Foraker v. USAA Casualty Insurance Company
Filing
567
Opinion and Order - The Court GRANTS the Motion to Intervene on behalf of Heather A. Brann, Heather A. Brann PC, Stephen C. Hendricks, and Hendricks Law Firm PC. ECF 560 . Intervenor-Plaintiffs shall file their Complaint-in-Intervention within two weeks. Signed on 10/6/2021 by Judge Michael H. Simon. (mja)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PEGGY FORAKER,
Case No. 3:14-cv-87-SI
Plaintiff,
OPINION AND ORDER GRANTING
MOTION TO INTERVENE
v.
USAA CASUALTY INSURANCE
COMPANY, a Texas corporation,
Defendant.
______________________________________
HEATHER A. BRANN; HEATHER A.
BRANN PC; STEPHEN C. HENDRICKS;
and HENDRICKS LAW FIRM PC,
Intervenor-Plaintiffs,
v.
PEGGY FORAKER,
Intervenor-Defendant.
Katherine R. Heekin, THE HEEKIN LAW FIRM, 7327 SW Barnes Road, Suite 824, Portland, OR
97225. Of Attorneys for Plaintiff and Intervenor-Defendant Peggy Foraker.
Robert S. McLay, DKM LAW GROUP LLP, 201 Spear Street, Suite 1100, San Francisco, CA
94105; Jessica J. Ross, DKM LAW GROUP LLP, 535 Pacific Avenue, Suite 101, San Francisco,
CA 94133; Joshua N. Kastan, DKM LAW GROUP LLP, 1050 SW Sixth Avenue, Suite 1100,
Portland, OR 97204; and Matthew C. Casey, BULLIVANT HOUSER BAILEY PC, One SW Columbia
Street, Suite 800, Portland, OR 97204. Of Attorneys for Defendant USAA Casualty Insurance
Company.
David B. Markowitz and Hannah Hoffman, MARKOWITZ HERBOLD PC, 1455 SW Broadway,
Suite 1900, Portland, OR 97201. Of Attorneys for Intervenor-Plaintiffs Heather A. Brann,
Heather A. Brann PC, Stephen C. Hendricks, and Hendricks Law Firm PC.
PAGE 1 – OPINION AND ORDER GRANTING MOTION TO INTERVENE
Michael H. Simon, District Judge.
Before the Court is a motion to intervene filed by Heather A. Brann, Heather A.
Brann PC, Stephen C. Hendricks, and Hendricks Law Firm PC (collectively, IntervenorPlaintiffs). ECF 560. Intervenor-Plaintiffs previously represented Plaintiff Peggy Foraker
(Foraker) in this lawsuit. On July 30, 2021, Intervenor-Plaintiffs filed a Notice of Claim of
Attorney Fee Lien Pursuant to ORS 87.430. ECF 550. The next business day, August 2, 2020,
Foraker filed a motion to substitute counsel (ECF 551), which the Court granted. ECF 553.
Foraker, through her new counsel, opposes the pending motion to intervene by her former
counsel. Defendant USAA Casualty Insurance Company (USAA) takes no position on the issue.
For the reasons that follow, the Court grants the motion to intervene.
STANDARDS
Under Rule 24(a)(2) of the Federal Rules of Civil Procedure, to intervene as of right an
applicant must meet the following four requirements:
(1) it has a significant protectable interest relating to the property
or transaction that is the subject of the action; (2) the disposition of
the action may, as a practical matter, impair or impede the
applicant’s ability to protect its interest; (3) the application is
timely; and (4) the existing parties may not adequately represent
the applicant’s interest.
United States v. City of Los Angeles, 288 F.3d 391, 397 (9th Cir. 2002) (quoting Donnelly v.
Glickman, 159 F.3d 405, 409 (9th Cir. 1998)) (quotation marks omitted).1 If a party seeking to
intervene fails to meet any of these requirements, it may not intervene as a matter of right.
Arakaki v. Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003).
1
Alternatively, Rule 24(a)(1) provides that a court must permit intervention as of right to
anyone who “is given an unconditional right to intervene by a federal statute.” Fed. R. Civ.
P. 24(a)(1). Rule 24(a)(1) does not apply in this case.
PAGE 2 – OPINION AND ORDER GRANTING MOTION TO INTERVENE
In evaluating whether these requirements have been met, courts “are guided primarily by
practical and equitable considerations” and generally construe the intervention rule “broadly in
favor of proposed intervenors.” City of Los Angeles, 288 F.3d at 397 (quotation marks and
citations omitted). “Courts are to take all well-pleaded, nonconclusory allegations in the motion
to intervene, the proposed complaint or answer in intervention, and declarations supporting the
motion as true absent sham, frivolity or other objections.” S.W. Ctr. for Biological Diversity v.
