Co-operative Insurance Companies v. Avon Products, Inc.

Filing 30

ORDER denying 19 Motion to Intervene. So Ordered by Magistrate Judge Landya B. McCafferty. (gla)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

Co-operative Insurance Companies
v.

Case No. 10-cv-153-LM

Avon Products, Inc.

O R D E R
Co-operative Insurance Companies (“Co-operative”), has sued
Avon Products, Inc. (“Avon”), in a subrogation action.

Co-

operative seeks to recover for the payment it made to its
insured, Robert Carroll, as a result of a fire that was
allegedly caused by a defective Cozy Warming Polar Bear that
Avon sold to a tenant in a residence owned by Carroll.
moves to intervene.

Co-operative objects.

Carroll

Avon has not

concurred, but also has not filed an objection.

For the reasons

that follow, Carroll‟s motion to intervene is denied.
Background
The following facts are drawn from Co-Operative‟s
complaint.

Co-operative insured a residence owned by Carroll

(“the subject property”).

In January of 2008, the subject

property was significantly damaged by fire.

The fire broke out

when a tenant in the subject property heated the buckwheat-

filled pouch for his Cozy Warming Polar Bear in a microwave oven
and then placed the pouch on a screened porch outside the house
after the pouch came out of the oven smelling like burned
popcorn.

Carroll made a claim on his insurance policy with Co-

operative, and Co-operative paid the claim.

Carroll says, but

Co-operative‟s complaint does not allege, that Co-operative paid
Carroll the policy limit.

Under the subrogation rights granted

to it in Carroll‟s policy, Co-operative has sued Avon, which
sold Carroll‟s tenant the Cozy Warming Polar Bear.
Discussion
Carroll now moves to intervene, under Rule 24(a) and/or
Rule 24(b) of the Federal Rules of Civil Procedure (“Federal
Rules”).

He seeks to recover damages from Avon above and beyond

the amount he was paid by Co-operative.

He claims both that the

subject property was underinsured, and that he has sustained
losses that were not insured under his Co-operative policy.

Co-

operative objects, arguing that Carroll‟s motion is untimely,
and that he has failed to meet the other three requirements for
intervention as of right under Rule 24(a).

Co-operative also

argues that at least some of the damages Carroll seeks are not
available from Avon under the legal claims he has stated.

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A. The Legal Framework
Intervention is governed by Rules 24(a) and (b) of the
Federal Rules. “Under the Civil Rules, intervention comes in two
flavors: intervention as of right, Fed. R. Civ. P. 24(a), and
permissive intervention, Fed. R. Civ. P. 24(b).”

Ungar v.

Arafat, 634 F.3d 46, 50 (1st Cir. 2011).
With regard to intervention as of right, the court of
appeals has explained:
In the absence of a triggering federal statute — and
none is involved here — Rule 24(a)(2) provides an
authoritative recipe that lists the essential
ingredients for intervention as of right:
On timely motion, the court must permit anyone to
intervene who . . . 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.
It follows that a would-be intervenor must demonstrate
that: (i) its motion is timely; (ii) it has an
interest relating to the property or transaction that
forms the foundation of the ongoing action; (iii) the
disposition of the action threatens to impair or
impede its ability to protect this interest; and (iv)
no existing party adequately represents its interest.
See R&G Mortg. [Corp. v. Fed. Home Loan Mortg. Corp.],
584 F.3d [1,] 7 [(1st Cir. 2009)]; Travelers Indem.
Co. v. Dingwell, 884 F.2d 629, 637 (1st Cir. 1989).
Each of these requirements must be fulfilled; failure
to satisfy any one of them defeats intervention as of
right. B. Fernández & Hnos., Inc. v. Kellogg USA,
Inc., 440 F.3d 541, 545 (1st Cir. 2006); [Pub. Serv.
Co. of N.H. v.] Patch, 136 F.3d [197,] 204 [(1st Cir.
1998)].
3

Ungar, 634 F.3d at 50-51.

Under the circumstances of this case,

permissive intervention, which also has a timeliness
requirement, see Fed. R. Civ. P. 24(b)(1), is “available in the
court‟s discretion where the applicant‟s claim or defense and
the main action „have a question of law or fact in common.‟”
Daggett v. Comm‟n on Govt‟l Ethics & Election Practices, 172
F.3d 104, 108 (1st Cir. 1999) (quoting Fed. R. Civ. P. 24(b)).
There are significant differences between intervention as
of right and permissive intervention.

