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Zurich American Insurance Company v. Ace American Insurance Company

August 31, 2012

ZURICH AMERICAN INSURANCE COMPANY, PLAINTIFF,
v.
ACE AMERICAN INSURANCE COMPANY, DEFENDANT. JACOBS ENGINEERING GROUP, INC., DEFENDANT-IN-INTERVENTION.



ORDER

This matter is before the court on Jacobs Engineering Group, Inc.'s ("Jacobs"), motion to intervene. (ECF 17.) This matter was submitted without a hearing. For the following reasons, Jacobs' motion to intervene is GRANTED.

I. FACTS & PROCEDURAL HISTORY

On April 1, 2011, plaintiff filed a complaint for equitable indemnity, contribution, subrogation and declaratory relief against defendant, ACE American Insurance Co., stemming from plaintiff's payment of over $2.6 million to settle three state court lawsuits ("underlying actions"), as well as attorneys' fees and costs on behalf of the County of San Luis Obispo ("County") and the San Luis Obispo County Flood Control and Water Conservation District ("District").*fn1 (Compl., ECF 1.) These underlying actions stem from an October 2, 2008 accident involving three employees of plaintiff's named insured, Teichert, Inc. ("Teichert"), who "were assisting with the installation of a 30" underground pipeline [when] an excavator accidentally severed a high-pressure water line which flooded the trench" leading two employees to drown and the third to allegedly sustain physical and emotional injuries. (Id. ¶¶ 9, 12.)

On or about November 14, 2006, the District and Jacobs, the parent company of Jacobs Civil, Inc. and engineer and construction manager of the pipeline project, entered into an agreement governing the project. (ECF 1 ¶¶ 10, 16.) The agreement provided that Jacobs would procure Commercial General Liability Insurance and would name the District and County as Additional Insureds. (Id. ¶ 20.) Jacobs procured said insurance from defendant ("Policy"). (Id. ¶ 37.) On or about August 28, 2007, the District entered into an agreement with Teichert to perform construction services for the project. (Id. ¶ 23.) The agreement provided that Teichert would procure Comprehensive General Liability insurance naming the District, the County, and Jacobs as Additional Insureds. (Id. ¶ 27.) Teichert procured said insurance from plaintiff. (Id. ¶ 30.)

Jacobs filed the present motion to intervene on February 24, 2012. (ECF 17.) Plaintiff filed its opposition on March 6, 2012 (ECF 20; redacted version, ECF 43) and defendant filed a statement of non-opposition on March 9, 2012 (ECF 22). Jacobs submitted its reply along with a notice of request to seal the reply on March 16, 2012.*fn2 (ECF 24.)

II. ANALYSIS

A. Standard

Federal Rule of Civil Procedure 24(a)*fn3 provides: 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.

The court applies a four-part test to determine whether intervention of right is proper under Rule 24(a): "(1) the application for intervention must be timely; (2) the applicant must have a 'significantly protectable' interest relating to the property or transaction that is the subject of the action; (3) the applicant must be so situated that the disposition of the action may, as a practical matter, impair or impede the applicant's ability to protect that interest; and (4) the applicant's interest must not be adequately represented by the existing parties in the lawsuit." Southwest Ctr. for Biological Diversity v. Berg, 268 F.3d 810, 817 (9th Cir. 2001) ("Berg"). Although Rule 24(a) is construed "liberally in favor of potential intervenors," it is the proposed intervenor's burden to show that it satisfies this test. Id. at 818.

B. Application 1. Timeliness

The determination of timeliness is left to the court's discretion and is "a flexible concept." United States v. Alisal Water Corp., 370 F.3d 915, 921 (9th Cir. 2004); see also Cummings v. United States, 704 F.2d 437, 439 (9th Cir. 1983) (motion to intervene timely despite being heard two weeks date set for close of discovery). "Courts weigh three factors in determining whether a motion to intervene is timely: '(1) the stage of the proceeding at which an applicant seeks to intervene; (2) the prejudice to other parties; and (3) the reason for and length of the delay.'" Alisal Water Corp., 370 F.3d at 921 (quoting Cal. Dep't of Toxic Substances Control v. Commercial Realty Projects, Inc., 309 F.3d 1113, 1119 (9th Cir. 2002)).

Plaintiff argues that Jacobs' motion is untimely as it was filed ten months after the complaint and noticed for hearing nine weeks before the close of non-expert discovery. (ECF 20 at 4.) Jacobs argues that at the time it filed the present motion, written discovery had recently commenced, no depositions had been taken, and no motions had been made (ECF 17 at 7); furthermore, defendant was not served until July 22, 2011, seven months before Jacobs filed this motion. (ECF 49 at 4.) Moreover, Jacobs contends it could not seek to intervene until a protective order governing discovery was adopted, to ensure the maintenance of confidentiality of the Policy between Jacobs and defendant; said order was filed on November 18, 2011. (ECF 17 at 7.)

While the discovery cut-off date was set for May 30, 2012 at the time this motion was filed, Jacobs did not request to continue this date in its motion to intervene and, although the complaint was filed ten months earlier, the present motion was filed in the early stages of litigation. Plaintiff has failed to show it would be prejudiced by allowing this intervention. Further, any delay in filing this motion was supported by Jacobs' desire to protect its agreement with defendant. In addition, since the filing of this motion, the court has granted defendant's request for modification of the scheduling order, which reset the close of non-expert discovery to November 30, 2012, expert discovery to February 15, 2013, hearing of dispositive ...


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