United States District Court, S.D. California
ORDER DENYING MOTION TO INTERVENE [ECF NO.
Cynthia Bashant United States District Judge.
Insurance Co. (“Colony”) brings this action for
declaratory relief against Advanced Particle Therapy, LLC
(“APT”) seeking a declaration that Colony is not
responsible for defending or indemnifying APT for various
lawsuits submitted to Colony between 2014 and 2017. APT has
failed to answer the Complaint, and Colony has moved for
default judgment. (ECF No. 10.)
pending before the Court is a Motion to Intervene filed by
Robert Yaquinto, as the Liquidating Trustee for the Dallas
Proton Treatment Center, LLC (“Dallas Center”)
and the Dallas Proton Holdings, LLC (“Dallas
Holdings”) (together “Dallas Proton
Entities”). (ECF No. 11.) Colony opposes Yaquinto's
Motion to Intervene. (ECF No. 13.) For the reasons stated
below, the Court DENIES Yaquinto's
Motion to Intervene.
“the promoter and organizer of four separate proton
therapy cancer treatment centers located in San Diego,
Dallas, Atlanta and Baltimore.” (Compl. ¶ 4).
Colony issued a policy effective May 24, 2015 to May 24, 2016
to APT (the “Policy”). (Compl. ¶ 8, Ex. A.)
June 2015 through April 2017, APT submitted to Colony
multiple lawsuits for determination of coverage under this
insurance Policy. (Compl. ¶¶ 10-38.) In response to
this submission, Colony issued reservation of rights letters,
appointed defense counsel to represent APT, and began
incurring costs and fees. (Compl. ¶¶ 51-56.) Colony
has brought this action for Declaratory Relief requesting
that this Court find that Colony is not responsible for
defending APT under various exclusions in the Policy.
the lawsuits at issue, described in the Complaint as the
“Trustee Matter, ” involved a lawsuit filed on
April 28, 2017 by Robert Yaquinto, as the Liquidating Trustee
for the Dallas Proton Entities, against APT in the U.S.
Bankruptcy Court in the Northern District of Texas. (Compl.
¶ 35.) Yaquinto alleges that APT was negligent and
breached its duty of loyalty to the Dallas Proton Entities.
alleges that “APT controls 96.4% of Dallas Holdings
Class B shares, with Dallas Holdings Board Members being
elected exclusively by holders of Class B units” and
that “Dallas Holdings maintains 100% ownership in
Dallas Center.” (Compl. ¶ 36.) Thus, Colony claims
that Dallas Holdings is a “subsidiary” of APT and
that Dallas Center is both a “subsidiary” and an
“affiliate” under the Policy, and thus
Yaquinto's claims are barred under Exclusion A of the
Policy. (Compl. ¶¶ 47, 61-62.) Colony further
alleges that coverage is excluded under Exclusion B
(id. ¶ 63), Exclusion R (id. ¶
65), Exclusion V (id. ¶ 66), and Exclusion W
(id. ¶ 67) of the Policy. Specifically, Colony
claims that APT commingled, misappropriated, and/or misused
approximately $30, 000, 000 in funds from Dallas Holdings and
redirected the funds to other APT investments and converted
the funds for its own benefit, actions that would all be
excluded under the Policy. (Compl. ¶¶ 65-67.)
Intervention By Right
Federal Rule of Civil Procedure 24(a)(2), a district court
must allow intervention if the proposed intervenor
demonstrates that: (1) the application to intervene is
timely; (2) the “applicant has a significant
protectable interest relating to the property or transaction
that is the subject of the action;” (3)
“disposition of the action may, as a practical matter,
impair or impede the applicant's ability to protect its
interest;” and (4) “the existing parties may not
adequately represent the applicant's interest.”
Citizens for Balanced Use v. Montana Wilderness
Ass'n, 647 F.3d 893, 897 (9th Cir. 2011) (quoting
Prete v. Bradbury, 438 F.3d 949, 954 (9th Cir.
2006)). “While an applicant seeking to intervene has
the burden to show that these four elements are met, the
requirements are broadly interpreted in favor of
intervention.” Id.; see also Smith v. Los Angeles
Unified School Dist., 830 F.3d 843, 853 (9th Cir. 2016)
(“A liberal policy in favor of intervention serves both
efficient resolution of issues and broadened access to the
courts.” (quoting Wilderness Soc. v. U.S. Forest
Serv., 630 F.3d 1173, 1179 (9th Cir. 2011))).
this Court ultimately finds Yaquinto does not have a
significant protectable interest related to the property or
transaction, the Court does not address the other three
elements. “Whether an applicant for intervention as of
right demonstrates sufficient interest in an action is a
practical, threshold inquiry, and [n]o specific legal or
equitable interest need be established.” Citizens
for Balanced Use, 647 F.3d at 897 (quoting NW Forest
Res. Council v. Glickman, 82 F.3d 825, 837 (9th Cir.
1998). However, “[t]o demonstrate a significant
protectable interest, an applicant must establish that the
interest is protectable under some law and that there is a
relationship between the legally protected interest and the
claims at issue.” Id. “An economic stake
in the outcome of the litigation, even if significant, is not
enough.” Greene v. United States, 996 F.2d
973, 976 (9th Cir. 2003).
argues that he has a significant protectable interest
because, if a judgment is entered in favor of Colony,
coverage that might otherwise be available under the Policy
to pay for APT's liability to Dallas Center will be lost.
Most circuit courts addressing this issue have held that such
contingent economic interests are insufficient to establish a
significant protectable interest. See, e.g., Medical
Liability Mut. Ins. Co. v. Alan Curtis LLC, 485 F.3d
1006, 1008-09 (8th Cir. 2007) (denying intervention when
intervenor's “only interest . . . is to ensure that
the defendants in her state lawsuit have sufficient resources
to satisfy any judgment she might obtain against them. This
interest is too remote and indirect to qualify as cognizable
interest under Rule 24(a)(2)”); Mt. Hawley Ins. Co.
v. Sandy Lake Properties, Inc., 425 F.3d 1308, 1311
(11th Cir. 2005) (denying intervention because the
claimant's “interest in the subject matter of the
declaratory action is purely economic, ” the claimant
was “not a party to the . . . insurance policy and has
no legally protectable interest in that insurance policy,
” and the claimant's “interest is purely
speculative because it is contingent upon his prevailing . .
. in the wrongful death action.”); Liberty Mut.
Ins. Co. v. Treesdale Inc., 419 F.3d 216, 222 (3rd Cir.
2005) (“Appellants here have no property interest in
the . . . policies nor do they have any other legally
protectable interest in the policies. Rather, they have the
kind of economic interest in the insurance proceeds that we
have held does not support intervention as a matter of
right.”); Reliastar Life Ins. Co. v. MKP
Invs., 565 Fed.Appx. 369, 372 (6th Cir. 2014)
(“[A] putative intervenor does not possess the
requisite interest where its ‘primary interest' in
the litigation is to preserve a party's financial
viability in order to protect the intervenor's own
economic interest in the party's continued
solvency.”); Deutsche Bank Nat. Trust Co. v.
F.D.I.C., 717 F.3d 189, 195 (D.C. Cir. 2013)
(“[C]ircuits have generally concluded that a party may
not intervene in support of a defendant solely to protect
judgment funds that the party wishes to recover
considerations support this conclusion as well. As noted by
the Ninth Circuit, if “an allegedly impaired ability to
collect judgments arising from past claims” sufficed to
confer a right to intervention, then “virtually any
creditor of a defendant [could] intervene in a lawsuit where