See R&G Mortgage, 584

F.3d at 8.
First, in the case of a motion to intervene as of
right, the district court‟s discretion is somewhat
more constrained than in the case of a motion for
permissive intervention. See Patch, 136 F.3d at 204.
Second, the timeliness requirement is often applied
less strictly with respect to intervention as of
right. See, e.g., Navieros Inter-Americanos, S.A. v.
M/V Vasilia Express, 120 F.3d 304, 320 (1st Cir.
1997). But we hasten to add a caveat: even in the
case of a motion to intervene as of right, the
district court‟s discretion is appreciable, and the
timeliness requirement retains considerable bite.
Id.
Finally, the shared timeliness requirement, see R&G
Mortgage, 584 F.3d at 11, entails an inquiry that “is inherently
fact-sensitive and depends on the totality of the
circumstances,” id. at 7 (citing Banco Popular de P.R. v.
Greenblatt, 964 F.2d 1227, 1230 (1st Cir. 1992)).

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As a general matter, the case law reflects four
factors that inform the timeliness inquiry: (i) the
length of time that the putative intervenor knew or
reasonably should have known that his interests were
at risk before he moved to intervene; (ii) the
prejudice to existing parties should intervention be
allowed; (iii) the prejudice to the putative
intervenor should intervention be denied; and (iv) any
special circumstances militating for or against
intervention. Id. Each of these factors must be
appraised in light of the posture of the case at the
time the motion is made. Geiger v. Foley Hoag LLP
Ret. Plan, 521 F.3d 60, 65 (1st Cir. 2008).
R&G Mortgage, 584 F.3d at 7.
B. Intervention as of Right
The court turns first to intervention as of right,
deferring, for the moment, the element of timeliness.

As to two

of the other three elements, Carroll has made an inadequate
showing.

Plainly, the element of interest is met; as the owner

of the subject property, Carroll has an obvious interest in a
claim that Avon is liable for its destruction.

The problem

arises with the remaining two elements.
Carroll bears the burden of showing that “the disposition
of the action [between Co-operative and Avon] threatens to
impair or impede [his] ability to protect [his] interest,”
Ungar, 634 F.3d at 50, in recovering from Avon for damages in
excess of what Co-operative paid him.

He attempts to do so:

“Should this mat[t]er go to trial, without Mr. Carroll, and an
award is granted to the plaintiff, Mr. Carroll stands to be

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barred from benefitting from such an award, and he also stands
to be barred from litigating the same against the defendant a
second time.”

Mot. to Intervene (doc. no. 19) ¶ 5.

Carroll does not develop his argument any further.

Thus,

he does not explain how or why a verdict for Co-operative would
bar him from pursuing a claim against Avon.

Nor does Carroll

explain how recovery by Co-operative of the amount it paid him
would bar him from recovering for his losses beyond the amount
Co-operative paid him.

Moreover, without fully researching or

deciding the issue, the court observes that the hypothetical
situation Carroll describes, i.e., a verdict for Co-operative,
might well be suited to the application of non-mutual offensive
collateral estoppel.

See Brown v. Colegio de Abogados de P.R.,

613 F.3d 44, 48 n.2 (1st Cir. 2010).

In any event, Carroll has

not carried his burden of demonstrating that his ability to
protect his interest in recovering from Avon would be harmed if
he were not permitted to intervene in this case.1
Similarly, Carroll has not shown that Co-operative does not
adequately represent his interests, at least to the extent of

1

Carroll does not raise, much less develop, an argument
based on the repercussions of a verdict for Avon in a trial in
which he did not participate. Accordingly, no such argument is
before the court.
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establishing Avon‟s liability.

Carroll does not argue, nor

could he reasonably argue, that his interests and Co-operative‟s
interests are in any way antithetical with regard to either
Avon‟s liability or damages.

Rather, Carroll says that Co-

operative does not represent his interests because Avon‟s
interest is limited to recovering the amount it paid him, not
his full loss.

It is plainly the case that Co-operative and

Carroll seek different damages.
what it paid Carroll.

Co-operative seeks to recover

Carroll seeks to recover both for covered

losses that exceed the policy limit and for additional uninsured
losses.

But, on the issue of liability, there is no basis for

arguing that Co-operative has an interest that is any different
from or less than Carroll‟s interest.

That is, with regard to

the question of whether Avon‟s Cozy Warming Polar Bear caused
the fire that burned down Carroll‟s house, Carroll‟s interests
are fully represented by Co-operative.
Based on the foregoing, the court concludes that Carroll
has failed to carry his burden of demonstrating his entitlement
to intervention as of right under Rule 26(a).

That said, the

court admits to being somewhat puzzled by the parties‟ stances
on this issue.