Berg, 268 F.3d 810, 820 (9th Cir. 2001). A proposed intervenor has a significant protectable
economic interest when that interest is “concrete and related to the underlying subject matter of
the action.” United States v. Alisal Water Corp., 370 F.3d 915, 919 (9th Cir. 2004). The interest
must be “direct” and “non-contingent.” Dilks v. Aloha Airlines, 642 F.2d 1155, 1157 (9th Cir.
1981).
Applicants for permissive intervention under Rule 24(b) need only meet the following
three threshold requirements: “(1) an independent ground for jurisdiction; (2) a timely motion;
(3) a common question of law and fact between the movant’s claim or defense and the main
action.” Freedom from Religion Found., Inc. v. Geithner, 644 F.3d 836, 843 (9th Cir. 2011).
Even if an applicant satisfies these threshold requirements, however, a court still has discretion to
deny permissive intervention. Donnelly, 159 F.3d at 412. In exercising this discretion, a court
“must consider whether intervention will unduly delay the main action or will unfairly prejudice
the existing parties.” Id.
BACKGROUND
In this case, the Court has already conducted two bench trials, one addressing Phase I
issues and a second resolving Phase II claims. In Phase I, Foraker recovered from her insured,
USAA, $1 million, representing the policy limits of her uninsured motorist (UM) coverage. Also
in Phase I, the Court awarded Foraker her attorney’s fees against USAA, under Oregon Revised
PAGE 3 – OPINION AND ORDER GRANTING MOTION TO INTERVENE
Statutes (ORS) § 742.061, in the amount of $1,310,580, which included a 1.5 multiplier.2 In
Phase II, Foraker prevailed against USAA on her claim of breach of the implied covenant of
good faith and fair dealing. She recovered $322,882.78 in damages, but that was only a small
portion of what she had sought. The Court also awarded Foraker attorney’s fees and costs at
Phase II in the amount of $178,792.93, but with no multiplier. This brought Foraker’s total
recovery in this case to $2,812,255.71, consisting of $1 million for UM policy limits plus
$1,812,255.71 for attorney’s fees, costs, and additional damages. Foraker appealed the Court’s
rulings at Phase II, both on liability and attorney’s fees.
On July 19, 2021, the Ninth Circuit affirmed in part, reversed in part, vacated in part, and
remanded. ECF 549. The Ninth Circuit held that this Court did not clearly err in denying
Foraker’s claim for lost investment profits from the sale of her retirement assets as damages for
USAA’s breach of the implied covenant of good faith. The Ninth Circuit also held that this Court
did not clearly err in calculating Foraker’s damages for the loss of the use of $1 million, which
was the amount of her UM policy limits. The appellate court further held that this Court did not
err in denying Foraker prejudgment interest on her Phase II damages. The Ninth Circuit,
however, concluded that this Court erred in denying Foraker her Phase II litigation costs as
consequential damages. The Ninth Circuit instructed this Court to award Foraker an additional
$109,468.86, representing these damages. Regarding Foraker’s claim for Phase II attorney’s fees,
the Ninth Circuit stated that “we are unable to determine whether the district court abused its
ORS 742.061(1) provides, in relevant part, that “if settlement is not made within six
months from the date proof of loss is filed with an insurer and an action is brought in any court
of this state upon any policy of insurance of any kind or nature, and the plaintiff’s recovery
exceeds the amount of any tender made by the defendant in such action, a reasonable amount to
be fixed by the court as attorney’s fees shall be taxed as part of the costs of the action and any
appeal thereon.”
2
PAGE 4 – OPINION AND ORDER GRANTING MOTION TO INTERVENE
discretion in reducing Foraker’s requested Phase II attorneys’ fees by 75%” and thus vacated the
Phase II fee award and remanded for further proceedings. ECF 549 at 5-6. Finally, whatever will
be the ultimate calculation of Foraker’s Phase II attorney’s fees, the Ninth Circuit directed that
this Court apply a 1.5 multiplier, just as was done with Foraker’s Phase I attorney’s fees. Id. at 6.
On July 30, 2021, eleven days after the Ninth Circuit issued its ruling but before its
mandate, Intervenor-Plaintiffs (who were still Foraker’s attorneys at the time) filed their Notice
of Claim of Attorney Fee Lien Pursuant to ORS 87.430.3 ECF 550. On the next business day,
August 2, 2021, Foraker moved to substitute counsel, replacing Intervenor-Plaintiffs (ECF 551),
which the Court granted. ECF 553. The Ninth Circuit issued its mandate on August 10, 2021.
