Hudson Insurance Company v. Miller et al

Filing 22

ORDER Granting Defendant Colonial Freight Systems's 17 Motion to Intervene as Defendant. Signed by Magistrate Judge Carl W. Hoffman on 9/9/2015. (Copies have been distributed pursuant to the NEF - SLD)

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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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HUDSON INSURANCE COMPANY,

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Plaintiff,
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vs.
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JAMES MILLER, et al.,
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Defendants.
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__________________________________________)

Case No. 2:15-cv-00349-GMN-CWH
ORDER

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Before the Court is Colonial Freight Systems’s (“Colonial”) Motion to Intervene as Defendant

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(doc. # 17), filed June 16, 2015. Also before the Court are Plaintiff Hudson Insurance Co.’s

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(“plaintiff”) response (doc. # 20), filed July 6, 2015, and Colonial’s reply (doc. # 21), filed July 15,

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2015.

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BACKGROUND

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This case arises from a motor vehicle accident involving Defendant James Miller (“Miller”)

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that occurred on August 3, 2013 in Las Vegas, Nevada. Plaintiff alleges that Miller was the driver of

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a tractor trailer covered under plaintiff’s policy, with Miller operating the vehicle under an agreement

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to deliver goods for Colonial. On the evening of August 3, 2013, plaintiff alleges that Miller was en

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route to a truck stop when he rear-ended another vehicle occupied by Defendants/Claimants Arturo

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Montes, Jesus Montes, and Efrain Meza-Montes (“claimants”). Plaintiff brings this lawsuit to dispute

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a duty to defend and indemnify Miller under the non-trucking automobile liability insurance policy

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(“policy”) for damages sought by claimants arising from the accident.

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DISCUSSION
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Rule 24 of the Federal Rules of Civil Procedure (“FRCP”) provides for intervention as a matter

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Legal Standard

of right and for permissive intervention. See Fed.R.Civ.P. 24(a)-(b).

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Intervention as a matter of right must be granted if, on a timely motion, the applicant can

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establish: (1) an unconditional right to intervene by a federal statute; or (2) 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

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may as a practical matter impair or impede the movant’s ability to protect its interest, unless existing

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parties adequately represent that interest. Fed.R.Civ.P. 24(a).

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The Ninth Circuit has also held that an applicant seeking to intervene as a matter of right must

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demonstrate the: (1) timeliness of the application; (2) significant protectable interest of the applicant

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relating to the property or transaction that is the subject of the action; (3) resulting impairment or

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impediment of the applicant’s ability to protect its interest upon disposition of the action; and

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(4) inability of existing parties to adequately represent the applicant’s interest. Citizens for Balanced

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Use v. Mont. Wilderness Ass’n, 647 F.3d 893, 897 (9th Cir. 2011).

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Permissive intervention similarly requires a timely motion, and may be granted to an applicant

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who has: (1) a conditional right to intervene by a federal statute; or (2) a claim or defense that shares

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with the main action a common question of law or fact. Fed.R.Civ.P. 24(b)(1). In deciding whether

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to grant permissive intervention, “the court must consider whether the intervention will unduly delay

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or prejudice the adjudication of the original parties’ rights.” Fed.R.Civ.P. 24(b)(3).

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Regardless of whether the applicant seeks to intervene as a matter of right or permissively, such

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requests receive liberal construction in favor of intervention. Arakaki v. Cayetano, 324 F.3d 1078,

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1083 (9th Cir. 2003).

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Analysis

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a.

Intervention of Right

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Colonial seeks leave to intervene in this case, claiming that under Rule 24(a): (1) its motion

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is timely; (2) it has an interest in the outcome of this action; (3) intervening in this action would allow

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for the protection of its interests; and (4) it would not be adequately represented by the existing parties
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in this case. Colonial also contends that its intervention would further judicial economy in this action,

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and wonders why it was never added as an interested party while claimants were added as defendants

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when they only have an attenuated interest in the subject policy.

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Plaintiff, in response, concedes that the instant motion is timely under Rule 24(a). However,

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plaintiff argues that there is a “tenuous” relationship between the matters at issue in this declaratory

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relief action and Colonial’s independent obligations under its own uninvolved insurance policy.