Co-operative‟s real interest in keeping Carroll

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out of this action is unclear.2

And, given the possibility that

Avon could face a separate suit from Carroll, Avon‟s decision
not to assent to Carroll‟s motion to intervene is difficult to
fathom on the limited information available to the court.

One

would think that Avon would have an interest in defending
against one action rather than two.
On its face, the idea of a single action involving Cooperative, Carroll, and Avon seems both reasonable and
efficient.

The legal basis for such an action is sound:

Under federal law, if an insurer has compensated
an insured for an entire loss, the insurer is the only
real party in interest and must sue in its own name;
however, if the insured is only partially compensated
by the insurer, both are real parties in interest.
If the [insurer-subrogee] has paid an entire loss
suffered by the insured, it is the only real
party in interest and must sue in its own name.
3 Moore, Federal Practice (2d Ed.) p. 1339. If
it has paid only part of the loss, both the
insured and insurer . . . have substantive rights
2

In what appears to be the best explanation for its
position, Co-operative says:
Co-operative asserts that Douglas Carroll, through
subrogation, is already an adequately represented
party to this action and as such his motion is mute
[sic] and should be denied. As the court is aware any
monies recovered from the defendant that are beyond
the amount paid out by Co-operative, if any, will be
given to Douglas Carroll.
Pl.‟s Mem. of Law (doc. no. 23-1) ¶ 3. Co-operative does not,
however, explain how it could recover more from Avon than it
paid out to Carroll.
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against the tortfeasor which qualify them as real
parties in interest.
United States v. Aetna Cas. & Surety Co., 338 U.S.
366, 381-82 (1949). To that effect, Wright and Miller
state:
An insurer who pays a part of the loss is only
partially subrogated to the rights of the
insured. This may occur when the loss exceeds
the coverage or when the insurance policy
contains a deductible amount that must be borne
by the insured. The respective rights of the
party in this situation parallel those when there
has been a partial assignment. Either the
insured or the insurer may sue. Thus, if the
insured brings suit, the insurer who is partially
subrogated may intervene in the action to protect
its pro rata share of the potential recovery. If
either sues and the other does not voluntarily
join or intervene, defendant may seek protection
from multiple lawsuits by having the absent party
joined.
6A Charles A. Wright, Arthur R. Miller & Mary Kane,
Federal Practice & Procedure § 1546 (2d ed. 1990).
Bumble Bee Foods LLC v. Refriammonia, Civ. No. 08-1752 (PG),
2010 WL 1905030, at *3 (D.P.R. May 10, 2010) (parallel citations
omitted).

But, of course, the litigation of this case is for

the parties, not the court.

The court‟s job is to decide the

issues raised by the parties in the context of the case as they
have framed it.
C. Permissive Intervention
Bearing in mind the inherent appeal of the judicial economy
that would result from allowing Carroll to intervene, the court

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turns to permissive intervention under Rule 26(b), and the only
real issue pertinent thereto: timeliness.3
related to timeliness are as follows.
against Avon on April 21, 2010.

The relevant facts

Co-operative filed suit

The parties‟ agreed-upon

deadline for Avon to add third parties to the case was April 1,
2011.

See doc. no. 17.

Carroll filed his motion to intervene

on April 11, 2011.
Carroll, who has the burden of demonstrating timeliness,
see Ungar, 634 F.3d at 50, says his motion “is timely because
the parties have only just begun discovery . . . and completion
of discovery is [not] due until October 31, 2011.”
Intervene ¶ 10.

Mot. to

In its objection, Co-operative avers that

Carroll knew that it intended to sue Avon even before it did so,
and that Carroll was aware of the suit as soon as it was filed.
In response, Carroll asserts that his motion is “a little late
but still timely.”

Carroll‟s Reply (doc. no. 29) ¶ 5.

He

argues: “During the progress of this case the need to intervene
had not yet become necessary.

It is now necessary for Mr.

Carroll to intervene to protect his interest in this
litigation.”
3

There
against Avon
main action,
being Avon‟s
house.

Id. ¶ 4.
can be no reasonable dispute that Carroll‟s claim
shares “a common question of law or fact” with the
Fed. R. Civ. P. 24(b)(1)(B), that common question
liability for the fire that destroyed Carroll‟s

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The first factor in the timeliness analysis is a consideration of “the length of time that the putative intervenor
knew or reasonably should have known that his interests were at
risk before he moved to intervene.”
7.

