandatory requirement for intervention in this
action, and denies Great West’s motion on this additional basis.

ORDER
For the foregoing reasons, Great West’s motion for leave to intervene in this action (DN
86) is DENIED.

June 9, 2016

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