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Plaintiff explains that if it is successful in this action, Miller will likely turn to Colonial to seek

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recompense and protection from any ongoing lawsuit, and this situation would not impair Colonial’s

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ability to file its own declaratory relief action or to evaluate coverage independently from the instant

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case. Plaintiff further points out that the same law firm represents both Miller and Colonial, with

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Colonial simply duplicating the assertions in Miller’s counterclaim. Plaintiff submits that it appears

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to be the only source of recovery for Miller in this action.

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In reply, Colonial restates its earlier arguments. Colonial also denies that it only has a

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“tenuous” connection to this action. In support, Colonial contends that it secured the subject policy

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from plaintiff through a broker, on behalf of Miller, to protect Colonial’s financial interest as a self-

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insured trucking company when Miller was not operating the vehicle within Colonial’s scope and

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control. Colonial adds that it already conducted an independent review regarding coverage and

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determined that the subject policy provides coverage because Miller was not operating the vehicle

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within Colonial’s scope and control. Colonial then contends that if the instant declaratory action is

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granted, Colonial would be precluded from filing a separate action to determine the subject policy’s

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coverage in this case. Colonial further contends that its interests are similar to plaintiff’s because it

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also seeks a determination of whether it will be required to defend and indemnify Miller, and while

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its interests are “somewhat aligned” with Miller’s, the evidence to be offered by Colonial and Miller

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in this case substantially differ from each other.

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Under Rule 24(a) and the test set forth in Citizens for Balanced Use, this Court finds that

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Colonial is entitled to intervene in this case. Colonial has timely filed its application, as this case is

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in its infancy. Colonial has shown that it has a significant protectable interest in the subject policy,

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which it secured on behalf of Miller, and in this action, which will determine whether plaintiff (or
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Colonial) will be required to defend and indemnify Miller for the accident. By denying Colonial’s

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intervention in this case, Colonial would be disadvantaged, as it would be unable to present claims,

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defenses, and evidence demonstrating that Miller was not operating the vehicle within Colonial’s scope

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and control and, once judgment is entered in the case, Colonial would be precluded from filing a

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separate action to determine the subject policy’s coverage in relation to Miller and the accident. Given

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such, this Court finds that the existing parties would be unable to adequately represent Colonial’s

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interests in this action.

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b.

Permissive Intervention

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Colonial contends that, under Rule 24(b), it is entitled to intervene because its claims and the

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instant action have questions of fact and law in common, and plaintiff will not be prejudiced because

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this case is in its early stages. By contrast, per Colonial, it would be “severe[ly]” prejudiced if it was

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not allowed to intervene in this action.

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Plaintiff, in response, argues that while Colonial is concerned with the outcome of this case and

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its obligation to pay arising from the accident, Colonial has no independent ground for jurisdiction

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because it has no independent basis to bring a lawsuit before this Court against plaintiff. Plaintiff adds

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that issues deemed unique to Colonial are not of import in this litigation. Specifically, plaintiff argues

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that the history of claims resolution between potentially insured drivers with plaintiff and Colonial are

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not of import in this litigation, though it might be relevant if the insured was arguing he had a history

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with plaintiff. Plaintiff therefore concludes that allowing Colonial to intervene would simply cause

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delay in this litigation.

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In its reply, Colonial does not assert any arguments under Rule 24(b).

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As stated earlier, this Court finds that Colonial has claims and defenses in this action that

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would inform the question of whether plaintiff, or Colonial, will be required to defend and indemnify

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Miller for the accident. Because this case is still in its infancy, Colonial’s intervention would not

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unduly delay the litigation, and plaintiff has not presented any evidence showing it would be

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prejudiced by the intervention. As such, the Court concludes that Colonial’s intervention is warranted

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in this case, would further judicial economy, and would be in line with the Ninth Circuit’s liberal

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policy favoring intervention.
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CONCLUSION AND ORDER
Accordingly, IT IS HEREBY ORDERED that Colonial’s Motion to Intervene as Defendant
(doc. # 17) is granted.
DATED: September 9, 2015

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______________________________________
C.W. Hoffman, Jr.
United States Magistrate Judge

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