R&G Mortgage, 584 F.3d at

More specifically:
A motion to intervene is timely if it is filed
promptly after a person obtains actual or constructive
notice that a pending case threatens to jeopardize his
rights. Greenblatt, 964 F.2d at 1231; Caterino v.
Barry, 922 F.2d 37, 40-41 (1st Cir. 1990). Perfect
knowledge of the particulars of the pending litigation
is not essential to start the clock running; knowledge
of a measurable risk to one‟s rights is enough. See
Greenblatt, 964 F.2d at 1231; Culbreath v. Dukakis,
630 F.2d 15, 20-21 (1st Cir. 1980).

Id. at 8.

“In the last analysis, the timeliness inquiry centers

on how diligently the putative intervenor has acted once he has
received actual or constructive notice of the impending threat.”
Id.
Here, Carroll does not contest Co-opertive‟s averments that
he knew about Co-operative‟s claims against Avon before the suit
was filed, and that he knew that the action had been filed for
approximately one year before he moved to intervene.

Rather

than explaining why he waited a year to intervene, Carroll
vaguely asserts that intervention did not become necessary until
sometime after Co-operative filed suit against Avon.

But, he

does not indicate what triggered his need to intervene, when
that need was triggered, or how long after the unidentified
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triggering event he actually moved to intervene.

The rights

that Carroll seeks to protect are the right to compensation from
Avon in excess of his policy limits and the right to be
compensated for uninsured losses.

Carroll fails to explain how,

at the time Co-operative sued Avon, he was unaware that: (1) he
had uncompensated losses due to underinsurance and lack of
coverage; and (2) Co-operative would not protect his interest in
recovering for those losses.
To be sure, analysis of the first factor of the timeliness
inquiry is relative, flexible, and full of gray areas rather
than bright lines.

See P.R. Tel. Co. v. Sistema de Retiro de

los Empleados del Gobierno y la Judicatura, 637 F.3d 10, 15-16
(1st Cir. 2011); R&G Mortgage, 584 F.3d at 8.

But, still,

Carroll bears the burden on this issue, see P.R. Tel. Co., 637
F.3d at 14; Ungar, 634 F.3d at 50-51, and light though it may
be, he has not carried it.
Carroll fares little better with the second and third
factors, “which together involve the balance of harms.”
Mortgage, 584 F.3d at 9.

R&G

His argument for timeliness rests

almost entirely on the second factor, lack of prejudice to the
existing parties.

Id. at 7.

Cutting in Carroll‟s favor is the

fact that this case is at a relatively early stage of
litigation, with discovery still ongoing.

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Carroll also points

out that there are currently no motions pending in the case.
For its part, Co-operative argues that it would be prejudiced by
the addition of a new party midway through the discovery
process.

Cutting slightly against Carroll, but unmentioned by

Co-operative, is the fact that the parties‟ agreed-upon deadline
for adding new parties has already passed.
As to the third factor, prejudice to Carroll should
intervention be denied, see R&G Mortgage, 584 F.3d at 7,
Carroll presents nothing other than the poorly developed
collateral estoppel argument the court has already found
wanting.

For its part, Co-operative argues that “there is no

prejudice to Carroll to deny his motion to intervene in that
this is a subrogation matter in which Co-operative is Douglas
Carroll.”

Pl.‟s Mem. of Law (doc. no. 23-1) ¶ 4.

That

argument, however, ignores the fact that the real Douglas
Carroll, as opposed to his subrogation-born alter-ego, claims
damages in excess of those Co-operative seeks to recover from
Avon.

Plainly, Carroll seems to have a good reason for suing

Avon; what he does not adequately explain is how he will be
prejudiced by suing Avon in a separate action rather than as an
intervenor in this one.

See R&G, 584 F.3d at 10 (“The

availability of an adequate alternative remedy softens any

13

plausible claim of prejudice.”) (citing N.Y. Chinese TV Programs
v. U.E. Enters., Inc., 153 F.R.D. 69, 72 (S.D.N.Y. 1994)).
On balance, Carroll has failed to carry his burden of
demonstrating that his motion to intervene is timely, which is
fatal to both to his bid to intervene as of right under Rule
24(a) and his request for permissive intervention under Rule
24(b).
Conclusion
There is little question that the addition of Carroll to
this action makes a fair amount of practical sense.
not the test.

But that is

Rather, it falls to Carroll to demonstrate that

he should be allowed to intervene under the provisions of Fed.
R. Civ. P. 24(a) and (b).

He has not done so.

Accordingly,

Carroll‟s motion to intervene, doc. no. 19, is denied.
SO ORDERED.

__________________________
Landya McCafferty
United States Magistrate Judge

June 15, 2011
cc:

James D. Kelly, Esq.
Adam A. Larson, Esq.
Sstephen W. Sutton, Esq.

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