ECF 554. On September 13, 2021, Intervenor-Plaintiffs filed the pending motion to intervene.
ECF 560. The following day, September 14, 2021, Intervenor-Plaintiffs filed their proposed
Complaint-in-Intervention (ECF 563),4 before the Court received any substantive argument from
any party or made any substantive ruling regarding the post-remand determination of Foraker’s
Phase II attorney’s fees.
Earlier, however, on February 27, 2021, Foraker, through her current counsel in this
lawsuit, sued her former attorneys (Intervenor-Plaintiffs) in state court. See Foraker v. Stephen
C. Hendricks, et al., Case No. 21CV07345 (Mult. Cnty. Cir. Ct.) (the State Lawsuit). ECF 561,
ORS § 87.430 provides, in relevant part: “An attorney has a lien for compensation
whether specially agreed upon or implied, upon all papers, personal property and money of the
client in the possession of the attorney for services rendered to the client.” In addition,
ORS 87.480 states: “Attorneys have the same right and power over actions, suits, proceedings,
judgments, orders and awards to enforce their liens as their clients have for the amount due
thereon to them.”
3
4
In their proposed complaint-in-intervention, Intervenor-Plaintiffs allege that Foraker
breached her contract for legal services, for which they seek money damages. They also seek an
assignment of Foraker’s interest in the Court’s remaining attorney fee award in this federal
lawsuit. See ECF 563.
PAGE 5 – OPINION AND ORDER GRANTING MOTION TO INTERVENE
Ex. 1. In that action, Foraker alleges against Intervenor-Plaintiffs (her former counsel) breach of
fiduciary duty, professional negligence, and financial elder abuse. As relief, Foraker seeks,
among other things, a court order nullifying all fee agreements and related settlement statements
with her former counsel. In their Answer, Affirmative Defenses, and Counterclaims in the State
Lawsuit, Intervenor-Plaintiffs assert counterclaims very similar to the claims they assert in their
proposed Complaint-in-Intervention. See ECF 565-1. The Court recognizes the significant
overlap (and thus the risk of inconsistent results) between the claims and counterclaims alleged
in Foraker’s State Lawsuit and the claims in intervention asserted by Intervenor-Plaintiffs in this
federal action. No one, however, has yet moved to stay either action, which is understandable.
The first step is for the Court to resolve the pending motion to intervene.
DISCUSSION
Intervenor-Plaintiffs satisfy all four requirements under Rule 24(a)(2). First, in their
proposed Complaint-in-Intervention, Intervenor-Plaintiffs have shown that, based on their
attorney fee lien, they have a significant protectable interest relating to the property or
transaction that is the only remaining subject of this action, namely the remaining unpaid
attorney’s fees due from USAA as part of Phase II. Second, the disposition of this federal action
may, as a practical matter, impair or impede Intervenor-Plaintiffs’ ability to protect their interests
in that fee award or some portion of it. For example, Foraker may attempt to settle that fee award
with USAA on terms that are unfavorable to Intervenor-Plaintiffs. Third, the application for
intervention is timely. Intervenor-Plaintiffs moved to intervene shortly after the Ninth Circuit
issued its mandate, which remanded the Phase II fee issue for further proceedings. Fourth, and
finally, the existing parties may not adequately represent the interests of Intervenor-Plaintiffs.
Neither Foraker nor USAA has any legal obligation to protect the interest of IntervenorPlaintiffs. Indeed, in the State Lawsuit, Foraker is attempting to extinguish their interests.
PAGE 6 – OPINION AND ORDER GRANTING MOTION TO INTERVENE
In the alternative, Intervenor-Plaintiffs satisfy all three threshold requirements for
permissive intervention under Rule 24(b). First, there is an independent ground for jurisdiction
over the proposed Complaint-in-Intervention. The proposed Complaint-in-Intervention invokes
diversity jurisdiction, alleging that Foraker is a “resident” of Virginia,5 that USAA is a Texas
corporation, that Intervenor-Plaintiffs are Oregon entities or “residents,”6 and that the amount in
controversy exceeds $75,000. In her opposition memorandum, Foraker argues that at the time
she filed her original complaint in this federal lawsuit in 2014, she was a citizen of Oregon, not
Virginia. In support of her opposition on this point, Foraker cites Morongo Band of Mission
Indians v. California State Bd. of Equalization, 858 F.2d 1376 (9th Cir. 1988). In that case, “the
district court, believing that it had jurisdiction based on the original interpleader claim, granted
the Band leave to file an amended complaint realleging the interpleader claim and adding three
claims for declaratory relief.” Id. at 1380. The Ninth Circuit explained: “In determining federal
court jurisdiction, we look to the original, rather than to the amended, complaint. Subject matter
jurisdiction must exist as of the time the action is commenced.” Id. Morongo, however, did not
involve a motion to intervene or a proposed Complaint-in-Intervention. It involved only an
amended complaint.
