CX Reinsurance Company Limited v. Homewood Realty Inc. et al
MEMORANDUM AND ORDER GRANTING 34 Motion of Liles, Streeter, Moore and Watson to Intervene; GRANTING 36 Motion of McKnight to Intervene; DIRECTING [36-2] be docketed as an Answer and Counterclaim; DENYING AS MOOT 56 Motion of defendants for Protective Order; DIRECTING all parties to confer and submit a proposed scheduling order within 10 days. Signed by Judge William M Nickerson on 1/25/2017. (hmls, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
CX REINSURANCE COMPANY
LIMITED et al.
HOMEWOOD REALTY INC. et al.
Civil Action No. WMN-15-3136
MEMORANDUM AND ORDER
Defendants Homewood Realty Inc. and Stanley E. Sugarman
owned various residential rental properties in Baltimore City.
Their ownership of those properties gave rise to several
lawsuits brought by former tenants for personal injuries
allegedly caused by exposure to lead-based paint.
Reinsurance Company Limited (CX Reinsurance) issued general
liability insurance policies insuring certain risks related to
the ownership of those properties.
CX Reinsurance filed this
action seeking rescission of those policies, or to recover
damages, based on allegations of fraudulent misrepresentations
in Defendants’ applications for those policies.
Pending before the Court are motions to intervene filed by
the plaintiffs in the state court tort actions.1
ECF No. 34
Also pending is a Motion for a Protective Order, ECF No. 56,
filed by Defendants on October 12, 2016, seeking to prohibit
certain depositions from going forward until after the motions
to intervene were decided. Earlier that day, the Court issued
an Order staying the scheduling order in this case, ECF No. 55,
effectively rendering the Motion for Protective Order moot.
(filed by Chauncey Liles, Shyliyah Streeter, KeiShonne Moore,
and Prentiss Watson) and ECF No. 35 (filed by Kayla McKnight).2
These Proposed Intervenors assert that the claims they are
asserting against Defendants in the state court are covered by
one or more of the policies that CX Reinsurance is attempting to
rescind and, therefore, they have an interest in this
They also assert, upon information and belief, that
Defendant Sugarman considers himself “judgment proof” and, thus,
the insurance proceeds from the CX Reinsurance policies might be
the only asset available to satisfy their claims.
Proposed Intervenors argue that they have a right to intervene
pursuant to Rule 24(a)(2) of the Federal Rules of Civil
Procedure to ensure that their interests in the CX Reinsurance
policies are not impaired or impeded without the opportunity to
adequately protect such interests.
In the alternative, they
argue that permissive intervention under Rule 24(b) is
appropriate because their claims share common questions of law
and fact with the claims and defenses raised and asserted
There are several similar cases that have been filed in this
Court by CX Reinsurance against other property owners. This
second motion, ECF No. 35, is an omnibus motion to intervene
also filed in several of those other actions by lead-based paint
victims who have filed state court actions against other land
owners. Ms. McKnight is the only individual seeking to
intervene in this action.
between CX Reinsurance and the Defendants.
Fed. R. Civ. P.
Defendants did not oppose the motions to intervene.
Reinsurance did oppose these motions as to all Proposed
Intervenors with the exception of the intervention of Mr. Liles.
Mr. Liles has already obtained a judgment against Defendant
Sugarman in his state court tort action.3
While CX Reinsurance
states that it does not oppose the intervention of Mr. Liles, it
suggests that, if the Court permits intervention, the Court
should “forbid any intervenor” from serving any discovery or
motions that would be duplicative of discovery or motions filed
ECF No. 43 at 10-11 (emphasis added).
CX Reinsurance does not provide any compelling reason as to
why Mr. Liles should be permitted to intervene but the same
opportunity should not be provided to the remaining Proposed
CX Reinsurance concedes that Mr. Liles “occupies a
position similar (albeit not identical) to the position the
Proposed Intervenors occupy,” and suggests that Mr. Liles’
participation in this litigation somehow renders the remaining
Proposed Intervenors’ participation unnecessary.
Id. at 10.
the remaining Proposed Intervenors note, however, most of the
Mr. Liles has also previously been sued in a declaratory action
brought by a different insurer seeking a ruling that there was
no coverage under its policies. QBE Int’l Ins., Ltd. v.
Sugarman, Civ. No. 15-3153 (D. Md.). That case was dismissed
same arguments CX Reinsurance raises to oppose their
intervention (i.e., lack of commonality, undue delay, and
prejudice) would, if valid, apply with equal force to Mr. Liles’
ECF No. 46 at 1.
In at least two of the similar actions brought by CX
Reinsurance, other judges in this Court have permitted
plaintiffs in underlying state court lead-based paint cases to
intervene in the related insurance coverage actions in this
CX Reinsurance Co. Ltd. v. Leader Realty Co., Civ. No.
JKB-15-3054, ECF No. 74 (D. Md. Jan. 10, 2017), and CX
Reinsurance v. Benjamin L. Kirson, Civ. No. RWT-15-3132, ECF No.
38 (D. Md. Jan. 18, 2017).
The individuals permitted to
intervene in those actions are similarly situated to the
Proposed Intervenors in this action.
While the intervenor in
Kirson, like Mr. Liles, had already obtained a judgment in his
state court action, the two intervenors in Leader Realty had
See Civ. No. JKB-15-3054, ECF No. 43 at 2. n.3 (noting
that any interests that the intervenor had in the policies at
issue was only contingent because they did not hold a judgment
against the insured) and ECF No. 44 at 3 n.4 (same).
Nonetheless, Judge Bredar found that there was a question of
fact common to the insurer’s claim and the intervenors’ claim as
to whether the insured made material misrepresentations on the
Based upon that common question of fact,
Judge Bredar concluded that permissive intervention was
appropriate under Rule 14(b)(1(B).
Id., ECF No. 74 at 4.
Court reaches the same conclusion here for the same reasons.
In both Leader Realty and Kirson, the Court also imposed
restrictions on discovery to address CX Reinsurance’s concerns
about duplicative discovery.
Those same restrictions will be
imposed here, for the same reasons.
Accordingly, IT IS this 25th day of January, 2017, by the
United States District Court for the District of Maryland,
(1) That Defendants’ Motion for a Protective Order, ECF No.
56, is DENIED as MOOT;
(2) That the Motion to Intervene filed by Chauncey Liles,
Shyliyah Streeter, KeiShonne Moore and Prentiss Watson, ECF No.
34, is GRANTED;
(3) That Chauncey Liles, Shyliyah Streeter, KeiShonne Moore
and Prentiss Watson shall be designated as Defendants in this
(4) That the Motion to Intervene filed by Kayla McKnight,
ECF No. 36, is GRANTED;
(5) That Kayla McKnight shall be designated as Defendant in
(6) That ECF No. 36-2 shall be docketed as Kayla McKnight’s
Answer and Counterclaim;
(7) That, by separate order, this case will be referred to
a magistrate judge to manage and rule on discovery issues,
should they arise;
(8) That these new intervening Defendants are prohibited
from taking discovery except to the extent that they can
establish to the satisfaction of the magistrate judge that it
will be non-duplicative of what the other parties are already
taking and otherwise within the scope of established discovery
(9) That all counsel shall meet and confer and submit to
the Court a proposed scheduling order within ten days of the
date of this Memorandum and Order; and
(10) That the Clerk of the Court shall transmit this
Memorandum and Order to all counsel of record.
William M. Nickerson
Senior United States District Judge
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