For a Complaint-in-Intervention, the Ninth Circuit has noted that “an independent basis
for jurisdiction is required for claims by permissive intervenors.” Blake v. Pallan, 554 F.2d 947,
956 (9th Cir. 1977). Further, in that case, the Ninth Circuit expressly looked at the claims
Intervenor-Plaintiffs allege that Foraker is a “resident” of Virginia. For diversity
jurisdiction, however, the correct requirement looks to whether the parties are “citizens” of
different States. See 28 U.S.C. § 1332(a). The Court gives Intervenor-Plaintiffs leave to correct
this allegation when they file their actual Complaint-in-Intervention.
5
6
See n.4, supra.
PAGE 7 – OPINION AND ORDER GRANTING MOTION TO INTERVENE
contained in the proposed Complaint-in-Intervention. Id. Applying that same method of analysis
here, the Court looks to the claims alleged in the proposed Complaint-in-Intervention; there
appears to be complete diversity of citizenship.7
Second, the Motion to Intervene is timely. It was filed shortly after the Ninth Circuit’s
mandate remanding this case and before any substantive filings or decisions have been made.
Third, there is a common question of law and fact between the claims asserted by IntervenorPlaintiffs and the main action. At least one common question concerns the determination of the
correct amount of attorney’s fees at Phase II that USAA must pay to Foraker under
ORS § 742.061. Indeed, that is the only disputed issue that remains to be decided on remand, and
it affects both Foraker’s claim against USAA and Intervenor-Plaintiffs’ claim against Foraker.
The Court also finds that intervention will not unduly delay the main action or unfairly prejudice
the existing parties.
Finally, in their Motion to Intervene, Intervenor-Plaintiffs cite the Ninth Circuit’s
decision in Venegas v. Skaggs, 867 F.2d 527, 528 (9th Cir. 1989), aff’d sub nom. Venegas v.
Mitchell, 495 U.S. 82 (1990). In that case, the Ninth Circuit held that it was an abuse of
discretion for a district to deny permissive intervention under very similar circumstances. In
Venegas, the intervenor (Mitchell) successfully represented the plaintiff in his § 1983 action
alleging false arrest and imprisonment. Id. at 529. The plaintiff then substituted new counsel on
7
The Court also notes that because the proposed Complaint-in-Intervention demonstrates
diversity jurisdiction, it could be filed as a separate action in this district. Further, because its
subject matter is related to the pending federal lawsuit, it would be assigned to the undersigned
district judge as a “related case.” Finally, Intervenor-Plaintiffs could move for consolidation
under Rule 42(a) of the Federal Rules of Civil Procedure. All of this further supports the Court’s
conclusion that subject-matter jurisdiction for the proposed Complaint-in-Intervention is to be
determined at the time that proposed pleading is filed and not when the original lawsuit was
commenced.
PAGE 8 – OPINION AND ORDER GRANTING MOTION TO INTERVENE
appeal, and Mitchell filed a motion to intervene to confirm his lien on the judgment for
attorney’s fees. Id. The district court denied the motion. Id. The Ninth Circuit held that this
denial constituted an abuse of discretion because the district court’s ruling went toward the
question of what amount of fees were due to Mitchell and neither of the other parties could be
expected to protect Mitchell’s interests. Id. at 530, citing Gaines v. Dixie Carriers, Inc., 434
F.2d 52, 54 (5th Cir. 1970) (holding that under such circumstances, a former attorney may
intervene as of right). The Ninth Circuit held that “the trial court abused its discretion when it
denied Mitchell permissive intervention.” Id. at 531. Here, the Court notes that in Foraker’s
memorandum in opposition to the motion to intervene (ECF 564), Foraker does not even
mention the Ninth Circuit’s decision in Venegas.
CONCLUSION
The Court GRANTS the Motion to Intervene on Behalf of Heather A. Brann, Heather A.
Brann PC, Stephen C. Hendricks, and Hendricks Law Firm PC. ECF 560. Intervenor-Plaintiffs
shall file their Complaint-in-Intervention within two weeks.
IT IS SO ORDERED.
DATED this 6th day of October, 2021.
/s/ Michael H. Simon
Michael H. Simon
United States District Judge
PAGE 9 – OPINION AND ORDER GRANTING MOTION TO INTERVENE
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